LONDON (Alliance News) - Vedanta Resources PLC released the full year results of its subsidiary on Thursday, revealing a steep drop in profit due to lower oil and metal prices.
Vedanta Ltd is the London-listed company's subsidiary with zinc, lead, silver, iron ore, copper, aluminium, power generation and oil and gas assets spread across India, South Africa, Namibia, the Republic of Ireland, Australia, and Liberia.
Th subsidiary posted a post-tax loss of INR6,216 crore in the financial year that ran until the end of March, shrinking from a INR11,373 crore loss in the previous year.
Vedanta Ltd managed to book a profit before tax and exceptional items of INR6,748 crore, but that has dropped 45% from the INR12,274 crore profit reported in the previous year. Exceptional items almost halved in the year INR12,452 crore from INR22,199 crore whilst taxes were also considerably lower at INR433 crore compared to INR1,448 crore.
The exceptional items booked in the year mainly relate to Vedanta Ltd's stake in Cairn India with other items booked against oil and gas, iron ore and copper assets. Vedanta is currently in the process of merging Vedanta Ltd and Cairn India to consolidate its assets and improve the balance sheet of both firms.
Income from operations at the subsidiary fell 13% year-on-year to INR63,931 crore from INR73,364 crore, pushing its earnings before interest, tax, depreciation and amortisation down by a third to INR15,012 crore from INR22,296 crore as its Ebitda margin declined to 30% from 41%.
The subsidiary's attributable profit after tax before exceptional items amounted to INR2,910 crore, a 43% fall from INR5,097 crore a year earlier.
"This year we successfully lowered production costs across all businesses, while achieving record annual production at Zinc India and of aluminium, power and copper cathodes. This is the result of our continued efforts to drive innovation, to optimise our existing low-cost operations across our Tier 1 assets that positions us strategically to benefit from future demand in India and globally," said Chief Executive of the subsidiary, Tom Albanese.
"Our focus has been and will continue to remain on deleveraging our balance sheet and maximizing free cash flow," he added.
Vedanta Ltd said it remains in a strong cash position with INR52,666 crore of cash and liquid investments and undrawn facilities of INR6,500 crore. At the end of March, net debt had fallen to INR25,286 crore from INR31,540 crore.
"The company is actively managing its balance sheet in light of the current commodity price environment, with a focus on maximizing free cash flow; refinancing and terming out maturing debt; and simplifying the group structure," said the subsidiary.
Operationally, Vedanta Ltd said it delivered record production of zinc, lead and silver at Zinc India, another subsidiary that is part of Vedanta Ltd, alongside record production of aluminium, power and copper cathodes. The subsidiary has also started to increase production of aluminium, power and iron ore, it said.
In March, Vedanta Ltd had a power portfolio with a total capacity of 9,000 megawatts.
London-listed Vedanta Resources shares were trading up 0.8% to 419.0 pence per share on Thursday afternoon.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
