Sesa Goa Q1 Net down 57% at Rs 414.30 cr

Company reported loss due to ban on iron ore mining operations in Goa and Karnataka

Vedanta group firm Sesa Goa today reported a 57% decline in consolidated net profit at Rs 414.30 crore for the quarter ended June 30, 2013, as its iron ore mining operations remained closed due to ban in Goa and Karnataka.

The company managed to remain profitable in the quarter largely on account of Rs 625.45 crore profit coming from its associate firm and oil major Cairn India. Sesa Goa holds 20% stake in the oil major.

Otherwise, it would have been consolidated net loss of Rs 211.15 crore in the quarter, the company said in a filing to the BSE.

It had posted a net profit of Rs 963.97 crore in the corresponding quarter of the previous fiscal, which includes contribution from Cairn India.

The continuation of mining ban in Goa and non-resumption of operations in Karnataka during the quarter continued to play spoilsport for the company. Due to this, the company neither produced nor sold any iron ore during the quarter, it said in a separate statement.

Its Goa operations closed 10 months back, while the Karnataka operations came to cease two-and-a-half years ago.

However, during the last quarter, Forest Advisory Committee of the Environment Ministry recommended granting forest clearance to company's mine in Chitradurga district of Karnataka. A final approval from the ministry is now awaited.

Sesa Goa's mining lease for Karnataka had expired in October 2011. Subject to statutory clearances, the company can now operate the mine at a reduced capacity of 2.29 million tonnes per annum (MTPA) against the  original capacity of 6 MTPA.

"We expect to resume mining in Karnataka from Q2," the company said, adding that the mine has received clearance from the Supreme Court, and is now awaiting final statutory clearances in order to restart mining.

On resumption of mining operations in Goa, the company said it remains suspended as "the date for hearing is yet to be fixed by the Supreme Court".

The closure of iron ore operations in both the states has also led to a decline in Sesa Goa's net income from operations by over 79% to Rs 360.66 crore during the quarter vis-a-vis Rs 1,724.94 crore for the Q1 of FY 2013.

The mining operations in Goa have been banned since September 2011, following a report of Justice M B Shah Commission, which had pegged about Rs 35,000 crore losses to the exchequer due to illegal mining.

First, the Goa government and later the Supreme Court banned mining in the state after the report was made public.