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Vedanta core profit $4.89 bn in FY'13; Cairn contributes 49%

Last Updated: Thursday, May 16, 2013 - 19:31

London/New Delhi: Vedanta Resources Thursday reported 21 percent growth in its core profits (EBITDA) at USD 4.888 billion for the year ended March, 2013, 49 percent of which was contributed by Cairn India alone.

The natural resources giant had reported USD 4.026 billion core profit or EBITDA (earnings before interest, taxes, depreciation and amortisation) in 2011-12.

Vedanta had acquired oil major Cairn India in December, 2011 and last fiscal was the first year, in which Cairn's full earnings and profits got reflected in Vedanta's financials.

Cairn's EBITDA stood at USD 2.44 billion during the last fiscal and it reported 18.8 percent increase in its average daily oil production at 2,05,323 barrels.

"In 2012, Cairn India contributed 49 percent of the Group?s EBITDA. This diversification has helped the group improve the profitability despite adverse commodity prices in copper, aluminium, zinc, lead and silver," Vedanta, whose most of the operations are in India, said in a statement.

Moreover, its net profit attributable to shareholders rose to USD 157.4 million from USD 59.8 million, a jump of 163 percent due to changes in profit mix and profits earned for its stake in Cairn India.

Besides, its revenues rose by 7 percent to USD 14.989 billion in the last fiscal vis-a-vis USD 14.005 billion of FY'12.

However, the continuation of mining ban in Goa and Karnataka in the last fiscal impacted Vedanta's iron ore business (run through subsidiary Sesa Goa) significantly during the year. According to the company, it contributed a negative variance of USD 495.2 million to operating profits.

Moreover, Vedanta's operating profit for the year was also impacted negatively by USD 518.9 million due to lower prices of aluminium, zinc and copper, the company said.

"Despite industry-wide inflationary pressures, we have reduced or maintained unit costs across majority of our operations," Vedanta chairman Anil Agarwal said on company's performance.

Talking about the proposed merger of Sesa Goa and Sterlite Industries, he said, in a conference call, that it could take another 2-3 month's time as approval from the Madras High Court is still awaited. Bombay High Court's Goa bench had already approved the merger, announced in February, 2011.

"It (the merger) is a very democratic process. We have no doubt that this is going to happen... It is a win-win for everybody but the timeline can take another 2-3 months," Agrawal said.

During the last fiscal, Vedanta managed to reduce its net debt by USD 1.5 billion in the last fiscal to USD 8.615 billion. Its gross debt stood at USD 16.592 billion.

The company said that it is now focused on deleveraging and reducing debt as about USD 7.6 billion debt is maturing in next two years. It also announced to raise funds through a bond offering in a separate announcement.

Company's Chief Financial Officer D D Jalan said in a conference call that the company has refinanced, rolled over and repaid most of the maturing debt (USD 3.6 billion) for the current fiscal.

He added that Vedanta is exploring various options, including bank loans and internal accruals for debts maturing in the next fiscal (at USD 4 billion).

According to the company, Vedanta continues to pursue its selective acquisitions strategy and is seeking "large proven assets with the potential for growth and/or cost improvement ... These could include new geographies and commodities that meet our investment criteria."

Meanwhile, Vedanta also made two different announcements -- one on raising funds through bonds and another was announcement of appointing HDFC's Non-Executive Chairman Deepak Parekh on its Board as Independent Non-Executive Director with effect from June 1, 2013.

According to the company, it intends to offer 5 and 10 year long bonds in a private offering to qualified institutional buyers.

It, however, did not disclose the quantum of the offer but said that proceeds of the offering will be used to refinance a portion of the term loan taken to part-finance Cairn India acquisition.

The road shows for the offering will commence from tomorrow 17) and the company has appointed Bank of America Merrill Lynch, Barclays, Citigroup, J.P. Morgan, The Royal Bank of Scotland and Standard Chartered Bank as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners. Deutsche Bank will act as Joint Bookrunner.


First Published: Thursday, May 16, 2013 - 15:00
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