Vedanta reaping benefit of capex

All of the key numbers were heading in the right direction in the first half of Indian resources firm Vedanta's financial year.

Profit before tax in the six months to the end of September rose to $1,059.4m from $916.2m the year before, on revenue that rose 14% to $7,451.9m from $6,552.6m.

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The interim dividend has been hiked by one cent to 21 cents.

"Vedanta has delivered a strong financial performance driven by production growth across the portfolio and strong cost performance, especially at the newly acquired oil and gas business which has significantly ramped-up production since acquisition," said Anil Agarwal, Chairman of Vedanta Resources.

Agarwal added that the company is now in a position to benefit from its huge capital expenditure programme, "which will continue to drive production and cash flow growth."

Net debt at the end of the reporting period was marginally lower at $9.8bn compared to $10.0bn at the end of March, with $7.2bn of cash and liquid investments and $3.1 billion in undrawn lines of credit.

Vedanta said the Cairn India acquisition which it sealed in December of last year is proving a good one, with the unit delivering a significant increase in production.

The group acknowledged that global economic conditions remain challenging, with subdued growth in the developed markets, while growth rates in emerging markets seem to have softened from the highs of the last decade, though they remain firmly in positive territory, with fundamental demand drivers such as industrialisation and urbanisation still intact.

"The quality of our tier-1 assets with low operating costs positions us well to take advantage of these markets conditions, and deliver strong results across business cycles. We remain the market leader across various commodities in India where growth is forecast to recover to 6% in 2013 and the global growth at 3.6% (source: IMF Sept 2012)," Agarwal noted.

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