New Delhi May 9
The country's largest trading company, MMTC, is confident of clocking up a turnover of Rs 1 lakh crore from its current Rs 45,000 crore in three years, thanks to its strategy of diversification and synergy in allied trading activities through consolidation.
Disclosing this to Business Line in an interview here, the Chairman and Managing Director, MMTC Ltd, Mr Sanjiv Batra, said since the company deals with a large variety of products, it has an advantage in that “if some of the products were not doing well in any given situation, some others do well.
“Last year because of the economic turmoil, people had more faith in gold and the country's gold import rose by more than 20 per cent as compared with 2008-09.
“MMTC's share of gold imports too went up from 16-17 per cent to cross 25 per cent, which helped the company to increase its topline.”
He said MMTC has been following “a policy of backward and forward integration and is into infrastructure because in the present environment where we have internet, e-trading, the role of trading company – who is buying what from where and who is selling to whom and at what price and terms are all known. Unless you have some USP or core competence, you cannot survive and thrive. That is why we are going into infrastructure.”
Ennore port berth
Mr Batra said the company has formed a joint venture with Sical Logistics Ltd and L&T Infrastructure for setting up a permanent berth for handling iron ore exports at Ennore port and this will be operational in July.
Similarly it has won a tender for an iron ore terminal at Paradip port and these initiatives will help the company get more iron ore for trading.
“In spite of being the largest iron ore trader, we do not get any ore above 64 because the market has already shifted to ore below 64. We also own five railway rakes as per the ‘own-your-own wagon' scheme which makes sure that we are assured of rake supply”.
He said India being the biggest importer of gold. MMTC has a joint venture with Pamp S.A. Switzerland for gold refining with a capacity to produce 2.75 million pieces of gold and silver materials to meet the market demand for refined gold products in “a competitive manner”.
Jewellery retailing
The company is getting into retailing in diamond studded jewellery, gold jewellery, medallions and silverware in association with Gitanjali Gems Ltd by setting up 11 such retail stores.
Pointing out that “there is synergy in operations in going into refining and retailing of bullion products”, Mr Batra said jointly with India Bulls and IPL, MMTC had set up a commodity exchange “where we are launching 10 gram gold coins. The gold coins that are refined by our joint venture would be delivered at our commodity exchange and also sold through our retail network.
“We have also taken a stake in currency exchange and the gold import can be hedged in the currency exchange at very competitive rates, completing the synergy with refining, retailing, and commodity and currency exchanges.”
Further, he said, MMTC has taken a coal block in Guinea which will supply coal to MMTC-promoted Neelachal Ispat Nigam Ltd where pig iron, coke and power are produced and now “we plan to expand and make steel billets in the next four to five months”.
Logistics hubs
Being a major logistics player, MMTC has already acquired 100 acres in Kandla and 200 acres Haldia to set up Free Trade Warehouse as per the Foreign Trade Policy of 2004, he said noting that IL&FS is the joint venture partner.
“We are looking for strategic investors to start these logistics hubs which will service both importers and exporters who need not pay duty while the goods remain in the warehouses.”
He said importers/exporters of non-ferrous metals have to contend with a lot of duties including sales tax and would not have to face there hassles once the logistics hubs go on stream.
Just-in-time delivery is feasible because the trading goods would remain in the warehouses, freeing the importers/exporters from the constant fear of port congestions, Mr Batra said.
The company has similar proposal to start a warehouse in Greater Noida with IL&FS and once the land acquisition is sorted out, it will start preliminary works, he said.
Sourced from www.thehindubusinessline.com
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