Millennium Post

NMDC defies global economic crisis, increases its quarterly net profit

NMDC, country’s largest iron ore miner, is also likely to see a reduction in net sales realisation and a bottom line erosion in the current quarter as it reduced prices for February by up to Rs 450 a tonne after holding the December price in January, experts said.

 “A host of issues caused evacuation problems for NMDC in October-December quarter. Railway tracks were damaged by the extremists a couple of times in the quarter. Cyclone Hudhud also caused some damage,” a senior company official said.

“All these hampered the evacuation problem resulting in lower sales during the quarter. However, our production was higher,” the official added. Physical sales were down by five per cent to 6.97 million tonnes during the quarter, but better price ensured net income from operations not falling compared to the same quarter last year.

Total income saw grew to Rs 2,946 crore during the quarter from Rs 2,823 crore a year earlier. Production was also higher by 11 per cent at 8.11 million tonnes, best-ever in any previous third quarter. Total expenses also went up to Rs 1,052 crore from Rs 957 crore primarily due to higher royalty payment. NMDC paid Rs 460 crore royalty during the quarter against Rs 226 crore a
year earlier.

The company board in its meeting today has recommended a second interim dividend of Rs 4.25 per share of Re 1 each.

With the second interim dividend, total interim dividend declared by the company so far in the current fiscal stands at Rs 7.25 per equity share, NMDC said.

For the nine-month period, the production of the company grew by 12 per cent to 22.50 million tonnes, sales were higher by 8 per cent to 22.83 million tonnes and its turnover stood at Rs 9,528 crore, up 17 per cent. Net profit of the company rose by 14 per cent to Rs 5,075 crore.

Meanwhile, NMDC has reduced the price of lump ore by Rs 450 per tonne for the month of February at Rs 3,750 per tonne and fines by Rs 300 a tonne to Rs 2,760 per tonne. The reduction in prices, as a fallout of weak global prices and pressure from its domestic buyers to align the cost with the international level, is expected to impact on the net sales realisation of the company and its bottom line, experts said.

A few days ago, NMDC reduced iron ore prices by Rs 200-300 per tonne for the current month as weak global prices, which nosedived to five-and-a-half-year lows, are putting pressure on domestic rates. “Our pricing committee has decided to reduce the price by 5-10 per cent for the current month. The decision has been taken in a meeting on January 31,” a senior company official said.

The country’s largest producer of steelmaking raw material, NMDC rolled over the December price in January at Rs 4,200 per tonne for lumps and Rs 3,060 per tonne for fines. In December, the PSU had reduced the price of lumps by Rs 200 per tonne and Rs 100 per tonne for fines.

NMDC reviews the price of its products every month. After holding the price of iron ore for July-October period, it had reduced the rate of lumps by Rs 200 per tonne for November. The lumps variety contents more iron and are considered superior grade while fines are low-iron content variety.
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