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State Trading Corporation of India Ltd

| Annual Report for the Financial Year 2024-25

BEARISH SENTIMENT

Report Source

⬤24th Dec 25

Summary : The State Trading Corporation of India Ltd. (STC) is a non-operative government company, primarily generating rental income, facing significant financial and governance challenges due to outstanding dues, legal disputes, and lack of independent directors, while working towards debt settlement and compliance.

Annual Report Analysis & Insights

Financial Disclosures

  1. Total Expenses: Rs. 76.21 crore (2024-25) vs. Rs. 43.36 crore (2023-24).
  2. Employees Benefit: Rs. 30.89 crore (2024-25) vs. Rs. 32.34 crore (2023-24).
  3. Administration & Trade: Rs. 16.14 crore (2024-25) vs. Rs. 13.44 crore (2023-24).
  4. Interest: Rs. 2.01 crore (2024-25) vs. Rs. 1.94 crore (2023-24).
  5. Exceptional Item (Net): Rs. 27.17 crore (2024-25) vs. (Rs. 4.36 crore) (2023-24).
  6. Trade receivables of Rs. 1,69,710.16 lacs (standalone) and Rs. 1,72,533.71 lacs (consolidated) are outstanding for more than 3 years.
  7. Disputed trade receivables with significant increase in credit risk: Rs. 1,06,982.54 lacs (standalone and consolidated).
  8. Disputed trade receivables - credit impaired: Rs. 62,727.62 lacs (standalone) and Rs. 65,551.17 lacs (consolidated).
  9. Total Income: Rs. 125.08 crore (2024-25) vs. Rs. 95.81 crore (2023-24).
  10. Rental Income: Rs. 104.66 crore (2024-25) vs. Rs. 76.92 crore (2023-24).
  11. Interest & Other Income: Rs. 20.42 crore (2024-25) vs. Rs. 18.89 crore (2023-24).
  12. No Trading Profit reported for 2024-25 or 2023-24.
  13. Net Cash Generated/Used In Operating Activities: (Rs. 17,014.30 lacs) (2024-25) vs. (Rs. 2,212.02 lacs) (2023-24).
  14. Net Cash From Investing Activities: Rs. 12,249.41 lacs (2024-25) vs. Rs. 9,463.45 lacs (2023-24).
  15. Net Cash From Financing Activities: Nil (2024-25) vs. Nil (2023-24).
  16. Net Increase/Decrease In Cash And Cash Equivalents: (Rs. 4,764.89 lacs) (2024-25) vs. Rs. 7,251.43 lacs (2023-24).
  17. Claims against the company not acknowledged as debt: Rs. 80,372.94 lacs (2024-25) vs. Rs. 1,02,064.99 lacs (2023-24).
  18. Court & Arbitration cases with parties: Rs. 41,657.12 lacs (2024-25) vs. Rs. 41,614.52 lacs (2023-24).
  19. Sales Tax/Service Tax/VAT: Rs. 47,819.93 lacs (2024-25) vs. Rs. 48,548.84 lacs (2023-24).
  20. Income Tax: Rs. 335.66 lacs (2024-25) vs. Nil (2023-24).
  21. Custom Duty: Rs. 692.55 lacs (2024-25) vs. Rs. 692.55 lacs (2023-24).
  22. Others: Rs. 12,381.97 lacs (2024-25) vs. Rs. 11,209.08 lacs (2023-24).
  23. Net Worth: (Rs. 923.71 crore) (2024-25) vs. (Rs. 955.30 crore) (2023-24).
  24. Total Assets: Rs. 2,35,998.20 lacs (2024-25) vs. Rs. 2,39,078.51 lacs (2023-24).
  25. Total Equity and Liabilities: Rs. 2,35,998.20 lacs (2024-25) vs. Rs. 2,39,078.51 lacs (2023-24).
  26. Current Assets (Inventories): Rs. 4.17 lacs (2024-25) vs. Rs. 4.70 lacs (2023-24).
  27. Current Assets (Trade Receivables): Rs. 1,06,982.54 lacs (2024-25) vs. Rs. 1,06,960.49 lacs (2023-24).
  28. Current Assets (Cash & cash equivalents): Rs. 4,031.75 lacs (2024-25) vs. Rs. 20,059.47 lacs (2023-24).
  29. Current Liabilities (Borrowings): Rs. 80,623.24 lacs (2024-25) vs. Rs. 80,623.24 lacs (2023-24).
  30. Current Liabilities (Trade payables -Others): Rs. 1,09,654.70 lacs (2024-25) vs. Rs. 1,11,775.72 lacs (2023-24).
  31. Transactions with government entities (e.g., SBI, NCLT, various government departments) for rent and CMC.
  32. Rent received from subsidiaries and joint ventures: Rs. 2.40 lacs (2024-25) and Rs. 2.40 lacs (2023-24).
  33. Compensation to Key Management Personnel (KMP): Rs. 174.88 lacs (2024-25) vs. Rs. 154.29 lacs (2023-24).
  34. STC Contribution to Employees Provident Fund Trust: Rs. 155.90 lacs (2024-25) vs. Rs. 161.40 lacs (2023-24).
  35. STC Employee Defined Contribution Superannuation Pension Trust: Rs. 126.95 lacs (2024-25) vs. Rs. 118.79 lacs (2023-24).
  36. STC Gratuity Fund Trust: Nil (2024-25) vs. Nil (2023-24).
  37. Standalone financial results show a net profit after tax of Rs. 25.72 crore for 2024-25, down from Rs. 52.21 crore in 2023-24.
  38. Consolidated financial results show a net profit after tax of Rs. 2,474.52 lacs for 2024-25, down from Rs. 5,107.23 lacs in 2023-24.
  39. Consolidated accounts for FY 2024-25 were approved by the Board at its 661st Meeting held on 17.09.2025.
  40. Subsidiary company STCL Limited's accounts for FY 2024-25 could not be prepared for consolidation purpose due to non-receipt of financial statements.

Corporate Overview

  1. Registered office in New Delhi, India.
  2. Operates through various representative offices across India (Agra, Ahmedabad, Bhopal, Bengaluru, Chennai, Cochin, Hyderabad, Jalandhar, Kolkata, Mumbai).
  3. Operating as a non-operative company with no trading income.
  4. Reduction in net profit due to litigation settlement and MAT credit reversal.
  5. Negative net worth of approximately Rs. 900 crores.
  6. Difficult financial phase, continuing as a 'non-going' concern.
  7. Manpower reduction due to resignations, superannuation, VRS, and no fresh recruitments.
  8. Vacant Functional Director posts, except for Director-Finance and CMD on additional charge.
  9. Government of India (Ministry of Commerce & Industry) for director appointments and operational directives.
  10. Lender banks for settlement of outstanding dues.
  11. STC operates as a non-operative company, ceasing trading activities since November 2020.
  12. Main income source is rental income from surplus office space.
  13. Monitors counter trade obligations as per Department of Commerce directions.
  14. Board expresses gratitude for continued cooperation and support from government entities and financial institutions.
  15. Acknowledges constructive suggestions from auditors and appreciates employee dedication.
  16. Rental Income: Rs. 104.66 crore (2024-25), up from Rs. 76.91 crore (2023-24).
  17. Interest & Other Income: Rs. 20.42 crore (2024-25), up from Rs. 18.89 crore (2023-24).
  18. 113 employees as of March 31, 2025, including 64 managers and 49 staff.
  19. 2 executives on fixed term contract basis.
  20. Recruited one Civil Engineer on fixed term contract during 2024-25.

Risk Factors

  1. Non-operative status limits business growth.
  2. Significant outstanding receivables pose recovery risk.
  3. Lack of independent directors impacts governance.
  4. Material weaknesses in internal financial controls.

Key Drivers

  1. Successful OTS with banks reduces debt.
  2. Increased rental income boosts non-trading revenue.
  3. Government support ensures operational continuity.
  4. Resolution of legal disputes improves outlook.

Auditor’s Report

  1. Qualified Opinion for Standalone Financial Statements.
  2. Qualified Opinion for Consolidated Financial Statements.
  3. Non-current assets held for sale: Overstated due to non-availability of title deeds, non-amortization of leasehold properties, and non-adjustment of value/area in Fixed Assets Register. Impact on profit not quantified.
  4. Trade Receivables: Rs. 1,69,710.16 lacs outstanding for over 3 years, considered doubtful. Provision for bad debts understated by Rs. 1,06,982.54 lacs, overstating profit. No balance confirmation available.
  5. Foreign Currency Receivables and Payables: Not revalued as per Ind AS 21, impacting financial statements. Under litigation/disputed.
  6. Other Current Assets: Overstated by Rs. 3157.74 lacs due to non-provisioning for non-recoverable duties/taxes and claims. Overstates profit.
  7. Provisions: Understatement of liabilities and overstatement of profit due to non-provision for demand from Land and Development Office and interest accruing on it.
  8. Trade Payables: Rs. 1,09,654.70 lacs outstanding for over 3 years without balance confirmation, liabilities overstated.
  9. Statutory Dues (GST & TDS): GST input/payable balances not reconciled, overstating profit. No provision for TDS default, overstating profit.
  10. Investments: Availability/recovery of assets and/or write-off for subsidiary and joint ventures not ascertainable due to non-availability of financials or liquidation status.
  11. Other Equity: Exchange Fluctuation Reserves and Bonus Reserve appearing since long, impact on financials unascertainable.
  12. Contingent Liabilities: Pending litigations and contractual claims from past operations expose company to extensive litigation costs not fully provided for. Ultimate liabilities unascertainable.
  13. Financial statements prepared on a non-going concern basis due to Board decision.
  14. Material uncertainty exists regarding the Company's ability to continue as a going concern.
  15. Internal financial controls over financial reporting are not operating effectively due to material weaknesses.
  16. Company unable to reconstitute Statutory Committees (Audit, Stakeholders Relationship, Nomination & Remuneration, CSR, Risk Management) due to non-availability of Independent Directors.
  17. Only 3 (three) directors on the Board as of March 31, 2025, with no Independent Director.
  18. Only 3 (three) Audit Committee meetings held during the Audit Period.
  19. No minimum Independent Directors appointed in the Board meeting on February 7, 2025.
  20. Compliance officer not one level below the Board of Directors as per SEBI (LODR) Regulations, 2015.
  21. Non-compliance of Regulation 33 SEBI (LODR) regarding timely publication of Financial Results for consolidated accounts.
  22. Subsidiary company's financial statements not audited by the same auditors, and not available for consolidation purpose.

Board Commentary

  1. Shri Nitin Kumar Yadav appointed Chairman & Managing Director w.e.f. 28.04.2025.
  2. Smt. Anoopa Sankarankutty Nair appointed Director (Finance) w.e.f. 05.06.2025.
  3. Shri Hardeep Singh ceased as CMD w.e.f. 27.04.2025.
  4. Shri Kapil Kumar Gupta ceased as Director (Finance) w.e.f. 30.11.2024.
  5. Seven Independent Directors ceased to be directors on various dates in 2024-25 due to completion of tenure.
  6. Smt Arti Bhatnagar to retire by rotation at AGM and offered for re-appointment.
  7. STC sought exemption from paying dividend from DIPAM due to not undertaking business activity and having negative net worth.
  8. Dividend Distribution Policy formulated as per SEBI Regulation 43A and DIPAM guidelines.
  9. Policy aims to balance profit distribution with internal accruals for growth.
  10. Considers future capital expenditure, profits, funding costs, cash flow, and taxes for dividend decisions.
  11. Minimum annual dividend of 30% of PAT or 5% of net-worth, whichever is higher, as per DIPAM guidelines.
  12. Risk Management Framework in place for assessing business proposals and identifying mitigation measures.
  13. Anti-Fraud Policy implemented to enforce controls and prevent/detect frauds.
  14. No exposure to volatile commodities/market conditions as no business activities undertaken.
  15. No hedging activities undertaken due to cessation of business operations.
  16. Litigation settlement with M/s Adani Enterprises led to profit reduction.
  17. Case filed by Lead banker Canara Bank against STC in DRT withdrawn after OTS completion.
  18. Ongoing follow-up with lender banks for One Time Settlement (OTS) of remaining dues.
  19. Compliance with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
  20. Compliance with Companies Act, 2013, regarding CSR activities and public procurement.
  21. Anti Sexual Harassment Policy in line with The Sexual Harassment of Women at Workplace Act, 2013.
  22. Compliance with Right to Information (RTI) Act, 2005.
  23. No public deposits accepted during the year, so Chapter V of Companies Act, 2013 not applicable.
  24. No loans, guarantees, or investments made under Section 186 of Companies Act, 2013.
  25. No contracts or arrangements with related parties under Section 188 of Companies Act, 2013, due to non-operative status.
  26. CSR budget of Rs. 27.30 lakhs for FY 2024-25 utilized in PM CARES Fund.
  27. Procurement worth Rs. 4.90 crore of goods and services, over 95% from GeM portal.
  28. MSEs accounted for 15% of total procurement value, including Rs. 0.24 lakhs from women entrepreneurs.

Corporate Governance

  1. Code of Conduct for Board Members and Senior Management in line with DPE guidelines.
  2. Code of Conduct for Prevention of Insider Trading implemented.
  3. Whistle Blower Policy framed and implemented.
  4. Anti Sexual Harassment Policy in line with relevant Act, with an Internal Complaints Committee.
  5. Policy on Preservation of Documents and Policy on Materiality of Related Party Transactions in place.
  6. All Directors are appointed by the President of India through the Ministry of Commerce & Industry.
  7. No Independent Directors on the Board as of March 31, 2025, due to completion of their tenures.
  8. This non-availability of Independent Directors impacts the composition of various Board committees.
  9. Audit Committee, Stakeholders Relationship Committee, CSR Committee, Nomination & Remuneration Committee, and Risk Management Committee were constituted.
  10. No Board level Committees were in place as of March 31, 2025, due to non-availability of Independent Directors.
  11. Audit Committee did not comprise minimum number of Independent Directors, resulting in non-compliance.
  12. Nomination and Remuneration Committee did not comprise minimum number of Independent Directors.
  13. Stakeholder Relationships Committee did not comprise minimum number of Independent Directors.
  14. Risk Management Committee did not comprise minimum number of Independent Directors.
  15. Non-compliance with SEBI (LODR) Regulations regarding Board and Committee composition due to lack of Independent Directors.
  16. Non-compliance with Regulation 33 SEBI (LODR) for timely publication of consolidated financial results.
  17. Secretarial Audit Report not yet received as of the Annual Report date.
  18. Compliance officer not one level below the Board of Directors as per SEBI (LODR) Regulations, 2015.

Management Discussion & Analysis

Future Strategy

  1. Continuing as a 'non-operative' company as per Ministry of Commerce & Industry directives.
  2. Reviewing potential areas for cost reduction and generating rental income from surplus office space.
  3. Expediting finalization of One Time Settlement (OTS) with lender banks for remaining dues.

Macroeconomic Outlook

  1. Global economy grew moderately at 3.2% in 2024, facing geopolitical and structural challenges.
  2. Inflation, geopolitical uncertainty, and cyber risks will shape the global economic environment.
  3. Indian economy grew at 6.54% in 2024-25, driven by domestic demand, easing inflation, robust capital markets, and rising exports.
  4. Agriculture sector expected to rebound with 3.8% growth in FY25 due to healthy Kharif production and monsoons.
  5. Industrial sector estimated to grow by 6.2% in FY25, supported by construction, electricity, gas, water supply, and other utility services.
  6. Service sector expected to remain robust at 7.2% in 2024-25, driven by financial, real estate, professional, public administration, defense, and other services.
  7. FDI inflow increased by 14% to approximately USD 81 Billion in FY 2024-25.
  8. Current account deficit contained at 0.6% of GDP due to strong service exports and remittances.

Operational Focus Areas

  1. Monitoring counter trade obligations as per Department of Commerce directions.
  2. Maintaining harmonious industrial relations and improving personnel policies/welfare schemes.
  3. Implementing Government of India's directives for SC/ST/OBC/PWD recruitment.
  4. Nominating employees for various training programs and vigilance awareness.

Performance Drivers

  1. Rental income is the primary source of income, increasing to Rs. 104.66 crore in 2024-25.
  2. Successful one-time settlement (OTS) with lender banks, paying Rs. 200 crore and withdrawing legal cases.

Risk Control Measures

  1. Regular follow-up with Department of Commerce for appointment of Independent Directors.
  2. Ongoing review of litigation cases and assessment of their merit for appropriate accounting treatment.
  3. Seeking expert opinion for tax-related issues and approaching tax authorities for resolution.
  4. Manual intervention in Tally software for accounting entries where systems are not interfaced.
  5. Continuous review of contingent liabilities and assets based on legal outcomes.

Critical Risks

  1. Non-going concern basis of financial statements due to cessation of business activities.
  2. Significant trade receivables outstanding for over 3 years, considered doubtful of recovery.
  3. Non-revaluation of foreign currency receivables/payables, impacting financial statements.
  4. Overstatement of non-current assets held for sale due to non-amortization of leasehold properties.
  5. Understatement of liabilities and overstatement of profit due to non-provisioning for demand from Land and Development Office.
  6. Non-compliance with SEBI (LODR) Regulations regarding Board and Committee composition due to lack of Independent Directors.
  7. Ineffective internal financial controls due to non-interfaced accounting software and lack of full-time working directors.
  8. Unreconciled GST input and payable balances, overstating profit.
  9. Unreconciled TDS deducted, with no provision for default, overstating profit.
  10. Uncertainty regarding recovery of investments in subsidiary/joint ventures due to their non-operative status or liquidation.
State Trading Corporation of India Ltd (STCINDIA) Annual Report Analysis & Insights | Dhanarthi