The fall in commodity prices and the mining bans in Karnataka and Goa weighed heavily on London-listed Vedanta Resources Plc as the latter cost Vedanta Rs 2,700 crore in profits in the financial year ended March 31, 2013. The company reported pure earnings, or EBITDA of Rs 26,500 crore, 49% of which was contributed by Cairn India.

The company said that its attributable profit of Rs 850 crore for the year ended March 31, 2013 was up by 163.2% as against Rs 323 crore in FY12. Its revenues went up by 7%, at Rs 81,000 crore in the same period. The EBITDA margin stood at 32.6% as against 28.7% in 2011-12.

Vedanta said, “During the year, we mined record zinc and lead metal production as well as strong increases in lead and silver volumes in Zinc India. Aluminium smelters operated above rated capacity and power sales volume improved significantly although we were impacted by power transmission constraints. These were mainly due to regional power distribution capacity constraints and legalised supply and demand imbalances. Copper cathode production at KCM and Sterlite India also increased.” However, the lower commodity prices played the spoilsport and the company could manage to increase its revenues by a mere 7% and the net profit declined by over 6%. It said, “The prices of many commodities declined during the financial year as global economic growth slowed and concerns surrounding the economic outlook increased.”

The average aluminium prices declined by 15% whereas zinc, lead and copper prices were also lower by 7% each, last year.

The company said that it continues to focus on selective acquisitions to further its growth strategy. It said, “We seek large proven assets with the potential for growth and/or cost improvement, where we can leverage our skills and experience. These could include new geographies and commodities that meet our investment criteria.”

Vedanta now owns a controlling stake in Cairn India which contributed 49% of Vedanta’s Rs 26,400 crore pure earnings, or EBITDA. The company said that the diversification helped it to improve the profitability despite the adverse commodity prices in copper, aluminium, zinc, lead and silver.

With Sesa Goa, its Indian iron ore mining arm performed badly because of the mining bans in Karnataka and Goa, the company has shifted its focus to its iron ore asset buy in Liberia, Africa. Vedanta said, “West Africa is an emerging hub for iron ore. The region has approximately 34 billion tonnes of reserves and resources, with the potential to become a 100 million tonnes per annum iron ore exporting region.”

Although the Supreme Court has allowed opening of category A and B mines in Karnataka, Sesa Goa is currently in the process of taking necessary approvals from the environment ministry to restart its mines.

The company said that its average debt in the year ended March 31, 2013 stood at Rs 90,700 crore as against Rs 74,000 crore in 2011-12. Its net debt came down by 14.4% in the year, to Rs 46,400 crore and the net gearing stood at 31.4%.

Courtesy: Business Standard