Hind Zinc

A subsidiary of Sesa Sterlite, in many ways, Q1FY15 was a tough quarter for Hind Zinc. Firstly, there was a fall in production across all metals – zinc, lead and silver. Realizations for zinc went up both QoQ as well as YoY, that for lead was flat while silver prices tanked. Even its wind power unit clocked in a degrowth of 10%. Thus it came as no surprise to see that the company had a flat, 1% (YoY) growth in net sales at Rs.2963 crore, with 69% of the topline coming from zinc. But higher costs and lower production volumes, led to the EBITDA falling 10% at Rs.1352 crore. Net profit for the quarter decreased by 3% to Rs. 1,618 crore in Q1 FY15. The impact of lower EBITDA was partly offset by strong other income during the quarter. The lower production volumes significantly impacted costs, accentuated by rupee depreciation, planned plant shutdowns and higher mine development.

In terms of internals of the numbers, production of refined zinc was down 19% lead fell 21and silver production was down 28. Zinc metal cost of production before royalty during the quarter was at Rs 60,093 ($1,005) a tonne, which is 29% higher in rupee terms and 20% higher in dollar terms on YoY.  In current Q1, total mine development rose 15% and as at 30th June 2014, the company is sitting on cash and equivalents  of Rs.26,272 crore, out of which Rs. 22,172 crore was invested in mutual funds, Rs. 2,049 crore in bonds and Rs 2,000 crore were in fixed deposits with banks.