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"We have delivered sustained performance in the third quarter despite the challenging markets. Strong operating performance of aluminium and zinc businesses led to the reduction in gross debt by Rs 400 crore. We are focused on disciplined capital allocation, coupled with deferred and phased development spending in zinc, oil & gas and other businesses which will help optimize our assets and drive strong cash flow in the near future,” group chief executive Tom Albanese said.
The company finance cost stood at Rs 1,329 crore in the quarter gone by, down from Rs 1,471 crore in the preceding quarter and Rs 1,530 crore in the adjusted proforma corresponding period.
On the margin front, however, Sesa Sterlite took a hit mainly because of the weak performance of subsidiary Cairn India.
The company's EBITDA margin declined to 43% in the period under review from 45% in the preceding quarter and 48% in the corresponding period last year on proforma basis.
"Margins of Sesa were expected to come down, given that the performance of Cairn was not-so-good," said an analyst with a local brokerage.
Sesa Sterlite's profitability is largely driven by subsidiaries Hindustan Zinc and Cairn India, both of which have already reported earnings. Sesa Sterlite owns a 59.9% stake in Cairn India and 65% in Hindustan Zinc.
"Going ahead, we will continue to focus on keeping costs low for our oil business. It is very important to note that we have managed to sustain our oil business even at such low oil prices," Tom told Business Standard.
The company's EBITDA which stood at Rs 6,234 crore in the period under review, was higher than bloomberg estimate by 6%.
"Higher zinc prices, aluminium premiums and rise in TC/RC for copper business has helped EBITDA," said the company in the post earnings conference.
Regarding the status of restructuring Sesa Sterlite, Tom said,"the talk of restructuring is speculative and exploratory and so not much can be elaborated on this front at the moment."
Anil Agarwal, promoter of the London-based Vedanta group, which owns 62.5% stake in Sesa Sterlite, had earlier said in an interview to Press Trust of India that the company had appointed consultants to explore if it made sense to merge Cairn and HZL into Sesa Sterlite, the holding company.
The move will not just make Sesa Sterlite a global mining giant but will also give access to the cash of the two companies.
Going ahead, Sesa Sterlite has its eyes on the upcoming Union Budget for 2015-16.
"We will be watching for any reduction in the 30% export duty on iron ore since the low grade that we mine in Goa has no competitiveness in the domestic market and can be only exported," said Albanese.
Apart the duty reduction which will help make its iron ore business in Goa economically viable, the company will also keep a close eye on announcement for any disinvestment plans by the government in Hindustan Zinc and BALCO.
"If the government announces any disinvestment in these two companies, we (Sesa Sterlite) will participate in the auction," said Albanese.
The government holds 49% stake in BALCO and about 30% stake in cash-rich Hindustan Zinc.
