Mining major Vedanta Ltd on January 25 posted an 18 percent fall in its net profit at Rs 2,013 crore for the third quarter of 2023-24, due to higher finance and raw materials cost amid muted sales.
The company had reported a profit of Rs 2,464 crore in the same quarter a year ago and a loss of Rs 1,783 crore in the second quarter of FY24. Vedanta's previous quarter performance was dented by exceptional expenses owing to a change in tax rates as the company shifted to a new tax regime.
Revenue from operations rose 3.8 percent to Rs 34,968 crore in October-December 2023, from Rs 33,691 crore in the same period of the previous fiscal. Sequentially, revenue was down nine percent.
"Our strategic focus on substantial cost compression, paralleled by an impressive production ramp-up across businesses has helped us to deliver remarkable performance," the company's executive director Arun Misra said.
Vedanta, which is reeling under debt, saw its finance costs rise more than 50 percent to Rs 2,417 crore due to higher borrowing costs. Responding to a Moneycontrol query on the rising costs, chief financial officer Ajay Goel said, "The macro monetary cost has become costly all over the world and hence the impact. It's a mix of both, higher borrowing cost and debt refinance cost."
Meanwhile, consolidated quarterly EBITDA came at Rs 8,677 crore, up 21% QoQ and 22%YoY.
During the second quarter, commodity prices remained under pressure, mainly due to supply outstripping demand growth. Weak global demand muted Vedanta’s sales growth, but the company has been leveraging on strong domestic demand in a subdued pricing environment.
Production growth
Vedanta’s mined metal production rose 7 percent year-on-year (YoY) and saleable silver output went up by 22 percent YoY in the third quarter of this fiscal, according to its business update released on January 3.
The company claimed that it recorded the "highest-ever" production of mined metal and silver during the first nine-month period of this fiscal. Between April and December, the mined metal output stood at 780 kt, up 2 percent YoY driven by improved mined metal grades. Saleable silver production during the same period stood at 556 tonne, up 5 percent YoY, it said.
Debt restructuring
During the third quarter, Vedanta restructured its debt worth $3.2 billion and the move was approved by more than 97 percent of its bondholders. As of December 31, 2023, the company's net debt stands at Rs 62,493 crore.
On December 14, 2023, the holding company of the Vedanta Group secured $1.25 billion from private credit lenders for debt refinancing and a new credit facility. The company said that fundraising will help create a long-term sustainable capital structure and demonstrate its continued ability to access global capital markets and investor confidence in the underlying business.
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