Sesa Goa's net profit falls 74% y-o-y to Rs 298 crore

MUMBAI: Suspension of mining activities in Goa and Karnataka led to a y-o-y fall in net profits by 74% to Rs 298 crore. The iron ore miner managed a positive bottom line by virtue of it having a 20% stake in Cairn India excluding which the company made a loss of Rs 215 crore.

After the ban on iron ore mining in Karnataka in 2011 and a similar ban in Goa in September, 2012, Sesa Goa has been unable to produce any iron ore. The other segments; pig iron and metallurgical coke, comprise very small part of the entire business and have mostly remained loss making at the EBIDTA level.

The recent order by the Supreme Court has allowed the miner to mine upto 2.3 million tonnes (MT) in Karnataka as against the company’s initial plan of 6 MT. However, the resumption of mining is contingent to the company achieving renewal of lease, forest clearance and implementation of Reclamation and Rehabilitation (R&R) plans. Due to lack of clarity at these ends it is expected that the company will be able to produce upto 1.5 MT in the current fiscal.

The Goa mining still remains hung and the verdict will depend on the report submitted by CEC. The Supreme Court hearing date for the same is still not out yet and a favourable decision on this front will largely benefit the company. The company also expects to receive 2 MT of iron ore from its wholly-owned Liberian subsidiary, Western Cluster, by the end of the current fiscal.

The most important trigger for the company in the coming weeks would be its merger with the Sterlite Industries. The scheme has already received approvals from CCI, FIPB, stock exchanges High Court of Bombay and Goa and the Supreme Court of Mauritius. The final decision by the High Court of Madras will culminate the scheme and might lead to a rerating of Sesa Goa.