MMTC eyes 10% gain in export earnings due to consistent rupee slump

State-controlled trading entity Ltd is eyeing 10 per cent growth in its export earnings in this financial year, led by consistent

expects the realisations to shore up from exports of key bulk minerals like iron ore and chromite ore, intermediate products like pig iron and some finished steel products.

“Due to the rupee fall, iron ore exports are becoming viable. We also hope to garner sizeable gains from exports of steel and pig iron. If other factors remain constant, we expect a 10 per cent jump in export earnings,” said a senior executive.

The rupee slide is set to lead a recovery in mineral exports for MMTC. In the last financial year, chrome ore and chrome ore concentrates exports canalised through MMTC plummeted 58 per cent to 95,000 tonnes. The steep export duty of 30 per cent had dented shipments both for chrome ore and higher grade iron ore. In value terms, exports of the chrome ore and its concentrate declined 45.4 per cent to Rs 1.90 billion at the end of 2017-18 as against Rs 3.49 billion in FY17.

Exports of chrome ore and chrome concentrates in the country is canalised through MMTC Ltd. On exports of chrome ore, there is a quantitative cap of 0.3 million tonnes and exports cannot breach this level. There are no curbs on exports of chrome ore concentrates as they are processed using low-grade ore (chromite content below 42 per cent) and has no direct application in the ferro chrome industry.


Sources: Company, BSE

But the weak rupee, coupled with the revival of demand in export markets, is getting MMTC back in the groove. The mini-ratna central public sector enterprise (PSE) has recently floated global e-tenders for exports of 11,000 tonnes of low-silica chrome concentrates. It has floated an expression of interest (EoI) for sale of pig iron manufactured by Neelachal Ispat Nigam Ltd (NINL) — a public sector steel maker where MMTC owns the largest stake at 49.9 per cent.

MMTC is yet to feel the heat of the weakening rupee on gold imports. “So far, gold imports haven’t been affected much. Imposing curbs on gold imports is acceptable given the kind of current account deficit the country is facing now. Our sense is that if the rupee continues to dive, crucial raw materials for plant and machinery will be dearer for the manufacturing industries,” said the executive.

MMTC, however, is unruffled by the possibility of limiting gold imports. “Under Gold Monetisation Scheme, eight tonnes of gold has been mobilised. More of domestic gold has stormed the markets. With the festive season looming ahead, we don’t see gold demand to subside,” he added.

MMTC’s net profit tanked 45.18 per cent to Rs 99.4 million for the quarter ended June 30, 2018. The company’s sales, too, declined 19.49 per cent year-on-year to Rs 50.88 billion from Rs 63.20 billion in the comparable period of FY18.

In this financial year, MMTC is aiming at a turnover of Rs 170 billion. It has formulated a roadmap to double topline in the next five years by diversifying into emerging areas of business. The trading company has initiated action on exports of minor minerals like feldspar and bentonite and trade in drugs, pharmaceuticals and engineering goods.

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