Sesa Goa Q1 net down 57% at Rs 414.30cr

Vedanta group firm Sesa Goa today reported a 57 per cent decline in consolidated net profit at Rs 414.30 crore for the quarter ended June 30, 2013, as its iron ore mining operations remained closed due to ban in Goa and Karnataka.

The company managed to remain profitable in the quarter largely on account of Rs 625.45 crore profit coming from its associate firm and oil major Cairn India. Sesa Goa holds 20 per cent stake in the oil major.

Otherwise, it would have been consolidated net loss of Rs 211.15 crore in the quarter, the company said in a filing to the BSE.

It had posted a net profit of Rs 963.97 crore in the corresponding quarter of the previous fiscal, which includes contribution from Cairn India.

The continuation of mining ban in Goa and non-resumption of operations in Karnataka during the quarter continued to play spoilsport for the company. Due to this, the company neither produced nor sold any iron ore during the quarter, it said in a separate statement.

Its Goa operations closed 10 months back, while the Karnataka operations came to cease two-and-a-half years ago.

However, during the last quarter, Forest Advisory Committee of the Environment Ministry recommended granting forest clearance to company's mine in Chitradurga district of Karnataka. A final approval from the ministry is now awaited.

Sesa Goa's mining lease for Karnataka had expired in October 2011. Subject to statutory clearances, the company can now operate the mine at a reduced capacity of 2.29 million tonnes per annum (MTPA) against the  original capacity of 6 MTPA.

"We expect to resume mining in Karnataka from Q2," the company said, adding that the mine has received clearance from the Supreme Court, and is now awaiting final statutory clearances in order to restart mining.

On resumption of mining operations in Goa, the company said it remains suspended as "the date for hearing is yet to be fixed by the Supreme Court".

The closure of iron ore operations in both the states has also led to a decline in Sesa Goa's net income from operations by over 79 per cent to Rs 360.66 crore during the quarter vis-a-vis Rs 1,724.94 crore for the Q1 of FY 2013.

The mining operations in Goa have been banned since September 2011, following a report of Justice M B Shah Commission, which had pegged about Rs 35,000 crore losses to the exchequer due to illegal mining.

First, the Goa government and later the Supreme Court banned mining in the state after the report was made public.

Talking about its iron ore operations in Liberia, Sesa Goa said that it has completed 91,500 metres drilling till 30 June 2013 across the three deposits - Bomi, Bea and Mano River - and is working to complete the first phase of 2 million tonnes ore mining by December 2014.

The company is poised to deliver the first shipment by March 2014, as announced earlier.

Its proposed merger with another group firm Sterlite Industries has received the approval of the Madras High Court last week and now the company is waiting for the order of Goa bench of the Bombay High Court, where the approval to merger scheme has been challenged by a company shareholder.

On its other businesses, Sesa Goa said that pig iron production increased by nearly three times during the quarter to 110 kilo tonnes (KT), while met coke production was up over 56 per cent at 83 KT. Sales of pig iron and met coke increased by 135 per cent and 16 per cent, respectively.

During the quarter, its expenditure also overshot net sales and stood at Rs 559.10 crore as against a net sales of Rs 360.66 crore. Besides, its finance costs were up 25.68 per cent at Rs 148.08 crore.

Shares of the company fell 4.34 per cent today to close at Rs 125.50 apiece on the BSE.