Whether it is the Karnataka mining crisis or the coal sector issue where eauction coal was diverted to power or the first-of-its-kind online hair auction, Kolkata-based MSTC is always a silent partner of the rescue act for Indian industry. S K Tripathi, chairman cum managing director, reveals his plans about the company to Shine Jacob. Edited excerpts:
MSTC was on the limelight, when the Supreme Court entrusted you to hold e-acution of iron ore lying in Karnataka, after and export and mining ban. How is the process going and what sort of a revenue are you expecting from this?
After the ban on export and mining in Karnataka area, the local industry had approached the Supreme Court for a relief and we were entrusted with its e-auction to domestic-end users. Our Bangalore office is closely working with a three-member monitoring panel appouinted by Central Empowered Committee (CEC) for conducting e-auction of iron ore in the three districts — Bellary, Chitradurga and Tumkur in Karnataka. The court has directed MSTC through CEC to hold e-auction of 1.5 million tonne (MT) of iron ore per month against a total quantity of 25.88 MT. We started the procedure on September 14 and has conducted six auctions so far, with a total quantity of 3.72 MT and fetched a revenue of Rs 850 crore to the state. Out of the 50-55 people who registered, 40-45 succeeeded in getting iron ore. If the present trend continues, the state will be getting a revenue of more than Rs 8,000 crore with in the current financial year. As the prices are high, mine owners are happy and the government will get higher duties too.
I believe that this model can be followed in other states like Goa, Jharkhand, Chhatisgarh and Orissa, where there are issues with iron ore mining. It will be of huge savings for the country.
You are also conducting e-auction for Coal India. Recently, the government has diverted e-auction coal for the month of October to power sector. How is it going to affect the business of the company?
I feel this is a temporary phenomenon and with the improvemnt in the coal availability scenario, CIL will be able to provide coal for e-acution. Coal is also reqyuired for non-core consumers of coal and they should also not be deprived of their coal for a long time. Through the development, there will be a revenue loss for CIL, as well as MSTC. I belive that things will improve in a couple of weeks and we will be able to resume auction soon.
How effective was the e-auction of hair done by MSTC this year?
On the lookout for new avenues of business we approached Tirumala Tirupati Devasthanam (TTD), which was facing problems because of the formation of some syndicates by buyers. Road shows and customer meets were organised before the meet. While the reserve price was Rs 105 crore, the maiden auction fetched us Rs 133 crore, which was 28 per cent more than the reserve price.
For TTD, it added transparency to the whole event and broken the cartilisation. Against a total number of 61 registered buyers, 49 participated in the auction and 42 enmerged succesful. Though overseas buyers also envinced interest, it did not happen due to certain logistic difficulties. We hope that they will be able to participate in the future auctions too.
The auction was so succsful that TTD has now offered sale of silver through MSTC portel, also will do some e-procurement of materlias like dried grapes through MSTC. They are initially planning to sell silver worth Rs 50 crore. While as far as hair sales is concerned, some other temples in Tamil Nadu, Karnataka and Kerala are also on the look out for such a platform and we are planning to approach them too.
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What are your diversification plans?
We are always looking for new avenues to grow our balance sheet and businesses. We are planning to enter into eauctioning of agri products, tobacco, tea, sago, gorgon nuts and slaughter house byproductucts. We are also planning some time time of a second-genetration diversification where we will starte mobile ecommerce, where buyers will be able to participate in auctions through mobile phones. This will be helpful for people in rural areas where internet connection is not available.
For tobacco sales, we are in touch with the respective boards in Andhra Pradesh and Tamil Nadu and for tea, with Tea Board in Kolkata. There are some initial positive signs from them.
MSTC started as a regulatory board for export of ferrous scrap in 1964, What is the status as far as this is concerned? What about the overall business of the company?
India is a net importer now. The price of ferrous scrap is in the range of abour $ 480 to $510, which is costly for Indian consumers.We are the only public sector undertaking which has the right to manage scrap availability and trading in the country. We are planning to set up the first mechanised scrap shedding plant with in the country. Once you shed the scrap and keep out non-ferrous and other materials from scrap it becomes usable in glass and induction furnaces and can be recycled. The locations that we are looking for this are in Gujarat and Maharashtra. The investment may be around Rs 100 crore. We also have plans to import sheddable cars from Japan and Europe for this.As far as our business is concerned, e-auction contributes the majority now, comopared to the marketing division (which looks after the procurement of industrial raw materials in bulk). During the last financial year, our turnover was around Rs 14,000 crore, we expect it to cross Rs 20,000 crore this year and profit may also increase from Rs 149 crore to Rs 200 crore.