SLT Sterlite Ind.I. Adr/4 IR1

Sterlite Industries (India) Limited (“SIIL” or the “Company”) today announced its unaudited consolidated results for the first quarter (“Q1”) ended 30 June 2012.

Q1 Highlights

• Integrated Lead production up 79% and integrated Silver production up 70% at Zinc India
• Power sales up 49%
• EBITDA at `2,337 crore
• Underlying EPS at `4.2 per share
• Strong balance sheet with cash and liquid investments of `24,917 crore
• Shareholder approval received for Sesa Sterlite merger

 

Financial Highlights

   

(In `crore, except as stated)

Particulars   Quarter ended

30 June

  Change   Year ended

31 March

    2012   2011   %   2012 Net Sales/Income from Operations   10,591   9,826   8%   40,967 EBITDA   2,337   2,758   (15%)   10,169 Interest Expense   242   164   47%   852 Foreign Exchange Gain/(Loss)   (217)   -   -   (305) Profit before Depreciation and Taxes (PBDT)   2,797   3,426   (18%)   12,174 Depreciation   518   420   23%   1,830 Profit before Taxes and Exceptional Items   2,279   3,006   (24%)   10,344 Exceptional Items   -   4   -   473 Taxes   334   614   (46%)   2,111 Profit after Taxes   1,945   2,388   (19%)   7,761 Minority Interest   577   642   (10%)   2,161 Share in Profit/(Loss) of Associate   (167)   (106)   57%   (772) Attributable PAT after Exceptional Items   1,202   1,640   (27%)   4,828 Basic Earnings per Share (EPS) (`/share)   3.6   4.9       14.4 Underlying Earnings per Share (EPS) (`/share) *   4.2   4.9   (14%)   16.7 Average Exchange Rate (`/$)   54.2   44.7   (21%)   47.9

*Underlying EPS excludes foreign exchange gain/loss and exceptional items

 

Consolidated Financial Performance

Revenues for Q1 were up 8% at `10,591 crore primarily due to increase in volume of Lead and Silver at Zinc India, Commercial Power and Copper. The drop in LME prices was partially offset by Rupee depreciation compared with the corresponding prior quarter.

EBITDA was down 15% at `2,337 crore, largely due to lower metal prices, lower volume of Zinc, lower power sales at Balco and higher cost of production in Rupee terms, partially offset by increased realisation on account of Rupee depreciation by 21% during Q1.

During Q1, profits were impacted by mark to market loss of `217 crore on foreign currency loans and higher interest costs of `78 crore.

Sesa - Sterlite Merger

Further to the approval received from the Stock Exchanges and the Competition Commission of India, Sterlite received shareholder approval at the Court Convened Meeting held on 21 June 2012. The Petition for the Schemes have been filed with and admitted by the High Court of Madras and High Court of Bombay at Goa. The Schemes are now subject to the approval of the High Court of Madras, High Court of Bombay at Goa and Supreme Court of Mauritius.

     

Zinc India Business

              Particulars   Quarter ended

30 June

  Change   Year ended

31 March

    2012   2011   %   2012 Production (in Kt, except for silver)                 Mined Metal – Zinc and Lead   187   188   (1%)   830 Total Refined Zinc   161   193   (16%)   759 Integrated Zinc   157   191   (18%)   752 Total Refined Lead 1   31   16   91%   99 Integrated Lead   29   16   79%   89 Total Refined Silver 2 (In ‘000 Kgs)   82   47   75%   242 Integrated Silver (In ‘000 Kgs)   79   47   70%   237                   Financials                 Revenue (` Cr)   2,641   2,784   (5%)   11,132 EBITDA (` Cr)   1,349   1,554   (13%)   5,993 Other Income (` Cr)   574   360   59%   1,543 PAT (` Cr)   1,542   1,479   4%   5,506 Zinc CoP without Royalty ($/MT)   844   874   3%   834 Zinc CoP with Royalty ($/MT)   1,007   1,063   5%   1,010 Zinc LME ($/MT)   1,928   2,250   (14%)   2,098 Lead LME ($/MT)   1,974   2,550   (23%)   2,269 Silver LBMA ($/oz)   28   38   (26%)   35

1 Including captive consumption of 1,641 tonnes in Q1 FY 2013 vs 1,391 tonnes in Q1 FY 2012.

2 Including captive consumption of 8,643 Kgs in Q1 FY 2013 vs 7,196 Kgs in Q1 FY 2012.

 

During Q1, mined metal production at 187,000 was in line with the current year mine plan. Mined metal output at Sindesar Khurd (SK) mine increased by around 60% from a year ago, offsetting planned lower output from Rampura Agucha mine. In line with the mine plan and as announced earlier, production in the first half of FY2013 is expected to be marginally lower than that in the corresponding prior period, but will be more than made up in the second half of FY2013.

Integrated refined Lead and Silver production in Q1FY2013 increased 79% and 70% from a year ago, to 29,000 tonnes and 79 tonnes respectively. The increase was primarily due to ramp-up of the SK mine and stabilization of the new Lead and Silver refining capacities. Integrated refined Zinc production at 157,000 tonnes was in line with the mine plan.

Revenues for Q1 FY2013 were `2,641 crore, down 5% compared with the corresponding prior quarter, reflecting the positive impact of higher Lead and Silver volumes, Rupee depreciation, lower Zinc volume and lower prices of Zinc, Lead and Silver.

The cost of production of Zinc, excluding royalty, during the quarter was `45,759 per tonne ($844 per tonne), compared with `39,117 per tonne ($874 per tonne) in the corresponding prior quarter. The increase in the cost of production was mainly due to the depreciation of Indian Rupee, planned increase in strip ratio at Rampura Agucha mine and lower by-product credits. Consequently, EBITDA during Q1 was lower at `1,349 crore compared with `1,554 Crore during the corresponding prior quarter.

Expansion Projects

Zinc India continues to progress well on the underground mine development at Rampura Agucha and Kayar mine. Developmental ore from Rampura Agucha underground and Kayar mines is expected in the second half of FY2013. Commercial production from both these mines will start next year. Zinc India is in the advanced stages of developing technical feasibility of its next phase of expansions.

     

Zinc International Business

              Particulars   Quarter Ended 30 June   Change   Year ended

31 March

    2012   2011   %   2012 Production (Kt)                 Mined Metal Content (MIC)- BMM & Lisheen   70   80   (12%)   299 Refined Metal – Skorpion   36   39   (7%)   145 Total   106   118   (10%)   444                   Financials                 Revenue (`Cr)   1,012   1,060   (5%)   4,258 EBITDA (`Cr)   337   517   (35%)   1,753 PAT (`Cr)   190   317   (40%)   1,034 CoP – ($/MT)   1,111   1,189   7%   1,165 Zinc LME ($/MT)   1,928   2,250   (14%)   2,098 Lead LME ($/MT)   1,974   2,550   (23%)   2,269  

In Q1, total production of Zinc-Lead metal-in-concentrate and Zinc metal was in line with our earlier guidance. The total production of 106,000 tonnes comprised 70,000 tonnes of Zinc and Lead metal-in-concentrate (MIC) at Lisheen and BMM and 36,000 tonnes of refined Zinc at Skorpion.

During Q1, revenue and EBITDA at our Zinc-International business were `1,012 crore and `337 crore respectively. EBITDA was 35% lower due to lower metal prices and volume.

       

Copper Business

                Particulars     Quarter Ended

30 June

  Change   Year ended

31 March

      2012   2011   %   2012 Production (Kt)                   Mined Metal Content – Australia     7   6   13%   23 Cathodes – India     88   74   19%   326                     Financials                   Revenue (` Cr)     5,301   4,631   14%   20,166 EBITDA (` Cr)     265   331   (20%)   1,498 Foreign Exchange gain/(loss) (` Cr)     (258)   (2)       (262) PAT (` Cr)     96   393   (86%)   1,155 Net CoP – cathode (USc/lb)     5.4   (2.9)       0.0 Tc/Rc (¢/lb)     12.4   13.9   (11%)   14.5 LME ($/MT)     7,869   9,125   (14%)   8,475  

Mined metal production at the Australian mine was up by 13% at 7,000 tonnes. Copper cathode production at the Tuticorin smelter was 88,000 tonnes.

In Q1, net cost of production was higher at 5.4 c/lb compared with (2.9) c/lb in the corresponding prior period primarily on account of lower realization of by-products.

EBITDA for Q1 was lower at `265 crore primarily due to higher net cost of production and lower Tc/Rc, partially offset by higher volume.

The first 80 MW unit of the captive power plant at Tuticorin is expected to be synchronized in the current quarter.

     

Aluminium Business (BALCO)

              Particulars   Quarter ended

30 June

  Change   Year ended

31 March

    2012   2011   %   2012 Production (Kt)                 Aluminum   60   61   (1%)   246                   Financials                 Revenue (` Cr)   780   757   3%   3,043 EBITDA (` Cr)   57   191   (70 %)   374 PAT (` Cr)   (7)   145       157 CoP ($/MT)   1,910   1981   4%   1,997 LME ($/MT)   1,978   2600   (24%)   2,313  

The Balco aluminium production was stable at 60,000 tonnes in Q1. Revenue in Q1 of `780 crore was in line with the corresponding prior period as higher realization on account of Rupee depreciation and improved product mix partly offset by the impact of lower aluminum prices.

During Q1, aluminium cost of production was `103,542 per tonne ($1,910 per tonne) compared with `88,642 per tonne ($1,981 per tonne) in the corresponding prior period. The increase in COP was on account of tapering of coal linkage and higher costs of Alumina and Carbon which reduced EBITDA to `57 crore compared with `191 crore in the corresponding prior quarter.

The first 300 MW unit of the 1200 MW captive power plant at BALCO is expected to be synchronized in the current quarter. The first metal tapping from the 325 ktpa BALCO-III Aluminium smelter is expected by Q3 FY2013.

We have received Environment Clearance for BALCO coal block in May 2012. Subject to Second Stage Forest Clearance which is progressing well, we expect to commence mining this year.

     

Vedanta Aluminium Limited

              Particulars   Quarter Ended

30 June

  Change   Year Ended     2012   2011   %   2012 Production (kt)                 Alumina (kt)   218   224   (3%)   928 Aluminium (kt)   124   112   11%   430                   Financials                 Revenue (` Cr)   1,681   1,498   12%   5,834 EBITDA (` Cr)   83   211   (61)%   563 PAT (` Cr)   (565)   (360)   (57%)   (2,618) SIIL Share as an associate (` Cr)   (167)   (106)   (59%)   (772) Alumina COP ($/MT)   334   347   4%   350 Aluminium COP ($/MT)   1,845   2,344   21%   2,188 LME ($/MT)   1,978   2,600   (24%)   2,313  

During Q1, Lanjigarh refinery produced 218,000 tonnes of alumina with bauxite from BALCO and third party purchases. Aluminium production at Jharsuguda was 11% higher at 124,000 tonnes as compared with corresponding prior quarter.

The cost of production at VAL in Q1 was `100,020 per tonne (US$1,845 per tonne) compared with `104,853 per tonne (US$2,344 per tonne) in the corresponding prior quarter, lower by 5 % in Rupee terms due to higher production and better operational efficiencies.

EBITDA was adversely impacted by `100 crore on account of interest differential as per AS 16 and `80 crore of mark to market loss on creditors and loans due to foreign exchange fluctuation. EBITDA excluding these items was `263 crore.

Aluminium premiums have risen substantially year on year on account of shortage of primary metal in the physical market due to capacity cutbacks. Premium over LME on aluminium ingot has improved significantly during the quarter to more than $200 per tonne.

       

Status of Investment in VAL (Associate Company) as at 30 June 2012

                  In ` Crore   Sterlite   Vedanta   External   Total Equity   563   1,391   -   1,954 Preference Share Capital   3,000   -   -   3,000 Quasi Equity / Debt   6,942   2,374   18,571   27,887 Total funding   10,505   3,765   18,571   32,841 Corporate Guarantees   4,538   23,382   -   27,921        

Power

              Particulars   Quarter ended

30 June

  Change   Year ended     2012   2011   %   2012 Merchant sales (mn units)                 SEL *   1,938   1,123   73%   5,638 Balco 270 MW   338   424   (20%)   1,605 Wind Power 273 MW   182   105   72%   336 Total   2,458   1,652   49%   7,578                   Financials                 Revenue (` Cr)   857   592   45%   2,572 EBITDA (` Cr)   329   166   98%   686 PAT (` Cr)   83   50   64%   163 Average Power CoP (`/ unit)   2.02   2.57   21%   2.40 Average Power Realization (`/unit)   3.44   3.55   (3%)   3.39 SEL CoP (`/unit)   2.14   2.86   25%   2.62 SEL realization (`/unit)   3.51   3.49   1%   3.42

* 202 MU in Q1 FY2013 and 140 MU in Q1 FY2012 generated under trial run

 

Power sales were higher at 2,458 million units in Q1, compared with 1,652 million units during the corresponding prior quarter, on account of sales from the three 600 MW units of the 2,400 MW Jharsuguda power plant of Sterlite Energy Ltd (SEL). The fourth unit is currently under trial runs and is expected to be commissioned in the current quarter.

Wind power generation increased by 72% on account of increase in generation capacity.

The generation cost at SEL during the quarter was `2.14 per unit compared with `2.86 per unit in corresponding prior quarter, from stable plant operations.

EBITDA for Q1 was 329 crore was higher compared with the corresponding prior quarter on account of higher volume and lower costs at SEL.

During the quarter, we commissioned an additional 700MW transmission capacity at SEL, taking our total capacity to 1,850MW, which will help to achieve higher PLF. In Q4 FY2013, we expect to commission an additional 1,000MW transmission capacity which will help to achieve capacity PLF.

Expansion Projects

Work at the 1,980 MW power project at Talwandi Sabo is progressing as scheduled, with the first unit targeted to be synchronized by Q4 FY2013.

Depreciation

Depreciation cost for the quarter was higher at `518 crore as compared to `420 crore during the corresponding prior quarter due to the capitalization of new plants at Zinc India operations and SEL.

Cash, Cash Equivalents and Liquid Investments

The Company follows a conservative investment policy and invests in high quality debt instruments in form of mutual funds and fixed deposits with banks. As at 30 June 2012, the Company had cash, cash equivalents and liquid investments of `24,917 crore, out of which `14,206 crore was invested in debt mutual funds and bonds, and `10,711 crore was in fixed deposits and bank balances.

Regd. Office: SIPCOT Industrial Complex, Madurai Bypass Road, TV Puram P.O., Tuticorin-628002, Tamilnadu

About Sterlite Industries

Sterlite Industries (India) Limited is India’s largest diversified metals and mining company. The company produces aluminium, copper, zinc, lead, silver, and commercial energy and has operations in India, Australia, Namibia, South Africa and Ireland. The company has a strong organic growth pipeline of projects. Sterlite Industries is listed on the Bombay Stock Exchange and National Stock Exchange in India and the New York Stock Exchange in the United States. For more information, please visit www.sterlite-industries.com

Disclaimer

This press release contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should” or “will.” Forward–looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.