Buoyed by higher commodity prices and cost savings, metals and mining conglomerate Vedanta today witnessed an over four-fold jump in its consolidated net profit at Rs 1,866.28 crore during the three months to December 2016.
The diversified mining group, led by NRI billionaire Anil Agarwal, had reported a net profit of Rs 408.58 crore in the October-December quarter of the previous fiscal.
Its consolidated income from operations was up significantly to Rs 20,393.03 crore during the third quarter of 2016-17, as against Rs 15,731.48 crore in the year-ago period.
Total expenses of the firm also rose to 16,033.75 crore during the quarter as against Rs 14,216.38 crore in the third quarter of 2015-16.
Vedanta CEO Tom Albanese told PTI: "We have certainly delivered operating performance on the back of strong commodity markets. We have EBITDA profit at highest level in the last two years. Volume ramp-up and cost efficiencies across our operations, aided by higher commodity prices, have significantly driven up EBITDA y-o-y. Our financial position remains robust and we continue to strengthen our balance sheet by maximising free cash flow and reducing debt."
Albanese said the company is also focussing on simplifying the group structure and Vedanta and Cairn India merger is expected to be completed in the first quarter of 2017.
"The proposed merger of Vedanta Limited and Cairn India is an important strategic step in simplifying the group structure. This was approved by all sets of shareholders in September 2016, and Vedanta expects the transaction to complete in the first quarter of 2017 (by March 2017)," the company said.
It said this has been the "best ever quarter for Vedanta Limited in last 2 years. Profit after tax jumped 4.5 times (or 353 per cent) to Rs 1,866 crore in the October-December 2016 quarter."
The company said it delivered cumulative cost and marketing savings of USD 545 million over the last 7 quarters, ahead of plan to deliver USD 1.3 billion in four years.
The free cash flow at Rs 1,801 crore has been driven by strong operating performance while it saw gross debt reduction of Rs 1,828 crore and net debt reduction of Rs 447 crore during the quarter.
The company said its financial position remains strong with total cash and liquid investments of Rs 53,452 crore.
The company said its mined metal production was up 44 per cent Q-o-Q in line with mine plans while environment clearances were received for expansion of Zawar and Sindesar Khurd mines.
Vedanta Ltd said aluminium smelters continue to ramp up
and third line of the 1.25 MTPA Jharsuguda-II smelter commenced ramp up in December 2016.
Talking about revenues, the company said revenues in Q3 were up 31 per cent y-o-y driven by higher volumes in iron ore operations due to recommencement of operations, ramp-up of volumes at the aluminium and power businesses and higher volumes at Copper India and Zinc India.
"This was partially offset by lower volumes from Oil & Gas, and Zinc International due to closure of the Lisheen mine, in Q3 FY2016," it added.
It said EBITDA was up 83 per cent on a y-o-y basis on account of higher commodity prices and increased volumes in iron ore operations due to recommencement of operations, ramp up of volumes and cost efficiencies at the aluminium and power business and decline in discount to brent at oil & gas.
This was partly offset by lower volume at oil & gas, and a one-time benefit of Rs 216 crore recognised in Q3 FY 2016 at Copper India and Zinc India regarding an export incentive scheme.
The company said depreciation was lower by Rs 200 crore y-o-y. This was mainly on account of lower depreciation charge at oil & gas due to lower entitlement interest volume in the current quarter and an increase in proved and developed reserves in Q4 FY2016, in addition to the closure of the Lisheen mine in Q3 FY2016.
These were partially offset by capitalisation of new capacities at the aluminium and power businesses, it said.
Finance cost, it said during the quarter was Rs 1,508 crore, higher by Rs 111 crore y-o-y.
"The increase was due to capitalisation and increase in borrowings at the aluminium and power businesses, partially offset by the accounting treatment of interest at Jharsuguda-II smelter which was earlier completely expensed when the project start-up was temporarily on hold and is now being capitalised as and when aluminium capacities are ramped up.
Other income remained relatively flat on a y-o-y basis.
The company said during the quarter, "The rupee depreciated..., leading to a forex loss of Rs 117 crore, primarily on restatement of MAT assets at Oil & Gas business."
Tax expense was at Rs 897 crore during the quarter, resulting in tax rate of 23 per cent (excluding dividend distribution tax or DDT of Rs 787 crore, the tax rate was 20 per cent).
The effective tax rate increased at the oil & gas business, as the current tax expense was higher than estimated due to increase in oil prices and lower discount to Brent, offset by reduction of effective tax rate at Zinc India, it said.
Tax rate for FY2017 is expected to be 20 per cent (excluding DDT).
EPS for the quarter was at Rs 6.29 per share.
