NMDC iron ore production up 20% at 34 million tonnes

Sale and production of iron ore by NMDC Limited has gone up by 23 per cent and 20 per cent respectively in the year ending March 31, 2017. However, a similar growth in profitability is unlikely as the iron ore prices started firming only towards the second half of the financial year, according to the company sources.

The company has achieved a total production of 34.07 million tonnes of iron ore in 2016-17 as compared to 28.57 million tonnes in the previous year while the sales volumes stood at 35.62 million tonnes as compared to 28.83 million tonnes in 2015-16, according to the company data.

"Though sales have increased by close to 7 million tonnes over the previous year, we expect a marginal improvement in profits because the company was able to raise the prices from October, 2016 on wards while in the previous months we were reducing the prices in line with global trends as well as the domestic demand," a company official told Business Standard.

Taking the prices of lumps and fines together, the average price of iron ore sold by NMDC stood at Rs 1,796 per tonne in the first quarter, Rs 1,681 per tonne in the second quarter, Rs 1,991 per tonne in the third quarter while it was around Rs 2,100 per tonne in the January-March quarter in 2016-17. The current prices are still at a half way mark compared to the peak prices, sources said.

In spite of price increase, the sales jumped 25 per cent in the third quarter touching 10 million tonnes and almost a similar sales volumes were registered in the fourth quarter. Higher sales volume in the second half may, to a large extent, compensate for the lower prices at which little over 15 million tonnes of iron ore was sold to the customers in the first half of the year.

For the nine month period ended December 2016, the public sector iron ore miner has reported a 20 per cent rise in income from operations at Rs 5,957.66 crore as compared to Rs 4,927.12 crore in the corresponding nine-month period in the previous year. While there was a 14 per cent increase in gross profit at Rs 2,503 crore for the 9-month period ending December, 2016, net profit was marginally down owing to a fall in interest income during the same period.