Vedanta reports cost pressure despite higher profit in FY2017-18

The mining conglomerate Vedanta Resources has reported rising cost pressures despite an increase in annual profits on the back of higher commodity prices. As announced on May 5, 2018, the company, controlled by Indian tycoon Anil Agarwal, witnessed a 21 per cent rise in consolidated profit-after-tax (PAT) at INR 13,692 crore in the financial year 2017 to 2018 ended on March 31, 2018, higher from INR 11,319 crore in FY2016-17. Earnings before interest, tax, depreciation, and amortisation rose 27 per cent to close at US$4.1 billion, while revenue jumped 3 per cent to US$15.4 billion in FY2017-18. Despite, the London-listed company has reportedly experienced higher costs pressures, particularly in aluminium business.

In this respect, Kuldip Kaura, company’s acting chief executive said in a statement “Alongside improving prices we have experienced inflationary headwinds for input commodities”, while adding, “These impacted our costs, especially at aluminium and in response we are focusing on operational improvements and have implemented a structured approach to optimise controllable costs which will yield results in the coming year, barring further cost inflationary pressures.”

Rising input costs have been the key concern for the mining industry. Aluminium producers are also combating the soaring prices of alumina, which resulted from the US sanctions against UC Rusal.

Company’s net debt rose to US$9.6 billion from US$8.5 billion in a year as it signed off on a number of growth projects.

Kaura pointed out that Vedanta was working with the relevant regulatory authorities in India to hurry the recommencement of 400,000 tonnes a year Tuticorin copper smelter in Southern India, which is, however, currently shut because of alleged non-compliance with local environmental rules.