Vedanta net melts 35% on market conditions

Vedanta's consolidated net profit at Rs 866 crore for the April-June period of 2015-16 was 35 per cent lower than Rs 1,341.2 crore reported in the same period a year ago. This is after adjusting the one-offs like additional charges of Rs 2,128 crore on account of the change in the method of depreciation on some of its oil and gas assets incurred by Cairn India in the June 2014 quarter. Profit before tax and extra-ordinary items stood at Rs 2,065 crore compared with Rs 3,352 crore in the year-ago period.

Soft aluminium prices and declining premiums for the white metal led to a loss of Rs 172.8 crore at the Ebit (earnings before interest and tax) level, for the aluminium segment, compared, with a profit of Rs 254 crore in the June 2014 quarter.

The oil and gas segment also saw its Ebit at Rs 254.8 crore, a decline of 87 per cent year-on-year.

This, however, was offset to an extent by the gains in the zinc and copper segments. The combined Ebit of zinc, lead and silver grew 30 per cent year-on-year to Rs 1,501 crore while copper segment Ebit surged to Rs 481.7 crore compared with Rs 21.7 crore in the year-ago quarter. The softness in power segment on the back of subdued demand and realisations led to further woes. Hence, earnings before interest, tax, depreciation and amortisation (Ebitda) at Rs 3,992 crore came almost 30 per cent lower than the Rs 5,673-crore reported in the year-ago quarter, as well as lower than Bloomberg consensus estimates of Rs 4,275 crore.

Net sales stood at Rs 16,952 crore almost flat against Rs 17,055 crore in the year-ago quarter, but three per cent lower than estimates of Rs 17,512 crore.

The aluminium segment continues to be a cause of concern for the company and there have been reports indicating layoff of employees to contain costs.

The company does not expect to finish FY16 at the same run rate as FY15 and expects that it would be lower. The management, however, remains optimistic on the iron ore business growth and expects approvals for at least one to two mines in Goa coming as early as in August. The managements of the two units are actively engaged with the businesses and decision will be taken depending on the outlook.

On the Cairn-Vedanta merger, it said, "We are in continuous contact with various regulators and exchanges for the merger to go through. Shareholders are seeing the benefit of combining the businesses. So we continue to engage in interactions for the next few months. This merger is going to give earnings stability due to the strong zinc assets."