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MSTC Ltd
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Ladies and gentlemen, good day, and welcome to the Q2 FY '21 earnings call of MSTC Limited, 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, sir.
Thank you, Bilal, and good afternoon to everyone on the call. On behalf of Equirus Securities, I would like to welcome you all to the Q2 FY '21 earnings conference call of MSTC Limited. From the company, we have with us the senior management team, including Mr. Surinder Kumar Gupta, Chairman and Managing Director; Mr. Subrata Sarkar, Chief Financial Officer and Director of Finance; and Ajay Kumar Rai, Company Secretary and Compliance Officer. Without wasting any time, I would like to hand over the call to the management team for their opening remarks, and then we can open the floor for Q&A. Thank you, and over to you, sir. Yes.
Yes. Good afternoon, everybody. You are able to listen, clearly, I hope. You see the company, the business has picked up in second quarter as compared to the first quarter because of the COVID impact. The results -- the comparison between the first quarter and second quarter is very prominent. But nevertheless, we are still slightly away from the first quarter results for the last year, '19-'20. But the -- in the second quarter also, we could not exceed the first quarter of '19-'20. I see the first quarter of '19-'20, or at least equal because of the effect of COVID-19 only. So the month of, let's say, April, May, June were totally almost total wash out. July was also very weak for us, but the things started improving from the August onward only. So September was the -- basically the full month of operation, where we have -- if we have a comparison -- see the comparison of month-to-month, so September, we did much better as compared to September of the last year. Similarly, this similar trend is being washed in the October also. So we are hoping that whatever shortfall was there in the year '19 in the first quarter, we'll be making all efforts, and we are hopeful that we'll be making good shortfall. This is as far as the -- your parent company, MSTC is concerned. Regarding our subsidiary FSNL. There, also, the story was similar. Their operations were affected as the operations of steel plant also. So there also the green shoots are visible. And they also have performed much better in the second quarter. And we are hopeful that, that performance will be repeated in the third quarter and fourth quarter also. Regarding our joint venture company, MMRPL. So it was basically the losses in the last financial year. But now as far as the current -- if we talk about the second quarter, it is almost on the verge of making profit. So we are able to basically more or less recover the operation cost and could be in the third quarter, our [ just ] of the joint venture company, there will be a token minor profit we are expecting as the trends -- we are getting -- we are getting more vehicles and there are plannings for further expansions also, which we'll be telling you as and when the plants are set up. So 2 plants currently are working, and we are hoping to start few more plants. Much depends upon the Government of India scrapping policy, vehicle scrapping policy also. So we'll be waiting for that also -- will be waiting by years, but basically putting much investments in the venture. With that, I'll conclude my opening remarks. I will leave more time for the question-and-answer session, please.
[Operator Instructions] We have a first question from the line of Dixit Doshi from Whitestone Financial.
Firstly, one small clarification. So we were targeting to do no more business from our marketing division from August onward. So from Q3 onwards, there will be no revenue from trading business. Is this right?
No. You see -- I mean if you see the marketing H1 last year and H1 current year, there is a down of 82%, right. So now we are not entering into any fresh agreement for the marketing. So -- but our order commitments were there. Yes, they will continue for the current year also and could be small portion of it goes to the next financial year also in the associate model. But that is the -- I mean, these are the transactions, which are basically totally safe transaction, either backed by 110% BC or in the associate model, there is no risk asset, which was in the cash and carry model. So as cash and carry is totally stopped, so 110% BC and the associate model, some spillover will be in the 2 quarters of the current financial year. And could be some spillover in the next financial year also, where the obligations are in the long-term contracts, some obligations takes time for the supplies to be complied and the payments to be received. So debt will be there, but that business, I mean, that is -- that will be, again, decreasing and also that is basically safe business model, and we don't perceive any basically risk as far as those models are concerned.
Okay. So it's just that whatever a long-term agreement we have, we are going to execute till mid of next year and no new orders we are doing.
Exactly. [ Find ].
Okay. Secondly, sir, in this presentation, you have mentioned that this -- for the first time, we have done the selling of seeds for Chhattisgarh government. So one thing is how this can be scalable for other states also? And related to that, after the Farm Bill, can we say that the opportunity in the agri sector is far more bigger because now the farmers can sell to anyone?
Exactly. We see a lot of opportunities in the agri sector, and we are getting queries also for all kinds of agri products. And this however -- we have a -- I mean [ either come in ] all these portals are working satisfactorily, and we are doing good business with NAFED and conversation with the CCIs and other [indiscernible] and all those organizations where we are trying to get the business. Apart from that, we have that [indiscernible] for the agricultural ministry. So there also, I mean, basically, the main issue are the logistics. So we have already -- we are tying upon the market facilitators. Initially, we're not getting good scope with this new [ piece ] coming up so people are very hopeful. And we are hoping to rope in some market facilitator who will be basically bridge between sellers and buyers and using -- who will be using the MSTC app while selling the agriproducts. This is an highly difficult business. I mean the margins are not that large, and it is a basically new field for MSTC. So we are seeing basically revenues, not in the very near term, but medium term on the long term, we feel there is large potential, but that has to be properly nutshell.
Okay. Yes, sir. Sir, in terms of private players. So obviously, we are still predominantly doing for PSUs or a state government. But in last 1 year, we have done many tie-ups with the private players also. So how we are doing -- how we are seeing the pricing from private players? And how big that opportunity can be?
You see, our focus is not -- I mean because most of the time, we have been doing business with the government. When we do -- I mean the government, there are certain kind of checks and balances and certain -- I'll say, kind of comfort with us. So when we enter into a deal with private concerns, so we make sure that is a well-known entity, right, and has got good market reputation. There have been a few instances where we have tied up with the private party and they do the rate discovery on our portal and then do the business directly with the people. So we don't want to -- we want to avoid that kind of scenario that we provide the services, but we don't get any service charge. So there we move cautiously. But we are getting few queries on that also. And we'll be focusing more. But the main focus will definitely remain towards the government sector, but we will try to expand our footprint in the private sector also.
Okay. And sir, in terms of our balance sheet, so one question was related to if I see your FY '20 annual report, there is -- in other financial liabilities, there is 2 big amount of security deposits, A and B, INR 454 crore and a deposit from customer INR 111 crore. So if you can just break this up in terms of how much of this is related to our trading business and how much of this will -- is related to our e-commerce business?
Good afternoon, gentlemen. I think you are referring the figures as on March 31, isn't it or the current?
Yes, this was for March 31 because currently, in September, I don't have the breakup. I just have the other financial liability numbers.
Basically, if you can remember that while there was a similar question at that particular point of time. And we clearly replied that it is basically a commingled sum. Because we take the security deposit and take deposits basically from the customers from this e-commerce segment as well as from the marketing segment. It is basically commingled sum. There is no -- as such in the balance sheet, there is no segregation per se about this is -- how much is there in the e-commerce and how much it is for the trading. So it's basically a commingled sum that is appearing in our financial statement. So we take up the deposits in both segments.
Okay. And on a stand-alone annual -- stand-alone balance sheet, can you just give the receivables breakup?
These receivables are -- receivables, what we can say that in the stand-alone, we have now reduced from 4-digit to 3-digit. As we have promised earlier in our con calls also, so we are on that -- on the reduction mode in this marketing business and gradually shifting towards this e-commerce segment. So basically, if we can say, now it is around INR 920 crores now that is appearing in our stand-alone balance sheet. So out of it, around 70-plus -- INR 70 crores to INR 80 crores is for e-commerce and the balance is for the trading business. And out of that, only that -- we have already -- our CMD sir was already explaining that key -- the majority of that marketing asset, it all belongs to the safe business that is backed by 110% BC. And this associate business, only 100-plus something of the -- is left out in that risky cash and carry business that we are trying to put it down. And it will be -- hopeful that it will be gradually going down.
And just one last question. So -- I mean, and in terms of short-term borrowing, it's now showing only INR 150 crores. So I assume that majority of this is Standard Chartered loan. So as and when that will be settled, we have to pay or not pay. And the other -- rest of the loans we have already paid.
Yes. Absolutely right. The majority of this is -- of the Standard Chartered loan that we have provided for. And it is sub-judice and the maturity of which depends upon the outcome of the court verdict for which we are fighting at various forum.
[Operator Instructions] We have a next question from the line of [ Srinivas Reddy ], an individual investor.
Good evening, everyone. And regarding -- the last time when we spoke regarding this provision, so you were telling some INR 160 crores you were expecting. Now what is the latest quarter thing, which you are expecting for that amount for provisions, for the total? This quarter, I think you have provided only INR 5 crores -- some sort of INR 5 crores around. So that is the thing.
Yes. [ Mr. Reddy, ] let me tell you that we have got now a provisioning policy by which we are now providing this -- only for this -- basically for this cash and carry model in a staggered manner as and when it is required, although whether required or not, but it is doing in a very staggered manner. So every quarter, we are putting some amount as a provision. So that does not key -- does not [indiscernible] in particular -- as a policy matter in a particular quarter. So as already disclosed and you have mentioned, it is now around INR 113 crores, INR 114 crores and odd left in our balance sheet. So as and when -- as it is realized and chiseled out through provision, so almost a small, small amount of provisions will be there for this amount only, basically, this amount only. And for others, in the 110% wage, no provision is required -- for the associate model, no provision is required. For e-commerce, very municipal provisions are required. It is very, very municipal as compared to the total business.
Yes. My other question is regarding these amounts of earlier bad debts and recovery cases, sir. Is there any positive news on those things, I mean, you're expecting or how much time more it might take?
Yes. So far, that we have written off in the earlier books of accounts. There is nothing substantial to report to our shareholders. So we are trying and having a fierce battle to -- legal battles to recover the same. So as of now, there is no substantial recovery. Whatever recovery was there in the last year in which we have already disclosed in the last year's balance sheet. That's the last one that we have recovered.
Okay. Last question, sir, regarding this FSNL, your subsidiary, Ferro Scrap Nigam Limited, FSNL, this investment or divestment sort of, sir. Is there any base price? Or what is the mode in which, I mean, you are expecting it to auction base prices? Or any -- if it is there, can you let us know?
Yes. The basic thing premises is like that. It is being handled by the Government of India, the Department of Investment and Public Asset Management. So right now they have advertised for the post of transaction adviser, asset valuer and legal adviser. So one of these 3 main -- I mean, key personnels are discovered through open tender. Then only they will -- the Government of India will fit and have their valuations and everything. And only then the things will be decided and the process will get started. So nothing so far is there in the MSTC's yet, it is all being -- the decisions being taken by the Government of India only.
Okay. And you have no idea of internal expectation of your own?
So no, no, no. Basically, it is a system-driven thing. There is no question of ideas on all these things, that there is a scientific process. So until unless there is a transaction advisor, there are -- asset valuers are there. They will do the evaluation as per scientific and approved norm of the DIPAM and present accounting norm. Then only DIPAM will take that call as per the extent procedures of Government of India.
[Operator Instructions] We have a next question from the line of Rushabh Shah from Equirus Securities.
Congratulate on a strong set of earnings for the last quarter. So I think my first question will be in terms of trading business. Now this quarter, obviously, we saw a little bit higher volumes compared to, I think, last 2 quarters. So can you just give a brief color? Or maybe can you quantify how much of contractual commitment we still have over the next -- second half of this year and maybe over the initial quarters of FY '22? Just maybe in terms of slight color or quantity, how much of that business could be equivalent to 2Q or maybe higher than that?
You are talking about the volumes?
No, sir, basically, basically, the trading business that we have done I think this quarter, it was, overall, the revenue from trading business was higher on a sequential over the last 2 quarters.
No, no, no. You see revenues are going down the trading, whatever trading, you are looking at in the segmental reporting, basically, this is outstanding because we report our interest from the customer in other operating revenue. So the -- it is on that front only, we have got certain outstandings, and we have earned a little bit of interest. So far, the revenue from that main operations are concerned, in the trading, we have done not better as compared to other quarters. And so far, e-commerce is concerned, of course, e-commerce has done a very good data, it shown a very good show. Overall, good show this quarter. In all of our segments like scrap sale, e-sale, in all the quarters we have done with, so far, we have done well. And it all depends how this quarter, I mean, we do because things are going and things are now a little bit picked up, as we can see from our August and September trends.
Great. Great, sir. So just wanted to get a clarity on that marketing segment now. Are we entering any new agreements or that has been completely stopped? And it just that old agreement so it what we are now come -- doing the business?
Categorically, in his opening remarks, our CMD sir has categorically told that we are now only servicing our old commitment, no fresh or new agreement has been entered into. Only -- again, repeating the only -- the whole commitments have been carried out. Still, that, I mean, is completed. A little bit of transactions will be there.
Perfect. Perfect, sir. And just a bit of color on e-commerce. So I think last quarter, you gave, I think, a broad guidance that maybe 2Q and 3Q performance will be largely in line with what we did in the previous year same quarter. So maybe we can expect that now 3Q and 4Q will be a bit better than what we did last year?
So -- which is very difficult, Mr. Shah. It will be very difficult to even tell right now. But the trends -- the trends early suggests that we have done pretty better in August and September. So trends are there. So let us see when we will meet in the month of February to late January and February to explain you the things. But things are generally -- it's the general trend that we do better in the last quarter. Generally, it happens because March is always a good month for us. It is a general perception and trend in our business.
Great, great, sir. And just wanted to get a brief on how that whole scrap business is doing? Because I think we have even this time, given note about that whole government of Daman & Diu also. How have things been picking up at the scrap business?
I think CMD sir will be explaining it in a better way.
If you see a comparison of stand-alone financials for H1, this -- we are down in various sectors. But scrap sector, we are basically down by around 13% as compared to INR 741 crore, we were INR 643 crore in the -- sorry, millions in the current second quarter. And if we see -- I mean, if we see compared from the first quarter, the first quarter was almost washout because there was no business activity. So majority of the sorting is in the -- basically in the second quarter only. There are 2 things, I mean, in scrap. We are having the maximum basically service charges. The scale -- the service charges depend upon product-to-product, model-to-model. But in the scrap, we are having the good amount of service charges. It may vary from 1.5% to even, I mean, in very rare cases, up to 5% or even 10% also depending upon the volume, a principal is ready to offer us. So for good volume, we are getting a lesser percentage, but our incomes are large. So it depends upon the quantities as well as the rates in the market. The last year were not very good as far as the steel rates are concerned. But the current -- especially the second quarter, the steel rates as well as the scrap rates have been much better. So this is resulting into better revenues for service charge, specifically in this scrap base. So here, we are very hopeful that -- and as the economy is going up, the automobile sale is picking up. The steel sector is doing very good. The cement sector is doing very good, construction activities have picked up. So we are hopeful that these trends will continue. But again, these are the trends only. What will happen after the festival season is still not very clear. So much will depend upon how the situations emerge, but as these things stand today, scrap, we are hoping to do better, and we are trying to enter new more agreements. Like there was 1 question about how we deal with the -- our focus on the private. So this OIDC Daman, we have done one contract through their public sector company. But there, we are basically selling the scrap of the private people only for the industries like Dabur and many other good names also. So there, we have entered more than 150 agreements with the all sorts of private players. So there, that model, we are still watching. And we'll be making efforts to do such similar kind of agreement with other state public sectors. So that the -- I mean, basically, the industrial zones or the such kind of zones, there the scrap can be harnessed. This helps not only the revenues for us, this helps the government also, because the scrap market is basically more or less the -- some sort of the taxes are among -- these are basically, I'll say it, it's basically cash kind of transactions are very prevalent. So this -- all these transactions come into the e-businesses and the -- all -- whatever taxes are required, those are paid to the government, and we also earn a bit on it. Apart from that, whatever hazardous materials are there, where environmental regulations are there. So we take care that those materials are sold only to the people who are registered licensed holders. So there, again, will be -- basically, the small, small steps will be tried by the MSTC for getting better revenues from scrap sector. Thank you.
Great, great, great, sir. And just last one on the business front. So while I think we have been, I think, adding more and more farmers under [indiscernible] initiatives which we have started. So just any update on that part. So how that has been go through -- growing? And how soon we can expect revenue and sizable revenue, maybe whatever the value will be, how soon can we get -- start getting revenue from that business part?
I would say that you see, agri commodity is a very price-sensitive commodity and our poor agricultural farmers are involved. So there, the service charges per se are not significant for us. They are very small. So we are basically depending more upon the volumes. So I'll say that we are trying to increase the volumes. And -- but as far as the service charges are concerned, it might take some time for a sizable value for the MSTC because there are -- you see, what happens is we are working in a competitive environment. So there, the -- there are many private players also who are -- although the service charges of MSTCs are also low in those kind of space. But those people are basically ready to do it lower -- a very, very small -- or even much smaller service charges compared to MSTC. So we are always taking the -- we have to compete basically those kind of players. So that is why the service charges rise. It may not be that significant. But that will give us good name. And if this agriculture policy of the government, we are able to open the other kind of crops could be when the times -- to come, then we can expect some better revenues. But as of now, nothing definite can be predicted.
Very great, sir. And I think the last question from my end will be Subrata, sir. So just on the receivables part. So while I think we have brought down receivables sizably in the last 2 quarters with that whole ramp down in trading business. But are we on track of the earlier guidance that we provided for bringing down large number of receivables maybe by end of first half of FY '22? So are we still positive that large number of receivables will be getting out from our balance sheet from maybe in the -- by the second quarter of FY '22?
Yes. Of course, we are on that particular part only, which is basically a simultaneous exercise. At the same -- at the one hand, we are exiting the marketing business and the co-effect, consequential effect, financial effect, these receivables are trimming down. So basically, simultaneously, they are going down, and we are so consciously on that particular part. And we hope that we are on the right track. And of course, we will bring it down by the next FY, FY '21-'22. And a very slimmer size of trade disposals will appear in our financials.
Great. Great. So just to follow-up on those receivables part. So now I think last quarter, we had some under INR 110 crores to INR 115-odd crores of receivables from cash and carry, which are still sizable, roughly at around INR 100-plus odd crores you mentioned this time around. So maybe according to the policy hiring, which you are following for that whole provisioning thing, can we expect this amount maybe coming up in couple of quarters? Or will there be chances of better recovery from this INR 100 crores amount also?
Yes, it is actually -- we are due to this COVID phenomena. We are a little bit behind by at least 2 quarters because the March quarter and the June quarter, nothing substantial happened. There was no, in fact, less commercial activity or minimal commercial activity. So we are expecting a little bit of recovery out of that. So -- and that outcome, of course, we will get a trend at the end of this third quarter, the third quarter. Then only will be in a position to, I mean, predict and/or other projects, what will be the scenario. So let's -- we are watching it very, very cautiously their movement in this particular quarter, and this quarter is very important for us, so far, this recovery is concerned. Because the businesses have just now picked up and the commercial activities are also going on in the full -- almost in a full manner in the whole country that we can perceive. This -- basically, the steel sector is also well that we can get from this second quarter results. So let us watch this quarter, then we will be in a position to -- in a better position to project these things.
[Operator Instructions] We have a next question from the line of Dixit Doshi from Whitestone Financial.
Sir, if I see our revenue in e-commerce business, it was, let's say, around INR 190 crore to INR 200 crore in FY '20. And '21, I'm not considering because we have this COVID-related issues, and we might not do that much revenue in FY '21. But going forward from FY '22 onwards, what kind of growth rate we can do in e-commerce business, given the opportunity in private sector, agri, even the bank's NPA asset. So whatever opportunities we have from FY '22 onwards on e-commerce side, what kind of growth rate we can do on an annualized basis, let's say, for 2, 3 years?
You can see from our trend, you have rightly pointed out, let us exclude this year as an exceptional year, absolutely right. Because of this COVID phenomena, it is not comparable. But you can see the past in also. So the growth was around 10%-plus, growth was there because 150 to 160, 180 then we had crossed 200 also. Last year, due to a COVID, we stepped to 182. So this year, the growth is also even where first quarter are washed out; second quarter, the growth was -- I mean, of course, of the similar line. So opportunities are very high, but there are 2 very, very important criteria. One, we have to -- we are trying to set up volume, so that the competition on our -- I mean earnings, right, service charge that we earn is minimized. Because until unless we check up our volumes, we cannot sustain the competition. So that's the strategy that we are taking up, we are going for higher volumes. And hopefully, again, having a close watch, so we feel that there will be of course growth in this FY '21-'22. But only the first quarter or the last quarter of this year can give us that direction because the market has just now stabilized and which way it will go up, it is very difficult still now to say because a little bit of COVID is still there. I mean it is showing its -- the collapse. So I mean the March, let us wait till March. And of course, from the next quarter, we will be able to see some kind of the thing there. But of course, whatever the business growth and whatever we do there in MSTC, it will be e-commerce-based growth only.
Okay. Okay. Sir, one more question was related to the -- so what we do with the NPA assets of banks. So we do the e-auctions of the properties. In one of the advertisement in newspaper, I saw that State Bank of India had advertised for the e-Auction. And there, there was -- for registration, there was 2,3 price mentioned. So one was obviously MSTC, but they had mentioned their own portal also, SBI's portal. So if somebody log in there, then we don't get anything?
Basically, what happen is there are 2 kinds of things. One is the central agreement through Indian Banking Association, IBAPI. So all the public sector banks are also putting their such kind of properties on IBAPI site. So from there on, the properties come to MSTC side where the actual option is there. Before this IBAPI thing came up, the banks were selling their such kind of NPA property through various other private operators like TenderWizard or so many other private operators. Because this is a slightly late phenomena, this agreement was entered in the favor of the last financial year and then this first half. So few banks are continuing to sell their property through the other portals, but that trend is continuously decreasing now. Now more and more properties are coming. I don't have the exact amount of the figure, but now we are getting much more properties from the banks for selling. So slowly, the public sector bank will not be selling any properties through the private portal, and we are talking with the DFS, Department of Finance, also for discouraging the bank to sell their property through other means other than MSTC. Through other portals, except MSTC, as per the agreement we have with them. So it is basically the transition phase where few banks are continuing with the old also. But eventually, they all have to come through MSTC portal only.
Okay. And sir, last question, during this quarter, we conducted the commercial coal mines auction. So was there any one-off lumpy service income in our e-commerce segment due to this?
No. Deal auctions, you see, there were 2 parts of this auction. One was the technical bid and technical auction. The -- basically the business as per the agreement with the Coal Ministry, we get the service charge only after the successful completion of the auction. So these auctions have been completed only yesterday. Right. So I mean, you must have read in the newspaper. It has been a good success, and the state government will be sharing a revenue of around INR 6,657 crore -- INR 67 crore -- INR 66,570 crore, every year. But our service charges will be coming in this -- I mean, hopefully, third quarter only. Then other mines also will be coming the -- as we discussed with the Coal Ministry. So eventually, whatever the mines are [ come ]. So -- but the business model, the agreement is that it is on the successful sales basis only. So when the mine is fully sold only, then we can do the billing. So this will be done...
So on Q2 numbers, there was no impact of the coal mine auction?
You see these -- basically, these are our total e-processes, right. The total e-processes, and these are basically -- not depending upon the physical kind of thing. So that is why the government could initiate these options. Therefore, government took steps so far changing all the statutes, regulations and do the commercial -- I mean, coal mining, despite a lot of resistance from many other stakeholders. But with this successful conduct and where the prices are received, there was very competitive bidding and the prices these mines have held are much better than the government was expressing. So I hope this model will eventually give good return to the country and also some part of it may come to the MSTC in the form of service charges that we charge for the sale of mines.
[Operator Instructions] We have a next question from the line of [ Bushin Patni ], an individual investor.
You were saying that the revenue growth could be -- the potential is 10%, around 10% of that. Don't you currently aim for higher revenue growth going forward? Right, let's say, 15% to 20%, something like that. The potential for MSTC is very good.
That's right. I mean we always -- we said we will always try to get more and more growth. But as far as production is concerned, we cannot predict whether it will be 10% or 15% or 20%. So that depends upon so many factors, but our efforts will always -- management efforts will always be because as we get out of the marketing business totally, so our main focus will be on e-commerce only. So won't be making hard efforts for increasing our recall commerce business and value to shareholders.
Okay. Okay. So it's more or less dependent on GDP growth. Can I say that?
Yes, I mean you see, we are all working in a basically very interdependent kind of things. So if the economy is doing good, if the prices are good, if the market demand is there, definitely, MSTC will get some pie out of it.
Then MSTC can grow higher. Correct? In that case or scenario? If economy is good.
That's right. You see everything is interdependent.
Yes, yes. Okay. And sir, [indiscernible] provision. Will there be any more provisions in this financial year or upcoming financial year?
No. You see, we have here, as our Director Finance has explained, that we have formulated the provisioning policy and as for the provisioning policy, we are basically staggering our provision. So that it doesn't affect in one go. So there will be provisions in every quarter as for the provisioning policy. So there will be -- but that will not basically come like a hammer to us, that very large provisions come in one quarter. So that will be progressively -- whatever provisions are there, so that will be progressively spread upon 2, 3 years, so that the balance sheets are okay. They are able to basically bear that kind of losses, I'll say.
Okay. Okay. So there could be some bad debt?
Yes, there is -- the provisioning policy, there will be some provisions.
Some provisions. Are there -- mainly it's coming from marketing side, marketing segment?
Well, already, we have -- we were -- during this con call, we were explaining that see, we are still left with some old data, which were there in the cash and carry segment, which were a risky and [ risk roll ] segment. So basically, the -- I think the provisions are basically mainly coming out of that segment only. So being that is totally realized or provided for, EBITDA provisions for the policy will be there. And nevertheless, even in any business, there would have, as CMD sir has pointed out, there is a probability of having a yield, but it will be a very, very meaningful in size and not affecting the much more -- this bottom line for the company in the near future, but of course, these trading data which are left out that's -- that is, of course, a risk prone and we'll declare provisions as per the policy.
Okay. Okay. And what would be the tax rate going forward?
Pardon?
Tax rate. Tax rate.
I wouldn't get.
The tax rate, tax rate going forward.
Tax rate. It is where it is. You have to ask our regulators only -- whatever the law of the land, whatever the tax rate they have. We will...
It's around actually 25% generally for the company, around 25%, 26%.
Whatever the tax -- and because a lot of deductions are there, a lot of -- balance sheet as per companies act and balance sheet as per the [indiscernible] the income tax are different. There are certain additions and there are certain deductions for income tax. Depreciation is totally different. So whatever it is, as per the law of the land. We have no control over that in the taxation base.
Okay. Okay. And will you try to become debt-free or something like that is in the works?
Yes, it all depends upon because as of now, we are working -- we are housing [indiscernible]
You have INR 400 crores actually of cash, right, on the balance sheet right now?
Yes, yes, yes. We are moving towards our e-commerce business. So which impacts a little lesser capital requirement. So of course, this debt requirement will be less in this [indiscernible]. As of now, what we foresee? If we diversify in the near future in the e-commerce segment also, and some kind of -- then the future will tell. But as of now, the requirement is very miniscule.
Okay. So that will reduce or will it stay here? You have INR 400 crores on balance sheet, right, cash. So will you use that for a reduction of debt? Or it will stay there right now looking for opportunities or something like that?
Yes, if you can see the -- you have got certain liabilities also. But you can see the financial assets as it [indiscernible] that balance sheet in the asset side. You can see that there are certain financial liabilities also there in the balance sheet, that we can reach from the balance sheet. So it's the kind of working capital cycle. And of course, it's on how you manage your CAGR. So once we can utilize our cash to reduce our credits also. So it depends upon the situation. As we have already explained in the RDS' cases also, it depends how we balance our creditor. Accordingly, much of this will depend upon the creditors repayments.
Okay. Okay. And e-commerce working -- you were saying e-commerce working capital is low. So what's this working capital settle days on e-commerce site?
Typically, we -- basically, you can see that from the P&L -- last year's P&L also, we have asked an overhead, basically the salary and overhead cost of around INR 100 crores. So that's the thing. That's the cost with this scale at -- with a certain scale of operation, this will hover around INR 100 crores and INR 100 plus, a little bit of INR 100 plus/minus.
Sir, if you grow, your e-commerce then grows?
That's a requirement. That's the requirement.
Only that only INR 100 crores, that's the requirement. That's it...
Yes. So you can see that the evidence from the P&L is still holding.
Okay. Okay. So whole bank...
And what our Director Finance has said. And in reference to your queries, manpower is our main asset. As far as the e-commerce is concerned. So the -- whatever our expenditure will be there and we see the purely e-commerce stands only. The sizable part will be on the manpower only, right? So the manpower is doing certain transactions, doing some auctions. There, we are getting certain revenues, and we are paying the salaries, right? So there, the cycle is maintained. We get something, we spend something. So we don't need basically, we spend on the infrastructure. The infrastructure spends are not that large. Could we upgrade our data center, hardware, software, licensing fees, so those kinds of expenditures are there, but these are not the sizable expenditure year after year. So basically, whatever our earnings, we are able to pay salaries from the earnings only. So as far as the debt -- I mean, if we have that pure business model, remove the marketing obligations or other bad things from the balance sheet. So it will be sort of debt-free kind of environment. But because of the very -- I mean, some old commitments, the old marketing losses, so some debt may remain, but that eventually will be decreasing year after year.
As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
So thank you very much for the questions. We hope that we were be able to satisfy the cause of our investors in the near future also and wishing you a Happy Dussehra and Happy Diwali in advance. Over to you, CMD sir, for closing remarks.
Thanks, everybody, for showing the interest. And your encouragement will always be beneficial for us. And we get -- I mean, whatever interaction we are having, we get some ideas from those interactions also. And definitely, we, as a team, MSTC will be working for increasing the shareholders' value and will make all of us so that whatever sales we have set imposed in the MSTC management, MSTC company. So we'll try to come out good and deliver good value for your investment. That's what I can say as a concluding remarks. Thank you. I wish everybody Happy Diwali and a Prosperous New Year also and best wishes for the festival season. Thank you.
Thank you very much, sir. As been on behalf of Equirus Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.