CAG said by extending unwarranted reduction in price, NMDC had passed Rs600.83 crore benefit to customers and not increasing prices in line with increase in export prices led to a loss of Rs227.40 crore for the state-run iron ore miner
New Delhi: Iron ore miner NMDC has suffered Rs745.94 crore revenue loss during 2007-10 for not revising the domestic prices of the steel-making raw material in line with prevailing market rates, the Comptroller and Auditor General (CAG) said, reports PTI.
"...due to non-revision of domestic prices by the company (NMDC) in line with movement of market price, the company has suffered a revenue loss of Rs754.94 crore during 2007-10," CAG said in a report, tabled in Rajya Sabha (Upper House of Indian Parliament), on Thursday.
The government auditor also said by extending unwarranted reduction in price, NMDC had passed Rs600.83 crore benefit to customers during 2010-11.
"Further, not increasing the prices by full percentage in line with increase in export prices led to a loss of Rs227.40 crore during the same period," CAG said.
The government miner exports iron ore by entering into long-term agreements (LTA) with Japanese Steel Mills (JSM) and the price it gets is at par with what Australian and Brazilian exporters get from JSM.
LTA prices of exports formed the basis for determining the domestic prices for LTA with domestic customers, CAG said, adding that 95% of NMDC's sales came from LTA and the rest were spot sales during 2005-12.
"Sales to domestic customers through LTA accounted for 84% of its sales," CAG said.
State-run Rashtriya Ispat Nigam and private sector firms like JSW Steel, JSW Ispat and Essar Steel are NMDC's major customers domestically.
During 2005-12, NMDC contributed 13% of India's iron ore production and met 26% of the domestic iron ore demand. Last fiscal, it had sold 27.3 million tonnes iron ore valued at Rs11,167.56 crore.
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