MMTC
MMTC posted a set of very disappointing numbers for Q1FY14. Despite a 69% jump in net sales at Rs.8823 crore, net profit declined over 50% to a meager Rs.6 crore. The main reason for this has been a surge in the total operating expenses, which have risen 39% at Rs.8826 crore. The component of “other expenses” rose 142% (YoY). The company would have slipped into the red but for the extraordinary income of Rs.5.12 crore; a small amount albeit helping the company post a small profit.
Precious metals is its highest revenue grosser. In Q1, 56% of its total revenue came from precious metals and YoY, recorded a 72% surge. Yet, it posted a loss at EBIT level at Rs.8 crore and this loss was on account of loss on valuation of inventory amounting to Rs.17 crore due to a fall in the market prices. Metals showed a fall in both revenue as well as EBIT but all the other segments – minerals and ores, coal and hydrocarbon and agro products did much better on YoY. Looking ahead, all the attempts of the govt to curb gold buying to control CAD will affect MMTC adversely as it is the biggest trader of the precious metal and with almost 70% of its turnover coming from gold, we are bound to see a slump. Its other big commodity, iron ore is also not doing too well. The company could continue to earn from its govt clients but private sector could show some withdrawals. In July, Govt divested a 9.3% stake in it for Rs.567 crore and it still holds 90%.
The company has stated that it has been trading into agro products through the NSEL has now been suspended due to the ongoing issues at the exchange. The company had executed contracts on the NSEL and had receivables to the tune of Rs.202 crore as at 30th June 2013 of which it has realized Rs.187 crore and Rs.15 crore is outstanding. As on 12 August 2013, Rs.226 crore was receivable from NSEL.