NMDC June Qtr net zooms 94% to Rs 1,504 cr

The state-owned miner NMDC today posted 94.3 per cent jump in its net profit to Rs 1,504.04 crore for the quarter to June on account of improved sales.

"The main driver of our first quarter profitability is a 20 per cent rise in overall sales and the moderate increase in our long-term iron ore prices," NMDC Chairman and Managing Director Rana Som told PTI. The company had a net profit of Rs 773.75 crore in the year-ago quarter.

"If the trend continues, NMDC can achieve record profit and turnover in the current fiscal," Som added.

The country's largest iron ore producer clocked total sales of Rs 490.60 crore in the reporting quarter as against Rs 334.92 crore in the year-ago period. Som said "cooperation from the Railways" helped the company evacuate more iron ore from the mines in Chhattisgarh. The miner's domestic sales went up by 29 per cent in the period, he added.

"We posted these numbers despite substantial payouts in the form of royalty and higher wages," Som added.

Elaborating on the outlook, he said, iron ore prices under long-term contracts may fall in the third quarter. "Seeing the trend of last two months, I anticipate a decline in prices in the third quarter," Som added.

"Demand of iron ore, however, would continue to be strong because of the high quality of the mineral we produce. Also, the strong base of long-term customers will help us will give us the stability," he added.

For the second quarter, prices of NMDC's iron ore for Japanese and Korean steel firms have increased by 22 per cent, while for the domestic customers like Essar Steel, JSW Steel, it is 14 to 15 per cent higher as compared to to first quarter rates. In the April-June quarter, NMDC had increased its prices by Rs 320 to Rs 2,900 a tonne for iron ore fines and for lumps it stood at about Rs 3,200 a tonne.

The miner is investing Rs 3,400 crore to augment its annual iron ore production to about 41 million tonne from around 22 million tonne at present. NMDC will invest Rs 3,000 crore to set up a 12 million tonne per annum pipeline in Chhattisgarh to supply iron ore to its domestic customers.

Also, it is talks with Nippon Steel for partnering it in a Rs 10,000-crore project in Karnataka, and with Kobe Steel of Japan for another project in Andhra Pradesh. To secure raw material reserves overseas, it is in talks to buy coking coal mines in Kolmar in Russia. The company is also talking to ArcelorMittal for a iron ore project in Senegal in Africa.