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OMC net profit up 30% on higher ore rates

Source : BUSINESS_STANDARD
Last Updated: Sat, May 10, 2014 07:53 hrs
Employees are seen at the BBH iron ore mines at Chitradurga in Karnataka

The state-owned Odisha Mining Corporation (OMC), which is yet to finalise its balance sheet for the last financial year, expects its net profit to zoom by more than 30 percent in 2013-14 as per the provisional estimates. This jump in profit is attributed to realisation of better ore prices compared to the previous year.

"We are in the process of compiling data of the last fiscal. But provisional estimates peg the company's net profit after payment of tax somewhere between Rs 1,100 crore to Rs 1,200 crore in 2013-14," said Saswat Mishra, chairman-cum-managing director of OMC.



The company sold nearly 2.1 million tonne of iron ore by the end of December 2013. Sources said, the total figure for 2013-14 could be around 2.5 million tonne. It had sold 2.7 million tonne iron ore in 2012-13. During the year, the rates remained in the tight range of Rs 4,800-Rs 5,200 per tonne for 62 grade iron ore.

Official and trade sources said, better price realisation from chrome ore sales boosted the profit margin of the company.  

In 2013-14, OMC sold nearly 600,000 tonne chrome ore through e-auction, a jump of 50 per cent from 399,000 tonne sold in the previous financial year. Apart from higher volume, the company has benefited from better prices for chrome ore during the year, traders said.

The rates of chrome ore remained in the range of Rs 14,000 per tonne throughout the last fiscal and even went up to as high as Rs 16,000 per tonne. In 2012-13, the chrome rates were hovering around Rs 11,000 per tonne.

"I believe most of the revenue of OMC came from chrome ore sales," said a trader who participates in online auction every month.

Currently, OMC accounts for about 10 per cent of total iron ore production and about   30 per cent of the total chrome ore output in the state. Some of its major iron ore mines are Daitari, Gandhamardan and Kurmitar (Khandadhar) while its main chrome ore property is located at South Kaliapani.

For the current fiscal, OMC has set a target to produce about 4 million tonne of iron ore and about one million tonne of chrome ore. However, it is sceptical about achieving the target.

"We are not sure whether we can meet the production target at a time when we are fighting court cases for lease renewal and have to wait for years to get forest approval for some our properties from the Centre," said Mishra.

The miner fears that it could lose as much as one million tonne iron ore output a year if the apex court rejects the deemed renewal status of its Kurmitar (Khandadhar) mining lease.

The Supreme Court has held that automatic renewals of mining leases, after first renewal period of 20 years, is illegal, while passing a ruling in case of Goa mining scam in April this year. An interim order regarding Odisha mining is expected this month.

Similarly, OMC is trying to get forest clearance from Union Ministry of Forest and Environment (MoEF) for additional storage area in its biggest iron ore mine at Daitari since 2011. Though it got stage-I forest clearance earlier this year, it is awaiting stage-II clearance to boost output of Daitari mines from one million tonne at present to three million tonne per year.

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