Uptick in Met­als Mar­ket Likely to Sus­tain: Vedanta

Co’s con­sol­i­dated net for Dec quar­ter rises 4.5 times YoY to ₹ 1,866 crore

The Economic Times - - Companies: Pursuit Of Profit - Rakhi.Mazum­dar @times­group.com

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.”


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