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Edited Transcript of MSTC.NS earnings conference call or presentation 14-Feb-20 6:30am GMT

Q3 2020 MSTC Ltd Earnings Call

Feb 14, 2020 (Thomson StreetEvents) -- Edited Transcript of MSTC Ltd earnings conference call or presentation Friday, February 14, 2020 at 6:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Bhanu Kumar

MSTC Limited - Director of Commercial & Whole Time Director

* Subrata Sarkar

MSTC Limited - CFO, Director of Finance & Whole Time Director

* Surinder Kumar Gupta

MSTC Limited - Chairman & MD

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Conference Call Participants

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* Deepak Poddar

Sapphire Capital Management LLC - Portfolio Manager

* Govind Saboo

IndiaNivesh Limited - Head of Merchant Banking

* Nisarg Vakharia

Lucky Investment Managers Private Limited - Analyst

* Pritesh Chheda

Lucky Investment Managers Private Limited - Analyst

* Rushabh Shah

* Rushabh Shah

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the MSTC Limited Q3 FY '20 Earnings Conference Call hosted by Equirus Securities.

(Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Rushabh Shah from Equirus Securities. Thank you, and over to you.

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Rushabh Shah, [2]

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Thank you, Tad, and good afternoon, everyone on the call. On behalf of Equirus Securities, I would like to welcome you to the Q3 FY '20 earnings conference call of MSTC Limited. From the company, we have with us key senior management team, including Mr. Surinder Kumar Gupta, our Chairman and Managing Director; Ms. Bhanu Kumar, Director, Commercial; Mr. Subrata Sarkar, Director, Finance; and Mr. Ajay Kumar Rai, Company Secretary and Compliance Officer.

I would like to now hand over the call to the management team for their opening remarks, and then we will open the call for Q&A.

Thank you, sir, and over to you.

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [3]

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Yes. Good morning, thanks. I'm Surinder Gupta, GM of the company. I joined the company around 2 months back, and what I found in these 2 months, the company has great potential. We have a good dedicated team of officers, who are striving hard to deliver best measures for the stakeholders, for our clients, customers, as it is their satisfaction which gives us value and further business. If we get further business, the company's financials improve, and it leads to better value for the shareholders. You are all aware, you are very valuable investors for the company. You are aware, last year was not very good for the company as far as the financials were concerned. Although company is doing consistently good as far as the e-commerce is concerned, but certain large provisions had to be made for our certain business this year, which were very old decisions. So now the things are stabilizing. As discussed by the management team, we have bring down the business of marketing quite largely. Cash and carry business has been totally stopped. As far as the marketing is concerned, if we see the financials, revenue from marketing business is around INR 294 crore in Q3 for the current year. This was INR 294 crore against INR 1,012 crore for the last financial year, which is a decline of almost 71%. This is largely driven by 35% de-growth in marketing business.

So we have bring down marketing business, which was basically one of the reasons for our loss in all transactions. Our -- we are focusing more on e-commerce business, and we are quite sure e-commerce is the future for the company and for the country also. We are adding good value to our customers. They are getting large benefits because of use of our e-commerce services. The company's performance and the credentials in e-commerce business are not hidden from anybody.

Not only the government sector, even the private sector is now giving business to MSTC. Based on the satisfactory service without any error with total safe secure solutions for which MSTC is known, starting from the coal auctions to various key projects of various ministries like UDAN project and portals. So many large teams we have given to government of India.

Our subsidies are being used by now not only central government, many state governments also for their minor mineral blocks and other [licensed fees]. This year, we have around profit before tax of around INR 56 crore in quarter 3 for the current financial year versus around INR 80 crore in last financial year. That is a decline of around 30%. One of the reasons is, as I said before, is our marketing business downturn because of the conscious decision taken by the company management, and the reason is slightly depressing scenario as far as the steel sector was concerned. Scrap is predominantly related to steel. So because of the downturn in steel industry, the prices for scrap are not good. We were getting good revenue. And many customers were not selling their scrap as, previously, they are sold at higher rates, and they were finding a difficult selling in -- selling at lower rates. But for the quarter 3, if things are slightly on better trend, and we are hoping that in the next quarter and the coming year also, the trend will be on positive side.

We have finalized our provisioning policy. In any business, there have to be certain works that any business will do. And in services, any business will perform, but they will not get the payment or the payment will be coming very late. Looking to these factors, we have finalized the provisioning policy with the MSTC Board's approval after detailed discussions. As a result of this, we have made a provision of around $89 million, that's approximately INR 9 crore in the quarter 3 for financial year '20.

As far as the business is concerned, we are uploading whatever new agreements are being signed on the heavy portal as per the guidelines. However, few major projects I would like to mention here. One is this IBA portal, Indian Banking Association, all the PSU banks are the member of IBA. Whatever there properties are there which are attached for nonpayment of loan by the customers. So those are being sold on MSTC portal. We have already done auction for 9 PSU banks as a beginning and hoping to drop in more PSU banks progressively. And the auction services are -- have been integrated with the IBA portal, and these things are getting refined. We are hoping to get good business volume in coming quarter and coming year as far as the IBA property sale is concerned.

Again, on the property front, as per the honorable Supreme Court mandate, MSTC is setting the property of Amrapali Group on our MSTC portal. As and when the properties are received from the court receiver after due diligence, after checking the paper work and everything, the properties are coming to MSTC portal from where these are being sold.

As the beginning, few vehicles and few properties have already been sold in last month. Major mineral blocks, now a lot of mines are where the licenses have expired, those are coming for auction. So many -- few mines have already been sold for Orissa government through MSTC portal, and few more events have already been scheduled as per the requirement of state governments. Apart from this, MSTC is developing a portal for DIPAM for strategic disinvestment of public sector units. So this will be a very unique project. The requirements are almost at the final stage. As we get go ahead from DIPAM, we'll be making the project live far disinvestment of seek public sector units sale.

Apart from that, MSTC has (inaudible) total for -- and a basically mobile (inaudible) sale of organic produce as per the directives of Ministry of Agriculture. We are in the process of imperilment of logistic partners so that the end consumers are given no delivery sources. We are hearing on B2B as well as B2C type of customers for these sectors. Once we enroll the logistic partners and do one small pilot project, we'll be hoping that apart from the agriculture, other ministries may require -- may use our portal for selling various products like small handicraft where the local artisan don't have the logistics for the market available with them. They don't get fair value for their products. So we'll be able to expand our portal for our associated activities. This was all I wanted to tell all our investors about small insight into what the future is ahead for us.

I would also like to say one more thing that it is a slow progress. We have to be doing the business in a safe way. We don't want to venture into any activity which will create problem for the company financial in future. So whatever we had -- decision we are taking and expanding in new areas, we are giving a proper thought before entering into the new areas. We are also doing some internal restructuring in the company. Whatever businesses are on declining side, so we'll be aligning our own resources with the e-commerce or wherever the growth are there. So those things are still in planning stage. We'll be doing as per the requirement of company from time to time.

Now with this, I'll hand over to our Director -- hand over the mic to Director of Finance, Mr. Subrata Sarkar. He will give you insight in the financials of the company for the last quarter.

Yes. Thank you, Mr. Subrata.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [4]

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Good afternoon, everybody. So this is all about us. I think you have all gone through the financials. So let me tell about the financials. So it is quarter-to-quarter, so for the quarter 3 financial year '20 versus quarter 3 stand-alone. Quarter 3 financial '19, the total revenue is INR 1,973.30 million as compared to last year [9127596]. But the revenue in the e-commerce has fallen a little bit of growth, that is INR 498.55 million. Our current quarter is INR 591.17 million. And the PBT as compared to quarter 3 of financial '19 was INR 695.23 million. Current PBT is INR 470.41 million, and it is a little bit bigger, but it is a conscious decision of the management to coming out of this -- getting back business and concentrate more on the state and some e-commerce business. And accordingly, the PAT is also INR 295.85 million as against last quarter -- quarter-to-quarter of the previous year is INR 445.86 million.

Now I will switch over to the conservative financial highlights. That is, again, that quarter 3 revenue comparison. Last year, it was INR 10,123.05 million. In current year, it's INR 2,948.28 million. And pre provisioning EBITDA was INR 1,011.31 million. Current year is INR 762.70 million, and the profit before tax is INR 558.50 million as compared to INR 798.85 million last year. And the PAT is INR 339.02 million as compared to INR 511.09 million last year.

Now I will go to the segmental reporting of the standalone. If you look at that, it is a total 9 months standalone. If we do that, it is the revenue is [7827568] as compared to [22251565] last year. And profit before tax is INR 1,230.91 million as against a loss of INR 2,735.47 million because last year, during that half year period, we have made a provision for bad and doubtful debt. Accordingly, profit after tax for current 9 months is INR 791.60 million as compared to INR 3,780.73 million of the last corresponding 3 years.

Now we are going to the highlights of 9 months of financial year '20. In the consolation position, it is the total revenue is INR 10,656.49 million as compared to INR 25,038.55 million last year. The pre-provisioning EBITDA is INR 1,931.51 million as compared to INR 3,109.83 million. And as you can see that there was a provision of last year is INR 4,933.36 million as compared to current 9 months is INR 89.22 million as our CEO CMD has already explained regarding that provision part. And PBT reached INR 1,464.41 million as compared to INR 2,444.17 million, and that is INR 923.08 million as compared to INR 393,295.47 million.

So (inaudible) it is -- we will now control -- I mean concentrate on, first, on the consolidated part. It is -- total revenue is INR 2,948.28 million as compared to INR 10,123.05 million. And profit before tax is [558150] as compared to INR 798.85 million, and the PAT is INR 339.03 million as compared to INR 511.09 million. And regarding the stand-alone part, the total revenue is INR 1,973.30 million as compared to INR 9,127.96 million. And the PBT is INR 470.41 million as compared to INR 695.23 million. And PAT is INR 295.85 million as compared to INR 445.86 million.

That's all from our side and hand over to Equirus.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Nisarg Vakharia from Lucky Investment Managers.

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [2]

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Congratulations on a very healthy growth in the e-commerce business and living up to the commitment of lower and lower trading business and higher e-commerce business. I had a small question that the un-allocable expense, which is generally the total cost of running our business, is running at a run rate of about INR 21 crores, INR 22 crores per quarter, which is showing about INR 16 crores in this quarter. Can you please elaborate on the same?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [3]

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Yes. Actually, basically, what is happening over here, as we were keeping on explaining earlier also during the interaction at different time at your office also when we are making presentation. Our salaries and overheads, it cannot be allocated partly between this e-commerce business and the trading business because each and every office and every premise is being used for both. So that's why it is like that. So it is -- therefore, it is kept in the portion. As already explained earlier also, this...

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [4]

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Sir, my question is slightly different. I'm saying it was like that 20 -- yes.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [5]

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So that -- you wanted to say that why there is a variation, isn't it?

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [6]

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Yes, sir. Yes.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [7]

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Why there is a variation?

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [8]

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Yes.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [9]

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It's the overhead expenses. That is your question?

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [10]

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Yes, sir, my question is that.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [11]

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You can repeat your question. What's the exact specific question that you want?

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [12]

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Sir, my exact question is that the un-allocable expenses, which were at INR 22 crore per quarter run rate, is that about INR 16 crores in this quarter, which is about INR 5 crore to INR 6 crore lower? So I wanted to ask you why.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [13]

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Yes. It is because of the fact that in the overhead expenses, we had to -- in the first or second quarter, we had a little bit of, I mean, other expenses like taxes and others were actually paid, some old taxes that we paid. That was there and some bank charges were also there. But this quarter, we have managed well. And the other expenses have gone down and overhead also, we have gone down in the traveling and others also. So that price is a little bit lower this quarter.

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [14]

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Okay. So sir, it is fair to assume that this is a steady state normal run rate if we do lower trading business and higher e-commerce business, right?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [15]

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Yes.

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Nisarg Vakharia, Lucky Investment Managers Private Limited - Analyst [16]

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Okay. My second question is that quarter-on-quarter, we have seen a significant growth in the e-commerce business and even y-on-y. Was there any large one-off orders or execution in the e-commerce space? Or the things have improved and things are back to normal, and we can see growth going ahead?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [17]

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Yes. I think I can take that question. And this is Kumar, Director, Commercial. Actually, what had happened was, in the first quarter and second quarter, we were lagging behind the last year comparative figures. And all that stock actually has started selling in the third quarter onwards. So that is why when you see there is a better result in the Q3 as compared to Q3 of last year as well as the Q1 and Q2 of the current financial year. The market, as of now, I'm sure if you -- the same trend will be within.

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Operator [18]

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The next question is from the line of Deepak Poddar from Sapphire Capital.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [19]

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I wanted to understand how e-commerce has grown by about 19% on a Y-o-Y basis, even on a quarter-on-quarter basis, about 30%, 40%. And if you have to see the next 2, 3 years, can you comment how big is the opportunity in e-commerce for you and what sort of growth are we targeting in the e-commerce segment as such?

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [20]

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You see, e-commerce is a very promising area, but it is not something that -- something it can be very big change in a small period. It has to be very consistent only. Our only efforts are to get more and more business, and we also understand the profit margins or the service charges in the e-commerce sector are not that large. So whatever volume increase or the service charge increase will be there, those will be small. But we are trying that we are on a consistently growth path, right? Yes.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [21]

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Okay. Sir, so would you want to put a number to it or a range to it that this is the range that we might be wanting to grow this business?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [22]

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So I think you can take the clue from the Q3 results, and we are hoping that the same trend will continue. Market is slightly picking up. As I said, about 45% of our e-commerce revenue is coming from scrap things. And once the steel sector slightly improves, the scrap sale revenue will also improve. So we are just hoping for this trend to continue, but we can't put any numbers to it.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [23]

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Fair enough. And 45% is from scrap rate, that's what you mean.

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [24]

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Yes. 45% e-commerce revenue is from scrap sale.

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Operator [25]

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Next question is from the line of [Gustav Dutta], an individual investor.

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Unidentified Participant, [26]

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Congratulations on the excellent number, and I'm happy to note that trading business is curtailing and e-commerce is growing. I have one question on the scrap recovery business and for which you have entered into a joint venture with Mahindra. How is that going? I know it's premature, but would you like to give us a sense of the opportunity that you see coming in the future?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [27]

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So I mean the question, I mean, we have answered by. Your question itself because it's the premature that we are selling. And so I'd say it's very enough and nothing's there. It is there. And it is -- what we can say, we are on the right path, and we are trying to explore the -- all the possibilities to get in this, and we are trying to explore to these areas where the recoveries can be coming up and all these things. And -- but again, that some time is required because it's a very -- I mean, although, it's a very sunrise industry, but sometimes we'll be required to have factual, I mean, outlook where it will be heading toward.

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [28]

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Apart from that, we are basically expecting one policy are the scrapping of vehicles, which is expected to come in very soon -- expected to come in months time. So with that, we'll have more clarity what are the business opportunities and how to go in future about it further.

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Operator [29]

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The next question is from the line of [Abhishek Agarwal] from (inaudible).

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Unidentified Analyst, [30]

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Sir, my question is related to your legal case with the SCB. So with the recent judgment, Supreme Court has given that they dismissed our petition. So what the next legal course of action is available to us? Okay. And why we have not created provisions regarding this in this quarter?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [31]

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I'm getting you one by one. First, Supreme Court judgment that you have gone through it. Okay, fine. That's the deal. They have rejected our option for review. So it is not that rejection of anything than other things. So we are exploring all the possible legal formalities and taking all the legal opinion. So very soon, we'll come up with a solution. And of course, we will let you know beforehand, and it will be all in the public domain, what we are going to see in this quarter. But we are taking all the possible legal opinions in this matter.

Number two, regarding the provision. So that I can tell you that it is not a question of having a provision because already it is appearing in our balance sheet. So on the balance sheet, it is there. So of course, under protest, and we are -- we can note that it is on sub judice and it is under protest, and we are contesting the claim at various legal forum. So that's why it is already there. With -- of course, with this type of (inaudible) because we have not accepted that claim. And the claim and sub judice, we are unable to further clarify all these matters.

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Unidentified Analyst, [32]

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So sir, you mean to say you have already accounted the INR 200 crores amount in your balance sheet as a protest amount?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [33]

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Yes. It is there. You can go to our -- I mean the financials of March 31, 2019. And with the notes and accounts, you will find there. It is still note there.

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Unidentified Analyst, [34]

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Okay, okay. So you mentioned that...

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [35]

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And that's validly -- again, add to it. It is a big note over there, and it's the DRHP. While raising the capital also, there was a big para and chapter on that particular business regarding all the things. Moreover, you can go through the 31st March 2019 Annual Report and accounts also, sir.

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Unidentified Analyst, [36]

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Okay. So the debt which you accounted, you are referring to that amount, correct?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [37]

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Yes. That note is there, very clarifying note is there. I think that is very sufficient enough to...

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Unidentified Analyst, [38]

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Yes. Yes. Okay. That's from my end.

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Operator [39]

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The next question is from the line of Pritesh Chheda from Lucky Investment.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [40]

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Sir, I just have a follow-up there. So that amount is a part of your debt or it's a contingent liability?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [41]

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It's a part of our -- that debt because that sector -- it is -- that rider is there in the -- I mean, it is the current liability. It is a part of the current liability, and there is no debt. It is being this liability being contested at variance.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [42]

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And my second question is, on these incremental revenue streams in e-com, which is IBA portal property sales or disinvestment, sale of mining license, what will be the revenue model here?

So in case of...

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [43]

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So there are actually more event-based. And we charge something as a upfront fee, but later on, there is event-based charges also, especially the Ministry of Agriculture dedicated portal and DIPAM portal, it is event-based. And as far as IBA portal is concerned, there are various models. It depends on the bank to choose a model. It can be on listing business, it can be on a successful sale basis. So we have a very complex model for this. It will be difficult to actually quantify it in terms of percentage or numbers.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [44]

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Is it fair to assume that a lot of this should be listing fee-based? And unlike, let's say, currently, in e-com, where you have a...

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [45]

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That choice is actually given to the bank. They can go for listing or go for customs. So as on date, only about 8 or 9 banks have come up. So it depends on the other banks, which kind of models they want to choose. And based on that, this actually average can be worked out. So I think another 6 to 7 months can probably show us the trend.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [46]

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This is valid for even mining licenses, disinvestment or...

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [47]

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Mining licenses are mainly event-based.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [48]

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Listing basis. So you'll get a listing fee for it, right?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [49]

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Yes. Not listing, successful sale, but for event, irrespective of what kind of mineral block it is or what kind of volumes are there, we charge for -- per event.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [50]

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Per event, but successful sale on...

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [51]

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(inaudible) happen for the event.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [52]

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Okay. Then only you'll get remuneration for it.

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [53]

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Yes. Yes. So there are no bids. I just listed, there are no bids, I don't get any fee. If there's a bid, but it is not allocated, then also I'm entitled to my fee.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [54]

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Okay, okay. Understood, understood. And lastly, on the growth side, ma'am, so a lot of our growth should be dependent on scrap? Or there is upside in case of procurement and the ESL portion of the revenue model that we have?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [55]

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It is all combined together because scrap, especially from the government sector, is somewhat limited. So that is why we started targeting the private sector, and we have had some success. But as I said, when the field sector picks up, the scrap sale, obviously, will go up. And -- but still, I would say that it will be in the range of 45% to 50% of our revenue. And we are focusing more on value-added services in e-sale as well as e-procurement. In fact, we're launching a new version of our e-procurement model very shortly, which, I'm sure, will be more marketable, and there'll be a lot of more clients for this.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [56]

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Okay. And my last question is, since we are the new loan over trade. So year-end, the debt or the liability, what it should look like in FY '20 and what it should look like in FY '21?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [57]

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Just repeat, sir. What are you asking?

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [58]

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We are bringing down our trading sale?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [59]

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Yes.

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Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [60]

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So the associated capital employed will also come down with it. So year-end liability on our books or debt on our books, what it should look like in FY '20 and FY '21 on this particular part?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [61]

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At this, of course, what we have told that we are bringing down the trading thing, for which it's a very capital-intensive thing. Of course, we are doing. But still, the contract which we have done, we are not adding the first contract, but some contracts are still there. And some trade distributable from this 110% BD segment are also there. So for that, I think, they are continuing. For that, of course, some debt will be required. But of course, we are scaling down to it. It might go down. The second thing that we have explained to you during our -- course of our -- this road show and other shows also, some kind of advances also we received from the parties. So depending upon that also, our debt keeps on fluctuating. So of course -- but the overall size, we expect it might go down because of that scaling down in this marketing business -- trading business, sorry.

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Operator [62]

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The next question is from the line of Govind Saboo from IndiaNivesh PMS.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [63]

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Sir, I wanted to understand more about this provision of INR 9 crore which we have made during the quarter. To which segment does it belong to? And we were of the understanding that all the provisions are behind us regarding the trading business or the traditional trading business. So why is it up to during this quarter?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [64]

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Yes. I think during our -- during this -- our CMD, as we clarified that the - there was a provisioning last year and a big, big amount. So that our management and governing body bet if there could be a consistent like the expected credit loss type thing met a little bit of strengthening the things for that key event in any particular year or quarter. There is no such heat on the profitability and the -- of the company. Accordingly, for a conservative basis, the policy has been created. And of course, it relates to basically -- the -- relates to the trading part, where even if there is a little bit of delay in the cement, we are making a little bit of municipal provision so that at the end of the year or into the second period, the whole thing does not come and affect the financial year. Although, again, we have what we have explained that this type of form very, very little part of our whole creditables. And now the majority of the creditables are backed by either by bank guarantee or through a contract where our associate supply guarantees the receivability of this creditables. So whatever is there, it will be a very municipal amount quarter-to-quarter by being on a conservative policy that we are following, so that does not affect any particular year or any particular year per year profitability, per se.

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [65]

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I will supplement what Mr. Subrata, our Director of Finance, has said. There maybe smart provisions as far as the e-commerce is also concerned. Because many times, there are -- I mean whatever the models or for these service fees are concerned, sometimes when we remove the amount to the price, we deduct our service charges. But as for the few agreements, we bill it subsequently, and the payments are received from those clients after some gap. So there could be always a few clients where there are abnormal delays in receiving those service charges. So that we don't get a shock in future, we are keeping -- we have made a provisioning policy that if we don't get our payments within this time period, defined time period as per the provisioning policy, we will make certain provisions. But we will always making efforts to go -- get those dues from the department from which our claims are there. So smart provisions are there but not big provision -- big ticket provisions.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [66]

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Sir, can you quantify the receivable amount which are -- which is open? I mean which is not bad wire associated guarantee or bank guarantee program?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [67]

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Yes. It is some kind of around still INR 140 crore to INR 150 crore-odd are there in the cash and carry model. So of course, they are paying, but at a very slow pace and all these things. So there might be a provisioning pricing and the policy takes care of staff in particular because otherwise, others are backed by guarantee and that can be sort of explain. But in the e-commerce, of course, e-commerce is a very municipal amount, very, very municipal amount for that.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [68]

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Sir, just to clarify, so are we doing some incremental business on a cash and carry basis or...

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [69]

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No, no, no. To very clarify and categorically, I will tell you, from 1st April this year onwards, we have stopped that model. Whatever is that is the backlog of earlier year.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [70]

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Okay, okay. So all these INR 150 crores are pertaining to business which we have done in the earlier year and nothing is of the current year.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [71]

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Absolutely.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [72]

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Okay, sir. And can I have the debt number as on 31st December?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [73]

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Yes. It's actually -- it is like -- we cannot -- it is because we not publish the balance sheet, per se, for this. So almost -- I mean, again, because we have not add the figures that we have right now.

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Operator [74]

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(Operator Instructions) Next question is from the line of [Jeevan Patwa] from [Candy Floss Advisers].

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Unidentified Analyst, [75]

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I have just one question. If you can just explain us what is the economics of this trading plant. So we have actually put a one plant, and there is another plant in progress. So if you can just explain how the economics works for the trading plant, so how much is the investment done, what kind of turnover it can achieve, and what kind of margins it has.

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [76]

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You see, right now, it's a new business. It has yet to stabilize.

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Unidentified Analyst, [77]

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Right. But whatever plant we have put up, the mine plant that we started.

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [78]

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One is Noida and second in Chennai. We have just, last month, got the license to operate, all the factory licenses and environmental clearance...

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Unidentified Analyst, [79]

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So how much you invested in Noida plant?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [80]

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Of a segment-wise investment, per se, it's not at least available at this point of time -- available, because it's the equity investment in that particular joint venture. So it is -- our equity right now is invested in INR 18.60 crore in the joint venture, equally invested by our JV plant at JV company, it is [18-plus] figure. But total now, the equity invested in that particular venture is INR 37.20 crore, sir.

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Unidentified Analyst, [81]

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Right. But how much you invested in your Noida plant?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [82]

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Segmental-wise, because it is actually not available right now at this moment with us.

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Unidentified Analyst, [83]

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Okay, okay. And secondly, if the scrappage policy comes, then is there any estimates from your side how much would be the scrap -- extracted scrap generator within the country?

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [84]

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It depends upon what is there in the scrappage policy. There is always hope of the industry, automobile industries, for some kind of incentive for scrappage of the vehicle. You see some form of financial incentive is there, then the volume should -- will get sudden jump in volumes. Then we can rapidly expand our business in this area. So that depends upon what is there in the policy. So it cannot be commented at this moment.

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Unidentified Analyst, [85]

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Okay, okay. And we have got some (inaudible) with the Orissa government or (inaudible) government. So is there any revenue flowing from that?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [86]

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Yes. In fact, the minor mineral block, e-procurement, all those, the activities have started with the government of Orissa. And even scrap sale has gone up under bill agreement. So as I said, because of the industry having a downturn in the first 2 quarters, it wasn't reflected. But now things have picked up, and we are expecting big gains from that agreement.

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Operator [87]

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Next question is from the line of [Harsh Shah], an individual investor.

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Unidentified Participant, [88]

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Sir, I want to ask, what will the revenues of the -- when that CapEx policy comes, what will be the revenues like?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [89]

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Yes. You want to get that figures of that JV, this -- the second plant?

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Unidentified Participant, [90]

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(inaudible)

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [91]

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It's getting correct.

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Unidentified Participant, [92]

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(inaudible) if you can do it. So what may be the shoot-up of the revenue mix? Percentage, 10%, 15%?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [93]

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It's very difficult to have it at this quarter time because as our CMBs have just now pointed out, what will be there, static policy. So we do not have that thing in our hand. So until unless, (inaudible)figure the -- what is there in the CapEx policy. So what type of areas are involved in that everything. So it is very difficult to predict right now. Please wait and have a year, it comes up in this quarter. Most well in the next con call, we will be able to enlighten you on this better.

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Unidentified Participant, [94]

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Okay. Sir, this INR 200 crore, so the Standard Chartered Bank, which is in the court, Supreme Court. So this actually the pricing has been made? Or if you lose the case, we have to give some our account. Are there (inaudible)?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [95]

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Can you repeat the question, sir?

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Unidentified Participant, [96]

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The Standard Chartered Bank, INR 200 crore litigation is there?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [97]

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Yes.

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Unidentified Participant, [98]

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But (inaudible) from that? Or if you lose the case in the Supreme Court. So because we find...

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [99]

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Let me clarify 2 things. First, is that the Supreme -- in the Supreme Court, as we have already informed to our investor, the Supreme Court has decided on the matter, give in which court of things like. So it's -- yes, the fact that the review is rejected, but we have got other legal options also there. We are exploring the thing, okay? So it is not now been decided, is that money has to be paid or not paid. It is still sub judice. Again, it has already been there in our accounts with a writer that this is sub judice, and we do not accept this liability. So it is already there in our books. If you can see that in the accounts -- our final accounts of March '19, in the Annual Report, you can clearly have that thing with our clear-cut note that this is sub judice, and we have not accepted the claim of the Standard Chartered Bank.

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Operator [100]

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Next question is a follow-up from the line of Govind Saboo from IndiaNivesh PMS.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [101]

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Sir, can I have the GMV number, sir, from the record, if it is available?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [102]

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Which one?

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [103]

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The gross merchandise value on the e-com portal.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [104]

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Yes. For e-commerce, it is [INR 672360 million].

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [105]

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INR 67,000 crores.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [106]

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So this is for the 9 months, if I'm not...

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [107]

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Yes, for the first 9.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [108]

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And correspondingly for the FY '19 numbers?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [109]

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It was INR 83,000 crores. But actually...

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [110]

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[INR 76,000 crores].

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [111]

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Sorry, [INR 76,000 crores]. But actually, these volumes do not actually reflect the performance. This is just for some statistics purposes. We capture this because in many cases, we can't quantify. Like, in case of mineral blocks or coal block auction, we can't quantify as to what is the value. Because sometimes it is for a 15-year lease, sometimes it is for 30-year lease, sometimes just for 10-year lease. So sometimes, we take only the annual revenue for the state (inaudible). So there is no uniformity amongst the state. It's not a true reflection of the performance of e-commerce sector. Numbers, very seriously. If that's for academy purpose, yes, we are progressing those also.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [112]

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Right, right, right. And sir, second question, I mean, it's just a follow-up on this Standard Chartered Bank dispute liability, which is balance sheet and which is contingent for payment. So I understand that it is sub judice and a lot has been explained in the annual report and DRSP. But looking at the current developments, can you just give some color or throw some light on the local stand of our position in this entire legal dispute for the sake of...

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [113]

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I'm telling you that you are aware that the Supreme Court, honorable Supreme Court, has already directed that the review is not attainable, okay? So we are taking other legal stage, number one.

Number two, that the things like that, whether MSTC has to pay or not pay, it is still sub judice, and it has not yet been decided by the court, okay, whether we have to pay or not to pay, because we have got lot of other legal remedies still available with us, and which we are exploring. And it will be coming up very soon, and we will let you know. So that is there, that is there. Still, it is there, and still it is sub judice.

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Govind Saboo, IndiaNivesh Limited - Head of Merchant Banking [114]

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So sir, on the outcome of the case, we -- there is no judicial directive as of now. That is what -- is it fair to assume?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [115]

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Of course, I will explain to you every -- the judgment and the directive. Here, the judgment here a case before the honorable court was that, whether it's reviews is attainable or not. So honorable Supreme Court fines you, okay, fine, if review is not attainable. So that's the judgment of the court. Then in the light of that thing, we have to explore other legal remedies, other than (inaudible). So that's the judgment. Of course, the judgment is there, but it was not on the payment form, whether MSTC has to pay or not to pay.

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Operator [116]

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Next question is from the line of Rushabh Shah from Equirus Securities.

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Rushabh Shah, [117]

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Congratulations on the nice -- good set of numbers. I just wanted to ask how has been the realization rates for the e-commerce segment. I think so, last quarter, you provided that for scrap. It was roughly 2%; and for e-sale, at 5%. Has there been any any change in those realization rates?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [118]

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The realization has improved in the first 9 months of this year, and the outstanding service charges in e-commerce has gone down in comparison to the closing. Average service charges is almost on the same lines as last year. There is not much change in that. But yes, the outstanding is not there. Realization is much better.

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Rushabh Shah, [119]

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Okay. So I can say the 2% and the roughly, it has been around those level itself?

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [120]

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Yes, yes, yes.

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Rushabh Shah, [121]

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Okay. And just wanted to ask on the balance sheet front. Though you have not published for this 9 months, has there been any improvement on the trade receivables front? I think it was [17 billion] in the last quarter. And now after this provision and a further decline in trading business, has there been any improvement in that -- on that part?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [122]

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Yes. Yes. I'm telling you something. So regarding the balance sheet particularly, the trade receivable front, we are -- I mean, there is much of them because on the cash and carry segment, we have stopped doing business. So -- and other trade receivables that as sound as it was like 110% biggest segment, associate segment and the e-commerce, of course. So if we are typically healthy on all these segments, of course, there are a little bit of thing in the cash and carry thing that already explained earlier. So we have now got a provisioning policy as explained by our CMD. So like -- with this thing, we will make it sure that we -- typically we will keep on providing on a conservative basis so that in any particular reporting period, there is not much of effect in the profitability of the company. So balance sheet is almost as it'll be as it was in the last quarter.

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Rushabh Shah, [123]

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Got it, got it. And then just one final question. Has there been any efforts made for further recovery for the provisions we have made? I think in the last quarter, there was some recovery. So...

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [124]

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Yes. Let me tell you, we are continuously on the endeavor to recover the covert money from the -- that trade issue that we have been providing for. So that is on the path as and when it is there. So because you have to appreciate the legal process of -- that is available and the remedies that we have available with our company within the legal framework of the company -- country. So we are on the continuous endeavor. And as and when it is there, of course, we will let you know, sir. We are on the job, sir. That's what we can share you.

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Operator [125]

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Ladies and gentlemen, we will -- we have time to take one last question. The next question is from the line of [Abhishek Agarwal] from (inaudible).

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Unidentified Analyst, [126]

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Sir, my follow-up question to that is, again, to STB case, okay. Just to have a better clarity, okay. At that recovery proceeding, what the DRT has ordered that for attachment of all the removal property of our company for the recovery proceeding, okay? So because as they have set aside the order of Mumbai High Court, okay. So now they can take this recovery proceeding? Or how it will go because we are not getting on this point?

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [127]

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Yes. So regarding this recovery proceeding, we have already -- they are taking all the legal stage. And so as of now, as of the last time that the Supreme Court has, you rightly pointed out, Supreme Court have pointed out that the sale will not be confirmed without order of the honorable Supreme Court. But as of now, we are taking all the stage that is available with us, and we'll come up with -- very soon with all these remedies that we have taken, and very soon, and it will be in the public domain.

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Unidentified Analyst, [128]

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Okay. And sir, suppose, in a worst case, if it's not in favor, so we will pay this INR 200 crores? Or this -- they will initiate the recovery proceeding? In the worst case, if not -- or in case it not in our favor.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [129]

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It's difficult to take -- tell all this thing because it's a professionally managed company, and that, too, is the government of India undertaking. So I mean that our (inaudible) is the honorable President of India. So whatever that court verdict and all these things will be there, it will put up for their approval and all these things. It will be taken up here by the Board and all these things. And whatever their decision will come, we will have to pay, whether not to pay, whatever thing. But it is -- I think it is a part of -- right now to decide on the (inaudible)

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Unidentified Analyst, [130]

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Okay. So that will not impact our financial stability? Is it...

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [131]

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Yes.

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Operator [132]

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Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing remarks. Over to you.

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Surinder Kumar Gupta, MSTC Limited - Chairman & MD [133]

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Thanks all the friends. I'm happy our investors are taking so keen interest in the company, its business model, its financial, legal issues. In fact, your questions, your queries will always give us more ideas for improvement of our services and investor confidence. I'm sure our investors will keep confidence in the company, its future growth. And we, in MSTC, as a team, are striving hard, as I said earlier, also for the satisfaction of our -- all the clients, customers as far as our services are concerned and get better revenue for the company so that our shareholders get good value for their investments in the company.

With that words, I'll conclude. Thank you once again. Thank you.

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Subrata Sarkar, MSTC Limited - CFO, Director of Finance & Whole Time Director [134]

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Thanks a lot.

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Bhanu Kumar, MSTC Limited - Director of Commercial & Whole Time Director [135]

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Thank you.

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Operator [136]

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Thank you. Ladies and gentlemen, on behalf of Equirus Securities, that concludes today's conference call. Thank you for joining us, and you may now disconnect your lines.