STC reports loss of Rs 13 cr in Q2
State Trading Corporation Tuesday reported a loss of Rs 13.33 crore for the quarter ending September but the state-run firm stressed that it was "quite confident" of resolving its financial position and was taking measures to tide over the current liquidity crunch.
STC had reported a net profit of Rs 7.76 crore in the corresponding quarter of the previous year.
In a regulatory filing, the company said it has undertaken various cost reduction measures to improve the liquidity/profitability such as the closure of unviable branches, undertaking trade in those commodities fetching higher trade margins & VRS to employees etc.
"Further, at the insistence of Lender banks, a request has been made to Administrative Ministry (Department of Commerce) for the issuance of Government guarantee for the existing as well as proposed borrowings," STC said in the filing.
The company's total income during the July-September quarter stood at Rs 2,919.17 crore, as against Rs 1,826.47 crore in the year-ago period.
However, total expenses also shot up to Rs 2,931.99 crore during the quarter under review, from Rs 1,827.50 crore in the same quarter last year.
According to STC, it is facing a temporary financial crunch due to blockage of huge amount in trade receivable where various parties have defaulted in making timely payments to the company.
"Legal actions have also been taken against customers for recovery of outstanding dues. The source of current liquidity crunch faced by STC is not a structural deficiency but the problem on account of some transactions which we are trying to resolve," the company said, adding that it has signed an agreement with the Commerce Ministry for turnover of Rs 9,200 crore to be achieved during the current fiscal.
The company has appointed a financial advisor for the restructuring of existing loans and for raising additional loans. Therefore, the Company has submitted a resolution plan to its lender banks for restructuring of working capital loans with the objective to make the operations of the company viable and sustainable.
Moreover, the lender banks have formed a Joint Lender Forum to finalise the reconstruction plan.
Ministry of Commerce had issued a Letter of Comfort in May this year for an amount of Rs 500 crore.
(With inputs from agencies.)