Vedanta Q2 net profit drops 34% to Rs 1,343 cr as finance cost spikes

Metals and mining giant Vedanta Ltd Wednesday reported a 34.32 per cent decline in consolidated net profit to Rs 1,343 crore for the July-September quarter due to higher finance cost and expenses.

The Anil Agarwal-led company had clocked a profit of Rs 2,045 crore during the corresponding quarter previous fiscal.

Its total income during the quarter rose to Rs 23,297 crore as against Rs 22,509 crore in the corresponding period last fiscal.

Total expenses also rose to Rs 20,999 crore during the quarter under review as against Rs 18,854 crore in the year-ago period.

The company said in a statement that its balance sheet was strong and the net debt reduced by Rs 3,553 crore in the second quarter of FY2019. Net debt was at Rs 26,357 crore at September-end, down quarter-on-quarter on account of cash generation from operations and working capital release.

The finance cost during the quarter was at Rs 1,571 crore, higher by Rs 144 crore year-on-year mainly due to increase in borrowings on account of acquisition of Electrosteel and increase in interest rates in line with the market rates.

In March, Vedanta was declared successful resolution applicant by the committee of creditors (CoC) for Electrosteel Steels under the corporate insolvency resolution process.

In June, Vedanta acquired the management control of debt-laden Electrosteel Steels.

"The company is uniquely poised to grow in commodities that have rising demand especially in India with an enviable growth pipeline which is systematically being brought to fruition," Vedanta Chief Executive Officer Srinivasan Venkatakrishnan said.

Vedanta was also competing for stressed asset Essar Steel.

When asked about the company's plan of expanding Electrosteel Steels, he said, "We have already mentioned it would be USD 200-300 million dollar it would be very quick capex plan. I would say under 18 months.