|
|
| Product | Quantum (Rs. Cr) (SEBI) | Quantum (Rs. Cr) (Other FSR) | Long Term Rating | Short Term Rating | Regulated By |
| Bank Loan Ratings | 0.00 | 10.00 | ACUITE A+ | Stable | Reaffirmed | - | RBI |
| Bank Loan Ratings | 0.00 | 100.00 | - | ACUITE A1+ | Reaffirmed | RBI |
| Total Outstanding | 0.00 | 110.00 | - | - | - |
| Total Withdrawn | 0.00 | 0.00 | - | - | - |
| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
|
Rating Rationale |
|
Acuité has reaffirmed the long-term rating of ‘ACUITE A+’ (read as ACUITE A plus) on the Rs. 10.00 Cr. bank facilities and reaffirmed the short-term rating of ‘ACUITE A1+’ (read as ACUITE A one plus) on the Rs. 100.00 Cr. bank facilities of MSTC Limited (MSTCL). The outlook remains ‘Stable’.
Rationale for rating: The rating reaffirmation considers the stable growth in operating revenue which is expected to continue in near future along with MSTCL robust financial risk profile led by accelerated deleveraging and a strong liquidity position. Further, the rating continues to derive strength from the company's long track record and established position of the company in e-commerce segment, its status as a Mini Ratna Category-I PSU under the administrative control of the Ministry of Steel, Government of India, with the Government of India holding a controlling stake. The rating, however, remains constrained on account of working capital-intensive nature of operations. |
| About the Company |
|
MSTC Limited (formerly known as Metal and Scrap Trading Corporation Limited) was incorporated in September 1964 for the export of ferrous scrap. The status of the company underwent change in February 1974 to that of a subsidiary of Steel Authority of India Limited (SAIL). In 1982-83, the company was converted into a Government of India (GoI) company, transferring the shares of SAIL to the President of India under the administrative control of the Ministry of Steel (MoS). The company commenced e-commerce operations in 2002 and was awarded Mini- Ratna category I status in 2006. In March 2019, GoI diluted 25.10 percent of its stake through an Initial Public Offer (IPO), thereby reducing its stake to 64.75 percent as against the previous stake of 89.85 percent. The core activity of the company is diversified mainly into providing e-auction/eProcurement services and trading of bulk products like ferrous and non-ferrous scrap, coke, finished steel, coal and petroleum products. MSTC’s e-commerce division has ISO 9001:2008 certification, and the system department is ISO 27000:2005 certified. The company has a registered office in Kolkata, and the current directors of the company are Mr. Surinder Kumar Gupta, Mr. Subrata Sarkar, Mrs. Bhanu Kumar, Mr. Awadhesh Kumar Choudhary.
|
| Unsupported Rating |
| ACUITE BBB+/Stable. |
| Analytical Approach |
|
Acuité has considered the standalone business and financial risk profile of MSTCL to arrive at the rating.
On account of being a 64.75 per cent subsidiary of the Government of India, the team has notched up the rating for MSTCL based on the nature of the relationship between the Government of India and MSTCL and the strategic importance of MSTCL for trading and e-commerce activities. |
| Key Rating Drivers |
| Strengths |
| Established track record and controlling stake of the Government of India
MSTC Limited is a Mini Ratna Category-I PSU under the administrative control of the Ministry of Steel, Government of India. The GoI currently has a 64.75 percent controlling stake in MSTCL. It is a strategically important entity and played a key role in government sector penetration in the B2B e-commerce industry enabling transparent practices for the sale of scarce natural resources and government assets through e- auction and e-procurement of goods/services/works by the government owned entities. Over the years, it has added various new products and services to its portfolio. Acuité believes that the controlling stake of GoI in MSTCL would be one of the key rating sensitivity factors. Stable operating income and healthy margins The operating revenue of the company stood at Rs 310.96 Cr. in FY 2025 as compared to Rs 316.25 Cr. in FY 2024. The stable revenue growth is on account of stable revenue from E -commerce business. Under e-commerce business, revenues are generated in the form of service charges from the buyer or transaction fees are collected from the vendor/supplier before participation in the event. The EBITDA margins of the company are range bound which stood at 59.06 percent in FY2025 as compared to 28.21 percent in FY2024 and 45.19 percent in FY2023. In the 9MFY 2026, the group has achieved a operating revenue of Rs.250.87 Cr. with an EBITDA margin of 59.05 percent. The improvement in the margin is on account of decrease in selling expenses i.,e provisions for trading business not to be created from FY2025 onwards. PAT margin stood at 129.59 percent in FY2025 as against 54.36 percent in FY2024. The reason behind improved PAT is exceptional item of Rs. 263.19 Cr. (During the financial year 2024–25, the Company completed the sale of its wholly owned subsidiary, Ferro Scrap Nigam Limited (FSNL), to Konoike Transport Co., Ltd.). Acuité believes that going forward improvement in revenues and profitability from the e-commerce segment will be key monitorable.
Healthy financial risk profile The company demonstrated strong free cash flow generation, leading to significant deleveraging and a healthy net worth position supporting the company’s healthy capital structure. The net worth of the company stood at Rs 746.62 Cr. and Rs.658.62 Cr. as on March 31, 2025 and 2024 respectively, mainly on account of accretion of reserves. The gearing stood at 0.19 times as on March 31, 2025 against 0.22 times as on March 31, 2024. The long pending sub-judice liability (classified as external debt) towards Standard Chartered Bank (SCB) to remain at similar levels over the medium term on account of the on-going litigations against the company, Which amounts to Rs. 143.62 Cr. The robust debt protection metrics – Interest coverage ratio and debt service coverage ratio stood at 1548.02 times and 1243.67 times as on March 31, 2025 respectively as against 602.69 times and 370.63 times as on March 31, 2024 respectively. The improvement in debt protection metrics on improved absolute EBITDA. TOL/TNW stood at 1.72 times and 1.63 times as on March 31, 2025 and 2024 respectively. The debt to EBITDA of the company stood at 0.28 times as on March 31, 2025 as against 0.50 times as on March 31, 2024. Acuité believes that going forward even in the event of any adverse outcome of the legal proceedings, the financial risk profile of the company will remain robust backed by steady accruals and no major debt funded capex plans.
|
| Weaknesses |
| Working capital intensive nature of operations
The working capital management of the company remained intensive with high GCA days at 874 days in FY2025 as against 704 days in FY2024. The GCA days includes high cash and bank balances of Rs. 378.20 Cr. in FY2025. The debtor day stood at 363 days in FY2025 as against 366 days in FY2024. Going ahead, the working capital operations are expected to remain at similar levels over the medium term.
Pending legal disputes Standard Chartered Bank (SCB) paid to MSTCL towards the purchase of export bills for gold jewellery during 2008-09 under a Receivable Purchase Agreement. As per the agreement, SCB would purchase the bills raised by MSTCL on foreign buyers and pay 95 percent of the amount to MSTCL, and foreign buyers would be paying against the bill directly to SCB on the respective due dates of the bills. The said export transactions were also insured by SCB with ICICI Lombard General Insurance Company. On non-receipt of proceeds from the foreign buyers, SCB claimed the amount from the insurance company. The insurance company repudiated the claim of SCB. Thereafter, SCB converted the receivables into debt and filed a case in the Debt Recovery Tribunal, Mumbai. MSTCL under the Receivables Purchase Agreement into loans/debts as if owing by MSTCL, claimed the amount from MSTCL with interest, and filed a case, being the original application in the Debt Recovery Tribunal (DRT), Mumbai, in the year 2012, which MSTCL has denied and disputed. Against this petition, an Interim order claiming Rs. 222.51 Cr. was passed by the DRT, Mumbai on I6.09.2017, which has been set aside by the Debt Recovery Appellate Tribunal (DRAT), Mumbai by its order dated 07.08.2023. MSTCL has shown liability in its books for Rs.143.62 crore (as borrowings with corresponding debtors) as on March 31, 2025. Consequently, the recovery proceedings have since been dropped. As a result of which MSTCL has got refund of Rs. 90 Cr. (pre-deposit amount towards hearing of appeal) along with interest of Rs. 53.43 Cr. The attached properties have also been released. Other proceedings challenging the claim of SCB are also pending before various forums including the Hon'ble High Court, Bombay and in the Civil Court at Alipore, Kolkata initiated by MSTCL both against SCB and the Insurance Company. Any adverse outcome of the legal proceedings impacting the debt coverage indicators is a key rating sensitivity. |
| Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix) |
|
Acuite takes into consideration the benefit derived by MSTCL from 64.75 Perrcent the ownership of Government of India, directly.
Stress Case Scenario While the rating has been derived on the standalone credit risk profile and cash flows of the company, Acuite believes given the 64.75 percent holding of Govt of India ; in case of any stress case scenario, the required support would come from the GOI. |
| ESG Factors Relevant for Rating |
|
MSTC Limited’s ESG profile demonstrates its commitment to sustainability through recycling and e-auctions that reduce industrial waste and promote circular economy practices. Environmentally, it shows efficiency with low energy intensity and near-zero water consumption, while socially it contributes to UN Sustainable Development Goals by advancing responsible consumption and climate action. On governance, MSTCL emphasizes transparency through initiatives like its MoU with Transparency International India and compliance with SEBI’s Business Responsibility and Sustainability Reporting framework, though challenges remain in addressing transition risks under stricter climate policies and improving ESG disclosures to strengthen investor confidence.
|
Rating Sensitivities
| Potential triggers (individual or collective) for an upward rating action: |
|
| Potential triggers (individual or collective) for a downward rating action: |
|
| Liquidity Position |
| Strong |
|
The company’s liquidity is strong marked by healthy net cash accruals which stood at Rs.412.07 Cr. in FY2025 as against its nil maturing long term debt obligations for the same period. The current ratio stood at 1.30 times as on March 31, 2025. The company maintains healthy cash and bank balances of Rs.378.20 Cr. as on March 31, 2025, of this Rs.153.20 Cr. is retained as current account balance and remaining as unencumbered cash. Further, it is expected to generate NCA in range of Rs.175-178 Cr. in FY2026-2028 against nil repayment obligations over the same period. Acuité believes that the liquidity of the company is likely to remain strong over the medium term.
|
| Outlook: Stable |
| |
| Other Factors affecting Rating |
| None. |
| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 310.96 | 316.25 |
| PAT | Rs. Cr. | 402.98 | 171.91 |
| PAT Margin | (%) | 129.59 | 54.36 |
| Total Debt/Tangible Net Worth | Times | 0.19 | 0.22 |
| PBDIT/Interest | Times | 1548.02 | 602.69 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable. |
| Any other information |
| None |
| Applicable Criteria |
|
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm • Trading Entities: https://www.acuite.in/view-rating-criteria-61.htm |
| Note on complexity levels of the rated instrument |
|
|
|
|||||||||||||||||||||||||||||||||
|
| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
| |
*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
|
||||||
|
Contacts |
List of instruments and names of regulators of the instruments |
