Higher volumes in the zinc and copper business, better realisations and benefits of rupee depreciation have led to better results. The consolidated entity reported total revenue of Rs 25,352 crore and net profit of Rs 2,394 crore. This is much higher than the average estimates of Rs 16,240 crore and Rs 1,930 crore, respectively, though it is close to the higher end of the analyst estimates.
The biggest contribution has come from its largest segment, zinc, 33 per cent of total revenue. According to the company, the segment reported 21 per cent year-on-year increase in refined zinc production. Revenues were up 26 per cent and operating profit up 31 per cent, compared to corresponding quarter last year. Copper, which contributes about 29 per cent to total revenue, also made a large contribution to profits because of a 30 per cent increase in TC/RC (refining) margins at $14 cents a lb. This led to a 23 per cent jump in operating profits of the copper business and comes despite the decline in production due to a temporary shutdown of production at the Tuticorn plant. Production has since resumed and one can expect the benefits in the coming quarters.
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In the aluminium segment, despite a seven per cent drop in London Metal Exchange prices to $1,781 a tonne, the segment reported a nine per cent jump in revenue, led by higher production. However, the biggest gain has come because of the lower cost of production at its various facilities, driving the operating profit higher by 47 per cent. Importantly, the Lanjigarh alumina refinery recommenced operations in July, which has met 17 per cent of its internal consumption as against nil in the year-ago quarter, when the company had imported alumina. This helped in controlling cost and is expected to add to profits in the coming months as well.
Oil and gas, 7.4 per cent of the revenue, also saw good growth in production and realisation, contributing to the overall growth. "Though the company has done well in most of the segments and results are good, issues in certain segments still remain," said Giriraj Daga, analyst with Nirmal Bang.
The disappointment came from power and iron ore, together a drag on performance. Power was hit because of lower demand. Its Jharsuguda 2,400 Mw power plant operated at a mere 31 per cent plant load factor (PLF) as against 41 per cent in the year-ago period. Total power sales reported a 29 per cent drop in volumes to 1,910 million units in the September quarter. The iron ore business has also suffered because of a mining ban in Karnataka and Goa. Though these segments have put pressure, they are expected to do better, as demand for power is expected to improve and PLF is seen improving to 50 per cent. In iron ore, the company has got approvals to start mining in Karnataka, which will reflect in the numbers. Mining in Goa, too, is expected to resume but after the Supreme Court gives approval.