MSTC Ltd.: Growth through to E-Commerce

Company Background: Incorporated in 1964 as Metal Scrap Trade Corporation Ltd., Kolkata based MSTC is a leading PSU engaged in providing e-commerce related services across the metals & mining segments offering e-auction/e-sale, e-procurement services and development of customized software/solutions. MSTC has emerged as a pioneer in the e-auction segment catering to the Government sector, partnering with different Government agencies and ministries in conducting e-Auctions. MSTC is one of the key players offering comprehensive range of services in e-procurement segment. Further, MSTC provides waste disposal services and offers assembling, breaking up, sorting and wholesale distribution of scrap and waste materials including coils, billets, wire rods, coke, coking coal and naphtha.

Growth Opportunities

Scrappage Policy: If the policy gets the approval (A scrappage policy is a government-funded programme to promote the replacement of old vehicles with modern ones), then the total scrap expected to come into the market is around Rs.1,20,000 crore and can potentially generate Rs. 40,000 crore worth of scrap every year. Based on the MSTC market share and 2.5% commission on the scrap trading, this can be a big game changer for MSTC. Once the policy is announced, Cero, its 50:50 joint venture with M&M, can setup more centers across the country and that scrap will also be traded on the MSTC e-commerce platform
Private Sector: Till now, only PSUs contribute majority to the e-comm business, but, now MSTC is casting more focus on the untapped e-Commerce business from the private sector and in this stride MSTC has signed big ticket agreement with Reliance Industry, Indus Tower, Tata Power, Vedanta etc. Private sector scrap volume is much bigger than PSUs and MSTC is currently in discussion with many such private players.
Government Auctions: MSTC is a nominated agency for allocation of coal blocks and all major mineral blocks in the country through its very customized e-Commerce portal. The minor mineral blocks allocation is also executed through MSTC’s e-Commerce portal in the various states of the country. The selection of Mine Developer-cum-Operator in many states is mostly done through e-Procurement portal of MSTC. In addition, all the major minerals including coal are being sold through e-Auction portal of MSTC.
E-procurement: MSTC is aggressively pursuing the e-procurement business. It has developed e-Procurement services providing end-to-end solution to National Thermal Power corporation (NTPC) for their purchases of coal. In addition, MSTC has developed and implemented e-Reverse auction portal for imported Thermal Coal, which has made import of coal transparent, hassle free and economical.
E-Retail: MSTC has carved niche for itself by developing an unique exim portal for Oil marketing companies. It has also developed the required expertise for providing e-Retail Software solutions to the Government and private organizations particularly the micro, small & medium enterprises (MSME), which hold a great opportunity and potential for MSTC in future
E-Rakam: E-rakam enables farmers to sell their produce directly to customer from any place. It started with the Jaivik Kheti portal, selling organic products with Indian Post as the logistics partner. Now more than 60,000 farmers and 2500 farmer groups are registered with the portal.
Bank NPA Auctions: MSTC has collaborated with the PSU Banks association under which all PSU banks will use the MSTC platform for their NPA auctions. MSTC has been conducting regular auctions for movable and immovable assets as NPAs of the Government as well as private companies. MSTC has developed an e-auction portal to function as an integral part of the Indian Banks’ Association’s (IBA’s) e-BKray website for the sale of mortgaged properties of different banks under the SARFAESI Act. The portal is being used by all PSU banks to sell their NPAs under the SARFAESI Act. The portal went operational in December 2019 and 15 Public Sector Banks have already auctioned 6895 properties.
PSU Divestment and government auctions: Telecom spectrum auctions, Oil blocks under the New Exploration Licensing Policy (NELP), Coal blocks for commercial mining, allotment of petrol pumps etc. are executed through the MSTC platform.
MSTC has signed a Service provider agreement on 27 November 2020 with JSW Steel for facilitating the sale of Iron ore and other products. MSTC is a Mini Ratna Category-I PSU under the administrative control of the Ministry of Steel, Government of India.
After exiting the trading business, MSTC is single-mindedly focused on growing the e-commerce business, which will be reflected in its FY22 numbers. Cero under which it had set up two C&D (Collection and Dismantling) centers with two more in the pipeline and one Shredding plant in the coastal belt of Gujarat. While its business may be valued around Rs.300-400 crore, MSTC’s market cap is Rs. 1171 crore with Rs.200 crore cash on the books in FY22.

MSTC posted Rs.200 crore from e-comm in FY20. At this run-rate, it may post a PAT of Rs.75 crore since the majority of its business is repeat business and any increase in its top-line (sales) will directly flow to its bottom-line.

During Q2FY21, MSTC’s PAT stood at Rs.29 crore on sales of Rs.209 crore. For FY20, MSTC’s PAT stood at Rs.99 crore on sales of Rs.1231 crore with an EPS of Rs.13.78. The company has an equity base of Rs.70 crore and reserves of Rs.403

crore. The promoters hold 64.75% while the investing public holds 35.25% stake in the company.

Ferro Scrap Nigam Ltd. (FSNL), a subsidiary of MSTC generated Rs. 46 crore EBIT in FY20 and is in the divestment process as per DIPAM. At 8x, it is valued at Rs.370 crore.


Thanks for starting the thread. This seems to be a good story which is yet to unfold.
A good write up available by Jeevan Patwa on the twitter link below.

Disc: Invested.


Latest credit rating report by care:


This is in spite of 10Cr donation to PM care fund in Q2 Fy21. Read the note 6 in the consolidated statement.

4 Likes Cero ( looks interesting
Do other car manufacturers have such facilities as of now? Can MSTC pe a probable partner with more companies?

Is there any entry barrier to what Cero is doing? Can startups like Cars24 jump in when a scrappage policy comes out?

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Another interesting venture by MSTC -
Launched in FY20

Will the new farm laws open up more avenues for them for online eauction?


Improvement in leverage ratio with significant decrease in debt levels
The total debt decreased significantly from Rs.2,753.76 crore as on March 31, 2018 to Rs.704.58 crore as on March 31, 2019and further to Rs.280.04 as on March 31, 2020 on account of lower working capital utilisation and significant decrease inacceptances. The total debt further decreased and stood at Rs.158.33 crore as on September 30, 2020, a major part of which is the sub-judice liability of Standard Chartered Bank (SCB). The consistent decrease in working capital is on account of
reduction in trading business.**The overall gearing improved significantly from 3.39x as on March 31, 2019 to 1.00x as on March 31, 2020 and further to 0.55x as on September 30, 2020 as a result of reduction in debt levels and increase in net worth.**PBILDT interest coverage improved to 5.44x in FY20 as the company reported profit as compared to a loss in FY19.


Thanks for feedback and sharing the reports.
What is really interesting is they are getting out from traditional trading business and trying to focus more and more in to Ecommerce. The profitability and financial are way better in e-commerce rather than their loss making brick and mortar trading business.

I personally feel that e-acutions is going to be the future in the agriculture trading.
Its in very nascet stage but has long runway.



Entry barrier should not be high.
Recycling is very underpenetrated market in India.Once the policy comes out there would be more participation from other vendors.


One of the kicker for this entity will be if liquidation assets under IBC are auctioned through its platform. Large industrial assets and equipments have to be sold on as is whereis basis, hence without financial burden. Best part of this business model is scalability without significant capex.

Downside is that it is a govt. entity, prone to bureaucratic plagues like corruption and mandate from political masters.

People who know auction business will tell you how cartels manipulate. If MMTC can build its credibility, there is no competition in India.


FYI - I Adding a disclosure in this reply as I am not able to edit the original post.

  • The write up is not created by myself but a friend.
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I disagree with the corruption doubt you have, being an e-auction platform, the effect of corruption will be completely wiped out. No person would want to leave a paper trail. MSTC being an online platform for auctioning could unlock some serious value in the coming quarters.

Discl: Invested


MSTC signs agreement With Uttar Pradesh Financial Corporation(UPFC)

This is waiting to happen since quite some time. MSTC can be the leader in this space with it’s JV with Mahindra.(Cerorecycling).

I have couple of qts to which I could not find any satisfactory answers yet -

  1. Does MSTC have exclusive rights to auction State/Central Govt tenders?

  2. If not, Can a private player/ Startup disrupt this business model of MSTC by more efficiency in model?

  3. If Auto scrappage policy gets approved, will MSTC have exclusivity? or would the auction marketplace will be open to all players?


@darkhorse I am trying to answer based on my limited knowledge.

  1. No…
  2. Yes…always possible…so is with any other business.
  3. No exclusivity…only the early mover advantage.




The other recycling revenue stream - So they procure from customers and pay up-front cash but when a vehicle is scrapped and sold to respective buyers in-value-chain comes the cash ( there might be even lag as they are whole-sale buyers).
That means working capital cycle might not be very favorable when the scrappage policy shows up considering the scale.

Also at this size of opportunity it will surely be a fragmented industry with less entry barriers as many players with cash burning capacity will join also there will be locational barriers as vehicles to be transported to the site for processing, another reason why fragmented players will emerge.

Again no Exclusivity in this revenue stream also.