The State Trading Corporation (STC) today posted 88.44 per cent fall in standalone net profit to Rs 1.46 crore during April-June 2018-19, on poor income.
Its net profit in the same quarter of 2017-18 stood at Rs 12.63 crore, the company said in a BSE filing.
Net income declined 21.75 per cent to Rs 3,815.61 crore from Rs 4,876.75 crore in the year-ago period.
"STC is facing mismatch in inflows and outflows of funds due to huge recoverable from business associates who had defaulted in making timely payment to STC. Legal actions have been taken for recovery from the associates. All these have led to a temporary financial crunch," it said.
The source of current liquidity crunch faced by STC is not structural deficiency but the problem on account of some transactions which the company is trying to resolve, it said.
The state-run company further said it has appointed financial advisor for restructuring of existing loans and for raising additional loans. The funds raised would be used for executing title deeds of its properties.
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"After executing perpetual lease deed, there would be substantial increase in value of the property. The company then proposes to raise additional working capital funds against the properties," it said.
STC also said it has approached its lender banks for an appropriate resolution plan with the objective to make the operations of the company viable and sustainable.
"The lender banks have formed Joint Lender Forum to finalise the reconstruction plan," it added.
The company informed that the government has given a Letter of Comfort for an amount of Rs 500 crore. Substantial amount is expected to be recovered from various associates in the coming years, it added.