NMDC hit by Rs 746-cr revenue loss, says CAG

Iron ore miner NMDC has suffered Rs 745.94 crore in revenue losses 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.

"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 ecnt 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.