New Delhi: The government Thursday accorded Navratna status to mineral giant National Mineral Development Corporation (NMDC) Ltd, a move which will enable the public sector company to avail greater financial and managerial autonomy and undertake domestic and overseas business initiatives like mergers and acquisitions.
“The proposal for conferring Navratna status for the NMDC Ltd received from the ministry of steel was considered by the government. After considering all relevant factors and parameters, the government has decided to confer Navratna status to NMDC Ltd,” the government said in a notification.
“It will give us a great help in making NMDC a global company. Apart from administrative and financial power associated with Navratna status, it is a recognition of the efforts the employees of NMDC have been putting up over the years,” NMDC Chairman and Managing Director Rana Som told PTI.
The new financial and operational autonomy will allow NMDC to form joint ventures in India and abroad up to 15% of its networth or Rs1,000 crore without the permission of the government.
The grant of navratna status to the NMDC follows the commitment of the UPA government’s National Common Minimum Programme (NCMP) to strengthen public sector units by providing them full managerial and commercial autonomy to enable them operate in a competitive environment.
NMDC, which is the country’s biggest miner of iron ore and other minerals, has a market cap of Rs1.41 lakh crore and its shares closed at Rs10,695 Thursday at the Bombay Stock Exchange.
“From a modest profit of about Rs48 crore in 1990-91, NMDC has come a long way to pay the highest dividend of 352% in 2006-07 with production of about 27 million tonnes of iron ore and a profit of over Rs2,300 crore. So, clearly there was a case for recommending Navratna status to NMDC,“ a top Steel Ministry official reasoned.
Meanwhile, NMDC would invest about Rs18,000 crore to ramp up its production capacity to 50 million tonnes and conduct fresh explorations within the next five years. Besides, the company is targeting Rs3,005 crore this year and has paid 100% as interim dividend amounting to over Rs130 crore to the government already.
“We would invest about Rs18,000 crore in the next five years to ramp our production capacity to 50 million tonnes of iron ore, besides conducting fresh explorations,” Som recently said.
He said NMDC would produce 3.10 lakh tonnes of iron ore this year and was chalking out plans to acquire mines both within and outside the country. NMDC will be a global company, he asserted.
Besides, NMDC along with SAIL and RINL, is building a 4-million-tonne steel plant in Chhattisgarh at the cost of Rs1,244 crore, he added. The project’s final DPR was under consideration.
The mineral giant would be setting up two pellet plants of one million tonne each at Donimalai in Karnataka at a cost of Rs700 crore.