Vedanta Q1 net profit down 30% to Rs615 crore

Sales were lower on account of a fall in oil and metal prices, a weaker power market and lower zinc volumes


Vedanta’s shares closed at Rs164.60, down 2.69%, while the benchmark index was down 0.56% at 28051.86. Photo: Reuters
Vedanta’s shares closed at Rs164.60, down 2.69%, while the benchmark index was down 0.56% at 28051.86. Photo: Reuters

Mumbai: Vedanta Ltd, the flagship firm of Anil Agarwal’s Vedanta Resources Plc, on Friday reported a drop of 30% in consolidated net profit for the June quarter, hurt by lower oil and metal prices.

Net profit dropped to Rs.615 crore from Rs.844.14 crore a year ago. Net sales fell 15% to Rs.14,437 crore from Rs.17,008.81 crore in the year-ago quarter.

A Bloomberg poll of 11 analysts had estimated consolidated net sales at Rs.16,022.10 crore and a poll of seven analysts had estimated net profit at Rs.787.9 crore for the quarter.

“Sales were lower on account of a fall in oil and metal prices, a weaker power market and lower zinc volumes, partially offset by a ramp-up in production of iron ore, power and aluminium,” said a company statement, explaining the reason for the drop.

Tom Albanese, chief executive officer, Vedanta Ltd, said: “We have made good progress on the ramp-up of capacities at our aluminium, power and iron ore businesses during the quarter. These would be significant contributors to earnings as the year progresses.”

He added, “We are focused on generating stronger free cash flow and deleveraging the balance sheet, in line with our strategic priorities. Another of these priorities, the simplification of the group structure, is also on track, following the recent announcement of the revised and final terms for the Vedanta Ltd and Cairn India merger.”

For the June quarter, Vedanta posted earnings before interest, taxes, depreciation and amortization (Ebitda, or operating profit) of Rs.3,543 crore, down 14% from Rs.4,139 crore for the same period last year. The Ebitda margin was flat at 32%.

Finance costs were marginally higher by Rs.20 crore year-on-year, primarily driven by capitalization of power units, increase in temporary borrowing at Hindustan Zinc Ltd, and change in Rs./$ borrowing mix.

Other income increased by Rs.139 crore year-on-year due to higher mark-to-market gains on investments in the quarter, partially offset by a lower investment corpus on account of the payout of a special dividend at the beginning of the quarter at Hindustan Zinc.

Gross debt fell by Rs.606 crore during the quarter to Rs.76,953 crore, given the repayment of an inter-company loan of Rs.5,736 crore to Vedanta Resources, partially offset by borrowings by Hindustan Zinc and the aluminium businesses.

Of the total debt of Rs.76,953 crore, the Rs/$ split is approximately 63%/37%.

Further, the gross debt comprises long-term loans of Rs.59,263 crore and short-term loans of Rs.17,690 crore.

“FY17 debt maturities are Rs.12,406 crore, which we intend to meet through a combination of roll overs, refinancing, internal accruals and working capital initiatives. We continue to evaluate different structures and options for future maturities with an objective to lower funding cost and/or extend the maturity profile,” the firm said.

Vedanta’s shares closed at Rs.164.60, down 2.69%, while the benchmark index was down 0.56% at 28051.86 points.

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