Bangalore: The Karnataka state-owned Hutti Gold Mines Ltd (HGML), India’s only gold miner, is set to make a profit of Rs 100 crore or more in 2010-11, up from Rs 94 crore a year ago, riding on higher prices for the precious metal.
“With increased production and the rise in gold prices, we will be achieving thethree-digit figure,” said HGML managing director V. Chandra Sekharin an interview.
In the global market that guides prices locally, gold set several records in 2010-11, rising above $1,400 an ounce driven by worries over a slow economic recovery, political turmoil in North Africa and West Asia and concerns over unmanageable European debt.
In Mumbai, spot gold closed at Rs 20,625 per 10 grams on Monday, showing a jump of 26% year on year, data from a trade body showed.
“We have produced an additional 110kg this year and, hence, the reason for the higher profit,” Sekhar said. HGML produced about 2,060kg, or 2.06 tonnes of gold ore in 2009-10.
The firm has invested Rs 70 crore in the current fiscal on better technology which, Sekhar said, was one of the reasons for the improved performance.
The investment is part of the modernization and expansion programme at Hutti mines. The crushing capacity is being raised to 2,400 tonnes a day from 1,500 tonnes, he said.
The company can process 550,000 tonnes of ore every year. HGML has two plants in Karnataka—at Hutti in Raichur district and in Chitradurga. India is the world’s largest market for gold but has a minuscule domestic production, which comes from Hutti. In 2010, India consumed a record 963.1 tonnes of gold, up 66% from the previous year as a good monsoon and higher economic growth led to a rebound in gold consumption, a World Gold Council report shows.
The company has had a mixed record, having made accumulated losses of Rs 30 crore between 1995 and 2000. It made a profit of Rs 19 crore in 2001 but then was on the verge of closure after losses in 2002-03. That plan was shelved when it made a profit of Rs 48 crore in 2004-05. The company has been profitable since then.
As part of diversification plans, the company will be signing a memorandum of understanding with Hindustan Copper Ltd in a few weeks to open a copper exploration mine in Chitradurga beside the existing facility, Sekhar said.
HGML also operates a 9.3MW wind mill farm in Chitradurga, having recently added 2.1MW of capacity. The firm recently entered into a tie-up with Suzlon Energy Ltdfor additional power generation of 2.1MW from the wind mill farm.
Few companies have strayed into gold exploration in India even though mines ministry data shows proven reserves of 15.6 mt of the metal in India. Private firm Geomysore Services (India) Pvt. Ltd is exploring for the resource in Andhra Pradesh.
HGML posted a profit of Rs 94 crore in the last fiscal year on a turnover of Rs 320 crore.
Ruchira Singh in Delhi contributed to this story.