Vedanta pre-tax profit down 57% at Rs 1,122 crore in Q2 on low revenue

Topics Vedanta  | Q2 earnings

Metals and mining conglomerate Vedanta reported a consolidated pre-tax profit of Rs 1,122 crore for its Indian arm in the September quarter, down 57 per cent from the same period last year as lower revenues and a one-time impairment charge hit performance.

Revenue was Rs 21,739 crore, down three per cent from a year before, on the back of weak commodity prices, said the company. A net exceptional loss due to the one-time impairment charge stood at Rs 422 crore. 

The exceptional item was a charge of Rs 504 crore relating to impairment at Avanstrate Inc, partially offset by accrual of interest against pending claims at TSPL Sterlite Energy, based on a Supreme Court order, giving a net charge of Rs 422 crore, said the company.

However, consolidated profit in the quarter was Rs 2,730 crore, up 44 per cent from last year, from a one-time deferred tax benefit of Rs 1,891 crore.

“We are at an exciting transition that will see the company accelerate in the expansion of its reserves and resource base over the coming quarters. This expansion is being delivered through strict capital allocation and balance sheet focus aimed at creating value for our stakeholders,” went a company statement from Srinivasan Venkatakrishnan, chief executive officer.

Vedanta was the highest bidder for the Jamkhani coal block in Sundargarh district of Odisha, in the 10th tranche of the captivel block auction conducted by the Union ministry. The block is in proximity to the company’s Jharsuguda aluminium smelter. Jamkhani is one of the most attractive coal blocks for the smelter in terms of location, annual capacity, reserves and readiness to produce, said the company.

The approved annual capacity of the mine is 2.6 million tonnes (mt), with estimated extractable reserve of 114 mt. Once operational, it will provide fuel security, improve power availability and  strengthen the aluminium business, said Vedanta.  

The company’s aluminium loss widened in the quarter, mainly due to lower global prices and coal shortage, even as the cost of production fell, year-on-year.

The company’s consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) declined 15 per cent from the period last year to Rs 4,497 crore. Gross debt reduced by Rs 3,279 crore, bringing the ratio of net debt to Ebitda down to 0.9, lowest among Indian peers, said Vedanta. Net debt reduced by Rs 8,322 crore in the quarter. As on September 30, the total of cash and liquid investments was Rs 35,817 crore. 

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