Sesa Goa, a Vedanta Group company, expects to receive clearances to restart mining in Karnataka during the June quarter, and is targeting the domestic market when iron ore production commences.
P. K. Mukherjee, Managing Director, said the company has applied to the Ministry of Environment for Renewal of Forest Clearance which expired in October and expectations are that it should happen soon.
“The Forest Advisory Committee that recommends clearance is meeting on May 1. We are also in the process of getting approval for our resettlement and rehabilitation. We expect to start production from this quarter if we receive the go-ahead,” he said.
The Supreme Court recently lifted the iron ore mining ban in Karnataka. In 2011, the apex court banned iron ore mining in Bellary, Chitradurga and Tumkur districts of Karnataka, due to rampant illegal mining.
On the export restriction imposed by the apex court, Mukherjee said the company will find enough demand for iron ore in the domestic market as mines in Karnataka will produce about 25 million tonnes (mt) of iron ore against the demand of 35 mt. The mining ban in Goa may prolong as the Supreme Court is yet to fix a hearing date. Meanwhile, the production of pig iron at the company’s plant in Goa has taken a huge hit.
“We are operating our pig iron plant at 70 per cent capacity utilisation. The cost of production has hit the roof with huge shortage of quality iron ore. We are not able to pass on the incremental cost due to low demand,” he said.
However, he added, the company has bagged a large export order for pig ironPig iron is the intermediate product of smelting iron ore with a high-carbon fuel. The company has pig iron production capacity of 625,000 tonnes per annum in Goa.
Sesa Goa is continuing with its austerity measures which includes cutting down on travel, closing down canteen facility and reducing the working hours for employees, he said.
Profit, sales down
On a standalone basis, Sesa Goa incurred a loss of Rs 175 crore in the March quarter, against a profit of Rs 648 crore in same period last year. Sales plunged 84 per cent to Rs 291 crore.
On consolidated basis, net profit fell 74 per cent to Rs 298 crore, as sales plunged 90 per cent to Rs 291 crore.
The board has recommended a dividend of 10 paise per share.