Uptick in Metals Market Likely to Sustain: Vedanta
Co’s consolidated net for Dec quarter rises 4.5 times YoY to ₹ 1,866 crore
Kolkata: The current strength in the metals market is driven by an underinvestment in mining and oil and gas and tighter supply conditions last year, and is likely to sustain the uptrend in prices in coming quarters, the chief executive of Vedanta told ET.
“Absence of large capital budgets will lead to supply constraints and is expected to lead to better prices in coming quarters. The recovery in the US and reasonable performance of the Chinese and Indian economies will drive metal demand in near to medium term,” said Tom Albanese, CEO, Vedanta. Albanese spoke to ET on Tuesday soon after Vedanta posted a consolidated net of ₹ 1,866 crore in the quarter ending December 2016 (Q3FY17), up 4.5 times from the corresponding quarter a year ago, riding on higher volumes of copper, iron ore, aluminium and improved zinc and oil prices. Revenues rose 31% on consolidated basis to ₹ 19,320 crore from the year ago. While Vedanta’s top line grew in line with expectations during Q3FY17, its profits were a shade below estimates of its quarterly net crossing ₹ 2,000 crore.
EBIDTA (earnings before interest depreciation taxes and amortization) was at ₹ 6,002 crore, up 83% from a year ago.
“We have seen the worst of the downturn and have also seen strong resilience in our businesses. We continue to ramp-up volumes and cost efficiencies across our operations, synchronised with higher commodity prices, have significantly driven up EBITDA y-o-y,” Albanese said.
Vedanta also said it achieved a cumulative cost and marketing savings of $545 million over the last seven quarters, ahead of its plans to save $1.3 billion in four years. Improved operational performance led to generation of free cash flow of ₹ 1,801 crore.
“As on December 31, 2016, gross debt reduced by ₹ 1,828 crore to ₹ 64,966 crore, while net debt was lower by ₹ 447 crore to ₹ 11,514 crore on account of positive free cash flow,” the company said.
While its volume of zinc mined in metal production went up 44% quarter-on-quarter, Vedanta, through Hindustan Zinc, received environment clearances for expansion of Zawar and Sindesar Khurd zinc mines. In its aluminium business, the third line at the 1.25 mtpa Jharsuguda-II smelter commenced ramp-up in December 2016.
Vedanta received additional iron ore mining allocation in Goa for FY17. Zinc and oil account for 70% of Vedanta’s business. “The merger with Cairn India is an important strategic step in simplifying the group structure,” the Vedanta statement said, adding that “the transaction is due to be completed by March 2017.”