Detailed Narrative
Strong FY25 Performance Amidst Challenges
Despite facing industrial issues that led to a loss of 43-44 days of production in FY25, NMDC reported a commendable 19% year-on-year PAT growth and 16% PBT growth (after exceptional items📎). The company also achieved its highest-ever capex of ₹3,700 crores during the fiscal year, demonstrating its commitment to strategic investments and capacity building.
Ambitious Capacity Expansion and Capex Plans
NMDC is targeting an ambitious increase in production from approximately 50 million tons to 100 million tons in the coming years. For FY26, the company plans a capex of ₹4,000 crores. Overall, projects worth ₹40,000 crores are already sanctioned (with ₹28,000-29,000 crores already in execution and another ₹12,000 crores to be sanctioned soon), and an additional ₹31,000-32,000 crores are in the drawing board stage, including two slurry pipelines estimated at ₹20,000 crores.
Strategic Land Acquisition for Value Addition
The company acquired 1,167 acres of land from RINL for approximately ₹1,500 crores, strategically located near Gangavaram port. This land is designated for key infrastructure projects, including an 8 million tons per annum pellet plant, a large blending yard with 20-30 million tons capacity, and future facilities for processing other minerals like lithium, aligning with NMDC's strategy to move up the value chain.
Nagarnar Steel Plant Turnaround and Operational Improvements
The Nagarnar Steel Plant, after initial operational challenges such as an R1 roughing stand breakdown and dispatch issues, has shown significant improvement. Dispatch volumes increased from 125,000 tons per month to 230,000 tons in March and 215,000 tons in April. This turnaround has led to the plant becoming EBITDA positive on a monthly basis in March and April, generating a cash surplus of ₹1,400-1,500 crores. The company targets 98% capacity utilization for HR coils (2.6-2.7 million tons) in FY26.
Diversification into Coking Coal and International Assets
NMDC is actively pursuing diversification into new minerals and geographies, with a clear policy to explore 10 key minerals, including coking coal. The company is evaluating operational stage coking coal assets in regions like Australia and Indonesia to capitalize on India's projected demand growth from 55-60 million tons to 150-160 million tons. The Rohne coal block is targeted to commence operations by Q3 or Q4 FY26, further supporting diversification efforts.
Focus on Pellet Exports and Pricing Mechanism
For FY26, NMDC aims to sell 2.5-3 million tons of pellets, with a focus on high-grade (66-67 DRI grade) pellets to achieve a premium of $30-$50 per ton in the international market. To enhance transparency and responsiveness to market dynamics, the company is transitioning from a manual pricing regime to an index-based or formula-based pricing mechanism, with initial implementation already underway.
Receivables Management and Liquidation
The company's receivables reached approximately ₹7,800 crores, primarily from RINL and NSL. However, NSL has begun making payments of ₹100-200 crores per month, with full liquidation expected by the end of FY26. RINL has also started generating cash surplus and recommenced bill discounting, indicating active efforts to liquidate outstanding amounts and improve working capital.