While steel companies have seen a steep erosion of their
profitability in the last quarter, NMDC, their major ore supplier and country's
biggest iron ore miner, has seen it soar to almost close to Rs3,000 crore.
The primary reason for this is that while companies have
been hit by higher coking coal import bills due to a falling rupee and also
high prices of iron ore, NMDC has gained due to the exercise of quarterly
benchmarking of iron ore to international prices in India.
As a result, gradually demands have started emanating for
monthly benchmarking of iron ore prices in India to international prices as
against the current trend of quarterly contracts.
However, Rana Som, the chairman and managing director of
NMDC, said the company follows the global trend and currently the trend is of
quarterly contracts.
“When long-term contracts were annual, we had annual
revision and now they are quarterly, so we are following that trend,” Som said.
The only steel companies which have been able to hold their
margins steady in these rough times are the ones having access to captive mines
of iron ore and coking coal, such as Jindal Steel and Power Ltd and Tata
Steel’s domestic operations.
While the losses of the steel industry are reeling under a
sharp rise in input costs (read iron ore and coking coal) and rupee
depreciation NMDC have scaled up exponentially in the last quarter and successfully
posted profit of Rs2,938.29 crore.
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