Hindustan Zinc Limited today announced its results for the third quarter ended December 31, 2014. In the quarter period, the mined metal production increased by 10%, EBITDA up by 14% to Rs. 2089 Cr and the company recorded the highest ever net profit at Rs. 2379 Cr.

Agnivesh Agarwal, Chairman – “We continued to deliver solid performance in the third quarter. Zinc market fundamentals are favourable and we remain committed to increasing production and controlling costs to drive profitability of our operations. Looking ahead, we believe that opportunities lie in our ability to execute against our long-term strategic priorities, which will continue to differentiate Hindustan Zinc and drive shareholder value.”

Operational Performance

Mined metal production in Q3 FY 2015 was up by 14% sequentially and 10% y-o-y at 242,417 MT, as compared with 212,575 MT in previous quarter and 220,126 MT a year ago. The increase was as per the mine plan and driven by higher production from Rampura Agucha mine and better ore grades.

For nine month period, mined metal production was 618,123 MT as compared to 679,597 MT in FY 2014. The shortfall will be made up in Q4, in-line with the mine plan and guidance of marginal growth in mined metal for the full year.

Integrated refined zinc production was up by 11% sequentially on account of higher mined metal production. However, it was marginally down by 2% at 191,785 MT on y-o-y basis due to higher cathode stock, even as total refined zinc production was flat from a year ago.

Production of integrated refined lead was marginally down from previous quarter at 24,890 MT and flat from corresponding period of last year. Integrated saleable silver production was up 3% sequentially and down 4% y-o-y to 70 MT.

The y-o-y decline was due to accretion to WIP even as the grades from Sindesar Khurd were higher. Integrated silver production in Q4 will be better than Q3 and full year production will be close to last year.

The zinc metal cost of production before royalty during the quarter was Rs. 50,534 ($817), which is lower by 8% (10% in USD terms) sequentially and 3% lower from a year ago.

The y-o-y decrease in cost was due to higher mined metal production, lower diesel cost and higher acid credits, partly offset by lower linkage coal and increased employee expense on account of long-term wage agreement.

Financial Performance

Revenues were up 12% to Rs. 3,804 Crore in Q3 FY 2015 from a year ago. The increase was driven by higher zinc LME and lead & silver metal volumes, partly offset by lower silver price and refined zinc volume.

EBITDA was up by 14% to Rs. 2,089 Crore for the quarter as compared to previous year as a result of better revenues and lower cost of production. Net profit increased by 38% to Rs. 2,379 Crore in Q3 FY 2015 as compared Rs. 1,723 in corresponding prior quarter.

Expansion Projects

Sindesar Khurd mine expansion is proceeding better than planned, although Rampura Agucha underground shaft project is behind schedule.

The Board has approved deepening of the open cast mine by 50 metres which will extend mine life to FY 2019-20 and ensure a stable transition from open pit to underground at Rampura Agucha. The pre-stripping work will start in the current quarter.

Liquidity and investment

The Company’s cash and cash equivalents increased by 5% from the end of Q2 FY 2015 and 20% from a year ago. As on December 31, 2014, cash and cash equivalents were Rs. 28,980 Crore, out of which Rs. 26,687 Crore was invested in mutual funds and Rs. 2,283 Crore in bonds. The Company follows a conservative investment policy and invests in high quality debt instruments.

About Hindustan Zinc

Hindustan Zinc (NSE & BSE: HINDZINC) is the one of the largest integrated producers of zinc-lead with a capacity of 1.0 million MT per annum and a leading producer of silver. The Company is headquartered in Udaipur, Rajasthan in India and has zinc-lead mines at Rampura Agucha, Sindesar Khurd, Rajpura Dariba, Zawar and Kayad; primary smelter operations at Chanderiya, Dariba and Debari, all in the state of Rajasthan; and finished product facilities in the state of Uttarakhand.

Hindustan Zinc has a world-class resource base with total reserve & resource of 365.1 million MT and average zinc-lead reserve grade of 12.0%. The Company has a track record of consistently growing its reserve & resource base since 2003 and currently has a mine life of over 25 years.

Hindustan Zinc is a subsidiary of the BSE and NSE listed Sesa Sterlite Limited (ADRs listed on the NYSE), a part of London listed diversified metals and mining major, Vedanta Resources plc.