Vedanta Q1 net profit falls 12% to Rs 1,351 crore

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Published: July 27, 2019 4:40:10 AM

The earnings before interest, tax, depreciation and amortisation (Ebitda) was down 20% to Rs 5,188 crore during the quarter under review compared with Rs 6,448 crore a year-ago and Ebitda margin narrowed to 27% from 34% during the comparable periods.

Vedanta Q1 net profit, CEO of Vedanta, Srinivasan Venkatakrishnan, Ebitda, Zinc India, Cairn Oil & GasRevenue from operations also fell 4% to Rs 21,167 crore during the quarter ended June 30, 2019 compared with Rs 23,092 crore during the same period last year.

Owing to falling commodity prices which hurt revenue and margins, Vedanta’s Q1 FY20 net profit fell around 12% to Rs 1,351 crore compared to Rs 1,533 crore in the year-ago period. Revenue from operations also fell 4% to Rs 21,167 crore during the quarter ended June 30, 2019 compared with Rs 23,092 crore during the same period last year. “Commodity markets were volatile during the quarter and prices were down year-on-year,” said Srinivasan Venkatakrishnan, CEO of Vedanta, adding that oil and gas business was also down because of natural decline in fields.

The earnings before interest, tax, depreciation and amortisation (Ebitda) was down 20% to Rs 5,188 crore during the quarter under review compared with Rs 6,448 crore a year-ago and Ebitda margin narrowed to 27% from 34% during the comparable periods.

There has also been a 20% jump in depreciation and amortisation to Rs 2,155 crore. “This was mainly due to higher ore production at zinc businesses, change in reserves estimates and asset capitalisation at Zinc India, commencement of Gamsberg operations and increased charge at oil and gas due to capitalisation,” the company said in a release.

The mining major was, however, able to maintain its volume growth which partly offset the effect of falling prices. Apart from oil and gas (down 8% y-o-y), zinc (up 3%), silver (up 15%), steel (up 34%) and aluminium (up 37%) witnessed production growth.

The management is confident that the coming quarters will be stronger and the company will be able to achieve the growth guidance for the year. The company aims to achieve 11% growth in Hindustan Zinc, 14% in silver and 11% in oil and gas production during the current financial year.

“Commodity production will be ramped up in the second half of the year and, oil and gas production will also go up once production enhancement related works are done,” said Venkatakrishnan. Oil production is expected to be at 270,000 barrels per day during the second half to achieve an overall average of 200,000-220,000 barrels per day in the financial year. Cairn Oil & Gas was awarded 10 new hydrocarbon blocks under rounds II and III of the Open Acreage Licensing Policy.

The company has a healthy debt-equity ratio of 1.3 and the capital expenditure plans for the year will be funded mostly through internal funds, said Arun Kumar, chief financial officer of Vedanta.

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