A crane lifts a load of copper plates out of a treatment tank at a copper mine, operated by a unit of Vedanta Resources Plc. (Photographer: Waldo Swiegers/Bloomberg)

Q4 Results: Vedanta’s Profit Dips On Lower Copper, Zinc Volumes

Vedanta Ltd.’s profit for the March-ended quarter fell but beat estimates as the company continues to struggle with a shut copper smelter plant and lower zinc volumes.

Net profit for the January-March period was at Rs 2,615 crore, 46 percent lower on a yearly basis. Analysts tracked by Bloomberg had estimated the figure at Rs 1,413 crore. The company had reported exceptional gains of Rs 2,869 crore in the corresponding quarter last year.

Revenue of the Anil Agarwal-led company was down 15 percent to Rs 23,468 crore on a yearly basis. This compares to the Rs 22,542-crore estimate by analysts. The company attributed the dip to its shut copper smelter in Tuticorin, lower volumes at its zinc and iron ore businesses, and lower metal prices. The copper plant’s revenue stood at Rs 2,803 crore—63 percent lower than the year-ago period.

Vedanta Ltd.’s two key divisions—refined zinc and oil & gas—fell short of their production guidance for the financial year 2018-19, the company had earlier said. Zinc volumes were lower owing to unsafe underground conditions at Rampura Agucha in the last quarter of FY19, according to Vedanta’s press release last month. The company’s Skorpion refinery was shut for 15 days in the quarter owing to a strike, further affecting the volumes of the metal.

The company continues to struggle with copper production as its Sterlite plant in Tuticorin remains shut and embattled in a legal battle. The Tamil Nadu government in May 2018 had ordered the state pollution control board to seal and “permanently” close the plant following violent protests over the pollution concerns.

Other Highlights:

  • Operating profit was down 20 percent to Rs 6,135 crore while its operating margin contracted 170 basis points to 26.1 percent, year-on-year.
  • The mining company’s gross debt was at Rs 66,225 crore on March 31— which is Rs 8,066 crore higher than last year.
  • The company attributed this to the acquisition of Electrosteel Steels Ltd., and temporary borrowing at Zinc India.
  • As of March 31, net debt stood at Rs 26,956 crore, which was nearly Rs 5,000 crore higher due to the acquisition.

Mark-To-Market Gains On Cairn India’s Anglo American Investment

The company’s other income rose 77 percent on a yearly basis to Rs 1,628 crore on mark-to-market gains from overseas investments.

Cairn India Holdings Ltd.’s investment in Anglo American Plc had performed positively during the quarter and, on an unrealised mark-to-market basis, the investment resulted in recognition of a gain of Rs 832 crore for the January-March period, Vedanta said in its filing.

Recognition of gain stood at Rs 1,041 crore for fiscal year 2018-19. During the year, Cairn India, a wholly-owned subsidiary, purchased an economic interest in investment in Anglo American Plc. This was purchased from parent Volcan for a total consideration of Rs 3,812 crore.

In March, British oil firm Cairn Energy Plc had said that its holding in Vedanta had dropped to just 0.1 percent after the income tax department sold most of its 4.9 percent stake in the company to recover a retrospective tax demand.