Vedanta shrugs off weak Q1 result

Vedanta rose 0.97% to Rs 129.70 on BSE after the company's consolidated profit after tax (PAT) before exceptional items fell 35% to Rs 866 crore on 1% decline in net sales/income from operations to Rs 16952 crore in Q1 June 2015 over Q1 June 2014.

The result was announced during market hours today, 29 July 2015.

Meanwhile, the S&P BSE Sensex was up 104.20 points or 0.38% at 27,563.43

On BSE, 10.65 lakh shares were traded in the counter as against average daily volume of 4.98 lakh shares in the past one quarter.

The stock hit a high of Rs 132.70 and a low of Rs 127.10 so far during the day. The stock had hit a 52-week high of Rs 305.30 on 19 August 2014. The stock had hit a 52-week low of Rs 126.60 on 28 July 2015.

The large-cap company has equity capital of Rs 296.47 crore. Face value per share is Re 1.

Vedanta's consolidated profit after tax (PAT) after exceptional items surged 131% to Rs 866 crore on 1% decline in net sales/income from operations to Rs 16952 crore in Q1 June 2015 over Q1 June 2014. There was an exceptional item of Rs 2128 crore in Q1 June 2014 on account of change in method of depreciation on some of oil and gas assets by Cairn India, a subsidiary of the company.

Consolidated earnings before interest, taxation, deprecation and amortization (EBITDA) fell 29% to Rs 4039 crore in Q1 June 2015 over Q1 June 2014 due to a steep fall in crude oil prices and aluminium premia. EBITDA was also impacted by one-time expense related to Renewable Purchase Obligations (RPO) provision of Rs 414 crore for the previous years (FY2012 to FY2014) for the Aluminium, Zinc India and Copper - India businesses.

On merger of Vedanta and Cairn India, Vedanta said that the transaction is expected to be complete by first quarter of calendar year 2016. During Q1 June 2015, Vedanta's board had approved merger of its subsidiary Cairn India with itself. Minority shareholders of Cairn India will receive one equity share in Vedanta and 1 redeemable preference share in Vedanta with a face value of 10 for each equity share held. No shares will be issued to Vedanta or any of its subsidiaries for their shareholding in Cairn India. Following completion of the transaction, Cairn India minority shareholders will own 20.2% and Vedanta minority shareholders will own a 29.7% stake in the enlarged entity. The transaction is conditional on Vedanta and Cairn India shareholder approvals, as well as Indian High Court, stock exchange and customary approvals.

Vedanta said that Renewable Purchase Obligation (RBO) was introduced in 2010 by the various State Electricity Regulation Commissions, making it mandatory for distribution companies, open access consumers and captive power producers to meet at least 5% of their total annual consumption of energy through renewable energy sources. The Regulations were finally appealed in the Supreme Court, and the Apex court vide its order dated 13 May 2015, has upheld the validity of RPO Regulations including on captive power producers. A provision of Rs 414 crore was made for the previous years (FY2012 to FY2014) for the Aluminium, Zinc India and Copper - India businesses on account of RPO. At current capacities, RPO will be a recurring cost of approximately Rs 36 crore per quarter across our Aluminium, Zinc India and Copper - India businesses, Vedanta said.

Tom Albanese, Chief Executive Officer, Vedanta said the company continues to focus on improving efficiency, costs, and enhancing production across our well invested asset base.

Vedanta (formerly Sesa Sterlite) is a diversified natural resources company, whose business primarily involves exploring and processing minerals and oil & gas. The company produces oil & gas, zinc, lead, silver, copper, iron ore, aluminium and commercial power and has a presence across India, South Africa, Namibia, Ireland, Australia, Liberia and Sri Lanka.

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