Vedanta reported 99% decline in its consolidated net profit in Q3FY16 compared to a year ago to Rs 17.91 crore, slightly above analysts’ estimates, due to subdued oil and metal prices as market conditions continued to remain challenging.
Revenue declined 22.6% from a year ago to 14,876.5 crore in the third quarter was hit due to benign oil and metals prices despite 13% growth in power business.
According to Bloomberg consensus, the metal and mining conglomerate was expected to report loss of Rs 103 crore on sales of Rs 14,486 crore.
Tom Albanese, chief executive officer, Vedanta said, metal, oil and iron ore prices continue to remain weak in Q4FY16, indicating results will continue to remain under pressure in the fourth quarter.
On merger of Vedanta and Cairn India, Albanese said, “The applications for the scheme have been filed with the respective High Courts, and the shareholders and creditors meetings are expected to be convened in the current quarter. We continue to work towards completion of the merger by Q2 CY2016.”
Despite challenging market conditions, cost reduction efforts have allowed to generate a robust EBITDA margin of 26% for the quarter, Albanese said.
The metal to oil firm, managed to bring down its expenses by 12% from a year ago to Rs 13,541.18 crore in the third quarter.
Albanese said the company is actively focusing on optimising operating expenditure and capital expenditure to maximise free cash flow, refinancing and terming out maturing debt and simplifying the group structure.
The company said that its financial position remains robust with cash and liquid investments of Rs 50,685 crore, which is invested in debt-related mutual funds, bank deposits and bonds, and undrawn committed facilities of about Rs 4,800 crore as on December 31, 2015.
Gross debt and net debt of the company were at Rs 80,952 crore and Rs 30,267 crore, respectively, as of December 31, 2015, higher than R79,433 crore and Rs 27,105 crore as of September 30, 2015. Out of the total debt of Rs 80,952 crore, the rupee/dollar split is approximately 50% each.
Further, the gross debt comprises long-term loans of Rs 67,166 crore and short-term loans of Rs 13,786 crore.
Majority of company’s business comes from Cairn India wherein it holds 59% stake and Hindustan Zinc wherein it has 65% shareholding.
Oil and zinc businesses were impacted by lower commodity prices in international market. Copper business registered a 22.5% de-growth in revenue in Q3FY16 compared to a year ago but its earnings before interest & tax (EBIT) grew by 17.9% during the period.