LONDON (Reuters) - A plan to streamline Vedanta’s (VED.L) sprawling structure is on track to complete this year, the India-focused miner said on Wednesday, brushing off fears of a delay as it reported an almost 50 percent jump in first-half core profit.
Vedanta said earnings before interest, tax, depreciation and amortisation (EBITDA) for the six months to the end of September came in at $2.6 billion, exactly in line with market forecasts, helped by record production at Cairn India, acquired last year, which offset weaker profits from zinc, copper and iron ore.
India-focused Vedanta said in February it planned to overhaul its web of subsidiaries, creating an umbrella unit that will group almost all its assets. It hopes to gain easier access to cash to service a heavy debt burden, but also to clear up a structure that has put off investors and held back the shares.
Vedanta said it was awaiting only approvals from Indian courts for the final stage of the process.
“In line with our strategy, the simplification of the group structure is on track for completion by the end of calendar year 2012,” it said. Vedanta gave no update on plans to buy the Indian government’s minority stakes in Hindustan Zinc (HZNC.NS) and Bharat Aluminium Co Lt (BALCO).
Vedanta said its first-half EBITDA was lifted by a $1.2 billion contribution from oil and gas - 47 percent of the total - as Cairn India’s operations in Rajasthan ramped up to make up more than 20 percent of India’s domestic oil production.
Zinc, iron ore and copper, however - typically the top contributors to Vedanta’s bottom line - saw their divisional core profit drop 27 percent, 63 percent and 28 percent respectively, not least because of weaker prices for the metals.
Vedanta’s iron ore production has been hit by a year-long ban on mining in the Indian state of Karnataka and more recent restrictions on the transport and extraction of iron ore in Goa, India’s second-biggest iron ore producing state.
Vedanta subsidiary Sesa Goa’s SESA.NS managing director said last week he expected “positive news” on the removal of iron ore mining restrictions in Goa by the end of the month.
India used to be the world’s No. 3 iron ore exporter, with most of its product heading to China, until a clampdown on illegal mining in 2010 and New Delhi’s measures to keep output for domestic steel mills halved exports.
Reporting by Clara Ferreira-Marques; Editing by Raji Menon and Kate Kelland