NMDC

The PSU iron ore maker, in Q2FY13, showed a decline in iron ore production by about 23% at 5.38 million tonnes due to heavy rains and evacuation related issues in Chhattisgarh, where its mainstay Bailadila mines are located. And this affected its overall performance. On a YoY, for the quarter, the company reported a 15% decline in its net profit at Rs 1,679 crore. And the lower iron ore production led to lower sales, which was down 15% at Rs. 2,611.84 crore.  But for the 14.5% decline in tax outgo, the net profit would have slipped further.  Plus, there was a 16% increase in its other income, at Rs.583 crore, which was through interest earned on deposits.

The iron-ore reserves have gone by 50%, based on intensive exploration and the reserve under its control was revised upwards to more than 2.1-billion tons. It sells some 85% of its total iron-ore product to Indian steel producers and the balance is exported, primarily to China. Given the domestic shortage, NMDC has revised its export strategy to reduce overseas shipments from the current 15% of production to 6% of production over the next two years. For current fiscal, the company has earmarked of Rs 4,656 crore for expansion programme, including Rs 1,200 crore for overseas acquisitions. The Govt of India holds 90% stake in the company, FIIs hold 0.7% and DIIs hold 8.32%. Compared to the other mining stocks, which seem to be stuck in a rut due to the mining scam, this stock continues to enjoy investor fancy due to its huge reserves, which as at end of Q2FY13 stands at Rs.22,516 crore. The Govt has approved 10% stake sale in the company and hopes to raise Rs.7000 crore but when is a big question mark.