Naxal hits to pull NMDC net down by Rs 1,000 cr

When the country's largest iron ore producer, NMDC, declares its financial results for 2009-2010, it will report a Rs 1,000-crore drop in net profit. Not on account of last year's slowdown, but Naxalite attacks.

NMDC has been operating for the past 43 years in what has now become the Naxal heartland of Chhattisgarh. The 267-km Essar pipeline, which carried iron ore slurry from a beneficiation plant at Bailadila to its pellet plant at Visakhapatnam (Andhra Pradesh) was blown up by Naxalites in June 2009 near Chitragonda (Orissa), close to the Chhattisgarh border. Essar sources its entire iron ore requirements for the pellet plant from NMDC.

NMDC sources said the blasting of the Essar pipeline resulted in lower despatches of four million tonnes, which would affect its net profit adversely for 2009-2010. NMDC's production in the previous year was 28 million tonnes.

"We will still maintain an earnings before interest, taxes, depreciation and amortisation (ebitda) margin of 75 per cent," said NMDC sources. In 2008-09, NMDC had revenues of Rs 7,564 crore and returned a net profit of Rs 4,372 crore.

Of the three fully-mechanised mines of NMDC, two are in the Bailadila pockets of Dantewads district, accounting for 71 per cent of the government-owned mining company's production.

Despite various, repair on the pipeline has been hampered. NMDC officials are hoping it would be done in the next six months. If that happens, NMDC would post record profits in the current financial year.

NMDC has been affected off and on by Naxal attacks. The rebels grouse being allegedly indiscriminate mining activities and displacement of tribals.

In October 2009, four Central Industrial Security Force (CISF) personnel were killed and two critically injured in a landmine blast at an NMDC facility. Early this year, 19 trucks of a private contractor  were set afire by more than 100 Naxals, who stormed into NMDC's mining complex.

Not just NMDC, though; all companies operating in the 'red corridor' have suffered. The targets range from mobile communication towers, Essar's pipeline to solar plates in Bihar.