Hindustan Zinc Limited Net Profit for the quarter was Rs. 1,918 Crore, up 2% y-o-y


Udaipur,: Hindustan Zinc Limited today announced its results for the first quarter ended June 30, 2018.

Mr. Agnivesh Agarwal, Chairman said “We are steadily increasing production from underground mines to fill the gap caused by closure of open-cast operation. As the year progresses, we will deliver record performance. As the journey towards 1.2 million MT output accelerates, we have started planning for our next phase of expansion.”

Operational Performance
Mined metal production from underground mines was 212kt, up 13% y-o-y and 7% sequentially even as the closure of open-cast operations caused total mined metal production to decline 9% y-o-y and 17% sequentially.

Integrated zinc production was down 11% y-o-y and down 17% sequentially to 172kt on account of lower availability of zinc mined metal. Integrated lead production of 42kt was achieved during the quarter, up 20% y-o-y in line with the availability of lead mined metal and down 16% sequentially due to maintenance related shutdowns. Integrated silver production was 138 MT, up 20% y-o-y on higher SKM production and better silver grades. Sequentially, silver production declined by 19% in line with lead production.
Financial Performance

Revenue from operations during the quarter was Rs. 5,310 Crore, an increase of 16% y-o-y primarily due to higher zinc LME price, rupee depreciation and higher lead & silver volumes, partly offset by lower zinc volume. Lower metal volumes led to a sequential decline in revenue.

The cost of production before royalty (COP) for zinc during the quarter was Rs. 69,907 ($1,043), up 11% (7% in USD) y-o-y and up 17% (13% in USD) from previous quarter. The y-o-y increase was primarily on account of lower overall volume due to open-cast closure, about 20% increase in prices of metcoke, coal & diesel and also due to the impact of long-term wage settlement. The sequential increase was on account of lower volume, higher power costs, maintenance related shutdown costs and impact of wage settlement. The Company concluded a five-year long-term settlement with its recognised union impacting COP by $33 per tonne.

EBITDA for the quarter was Rs. 2,785 Crore, up 16% y-o-y and down 24% q-o-q.

The resultant Net Profit for the quarter was Rs. 1,918 Crore, up 2% y-o-y and down 23% sequentially, in line with EBITDA. Additionally, Net Profit was impacted by lower investment income on account of mark-to-market loss on debt investments due to spike in interest rates.

Mined metal and refined zinc-lead production in FY 2019 is expected to increase progressively during the year with the continued ramp-up of underground mines and be slightly higher than that of last year despite closure of open-cast operations. Silver production is expected to be in the range of 650 to 700 MT and COP before royalty is projected to be in the range of USD 950 to 975 per MT in FY 2019. This is in line with our earlier guidance.

Expansion Projects
Capital mine development increased by 18% y-o-y to over 10.4 km during the quarter.

Rampura Agucha underground mine continued with high development of 5.6 km during the quarter. The ventilation system has been commissioned, off shaft development is on track and production from main shaft is expected to start from Q3 FY 2019.

Sindesar Khurd has received Environment Clearance by the Ministry of Environment, Forest & Climate Change to increase ore production from 4.5 to 6.0 mtpa. During the quarter, the main shaft skip winder was cold commissioned and production from the shaft is expected to start in Q3 FY2019. Civil work and equipment erection of the new 1.5 mtpa mill is progressing well and is expected to commission by Q3 FY 2019.

At Zawar, civil construction of the new 2 mtpa mill is on track and expected to commission by Q4 FY2019. The Fumer project is 75% complete and expected to commission in Q3 FY 2019.

Planning for the next phase of expansion from 1.2 to 1.35 mtpa mined metal capacity announced in April 2018 is underway. The Chanderiya zinc-lead pyro-metallurgical smelter is being modified to produce standalone lead to cater to the increasing lead mined metal and pilot trial has been successfully completed. Zinc smelting configuration and basic engineering is under finalisation.

Liquidity and investment
As on June 30, 2018, the Company’s cash and cash equivalents was Rs. 21,283 Crore invested in high quality debt instruments and the portfolio is rated “Tier –I” (implying Highest Safety) by CRISIL.

Earnings Call on Monday, July 23, 2018 at 4:00 pm (IST)
The Company will hold an earnings conference call on Monday, July 23, 2018 at 4:00 pm IST, where senior management will discuss the Company’s results and performance.

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