Sterlite Industries ( India ) Limited - QTRLY RESULTS - Q3 FY 2012 - Q/E DEC,2011 - NET SALES UP 23.53%; CONS-NPT DOWN 17.03% YoY

Sterlite Industries ( India ) Limited

NSE Symbol        STER

STERLITE INDUSTRIES (INDIA) has declared dismal (Consolidated) results for the third quarter ending dec,2011.

Net Sales in Q3 FY 12 stands at Rs.10246.18 cr – up by 1.11% from Q2 FY 12; Up by  4.30% from Q1 FY 12; and up by  23.53% from Q3 FY 11.

Total Expenditure in Q3 FY 12 stands at Rs.8868.27 cr – up by 8.70% from Q2 FY 12; up by  17.89% from Q1 FY 12; and up by  34.32% from Q3 FY 11.

Profit from Operations stands at Rs.1435.40 cr in Q3 FY 12 – down by  -29.53% from Q2 FY 12; down by  -38.61% from Q1 FY 12; and down by  -17.03% from Q3 FY 11.

Other Income stands at Rs.876.81 cr in Q3 FY 12; up by  46.81% from Q2 FY 12; up by  4.18% from Q1 FY 12; and up by  83.59% from Q3 FY 11.

Interest in Q3 FY 12 stands at Rs.157.34 cr in Q3 FY 12 – down by  -55.79% from Q2 FY 12; down by -9.56% from Q1 FY 12; but up by a huge      123.05% from Q3 FY 11.

Profit before tax stands at Rs.2148.44 cr in Q3 FY 12 – down by  -4.45% from Q2 FY 12; down by  -28.42% from Q1 FY 12; but up by 0.73% from Q3 FY 11.

Tax Expense stands at Rs.505.30 cr in Q3 FY 12 – up by 0.09% from Q2 FY 12; down by  -17.67% from Q1 FY 12; but up by  19.9% from Q3 FY 11.

Net Profit  stands at Rs.1643.14 cr in Q3 FY 12  – down by  -5.76% from Q2 FY 12; down by  -31.19 from Q1 FY 12; and down by  -3.99% from Q3 FY 11.

Minority Interest stands at Rs.466.04 cr in Q3 FY 12 – down by -7.35% from Q2 FY 12; down by  -27.41% from Q1 FY 12; and down by -8.28% from Q3 FY 11.

Shares of Associates stands at Rs.263.58 cr – up by  8.55% from Q2 FY12; up by  148.50% from Q1 FY 12; and up by  157.68% from Q3 FY 11.

Consolidated NPT in Q3 FY 12 stands at Rs.913.52 cr – down by   -8.44% from Q2 FY 12; down by  -44.29% from Q1 FY 12; and down by  -17.03% from Q3 FY 11.

 On a Face value of Rs.1, the Basic EPS stands at Rs.2.72 in Q3 FY 12; Rs.2.97 in Q2 FY 12; Rs.4.88 in Q1 FY 12; and Rs.3.28 in Q3 FY 11.

The annual EPS may therefore stand at Rs.13.29.

Current Market price is Rs.  105.55    While the 52 week high price is Rs.190 and the 52 week low price is Rs.86.15 on the Face value of Rs.1

The PE Ratio comes to 7.94.

RESULTS TABLE

STERLITE IND-CONSOL	Q3FY12	Q2FY12	%DIF1	Q1FY12	%DIF2	Q3FY11	%DIF3
Net Sales	1024618	1,013,384.00	1.11	982,400.00	4.30	829,432.00	23.53
Other Oprtng Income	5749	6,186.00	-7.06	3,670.00	56.65	3,813.00	50.77
Increase in SIT/WIP	13002	138	9,321.74	-6,981.00	-286.25	-13,154.00	-198.84
Raw Materials	584155	587,440.00	-0.56	535,827.00	9.02	510,237.00	14.49
Traded goods	644	200	222.00	118	445.76	-
Employees Cost	41499	39,698.00	4.54	38,503.00	7.78	25,794.00	60.89
Depreciation	45752	44,504.00	2.80	42,001.00	8.93	24,877.00	83.91
Other Expenditure	201775	143,891.00	40.23	142,774.00	41.32	112,499.00	79.36
Total Expenditure	886827	815,871.00	8.70	752,242.00	17.89	660,253.00	34.32
Profit from Operations	143540	203,699.00	-29.53	233,828.00	-38.61	172,992.00	-17.03
Other Income	87681	59,724.00	46.81	84,164.00	4.18	47,760.00	83.59
Interest	15734	35,586.00	-55.79	17,398.00	-9.56	7,054.00	123.05
Exceptional items	643	2,992.00	-78.51	442	45.48	410	56.83
Profit before tax	214844	224,845.00	-4.45	300,152.00	-28.42	213,288.00	0.73
Tax Expense	50530	50,487.00	0.09	61,373.00	-17.67	42,142.00	19.9
Net Profit	164314	174,358.00	-5.76	238,779.00	-31.19	171,146.00	-3.99
Minority Interest	46604	50,299.00	-7.35	64,199.00	-27.41	50,811.00	-8.28
Shares of Associates	26358	24,281.00	8.55	10,607.00	148.50	10,229.00	157.68
Consolidated NPT	91352	99,778.00	-8.44	163,973.00	-44.29	110,106.00	-17.03
Face Value (in Rs.)	1	1	0.00	1	0.00	1	0
Paid-up Equity	33612	33,612.00	0.00	33,612.00	0.00	33,612.00	0
Basic EPS	2.72	2.97	-8.42	4.88	-44.26	3.28	-17.07
Public holding (%)	33.94	34.07	-0.38	34.26	-0.93	34.16	-0.64

Highlights of the quarter (Consolidated Results)

Operational Performance 

                        n Record production volumes of refined Lead and Silver at Zinc India operations

                        n Commissioned the 350tpa silver refinery at Zinc India

Financial performance

                        n Revenues up 24% at Rs. 10,246 crore

                        n EBITDA up 17% at Rs. 2,318 crore

                        n PAT at Rs. 914 Cr after foreign exchange loss of Rs. 425 crore

                        n Strong balance sheet with cash and liquid investments of Rs. 21,546 crore

ZINC INDIA BUSINESS :

Mined metal production in Q3 was marginally lower at 209,007 tonnes, compared with the corresponding prior quarter. Refined Zinc production in Q3 was up 7% at 190,946 tonnes, compared with the corresponding prior quarter primarily on account of improved throughput and operational efficiencies.

Refined Lead production in Q3 was highest ever at 28,804 tonnes, up 102%, compared with the corresponding prior quarter. The increase in production was due to volume contribution from the newly commissioned 100kt Dariba Lead smelter, currently under ramp-up.

Refined Silver production in Q3 was highest ever at 57,595 kg, up 37% compared with the corresponding prior quarter. This was mainly attributable to higher input from the mines and volume contribution from the new 350tpa Silver refinery commissioned during the quarter.

Revenues and EBITDA for Q3 were Rs. 2,726 crore and Rs. 1,373 crore respectively. The decrease in EBITDA was mainly on account of lower LME prices, higher coal costs and manufacturing expenses, which more than offset the benefit of higher volumes and higher realisation on account of rupee depreciation.

The Zinc metal cost, without royalty, during the quarter was Rs. 40,300 per MT ($785), 13% higher in INR, compared with the corresponding prior quarter. The positive impact of operational efficiencies was more than offset by increase in commodity prices and other inflationary factors.

The average Silver Cash Settlement Price per London Bullion Market Association increased to $31.87/oz in Q3 FY2012 from $26.43/oz in the corresponding prior quarter. The silver revenue increased to Rs. 255 Cr from Rs. 116 Cr in corresponding prior period.

Expansion Projects

Ramp-up of the Sindesar Khurd mine is on track to achieve its targeted 2.0mtpa capacity. The 100ktpa Dariba Lead smelter, commissioned during Q2, is ramping up well. The new 350tpa Silver refinery has been successfully commissioned during the quarter. The mine development work at proposed 1.0mt Kayar mine has commenced.

Zinc International Business

The total equivalent zinc-lead production was 105,000 tonnes in Q3. This comprised production of zinc-lead concentrate of 71,000 tonnes MIC at BMM and Lisheen, and refined zinc production of 34,000 tonnes at Skorpion.

Revenues and EBITDA for Q3 were Rs. 1,030 crore and Rs. 342 crore respectively, a decrease of 11.2% and 35% respectively, compared with the immediately preceding quarter. EBITDA is lower on account of lower zinc and lead LME, partly offset by decrease in the production costs.

Copper Business

During Q3, copper cathode production at the Tuticorin smelter was 6.9% higher at 84,000 tonnes compared with the corresponding prior quarter.

Mined metal production at Australia mines was 6,000 tonnes in Q3.

Revenue and EBITDA for Q3 were Rs 5,130 crore and Rs 395 crore, an increase of 10.9% and 75.5% respectively, compared with the corresponding prior quarter, primarily on account of higher TcRcs, better margins on phosphoric acid sales, and positive impact of rupee depreciation.

Despite improved operational performance, the PAT was lower due to MTM loss on FCCB bond liabilities due to depreciation of Indian Rupee which resulted in a net exchange loss of Rs. 72 crore in Q3 after adjusting fair value gain on derivative portion.

In reference to Special Leave Petition (SLP) filed by the company against the closure order of the copper smelter at Tuticorin, the Honourable Supreme Court in subsequent hearings directed Tamil Nadu Pollution Control Board (TNPCB) to issue directions to implement the improvement measures suggested by National Environment Engineering Research Institute (NEERI), Central Pollution Control Board (CPCB) and TNPCB. The matter was last heard on 17th January 2012 and listed for further hearing on March 18 2012. The company is fully on track to implement the improvement measures suggested by TNPCB. Interim stay order granted by the Supreme Court continues and the unit continues to operate at rated capacity.

Expansion Projects

The construction of the captive power plant at Tuticorin is progressing well and the first unit of 80MW is scheduled for commissioning in Q4 FY2011-12.

Aluminium Business (BALCO)

The BALCO aluminium smelter continues to operate at its rated capacity, with production of 63,000 tonnes during Q3.

Revenue and EBITDA for Q3 were Rs. 801 and Rs. 32 Crore respectively. EBITDA was lower on account of higher costs of production and lower LME prices, partly offset by the rupee depreciation. During Q3, the COP of hot metal produced was at Rs 98,234 per MT, 22% higher in INR, compared with the corresponding prior quarter. The increase in cost was primarily due to increase in costs of coal, alumina and carbon.

Expansion Project

The first metal tapping from the 325 ktpa aluminium smelter is now scheduled for Q2 FY2013. The first unit of the 1,200MW (4x300MW) captive power plant is expected to be synchronised in Q1 FY 2012-13.

Coal Block

STERLITE have made further progress on getting the required regulatory approvals for the 211 mn tonne coal block at BALCO. The EAC in its meeting held in Nov 2011 has accorded its approval for the project, paving the way for the remaining approvals.

Vedanta Aluminium Limited

Alumina production at Lanjigarh was 236,000 tonnes in Q3. The Aluminium production in Q3 was 107,000 tonnes at Jharsuguda – I smelter.

Revenue and EBITDA for Q3 were Rs. 1,444 crore and Rs 102 crore respectively. The COP of hot metal produced during the quarter was Rs 102,224 per MT (US $2,004), 9% higher than the corresponding prior quarter due to higher coal and carbon costs. However, the CoP of hot metal during Q3 was lower by 22% compared to Q2 due to improved operational performance as expected.

During the quarter, there was a net loss of Rs. 893 Crore on account of compressed margins and higher finance cost due to Mark to Market loss on foreign exchange fluctuation on borrowings. The interest and finance charges during Q3 were Rs. 793 crore which includes MTM loss of Rs 339 crore due to currency depreciation.

The 1.25 mtpa Jharsuguda-II smelter project is in the final stages of completion, and STERLITE continue to evaluate the option of selling power versus producing aluminium at this smelter.

Energy Business

Power sales were 1,559 million units during Q3, significantly higher compared with the 245 million units in the corresponding prior quarter. The increase in power sales was mainly on account of sales from two 600 MW units at the 2,400 MW Jharsuguda power plant.

Revenue and EBITDA for Q3 were Rs.574 Crore and Rs.147 Crore respectively, an increase of 365% and 297% 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 and higher realisations of power.

During Q3, the generation cost at SEL was Rs 2.6 per unit as against the Rs 2.9 per unit in Q2 of 2011-12. The cost at SEL was lower on account of improved operating performance. The third 600 MW unit is currently under trial run.

Expansion Projects 

Work on the fourth 600 MW unit of the Jharsuguda power plant is progressing well and the same is expected to be synchronized in Q4 FY 2011-12.

Work on the power project at Talwandi Sabo is progressing as scheduled with synchronization of first unit scheduled for Q4 FY 2012-13.

STERLITE have commissioned 135MW of the 150MW expansion in wind power generation capacity announced in January 2011. The balance capacity is expected to be commissioned in early Q4 FY2012. Post the expansion, the Company’s wind power generation capacity will increase to 273MW.

Depreciation

Depreciation and amortization cost for the quarter was higher at Rs. 458 crore compared with Rs. 249 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 and Rs 142 crore charged during the quarter on the assets of our Zinc International business.

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