Sterlite Industries reported a 8% increase in net sales to Rs 10818.87 crore in Q4FY'12 compared to Q4FY'11 driven by higher volumes as several of its growth projects commenced operations and ramped up production, and the successful integration of the Zinc International business acquired in second half of FY 2011. 8% increase in revenues were on the back of 39% increase in copper revenues to Rs 4945.42 crore, 4% increase in Aluminium revenues to Rs 868.71 crore, 89% increase in Silver metal revenues to Rs 409.24 crore, 20% increase in Zinc International revenues to Rs 1009.46 crore and 230% increase in Power revenues to Rs 737 crore. Zinc India segment revenues fell 11% to Rs 2652.37 crore. Bottomline fell 34% to Rs 1276.89 crore. Profitability of the company was impacted due to lower LME prices offset by higher volumes and EO expenditure of Rs 423 crore due to an unfavorable ruling by the US courts in connection with the cancellation of the share purchase agreement entered with ASARCO in 2009
During the quarter, it announced the merger of Sesa Goa Limited and Sterlite Industries, and Vedanta Group Consolidation. The merger is on track for completion in CY 2012, as previously announced. Shareholder meeting to approve the merger is expected to be held in June 2012. After receiving the BSE and NSE approvals, the Companies have filed petitions in the respective High Courts. The Competition Commission of India has approved the transaction and an application for the approval of Foreign Investment Promotion Board has been filed.
The Board has recommended a final dividend of Rs. 1 per share, taking the total dividend for FY2012 to Rs. 2 per share, which is the highest ever dividend proposed by the company. The total dividend outgo will nearly double to Rs. 686 crore as against Rs. 370 Crore during the previous year.
Consequent to acquisition of zinc business at Namibia, South Africa and Ireland in the second half of the FY 2010-11, the results for the quarter reported and year ended March 31, 2012 are not strictly comparable with corresponding previous periods
OPM fell 220 bps to 28.1% as power, fuel and water expenditure as a percentage to net sales (net of stock adjustment) rose to 9.2% from 7.0%, employees cost increased to 3.9% from 3.7% and other expenses rose to 17.2% from 14.5% and consumption of raw materials rose to 44.5% from 43.9%. As a result operating profits stood flat at Rs 3036.81 crore.
Other income fell 6% to Rs 703.54 crore, interest cost jumped to Rs 327.99 compared to Rs 118.26 crore while depreciation increased 44% to Rs 507.24 crore due to capitalization of Dariba lead smelter at Zinc - India operations, wind power project and three units of 600 MW at SEL, Jharsuguda and depreciation on the assets of Zinc International business which was acquired in Q3 and Q4 of 2011. It resulted in 13% fall in PBT to Rs 2905.12 crore. The company had an EO expenditure amounting Rs 431.87 crore representing Rs 423.32 crore recognised during the quarter is net incidental damages payable to ASARCO pursuant to the order of US District Court dated 13 February, 2012 in respect of a suit filed by ASARCO in US Courts against the company and Sterlite (USA) for the alleged breach of the Purchase and Sale Agreement signed in May 2008 and is being disputed by the company and Rs 8.42 crore incurred under the voluntary retirement scheme at a subsidiary engaged in Zinc, lead & silver operations and Rs 0.13 crore at a subsidiary engaged in Aluminum operations.
PBT after EO fell 25% to Rs 2473.25 crore. Effective rate of taxes rose 250 bps to 19.7% from 17.2% leading 27% fall in PAT to Rs 1986.60 crore. After considering MI and share of profit and loss of associate the final net profit fell 34% to Rs 1276.89 crore.
PBIT margins of Sterlite Industries decreased 740 bps during the quarter to 20% due to fall in PBIT margins across all segments. Copper PBIT margins fell 70 bps to 5.5% while Aluminium PBIT margins fell 2070 bps to 2.7%, Zinc India PBIT margins fell 1360 bps to 42.1%, Silver metal India business PBIT margins fell 140 bps to 89.9%, Zinc International PBIT margins fell 1800 bps to 21.9% and Power PBIT margins fell 80 bps to 20.6%.
Commenting on the performance Anil Agarwal, Chairman, Sterlite Industries (India) Ltd said; Sterlite Industries delivered strong operating and financial performance during the year, despite macroeconomic headwinds. We continue to deliver on our growth projects, expanding and optimizing our assets to generate strong returns for our shareholders. The board has approved a dividend of Rs. 2/share for FY2012. Last quarter, we announced a merger of Sterlite with Sesa Goa, and simplification of the Vedanta Group structure. The merger process is well on track to create one of the world's largest natural resource majors, and deliver significant long term value for shareholders.
For year ended March 2012, Sterlite Industries recorded 35% increase in net sales on a Y-o-Y basis to Rs 41178.94 crore. 35% increase in net sales was contributed by 29% increase in copper revenues to Rs 19513.86 crore, 8% increase in Zinc India revenues to Rs 9999.89 crore, 3% increase in Aluminium revenues to Rs 3111.84 crore, 108% increase in Silver revenues to Rs 1131.99 crore and 313% increase in Zinc International revenues to Rs 4108 crore. Power sales were up 230% to Rs 2564.92 crore. OPM of the company fell 250 bps to 24% leading to a 23% growth in operating profits to Rs 9863.32 crore. Other income of the company rose 25% to Rs 3163.21 crore, interest cost rose 143% to Rs 852.42 crore and depreciation increased 78% to Rs 1829.81 crore. It resulted 13% increase in PBT to Rs 10344.30 crore. The company had an EO expenditure amounting Rs 472.64 crore compared to Rs 56.82 crore in the corresponding previous year period. PBT after EO rose 8% to Rs 9871.66 crore. Effective rate of taxes increased to 21.4% from 19.8% leading 6% increase in PAT to Rs 7761.11 crore. After considering MI and share of profit and loss of associate the final net profit fell 4% to Rs 4827.92 crore.
Vedanta Aluminum (VAL), an associate of the company, is in the process of expanding its alumina refinery and its aluminium smelter in the state of Orissa. Ministry of Environment and Forests ('MoEF') has rejected the forest clearance for Niyamgiri Mining lease of Orissa Mining Corporation (OMC), which is one of the sources of supply of bauxite to the alumina refinery of VAL. OMC has filed a petition in the Hon'ble Supreme Court, which is yet to be heard. MoEF has also denied VAL's application for expansion of alumina refinery, which was challenged by VAL before the Hon'ble Orissa High Court. The Hon'ble Orissa High Court has upheld the order of the MoEF. VAL in terms of MOEF directive is proceeding for a public hearing for the refinery expansion. The company has put the expansion activity on hold. The management of the company has evaluated and considered good, its loans granted and investment made in VAL, aggregating Rs 10,570 Crore.
The company has, over the period invested Rs 3,563 Crore in Vedanta Aluminum, an associate company, by way of Equity Shares and Redeemable Cumulative Preference Shares. The company has accounted for its share of losses of its associate, even though the carrying amount of the equity investment has reduced to Nil. The additional losses (including share of hedging reserves) of Rs 107 Crore and Rs 896 crore for the quarter and year ended 31st March 2012 have been recognised in the results.
The scrip is currently trading at Rs 105.30.
Sterlite Consolidated results
Sterlite Segment Results