Sesa Sterlite Q3 profit slips 15%, Cairn & tax costs hurt

London-listed Vedanta Resources Group company  Sesa Sterlite  beat street expectations on bottomline and operating front while topline was in line. Consolidated profit fell 15 percent year-on-year to Rs 1,587.5 crore, impacted by Cairn earnings, higher tax expenses, power & fuel and depreciation costs. However, forex gain, other income and lower finance cost led support to the bottomline. Consolidated total income declined 1.6 percent to Rs 19,219 crore during the quarter compared to Rs 19,523 crore in same quarter last fiscal, dented by lower oil & gas and copper revenue. Sesa's profitability is solely driven by  Hindustan Zinc  and  Cairn India  as the company owns 59.9 percent stake in Cairn and 65 percent in Hindustan Zinc. Even both these companies contribute around 75-80 percent of the total EBITDA of the company. Cairn India's profit dropped 53 percent year-on-year to Rs 1,350 crore and revenue plunged 30 percent to Rs 3,504 crore during the quarter due to lower realisation. Crude oil prices fell more than 50 percent since June 2014. Hindustan Zinc recorded a 38 percent growth in profit and 12 percent in revenue in Q3. According to the average of estimates of analysts polled by CNBC-TV18, profit was expected at Rs 1,480 crore on revenue of Rs 19,300 crore for the quarter. "Copper revenue plunged 11 percent to Rs 5,865 crore while zinc & lead (India) business clocked 14.6 percent growth at Rs 3,500 crore and aluminium showed 35 percent growth at Rs 3,502.5 crore compared to a year-ago period," said the company in its filing. Consolidated operating profit declined 6.5 percent year-on-year to Rs 6,147 crore and margin slipped 170 basis points to 32 percent in the quarter gone by. Analysts had estimated operating profit at Rs 5,880 crore and margin 30 percent for the quarter. Sesa earned forex gain of Rs 393.2 crore during the quarter. Other income increased 10 percent Y-o-Y to Rs 429 crore while finance cost declined 13 percent to Rs 1,329.3 crore. Tax cost for the quarter stood at Rs 477.6 crore against writeback of Rs 138.5 crore in same quarter last year. In Q3FY15, deletion, depreciation and amortisation expenses (including goodwill) jumped 16 percent on yearly basis to Rs 2,327.9 crore, power & fuel charges climbed 13.6 percent to Rs 2,105 crore and other expenses spiked 6.8 percent to Rs 3,927.2 crore.