Vedanta takes ~17,000-crore coronavirus hit
Posts pre-tax loss of ~15,269 crore in Q4FY20 due to impairment charges for oil & gas biz
Anil Agarwal-led Vedanta Ltd on Saturday reported a consolidated loss before tax of ~15,269 crore for the March 2020 quarter, as against a profit before tax of ~4,104 crore in the same period last year, on account of impairment charges for its oil and gas business assets.
The exceptional item for Q4FY20 was at ~17,132 crore, primarily due to impairment of its Cairn and Rajasthan oil and gas assets and, to a small extent, exploration, copper, and iron ore businesses. The impact on property, plant and equipment, exploration, and other assets was triggered due to a significant fall in crude oil prices after the Covid-19 outbreak, the company said.
“The Covid pandemic has hit the world and us in the last quarter of the year. We have taken a proactive approach to keep our assets and people safe while ensuring optimum operations during these difficult times,” Sunil Duggal, chief executive officer at Vedanta, said.
For the full year 2019-20, the impairment charge was ~17,386 crore. Vedanta has taken large impairment charges in FY15 and FY16 on account of goodwill in Cairn India, where it had acquired a majority stake in 2011.
Also, the company’s consolidated revenue for the March quarter declined 16 per cent to ~19,513 crore from the same period last year on the back of lower commodity prices impacted by Covid, weak volumes in zinc, oil and gas, and steel businesses, and lower power sales at Talwandi Sabo Power Project.
Base metal prices on the London Metal Exchange (LME) had declined sharply during the March quarter. While average aluminium prices at $1,684 a tonne were down 9 per cent year-onyear (YOY), zinc, lead, and copper prices averaged a 9-21 per cent YOY decline.
Lower realisations were partially offset by higher volume at aluminium and iron ore business, and rupee depreciation. Higher alumina production by 13 per cent YOY in Q4 helped reduce the cost of production by 14 per cent, while iron sales in Karnataka were up 17 per cent YOY.
The company’s bottom line, on the other hand, did get some cushioning as benefit of net deferred tax of ~3,186 crore lent some support, bringing the net loss to ~12,521 crore in the quarter goneby. Vedanta had reported a net profit of ~2,236 crore in the same period last year.
The normalised effective tax rate (ETR) for FY20 stood at 34 per cent compared to 28 per cent in FY19 due to a change in profit mix amongst businesses.
In the period under review, the company’s earnings before interest, taxes, depreciation and amortisation (Ebita) stood at ~4,844 crore, down 23 per cent from the same period last year, while Ebitda margin contracted to 28 per cent from 31 per cent in the corresponding period last year.
As on March 31, 2020, Vedanta's gross debt stood at ~59,187 crore, down by ~7,038 crore from the same period last year. On May 12, 2020, the promoter Anil Agarwal group expressed its intention to voluntarily delist the equity shares in accordance with delisting regulations and highlighted an indicative offer price of ~87.5 per share. In the following week, the board of directors of company approved the proposal.