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Business News/ Companies / Company-results/  Vedanta’s Q4 loss narrows to Rs10,281 crore on lower impairment charge
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Vedanta’s Q4 loss narrows to Rs10,281 crore on lower impairment charge

Vedanta reported a loss of Rs10,281 crore for the March quarter on account of a non-cash impairment charge of Rs12,304 crore taken on oil and gas assets

Net sales for the March quarter stood at Rs15,829 crore, 11% lower than the Rs17,732 crore reported in the same period a year back. Photo: BloombergPremium
Net sales for the March quarter stood at Rs15,829 crore, 11% lower than the Rs17,732 crore reported in the same period a year back. Photo: Bloomberg

Mumbai: Vedanta Ltd reported a loss of 10,281 crore for the March quarter on account of non-cash impairment charge of 12,304 crore, a significant part of which was taken on its oil and gas assets.

The company had reported a loss of 18,718 crore in the year earlier after taking 19,180 crore non-cash charge for impairment of goodwill related to its Cairn India Ltd unit.

“Exceptional items in the quarter were 12,312 crore, of which 12,304 crore pertained to impairment. 10,074 crore of the same was incurred on account of impairment of goodwill created on acquisition of Cairn India and 284 crore due to write-off in exploratory assets in the oil and gas segment. The impairment was triggered by the continued fall in oil prices during the year," the company said in its statement to BSE.

In the last 12 months, Brent crude has plunged 32.3% to $47.18 as on Thursday.

The March quarter impairment amount also includes the impairment taken on some of Vedanta’s iron ore assets.

“Further, in light of the declining iron ore prices, both the acquisition goodwill and carrying value of the exploratory assets in West Africa have also been impaired to the extent of 1,490 crore. In addition to the above, certain unused fixed assets and goodwill at copper mines in Tasmania and (iron ore mines in) Bellary, Karnataka, incurred an impairment charge of 456 crore," the company said in its statement to BSE on Thursday.

Revenue for the company also took a hit due to the fall in metal and oil prices. Net sales for the March quarter stood at 15,829 crore, 11% lower than 17,732 crore reported in the year-ago period.

Global commodity prices have declined over the last one year, including prices for zinc, aluminium and copper—segments Vedanta has presence in.

In the last 12 months, London Metal Exchange (LME) Zinc prices has fallen 18.5%, LME copper has fallen 19.9% and LME aluminium has fallen 12.6%.

Ebitda (earnings before interest, taxes, depreciation and amortization) was lower by 13% at 3,508 crore for the March quarter. “Ebitda was lower by 13% primarily due to a steep fall in oil and metal prices and premia; partly offset by cost-saving initiatives and strong volume," the company said in its statement to BSE.

Vedanta also reported other income of 1,289 crore for the March quarter, compared with 41 crore reported in the same period a year back.

“Other income was significantly higher both sequentially and y-o-y (year-on-year) largely due to the timing differences wherein income earned on certain investments are recognized at maturity. During the quarter, a substantial portion of investments were liquidated at Hindustan Zinc Ltd on account of an announcement of special dividend and at Cairn India," the company said in its statement.

Vedanta holds a 64.92% stake in Hindustan Zinc and 59.88% in Cairn India.

For 2015-16, the Cairn India board recommended a final dividend of 3 per equity share, entailing an outflow of approximately 677 crore including dividend distribution tax. Hindustan Zinc also announced on 30 March a special golden jubilee dividend of 24 per equity share for financial year 2015-16.

For the year ended 31 March, the company reported a loss of 6,137 crore against a loss of 11,373 crore reported for the previous financial year. As on 31 March, net debt for the company was lower at 25,286 crore, reduced by 6,254 crore during the year and gross debt stood at 77,952 crore. Of this, 14,932 crore is expected to be up for repayment in the current financial year.

For fiscal year 2015-2016, the company spent $600 million and plans to spend $1 billion as capital expenditure in the current financial year.

Segment-wise, in the March quarter, Vedanta said oil and gas revenue fell 36%, zinc revenue was lower by 25%, zinc international revenue fell by 13%, aluminium revenue declined 15% and copper India division’s revenue fell by 3%. The company’s power segment revenue rose by 27% in the quarter.

“For the next quarter, aluminium and power should do well. Copper will do better and zinc production is likely to be lower," said Sanjay Jain, senior vice- president (research) at Motilal Oswal Securities Ltd.

In its results presentation, Vedanta said it expected its division Zinc India’s production to be significantly lower in the first quarter of the current financial year and to be higher in the second half of the year.

On Thursday, the shares of Vedanta Ltd fell 4.63% to 100 on BSE, while the exchange’s benchmark Sensex shed 1.77% to 25,603.10 points.

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Published: 28 Apr 2016, 06:03 PM IST
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