The Comptroller and Auditor General (CAG) of India has reported that NMDC Ltd had fixed over-ambitious targets for production of iron ore. In its report on the operational performance of NMDC Ltd, CAG said the 75 million tonnes per annum (mtpa) production target by 2018-2019 and 100 mtpa by 2021-2022 were fixed without giving due cognisance to the adverse findings of the consultant appointed for the purpose.

These targets were also set without taking into consideration the declining trend in domestic and international prices of iron ore, the CAG said. These targets were subsequently reduced to 50 mtpa by 2018-2019 and 67 mtpa by 2021-2022.

Despite the lower targets, “The enabling action of setting up various projects and infrastructure facilities to achieve the targeted production capacity were not in sync with the envisaged timelines,” the CAG noted.

CAG also red-flagged delays in environmental clearances and rapped the company for undertaking risky investments.

“The company needs to factor in market trends while fixing targets in its periodic plans, so that the set targets are realistic and achievable…The company needs to conduct proper due diligence and pay due cognisance to risk factors before embarking on national and international investment ventures,” the CAG recommended.

“The company needs to strengthen its project execution mechanism/ strategy to avoid delays in implementation of projects/ construction works and to avoid time and cost overruns so that the envisaged benefits are realised…The Board of the Company may strengthen its monitoring mechanism with a view to ensure timely completion of projects,” CAG added.

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