Advocates of liberalisation have always held that competition in the market helps the consumers and ensures most effective utilisation of resources. When we look at today's scenario, we find that it is not always so. For instance, there is no doubt that there is now a fierce competition in the field of automobiles. But still the Indian prices are higher than the international prices. The point perhaps is that the inherent inefficiency of an economy, be it low productivity, poor infrastructure or an archaic legal system; will have its reflection on the industry and competition by itself cannot remove the inefficiency automatically. Also one sees that given a demand recession or at best static demand, there is a natural tendency for the firms  to merge and form bigger entities. 

In perfect competition, all producers take the price as dictated by the market and no single firm can hope to control the market. However, in practice, especially when the demand becomes static, the firms tend coalesce together with the sole objective of having some kind of a control over the market even if such control falls short of monopolistic control. Firms in a given segment, even if they do not come together as a single entity, are going for cooperation at least in certain areas, for instance, in creating protocols, generating new demand even in sourcing and buying materials. Thus the Japanese steel manufacturers have negotiated the price of iron ore, DR pellets as a group. Obvious objective is to consolidate the purchasing power of individual firms and using the clout of the aggregating purchasing power to derive best possible deal in the market. It has, therefore, been held that in today's business scenario, co-opetition rather than un-bridled competition has become the rule of the day. 

An interesting reflection of this theory can be seen in the Chinese market. A group of trading houses usually controlled by Government are allowed to do international trade. More often than not, there is some kind of understanding between them. Of course the fact that Chinese prices are usually lower than the international prices helps. In the field of international trade, in the good old days of controlled economy, the public sector trading houses like STC, MMTC, TTC, MSTC, etc. were canalising agencies and automatically aggregated the demand of all individual users and went to the market as a bulk buyer, thus the advantage of cooperation was indirectly ensured even without any positive action on the part of the buyers or end users. 

In today's liberalised scenario, of course, canalisation cannot even be thought of. Nevertheless, there is  till need for aggregating the purchasing power of individual firms for the benefit of all. This is specially so because the size of an average Indian firms is by far too small to judge by any international standards. This can either be done by voluntary association of such firms or by a trading house which will maintain its transparent operations and will be willing to pass on the benefit to the end users to a significant extent.

MSTC which is concentrating on the steel sector and especially bulk raw materials of the steel sector, is basically trying to play this role. Its operations are transparent, service charges are low and it is trying to emerge as a single largest buyer of certain commodities so that it can obtain best possible deals and ensure continuity of supplying quality raw material at best possible price. It has already built up a significant business in the market for scrap, Lam coke and DR pellets and is further trying to consolidate its business. It remains to be seen to what extent it is able to improve its efficiency and obtain deals which will be better than the deals obtainable by the individual firms. However, after a nil import in 1997-98, during April to August this year, it has already imported bulk raw material worth Rs. 186 crores. Its profit before tax in 2000-2001, being Rs. 6.30 crores was also much higher than its average profit of about Rs. 3.0 crores during 1995-96 to 1998-99. The evidence would therefore indicate that it is on the right path. Still there are many hurdles to cross before MSTC can reemerge as a prime player in the field of imported raw materials.

In its other portfolio, where it acts as a selling agent to various industries in respect of their scrap arisings, surplus stores, spares, capital equipments etc. MSTC has increased its volume of business from about Rs. 140 crores in 1991-92 to Rs. 600 crores in 2000-2001, a 400% growth in 3 years. It has also developed an E-auction portal and hopes to further strengthen this portfolio in the years to come.