Sesa Sterlite PAT dips 11%, plans significant capex prune

Metal, mining, oil & gas major Sesa Sterlite today reported 11 per cent dip in consolidated profit after tax in October-December quarter of the current fiscal and hinted at pruning capex plans significantly in view of subdued commodity prices.
The company's attributable profit after tax and exceptional item declined to Rs 1,588 crore compared to Rs 1,780 crore during the corresponding quarter last fiscal.
Sesa Sterlite, a unit of London Stock Exchange-listed Vedanta Resources Plc, however, said as its merger and consolidation at the group level was completed in last August, the third quarter performance was compared with the adjusted proforma numbers of the respective periods, which are more representative of the performance during the period, the company said in a release.

The decline in profit after tax was mainly due to various reasons including lower income because of a subdued oil price, but the company said its zinc and oil and gas businesses would drive strong cash flows in the near future. Higher production
Revenues from its businesses such as Cairn India and Hindustan Zinc was down from Rs 19,414 crore to Rs 19,128 crore during the quarter due to decline in the prices of oil, lead, copper and silver. This was partly offset by stronger zinc and aluminium prices.
"We will continue to be watchful in the coming quarters about the commodity prices. We have seen continued declining in the quarter so far on the oil prices ... We have also seen a decline in the copper prices. We are mindful of commodity market," company CEO Tom Albanese told PTI.

The company also plans to "significantly" prune in its proposed capex and opex programmes in across businesses aimed at maximising cash flows in view of the subdued commodity price and a decision would be taken in the next 1-2 months.

"We are reviewing all aspects of capex and opex plans. We have an expectation of significant reduction in overall level of these expenditure. We will be able to be in a position to be more precise on these in the next 1-2 months," Albanese said.
In a presentation last September, the company had said it plans to spend USD 6.1 billion as capex till FY'17 including USD 3 billion in Cairn India, subject to the approval of the government. The company had also plans to invest in its zinc, aluminium and iron ore businesses in India.

"We are focused on disciplined capital allocation, coupled with deferred and phased development spending in zinc, oil and gas and other businesses which will help optimise our assets and drive strong cash flow in near future," he said.
The gross debt of the company stood at Rs 79,096 crore as on December 31, 2014 which was at Rs 80,566 crore a year ago. It has Rs 46,806 crore cash or cash equivalents and liquid investments.