Report No. 20 of 2012-13 – Performance Audit of Production and Sale of Iron Ore by NMDC Limited, Ministry of Steel

Overview

Starting in 1958 with a production capacity of 2 million tonnes per annum, NMDC Limited, a mining Company, has achieved a production capacity of 32 million tonnes per annum (MTPA) as of 2011-12. The Company has been making profit over the last 21 years and earned a profit before tax of RS 10,760 crore on an income of RS 13,278 crore in 2011-12.

The Company undertakes iron ore mining operations mainly through its four open cast mines at Kirandul and Bacheli (two mines each) in the State of Chhattisgarh and one at Donimalai in the State of Karnataka. We conducted performance audit of Company's activities relating to production, evacuation and sale of iron ore covering the period from 2005-06 to 2009-10, This was updated with statistics for 2010-12.

During audit, we reviewed the activities of all the mines, i.e,, five operational mines and two new mines (Kumaraswamy Deposit at Donimalai, Karnataka and Deposit 11B at Bailadila, Chhattisgarh) under development. We also reviewed sales made to selected customers, which represented 94 per cent of the total sales of the Company. Apart from this, we also reviewed price fixation mechanism and minutes of 63 Board meetings held between April 2005 and March 2012.

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