Mumbai: Sesa Goa Ltd., India’s biggest non- state iron ore exporter, said Q4 profit rose after the company sold more of the material used to make steel.
Net income increased to Rs2.54 bn in the fourth quarter ended 31March from Rs1.92 bn a year earlier, Managing Director P. Mukherjee said by phone from Goa, where the company is based. Sales climbed 29% to Rs7.6 bn.
Earnings growth may slow after a government tax on iron ore exports last month caused a decline in overseas sales and a Rs335 mn drop in fourth-quarter profit, Mukherjee said. Net income will fall by Rs1.8 bn next year, he said which is almost a third of this year’s Rs6.06 bn of profit.
Sesa Goa, which has agreed to be acquired by UK based Vedanta Resources Plc, sold 10.8 mn tons of iron ore in the year ended 31March, up from 10 mn tons. It exports 93.5% of production to steelmakers in countries including Japan and China.
Vedanta paid Rs2,036 per share this month for Mitsui & Co.’s 51% stake in the ore miner, or 31% more than the stock’s six-month daily average. Vedanta will buy 20% more from investors at the same price, as required by Indian law, pushing up the total cost to $1.37 bn.
The company beat rivals Arcelor Mittal and Aditya Birla Group’s Essel Mining and Industries Ltd. to secure mines in three Indian states as demand from China, producer of a third of the world’s steel, pushes iron ore prices to records. Rates this year have climbed 9.5% after rising a record 19% last year.
Anglo American Plc said April 23 it will pay $1.5 bn for about half of a Brazilian iron-ore project, adding to $69.8 bn of mining takeovers announced this year.
Sesa Goa gives Vedanta its first iron ore mine in India, where demand for steel is growing at twice the global average, fuelled by economic growth of more than 8%.