The government has recommended winding up of loss making Spices Trading Corporation Ltd (STCL) saying the firm has suffered massive liability of Rs 1,208 crore on account of fraud and it cannot be revived.
The losses of Bangalore-based STCL, a wholly-owned subsidiary of State Trading Corporation of India, increased to Rs 271 crore in 2012-13, from Rs 235 crore in the previous fiscal.
“The Ministry of Commerce, administrative ministry of STCL, has said STCL is beyond turnaround as it has suffered massive liabilities due to fraud and has bleak prospects of future income,” an official said.
“Also, the holding company would not like to fund in any form as its liability is limited to its paid up capital,” he said adding therefore, the implementation of turnaround plan is not feasible without arriving at a settlement with the lenders and the only option before it is to wind up the company.
In order to improve turnover and profitability, STCL started merchanting trade (third country exports) in 2005-06 through business associate.
The scam, which took place in 2008, involved passing off iron ore scrap as nickel and copper scrap.
At present, the company’s operations are limited to conducting cardamom auctions, issuing no objection certificate to the exporters of onion as a canalising agency and selling agricultural inputs (like fertilisers and pesticides) to growers.
“The Commerce Ministry is of the view that the Board of STCL should not oppose the winding up petition filed by the bank/creditor,” the official said.
Besides, the Board for Reconstruction of Public Sector Enterprises (BRPSE) discussed the case of the company.
“It was also of the similar view that the company should be winded up. It should give Voluntary Separation Scheme (VSS) to 53 employees from its own resources and if STC found suitable, it can absorb some of the employees,” the official said.