Vedanta writes down nearly Rs20,000-cr on Cairn India oil-pricre fall impairment
30 April 2015
Vedanta Ltd on Wednesday reported a consolidated net loss of Rs19,956 crore in the January-March quarter due mainly to an impairment charge related to the acquisition of goodwill from oil and gas explorer Cairn India.
Vedanta Ltd said Rs19,180 crore of the assumed loss has been due to a non-cash impairment charge of acquisition of goodwill of Cairn India following a slump in global crude oil prices, which had fallen from over $100 per barrel at the time of the acquisition to around $60 per barrel at present.
Vedanta Ltd (formerly known as Sesa Sterlite Ltd and earlier as Sesa Goa Ltd) was renamed 'Vedanta Limited' on 21 April 2014, to align the company's identity with that of its parent, Vedanta Resources Plc, and provide a unified branding for Vedanta, as a diversified natural resources group.
Vedanta said the company presented strong underlying results, on the back of a diversified portfolio, in a weak commodity price environment.
Profit after tax before exceptional items stood at Rs5,060 crore. Exceptional items include a one-time non cash impairment charge of Rs19,956 crore largely relating to Cairn India acquisition goodwill and the Sri Lanka Block on account of a steep fall in crude oil prices
Revenue stood at Rs73,364 crore while EBITDA rose to Rs22,226 crore with an EBITDA margin of 41 per cent.
The company said its gross debt stood lower by Rs2,814 crore during the year with cash and cash equivalents of over Rs46,200 crore while free cash flow post capex stood at Rs3,425 crore.
Vedanta claims to have contributed Rs27,900 crore to the India's exchequer during the year, in the form of taxes, duties, royalties and profit petroleum.
The company declared a final dividend of Rs2.35 per share. With this the final dividend for FY2015 stands higher at Rs4.1 per share or 26 per cent.
Excluding custom smelting at zinc and copper India operations revenues in Q4 were 7 per cent lower sequentially and 15 per cent lower Y-o-Y, on account of decline in oil and copper prices.
Revenue for the year remained strong, up by 1 per cent at Rs73,364 crore. Higher volumes at Copper India, aluminium ramp up at Korba, commissioning of Unit I at TSPL and iron ore sales from Karnataka partially offset weaker commodity prices in the latter half of the year, Vedanta said.
EBITDA in Q4 was 36 per cent lower sequentially and 40 per cent Y-o-Y on account of lower commodity prices, particularly a 50 per cent fall in oil prices, and higher exploration charges at Cairn India.
Normalised EBITDA during Q4 was Rs4,500 crore excluding the impact of one-off charges on exploration expenses in oil and gas segment of Rs280 crore and provision made for GRIDCO receivable of Rs270 crore.
EBITDA for the full year was Rs22,226 crore, a decline of 13 per cent due to lower volumes, increased exploration costs, lower prices and higher profit petroleum in the oil and gas segment.
This was supplemented by lower volumes during H1 of 2015 and higher costs of production on account of increase in royalty rates and coal prices at Zinc India. Weaker oil prices were significantly offset by stronger zinc and aluminium premium and prices during the year.
Vedanta cited several positive developments in 2015, which included record annual mined metal production at Zinc-India, record aluminium production as the new Jharsuguda-II and Korba-II smelters are ramping up well, and record alumina production at the Lanjigarh refinery.
Vedanta said the company also commenced iron ore production in Karnataka and mining activities in Goa are expected to resume in the latter half of 2015.
''We remain confident of our diversified business model and low cost asset base and will continue to generate attractive returns to our shareholders,'' Tom Albanese, CEO, Vedanta Limited, said.
''Our Q4 results include a one-time non-cash impairment charge of acquisition goodwill, largely relating to the Oil & Gas business and the Sri Lanka Block on account of a steep fall in crude oil prices. This has no impact on the production or future earnings capacity of these assets,'' he added.
Vedanta said the merger of Sesa Goa Ltd and Sterlite Industries India Ltd, and the Vedanta Group consolidation was completed in August 2013. Consequently Q4 and FY2015 performance is compared with the adjusted proforma numbers of respective periods, which are more representative of the performance during the period.