Challenging commodity prices pulled down the consolidated net profit of metals and mining conglomerate Vedanta Ltd by 40.6 per cent to at Rs 973.97 crore for second quarter of FY16, even as it expects a better second half of the year.
Billionaire Anil Agarwal-led mining conglomerate had reported a net profit (after taxes, minority interest and consolidated share in profit/loss of associates but before exceptional items) of Rs 1,639.93 crore during the second quarter of 2014-15.
"Second half of the year is going to be better. We are going to start ramping up of iron ore production in Goa. In Goa, the mining has already started. We have put in a lot of efforts... We are planning to ramp up our aluminium production," Vedanta CFO D D Jalan said in a conference call.
Vedanta began mining again in Goa in August, shipping ore from October.
"Finally, we commenced mining in Goa... There would be improvement in business in challenging environment. Some signs of commodity recovery may be in next few quarters," company CEO Tom Albanese said.
Albanese said the company is doing everything to increase production in weak market conditions.
"We continue to optimise our capex to maximise free cash flow. Rs 20,000 crore to be invested in oil and gas over the next three years. We have allocated Rs 12,500 crore for Cairn India," he said.
The company, which was earlier known as Sesa Sterlite, saw its net sales drop to Rs 16,349.21 crore during the quarter from Rs 19,448.14 crore in the year-ago period.
"Revenues during the quarter at Rs 16,349 crore were 16 per cent lower than last year on account of the fall in crude oil and metal prices, partially offset by higher volumes at Zinc India, Oil & Gas and TSPL (Talwandi Sabo Power Ltd) as well as rupee depreciation," the company said in a statement.
"Revenues for the quarter were lower by 4 per cent QoQ due to softening of crude oil and metal prices during the quarter, partially offset by higher volumes at Zinc India and depreciation of the rupee," it said.
Total expenses of the company declined to Rs 14,221.32 crore during the period as against Rs 15,270.56 crore a year ago.
Albanese said, "Our diversified asset portfolio has delivered a strong operating performance, including record production from our tier-1 zinc mines, resulting in strong free cash flows during the quarter.
"We are continuing to drive efficiency improvements and optimise opex and capex across the business, taking measured steps to reduce net debt and maximise free cash flow."
He added: "While the near-term market outlook is challenging, we believe we have the right mix of low cost assets fuelled with new technologies to benefit from future demand in India and globally.
