The Hindu Business Line : STC confident of dealing with declining commodity prices

“(STC) will also look for backward and forward integration activity by way of diversification, while continuing with its commodity trading business”’ – Mr N.K. Mathur

G. Srinivasan

New Delhi, Nov. 30 Unfazed by the declining trends in commodity prices the world over, which have buffeted the commodity trading companies, the Rs 16,000-crore State Trading Corporation (STC) is quite confident of handling the evolving situation with its “inbuilt strengths and credible image” in the global trading arena for commodities.

In an interview to Business Line here, the Chairman-cum-Managing Director of STC, Mr N.K. Mathur, who recently assumed office, said “In spite of recent economic meltdown and volatility in currency and commodity prices, our business transactions are under our control by way of safeguards that we had built in our commercial transactions over the past. The market also appears to be improving as we go along and so we will be able to manage the current crisis.”

Edible oils

Stating that even in this threat situation “we find opportunities”, Mr Mathur said, adding that in edible oils, “the Malaysian and Indonesian companies have very clearly said they will deal only with public sector undertakings like STC and are not keen on doing with the private trade because the latter has defaulted”.

Mr Mathur said the corporation has proposed a joint venture with the largest Malaysian edible oil trading company SimeDarby. He said, “The feasibility study is under way and very soon we will finalise it.” He said this would also provide a strategy for STC to go in for business that is long-term and sustainable.

While the corporation would continue in its normal commodity trading business, he said, “It will also look for backward and forward integration activity” by way of diversification. Thus in edible oil, “we bring it in crude form, process it, package it and retail market it so that it gives us assured margins and assured business and that would also give (us) an advantage for marketing our products,” he said.

He said besides looking for taking a joint venture in diamond mining abroad, the corporation, which imports coal of 8 million tonnes and supplies to NTPC, would also be bidding for coal blocks for mining.

Plantation biz

Mr Mathur said the corporation’s entry into tea business by buying tea leaves from small and marginal growers in Nilgiris district in Tamil Nadu and getting them processed through “our processing unit there” for sale, both in the overseas markets and auction centres, was so successful that “we are thinking of the second processing unit”.

He said the company would aim at 200 or 300 per cent increase in tea business, besides meeting the social objective of protecting the livelihood security of small tea growers. He said Egypt has become a big market for the Indian tea sold through STC. He said along side, the company is also looking for food processing ventures involving procurement, processing, packaging and supply of vegetables and fruits to big stores, as marketing is “not our cup of tea”.

Pulses overseas

He said the corporation also plans to initiate discussion for jatropha plantation abroad and also for cultivation of pulses overseas. In both these products to be produced abroad, “our role would be to assure and ensure that we are the buyers of whatever is produced and it would be a joint venture”.

Mr Mathur said that recently a high-powered team — including himself and officials from Ministries — went to Myanmar for a tie-up in pulses purchases. He said Myanmar is the sole supplier of certain types of pulses and “they are keen on government to government contract” because private trading has sparked a lot of uncertainty and speculative prices.

As India buys 1 million tonnes plus of pulses from Myanmar every year and Myanmar is keen on keeping this supply at a steady price, both the governments have appointed a nodal agency from each country. A committee comprising members of both sides has also been flagged off to determine the price periodically so that supply is ensured and prices do not fluctuate, he added.

Mr Mathur said the Corporation clocked a 33 per cent growth in turnover during the first half of the current fiscal and its full-year performance would be definitely above the last year’s actual of Rs 15,774 crore as the company keeps innovating to stay ahead in the field.

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