Sesa Sterlite plans cost cuts for the financial year 2015-16

Sesa Sterlite, the metals, mining and energy firm has released its revised capital expenditure (capex) for the new financial year (2015-16) cutting costs to $1 billion from $2 billion planned last year.

Cairn India bears the bigger brunt of the cost cuts with their capex reduced to $500 million from the previous $1.2 billion due to low prices of crude oil. Even the Gamsberg zinc mining project company in South Africa will witness a reduced capex from $250 to $80 million.

The chief financial officer of Sesa Sterlite, D.D. Jalan has confirmed the cost cuts and told the investors that 80% of the allotted $1 billion will be utilized in the core businesses of oil and gas while the remaining 20% will be spread between the zinc, aluminium and power business.

The falling commodity prices led by the 40% drop in crude oil prices is the main reason for the cost revision undertaken by the company.

Sesa Sterlite will however continue with their aluminium expansion plans by increasing their smelting capacity to 1.7 million tons by March 2016 from the current 890,000 tons. Even the alumina business will get a boost through the Lanjigarh alumina refinery where production is expected to reach 2 million tons from the current 1 million.

Sesa Sterlite has been an under-performer to the benchmark Sensex this financial year so far, with the company gaining only 5.96% against a gain of 28.85% by the Sensex.