In This Article:
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CapEx: INR 3,112 crores locked in this year; expected to reach INR 4,000 crores for the financial year.
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Future CapEx Plans: INR 70,000 crores planned over the next five to six years to reach a 100 million tonne target.
Release Date: February 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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NMDC Ltd (BOM:526371) reported a strong quarter with production levels surpassing those of the previous year's Q4, marking an unprecedented achievement.
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The company successfully maintained iron ore prices despite a downturn in steel prices, showcasing effective pricing strategies.
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Capital expenditure (CapEx) for the year has already exceeded last year's figures, with expectations to reach INR 4,000 crores, nearly double the previous year.
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NMDC Ltd (BOM:526371) hosted a successful vendor conference, unveiling plans for a significant CapEx of INR 70,000 crores over the next five to six years to achieve a 100 million tonne production target.
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The company has taken possession of land for developing India's largest blending yard, which will support future expansion and infrastructure projects.
Negative Points
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The company faces challenges in dispatching production due to non-availability of rigs, impacting sales volumes and causing a backlog.
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There is uncertainty regarding the potential increase in royalty rates in Karnataka, which could affect financials if implemented retrospectively.
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NMDC Ltd (BOM:526371) is experiencing increased finance costs due to higher working capital requirements.
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The company is dealing with significant receivables from RINL, which could impact cash flow if not resolved promptly.
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There are concerns about the high CapEx required to reach the 100 million tonne target, which may necessitate a reevaluation of dividend policies in the future.
Q & A Highlights
Q: The royalty as a percentage of realization is around 46% this quarter, much higher than the last two quarters. Have you started making provision for the possible higher royalty in Karnataka? A: We have made no provision for the expected higher royalty in Karnataka. The higher royalty is due to increased production, which is about 86 lakh tonnes compared to the previous quarter. The royalty provision is made on production, not sales.
Q: What was the sales volume this quarter at NMDC Steel, and how are you ramping up there? A: This quarter, we produced around 380,000 tonnes, but dispatches are a problem due to non-availability of rigs. We are working on solutions, including backloading cold rigs and light rigs. Sales revenue has grown to about INR 2,120 crores, but we need to sell around 155,000 tonnes to break even.