Sesa Goa lowers FY12 volume guidance to 15%

Sesa Goa, a Vedanta Group firm, today scaled down its sales volume guidance for the year to 15-16% from the earlier projection of 25% amid uncertainty over the resumption of iron ore exports from Karnataka and logistical issues in Goa.

"This is the first time that we are reversing our growth estimates as various restrictions, particularly the export ban in Karnataka, coupled with restrictions of logistics on public roads of Goa... 20-25% growth is not possible, it may be 15-16%," Sesa Goa Managing Director P K Mukherjee said during an investor call.

He added that despite the Supreme Court lifting the ban on iron ore exports in April, the Karanataka government is yet to issue permits for transportation of iron ore from the state and this has led to uncertainty in the markets.

The Vedanta Group firm, which posted a consolidated net profit of Rs 840.59 crore for the April-June quarter, expects to sell its entire output of iron ore from Karnataka in the domestic market during the current fiscal.

"We are targeting to sell it in the domestic market due to the uncertainty... We will increase supplies to steel plants in Karnataka when our sinter plant gets commissioned in December," Mukherjee said.

Sesa Goa has pegged iron ore production in the current fiscal at about 22 million tonnes, of which 7 mt will come from Karnataka, while 15 mt will be produced from its mines in Goa, he said.

The Sesa Goa MD added that its operations have not been affected due to the controversy over illegal mining in the southern state, as its operations are in Chitradurga district, whereas the Bellary-Hospet area is under investigation.

On iron ore sales volumes, which fell by about 12% during Q1 this fiscal to 4.3 million tonnes, the Sesa Goa Managing Director said it was primarily due to the termination of a third party mining agreement in Orissa and logistical constraints in Goa.

"Due to this, our sales were down by 60,000 tonnes," Mukherjee said.