New Delhi: Challenging market conditions and volatility in commodity prices pulled down the consolidated net profit of mining major Vedanta by 35 percent to Rs 866 crore in the first quarter of 2015-16.
The Anil Agarwal-led mining conglomerate had clocked a net profit of Rs 1,341.23 crore a year ago.
The firm, part of the London Stock Exchange-listed Vedanta Resources, saw its net sales fell marginally to Rs 16,951.88 crore in April-June of 2015-16, from Rs 17,055.5 crore in the same quarter of 2014-15. Its total expenses rose to Rs 14,742.34 crore from the earlier Rs 13,599.20 crore.
On the quarterly show, Vedanta Ltd CEO Tom Albanese told PTI: "It was quite a challenging period for the natural resources sector and this is expected to be for some time. We have been controlling costs and capital expenditure."
Albanese, however, said the firm is beginning to see some tightness in supply of minerals, notably zinc, indicating that such a scenario will lead to prices hardening.
Going ahead, he said: "For the balance of the next quarter, I'm looking forward to those actions that we or the government can take and we can actually bring our business into full potential. Notably, this would include getting the iron ore production going from Goa and our aluminium businesses.
"This would include getting requisite approvals, so we can expand our facility at Lanjigarh (Odisha) for refining and be able to use our own power generation to ramp up facilities for aluminium smelters in Jharsuguda through CPP conversion."
Both iron ore and aluminium markets are in a "very difficult share right now", so the firm needs to ensure that those businesses can remain compatible and sustainable, he added.
The firm, earlier known as Sesa Sterlite, said attributable PAT was 35 percent lower at Rs 866 crore in the quarter under review due to a lower EBITDA partially offset by lesser finance costs, forex gains and a subdued depreciation and amortisation.
Exceptional items of Rs 2,128 crore (gross of tax) for Q1 of 2014-15 pertain to change in the method of depreciation at Cairn India for the period up to March 31, 2014, it said.
"In Q1, we saw continued volatility in commodity prices, but zinc has held up quite well in view of its strong fundamentals and is now the largest contributor to our EBITDA," Albanese said.
"We continue to focus on improving efficiency, costs, and enhancing production across our well-invested asset base. We remain on track to restart iron ore production in Goa following the monsoon."
The company's gross debt increased Rs 1,778 crore to Rs 79,530 crore on account of funding project payments and temporary working capital requirements.
"Debt levels are expected to reduce as working capital is repaid in Q2 of 2015-16," the statement said.
The stock on Wednesday closed at Rs 130.60 on BSE, up 1.67 percent.
Vedanta said its cash and cash equivalents stood at Rs 47,000 crore for the June quarter.
The Goa government has approved all leases of the company after the Supreme Court order in April 2014 lifted the ban on mining, it said.
"The company is in process of obtaining other approvals and clearances necessary for the resumption of operations and expects to restart mining activities in the second half (October-March) of the current fiscal," Vedanta added.
On renewable purchase obligation (RPO), Vedanta said a provision of Rs 414 crore has been made for previous years (2012-13 to 2014-15) for aluminium, zinc and copper businesses in India.
At current capacity, RPO will be a recurring cost of around Rs 36 crore per quarter across the firm's aluminium, zinc and copper businesses in the country, it added.
RPO was introduced in 2010 by various state electricity regulation commissions, making it mandatory for distribution companies, open access consumers and captive power producers to meet at least 5 percent of their total annual consumption of energy through renewable energy sources.
On appeal, the Supreme Court has upheld the validity of the RPO regulations, including those on captive power producers.
Mined and refined zinc production was significantly higher year on year in line with the mine plan and the company has maintained its lowest decile cost position, it said.
In oil and gas business, the production volume stood at 209,738 boepd (Barrels of Oil Equivalent Per Day) and output in Rajasthan was steady at 172,224 boepd. Gas production grew 20 percent quarter on quarter, Vedanta added.
The production in Ravva and Cambay grew 8 percent y-o-y.
Vedanta reported a record quarterly aluminium production despite weaker markets, it noted.
On copper, it said, there was higher cathode production at 98 kilo tonnes (KT) and continued strong treatment and refining charges (TCRC) realisations.
Zinc International production ruled steady at 70 KT and the firm has commenced pre-stripping at Gamsberg in South Africa.
