NMDC Q1 net down 17% at Rs 1,572 cr on lower realisation

PSU reported Rs 1,906 crore net profit in the corresponding quarter of the previous fiscal

Iron ore miner NMDC today reported 17.51% dip in net profit to Rs 1,572 crore for the April-June quarter due to lower realisation as a result of subdued price of the steel-making raw material.

"Our production as well as sales were up during the quarter. But, PAT was down due to lower realisation as compared to the same period last year. We had to take Rs 310 crore hit during the quarter due to lower realisation," NMDC Chairman C S Verma told reporters here.

The Hyderabad-based PSU had reported Rs 1,906 crore net profit in the corresponding quarter of the previous fiscal.

Verma said due to decrease in sales price, average sales realisation during the quarter was down by four % to Rs 3,907 per tonne compared to Rs 4,081 a tonne a year ago.

Though the price of fines or inferior quality of iron ore was up by 8% to Rs 3,100 a tonne; price of lumps or higher grade of iron ore was down by over 18% to Rs 5,188 per tonne.

The profitability of the company is unlikely to be better in the current quarter too, as it has reduced price of lumps by Rs 200 per tonne to Rs 4,200 per tonne for the month of August. It had reduced price of lumps by the similar margin in previous month also.

It, however, kept price of fines unchanged at Rs 2,510 per tonne.

NMDC's profit also eroded as it had to make a provision of Rs 66 crore or 10% of the sales proceeds for local area development, as per the Supreme Court directive. This was not the case in the year ago period.

Meanwhile, net sales of the company for April-June quarter was up marginally by 1.10% to Rs 2,869.10 crore in the quarter vis-a-vis Rs 2,837.90 crore of the Q1FY'13.

Its total expenditure, at Rs 1,001.79 crore, amounted to 34.92% of its net sales during the quarter due to Rs 255 crore increase in its expenditure on exporting iron ore.

In the first quarter of 2012-13, NMDC's total expenditure, at Rs 571.11 crore, was 20.12% of its net sales (at Rs 1,906 crore).

"During the current quarter, the company exported a quantity to 4.92 lakh tonnes (previous period nil), due to which the selling expenditure on exports has gone up by Rs 255 crore," the company said in a filing to BSE.