MMTC plans foray into new commodities, eyes pharma, engineering goods

State-controlled trading entity MMTC Ltd is aiming at trading in new commodities like engineering goods, drugs and pharmaceuticals as well as minor minerals. The planned foray into new commodities signals the company’s diversification strategy to go beyond its proven strength in the trade of bullion and major bulk minerals like iron ore and chromite.

Minor minerals are targeted for exports and will be canalised through MMTC. The other identified commodities are meant for two-way trade.

“We aren’t losing focus of our bullion business where we are constantly looking to expand footprint. At the same time, MMTC is aiming to tap emerging trade commodities such as engineering goods, drugs & pharmaceuticals and minor minerals. There is considerable trading activity globally on these items. Many countries are looking forward to government level participation in their trade. And, we as a government-owned company possess that natural advantage," said a senior MMTC executive.

For MMTC, plans to trade in the newly identified commodities are still incipient. “We haven’t pegged turnover targets yet for the new commodities”, the official said.

In a recent presentation to the Ministry of Commerce, MMTC’s parent ministry, the company delineated a roadmap to double its top line in the next five years. The surge in turnover is expected to be fuelled by MMTC’s diversification into the new potential business areas. MMTC is eyeing Rs 170 billion turnover in this financial year with a targeted net profit of Rs 550 million. Last fiscal, the trading company logged Rs 375 million in consolidated net profit, recovering dramatically from Rs 297 million net loss it bled in 2016-17. 

MMTC has initiated action on exports of minor minerals like feldspar and bentonite. Historically known for its strengths in trade of bulk minerals like iron ore and chrome ore, MMTC is witnessing a downtrend in exports of these minerals in value and volume terms. In FY18, low-grade chrome ore and chrome concentrate exports plunged 58 per cent as a steep export tax of 30 per cent weighed on exports. Total volumes exported in previous fiscal were only 95,000 tonnes, down from 225,000 tonnes shipped in FY17.

MMTC is one of the premier bullion traders in the country with the precious metals division contributing significantly to its turnover. During 2016-17, the precious metals group contributed nearly 50 per cent to MMTC's gross turnover despite high volatility in bullion prices. In 2016-17, the trading company had a share of two per cent in gold and 12 per cent in silver in the country's bullion trade. MMTC's turnover in FY17 included gold and silver imports valued at Rs 48.74 billion and domestic trade worth Rs 11.64 billion.

The company has decided to go for the revamp of its e-commerce operations. Plans are afoot to put in place a full-fledged portal for the transaction of gold and silver. The idea is to expand the retail footprint for gold and silver. MMTC wants to reach out to a wider customer base through a dedicated portal for bullion transactions.