Last Updated on October 28, 2023 by BFSLTeam BFSLTeam
Hindustan Zinc, part of the Vedanta Group, is a top Zinc-Lead and Silver producer, ranking 2nd in Zinc and 5th in Silver globally. Headquartered in Udaipur, it dominates India’s Zinc market, focuses on sustainability, and has climate targets aligned with the 1.5°C global goal.
Table of Content
Key Highlights of Consolidated Financial Review
Q2 FY24
1. Revenue decreased by 19% year-on-year (YoY) primarily because of a significant drop in zinc London Metal Exchange (LME) prices. This decline was partially mitigated by lower zinc and silver volumes, along with higher lead and silver prices, as well as favourable foreign exchange rates.
2. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) decreased by 29% YoY, mainly due to the impact of lower zinc LME prices. However, this decrease was partially offset by reduced costs and improved lead and silver prices.
3. The consolidated Profit After Tax (PAT) declined by 35% YoY, primarily as a result of the lower EBITDA. However, this decline was partially offset by a reduction in tax expenses.
4. The effective tax rate for the second quarter of FY24 is approximately 25%.
Additional Read: Q2 Results Dashboard
H1 FY24
1. Revenue decreased by 21% year-on-year (y-o-y) primarily due to the significant decline in zinc London Metal Exchange (LME) prices, and lower metal and silver volumes. This decrease was partially mitigated by higher lead and silver prices and favourable foreign exchange rates.
2. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) declined by 33% y-o-y, mainly as a result of the lower revenue. However, this decline was partially offset by improvements in cost.
3. The consolidated Profit After Tax (PAT) fell by 36% y-o-y, primarily due to the lower EBITDA, but this decrease was partially offset by reduced tax expenses.
4. The effective tax rate for the first half of FY24 is approximately 25%.
Operational Review Highlights
Q2 FY24
1. Mined metal production saw a marginal decrease year-on-year (YoY) and a 2% decrease quarter-on-quarter (QoQ). This decline was due to lower ore production at the Rampura Agucha and Kayad mines, although improved overall grades partially offset it.
2. Refined metal production decreased by 2% YoY and 7% QoQ due to scheduled maintenance activity.
3. Saleable silver production increased by 1% q-o-q but decreased by 7% YoY. This drop was attributed to Work-in-Progress (WIP) accumulation during the quarter.
4. Q2 FY24 marked the third consecutive quarter of cost optimisation, with Zinc Cash Operating Costs (COP*) at $1,137 per ton, down by 10% YoY and 5% QoQ. This improvement was driven by lower coal and input commodity prices and better availability of linked coal, further supported by improved grades sequentially.
H1 FY24
1. The first half of FY24 witnessed the highest-ever mined metal production, showing a year-on-year (YoY) increase. This increase was attributed to higher ore production at the Rampura Agucha Mine, supported by improved overall metal grades.
2. Refined metal production saw a marginal decrease year-on-year (YoY), primarily in line with plant availability.
3. Saleable silver production decreased by 3% YoY, in alignment with the lead metal production.
4. Zinc Cash Operating Costs (COP*) for the period were at $1,167 per ton, marking a 7% YoY decrease. This reduction was driven by lower coal and input commodity prices and improved availability of linked coal.
*COP excluding royalty
Additional Read: Hindustan Zinc Share Price
Key Strategic Updates
Projects Update:
1. The Fumer plant was commissioned in Q2 FY24 with remote support from the OEM and the HZL team in China. It’s an innovative commissioning method, a first for Hindustan Zinc. Full ramp-up is in progress, with a target by early Q3 FY24.
2. The Rajpura Dariba Mill has been commissioned, and a full ramp-up is underway, targeted for early Q3 FY24.
3. For Hindustan Zinc Alloys Private Limited (HZAPL), hot commissioning is complete, and the first alloy metal was produced in the first week of Oct 2023.
4. Orders have been placed for the new Roaster at Debari. Engineering and procurement activities are ongoing, and the EPC contractor is mobilised at the site.
5. For Hindustan Zinc Fertilisers Private Limited (HZFPL), major orders have been placed, and a technology partner has been onboarded. Engineering and procurement activities are in progress.
ESG Update:
1. Hindustan Zinc is the first metal and mining company in India to have validated Science-Based Targets in line with 1.5°C. Approved targets include a 50% reduction in Scope 1 & 2 and a 25% reduction in Scope 3 GHG emissions by 2030, aiming for net zero by 2050 from the base year 2020.
2. A landmark agreement was signed for deploying 180 LNG vehicles to reduce Scope 3 emissions for inter-unit and finished goods movement.
3. A 4,000 KLD Zero Liquid Discharge (ZLD) Plant was inaugurated at Zawar mines, promoting water recovery and reducing freshwater dependency in line with the vision of zero waste & zero discharge and 5x water positivity by 2025.
4. HZL launched its second battery electric vehicle in the underground mines of Sindesar Khurd (SK).
5. Hindustan Zinc was selected to pilot the world’s first Science-based Targets for Nature.
6. The Rajpura Dariba mine introduced a wildlife rescue van as part of the wildlife conservation plan, which was handed over to the forest department of Rajsamand district.
7. Zawar Mines received the CII National Award in the Innovation Project Category for Environment Best Practices.
8. DSC was recognized with a Platinum award in the metal and mining sector at the Apex India Occupational Health and Safety Awards 2023.
Liquidity and Investment:
The company generated a cash flow of INR 2,648 Crore during the quarter. As of September 30, 2023, the Company’s gross investments and cash & cash equivalents were INR 11,393 Crore, compared to INR 9,709 Crore at the end of June 2023, which was invested in high-quality debt instruments.
Total borrowings outstanding as of Sep 2023 amounted to INR 11,323 Crore. During the quarter, the company paid dividends totalling INR 2,958 Crore.
Additional Read: Vedanta Share Price
About Hindustan Zinc Limited
Hindustan Zinc, part of the Vedanta Group, is a leading player in Zinc-Lead and Silver production. It’s the world’s 2nd largest Zinc producer and the 5th largest Silver producer. Headquartered in Udaipur, it dominates 75% of India’s Zinc market, with mines and smelting complexes across Rajasthan.
The company generates its power and is venturing into green energy. It’s an Asia-Pacific leader in sustainability and has won prestigious awards in corporate responsibility. Hindustan Zinc is the only Indian mining company with validated climate targets aligned with the 1.5°C global goal.
Source – https://www.bseindia.com/xml-data/corpfiling/AttachHis/d46c07ca-ba11-4a54-97ff-77daa735d011.pdf
