NMDC suffers Rs 746-cr rev loss during 2007-10: CAG

New Delhi: Iron ore miner NMDC has suffered Rs 745.94 crore revenue loss during 2007-10 for not revising the domestic prices of the steel-making raw material in line with prevailing market rates, government auditor CAG said.

"…due to non-revision of domestic prices by the company (NMDC) in line with movement of market price, the company has suffered a revenue loss of Rs 754.94 crore during 2007-10," CAG said in a report, tabled in Rajya Sabha, on Thursday.

The government auditor also said by extending unwarranted reduction in price, NMDC had passed Rs 600.83 crore benefit to customers during 2010-11.

"Further, not increasing the prices by full percentage in line with increase in export prices led to a loss of Rs 227.40 crore during the same period," CAG said.

The government miner exports iron ore by entering into long-term agreements (LTA) with Japanese Steel Mills (JSM) and the price it gets is at par with what Australian and Brazilian exporters get from JSM.

LTA prices of exports formed the basis for determining the domestic prices for LTA with domestic customers, CAG said, adding that 95 per cent of NMDC's sales came from LTA and the rest were spot sales during 2005-12.

"Sales to domestic customers through LTA accounted for 84 per cent of its sales," CAG said.

State-run Rashtriya Ispat Nigam and private sector firms like JSW Steel, JSW Ispat and Essar Steel are NMDC's major customers domestically.

During 2005-12, NMDC contributed 13 per cent of India's iron ore production and met 26 per cent of the domestic iron ore demand. Last fiscal, it had sold 27.3 million tonnes iron ore valued at Rs 11,167.56 crore.