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Vedanta core profits up 12.9 pc to USD 4 bn in 2011-12

London: India-focused mining conglomerate Vedanta Resources on Thursday reported a 12.9 per cent growth in its core profits to USD 4.026 billion for the year 2011-12, buoyed by earnings from recently acquired Cairn India and higher output in zinc, silver, and power.

Analyst said the core profits/EBITDA (earnings before income, tax, depreciation and amortisation) of the company were in line with the expectations of USD 4 billion.

The London-listed firm had reported USD 3.566 billion EBITDA in FY`11. "This has been a transformational year for the group, in which we completed the Cairn India acquisition, announced the consolidation of the group, and delivered a strong production growth," Vedanta chairman Anil Agarwal said in a statement.

"With our growth projects largely completed, (we) are well placed to continue this strong growth," he said.

Core profits at USD 713 million from Cairn, which was acquired in December last year, accounted for most of the increase in group EBITDA of Vedanta. Zinc, silver and power businesses were other contributors in company`s group EBITDA.

However, iron ore business of Vedanta, operated by subsidiary firm Sesa Goa, was a drag on company`s core profits as it reported a 38.6 per cent drop in EBITDA to USD 721.4 million, mainly due to 26.6 per cent drop in production.

The iron ore production fell because of a Supreme Court-imposed mining ban in Karnataka and logistical bottlenecks in Goa, the company said. Company`s revenue rose by 22.6 per cent to USD 14 billion in the last fiscal vis-a-vis USD 11.427 billion of 2010-11, it said.
However, net profit attributable to the shareholders of the company dropped by over 92 per cent to USD 59.8 million in FY`12 from USD 770.8 million in the previous fiscal.

The drop in net profit was largely due to increased depreciation and amortisation costs and interest expenses related to funding of its acquisition of majority stake in Cairn India.

Company`s depreciation of assets rose by over 67 per cent to USD 927.3 million, whereas amortisation costs were up 53 per cent to USD 481.1 million in FY`12. The interest expenses of the company rose by a whooping 307.7 per cent to USD 420.3 million in the last fiscal.

By December, the company is expecting to complete group restructuring exercise, which seeks to bring all businesses, except Konkola Copper Mines in Zambia, under the fold of a new entity, Sesa Sterlite, it said.

The new entity will be created through merger of Sterlite Industries and some other subsidiaries including Vedanta Aluminium, Madras Aluminium into Sesa Goa. The company also announced a full-year dividend of 55 cent per share for the last fiscal, 5 per cent more than it paid in the previous fiscal.

"The outlook for natural resources remains robust, industrialisation and urbanisation in China and India and other emerging economies continues to drive demand and Vedanta is well-positioned to serve these markets," Agarwal said. He added that Cairn India besides assets in Liberia and Gamsberg, will be the future growth drivers for Vedanta.

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