Thoothukudi closure impact: Vedanta may take $213-million hit on EBITDA

A private security guard stands in front of the main gate of Sterlite Industries Ltd's copper plant in Tuticorin

Explaining the financial impact of the closure of its Thoothukudi copper facility, Vedanta on Tuesday said that the plant generated an EBITDA of around $213 million in FY18.

This was around 5 percent of Vedanta's consolidated earnings before interest, tax, depreciation and amortisation.

"The carrying value of property, plant and equipment as at March 31, 2018 was  $328 million, which is ~2 percent of the total asset value," the company said in a statement.

Operated by Vedanta's subsidiary Sterlite Copper, the plant has not been operational since March. On May 22, the Tamil Nadu Pollution Control Board ordered a permanent closure of the plant.

"We will decide on the future course of action in due course," the company said.

A week before the court ordered its closure, 13 people were killed while protesting against the plant. The protesters alleged that the plant was causing pollution, and the protest intensified after Sterlite Copper was granted permission to expand its capacity.

Impact on economy

India's domestic demand for refined copper is around 675,000 tonne a year, of which 33 percent is met by Vedanta alone. Sterlite Copper is capable of manufacturing 400,000 tonne of refined copper a year, at its plants in Thoothukudi and Silvassa.

"Imports contribute around 33 percent which will increase significantly due to the stoppage of supplies from Sterlite," the company said.

Around 2 percent of the world’s copper is produced in Thoothukudi. Including the capacity there, India currently has a capacity to manufacture around one million tonnes.

"The plant provided direct employment to ~3,500 to 4,000 people and more than 70 percent of these employees are from Tamil Nadu. Further, the plant operations impacts more than 20,000 people engaged in various supplier and customer units," said Vedanta.

"We have over 650 supply and service partners and we help them generate a business of close to $134 million every year," the company said.

The Anil Agarwal-led company "strongly rejected" allegations about the plant creating environmental pollution.