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G. Srinivasan

At a time when the fortunes of the company are turning for the better with employees' morale upbeat, the Government has lined up STC for sell-off.

New Delhi , Oct. 9

CLOSE on the heels of the protest by BPCL/HPCL employees as also the IOC against disinvestment of their companies, the less-than-thousand employees of the star trading house, the State Trading Corporation (STC), too joined the fray to oppose the sale of the country's oldest premier bulk trading company.

Talking to Business Line here, the Federation of STC Employees' Unions Secretary-General, Mr Ravinder Goyal, and the STC Employees Union General Secretary, Mr S.P. Kochhar, said that STC, set up in 1956, had till the end of 1991 handled as many as 114 canalised items for trading purposes. Since the launch of economic reforms in 1991 and subsequent gradual removal of all import curbs and decanalisation, the operations of the corporation too went through the usual vicissitudes of changing economic landscape. In the process the turnover took a nosedive and employees strength came down drastically.

But very recently the company has been able to cut down expenditure, rationalise operations and began earning a small profit with the current year's turnover likely to exceed Rs 6,000 crore with the first two quarters operations having been around Rs 2,500 crore on the sale of bullion, fertilisers, palm oil and other commodities, they said.

At a time when the fortunes of the company are turning for the better with employees morale upbeat, the Government has lined up the STC for sell-off with the process of due diligence being over and bids are about to be called. Though the representatives of the federation have been writing to the nodal Ministry of Commerce and also to the Ministry of Disinvestment spelling out their concerns and seeking a clarification, they did not meet with any success.

The crux of their contention is that STC has been successful in price support work especially in commodities like rubber, tobacco and cotton to protect the interests of the farmers, even as it has been supplementing efforts of the private trade and industry in developing exports and expanding extant markets and exploring new ones for Indian products.

"Being a government company, the corporation has never defaulted on tax payments," Mr Goyal said. With cash reserves of over Rs 250 crore and immovable properties in the form of buildings and residential complexes in major cities amounting to Rs 750 crore, the sale of STC, which is only in trading business, would amount to a sale of real estate assets. STC has not developed/promoted any brands to be sold in the local market or abroad by its name.

The sale of STC is proposed by transfer of shares with the share value being assessed to be around Rs 100 per share which is Rs 300 crore for three crore shares. This is in contrast to the assets and reserves of Rs 1,000 crore of STC, which itself is a conservative estimate, they said.

Some of the indigenous bidders they said are "declared defaulters of the financial institutions/SEBI." So in identical letters to Commerce and Disinvestment Ministers, Mr Harmesh Kumar of the Federation of STC Officers Association, said that pre-audit of the whole process of disinvestment should be done from the CAG and resale of assets by the prospective buyers for at least 10 years be barred. Finally, if real estate assets are to be disposed, the Government alone should do this so that the interests of the serving employees would be safeguarded with a proper compensation package for those seeking voluntary retirement, he added.

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