The PSU iron ore maker, in Q2FY13, showed a decline in iron ore production by about 23% (YoY) due to heavy rains and evacuation related issues in Chhattisgarh, where its mainstay Bailadila mines are located. And now in Q3, iron ore production was down 25% and performance is once again affected due to evacuation problems at the same mines, which also got aggravated by poor off-take of ore by the customers. On a YoY, the company reported a 30% fall in net profit at Rs.1293 crore Net sales was at Rs.2047 crore, down 27%. Sale of iron ore was down 17%. The fall in net profit would have been much lower but for the 30% fall in tax outgo. Other income up 6% also helped, which was through interest earned on deposits.

The iron-ore reserves have gone up 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 80% stake in the company. 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 Q3FY13 stands at Rs.24,010 crore.