Vedanta net profit falls 57%; plans USD 1.7 bn capex across businesses

New Delhi: Mining giant Vedanta Ltd on Friday reported a 57 per cent drop in its March quarter net profit on softer commodity prices and impairment in the oil and gas business.

Consolidated net profit was at Rs 3,132 crore in January-March compared with Rs 7,261 crore net earnings in the same period a year back, the company said in a statement.

On a sequential basis, net profit was up 1 per cent from Rs 3,092 crore in October-December.

Revenue declined 5 per cent to Rs 37,225 crore in the fourth quarter of 2022-23 (April 2022 to March 2023) fiscal year from Rs 39,342 crore a year back.

A dip in commodity prices led to earnings across Vedanta's business - from zinc to iron ore, oil and gas, copper and aluminium decline. Pre-tax earnings from the aluminium business fell 57.5 per cent.

The share of the revenue from the mainstay aluminium business reduced to 33 per cent from 39 per cent.

Zinc and aluminium prices have plunged more than 40 per cent from the record highs hit in March 2022.

Also, the firm booked an exceptional loss of Rs 1,336 crore mostly on account of impairment in the oil and gas business and payment of windfall tax on oil produced from the Rajasthan block.

Chief executive Sunil Duggal said for FY23 (April 2022 to March 2022 fiscal year), Vedanta had an all-time high consolidated revenue of Rs 145,404 crore, up 11 per cent year-on-year. Annual EBITDA at Rs 35,241 crore was the second highest ever. Free cash flow of Rs 28,068 crore was at a record high while the net debt to EBITDA ratio was at 1.28x.

While softer commodity prices particularly that of aluminium hurt financially, operationally Vedanta did well. Aluminium and zinc production was at a record high. In steel, the highest ever hot metal and finished goods production was recorded.

"We have delivered the highest-ever free cash flow (pre-capex) of Rs 28,068 crore, enabling us to reinvest for business growth and provide our valued shareholders with attractive dividends. Our progress on ESG transformation has been recognized by leading rating agencies, making it a remarkable year for us," Duggal said. "We finalized 1868 MW renewable power delivery agreements which brings us one step closer towards becoming carbon neutral by 2050 or sooner. Going ahead, we remain committed to operational excellence, shareholder value creation and transforming for good.

Vedanta has planned a capex spending of USD 1.7 billion in the 2023-24 fiscal year, up from USD 1.2 billion in the last as it looks to ramp up production at key businesses.

Total expenses climbed 10.5 per cent to Rs 33,041 crore from a year earlier, with finance costs jumping 35 per cent and depreciation & amortization costs surging 16 per cent.

The company said its board of directors have approved the reappointment of Navin Agarwal and Priya Agarwal as directors on the company board for five years.

While Navin is the brother of founder and chairman Anil Agarwal, Priya is the daughter of Anil.

The board also approved a USD 296 million capex for the exploration of oil and gas.

Vedanta reported gross debt rising to Rs 66,182 crore at the end of March from Rs 51,109 crore a year back and Rs 61,550 crore at the end of December 2022.

After considering cash in hand, net debt was Rs 45,260 crore as on March 31, 2023, more than double of Rs 20,979 crore net debt a year back. This was primarily resulting from higher borrowings and cash in hand depleting to Rs 20,922 crore from Rs 32,130 crore as of March 31, 2022.