The Anil Agarwal-led Vedanta Ltd announced on Wednesday that it had taken a ₹20,000-crore goodwill impairment charge for the loss of value of Cairn India, its oil and gas business subsidiary, triggered by an unprecedented fall in crude oil prices.

The company, formerly known as Sesa Sterlite, posted a ₹19,228-crore loss for the quarter ended March 31, 2015, against a profit of ₹1,222 crore in the corresponding year-ago period.

Net sales were down 15 per cent at ₹17,732 crore (₹20,785 crore) on weak metal and energy prices.

But the company announced a dividend of ₹2.35 a share (face value ₹1).

The impairment was triggered by a steep fall in crude oil prices, leading to a downward revision of the carrying values of the assets in India.

The charge includes ₹19,180 crore relating to goodwill created on the acquisition of Cairn India; ₹505 crore on Sri Lankan oil and gas assets, which became commercially unviable due to softer oil prices; and the rest for copper mines in Tasmania, Australia. The mine has been “under maintenance” since January last year.

The company said the impairment was a non-cash charge and does not affect any of the company’s financial covenants, its funding position or its earning capacity.

Cost cutting measures Tom Albanese, Chief Executive Officer of Vedanta, said the company will continue to look at cost-cutting measures, including pruning its workforce and postponing projects. “There is no major turnaround in oil prices with Brent crude range bound at $55-65 a barrel. Prices of metal are likely to remain under pressure, though zinc may look up with the supply squeeze from Australia,” he said.

The company has started iron ore mining in Karnataka and is waiting for environmental approval in Goa.

With seaborne iron ore prices remaining very low, the industry has requested the Centre to reduce the export duty, he said.

Finance costs down Finance costs were down 7 per cent at ₹5,659 crore (₹6,111 crore) due to refinancing some debts with fresh loans, FCCBs, project loans and repayment of loans relating to Cairn India acquisition.

Gross debt was down by ₹2,814 crore to ₹77,752 crore due to repayment of loans from internal accruals. Of the total debt, loans in rupees totalled ₹33,512 crore and those in US dollars amounted to ₹44,240 crore. The average rate of borrowing was 7.9 per cent last fiscal year.

On the BSE, Vedanta shares fell 2 per cent to close at ₹207 on Wednesday.

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