In an interaction with Shri Amitava Mukherjee CMD (Addl. Charge) and Director (Finance), NMDC LTD.

Right Quantity, Right Quality and Competitive Price are the Unique Selling Points of NMDC that will continue to be the alters as we grow with our esteemed customers, asserts Amitava Mukherjee

Right Quantity, Right Quality and Competitive Price are the Unique Selling Points of NMDC that will continue to be the alters as we grow with our esteemed customers, asserts Amitava Mukherjee, CMD (Addl. Charge) and Director (Finance). 
 

Can you shed some light on your competitive landscape? 
 

India produced about 258 Million Tonne of iron ore in FY 23 and is expected to produce 285-290 Million Tonne of iron ore in FY 24. The estimated domestic production of iron ore in Q1 of FY 24 is around 72.5 Million Tonne, which is 13 per cent higher compared to CPLY. 

NMDC is the largest Iron ore Producer in the country producing over 40 MTPA of iron ore. NMDC has produced 10.7 Million Tonne of Iron ore in Q1 of FY 24, which is about 20 per cent higher compared to CPLY. The state-owned Odisha Mining Corporation (OMC), has produced about 32 Million Tonne of iron ore in FY 23 whereas in Q1 it is estimated to have produced about 5.7 Million Tonne of iron ore (lower by about 10 per cent) as against 6.3 Million Tonne of iron ore in the Q1 of CPLY, mainly on account of sluggish sales of iron ore. 

In terms of Steel production, the crude steel production of the country for FY 23 stood at about 126 Million Tonne, which is around 5 per cent higher than the previous year. In the ongoing financial year, the steel sector continues to grow strongly, as India has produced about 45.3 Million Tonne of crude steel from April-Jul 23, which is about 11 per cent higher compared to CPLY. 

Iron ore exports are rising in the current FY and are estimated to be about 10.5 Million Tonne between April- July 2023 as against 4 Million Tonne in CPLY. In view of the increased production the availability of iron is likely to remain stable. Moreover, it is noteworthy, that the Government has acknowledged that the production of key minerals under the ambit of Mineral Conservation and Development Rules (MCDR) has increased during the last nine years (FY 15 to FY 23) and reflects on the augmented production capacities. The production of iron ore has increased at a CAGR of 9 per cent in the said period. 

NMDC is also well on its way to achieving a record-breaking production volume in the current financial year, as we embark on a journey to becoming a 100 MTPA iron ore miner by FY 30.

 

With the recent increase in iron ore mining in the western region, especially in Gadchiroli, Maharashtra, do you see any risk to NMDC Ltd’s offtake from some of the western players? If so, what are the company’s plans to mitigate these risks?

Lloyd Metals and Energy Ltd has been granted an iron ore mine in the Surajgarh village at Gadchiroli. The mines are being operated since 2021 and are estimated to have a reserve of about 74 Million Tonne which may revise upward with the ongoing exploration activities. In FY 23 they evacuated about 3 MTPA of iron ore from the mines. Recently in March, the production capacity has been revised to 10 MTPA from the existing 6 MTPA. 

New Mines are being allotted by the Government and are being operationalized for merchant and captive use across the country. This is being done in order to strengthen the availability of an important steel-making raw material -iron ore. This is being done to pave the way for the envisaged growth in the steel sector by 2030-31. 

As far as mitigating the risk due to the increased availability of iron ore in the country is concerned, NMDC remains the single largest iron ore miner in the country with a market share of about 18 per cent. We are in the business of producing quality iron ore for over six decades and are a trusted growth partner for all its customers. NMDC is synonymous with transparent business practices and customercentric approach. 

NMDC by virtue of its sheer volumes, quality of iron ore in the deposits (high Fe%, Low alumina, Silica and a good tumbler index), especially in the Chhattisgarh region, coupled with consistent supplies to its strong and large Long-Term Customer base will continue to have an edge over other suppliers in the market. Right Quantity, Right Quality and Competitive Price are the Unique Selling Points of NMDC that will continue to be the alters as we grow with our esteemed customers. 

NMDC has not been exporting any iron ore since March 21 as we accord top priority to the domestic iron and steel industry and are committed to meeting the demand of the domestic market. In line with the National Steel Policy 2017, we are well on our way to reaching new production milestones and evolving as a 100 MTPA miner in the coming years.
 

In Q4 FY23, the company’s net sales decreased by 13.76 per cent on YoY, but net profit climbed by 22.27 per cent YoY. What were the variables that led to the company’s performance? 

The main reason for the increase in net profit after tax by 22.27 per cent in Q4 of FY’23 is exceptional income of ₹ 1,237 crore. Exceptional Income includes:

(a) Receipt of ₹ 958 crore from Monitoring Committee – towards 10 per cent of the amount withheld for the period 1st January 2019 to 31st March 2022.
(b) ₹ 279 crore profit on Strategic disinvestment of NINL. The dip in net sales by 13.76 per cent is due to a decrease in average sales realization by 13 per cent.
 

Could you please update us on the probable CAPEX in FY2024 & FY2025 and other production-enhancing projects? What are the specific projects that are included in the CAPEX plan?
 

The CAPEX target for FY’24 is ₹ 1,630 crore approx. which is mainly towards

(i) Laying of Slurry Pipeline from Bacheli to Nagarnar
(ii) Screening Plant III at KDL
(iii) Crushing Plant of Dep 14 & 11 C
(iv) Screening Plant II at DIOM & Others
(v) Development of Coal Block at Ranchi etc.
 

What are your top 3 Strategic Priorities?

The Top Three Strategic Priorities are:

a. Digitization and Efficiency Improvement

In the era of digitalization, NMDC is also matching the pace and implementing digital technology. The target is to implement Industry 4.0 in the operations. NMDC has laid down a ROAD MAP for Digital Disruptions in its Mining Business in a Phased Manner. As part of the journey to "Automate & Integrate" and create "Intelligent" Mines, NMDC has initiated the building Blocks of its Digital Journey by embarking on ERP implementation. NMDC successfully implemented ERP SAP S/4 HANA in January 2021. 

Some of the automations/digitalisations envisaged by NMDC are - Vendor Invoice Management System, Customer Portal, Vigilance Portal, E-measurement Book, Ex-employee Portal, Management Dash Boards, Fleet Management System (FMS), Hospital Management System (HMS) etc. The target is to integrate the activities and implement “Integrated Command and Control Central” and convert the mines into “Intelligent Mines”. The target is to improve the operational efficiency of the mines.
 

b. NMDC to become a 100 Million Tonne mining capacity company

In FY22 and FY23, we produced over 40 MnT of iron ore for two fiscals in a row. NMDC plays a pivotal role in fostering self-sufficiency in the steel sector and is a key enabler in India's industrial progress. Our partnership with the steel industry has been a cornerstone of the nation's development, and we take great pride in this responsibility. 

We have made a steely resolve to achieve in the next five years as much as we have done in the past six decades by enhancing our production from 40 MnT to 100 MnT. In this journey to measure up to our entire history in the next 5 years, we will also ensure the realization of ambitious projects in our pipeline.
 

c. Diversification in other minerals

Diversification into other minerals like Coal, Gold, Lithium etc. We are already in the process of opening Coal and Gold Mines in Jharkhand and Andhra Pradesh respectively and also a Gold mine in Australia. We are looking for diversifying in Critical minerals like Lithium
through various routes.