July 2008NMDC Ltd. the new Navratna PSU is the most profitable one among the government-owned companies. The recently released annual result of the company records a net profit of Rs 3251 crore on a turnover of Rs 5711 crore - a whopping 57 per cent profitability. Compared to the previous year there has been a 40 per cent increase in net profit – an increase by Rs 931 crore in absolute terms from Rs 2320 crore in year-ended March 31, 2007. "NMDC earned the record profit despite working hard to keep iron ore prices stable in the domestic market. In fact NMDC has provided iron ore to Indian industry at an average price of Rs1900 per tonne against international price of Rs 3500", said Rana Som, the CMD of the Navratna PSU.
NMDC's turnover increased by 36 per cent during the year ended March 31, 2008 – it increased to Rs 5711 crore from 4541 crore in the year before. In view of the fact that NMDC has been responsible for maintaining stable iron ore prices in the country, the average price realization has increased only nominally during the year. The company sold 244.06 lakh tonnes of iron ore in the financial year against 223.28 tonnes during the year before. Total sales of ore overseas increased from 32.61 lakh tonnes to 37.78 lakh tonnes. The average price realization thus works out to Rs 2026 per tonne in 2007-08 against Rs 1775 in 2006-07 – a rise of mere 14 per cent. The point to note is that during the period international steel prices rose by more than 27 per cent from Rs 21960 per tonne in January 2007 to Rs 27960 per tonne in February 2008.

During the year under report NMDC produced a record 298.16 tonnes of lump and fine ore. This is 10 per cent more than the previous year production of 271.77 tonnes. However NMDC saw a fall in income from sale of minerals other than iron ore. Income from sale of other minerals and services stood at mere Rs 5.78 crore against Rs 14.92 crore last year.

NMDC paid a dividend of Rs 652 crore. Since the government owns more than 98 per cent of NMDC shares the lion's share of the dividend flows back to the exchequer. If one adds the tax paid during the year – Rs 1717 crore – the total realization by the exchequer from NMDC works out to over Rs 2360 crore. On a government investment of Rs 130 crore this implies a return of 18 times. NMDC indeed gives the highest return to the exchequer. Add the price stabilization effect arising out of NMDC holding the iron ore price and the critical role of NMDC in the country's economy will be apparent.