The market didn’t seem too pleased with the June 2018 quarter performance of mining major Vedanta, with the stock falling about 2 per cent. The performance was a mixed bag with a good show by the aluminium and oil & gas segments offset by lacklustre display by the zinc and copper segments. Despite consolidated sales revenue growing about 15 per cent year-on-year (y-o-y) to ₹22,206 crore, profit was almost flat at ₹2,248 crore. This was mainly due to weak volumes in the zinc and copper businesses.

Strong performers

Operating profit in the aluminium segment more than doubled y-o-y to ₹1,259 crore in the June 2018 quarter. This was driven by a strong 38 per cent increase in volumes to 4.65 lakh tonnes; better realisations also helped. The good show was also aided by cost savings of about $50 a tonne due to operational efficiency and reduction in raw material (alumina) prices. The segment contributed about a fifth of the overall operating profit of ₹6,529 crore.

The oil & gas segment also put up a good show aided by higher oil prices and higher volumes, that more than offset the impact due to maintenance shutdown at one of the fields in the Ravva block. The segment’s revenue and operating profit were up 41 and 46 per cent y-o-y, respectively.

Laggards

But Zinc - India, the major contributor to the group’s operating profit was dragged down by lower volumes. The mined metal during the June quarter (2.12 lakh tonnes) was about 17 per cent lower compared with the March quarter and 9 per cent lower y-o-y. This was due to the closure of the open pit mine at Rampura Agucha and the process of complete shift to underground mining during this quarter. The cost of production ex-royalty was also higher due to factors such as lower volumes and maintenance shutdown.

Zinc - International, too, was on the backfoot due to production decline of 25,000 tonnes, mainly on account of a planned maintenance shutdown at Skorpion, Namibia. Volumes should pick up with production from the Gamsberg zinc mines at South Africa which is expected to start from the second quarter of FY19.

The copper business took a knock due to the troubles in Thoothukudi; the segment posted operating loss of ₹87 crore in the June quarter. It usually contributed 4-5 per cent to the group’s operating profit.

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