Journal of Management and Social Sciences Vol. 9, No.

1, (Spring 2013) 49-66

Financial Appraisal and Analysis of Minerals and Metals Trading Corporation (MMTC)

Muhammad Taqi *
Aligarh Muslim University, Aligarh, India.

ABSTRACT
India is a nation with vast geographical diversities, providing a variety of mineral and metal resources, crucial for the economic development of a country. There are many public sector enterprises in India engaged in the business of these natural resources. Minerals and Metals Trading Corporation (MMTC) Ltd. is one of the leading public sector enterprises involved in the business of minerals and metals at international as well as national level. This paper aims to study the performance and efficiency of MMTC Ltd. during the period from 200001 to 2010-11 using various financial and statistical tools for analysis and interpretation of the data obtained basically from the published reports of the corporation. The study, in addition to checking the growth in business examines the liquidity, solvency, profitability and activity of the corporation and found it growing. The analysis further reveals that the liquidity position of the corporation is comfortable but profitability wise it is precariously placed.

Keywords : Financial Performance, MMTC Ltd., Minerals, Metals, PSU. Jel classification : E440
material presented by the author does not necessarily portray the viewpoint of the editors and the management of the Institute of Business & Technology (IBT) or Aligarh Muslim University, Aligarh, India.
*
C

* The

Muhammad Taqi : taqiamu@rediffmail.com

JMSS is published by the Institute of Business and Technology (IBT). Main Ibrahim Hydri Road, Korangi Creek, Karachi-75190, Pakistan.

Muhammad Taqi

1. INTRODUCTION
Availability of natural resources makes an economy strong and developed. Minerals and metals are very crucial for the economic development of a nation. Government has the ownership on the reserves of natural resources of its country. India has abundant reserves of various types of minerals and metals. There are many government undertakings doing business of these natural resources. These companies are categorized as public sector enterprises and are playing a dominant role in the industrial growth and the development of Indian economy. State Trading Corporation (STC), National Minerals Development Corporation (NMDC), Minerals Exploration Corporation Limited (MECL) and Minerals and Metals Trading Corporation (MMTC) etc. are the main public sector companies which are focusing on mining, excavation, trade of these minerals and metals at domestic and international level. MMTC Ltd. is one of the leading international trading companies of India. Basically, it is involved in the export and import of minerals and metals and covers domestic markets also. Being a leading trading company of India it is essential to evaluate the financial performance of MMTC Ltd. Performance evaluation of a company is generally related to how well a company can use its assets, share holder equity and liability, revenue and expenses. Financial analysis embraces the methods used in assessing and interpreting the results of past performance and current financial position as they relate to the particular factors of interest in investment and other important decisions taken by the concerned stakeholders and the government. It is very important to assess the past performance to forecast and plan the development of the company and future prospects. Financial performance analysis gives an outcome regarding workings and performance of a company during a specific period. It relates to the earning capacity and utilization of available resources. In this context, evaluation has been done focusing of financial aspects of the company with the help of its financial statements, since MMTC Ltd. is a leading international trading company engaged in business at domestic level as well. The profitability of the business depends on the cost incurred for the production. If the cost increases on one hand and the profit of business decreases on the other, the business may go to the liquidation stage. Moreover, the future development programme of the company can be designed according to the expenses and investment level. Consequently, the analysis of the profitability of the MMTC gets importance in the present day context. For measuring the financial performance of MMTC, profitability and liquidity measures are to be considered. The basic aim of this study is to analyze the financial performance of MMTC Ltd. It has been observed that the import of minerals and metals by MMTC Ltd. exceeds its exports which mean that the Balance of Payment is going to be negative on a continuous basis. Moreover, MMTC Ltd. is engaged in domestic trade on a very small scale. Since, it is an international company; its performance should be good enough to contribute in the economic development of the country. So, the purpose of the Researcher behind this study is to analyze the performance of MMTC Ltd. in order to evaluate how much, it is contributing in enhancing the efficiency of the economy. The present paper is divided into five sections. The first section gives the background of MMTC and second part related with review of previous studies and research gap. The third section consists design of the study including objectives, hypotheses and methodology. The fourth part of the study related to analysis and interpretation. The last section of the study gives the concluding remarks.

1.1 Profile of the MMTC Ltd.

Minerals and Metals Trading Corporation (MMTC) Ltd. was established in 1963 with the basic purpose to increase the trade of minerals and metals at international as well as
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Financial Appraisal and Analysis of Minerals and Metals Trading Corporation (MMTC)

national level. The principal activities of the company are export of Minerals and import of Precious Metals, Non-ferrous metals, Fertilizers, Agro Products, general trade, coal and hydrocarbon. It is the first Public Sector Enterprise to be accorded the status of five star export house by the Indian Government for long standing contribution in exports. Trade activities of MMTC encompass third country trade, joint ventures, and link deals in all modern day tools of international trading. Its international trade network spans in all countries of Asia, Europe, Africa, Oceania and America. It is the largest importer of gold and silver in the Indian sub continent and the largest non-oil importer for India. MMTC Ltd. is the single largest exporter of minerals, the major fertilizer marketing company and the leading exporter and importer of agro products in India. It has a comprehensive infrastructural expertise to handle minerals that provide full logistic support from procurement, quality control to guaranteed timely deliveries of minerals from different ports, through a wide network of regional and port offices in India, as well as international subsidiary. It retains the position of single largest trader in the country for product lines like Minerals, Metals and Precious Metals. MMTC Ltd. provides support services to the medium and small scale sectors. The company is doing a project, namely, Neelachal Ispat Nigam Ltd. (NINL) jointly with the Government of Odisha. MMTC has a wholly owned subsidiary in Singapore i.e. MMTC Transnational Pte. Ltd. Singapore (MTPL).The trading network of the company spans all over the world. MMTC has been manufacturing its own brand of gold and silver medallions since the year 1996. MMTC has retail jewellery and its own branded Sterling Silverware (Sanchi) showrooms in all the major cities of India. The total turnover of MMTC Ltd. was Rs. 45124 crore in 2009-10 which reached at a level of Rs. 65929 crore in 2011-12. The export, import and domestic trade of MMTC Ltd. was stood at Rs. 3222, 39969 and 1932 crore respectively in 2009-10 which reached on Rs. 2045, 61042 and 2842 crore respectively. The earning per share of MMTC Ltd. was Rs. 43.25 in 2010 and in 2011-12, it was Rs. 0.71.

2. REVIEW OF LITERATURE
There are a number of studies that have approached to the evaluation the performance of a company. Some pioneer works have been undertaken to evaluate performance of companies but very few studies have been done on financial aspects and its impact on the given economic scenario. None of the study reviewed by the researchers examined the financial aspects of any public sector organization especially in mineral sector of India. Hence, the present study attempts to analyses the financial performance of Minerals and Metals Trading Corporation (MMTC) Ltd. Some reviews related to financial performance evaluation are as follows; Singh P.K. (2003) evaluate the financial performance of IDBI Bank Ltd. by using accounting ratios and applied t test and correlation for check the validity of hypotheses. The study concluded that IDBI Bank is a progressive, technology driven and professionally managed entity. Bagchi S.K (2004) analyzed the practical implication of accounting ratios in risk evaluation. The study concluded that accounting ratios are still dominant factors in the matter of credit risk evaluation. Tyagi et al (2005) examine the financial performance of Hindustan Liver Ltd. (HLL). Many accounting ratios were calculated and analyzed in length to appreciate their impact on company's performance. They used DuPont chart to check the overall credibility of company. The results gave the conclusion that the company has managed its cash position very efficiently. Vanitha et al. (2007) examined the financial performance of Indian Manufacturing Companies. In order to evaluate the financial performance they used ratio analysis, mean, standard deviation and't' test as tools of analysis. The study found that in India merging companies were taken over by companies with reputed and good management. Gopinathan 2009), used financial ratios to analyze the financial performance. The analysis
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was typically done to make sense of the massive amount of numbers presented in the financial statements of the company. It helps to evaluate the performance of a company, so that investors can decide whether to invest in that company. Different ratios categories like profitability ratios, liquidity ratios, debt ratios, performance ratios and investment evaluation ratios are calculated for covering the different aspects of performance. Jenkins (2009), states in the study that technique of financial ratios analysis can help in gaining a complete picture of the financial outlook of a company. The study states that the most important thing is cost (fixed as well as variable). Fixed costs are those costs that are always present, regardless of how much or how little is sold. Variable costs are the costs that increased or decreased in ratios proportion to sales. DAS S. (2010), analyzed and interpreted the financial statements of different companies viz. ACC Ltd, Tata Steel, Jindal Steel and Power Limited, Hindustan Zinc Ltd. (HZL) and Gujarat Mineral Development Corporation (GMDC) with respect to many financial ratios such as current ratio, debt equity ratio, net profit margin, return on investment etc. Okundamiya and Ojieabu (2010), in their study entitled 'Performance Analysis and Evaluation of Communication System' developed a mathematical approach to obtain closed formula for generating functions of a systems content from which most important performance measures are derived. The derivation of such generating functions was based on queuing theory. The numerical results of analysis were satisfactory. According to Asma S. (2010), financial analysis is useful for every business entity to enhance their performance, competitive strength and access their financial stability and profitability of the firm. She investigates the financial analysis of the two multinational companies, Glaxo Smith Kline (GSK) and Sanofi Aventis (SA). It is an attempt to compare their financial performance by using ratio analysis. Data is drawn from pharmaceutical industry in Pakistan from 2005 to 2009. Analysis include statistical hypothesis test (t-test) with independent sample characteristics through SPSS. The results revealed that the performance of both companies in the observed period has improved. The current method reflects that GlaxoSmithKline is leading Sanofi Aventis. Basically these financial ratiossolvency ratios, liquidity ratios, activity ratios, profitability ratios and marketability ratios are used extensively in this study. Sheela (2011) reveals in his research paper the financial performance of Wheels India Ltd. through various financial tools namely ratio analysis, comparative balance sheet and DuPont analysis and also statistical tools such as trend analysis and correlation. The main contribution of this study is the use of five power analysis methodology to retrieve ratios commonly used in financial analysis to tackle the problems of sample size and distribution uncertainty. Mistry (2011), in his paper 'Performance Appraisal of Indian Automotive Industry through Production Trend Analysis' endeavored to make performance appraisal of the Indian Automotive Industry through analysis of the production trend with the help of the arithmetic mean, the coefficient of variance, trend indices and Analysis of Variance (ANOVA). He observed from the analysis of the production indices that production performances in all segments of the industry improved significantly. The study revealed that the mean value of production is the highest in two-wheeler segment. Coefficient of variation suggested higher fluctuations in commercial vehicle and passenger vehicle segments as compared to two wheelers and three wheelers segments. Venkataramana, M. N. et al (2012), evaluate the profitability and financial position of selected cement companies in India through various financial ratio and applied correlation, mean, standard deviation and variance. The study uses liquidity and profitability ratios for assessment of impact of liquidity ratios on profitability performance of selected cement companies.

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Research Gap
A number of studies have been conducted on financial performance evaluation by using different financial measurement and statistical tools according to the nature of the studies, but these studies provide mixed results. Many researchers have evaluated the performance of various companies but still the performance of MMTC Ltd. has not been evaluated till now by any researcher as far as researchers gone through various research studies. So, under this study we are going to evaluate the performance of MMTC ltd. As it is a leading international company of India, there is a need to analyze its workings and performance. After reviewing various studies conducted on financial performance, the researchers have observed that very few researches could focus on evaluation of the financial performance of a firm. Hence, in the present study the researcher make an attempt to analyze the financial performance of one of the largest international trading company of India engaged in the export and import of various minerals and metals throughout the world.

3. RESEARCH DESIGN
3.1 Objectives of the Study
The present study aims at endeavoring to evaluate the financial performance of Minerals and Metals Trading Corporation (MMTC) for the period from 2000-01 to 2010-11. The main objective of the study is to analyze the financial performance of Minerals and Metals Trading Corporation (MMTC) Ltd. . To evaluate the financial performance of MMTC Ltd. . To study its business practices i.e. export, import and domestic trade . To analyze the operational efficiency of MMTC Ltd. by ascertaining the relationship between export, import and domestic trade.

3.2 Hypotheses of the Study

The main hypotheses of the study are as follows: First Hypothesis: Significant difference in Financial Ratios; H0; there is no significant difference in financial ratios of MMTC Ltd. across the years. H1; there is a significant difference in financial ratios of MMTC Ltd. across the years. Second Hypothesis: Relationship between Export and Import; H0; There is no significant relationship between export and import of MMTC Ltd. H2; there is a significant relationship between export and import of MMTC Ltd. Third Hypothesis: Relationship between Import and Domestic Trade; H0; there is no significant relationship between import and domestic trade of MMTC Ltd. H3; there is a significant relationship between import and domestic trade of MMTC Ltd. Fourth Hypothesis: Relationship between Export and Domestic Trade; H0; there is no significant relationship between export and domestic trade of MMTC Ltd. H4; there is a significant relationship between export and domestic trade of MMTC Ltd.

3.3 Methodology of the Study

Present study focuses only one of the important public sector enterprises which is engaged in the business of minerals and metals. The study is primarily based on the secondary data taken from the Annual Reports and other relevant publications of MMTC Ltd. A moderate period of ten years from 2001-02 to 2010-11 is adopted to draw the meaningful inferences. Data of last ten years are sufficient to have an idea about the financial performance of MMTC Ltd. The methodology used under this study in order to evaluate the financial performance of MMTC Ltd. includes student's t test and spearman's rank correlation test. Before applying these tests, the normality of the data has been checked through descriptive
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statistics. For calculating t test, we used different types of ratios like liquidity ratio, profitability ratio and activity ratios. For calculating rank correlation we have taken export, import and domestic trade of MMTC Ltd. The financial ratios of MMTC Ltd. were calculated and graphical presentation done by the researcher with the help of MS-Excel. The data was analyzed with the help of SPSS 20.0 also. Financial performance of MMTC Ltd. analyzed through various financial ratios i.e. liquidity ratios, profitability ratios and activity ratios. For check the growth in financial ratios we used significant test (one sample t test).

3.3.1 Accounting Tools

Liquidity Ratios; Current Ratio = Current Assets / Current Liabilities Liquid Ratio = Liquid Assets / Current Liabilities Cash Position Ratio = Cash + Marketable Securities / Current Liabilities Working Capital Turnover Ratio = Working Capital / Current Liabilities Profitability Ratios: Gross Profit Ratio = Gross Profit / Total Sales * 100 Operating Profit Ratio = Operating Profit / Total Sales * 100 Net Profit Ratio = Net Profit / Total Sales * 100 Return on Shareholder's Fund = Net Income after Tax / Total Sales * 100 Return on Capital Employed = Net Income after Tax / Total Capital Employed * 100 Activity Ratios: Inventory Turnover Ratio = Avg. Stock / Sales Debtors Turnover Ratio = Avg. Debtors / Sales Fixed Assets Turnover Ratio = Fixed Assets / Sales Total Assets Turnover Ratio = Total Assets / Sales

3.3.2 Descriptive Statistics

Descriptive statistics are used to describe the basic features of the data in a study. It gives numerical and graphic procedures to summarize the data in a clear and understandable way. It helps us to simplify large amounts of data in a sensible way. Each descriptive statistics reduces lots of data into a simpler summary. The range is simply the highest value minus the lowest value. The average may be either mean or median. The standard deviation is a more accurate and detailed estimate of dispersion because an outlier can greatly exaggerate the range. The standard deviation shows the relation that set of scores has to the mean of the sample. The details of descriptive statistics are as follows:

3.3.3 One Sample t test

One sample t test has been applied to check the significant difference in the various financial ratios of MMTC Ltd. from 2001 to 2011 with the help of SPSS 20. To check the significant growth in the ratios during the study period we used one sample t test on 95 per cent degree of significant.

3.3.4 Spearman Rank Correlation

To study business practices i.e. export, import and domestic trade we used trend analysis of growth during the year and check the relationship between trade practices, spearman rank correlation has been used. Spearman's Rank Correlation is a technique used to test the direction and strength of the relationship between two variables. It's a device to show whether any one set of numbers has an effect on another set of numbers. Calculation of trends and Spearman Rank Correlation has been done with the data of export, import and domestic trade using MS-Excel.

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Where, di = difference in paired ranks and n = number of cases. The formula to use when there are tied ranks.

4. ANALYSIS AND INTERPRETATION

The analysis and interpretation of the financial statements results in the presentation of information that will aid the decision making by investors, creditors, managers as well as other groups who are interested in the financial position and operating results of a concern. The financial performance of MMTC Ltd. is evaluated mainly from three facets namely liquidity performance through current, liquid, cash position and working capital turnover ratio, profitability performance via gross profit, operating profit, net profit, return on capital employed and return on shareholders fund ratio and activity ratios through inventory turnover, debtors turnover ratio and total assets turnover ratio. The relevant ratios are computed to make effective judgments about the financial performance of MMTC Ltd. Financial ratios indicate the accurate financial position of a firm. Liquidity is defined as the capacity to meet short term financial commitments, i.e. short term solvency. One of the important measures of liquidity for the business enterprise is current ratio which is obtained by dividing current assets by current liabilities of a firm and is widely acceptable for measuring the business firm's short term solvency. Table 1 Liquidity Ratios of MMTC Ltd. (in times) Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 CR 2.47 2.38 1.80 1.26 1.16 1.55 2.13 1.90 2.11 2.29 2.53 LR 2.07 2.18 1.61 1.20 1.14 1.44 2.02 1.78 1.99 1.86 2.40 CPR 0.54 0.58 0.35 0.89 0.89 0.65 0.94 1.31 1.21 1.22 1.39 WCTR 0.15 0.10 0.08 0.08 0.05 0.06 0.07 0.14 0.14 0.13 0.10

Source: Annual Reports of MMTC Ltd. from 2000-01 to 2010-11 Where: CR= Current Ratio,QR= Quick Ratio,CPR = Cash Position Ratio, WCTR = Working Capital Turnover Ratio The table shows that the current ratio of the company has a fluctuating trend during the study period. It is to be at its highest level of 2.53 in the year 2010-11, and at its lowest level in the year 2004-05. The analysis of liquidity position of MMTC Ltd. through liquid ratio and the results are presented in the above table. The ratio has been bound at its highest level of 2.07 during the year 2001-02, and at the lowest level of 1.14 in the year 2004-05. From the analysis, it is evident that the quick ratio of the MMTC Ltd. is very sound which indicates that the company can meet the short term obligations. Cash position of the company is likely to be satisfactory during the study period as it shows the
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higher ratio to the standard i.e. 0.50:1. Working capital turnover ratio indicates the proportion of working capital as current liabilities and it was fluctuating during the study period. Figure 1

Source: Drawn from the Table 1 Figure 1 displays the graph of the liquidity ratios of MMTC Ltd. from 2000-01 to 2010-11. The values of ratios are plotted on the X-axis and the numbers of years are plotted on the Y-axis. The figure shows exhibit the actual position of current ratio, liquid ratio, cash position ratio and working capital turnover ratio of MMTC Ltd. Before employing any test it is very important to find out the normality of the data which can be found out by statistical description of the data. Table-2 presents statistical description of liquidity ratios of MMTC Ltd. Under this mean, standard deviation, variance, minimum, maximum, skewness and kurtosis have been calculated. Statistical description is made in order to find out whether the data shows normality or not. Table 2 Statistical Description of Liquidity Ratios of MMTC Ltd. (from 2000-01 to 2010-11) Skewness Kurtosis

Mini Maxi Std. Std. Std. N Range mum mum Mean Deviation Variance Statistic Error Statistic Error CR 11 1 1 3 1.96 0.474 .225 -.578 .661 -.905 1.279 LR 11 1 1 2 1.79 0.403 .163 -.373 .661 -.783 1.279 CPR 11 1 0 1 .91 .347 .121 -.103 .661 -1.276 1.279 WCTR 11 0 0 0 .10 .035 .001 .134 .661 -1.529 1.279 The above table presents the statistical description of liquidity ratios of MMTC Ltd. On an average, current ratio of the MMTC Ltd. was 1.96 times during the study period. From the analysis, it is also evident that the current ratio of MMTC Ltd. is not equal to the standard which indicates that the MMTC Ltd. cannot meet its short term obligations within time and does not have a sufficient amount of working capital for the smooth running of the business activities. On an average, the ratio of cash position of MMTC Ltd. stood at .91. Statistical description is being calculated on the basis of the data collected from the annual reports of MMTC Ltd. since 2000-01. The mean value of current ratio, liquidity ratio, cash position ratio and working capital turnover ratio is 1.96, 1.79, .91 and .10 respectively. It is observed that the mean value of current ratio is lower than the standard. The mean value of liquid ratio is more than its standard. The values of skewness and kurtosis determine the normality of the data. The critical values for skewness and kurtosis of current ratio, liquid ratio, cash position ratio and working capital ratio are shown in Table 2 which represents that the observed data is perfectly normally distributed.
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Table 3 t Statistics of Liquidity Ratios of MMTC Ltd Test Value = 0 Mean t-value Df Sig. (2-tailed) Difference CR LR CPR WCTR 13.720 14.723 8.660 9.419 10 10 10 10 <0.001 <0.001 <0.001 <0.001 1.962 1.790 0.906 0.100 95% Confidence Interval of the Difference Lower Upper 1.64 2.28 1.52 2.06 .67 1.14 .08 .12

In the present table the test of significance has been applied on liquidity ratios. Our null hypothesis stands for rejection and alternate hypothesis is accepted. Since the significant t value is less than 0.05 at 95 per cent level of significance. It means there is a significant difference in liquidity ratios of MMTC Ltd. across various years measured through current ratio, liquidity ratio, cash position ratio, working capital turnover ratio. Table 4 Profitability Ratios (in percent) Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 GPR 2.62 1.74 2.09 1.78 1.69 1.36 1.07 1.63 0.87 0.70 0.48 OPR 0.28 0.35 0.58 0.88 1.16 1.03 0.81 1.23 0.59 0.74 0.28 NPR 0.23 0.26 0.40 0.56 0.71 0.66 0.55 0.76 0.38 0.48 0.18 ROSF 3.24 3.06 4.25 11.01 15.01 13.81 15.08 19.71 12.47 16.86 8.84 ROCE 2.02 2.01 3.29 6.90 10.66 8.58 6.61 4.80 2.58 3.36 1.63

Source: Annual Reports of MMTC Ltd. since 2000-01 to 2010-11 Whereas: GPR= Gross Profit Ratio,OPR = Operating Profit Ratio, NPR= Net Profit Ratio, ROSF = Return on Shareholder's Fund, ROCE = Return on Capital Employed The present table shows a fluctuating cum decreasing trend in gross profit ratio of MMTC Ltd since 2000-01. It decreased continuously from 2.9 per cent in 2002-03 to reach 0.48 per cent in 2010-11. The main reason behind the continuous decline is the increase in cost of sales because of an increase in purchases and opening stock and a decrease in closing stock. Return on Shareholder's Fund shows the company's return to the ordinary shareholders' investment. A return of at least 10 per cent will be necessary to ensure that shareholders hold on to their shares. Return on shareholder's fund of MMTC Ltd. was 3.24 per cent in 2000-01 which increase over the year and reached at its highest level of 19.71 per cent in 2007-08 and further it was declined. On an average, this company's return on shareholder's fund is maintained at a satisfactory level.

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Return on Capital Employed shows the profit generated by the company considering the total capital invested. A constant return of 10 per cent or above would be considered a healthy trend. The return on capital employed of the company was 2.02 per cent in 2000-01. It was reached at a level of 10.66 per cent in 2004-05. Net profit ratio has also shown a fluctuating trend during the whole study period. MMTC Ltd. has a very low trend of this ratio. It was 0.23 per cent in 2000-01 that fluctuated continuously during the study period to finally stand at 0.18 per cent in 2010-11. Table 5 Statistical Descriptions of Profitability Ratios of MMTC Ltd. (from 2001 to 2011) Skewness Mini N Range mum GPR 11 2 0.48 OPR 11 1 0.28 NPR 11 1 0.18 ROSF 11 17 3.06 ROCE 11 9 1.63 Maxi mum 2.62 1.23 0.76 19.71 10.66 Mean 1.46 .72 .47 11.21 4.77 Std. Std. Deviation Variance Statistic Error .637 .405 .128 .661 .338 .114 .074 .661 .198 .039 -.035 .661 5.709 32.598 -.311 .661 3.019 9.115 .830 .661 Kurtosis Statistic -.382 -1.236 -1.265 -1.139 -.432 Std. Error 1.279 1.279 1.279 1.279 1.279

Table 5 shows the descriptive statistics of profitability ratios of MMTC Ltd. for the period from 2001 to 2011. In this table mean, standard deviation, variance, minimum, maximum, skewness and kurtosis have been calculated which shows the important statistical aspects related to profitability ratios of MMTC Ltd. The mean value of ROSF is higher as compare to other profitability ratios at the same time the standard deviation of ROSF is also high which means it implies the more variability. Figure 2

Source: Drawn from Table 4 Figure 2 exhibit the graphical presentation of profitability ratio of MMTC Ltd. from 2000-01 to 2010-11 which consists Gross Profit Ratio, Operating Profit Ratio, Net Profit Ratio, Return on Shareholders Fund and Return on Capital Employed. All the ratios are stable up to 2002-03 and later ROSF start increasing at a higher rate till 2007-08 and ROCE increased till 2004-05. GPR, NPR and OPR were stable over the study period. The
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ROCE was its maximum level in 2004-05 and later it declined. The graph shows that the return in terms of investment is more than the return in terms of sale. Table 6 t Test Statistics of Profitability Ratio Test Value = 0 Mean t-value Df Sig. (2-tailed) Difference GPR OPR NPR ROSF ROCE 7.592 7.068 7.881 6.513 5.237 10 10 10 10 10 <0.001 <0.001 <0.001 <0.001 <0.001 1.457 .721 .470 11.213 4.767 95% Confidence Interval of the Difference Lower Upper 1.03 1.88 .49 .95 .34 .60 7.38 15.05 2.74 6.80

In this Table student t test has been applied for testing the significance level of profitability ratios of MMTC Ltd. from 2001 to 2011. The result shows that there is a significant difference in the profitability ratios of MMTC Ltd. among the various years. The P value in all the ratios is less than 0.05 which means our null hypothesis is rejected and alternative hypothesis is accepted. Table 7 Activity Ratios (in times) Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 ITR DTOR TATR 4.30 24.66 3.48 1.62 23.37 4.69 2.02 25.62 4.38 1.79 19.95 2.16 0.73 22.11 2.38 1.52 22.17 4.51 0.76 20.82 6.38 2.09 18.29 2.93 1.57 19.31 3.48 4.73 29.07 3.82 0.94 27.11 5.43 FATR 2.32 1.89 3.98 2.55 1.67 1.55 1.71 1.50 0.99 0.88 0.57

Source: Annual Reports of MMTC Ltd. since 2000-01 to 2010-11 Whereas: ITR = Inventory Turnover Ratio, DTOR = Debtors Turnover Ratio, TATR = Total Assets Turnover Ratio, FATR = Fixed Assets Turnover Ratio Activity ratios measure how effectively a firm is using its assets. These ratios help us gauge how effectively the company is at putting its investment to work. Inventory Turnover Ratio measure how quickly inventory is sold. A firm should neither have a high ratio nor a low ratio. ITR of MMTC Ltd. was 4.30 times in 2000-01 which was fluctuating among the years and it was reached on its lowest at 0.76 on 2006-07. DTOR shows how quickly current assets i.e. receivables or debtors are converted to cash. A firm should neither have a high ratio nor a low ratio. Debtor's turnover of MMTC Ltd. was 24.66 in 2000-01 which was fluctuating during the study period and finally it
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reached on 27.11 in 2010-11. Total Asset Turnover Ratio (TATR) and Fixed Assets Turnover Ratio (FATR) measure the efficiency of a firm in managing and utilizing its long term assets. Higher the ratio, more efficient is the firm in utilizing its assets. As per results show the assets turnover ratio is very low it may be stated that company is using the long term assets in very low quantity. Table 8 Statistical Descriptions of Activity Ratios of MMTC Ltd. (from 2001 to 2011) Skewness Kurtosis

Mini Maxi Std. Std. Std. N Range mum mum Mean Deviation Variance Statistic Error Statistic Error ITR 11 4 0.76 4.73 2.01 1.328 1.763 1.398 .661 1.094 1.279 DTOR 11 11 18.00 29.00 22.95 3.388 11.481 .431 .661 -.676 1.279 TATR 11 4 2.00 6.00 3.97 1.277 1.631 .383 .661 -.227 1.279 FATR 11 3 1.00 4.00 1.78 .937 .878 1.212 .661 2.243 1.279 Table - 9 gives the statistical description of activity ratios of MMTC Ltd. from 2001 to 2011. The average, standard deviation, variance, minimum, maximum, skewness and kurtosis of activity ratios have been calculated in this table which shows the important statistical aspects related to activity ratios of MMTC Ltd. The mean value of ITR, DTOR, TATR and FATR is 2.01, 22.95, 3.97 and 1.78 respectively. The standard deviation of DTOR is high among the activity ratios which mean it implies the more variability. Figure 3

Figure 3 presents the activity ratios of MMTC Ltd. from 2000-01 to 2010-11 including Inventory Turnover Ratio, Debtors Turnover Ratio, Total Assets Turnover Ratio and Fixed Assets Turnover Ratio. Debtor's turnover ratio is very high during the whole study period as compare to other activity ratios. Fixed assets turnover ratio shows the lowest proportion during the study period. Inventory position shows the trading activity of the company.

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Table 9 t Statistics of Activity Ratios of MMTC ltd. Test Value = 0 95% Confidence Interval of the Difference Lower Upper CR 5.012 10 <0.001 2.006 1.11 2.90 LR 22.467 10 <0.001 22.953 20.68 25.23 CPR 10.304 10 <0.001 3.967 3.11 4.83 WCTR 6.309 10 <0.001 1.783 1.15 2.41 From the table it can be observed that the significant value of each and every ratio is less than 0.05 which leads to the rejection of the null hypothesis that there is no significant improvement in activity ratios of MMTC Ltd. since 2000-01 and acceptance of alternate hypothesis that there is a significant improvement in financial ratios of MMTC Ltd. since 2000-01. Mean t-value Df Sig. (2-tailed) Difference

Analysis of Trade Practices of MMTC Ltd

Minerals and Metals Trading Corporation (MMTC) Ltd. is the largest international trading company of India involved in the exports, imports and domestic trade of a number of minerals and metals. In order to evaluate the financial performance of MMTC Ltd., three variables have been taken i.e. export, imports and domestic trade. To draw a clear picture of the working and business of MMTC Ltd., we can go through the tabular and graphical presentation of the variables and can interpret them. Table 10 Statement Showing Total Trade of MMTC Ltd. Inc/Dec Inc/Dec Domestic Inc/Dec in Year Exports in % Imports in % Trade % 2000-01 1604 3641 57 2001-02 1729 8 5481 51 34 -40 2002-03 2336 35 3732 -32 158 365 2003-04 1891 -19 6679 79 529 235 2004-05 3031 60 11033 65 1060 100 2005-06 2925 -3 11786 7 1521 43 2006-07 3413 17 18608 58 1281 -16 2007-08 3911 15 20450 10 2062 61 2008-09 4576 17 30696 50 1550 -25 2009-10 3222 -30 39969 30 1932 25 2010-11 3693 15 63301 58 1860 -4 7.88 29.64 37.28 CAGR Table 10 describes the exports value of MMTC Ltd. It has grown steadily at a Compound Annual Growth Rate (CAGR) of 7.88 per cent from Rs. 1604 crore in 200001 to Rs. 3693 crore in 2010-11. The table shows the waving cum increasing trend of export by MMTC Ltd. The value of export was Rs. 1604 crore in 2000-01 which reached on Rs. 32331 crore in 2010-11 with an increasing trend throughout the study period. In 2003-04 and 2009-10, the export decreased due to various financial and economic problems faced by the corporation but finally in 2010-11, the export increased by 15 per cent. The mean value of the export throughout the period under study is Rs. 2939 crore.
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Figure 4

Figure 2 gives the graphical presentation of export of MMTC Ltd. from 2000-01 to 2010-11. It shows an increasing trend of export during the study period. The export of MMTC Ltd. was stood at Rs. 1604 crore in 2000-01 which reached Rs. 3693 in 2010-11. Figure 5

Table 10 reveals that the imports of MMTC Ltd. has grown steadily at a compound annual growth rate (CAGR) of 29.64 per cent from Rs. 3641 crore in 2000-01 to Rs. 63301 crore in 2010-11. This table also depicts that the value of imports registered a rising trend from 2003-04 onwards. It also reveals that the growth of imports by MMTC Ltd. is very high as compared to exports. The value of imports was Rs. 3641 crore in 2000-01 which reached at Rs. 63301 crore in 2010-11 at a very fast growing trend. From 2003-04, the value of imports increased regularly. The mean value of the imports during the period under study is Rs. 19580 crore. The growth line is going upward during the whole study period which indicates the imports of minerals and metals of the corporation are very sound and growing rapidly.

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Figure 6

Table 10 demonstrates the value of domestic trade of MMTC Ltd. which grew at a compound annual growth rate (CAGR) of 37.28 per cent from Rs.57 crore in 2000-01 to Rs. 1860 crore in 2010-11. It also describes the value of domestic trade which registered a rising trend from 2000-01 to 2005-06 and for rest of the period, showed a fluctuating trend. The value of domestic trade was Rs. 57 crore in 2000-01 which reached at Rs. 1860 crore in 2010-11 with a waving trend throughout the study period. Since 2003-04, the imports increased regularly due to the expansion of its business. The mean value of the import was Rs. 19580 crore throughout the period under review. From 2000-01 the domestic trade grew highly but after that, it had changing trend throughout the study period. Figure shows the growth in domestic trade of MMTC Ltd. during the period under study. The growth line went upward till 2005-06 and then it started fluctuating. It indicates that the position of MMTC Ltd. in domestic trade of the minerals and metals is good. Table 11 Descriptive statistics of export, import and domestic trade of MMTC ltd. Skewness Particulars Exports Imports Domestic Trade Kurtosis Mini Maxi Std. Std. Std. N mum mum Mean Deviation Variance Statistic Error Statistic Error 11 1604 4576 2939 959.93 921473.16 .047 .661 -.904 1.279 11 3641 63301 19580 18592.28 345673037.26 1.51 .661 2.041 1.279 .661 1.279 11 34 2062 1095 777.60 604669.49 -.312 .661 -1.617 1.279

Descriptive statistics gives numerical procedures to summarize a collection of data in a clear and understandable way. It helps us to simplify large amounts of data in a sensible way. Each descriptive statistics reduces lots of data into a simpler summary. Table 7 reveals the various aspects related to descriptive statistics of trade practices of MMTC Ltd. Table 12 Spearman Rank Correlation between Export, Import and Domestic Trade of MMTC ltd. Export Import Domestic Trade Export 1 0.8636 0.8636 Import 0.8636 1 0.9181 Domestic Trade 0.8636 0.9181 1

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Spearman's rank correlation coefficient measures the strength of relationship between two variables. Trade practices of MMTC Ltd. mainly are exports, imports and domestic trade of various minerals, metals and fertilizers at international as well as national level. In table 8 the relationship between exports and imports is 0.86364 which reveals positive relationship between both variables. The relationship between import and domestic trade is 0.91818 shows the highly positive relationship between them. In the table 8 the relationship between export and domestic trade is 0.86364 which depicts positive relations between export and domestic trade of the company.

5. CONCLUSION AND SUGGESTIONS

The present study has been conducted with a view to assessing the financial performance of Minerals and Metals Trading Corporation (MMTC) Ltd. since 2000-01. The available data of MMTC Ltd. has been analyzed and interpreted through various financial ratios, trends and graphical presentations of total trade activities as well as applied statistical tools. It can be summed up that the financial position of the company is sound in terms of short term solvency. The profitability position of the corporation is not very impressive. The gross and net profit ratio does not show a good indication regarding profitability. The main reason of low profit is very high cost of sales and other related direct expenses. The return on capital employed and shareholders fund is quite satisfactory as compared to other profit ratios. MMTC is giving preference to trading on equity as shown through the analysis of debt equity ratio. The imports are growing rapidly in comparison to other trade activities of the corporation. It is observed that MMTC has focused on imports since 2000-01. Exports are escalating but not as much as imports necessitating it to focus on exports. Since 2000-01, MMTC Ltd. has grown its business at domestic level through various business strategies like outlets, exhibitions etc. From the analysis it may be stated that the financial position of MMTC Ltd. is good but some steps should be taken by the Government for improving the position of this corporation. After analysis and interpretation of the available data it can be concluded that MMTC Ltd. primarily focuses on foreign trade (exports and imports) instead of the domestic trade. In trade activities of MMTC Ltd. the domestic trade has not played any significant role because exports and imports were the main trade practices during the period under study. MMTC Ltd. has promoted its domestic trade through exhibitions and by opening some outlets in major cities of India. It has also been found that it mainly focused on imports which grew rapidly throughout the study period. It should focus on the national market as well as international market and expand their business at domestic level also. After analysis and interpretation of the data we find some indications regarding the performance of Minerals and Metals Trading Corporation (MMTC) Ltd. which are as follows: . The study reveals the fluctuations in the trend of liquidity and profitability position of the company. . The profitability position of the company is not comfortable in terms of sales but the return on capital employed and return on shareholders' fund is satisfactory as compare to gross profit and net profit ratios. . The growth in liquidity ratio of the company is significant as it was checked by the student t test. . The growth in solvency ratio, activity ratio and profitability ratio of MMTC Ltd. is also more significant. . The relationship between exports and imports is highly correlated which shows that both variables impact each other. . The relationship between export and domestic trade is also positively correlated which reveals the export trend impact on domestic trade of the company. . As per analysis of available data of MMTC Ltd. it can be revealed that the import
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of the company is highly escalated as compared to export. . The trade practices of the company include exports, imports and domestic trade. Out of these, the company mainly focuses on import and export as compared to domestic trade practices.

Suggestions and Recommendations

There is need to secure the confidence of stakeholders providing them with the results from financial analyses. Every company carries out financial appraisal of its performance on a periodical basis. More awareness and education be provided to the public with regard to evaluation of financial performance of a company. Government undertakings should be advised more on how to increase their working efficiency through adoption of best trade practices. There are some suggestions for the company is as follows: . The company's ability to meet its current obligations is satisfactory. This company maintains current assets more than the amount of current liabilities and it should be advised to increase the value of current assets to achieve the optimum level. . Liquidity position of the corporation is quite satisfactory and it should be maintained to meet short term obligations. . The corporation does not earn significant profit on sales. There should be reduction in the cost of sales and other expenses. . The export should be promoted by the corporation for earning long term profits and meet domestic needs as it is a public sector enterprise. . It is notable that the import is growing as compared to export. The company should focus on exports. . The corporation is involved in domestic trade at very low level. It is needed to accelerate the domestic trade activities by the corporation. Since MMTC Ltd. is an international trading corporation, it should focus on export as compared to other trade activities because the export volume of the company is lower than its import. The domestic trade of the company is very low and not as much as other trade activities. So the company should increase its trade at domestic level for proper utilization of the available resources and fulfillment of domestic requirements.

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