Vedanta Q1 profit falls 11%; Co drops plan to tap strategic reserves
The metals and mining major has shelved its plans to transfer ₹ 12,587 crore from its strategic reserves to retained earnings, the total profits that a company keeps after distributing dividends to shareholders.
The move was seen as an attempt by the company to free up cash by liquidating reserves to increase the dividend outgo to its shareholders, including its London-based parent company Vedanta Resources. Vedanta had earlier moved the Mumbai bench of the National Company Law Tribunal to seek its nod on the transaction.
'In view of evolving strategic priorities, the Board of Directors, at its meeting held today, has decided not to pursue the aforesaid Scheme at this stage,' the company said in a regulatory filing on Thursday.
The company's board also approved an additional $84 million for the expansion of its zinc mines at Gamsberg in South Africa. Earlier, it had approved a $466 million plan to double the mine's capacity from 4 million tonnes a year. With the additional investment, the capacity will be ramped up to 8.4 million tonnes a year, making Vedanta Zinc International the largest Zinc producer in South Africa, the company said.
Vedanta Ltd reported a profit of ₹ 3,185 crore, lower than ₹ 3,606 crore a year ago. The corresponding quarter last year had a deferred tax gain of ₹ 735 crore, which turned to a ₹ 206 crore outgo this year, impacting its bottom line.
Its revenue for the quarter was 6% higher year-on-year at ₹ 37,434 crore.
The company's stock closed 2.16% lower at ₹ 425.3 on the BSE on Thursday. The earnings were disclosed during trading hours.
'Our 1Q performance has set a strong foundation for the year ahead. Amidst global market volatility, we delivered the highest-ever first quarter Ebitda,' Anil Agarwal, chairman, Vedanta, said in a press statement.
The company reported earnings before interest, tax, depreciation and amortization (Ebitda) of ₹ 9,528 crore, up 1% year-on-year.
'This strong performance alongside corporate initiatives, such as the HZL stake sale which generated ₹ 3028 crore cash, has enabled Vedanta to deliver a Net Debt to EBITDA ratio of 1.3x,' said Ajay Goel, chief financial officer of the company.
'Given our NCD (non-convertible debenture) issuance of ₹ 5,000 crore and other refinancing, the cost of our debt has reduced by around 130bps y-o-y to 9.2%. The recent reaffirmation in credit rating at AA by both Crisil and ICRA highlights our financial strength and market's confidence in Vedanta's growth story,' he said.
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