Vedanta H1 down, no need for fraud probe provisions

By Eric Onstad

LONDON (Reuters) - India-focused mining group Vedanta Resources Plc said no provisions were needed for a fraud probe into its iron ore unit as it posted a steep fall in first-half profit due to weaker metals prices.

Unit Sesa Goa, India's biggest iron ore exporter, said on Oct. 29 that it was under investigation by India's Serious Fraud Investigation Office for financial and other irregularities, sparking a slide in its shares.

But Vedanta Chief Executive M.S. Mehta said on Thursday the probe related to issues in 2003, four years before Vedanta bought its 51 percent stake in Sesa.

"It has nothing to do with Vedanta and our understanding is that it's a very old matter and not of great significance," he told a conference call.

"So we don't need to provide any provisions in the books or accounts because it doesn't relate to those kind of cases."

London-listed Vedanta said basic earnings per share for the six months to end September fell 44 percent to 68.5 cents, beating a consensus forecast of 57 cents from eight analysts polled by the company.

The better-than-expected performance was driven by a lower tax rate and foreign exchange gains, Morgan Stanley said in a note.

Some analysts, however, faulted the cost performance at the firm's Konkola Copper Mines (KCM) in Zambia of $1.69 per lb, above the year-end target of $1.35.