The Shares of two renowned government owned companies that are into import and export of mineral, metals and various other goods surged after reports came out that the government is considering shutting down these companies due to less profitability and other reasons.
MMTC
MMTC is a Miniratna Central Public Sector Undertaking, it facilitates foreign trade in India and canalizes the export and import of essential minerals and metals.
MMTC shares gained 7 percent on Tuesday and touched a 52 week high price of Rs 89.20 a share and stock closed at Rs. 87 up 4.57 percent from its previous day close price and the company has a market capitalization of Rs. 13,065 crores.
The stock has delivered multibagger returns of 147.16 percent in a year and 188.08 percent in the last six months.
State Trading Corporation of India
State Trading Corporation of India is a government owned international trading company, it is primarily involved in import and export of large mass consumption items like bulk oils, fertilisers, coal, bullion, wheat, sugar, pulses, etc.
State Trading Corporation of India shares gained 15 percent on Tuesday and touched a 52 week high price of Rs 177.80 a share and stock closed at Rs. 165.50 up 7.50 percent from its previous day close price and the company has a market capitalization of Rs. 1,002 crores.
The stock has delivered multibagger returns of 112.75 percent in the last six months and 93.68 percent in a year.
The Shares of MMTC Ltd and State Trading Corporation Limited surged after CNBC-TV18 reported that the government might shut down these companies.
Union Commerce Minister Piyush Goyal is slated to lead a high-level meeting on October 23 to explore the closure of three state-run entities, MMTC, STC and PEC, according to the CNBC-TV18 report. The government holds around 90 percent stake in MMTC and STC, while details of PEC are not available publicly.
According to NCLT standards, STC and MMTC may need to be removed from NCLT through an agreement with their lenders. Other possibilities, such as demerger and selective asset sales, may be more complicated, but the government hasn’t ruled them out until the final processes are determined.
The government had earlier evaluated the necessity for these canalizing agencies in the Department of Commerce and determined that they were unnecessory. PEC, STC, and MMTC were previously in charge of overseeing various imports and exports.
According to multiple news sources, the government is scrutinizing central public sector enterprises’ (CPSEs’) investments in state-level companies to prevent them from being involved in unrelated or loss-making activities.
Written by: Bharath K.S
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