Vedanta posts surprise fall in profit on tax expense, one-time charges

5 February 2018

Indian mining and energy group Vedanta posted an unexpected 4% decline in third-quarter profit, weighed by a surge in tax expenses and one-time charges.

Vedanta, controlled by billionaire Anil Agarwal, said profit for the October-December quarter stood at 20.53 billion rupees ($322 million), compared with 21.33 billion rupees a year earlier. Analysts were expecting a net income of 24.10 billion rupees, according to a Reuters poll.

The quarter included a one-time charge of 1.58 billion rupees related to the reversal of a provision in the aluminum business, and expenses toward the acquisition of a 52% stake in Japanese glass substrate manufacturer Avanstrate from private equity firm Carlyle Group. As part of the deal, Vedanta had said its wholly owned unit Cairn India Holdings will invest $158 million in Avanstrate.

Tax expenses more than doubled to 13.64 billion rupees, the company said in a statement.

Net sales at Vedanta, which has interests in oil and gas, iron ore, zinc, copper, power, and aluminum rose more than 16% to 249.34 billion rupees. Sales were buoyed by higher Zinc and oil prices, and an expansion in aluminum smelters.

“We are looking forward to a strong fourth quarter which will help us finish the year with healthy cash generation,” Chief Executive Kuldip Kaura said in the statement on Wednesday. “The continued strength in the commodity market augurs well for us.”

Last month, Hindustan Zinc, a unit of Vedanta, reported a 4% fall in third-quarter profit as its mined metal production declined. Still, Hindustan Zinc reiterated its pervious guidance of producing 950 kiloton of refined metal production for this fiscal year.

The company said its gross debt reduced 15% to 552.18 billion rupees at the end of December. Though on a sequential basis, the debt rose due to costs incurred for the acquisition of Avanstrate.

Source: NIKKEI ASIAN REVIEW