Production halts in India hurt Vedanta Resources first-quarter results

Written by Reuters | Updated: Jul 31 2013, 22:09pm hrs
Vedanta
1st-qtr EBITDA falls 23 pct to $1.03 bln

1st-qtr revenue falls 23 pct to $2.87 bln

Says to resume iron ore mining in Karnataka in 2nd-qtr

Expects order on group restructuring soon

Vedanta Resources Plc reported a 23 percent decline in first-quarter core earnings, hurt by production holdups at its copper and iron ore mines in India.

Core earnings at its copper business fell 60 percent to $52.8 million as production at its copper smelter in Tuticorin, India, was suspended for most of the quarter.

The smelter, operated by Vedanta's unit Sterlite Industries Ltd, has long been the target of protesters and politicians who call it a risk to fisheries in the coastal town of Tuticorin, near the southern tip of India.

The smelter was restarted on June 23 after the company received conditional approval from an environment tribunal. The London-listed mining conglomerate said group core earnings or earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell to $1.03 billion for the quarter ended June 30 from $1.34 billion a year earlier. Total revenue fell 23 percent to $2.87 billion. The company's power business was one of the few bright spots with core earnings growing 20 percent to $76.9 million.

IRON-ORE UNIT ALSO STRUGGLES

Vedanta's iron ore business reported a loss of $8.4 million before interest, taxes, depreciation, and amortisation in the quarter ended June 30, as mining bans in the states of Goa and Karnataka in India halted production.

Vedanta said on Wednesday that it expected to resume iron mining in Karnataka in the second quarter. It received a clearance from India's top court in September.

The miner also moved a step closer to consolidating its group structure, after the Madras High Court in India approved the plan last week.

The restructuring plan, which has also got a go-ahead from the Goa Bench of the Bombay High Court, is still awaiting a final order, after a shareholder from Vedanta's Sesa Goa unit filed an appeal.

The order was "a matter of a few weeks or few months, rather than years," a company executive said on a post earnings call with analysts. The company, controlled by billionaire Anil Agarwal, hopes that the restructuring will attract investors who have been put off by its complex structure and help pay down its huge debt pile.

Vedanta's debt structure had not changed since the end of March, with gross borrowings of $16.6 billion and cash on hand of $8.1 billion, the company said on a conference call with analysts.

Vedanta's shares were up 0.76 percent at 1184.12 pence at 1022 GMT on the London Stock Exchange. The FTSE 100 index was up 0.76 percent at the time.