Following the CCD decision, an inter-ministerial group was set up under the additional secretary, ministry of commerce, to sort out the outstanding issues pertaining to STC divestment. The group held two meetings and reached the conclusion that it was best to defer STC divestment for the next fiscal, sources said.

It may be recalled that the erstwhile Disinvestment Commission had recommended the sale of entire government equity in favour of a strategic partner after reserving 5 per cent shares for the employees who opt for the voluntary retirement scheme at a discount. The commission had suggested downsizing along with divestment.

STC earned a profit of Rs 13 crore in 1998-99, up from Rs 2.6 crore in 1997-98. However, the total turnover came down from Rs 2,867 crore in 1997-98 to Rs 1,894 crore in the next fiscal. As per official estimates, the turnover for 1999-2000 is estimated to be even less, Rs 1,528 crore.

The corporation was set up in 1956 to broaden and enlarge the scope of India's exports and to arrange for essential imports. It worked as one of the canalising agencies of the government, along with Mining & Metals Trading Corporation and Projects & Engineering Corporation.

The government has already offloaded 9 per cent equity in STC in favour of Canara Bank (3 per cent), UTI (2 per cent), GIC (2 per cent) and others (2 per cent).

STC is suffering from all the usual maladies PSUs are afflicted with. The PSU status hurts operational efficiency and impedes change in organisational culture. Its research is limited, and it has to rely heavily on foreign agencies for its information inflow. The corporation has failed to keep abreast of the latest developments in information technology and is grossly under-computerised.

STC's dependence on government trade has hardly decreased. A creation of socialist India, the corporation has become anachronistic in the liberalisation era. Yet, the mandarins in Udyog Bhawan have succeeded in stalling the privatisation of STC.