mmtc ltd share price Management discussions

Overview of Global Trade & Developments

The global economy is facing unprecedented volatility and disruption due to Covid-19 and global uncertainties. A tentative recovery in 2021 has been followed by increasingly gloomy developments in 2022 as risks began to materialize. Several shocks have hit a world economy already weakened by the pandemic higher-than-expected and also further negative spillovers from the war in Ukraine.

With increasing prices continuing to squeeze living standards worldwide, taming inflation should be the first priority for policymakers. Tighter monetary policy will inevitably have real economic costs, but delay will only exacerbate them. Targeted fiscal support can help cushion the impact on the most vulnerable, but with government budgets stretched by the pandemic and the need for a disinflationary overall macroeconomic policy stand such policies will need to be offset by increased taxes or lower government spending. Tighter monetary conditions will also affect financial stability, requiring judicious use of macro prudential tools and making reforms to debt resolution frameworks all the more necessary. Policies to address specific impacts on energy and food prices should focus on those most affected without distorting prices. Finally, mitigating climate change continues to require urgent multilateral action to limit emissions and raise investments to hasten the green transition.

Overview of Economic Developments in India during 2022-23

Indias annual growth rate during 2022-23 was 7.2%. which underscore the resilience of the Indian economy amidst global challenges. This robust performance along with overall optimism and compelling macro-economic indicators exemplify the promising trajectory of our economy.

Indias GDP has reached $3.75 trillion in 2023, from around $2 trillion in 2014; moving from 10th largest to 5th largest economy in the world.

Outlook for 2023-24

In Indian economy is expected to grow in a range of 6.5-6.7 per cent in the financial year 2023-24.

The growth will be supported by strong domestic drivers and robust momentum in capital expenditure.

The government expects Indias 2023-24 GDP at 6.5 per cent.

"The Indian economy remains resilient in the face of a challenging global environment, and we do not anticipate major domestic roadblocks in the year ahead," Dinesh said in his first media interaction after taking over as president CII. Despite strong global headwinds and tighter domestic monetary policy tightening, various international agencies have forecasted India to be one of the fastest-growing economies in 2023-24, supported by robust growth in private consumption and sustained pick-up in private investment.

MMTC- 2022-23 in retrospect Financial Review

In the backdrop of stoppage of entire business activities on the instructions of the administrative ministry following the new Enterprise Policy for CPSEs in the Non Strategic Sector, your company achieved a trade turnover of Rs.271.77 crore during 2022-23 as against the turnover of Rs. 7840.78 crore registered during last fiscal. Your Company earned a net profit of Rs.1076.07 crore in the current financial year as against Net Loss of Rs. 237.77 crore during last year. As there is stoppage of all the business activities during the financial year, the net profit is mainly due to funds received from the sale of its stake in the JV Neelachal Ispat Nigam.

Source and Utilization of Funds

The source of funds of the company as on 31st March, 2023 comprises of shareholders fund amounting to Rs.1264.83 crores including equity share capital of Rs.150 crores and non-current and current liabilities of Rs.48.08 crores and Rs.1960.46 crores respectively. These funds have been deployed, inter alia, towards non-current assets amounting to Rs. 287.45 crores and current assets of Rs.2985.92 crores as on 31st March, 2023.

Internal Control Procedures

MMTC has Internal Audit System & Procedures which are in line its business operations. The scope of audit is reviewed by the Audit Committee. The directions, if any, of Audit Committee are duly complied. The company has an Internal Audit Division, to coordinate with external auditing firms in conducting internal audit. The Audit Committee comprises of Dr. Pradip Kumar Varma, Independent Director as Chairman, Ms Arti Bhatnagar, Govt. Nominee Director, Ms S.Meenakshi, Shri Srinivas Rao Maddi and Shri Nabarun Nayak, Independent Directors.

Subsidiary Company

MMTC Transnational Pte. Ltd. (MTPL), Singapore, the wholly owned subsidiary of your Company has been engaged in commodity trading and has established itself as a credible and reputable trading outfit in Singapore. During the financial year 2022-23 MTPL achieved sales turnover of USD 405.15 million as against USD 456.58 million recorded during last fiscal. The Net Profit of MTPL during the financial year 2022-23 amounted to USD 0.51 million as against USD 0.69 million earned during 2021-22. The net worth of MTPL stood at USD 5.68 million as on 31st March 2023. Overall dividend declared by MTPL since inception is USD 27.945 million which includes a dividend of USD 1 million received from MTPL during FY2022-23.

Pursuant to the provisions of Section 129 of the Companies Act, 2013, the audited financial statements of MTPL together with Directors Report & Auditors Report are attached herewith.

Business Group wise Review for 2022-23

The During 2022-23, MMTC was not involved in any business activity as per the directives of Department of Commerce, the administrative ministry. No fresh import and domestic sale contracts were signed by it during FY 2022-23. Only the bullion group of mMtC has recorded turnover of Rs. 265.98 crore beside sale of wind power generated from its captive wind power mill amounting to Rs. 5.13 crore.

Future prospects of the Company

In the past, the Company has been engaged in canalized business activities in the segments of Minerals & Metals, Fertilizers, Precious Metals and Agri products. However, due to Governments new Public Sector Policy as per which there will be a bare minimum presence of PSEs limited to strategic sectors only. Since MMTC falls in the nonstrategic sector, MMTC has been directed to prepare a road map for scaling down of operations including exit from various JVs in a phased manner and downsizing of business operations, implementation of VRS etc. LTA for export of Iron Ore to Japan and South Korea discontinued and MMTC was delisted as an STE for import of urea on account of Deptt. of Fertilizers. MMTC was directed to exit from bullion operations and other canalized/nominated business. Government is of the view that there is no requirement of MMTC as a central canalizing agency and that relevant Ministry/Departments can do trading through their own PSUs/other agencies. However, formal decision of Government regarding closure of the Company is awaited.

Cautionary Statement

Statements in the Management Discussions and Analysis describing the Companys projections, estimates, and expectations may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations/policies, tax laws, other statutes and other incidental factors. MMTC is not carrying any business at present.

By Order of Board

Sd/- (Hardeep Singh)

Chairman and Managing Director

Date : 22.09.2023