NMDC Limited · NSE:NMDC
NMDC — IPO Roadshow (January 2010)
57 slides from NMDC's IPO roadshow presentation, Jan 8, 2010
Slide 1: NMDC Limited Presentation
NMDC Limited Presentation 8 January 2010 Strictly Private and Confidential The Government of India is proposing, subject to receipt of requisite approvals, market conditions and other considerations, an offer for sale of the equity shares of the Company in the near future and the Company is in the p
Slide 2: Disclaimer
Disclaimer The information contained in this Presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for or purchase the securities of the Company in any jurisdiction. Neither this Presentation or any part of it shall form the basis of, o
Slide 3: Table of Contents
Table of Contents 1. Corporate Overview 2. Operations 3. Commercial Overview 4. Human Resources 5. Financials 6. Environment, Health and Safety
Slide 4: 1. Corporate Overview
1. Corporate Overview
Slide 5: NMDC - highlights
NMDC - highlights Indian iron ore producer accounting for: – About 14% of India’s total production of iron ore * – About 1.7% of world iron ore production ** Financial strength Among the world’s least cost producers of – High net worth, zero debt, cash high quality iron ore reserves – 65%+ Fe
Slide 6: Formation of NMDC – key milestones
Formation of NMDC – key milestones Established on 15th November 1958 as a Government company as per the provisions of the Companies Act Developed from being a single product (lump ore) single customer company to a multi product (lump ore, fines and calibrated lump ore), multi customer (>100) com
Slide 7: Significant mining expertise attained over several years of existence
Significant mining expertise attained over several years of existence Started operation as exporter of iron ore but gradually increased its market share in domestic market Conducted extensive exploration work covering a large number of minerals such as iron ore, copper, diamonds, phosphates, etc.
Slide 8: Organisation Structure
Organisation Structure CHAIRMAN-CUM- MANAGING DIRECTOR Company Director Director Director Director ED (PER & CVO Secy ED (Production) (Tech) (Comml) (Finance) IR) (L&CC) Projects Engineering CWS Projects Corporate IE&MS Steel Affairs Commercial Personnel Materials R&D Finance Corporate and Vigilance
Slide 9: Board Composition
Board Composition Details Number Remarks Whole-time Directors 5 CMD with 4 full-time functional directors GOI Officials as Directors 2 To give support from Government of India Independent Directors (1) 6 To review performance and for corporate governance Total 13 (1) Appointment of one Independent D
Slide 10: Introduction to the Board
Introduction to the Board Mr. Rana Som - Chairman cum Managing Director Mr. Rana Som is an HR professional with post-graduate qualifications in Economics and Personnel Management. He has approximately 37 years of managerial experience and has been the CMD of Hindustan Copper Limited and Director of
Slide 11: Introduction to the Board (cont’d)
Introduction to the Board (cont’d) Mr. B.S. Meena – Government Nominee Director Mr. B.S. Meena I.A.S is presently serving as Special Secretary and Financial Adviser, Ministry of Steel, Government of India. He has served in various positions / capacities in Government Mr. U.P. Singh – Government Nomi
Slide 12: Introduction to the Board (cont’d)
Introduction to the Board (cont’d) Mr. Abdul Kalam – Independent Director Mr. Abdul Kalam is a graduate in mining engineering and has approximately 37 years of experience in the coal mining industry. He is a retired Chairman and Managing Director of Eastern Coalfields Limited and also served as Chai
Slide 13: Business objectives
Business objectives To continue to be a low cost, efficient, eco-friendly mining company To expand its exploration wing to acquire more prospecting licenses and mining leases in India and abroad To expand into non-iron ore minerals – The Company has got leases for limestone, magnesite and is o
Slide 14: Business Strategy
Business Strategy Forward Integration Value addition projects steel, pellets, critical beneficiation Core Business Horizontal Integration Exploration, evaluation, Horizontal Integration mining, beneficiation Overseas expansion, New JVs, collaboration new minerals, new leases in Core Strength through
Slide 15: 2. Operations
2. Operations
Slide 16: Diversified product portfolio – current and planned
Diversified product portfolio – current and planned Mineral Description Production Capacity Iron ore Mining complexes at – Kirandul (Chattisgarh) 30 mTpa (current) (lumps and fines) – Bacheli (Chattisgarh) and 50 mTpa (by FY15) – Donimalai and Kumaraswamy in Karnataka Diamond mine at Panna (Madhya P
Slide 17: Iron-ore: Production and Sales Performance
Iron-ore: Production and Sales Performance 30 29.82 28.52 28.18 27 26.23 26.47 25.59 24.85 Million Tonnes 24 23.22 22.92 21 20.74 18 15 2004–2005 2005–2006 2006–2007 2007–2008 2008–2009 Production Sales * Source: NMDC Annual Report for the year ended 31 March 2009 17
Slide 18: Process for acquisition of mining leases
Process for acquisition of mining leases Stage 1: Reconnaissance Permit (RP) application for larger area of exploration RP Grant by respective state governments RP deed execution Reconnaissance Reconnaissance Survey work under RP (Period of RP - 3 years) Permit Selection of area for Prospe
Slide 19: Iron Ore Reserves / Resources of NMDC
Iron Ore Reserves / Resources of NMDC Iron Ore Reserves / Resources as on 1.4.09 * Present Reserve (proved) 1,156 mT ** Probable Reserve 79 mT Possible Reserve 126 mT Resources Based on Ongoing Drilling 102 mT Total (Including 50% of D-4 & D-13) 1,463 mT The above reserve is based on a cut off level
Slide 20: Current production sites
Current production sites Production (mt) Complex Reserves (mt) FY08 FY09 Kirandul 288.9 11.21 10.77 Bacheli 564.6 14.35 10.81 Donimalai 37.4 5.82 5.23 Panna Diamond Mine Resource includes proved, probable and possible reserves + ongoing drilling Madhya Pradesh Kirandul Complex Deposit – 14 / 11C Chh
Slide 21: Kirandul Mining Complex (Bailadila Deposit-14 & Deposit-11C)
Kirandul Mining Complex (Bailadila Deposit-14 & Deposit-11C) Reserves / Resources Information * Reserves / Resource (mT) as on 1.4.09 Original Mined till Production Life of Investment Estimated Year March-09 Ongoing Capacity Mine (Rs. Cr.) Reserve Proved Probable Possible Total (mT) Drilling (mTpa)
Slide 22: Bacheli Mining Complex (Bailadila Deposit-5 & Deposit-10/11A)
Bacheli Mining Complex (Bailadila Deposit-5 & Deposit-10/11A) Reserves / Resources Information * Reserves / Resource (mT) as on 1.4.09 Original Mined till Production Life of Investment Estimated Year March-09 Ongoing Capacity Mine (Rs. Cr.) Reserve Proved Probable Possible Total (mT) Drilling (mTpa)
Slide 23: Donimalai & Kumaraswamy Mining Complex
Donimalai & Kumaraswamy Mining Complex Reserves / Resources Information * Reserves/Resource (mT) as on 1.4.09 Original Mined till Production Life of Investment Estimated Year March-09 Ongoing Capacity Mine (Rs. Cr.) Reserve Proved Probable Possible Total (mT) Drilling (mTpa) (years) (mT) Donimalai 1
Slide 24: Diamond mine at Panna
Diamond mine at Panna Panna Diamond mine was re-opened on 20.06.09 after a closure of 4 years after the Supreme Court authorised this mine to operate in a wild-life sanctuary NMDC has the clearance for producing 100,000 carats of gem and industrial diamonds per annum 24
Slide 25: Logistics infrastructure
Logistics infrastructure Bailadila (Kirandul & Bacheli complexes) Traffic moved in the last 3 years through The Kirandul-Kottavalasa railway line (K-K line) was various modes (mT) – Bailadila Sector opened in 1967 exclusively to connect Bailadila 2006-07 2007-08 2008-09 mines to Vizag Port – The K
Slide 26: Logistics infrastructure - Ports
Logistics infrastructure - Ports Exports from Bailadila Sector are handled at Vizag Port while those from Donimalai Sector are handled at Chennai Port Each port can accommodate capesize vessels of 130,000T Loading rate is typically about 35,000T/day for panamax vessels and 60,000T/day for cape
Slide 27: New Projects: Iron ore
New Projects: Iron ore Under development Deposit -11B of Bailadila – Mine reserve (proved) – 114 mT – Mine capacity – 7 mTpa – The mine is expected to be commissioned by 2010 end Kumaraswamy mine (currently under manual operations) – Mine reserve (proved) – 132 mT – Mine capacity – 7 mTpa – In t
Slide 28: Steel Plants
Steel Plants Jagdalpur, Chhattisgarh Capacity – 3 mTpa (hot metal), Investment – Rs16,781 cr Environmental clearance obtained Land in possession 995 acres, additional land of 780 acres is under acquisition Sanction for construction/operational water and construction power received Project
Slide 29: Pellet Plants
Pellet Plants Pellet plants are intended for utilisation of slimes and value addition of the existing products which helps in achieving zero waste targets and maintain environment Two pellet plants under development – At Donimalai, Karnataka (Capacity: 1.2 mTpa) at an investment of Rs 546 crore
Slide 30: Coal Blocks
Coal Blocks The Ministry of Coal has allotted two coal blocks – Shahpur East and Shahpur West to NMDC in July 2007 Blocks have been regionally explored by GSI Area – Shahpur East: 6.93 sq km – Shahpur West: 5.875 sq km Reserve – Shahpur East: Total - 63.356MT (Proved: 53.606MT; Probable – 9.
Slide 31: Panthal Magnesite Mine, J&K
Panthal Magnesite Mine, J&K NMDC is developing a Magnesite mine at Panthal in Jammu as a JV with JKMDC The mine along with the plant of 30,000 T/annum for Dead Burnt Magnesite will be developed by a JV company called J&KMDC Ltd. NMDC has 74% equity in the JV 31
Slide 32: Arki Limestone Project, HP
Arki Limestone Project, HP Estimated reserve of 120 mT The mine will be developed with a capacity of 3 mTpa at a project cost of Rs 274 crore The product is mainly Lump, which is of SMS grade suitable for Steel Plant. Fines will be used for cement manufacturing, for which permission of State G
Slide 33: Location of New Projects
Location of New Projects Panthal Magnesite Project, J&K Jammu and Kasamir Sasangada, Ghatkudi Himathal Pradesh Arki Lime Stone Project, HP Jharkhand Coal Block in Shahdol, MP Karnataka Ramandurg Iron Ore Deposit 33
Slide 34: Beneficiation of BHJ / BHQ
Beneficiation of BHJ / BHQ Iron ore mines of NMDC have BHJ / BHQ. Donimalai mine alone has about 17 mT of BHJ. This is considered as waste as the Fe% is about 35%. R&D centre has developed a flow sheet of setting up a demonstration plant to beneficiate BHJ / BHQ material and upgrade it to about
Slide 35: Research and Development
Research and Development Located at Hyderabad to undertake in-house research work Established to characterise ore and develop process flow sheet for exploitation of minerals. All the operational mines were set up based on our R&D recommendations R&D centre has been named as a ‘Centre of Excell
Slide 36: Update on acquisition of Sponge Iron India Ltd.
Update on acquisition of Sponge Iron India Ltd. Merger of Sponge Iron India Limited is in final stage Land of 445 acres available with the company will facilitate modernisation and expansion and is expected to add value to NMDC 36
Slide 37: Backward Integration
Backward Integration NMDC has set up a Global Exploration Centre at Raipur in Chhattisgarh to provide services free of cost to State Govts., in regard to exploration activities 1st MOU has been signed with Govt. of Jharkhand to carry out geological exploration in Jharkhand for various minerals l
Slide 38: Overseas Plans
Overseas Plans Set up an International Investment division called NMDC Global to acquire overseas properties especially in the field of iron ore, coal, manganese and fertiliser minerals, namely rock phosphate and potash Secured prospecting license for Gold in Tanzania, completed work and now awa
Slide 39: 3. Commercial Overview
3. Commercial Overview
Slide 40: Global Steel and Iron Ore Production
Global Steel and Iron Ore Production 2,000 1,792 M illion T onne 1,750 1,633 1,488 1,500 1,320 1,344 1,250 1,184 1,330 1,250 1,147 1,069 1,000 2004 2005 2006 2007 2008 World Crude Steel Production World Iron Ore Production World crude steel production has witnessed an impressive growth during the l
Slide 41: Relation of Steel Consumption with GDP Growth
Relation of Steel Consumption with GDP Growth Sensitivity of GDP Growth vs. Steel Consumption: GDP Growth Steel Consumption Growth Rate Each 1% growth upto 9% +1.2% Each 1% growth beyond 9% +1.5% As per recent estimates, India’s GDP is likely to grow about 7.5% in 2009-10 second highest (after China
Slide 42: Iron Ore Sector Dynamics
Iron Ore Sector Dynamics The experience of the 2008-09 recession has indicated that industries dependent on export are more susceptible to volatilities of the market China and India are leading the way in world crude steel production Unlike world steel production, iron ore sea-borne trade is esti
Slide 43: Review of Indian Steel Trends
Review of Indian Steel Trends India Crude Steel Capacity and Production Export and Import – Steel 100 100% 10 90 90% 80 80% 8 70 70% Million Tonne 60 60% 6 50 50% 40 40% 4 30 30% 20 20% 2 10 10% 0 0% 0 FY10E FY11E FY12E FY13E FY96 FY97 FY99 FY00 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY98 FY01 FY02 FY96
Slide 44: Export vis-a-vis Domestic Supply of NMDC
Export vis-a-vis Domestic Supply of NMDC Initially Started with 100% Export Orientation 90 80 70 60 50 % Age 40 30 20 10 0 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Export % Domestic % Have followed diverse market approach and is present in both domestic as we
Slide 45: NMDC Customers - Domestic
NMDC Customers - Domestic NMDC is the preferred supplier of iron ore to most of the domestic steel producers Map showing locations and names of key customers - Steel production capacity of NMDC’s customers: 40 mTpa - Their Maximum Iron Ore requirement: 64 mTpa Customer Location RINL AP Essar JSW S
Slide 46: NMDC Customers - Export
NMDC Customers - Export Export Policy of GoI Export markets and range of quantity as per – Export of +64% Fe content iron ore of all long term contracts (2006-07 to 2010-11) origins except Goa and Redi is exported through MMTC, the canalizing agency of GOI Quantity range Country Unit (per annum) –
Slide 47: Composition of sales and pricing
Composition of sales and pricing NMDC supplies about 85% of its sales Sales realisation – weighted average rate per ton (last based on long term agreements both in the domestic and export markets five years; Rs/ton) 2004-05 2005-06 2006-07 2007-08 2008-09 Spot sales of about 15% of total sales K
Slide 48: Future Logistics Plan
Future Logistics Plan In order to meet increased demand, NMDC has plans to increase its production capacity to about 50 mTpa by 2014-15 comprising about 43 mTpa from the Bailadila sector and 7 mTpa from the Donimalai sector In order to increase evacuation of iron ore from Bailadila, the followin
Slide 49: 4. Human Resources
4. Human Resources
Slide 50: Human Resources
Human Resources Number of employees over last five years 6,000 5,900 5,948 5,800 5,700 5,600 5,667 5,652 5,500 5,582 5,560 5,400 5,300 Mar-06 Mar-07 Mar-08 Mar-09 Dec-09 As of December 2009, there were 803 technical executives and supervisors in the Company Industrial relations have been cordial
Slide 51: 5. Financials
5. Financials
Slide 52: Summary standalone financials – last 5 years
Summary standalone financials – last 5 years All figures in Rs. crores Summary Profit and loss stmt 31-03-2005 31-03-2006 31-03-2007 31-03-2008 31-03-2009 Sales 2226.55 3707.38 4182.86 5709.16 7561.41 EBITDA 1373.51 2883.82 3578.33 5007.47 6721.79 PBT 1223.65 2770.13 3498.31 4947.47 6648.23 Profit a
Slide 53: September 09 & 08 limited review financials
September 09 & 08 limited review financials All figures in Rs. crores September 30th 2008 2009 SALES 3288.77 2666.58 EBITDA 2956.91 2367.67 PBT 2924.26 2339.66 PROFIT AFTER TAX 1926.25 1544.59 SUMMARY BALANCE SHEET TOTAL FIXED ASSETS 748.65 1113.84 TOTAL CURRENT ASSETS, LOANS AND ADVANCES 9955.73 12
Slide 54: Key financial indicators
Key financial indicators Sales (Rs Crores) PBDIT (Rs. Crores) Capex (Rs. Crores) 8,000 7561.41 8,000 400 6721.79 336 7,000 7,000 350 5709.16 6,000 6,000 5007.47 300 5,000 4182.86 5,000 250 3707.38 3578.33 4,000 4,000 200 2883.82 134 3,000 2226.55 3,000 150 121 113 2,000 2,000 1287.49 100 47 1,000 1,
Slide 55: Key financial indicators
Key financial indicators Output/Man shift 35 29.94 27.77 28.62 30 23.98 25 Tonnes 20 14.59 15 10 5 0 1999-2000 2005-2006 2006-2007 2007-2008 2008-2009 Value added/employee 140 122.75 120 94.72 100 Rs. In Lakhs 80 67.12 56.83 60 40 20 6.83 0 '99-00 2005-2006 2006-2007 2007-2008 2008-2009 55
Slide 56: 6. Environment, Health and Safety
6. Environment, Health and Safety
Slide 57: Action Areas for CSR
Action Areas for CSR Integrated development of villages Covering villages with Integrated Medicare System Promoting Education & Training Promoting Nutrition Working in areas beyond the periphery especially for disaster management shelter Established strong binding with surrounding villages to