06-Nov-2023
2 mins read
Q2 Net Loss of Rs 915 Crore and Tax Outgo of Rs 9,092 Crore
Vedanta announced a net loss of Rs 915 crore for Q2 FY24, a significant contrast from the Rs 2,687 crore net profit posted in Q2 FY23. This downturn in financial performance is primarily attributed to strategic investments and changes in the company’s tax regime.
Increased Income and Reduced Expenses
While the net loss is a concerning factor, Vedanta’s income increased by 6%, reaching Rs 39,585 crore, compared to Rs 37,351 crore in Q2 FY23. Moreover, overall expenses saw a YoY decrease at Rs 32,631 crore, down from Rs 33,221 crore in Q2 FY23.
EBITDA Growth
One bright spot in the report is Vedanta’s EBITDA, which saw a substantial 47% growth, totalling Rs 11,834 crore compared to Rs 8,038 crore in Q2 FY23. This increase can be attributed to reduced operational costs, softening input commodity prices, foreign exchange gains, and a favourable arbitration award, albeit partially offset by strategic hedging gains.
Debt and Cash Status
The company maintained Cash & Cash equivalents of Rs 16,702 crore during Q2 FY24. However, it registered a Gross Debt of Rs 74,473 crore in Q2 FY24, a little more than in Q1 FY24 of Rs 73,484 crore.
Tax Regime Change
One significant factor impacting Vedanta’s financials is the adoption of a new net tax regime starting from FY23, resulting in a tax outgo of Rs 9,092 crore. This figure includes a net tax expense of Rs 6,128 crore, associated with expected corporate actions and other considerations. The company intends to file its first tax return under the New Tax Regime for FY23 before the due date of November 30.
Strategic Investment to Become India’s Largest Ferrochrome Producer
Vedanta plans to invest Rs 2,650 crore to increase ferrochrome production capacity to 4.5 lakh tonnes per annum from 1.5 lakh tonnes. To fund this expansion plan, Vedanta plans to raise 70% of the necessary capital through debt and the remaining amount from internal accruals.
Future Expectations
Arun Misra, the Executive Director of Vedanta, expressed optimism despite the Q2 losses, highlighting the company’s achievement of the highest-ever EBITDA in the second quarter. Vedanta has ambitious investment plans, targeting $8.4 billion across its business, anticipating that this strategy will increase revenue by $4 billion and EBITDA by $1 billion.
Vedanta’s Q2 FY24 report reflects a net loss, primarily driven by strategic investments, tax changes, and reduced expenses. While challenges persist, the company remains focused on future growth and expansion in various sectors.