NMDC Plans Rs 75,000-crore Capex To Double Production Capacity In 10 Years
NMDC share price was trading 2.13% lower at Rs 232.01 apiece on the NSE as against the benchmark Nifty's decline of 0.29% at 1:32 pm on Tuesday.
State-owned miner NMDC Ltd. is aiming to double its existing capacity to over 100 million tonnes in the next decade, according to the company's chairman and managing director, Amitava Mukherjee.
Speaking to NDTV Profit, Mukherjee said the company has planned capex of up to Rs 75,000 crore to reach this target.
"We plan to spend around Rs 70,000 to Rs 75,000 crore to take our capacity to about 100 million tonnes by the end of the decade, which would require a substantial investment in terms of marketing infrastructure and dispatch infrastructure as well,” he said.
Mukherjee added the company had substantial cash balance, and would fund the planned capex with internal accruals.
"We have a cash balance of around Rs 13,000-Rs 14, 000 crore, which will also go up as we increase our production. Also, we expect our internal accruals to rise. Hopefully, we will not require borrowing," he said.
The top executive predicted the increased capacity would enable the company to take its profitability up by at least 2x, if not more.
The largest iron ore producer in the country is on track to comfortably achieve its capex guidance of Rs 2,200 crore for FY25, according to Mukherjee.
"We have already achieved around Rs 700 crore in the H1. In H2, I think we will be easily achieving the remaining [capex]. We have spent around Rs 1,500 crore, in the acquisition of a strategic piece of land in Vizag, where we expect to terminate our slurry pipeline, and build a pellet plant, and also have a major blending yard there. So, these are the major highlights of capex. I think we should end up at Rs 4,000-crore of capex by the end of this year," Mukherjee added.
The land acquisition is connected to the company's project to build a 400- km slurry pipeline to transport iron ore from its Bailadila mines in Chhattisgarh to Vizag in Andhra Pradesh.
Mukherjee is confident NMDC Ltd. will breach the 50-million tonnes mark for volumes in FY25.
Metal stocks have been in focus over the past few days amid speculations about a stimulus by the Chinese government to revive the economy. China is the world’s largest consumer of metals. The Chinese finance minister on Saturday indicated a series of fiscal measures to stimulate growth and increase domestic demand.
Commenting on the development, Mukherjee said the stimulus from the Chinese government would bring long-term relief.
"For iron ore, I would presume the worst is over. With the Chinese stimulus, I think they will have a better domestic market, which means more demand for iron internationally. This will give stability to the international market and consequently to the Indian market. Although I would say that the international market and the domestic market are fairly insulated from each other," he added.
Shares of NMDC Ltd. were trading 2.13% lower at Rs 232.01 apiece on the NSE as against the benchmark Nifty's decline of 0.29% at 1:32 pm on Tuesday.
