Vedanta Reports 27% Decline in Q4 Net Profit Amid Tuticorin Impairment

Vedanta Ltd, under the leadership of Anil Agarwal, has reported a notable decline in its consolidated net profit for the March quarter, with figures falling by 27.2% to Rs 1,369 crore. This decrease is attributed primarily to a one-time impairment of the Tuticorin asset. The previous year's same period saw the company achieving a consolidated net profit of Rs 1,881 crore, as per the details shared in a filing to the BSE.

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The company's consolidated income for the January-March period also saw a reduction, coming in at Rs 36,093 crore compared to Rs 38,635 crore in the corresponding period last year. Despite these challenges, Vedanta Ltd has managed to post impressive financial results for the fiscal year, boasting the second highest annual revenue and EBITDA in its history, with figures reaching Rs 1,41,793 crore and Rs 36,455 crore respectively.

Ajay Goel, Vedanta's Chief Financial Officer, highlighted the company's efficiency and agility which led to a remarkable EBITDA margin of 30% in FY24. This represents a 240 basis points annual margin expansion through continued cost optimisation efforts.

Arun Misra, Vedanta Executive Director, explained via phone that the drop in net profit was primarily due to accounting charges amounting to about Rs 1,000 crore. These were related to markdowns on Tuticorin and ESL Steel assets. The company's consolidated revenue for 2023-24 experienced a slight decrease of 2%, which was attributed to lower commodity prices. However, this was partially offset by higher volumes across businesses and favourable exchange rate movements.

The fiscal year also saw an increase in depreciation and amortisation by 2%, owing to a rise in ore production at Zinc India and increased capitalisation in aluminium. Furthermore, Vedanta reported a significant increase in finance costs by 52% to Rs 9,465 crore for FY24. This increase was due to higher average borrowings and borrowing costs.

In the fourth quarter of FY24 alone, Vedanta faced an exceptional loss of Rs 201 crore. This was largely due to impairment charges of Rs 994 crore at Tuticorin, although partially offset by capital creditors written back in the power sector amounting to Rs 793 crore.

As of March 31, 2024, Vedanta's gross debt stood at Rs 71,759 crore. Vedanta Ltd operates as a subsidiary of Vedanta Resources and is recognized as a diversified global natural resources company. Its operations span across various sectors including oil and gas, zinc, lead, silver, copper, iron ore, steel, aluminium and power. The company has a presence not only in India but also in South Africa and Namibia.