The Hindu Business Line : State Trading Corporation set for a makeover

THE State Trading Corporation of India Ltd (STC) is all set for a make-over from being a bulk trading agency in commodities to a one-stop shop that offers specialised trade facilitation, by drawing from experience and contacts built over five decades.

In an interview to Business Line, the Chairman-cum-Managing Director of STC, Dr Arvind Pandalai, said, "In the medium- to long-term, with so much competition and the market opening up, the trading scenario is going to change. Unless we prepare ourselves through value-addition in trading operations, nobody is going to come to us."

Accordingly, the Rs 10,000-crore trading giant has devised several plans to position itself through "backward and forward integration and industrial participation programme with best international companies so that not only our requirements are met but the country too gets the best technology at affordable cost," said Dr Pandalai.

"Our product range, strong financial base, proprietary infrastructure and expertise in third-party trading would all be duly and fully used to convert STC into a world trading company instead of being an India-centric corporation," Dr Pandalai said.

On backward integration, he said, anybody who exports through us needs certain inputs, whether it is raw materials, machinery, technology or assistance in developing products, which might be available domestically or globally.

"We are going to get all these through our connections and contacts so that the exporters become permanent partners and together we can grow manifold," Dr Pandalai said.

In certain cases, he said, this might even be financial requirements and "if we see capabilities, we can get finances cheaper than anybody else as we have structured financial operations which we had begun a couple of years ago."

On forward linkage, he said, "Our clients (both exporters and importers) may require certain inputs and want us to offload some of their products somewhere else. We are helping to get these done besides assisting them in running their plants efficiently."

Dr Pandalai said the corporation is going to certain high-tech areas and tie up with patent-holders internationally, bring them to India and help them set up units to manufacture their products which can be used as a base for selling to India and also for third country exports.

He cited the example of proprietary items for which there was an exclusive tie-up for production and marketing of ballistic protection equipment, including bullet-proof armouring of vehicles, under the Centre's plan to modernise police/paramilitary forces and forensic science laboratories.

He said the company would derive its strength from its earlier experience in counter-trade deals on defence equipment.

Dr Pandalai also mentioned a recent MoU that STC had signed with the Foreign Economic Relations Department of the Government of Uzbekistan. Under this, STC would take some capable textile manufacturers from India to set up a manufacturing base in Uzbekistan, using the abundant local cotton there to manufacture yarn.

The final product could be exported to a third country or brought back to India, which meant, he said, "instead of bringing large volume of cotton, it is much easier to bring in yarn."

The STC Chief said, with disinvestment blues behind the company, "we are going to fill up the vacuum for professional skills available at various stages."

The company has begun "dialogues with reputed global organisations to study the new areas into which the corporation plans to foray and develop a structure and the inputs required so that the company can get the human skills by staying one step ahead of competition."

On the current year's prospects for the company, Dr Pandalai said STC would definitely do better than the MoU physical target it had projected to the Government, particularly on the export front in areas such as steel, ore, granite and pharmaceutical products.

On the import front, the company would consolidate its gains in trading edible oil, parallel marketing of petro-products and a few other traditional and non-traditional items.

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