s t c Management discussions

WORLD ECONOMIC OVERVIEW

The cumulative effect of Russias on going war of invasion of Ukraine and outbreak of different variants of COVID-19 continued to weigh heavily on the world economy during 2022. The world economy is estimated at 3.3 percent as against 6 percent in 2021 due to lingering supply disruption, perishing high inflation and resultant tightening of financial conditions in many economies. There was significant slowdown for largest economies with growth of Advanced Economies estimated at 2.7 percent in 2022, with growth of US economy, Japan and Euro Area estimated at 2.1 percent, 1.1 percent and 3.5 percent respectively for 2022. Emerging Market and Developing Economies and Developing Economies estimated have grown at 4.0 percent in 2022. The economy growth of China and India estimated at 3.0 percent and 6.8 percent respectively for 2022.

OVERVIEW OF INDIAN ECONOMY

The Indian economy is estimated to grow by 6.8 percent in 2022-23. Despite persistent inflation, depreciating rupee and widening current account deficit, agencies worldwide continue to project India as the fastest-growing major economy. The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity grew by 7.6 percent during 2022-23 as compared to a growth of 10.4 percent in 2021-22. The performance of the industrial sectors based on the Index of Industrial Production (IIP) comprising mining, manufacturing and electricity registered a growth of 5.1 percent in 2022-23 as compared to 11.4 percent in 2021-22. The average inflation rate during in the year 2022 was 6.7 per cent as against 5.1 per cent during the year 2021. During 2022-23, India made merchandise exports worth US$ 447.46 billion as against US$ 422.00 billion in 2021-22, registering a growth of 6.03 percent over the previous year. Merchandise imports for 2022-23 were US$ 714.24 billion as against US$613.05 billion in 2021-22, registering a growth of 16.51 percent over the previous year. Non-petroleum and non-gems & jewellery exports during 2022-23 were 314.98 billion as compared to US$315.43 billion in 2021-22. Whereas non-petroleum and non-gems & jewellery imports during 2022-23 were 433.65 billion as compared to US$370.79 billion in 2021-22. Thus, the trade deficit for 2022-23 estimated at US$ 266.78 billion, as compared to US$ 191.05 Billion in 2021.22.

According to the estimates released by Department of Industrial Policy and Promotion (DIPP), the total FDI investments in India during 2022-23 stood at US$ 55.27 billion as against US$ 84.83 billion in the previous year. The foreign exchange reserves stood at US$ 509.69 billion as on 31st March 2023, as compared to US$ 539.72 billion at end-March 2022.

STCs PERFORMANCE AND OUTLOOK Business Activity

During the year 2022-23, no business activities were undertaken by the Company and STC continued as a ‘non-operative company in pursuance of the direction of the Ministry of Commerce & Industry and approval of the Board of Directors. However, the company continued monitoring of counter trade obligation as per directions of the Department of Commerce. The performance of the company during the year 2022-23 vis-a-vis the previous year is summarized below:

(Rs Crore)

Particulars	2022-23	2021-22
TURNOVER	-	-
FINANCIALS
Income
Trading Profit	-	-
Rental Income	73.35	64.95
Interest & Other Income	11.69	12.41
Total	85.04	77.36
Expenses
Employees Benefit	34.75	40.91
Administration & Trade	11.48	12.21
Interest	1.94	1.94
Exceptional Item (Net)	(0.24)	70.89
Total	47.93	125.95
Profits
Profit Before Tax	37.11	(48.60)
Profit After Tax	32.89	(93.97)
Net Worth	(1028.67)	(1082.17)

Details of Significant Changes in Key Financial Ratios:

Details of significant changes in key financial ratios are given as under:

S. No.	Particulars	2022-23	2021-22	Variation (%)	Remarks
1	Debtors Turnover	-	-	-	Turnover is NIL during the FY 2022-23.
2	Inventory Turnover	-	-	-	Inventory and Turnover is NIL during the FY 2021-22.
3	Interest Coverage Ratio	22.18	12.49	(9.69)	Increase in EBITDA due to increase in other income and reduction in expenses.
4	Current Ratio	0.60	0.60	-	-
5	Debt Equity Ratio	(17.23)	(12.63)	4.60	Debt /Equity, Debt include Total Liabilities other than Shareholder fund
6	Operating Profit Margin (%)	-	-	-	Turnover is NIL during the FY 2021-22.
7	Net Profit Margin	-	-	-	Turnover is NIL during the FY 2021-22.
8	Return on Net Worth		N.A		Net worth is negative

Profitability

During the year 2022-23, the Company reported a net profit (after tax) of Rs. 37.11 crore as against the net loss (after tax) of Rs. 93.97 crore reported during the year 2021-22. The same was mainly due to enhanced rental income (from Rs. 65 crore to Rs. 73 crore) and reduction in establishment cost (from Rs. 41 crore to Rs. 35 crore) in view of overall reduction in the manpower of the Corporation. However, there was no trading income due to stoppage of business activities.

INTERNAL CONTROLS AND PROCEDURES

Statutory Auditor is appointed by the CAG and professional agencies conducting regular and exhaustive internal audits are appointed through GeM Portal. The observations/ recommendations made by the auditing agencies are reported to the Audit Committee of Directors along with a report on the compliance of directions issued in the past. The quarterly financial statements as well as reports of the statutory auditors and Government audit party are reviewed by the Audit Committee of Directors before these are submitted to the Board of Directors. The Company has a full- edged Vigilance Division to oversee that the guidelines of the Government and the rules/procedures of the company are strictly adhered to/ implemented in all matters. The Vigilance Division also conducts inspection of Divisions and Branch Office of the Company and makes suggestions for taking corrective / preventive action.

WAY FORWARD

STC was exempted from signing of MOU for the year 2022-23. The Company continuing on ‘non-going concern basis and no business activities are being carried out by STC in pursuance of direction of the Administrative Ministry/Board. Also, the Company continued to pass through difficult financial phase and account of STC is continued to be classified as NPA by the lender banks. Since there is no change in the business activity and financial position of the Company, therefore exemption from signing of MOU for the year 2023-24 has also been sought from DPE through DOC.

The Company continuously keeps reviewing potential areas of cost reduction and takes appropriate steps for reduction in avoidable expenses and avenues of generating rental income by renting out surplus office space available with STC. The Company continued to follow-up with the lender banks for expediting the finalisation of One Time Settlement (OTS) for settling their remaining dues in line with the decision taken during the high level meeting chaired by Honble CIM on 29.08.2019 regarding One Time Settlement of dues of STC with the Banks. An amount of Rs. 1100 crore has already been paid to the lender banks and as per decision STCs identified immovable properties worth Rs. 300 crore (approx.) to be transferred to Banks on as is where is basis as full and final settlement under the OTS. However, the Draft Memorandum of One Time Settlement (MOTS) forwarded by Banks to STC was not in-line with the decision taken during the meeting held on 29.08.2019. As such, OTS is yet to be concluded due to deviation by the Banks from original terms of OTS agreed upon during the meeting chaired by Honble CIM. The case filed by Consortium of lender banks is still going on in Debt Recovery Tribunal (DRT). Last date of hearing in DRT was on 26.07.2023. The matter is being placed before the Board regularly for information and further direction. The matter has also been informed to the Administrative Ministry for further directions.

CAUTIONARY STATEMENT

The Company is not carrying out any business activity for last three years, continues to pass through difficult financial phase and is continuing as a ‘non-going concern. The manpower of the Company is also reducing due to resignations, superannuation, VRS, etc. and there are no fresh recruitments in STC. Further, all posts of Functional Directors except Director-Finance (AC) and CMD (AC) are vacant. Therefore, the certain statements contained in this Annual Report describing the Companys objectives, expectations or anticipations may be forward-looking statements within the meaning of applicable laws and regulations and the actual results may differ materially from the expectations.