Hindustan Zinc Limited (“HZL” or the “Company”) today announced its results for the second quarter ended 30 September 2013.

Agnivesh Agarwal, Chairman, Hindustan Zinc said, “Market environment is challenging as global economy faces risks and uncertainty and growth in emerging economies is contingent upon global liquidity situation. We remain focused on sustainability of our operations and are committed to increasing our mining capacity and maintaining our cost efficiency”.

Operational Performance

· Mined metal production – up 16%

· Record integrated saleable zinc metal production – up 28%

· Integrated saleable refined lead and silver metal production – up 29% and 14% respectively

Financial Performance

· EBITDA up 28% to Rs 1,904 crore

· PAT up 7% to Rs 1,640 crore

Interim Dividend

· Interim dividend of Rs 1.60 per share

Operational Performance

Mined metal production was 221,646 MT in Q2, as compared with 190,491 MT in the corresponding prior period. For six month period, mined metal production was 459,471 MT as compared to 377,133 MT in H1 FY13. The increase is due to higher production at Rampura Agucha and restarting of Zawar mines.

Integrated refined zinc production was up 28% to 194,814 MT in Q2 and up 19% to 367,814 MT in H1, compared to corresponding prior periods. The increase was due to improved operational efficiencies. Production of integrated refined lead was up by 29% and 13% to 28,978 MT in Q2 and 56,445 MT in H1 respectively compared to previous year due to improved utilization of smelter capacity. Integrated saleable silver production was up 14% y-o-y to 83 MT in Q2 and 12% y-o-y to 160 MT in H1.

We expect mined metal production of ~950,000 MT in FY 2014. The momentum in integrated zinc-lead production in H1 is expected to continue in H2. Integrated saleable silver production is projected to be ~335 MT in FY 2014.

Financial Performance

Revenues were up 25% to Rs. 3,521 crore in Q2 and 17% to Rs. 6,460 crore in H1, as compared with the corresponding prior periods. EBITDA increased by 28% to Rs 1,904 crore in Q2, and was 17% higher at Rs. 3,410 crore in H1 from a year ago. The increase was driven by higher sales volume and rupee depreciation, partially offset by lower silver price.

Net profit was up 7% to Rs. 1,640 crore in Q2 and 6% to Rs. 3,301 crore in H1 as compared to previous year. The positive impact of higher EBITDA was partly offset by lower other income due to mark-to-market losses on investments during the quarter.

The zinc metal cost of production before royalty during the quarter was Rs. 50,522 ($816), 8% higher in Rupee and 3% lower in USD terms from a year ago. The cost of production benefited from higher production volume and operational efficiencies, which were more than offset by rupee depreciation and over Rs 3000/MT decline in by-product credits from a year ago.

Interim Dividend

HZL’s Board of Directors has recommended an interim dividend of 80% i.e Rs 1.60 per share on equity share of Rs 2.00 each, flat from last year. The record date for the payment of interim dividend is 29 October 2013.

Expansion Projects

The Rampura Agucha underground mine project is operational via ramps and commercial production will ramp up in Q3 and Q4 of FY 2014. The Kayad mine project will also commence commercial production in the current fiscal year.

Vizag Zinc Smelter

Pursuant to discontinuation of our Vizag smelter operation, all workmen at Vizag have accepted voluntary retirement during the quarter.

Liquidity and investment

As on 30 September 2013, the Company had cash and cash equivalents of Rs. 23,632 crore. The Company follows a conservative Investment Policy and invests in fixed deposit with banks and high quality debt instruments including AAA/AA rated bonds and debt mutual funds.