Sterlite Industries (India) Limited (“SIIL” or the “Company”)
today announced its unaudited consolidated results for the Second
Quarter (“Q2”) and Half Year (“H1”) ended 30 September
2011.
Highlights of the
quarter
Operational Performance
- Refined Zinc-Lead metal production up
5% at 201,821 tonnes
- Refined Silver production up 12% at
49,274 kg
- Commissioned the 100 ktpa Dariba Lead
smelter, taking the Zinc - India capacity to 1.064 mtpa
- Stable operations at Zinc
International
Financial performance
- PBDT up 29% at Rs. 2,693 crore, Rs. 530
crore contributed by Zinc International
- Strong balance sheet with cash and
liquid investments of Rs. 22,691 crore
- EPS of Rs. 3 per share
- Interim Dividend of Rs 1 per
share.
Financial Highlights
(In Rs. crore, except as stated)
Particulars Quarter ended
30 September
Change Half Year Ended
30 September
Change 2011 2010
% 2011 2010
% Net Sales/Income from operations
10,134
6,029 68.1
19,958
11,953 67.0 Profit before interest,
depreciation & taxes
3,049 2,086
46.1
6,645 4,260
55.9 Interest
356
530 127
Profit before depreciation and taxes (PBDT)
2,693
2,086 29.1
6,115
4,134 47.9 Depreciation
445
212
865
429 Taxes
505
456
1,119
824 Profit After Taxes
1,744
1,418 23.0
4,131
2,881 43.4 Minority Interest
503
385
1,145
761 Share in Profit/(Loss) of
Associate
(243) (25)
(349) (103)
Attributable PAT after exceptional item
998
1,008 (1.0)
2,637
2,016 30.8 Earnings per Share (EPS) (Rs. /share)*
3.0 3.0
7.8 6.0
*Not Annualised
Zinc India Business
Particulars Quarter ended
30 September
Change Half Year Ended
30 September
Change 2011 2010
% 2011 2010
%
Production (in Kt, except for
silver)
Mined Metal
210 205 2.4
398 387 2.9 Refined Metal – Zinc
185 176 4.9
378 341 10.8 Refined Metal –
Lead*(1)
17 16 5.2
33 31 5.4 Silver (in 000’s Kgs)
(2)
49 44 12.1
96 87 10.1
Financials
Revenue (Rs. Cr)
2,560
2,146 19.3
5,344
4,073 31.2 PBDT (Rs. Cr)
1,775
1,265 40.2
3,673
2,418 51.9 PAT (Rs. Cr)
1,330
941 41.3
2,809
1,826 53.8 CoP with Royalty ($/MT)
1,036 976 6.1
1,050 997 5.3 Zinc LME ($/MT)
2,224 2,013 10.5
2,236 2,015 11.0 Lead LME ($/MT)
2,459 2,032 21.0
2,503 1,989 25.8
(1) Includes captive consumption of 1,348 tonnes and 2,739
tonnes in Q2 FY2012 and H1 FY2012, as compared with 1,646 tonnes
and 2,812 tonnes in corresponding prior periods, respectively.
(2) Includes captive consumption of 7,193 kg and 14,389 kg in Q2
FY2012 and H1 FY2012, as compared with 8,612 kg and 14,745 kg in
corresponding prior periods, respectively.
Mined metal production in Q2 was 209,676 tonnes, up 2% as
compared with the corresponding prior quarter.
Refined Zinc production in Q2 was 184,816 tonnes, up 5% as
compared with the corresponding prior quarter, primarily on account
of improved operational performance at our hydro smelters. Refined
Lead production in Q2 was 17,005 tonnes, up 5% as compared with the
corresponding prior quarter. This was primarily due to volume
contribution from the new 100kt Dariba Lead smelter which was
commissioned and capitalized during the quarter.
Refined Silver production in Q2 was 49,274 kg, up 12% as
compared with the corresponding prior quarter. The increase in
production was mainly attributable to higher silver content in the
mined ore and improved plant efficiencies.
Revenues and Profit Before Interest Depreciation and Taxes
(“PBDT”) for Q2 were Rs. 2,560 Crore and Rs. 1,775 Crore
respectively, an increase of 19.3% and 40.2%, compared with the
corresponding prior quarter. The increase was primarily on account
of increased volumes and improved Zinc-Lead LME and Silver
prices.
The Zinc cost of production, excluding royalty, during the
quarter was Rs. 38,800 per MT ($847), marginally higher compared
with the corresponding prior quarter. The positive impact of
operational efficiencies was more than offset by the impact of
increase in commodity inputs.
During Q2, average Zinc and Lead LME prices were $2,224 per
tonne and $2,459 per tonne respectively, compared with $2,013 per
tonne and $2,032 per tonne, in the corresponding prior quarter.
The average Silver Cash Settlement Price per London Bullion
Market Association increased to $38.80/oz in Q2 FY2012 from
$18.97/oz in the corresponding prior quarter.
Exploration
We continue to maintain our focus on mine exploration, which
will be the key driver of our future growth. In the last 7 years,
exploration activities have added 167 mt, net of depletions, to our
reserve & resource base. We are currently exploring over 6,200
sq km area in 10 ‘Reconnaissance Permits’ (RPs). Our total reserves
& resources base as of 31st March 2011 is 313.2 mt containing
34.7 mt of Zinc-Lead metal and 885 million ounces of Silver,
ensuring long mine life of 25+ years.
Expansion Projects
Ramp-up of the Sindesar Khurd mine is on track to achieve its
targeted 2.0mtpa capacity by the end of the year. The 100ktpa
Dariba Lead smelter was commissioned during the quarter, taking the
total refining capacity for Lead to 185ktpa. The new Silver
refinery of 350tpa is scheduled to be commissioned in Q3 FY2012.
The mining work at underground Kayar mine has commenced and we
expect it to start first ore production in FY 2013-14.
Interim Dividend by HZL
Sterlite’s subsidiary, Hindustan Zinc Ltd, has announced an
interim dividend of 75% i.e. Rs. 1.50 per share on equity share of
Rs 2.00 each
Zinc International
Business
Particulars Quarter Ended
30th September
Quarter Ended
30th June
Change 2011
2011 % Production (Kt)
Mined Metal Content
(MIC)- BMM & Lisheen *
77 80
Refined Metal content – Skorpion
37
39 Total 114
119 (4.2)
Financials
Revenue (Rs. Cr)
1,160 1,060 9.4
PBDT (Rs. Cr)
530 522
1.5 PAT
342 317
7.8 CoP – ($ per MT)
1,242 1,189
4.5 Zinc LME ($/MT)
2,224
2,250 (1.2) Lead LME ($/MT)
2,459
2,550 (3.6)
* Includes Lead MIC production of 20,574 tonnes and 23,934
tonnes in Q2 FY 2012 and Q1 FY 2012 respectively, considered as by
product.
The total equivalent zinc-lead production was 114,000 tonnes in
Q2. This comprised production of zinc-lead concentrate of 77,000
tonnes MIC in Q2 at BMM and Lisheen, and refined zinc production of
37,000 tonnes at Skorpion.
Revenues and PBDT for Q2 were Rs. 1,160 Crore and Rs. 530 Crore
respectively, an increase of 9.4% and 1.4% respectively, compared
with the corresponding prior quarter.
Copper Business
Particulars Quarter ended
30 September
Change Half Year Ended
30 September
Change 2011 2010
% 2011 2010
%
Production (Kt)
Mined Metal Content
5 7
(28.5)
11 13
(15.3) Cathodes
87 68
28.1
161 144
11.2
Financials
Revenue (Rs. Cr)
5,575 3,526
58.1
10,428 7,121
46.4 PBDT (Rs. Cr)
477 654
(27.0)
1,085 1,351
(19.7) PAT
294 443 (33.6)
687 917 (25.0) Net CoP –
cathode (¢/ lb)
(3.7) 7.3
(3.3) 7.1
Tc/Rc (¢ / lb)
13.0 11.7 11.0
13.4 12.7 6.2 LME
($/MT)
8,982 7,242 24.0
9,057 7,131 27.0
During Q2, the Tuticorin copper smelter produced 87,000 tonnes
of copper cathode, 28% higher than the corresponding prior quarter.
Production in the prior year period was lower on account of a
planned bi-annual maintenance shut-down. Mined metal production at
Australia was 5,000 tonnes in Q2.
Revenue and PBDT for Q2 were Rs. 5,575 Crore and Rs. 477 Crore
respectively, an increase of 58% and decrease of 27% respectively,
compared with the corresponding prior quarter. Higher operational
efficiencies and higher realisation on by-product and acid sales
was more than offset by Mark to Market loss on foreign exchange
fluctuation on borrowings.
The effective tax rate at copper India operations increased to
32% in Q2 from 27% in the corresponding prior period, due to expiry
of tax incentive on export oriented units.
In Q2, net cost of production was (3.7) c/lb compared with 7.3
c/lb in the corresponding prior period. The decrease in net cost of
production was on account of by-product credits, higher volumes and
improved metal recovery.
Despite improved operational performance, the PAT was lower on
account of unprecedented depreciation of Indian Rupee which
resulted in a loss of Rs. 304.55 crore in Q2.
On the Special Leave Petition (SLP) filed by the Company,
Hon'ble Supreme Court of India vide order dated 01.10.2010 had
stayed the operation of the judgement of Hon'ble Madras High Court
directing closure of Copper Smelter Unit at Tuticorin. The Hon’ble
Supreme Court has directed Tamil Nadu Pollution Control Board
(“TNPCB”) to issue directions, to the copper smelter to implement
the improvement measures suggested by National Environment
Engineering Research Institute, Central Pollution Control Board and
TNPCB. The Court has directed that the case be listed in the first
week of January 2012. Interim stay order granted by the Hon’ble
Supreme Court continues and unit continues to operate at rated
capacity.
The Tuticorin smelter has been operating for more than 12 years
and is committed to employing environmentally friendly technologies
and would work in close co-ordination with the agencies to ensure
proper implementation of improvement measures suggested by
them.
Expansion Projects
The construction of the captive power plant at Tuticorin is
progressing well and the first unit is scheduled for commissioning
in Q4 FY2011-12. The 400 ktpa copper smelter expansion project at
Tuticorin is awaiting consent from the TNPCB.
Aluminium Business
(BALCO)
Particulars Quarter ended
30 September
Change Half Year Ended
30 September
Change 2011
2010
% 2011
2010 %
Production (Kt)
Aluminium
60 64 (7.1)
121 127 (4.6)
Financials
Revenue (Rs.
Cr)
686 718 (4.5)
1,442 1,384 4.2 PBDT (Rs. Cr)
37 166 (77.6)
250 258 (3.2) PAT
(Rs. Cr)
(17) 64
128 94 CoP
($/MT)
2,133 1,748
22.0
2,036 1,780
14.4 LME ($/MT)
2,399 2,089
14.8
2,495 2,090
19.4
The BALCO aluminium smelter continues to operate at its rated
capacity and the aluminium production was 60,000 tonnes during the
quarter.
PBDT for Q2 was Rs. 37 Crore compared with Rs. 166 Crore in the
corresponding prior quarter due to higher COP. During Q2, the COP
of hot metal produced was at $2,133 per tonne, 22.0% higher
compared with the corresponding prior quarter. The increase in cost
was primarily due to increase in prices of alumina and higher
carbon costs.
PAT was lower on account of unprecedented depreciation of Indian
Rupee which resulted in a loss of Rs. 31.77 crore in Q2.
Expansion Project
The first unit of BALCO 1,200MW (4x300MW) captive thermal power
plant is expected to be synchronised in Q3 of FY 2011-12.
Work at the 325 kt aluminium smelter project at Korba is
progressing well, and we target first metal tapping in Q4
FY2011-12.
Investment in Associate - Vedanta
Aluminium Limited
Particulars Quarter ended
30 September
Change Half Year Ended
30 September
Change 2011 2010
% 2011 2010
%
Alumina (Mt) 228 187
21.9
451 377
19.6
Aluminium (Mt) 89 97
(8.2)
201 174
15.5
Financials
Revenue (Rs. Cr)
1,198
1,272 (5.8)
2,696
2,324 16.0
PBDT (Rs. Cr)
(624)
(196)
(785)
(278)
PAT (Rs./ Cr)
(823) (84)
(1,183) (350)
SIIL
Share (Rs./Cr)
(243) (25)
(349) (103)
Alumina COP ($/MT) 381 328
16.3
364 322
13.0
Aluminium COP ($/MT) 2,554
1,853 37.8
2,427
1,847 31.4
Aluminium production in Q2 was at 89,000 tonnes, post the pot
outage in Q1 at the 500 ktpa Jharsuguda-I smelter. At Jharsuguda-I,
we remain on track to return to normal capacity by the end of Q3 FY
2011-12 and approximately 115 of the 170 affected pots had been
restarted by the end of Q2. Alumina production at Lanjigarh was
228,000 tonnes in Q2, up 21.4% compared with the corresponding
prior periods.
Revenue for Q2 were Rs. 1,198 crore. During the quarter, there
was a loss of Rs. 624 Crore. The PBDT was lower on account of
increase in cost of production and higher finance cost on account
of Mark to Market loss on foreign exchange fluctuation on
borrowings. The interest and finance charges during Q2 were Rs.
625.89 crore which includes loss (net) due to currency fluctuation
of Rs 208.8 crore.
The average COP for alumina in the quarter was US $381 per
tonne, higher by 16.3% compared with the corresponding prior
quarter. The increase in CoP was on account of higher bauxite
transportation costs and lower quality bauxite.
The COP of hot metal produced during the quarter was at US
$2,554 per tonne, higher by 37.8% compared with the corresponding
prior quarter. The increase was mainly on account of increase in
power & Alumina cost. Cost of power was higher on account of
higher coal procurement prices and purchase of power in open access
due to shortage of coal from mines.
The 1.25 mtpa Jharsuguda-II smelter project is in the final
stages of completion, and we continue to evaluate the option of
selling power versus producing aluminium at this smelter.
Status of Investment in Associate Company as at 30 Sep
2011
Investment In VAL (Rs. In Crore)
Sterlite Vedanta
External Total Equity
563 1,391 NA 1,954
Quasi Equity / Debt 8,939 4,586
15,603 29,128
Total funding
9,502 5,977 15,603
31,082
In addition, Vedanta Resources Plc and Sterlite have extended
Corporate guarantees to VAL for an amount of Rs 26,076 crore and Rs
4,538 crore respectively.
Energy Business
Particulars Quarter ended
30 September
Change Half Year Ended
30 September
Change 2011
2010
% 2011
2010 %
Merchant sales (Mn units)
SEL
* 1,134 -
2,146 -
Balco 270 MW 387
362 6.9
811 774
4.7
WPP 94
52 82.1
200 120
66.1
Total 1,615
414 290.1
3,156
894 253.0
Financials
Revenue (Rs. Cr)
601 143 320.3
1,202 382 214.6
PBDT (Rs. Cr)
109 69
57.9
250 195
28.3 PAT (Rs. Cr)
23 42
(45.2)
73 135
(45.9) CoP (Rs./ unit)
2.7
1.8 50.0
2.6
2.0 30.0 Net Realisation (Rs./unit)
3.5 3.4 2.9
3.6 4.3 (16.3)
* 156 MU and 295 MU generated under trial run in Q2 2011 and H1
2011 respectively.
Power sales were 1,615 million units during the quarter,
significantly higher compared with 414 million units in the
corresponding prior quarter. Higher power sales was mainly on
account of sales from two 600 MW units at the 2,400 MW Jharsuguda
power plant.
Revenue and PBDT for Q2 were Rs. 601 Crore and loss of Rs. 109
Crore respectively, an increase of 320.3% and 57.9% compared with
the corresponding prior quarter. Increase in revenue was on account
of higher sales from two units of 600 MW each commissioned in March
and May 2011.
During Q2, the generation cost at SEL was Rs 2.9 per unit as
against the Rs 2.8 per unit in Q1 of 2011-12. Coal supplies to
Jharsuguda were adversely affected due to heavy rainfall in the
coal belt, affecting our ability to generate power at our rated
capacity.
Expansion Projects
Work on remaining two 600 MW units at the 2,400 MW Jharsuguda
power plant is progressing well and the units are expected to be
synchronized in Q3 and Q4 of FY2011-12, respectively.
Work on the Talwandi Sabo power project is progressing as
scheduled. The project will now comprise 1,980 MW (660 MW*3) as
originally planned and we will not build the 4th (merchant)
unit.
We have commissioned 105MW of the 150MW expansion in wind power
generation capacity announced in January 2011. The balance capacity
is expected to be commissioned in Q3 FY2012. Post the expansion,
the Company’s wind power generation capacity will increase to
273MW.
Depreciation
Depreciation and amortization cost for the quarter is higher at
Rs. 445 crore as compared to Rs. 212 crore during the corresponding
prior quarter due to capitalisation of Dariba lead smelter at Zinc
- India operations, wind power project and two units of 600 MW at
SEL, Jharsuguda besides Rs. 142 crore charged during the quarter on
the assets of our Zinc International business.
Income Tax
Effective tax rate was at 22.5% for the current quarter compared
to the 24.3% corresponding prior period.
Cash, Cash Equivalents and liquid
investments
Company follows a conservative Investment Policy and invests in
high quality Debt instruments in the form of mutual funds and fixed
deposit with banks. As at 30 September 2011, the Company had cash
and cash equivalents of Rs. 22,691 crore, out of which Rs. 12,342
crore was invested in debt mutual funds and Rs. 10,349 crore was in
fixed deposits and the balance with Banks.
Interim dividend
The Board of Directors have recommended an interim dividend of
Rs. 1 per share (i.e. 100%) on equity share of Rs 1.00 each. The
record date for payment of dividend is 1 November 2011.
Borrowings
Company had a total borrowings of Rs 14,943 crore as on 30
September 2011.
Foreign Currency Losses
Due to unprecedented depreciation of Indian Rupee, the net
impact of foreign currency exchange fluctuations during the quarter
resulted in a loss of Rs. 466 crores.
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. The company is setting up 5,040 MW independent thermal
power plants through its subsidiary Sterlite Energy Limited.
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.
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