NMDC Limited CONTENTS Directors’ Report .......................................................................... 11 Auditors’ Report ...........................................................................78 Comments of C&AG ...................................................................83 Balance Sheet .............................................................................88 Profit & Loss Account ................................................................89 Schedules.....................................................................................90 Cash Flow Statement .............................................................. 125 ANNUAL REPORT OF SUBSIDIARY COMPANIES J&K Mineral Development Corporation Limited ............................................................. 127 NMDC-CMDC Limited.......................................................... 149 NMDC SARL ........................................................................ 175 Nam - India Minerals Development Corporation (Pty) Limited ................................................... 179 STATUTORY AUDITORS BANKERS State Bank of India M/s. Ramamoorthy (N) & Co. Canara Bank Hyderabad, Andhra Pradesh UCO Bank State Bank of Mysore BRANCH AUDITORS State Bank of Hyderabad M/s. Sriramamurthy & Co. Visakhapatnam, Andhra Pradesh REGD. OFFICE: M/s. D.V. Sarovar & Co. Bellary, Karnataka NMDC Limited “Khanij Bhavan”, M/s. Hari Gupta & Co. 10-3-311/A, Castle Hills Allahabad, Uttar Pradesh Masab Tank, Hyderabad - 500 173 1 NMDC Limited Achievements Turnover – Rs. 6239.09 Crore Profit before Tax – Rs. 5207.32 Crore Cash Profit – Rs. 5264.48 Crore Net Profit – Rs. 3447.26 Crore Total Assets – Rs.15682.99 Crore Net Worth – Rs.14250.45 Crore Book Value per Share – Rs. 35.94 Earnings per Share – Rs. 8.69 Return on Capital Employed – 25% Return on Net Worth – 24% Dividend : - Interim – 75% - Final – 100% Value added per Employee – Rs. 93.58 Lakh Output per Manshift (Iron Ore) – 28.27 Tonnes 2 NMDC Limited Board of Directors Rana Som Chairman-cum-Managing Director S. Machendranathan U.P. Singh Ms. Teresa Bhattacharya Abdul Kalam Director Director Director Director K.S. Raju Y.K. Sharma Arvind Mahajan Director Director Director V.K. Sharma S. Venkatesan N.K. Nanda S. Thiagarajan Director (Commercial) Director (Production) Director (Technical) Director (Finance) N.V. Raja Shekar, IFS Kumar Raghavan Chief Vigilance Officer Company Secretary & ED (L&CC) B.S. Meena R.N. Aga Dr.Indira Misra Director Director Director (Upto 23.01.2010) (Upto 03.06.2010) (Upto 03.06.2010) As on 52nd Annual General Meeting held on 5th August, 2010. 3 NMDC Limited Senior Management G.B.Joshi Atul Bhatt N.K. Dhawan Executive Director (Per) Executive Director (BD) General Manager (RP) Head Office Head Office Head Office L.N. Mathur Subimal Bose A.S. Ahluwalia General Manager General Manager General Manager (Safety, C&CS, Arki, JKMDC) Bacheli Vizag N.P.B. Jagannath Y. Venkata Swamy V.K.S. Rathore General Manager (Engg) General Manager (Proj) General Manager Head Office Head Office Kirandul Complex K.L.N. Rao C.E. Kindo General Manager Project Manager Donimalai Panna As on 52nd Annual General Meeting held on 5th August, 2010. 4 NMDC Limited Speech delivered by Shri Rana Som, CMD at the AGM held on 5th August 2010 Dear Shareholders, I have great pleasure in welcoming you all to the 52nd Annual General Meeting of the Company and present to you the Annual Report of your Company for the financial year 2009-10. The Directors' Report and the Audited Balance sheet of your Company for the period ended 31st March, 2010 have already been provided to all the shareholders of the Company. With your permission, I take them as read. ECONOMIC SCENARIO - WORLDWIDE The year gone by in 2009-10 was a year of stabilization and recovery for the global economy post global economic meltdown and subsequent economic recession. After plunging into the steepest economic contraction since the great depression, the global economy witnessed significant improvement during the year. Although the process of recovery continues, the recent sovereign debt crisis in a few European economies poses new obstacles towards sustained growth and stability on a long term basis. According to the latest world economic outlook published by International Monetary Fund (IMF) in April 2010, world economy is expected to grow by 4.2% in 2010 as against a decline of 0.6% in 2009. At the heart of this recovery was the co-ordinated fiscal action by the world powers, including India, to stimulate the economies. In a sign of shifting economic might, China and India were at the forefront of this recovery added by their relatively stable domestic demand. ECONOMIC SCENARIO - INDIAN India was one of the first countries to recover from the global economic crisis on account of its strong domestic demand. In India, the economic growth exceeded expectations and grew by an impressive 7.4% GDP growth rate during FY 2009-10. The financial year 2009-10 saw large volatility in inflation numbers with food prices witnessing the steepest increase. 5 NMDC Limited As per estimates, the outlook for the 2010-11 looks encouraging backed by normal monsoon, higher agriculture productivity and buoyancy in industrial output and exports. In the year 2010-11, the GDP is likely to grow by 8.5%. WORLD IRON & STEEL SCENARIO - 2009 Global crude steel production during the year 2009 was 1.22 billion tonnes down 8% over 2008 driven mainly by growth in China. During 2009, China's crude steel production was about 569 million tonnes as against 500 million tonnes in 2008 registering an impressive growth of 13.5%. Rest of the world (world-China) showed a decrease of 21% in crude steel production to 652 million tonnes in 2009 compared to 826 million tonnes during 2008. Meanwhile, world iron ore production reached (estimated) 1.83 billion tonnes during 2009 registering an increase of 2.8% over 2008 production level of 1.78 billion tonnes. INDIAN IRON & STEEL SCENARIO - 2009-10 India registered impressive growth of 11% in steel production during 2009-10 and its crude steel production increased to 64.88 million tonnes during 2009-10 compared to 58.44 million tonnes of crude steel production during 2008-09. India's iron ore production during the year 2009-10 is estimated to be 226 million tonnes registering an increase of about 5% over 2008-09 iron ore production of 215.44 million tonnes. THE POSITION OF NMDC For NMDC, the year 2009-10 had been one of challenges and endeavours to overcoming them. In May 2009, the slurry pipeline, laid by a major customer of the company, through which around 7 million tonnes of materials are evacuated from Bailadila sector, was damaged reportedly by the Maoists. With this, evacuation of about 30% of total material from Bailadila got directly affected. Disruption of railway services due to frequent bandhs compounded the problem. Further, as a consequence of the global recession, international prices of iron ore dipped by 32.95% for fines and 44.47% for lumps. With the fall in bench mark prices, the domestic prices were also readjusted downwards. Consequently, the company faced a challenge both in respect of maintaining the level of sales as well as the level of revenue. I am happy to state that your Company has put in all its endeavour to overcome the situation and has been successful to a large extent. Through continuous coordination with railways and through mid-term adjustment of price structure, your Company has been able to restrict drop in sales to less than 10% and 6 NMDC Limited drop in revenue to less than 18%. On the other hand, the Company continued its initiative for horizontal and vertical expansion of its activities. Your company achieved an excellent progress in taking forward its project for construction of an integrated steel plant of 3 million ton capacity in Nagarnar. In order to overcome the difficulty of evacuation, the Company has decided to set up a 12 million ton capacity slurry pipeline from Bailadila to Vizag and put this project on fast track. The construction of a new mine at Bailadila 11B is now in the last stage of completion and work on construction of a new mechanised mine at Kumarswamy in Karnataka is just going to commence. Simultaneously, the company's value addition project of 1.2 million ton capacity pellet plant is progressing satisfactorily. Your Company has also set up a new division called "NMDC Global" to aggressively work in the area of acquisition of mineral assets especially of iron ore and coal in different parts of the world. The sustained efforts of the Company have started giving results in 2010-11. The Company has already marched ahead in recording the highest ever first quarter profit. The dream of NMDC has been to continuously strengthen its core area of mining and also to expand in other fields, both in the areas of mining and value addition so as to improve the Company's value not only for its shareholders but also for the nation, it is created by. COMPANY'S PERFORMANCE The Company's performance for the year under review are summarized as under: Turnover for the year under review was Rs.6239 crores. Profit before tax was Rs.5207 crores. Profit After Tax (PAT) was Rs.3447 crores. Net worth increased to Rs.14250 crores as on 31.03.2010, 23% higher than Rs.11615 crores in the previous financial year. Interim Dividend @ 75% on the equity shares of Re.1/- each aggregating Rs.297.35 crores was paid. The Board has recommended subject to shareholder's approval, payment of final dividend @100% of Rs.396.47 crores. (Total dividend aggregating Rs.693.82 crores). Supply of Iron Ore to domestic industries recorded 206.53 lakh tonnes. Total exports of Iron Ore during the year was 34.32 lakh tonnes. As an MOU signing PSE with the Government of India, your Company's performance during the year qualifies for Excellent rating. 7 NMDC Limited IRON ORE SALES In respect of iron ore, the Company has achieved production of 238.03 lakh tonnes in the financial year 2009-10 against 285.15 lakh tonnes in the previous financial year 2008-09. On the side of sales, the performance in the year 2009-10 has been 240.85 lakh tonnes as against 264.72 lakh tonnes in the previous financial year.