Sesa Earnings Trails Estimates as Profit at Unit Declines

Sesa Sterlite Ltd. (SSLT), the India-based metals and oil producer, posted quarterly profit that missed analyst estimates as earnings at unit Cairn India Ltd. (CAIR) fell to the lowest in three years.

Net income was 3.76 billion rupees ($63 million) in the first quarter, the Panaji, Goa-based unit of Vedanta Resources Plc (VED) said today in a statement. Profit was projected at 12 billion rupees according to the median of 16 analysts’ estimates compiled by Bloomberg. Sales in the three months ended June 30 were 170.6 billion rupees.

The numbers aren’t comparable with the year-earlier period as the merger of copper producer Sterlite Industries (India) Ltd. and iron-ore miner Sesa Goa Ltd., both owned by billionaire Anil Agarwal, to form Sesa Sterlite took effect in August.

“The results are disappointing,” Giriraj Daga, an analyst at Mumbai-based Nirmal Bang Equities Pvt., said by phone. “Apart from a large exceptional item, which is a drag on net income, Sesa’s ebitda is also below our expectations.”

Cairn India, operator of the nation’s biggest oil field on land, reported the lowest profit in 11 quarters on July 23 after booking a one-time depreciation charge because of new accounting rules. Group net income declined 65 percent from a year earlier to 10.9 billion rupees. Profit missed the 27.3 billion-rupee median of analyst estimates.

Total expenses at Sesa Sterlite were 135.8 billion rupees. The company also incurred a finance cost of 15.4 billion rupees in the quarter, according to the statement. Prices of aluminum, the light-weight metal which the company also produces, averaged 2 percent lower in London last quarter, while zinc averaged 11 percent higher.

Sesa Sterlite shares fell 0.7 percent to 290.15 rupees in Mumbai yesterday. The stock has jumped 44 percent this year, compared with a 23 percent gain for the benchmark S&P BSE Sensex.

The exchanges are closed today on account of a holiday.

India’s Ministry of Corporate Affairs has challenged the merger of Vedanta’s local units in court, the company said. Earlier this month, the Indian government filed a petition opposing the deal on the grounds it was aimed at avoiding taxes.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Abhay Singh, Suresh Seshadri

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