Vedanta Group firm Sesa Goa today said its profit may fall in the second quarter due to slowing economic activity in China and prevalent monsoon.
"Historically in the second quarter, our profit has declined due to the monsoon. Now, Chinese economy is also slowing. On volume, we will be able to deliver to our long- term customers in China. But we have no control over the fluctuating prices. We are not in China out of choice," Sesa Goa Managing Director P K Mukherjee told PTI.
China accounts for over 80 per cent of its total sales.
The company saw its profit growing three-folds in the first quarter of the current fiscal to Rs 1,301 crore over the year-ago period on account of increased sales after the acquisition of Goa-based V S Dempo last year for Rs 1,750 crore.
The mining firm sold about 5.4 million tonnes of iron ore in the first quarter. It had a profit of Rs 422 crore in the first quarter of the last fiscal. The company said it will try to contain input cost in the second quarter.
To reduce its dependence on China, the company is actively looking at supplying iron ore to customers in other parts of the world. It is negotiating higher prices for its iron ore supplied to Japanese and South Korean mills in the first quarter of the fiscal.
"We had also recently made a trial-supply to Tata Steel Thailand. Indian steel firms mostly do not use fines to produce steel," he added.
On iron ore prices, which had touched a peak of $150 a tonne in the first quarter, he said, could hover in the range of $100-110 a tonne in the next few months.
The company operates mines in Goa, Karnataka and Orissa. Supplies from Goa will be affected due to the ongoing monsoon in the second quarter, Mukherjee said.
The Vedanta Group firm saw its sales increasing to Rs 2,413 crore in the first quarter, as against Rs 1,011 crore in the corresponding period a year ago.
Sesa Goa produced about 21 million tonnes of iron ore in the last fiscal and expects the output to grow in the current financial year, as it targets the 50 million tonnes mark in next 2-3 years.
The company is actively scouting for properties in India and overseas.