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Business News/ Companies / Company Results/  Vedanta takes 746 crore impairment for Sterlite Copper's Thoothukudi plant
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Vedanta takes ₹746 crore impairment for Sterlite Copper's Thoothukudi plant

The mining and resources major reported a sharp dip in its profits for the March quarter compared to the previous year due to lower commodity prices, higher borrowing costs and some exceptional charges.

The company reported a profit of ₹1,369 crore attributable to the owners of the company. (REUTERS)Premium
The company reported a profit of 1,369 crore attributable to the owners of the company. (REUTERS)

Mumbai: Vedanta Ltd has taken a final charge on its books on account of its shut Sterlite Copper plant and is exploring options to utilize the plant’s assets at its other locations after the Supreme Court dismissed the company’s special leave petition (SLP) to reopen the unit.

While the company plans to file a review petition before the apex court, it has taken an impairment of 746 crore on its books during the January-March quarter. The residual value of the plant on its books is what can be “conservatively" realised through the sale of the assets, a top executive at the company said.

“We are exploring legal options. At the same time, we are at the drawing board to look at how the asset can be utilised at the rest of our facilities," Arun Misra, executive director of Vedanta Ltd, told Mint on Thursday.

The equipment at the Thoothukudi-based plant, like sulphuric acid plant, phosphoric acid plant, among other things, can be utilized at Vedanta’s numerous other manufacturing locations, Misra said.

“It’s not very difficult to relocate the facilities and make the best use of it. We will first look at the legal options. If all roads are closed, we will of course use the asset wherever it adds the best value to our current business," he said.

Plant shut since 2018

The plant has been shut since 2018 after Vedanta’s application for renewal of Consent to Operate (CTO) for the plant was rejected by the Tamil Nadu Pollution Control Board in April that year. Since then, the company has moved the National Green Tribunal, the Madras High Court and the Supreme Court and even made a failed attempt at selling the plant, but to no avail.

Meanwhile, the company is awaiting CTO for its ESL Steel plant that it has put on the block, according to Misra. The company has received “attractive" offers for the plant that it acquired for 5,320 crore through a bankruptcy resolution process six years ago, he added. The company should get the CTO during the ongoing quarter, post which it expects to close the transaction in due course.

The mining and resources major reported a sharp dip in its profits for the March quarter compared to the previous year due to lower commodity prices, higher borrowing costs and some exceptional charges.

The company reported a profit of 1,369 crore attributable to the owners of the company. This was a 27% decline compared to the preceding year.

Lower prices of metals such as aluminium and zinc during the quarter meant that the company’s top line dipped 6% year-on-year to 34,937 crore.

Earnings before interest, tax, depreciation and amortisation (Ebitda) dipped by a similar magnitude to 8,196 crore. Ebitda margin remained almost steady at 23.5%, dipping just 6 basis points compared to corresponding period last year.

The company’s borrowing cost during the quarter was 34% higher at 2,415 crore, hurting its bottom line. This, after net debt went up to 56,338 crore as of 31 March, from 45,260 crore a year ago.

To be sure, Vedanta Ltd pared its net debt by 6,155 crore during the January-March quarter, its net borrowings having ballooned to 62,493 crore as of 31 December 2023.

Looking ahead, the company expects to aggressively deleverage, according to Ajay Goel, the company’s chief financial officer. The company expects an Ebitda of “no less than $6.5 billion" (nearly 54,000 crore ) in FY25, he said, which will help the company pare its debt.

For context, Vedanta Ltd reported an Ebitda of 33,264 crore for FY24, which was 2% higher than the preceding year.

The company reported a profit of 4,239 crore attributable to owners for FY24, which was 60% lower than in FY23. Revenue for the year was 2% lower at 1.42 trillion.

Speaking about Vedanta’s proposed demerger into six separately-listed companies, Misra said that the demerger process was going per schedule and is expected to be concluded by December.

Vedanta has already received no-objection certificates from the two leading bourses – BSE and National Stock Exchange – and is awaiting a nod from markets regulator Securities and Exchange Board of India (Sebi).

The company expects to receive the green light from 75% of its lenders by the end of May, which is a key criterion for its to receive Sebi’s blessings for the demerger.

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Published: 25 Apr 2024, 03:30 PM IST
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