Ladies and gentlemen, good day, and welcome to Hindustan Zinc First Quarter FY 2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an option for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Miss Kritika Mehta, Investor Relations. Thank you, and over to you, ma'am.
Thank you, Nirav. A very good afternoon, everyone. I welcome you all to Hindustan Zinc's First Quarter FY 25, ending 30th June 2024 results briefing. In this call, we will refer to Q1 FY 25 investor presentation available on our company's website. Some of the information on this call may be forward-looking in nature and is covered by the safe harbor language on second slide of the said presentation. Today, on the call, we have with us our CEO, Mr. Arun Misra, and our CFO, Mr. Sandeep Modi. Mr. Misra will begin with an update on business performance, while Mr. Modi will walk you through the financial performance, after which we will open the floor for questions. I now request Mr. Misra to begin today's call. Over to you, sir.
Thank you, Kritika. A very good afternoon to all of you. Thank you for joining us today for the first quarter of FY 25 results briefing. At the outset, I deeply regret to inform you all that despite all the efforts and constant emphasis on safety as our key priority, we had an extremely unfortunate incident in our Rampura Agucha underground mine on 29th May 2024, where we witnessed a man-machine interaction as a pedestrian was fatally injured by a passing underground vehicle. I would like to offer my deepest condolences to the bereaved family and friends of the deceased, and we stand by them in this hour of distress.
An in-depth investigation was carried out to determine the root cause of the accident and design corrective and preventive measures, and the learnings were shared across the organization for preventing such undesirable incidents and promote a safe working environment for everyone. It gives me immense pleasure to inform you that Hindustan Zinc has trained India's second all-women underground mine rescue team, following the remarkable success of the first batch. We constantly strive to set benchmarks in people practices through game-changing initiatives and policies, as a result of which the company has won prestigious People First HR Excellence Awards in the categories of Leading Practices in Employee Management, Leading Practices in Talent Acquisition, and Leading Practices in Technology Deployment in HR.
Coming to an update on the sustainability front, I'm happy to announce that Hindustan Zinc has preponed the commencement of renewable power supply from Serentica to May 2024, with around 8.5% of our overall power requirement being catered through renewable energy during the quarter. We have marked a significant milestone in the metal and mining industry by launching Asia's first low-carbon green zinc, EcoZen, expanding our zinc product portfolio, which is currently one of the largest in the world. Produced using renewable energy, it boasts of a carbon footprint of less than 1 ton of carbon equivalent per ton of zinc produced, almost 75% lower than the global average.
This new offering enables the steel producers to avoid a total carbon emission of about 400 kg of CO2 equivalent per ton of steel, providing an unmatched competitive advantage to them with a more sustainable choice. The quarter was also characterized by a few key strategic partnerships done to sustain our global sustainability leadership. We have signed an MoU with VEXL Environ Projects Private Limited, for establishing a pilot plant for producing sellable products from our waste stream, embracing environmental responsibility through circular economy. Another key partnership is done with US-based AEsir Technologies as a preferred supplier of zinc for their nickel zinc batteries, which has a potential to revolutionize energy storage due to their cost effectiveness and environmental friendliness, with much scope to grow, owing to their merits over conventional lithium-ion batteries.
Furthering our commitment toward the environment, we have set a new standard in the Indian metals and mining industry by launching the first-ever task force on nature-related financial disclosures or TNFD report, covering the key dependencies, impacts, risks, and opportunities in nature. As an update on our corporate social responsibility, it gives me immense satisfaction to see remarkable outcomes from our CSR activities, spanning across the verticals of women empowerment, education, sustainable livelihood, health and water, environment and safety, sports, and community asset creation. A quick snapshot of a few key CSR initiatives taken during the quarter is provided on slide 14 for your reference. Moving on to the market update. The quarter has seen a sharp improvement in base metal and precious metal prices, whose momentum sustained throughout the quarter.
The global economies have shown a modest recovery following the pickup in manufacturing activity globally, as reflected through the global manufacturing PMI, which has recorded 50.9 in May 2024, its highest since June 2022. During the quarter, the global zinc prices closely traced the copper trend, with production cuts across Chinese smelters due to tight concentrate market, the geopolitical tensions near Middle East, the zinc stocks in the LME warehouses dropped by 12% during the quarter, thereby increasing the prices to as high as $3,093 per ton. India, being the fastest growing economy among the major economies, continues to drive healthy zinc demand through robust public expenditure towards infrastructure projects. Touching briefly on lead, the quarter started with a neutral sentiment and ended at a higher level with an 18% reduction in LME stocks.
The domestic demand for primary lead dropped by 10% in line with the automobile sales. However, India's share in global lead demand is expected to increase from 9.2% in 2023 to 9.9% in 2026, on account of increasing digital transactions and growing data centers. Coming to silver, the prices rallied along with the gold prices, with an average of $29 per troy ounce, even touching the highest of $32.01 per troy ounce. With the Indian industrial sector shifting towards renewable energy and EVs, et cetera, the domestic silver demand is expected to expand beyond jewelry and physical investments.
Giving an update on the operational performance, I am pleased to inform you that Hindustan Zinc has recorded its highest ever first quarter mine and refined metal production at 263,000 tons and 262,000 tons, respectively. The sellable silver production dropped by 7% year-on-year on account of WIP accumulation in the normal course of the business as company moved to late mode of pyro operation from June 2024. However, this WIP will be liquidated in the subsequent periods, advancing us towards the commitment to deliver on the volume guidance for metal and silver, and would like to keep it unchanged.
I am proud of my team, who delivered very significant cost reduction of 7% over last year to help the company register a massive growth in net profit by 19% over last year on the back of a growth in total income by 12%. Coming to the project update, the 160,000 tons per annum roaster at Debari and the 500,000-510,000 tons per annum fertilizer plant are on track with their commissioning being targeted by Quarter 4 of FY 2025 and Quarter 2 of FY 2026 respectively. Bamnia Kalan Mine received the consent to operate in the last quarter, post which site work has started and is currently in progress. The company has also appointed strategic partners for conceptual design of a growth plan towards 2 million tons fine metal, for which the studies are under progress.
With the rest of the commission projects wrapping up, we have marked a great start of the year and would like to build on this momentum, going ahead to finish the year with 5%-7% growth in metal production and 3%-5% growth in silver production over last year. With this, I hand over the call to Sandeep for an update on the financial performance.
Thank you, Mr. Misra, and a very good afternoon, everyone. As Mr. Misra said, this has indeed been a great start for the year, with numerous accomplishments achieved on the sustainability front. Apart from our first TNFD report, we have also published our fifth edition of the Integrated Annual Report for FY 2024, giving a peek into the key highlights across the length and breadth of our business in the last year, along with our Tax Transparency Report, which are available on our website. We have also set a benchmark in reporting by launching India's first AI-based digital annual report for FY 2024, which leverages generative AI in the form of your very own Zincky, a generative AI chatbot which seamlessly and accurately answers any questions based on the integrated annual report.
On this note, I humbly request everyone to join us in our sustainability journey by utilizing Zincky and opting for the digital copies of the reports over paper printouts. Briefing you on our financial performance, the total revenue for operations during the quarter stood at INR 8,130 crore, up 12% YOY, on account of better metal volume and prices, further supported by a stronger dollar and partly offset by lower silver volume. It's up 8% quarter-on-quarter. In our pursuit towards sustenance of our global cost leadership, we have achieved an entry cost of production of $107 per ton in Q1 2025, indicating a progression towards recording a fourth-year-lowest cost. The Q1 zinc cost of production was down 7% YOY, as Mr.
Misra said, this is on account of softening coal and input commodity prices, better linkage, coal availability, and starting of the RE power from our Serentica captive arm and a better metal grade. It's a 5% up quarter-on-quarter, in line with the volume and grade. The resulting EBITDA for the quarter was INR 3,946 crore, up 17% YOY. The consolidated PAT stood at INR 2,345 crore, up 19% YOY. The effective tax rate for the quarter stood at 25%. I would like to highlight that this quarter's revenue, EBITDA and PAT, recorded the highest level in the last five quarters. Leveraging the favorable LME environment and buoyant silver prices, we have recorded double-digit YOY improvements in revenue, EBITDA and PAT, and have expanded our margin from 46%- 49%.
With concentrate efforts, we have also expanded our domestic primary zinc market share to 78% from 75% last year. Further, considering the volatility in the current metal market and inherent necessity to protect the margin, we have embarked on a strategic hedging of zinc to cash in the elevated zinc prices during the quarter. We have sold forward 90 KT of the zinc production for the fiscal year, around 10% of our annual production of zinc, demonstrating our agile decision making and flexibility to harness right opportunities. During the quarter, the company paid INR 4,225 crore as dividend. As one of the leading companies in our country, our ultimate priority is to maximize the distribution of the value created amongst the shareholders in a sustainable manner.
As a key highlight of the quarter, Hindustan Zinc delivered the highest shareholder returns among the major Indian companies, reinforcing the trust among the investor community. During the period, the total return per share in form of capital appreciation stood at INR 377. Considering a dividend of INR 10 per share, the shareholder return total to INR 387 per share, with a whopping 1.3% return on the closing price of the previous fiscal year. The company's returns were incomparable with 18x return as compared to Nifty 50 and 7x return as compared to Nifty Metal Indices. I would also like to draw your attention to the fact that Hindustan Zinc enjoyed an industry-leading EV/EBITDA multiple of 18x in the metal and mining sector.
As most of you would already know, we have organized the site visits for around 35+ analysts and investors in June to showcase our excellence and irreplicability of our assets and operations. I'm sure most of you attended it, and I strongly believe that the visit has helped you to assess the true potential of Hindustan Zinc. You are now more confident on our ability to record an EBITDA of $2.7 billion in near term, with a 1.2 MT metal, 800 ton silver and COP of $1,000 in a favorable LME environment and silver prices. We are constantly striving to push ourselves beyond your expectations by identifying and exploring new opportunities to exploit and challenging ourselves regularly by setting up further targets and achieving them.
I hereby let you know that we are confident in achieving our cost guidance and hence are keeping the cost and capital guidance intact. With this, I conclude my comments and will open the floor for your questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, you will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah. Hi, good evening, everyone, and thanks for the opportunity. Congratulations for a good set of numbers. I have two questions. The first one is essentially on the recent judgment by the Supreme Court, in which they have mentioned that the state have got the power to levy additional surcharge or cess or whatever. Now, in the past, in 2008, I think, June 2008, to be precise, Rajasthan government had notified a cess, environment and health cess, actually. We have certain contingent liability on the balance sheet, I think, to the extent of INR 142 crore as on March 31, 2024. Now, first of all, what are your thoughts on, you know, Rajasthan government going ahead and applying this in a retrospective manner?
Although I understand that the Supreme Court has stayed this particular judgment for a while, reserved rather, this judgment for a while. But what are your thoughts around that? How do you feel that, you know, it taking advantage of this, there could be some other steps or this step can be applied retrospectively from 2008 or, whatever? Just wanted your thoughts on the same.
Requesting Sandeep to address this, sir.
Yeah. So thanks for your question. While we await the order from the, you are right, Supreme Court has reserved the order, and you are- I also appreciate the, your memory and recollection of INR 142 crore environmental health cess. You are right, this remain as a part of the contingent liability. And of course, one of the argument, we had the royalty is not a tax. But apart from this also, from a legal evaluation point of view, there, this is one of the argument which we had in the court. And apart from this, we don't have any, liability or any part of the contingent liability which comes into the picture or impact in the financial materially.
Whatever the cases were there have been already closed, or it has many other grounds to argue in the court. Of course, the future or prospective, anything Rajasthan government or any state government putting any steps, I think that will depend upon the time, and we will need to be watchful about it.
So actually, this amount has remained constant for a while. You know, we, maybe we have recognized this contingent liability when it occurred, and it was, I think, INR 1.05 million per ton of ore, if I'm not mistaken. So, potentially, what would be the liability now, let us say, if we were to recalibrate this contingent liability?
I think I would refrain to answer or evaluate about giving any numbers, because we need to wait about the Supreme Court order. At the same time, as I said earlier, the one of the argument was royalty is not a tax and state doesn't have the power. But apart from this, there are many other arguments. So I would not like to quote any number which will create something impact on the financial. As of now, we remain confident that we have a strong grounds apart from this as well.
Okay. The second one is on your cost, essentially. So if I see the cost of production, first of all, great work on that. We have seen the cost declining, you know, quarter-on-quarter. Just wanted to understand, since we are getting more power now from Serentica and coal prices are, e-auction prices are topped, we will get more, you know, these e-auction prices or linkage from Coal India. So, and our cost is, like, near, the level we guided for the full year. I mean, the in Q4 results.
... So, why are you refraining from giving a revised, more optimistic cost guidance at this point in time? Whether we expect some kind of escalation in cost going ahead or, what is that?
I don't think it's right to say that we are being conservative. We have given the guidance as a lower quartile of 1,050 to 1,100. We are giving $1,107, and it is partly on account of the rise in coal prices, as well as the RE power which started coming from Serentica. So we remain optimistic that, and confident to remain. It's better to stay, remain 1,050 to 1,100, and at the same time, if we deliver 1,050 or below that, I think it will be good to close the year. But we believe that we remain between 1,050 to 1,100, and most likely the lower quartile of this range.
Okay, wonderful. Thank you so much, and all the best.
Thank you. Next question is from the line of Ashish Kejriwal from Nuvama Institutional Equities. Please go ahead.
Yeah. Hi, good evening. Thanks for the opportunity. Sir, again, the same question which I may ask about Supreme Court judgment. You are. What you are trying to say is that, yeah, because Supreme Court has already said that royalty is not a tax, so there is no question on that reverting back. Only thing is whether it's prospective or retrospective. So you mean to say that even if it is retrospective, then also we have certain grounds to get negotiation with Rajasthan government, and we don't need to pay that amount?
No, I have not said about the negotiation. I said the cases are in the court, and we have multiple grounds. Because in any case, when you go to any court, you know, there are various grounds, and one of the ground which was there, even the Supreme Court upheld that ground, we have many other grounds to protect ourselves.
Okay. So in case, in the worst case, this will be, suppose, in the worst case, INR 150 per ton of overproduce, whatever we have produced, that could be there in case if, it's in the worst case, which I'm trying to look at.
Yeah, it's an immaterial amount from the point of the Hindustan Zinc's profitability and benefit point of view.
So, no, again, sir, because now this one, INR 142 crore, which was imposed that time, that was on a small amount maybe, and, because it's INR 150 per ton of overproduced, and over a year, obviously we have produced more than 1 million tons of ore on a yearly basis. So in case of retrospective and... So my only point is that even after the Supreme Court judgment, do we have something where we can fight legally with the state government that which will not allow us to impose these kind of taxes?
I think we have to look at first is that we should refrain from the Supreme Court judgment until it is out. And I think we have been in touch with the various lawyers and our own peers. It is what we understand, the Supreme Court is going to take a balanced view, and because we have, in our board, government nominee directors as well.
So we have to appreciate that we are not the only mining company. There are larger mining companies, including government entities, which are also likely to be affected had there been if the judgment was to be effective on a retrospective effect. The numbers would be much, much larger compared to the numbers that we can even think of. So our information is expected that the judgment, whatever comes, would be more balanced and not to cause complete stoppage of industries across India.
Understood. So, on this only, if it's prospective, then also, because INR 150, INR 150 per ton, they are imposing it right now also, so going forward also, maybe they can continue with that. Is that right?
Going forward, they can levy anything. It is not in your or my control.
Uh-uh.
I think we have to be watchful. But at the same time, as Mr. Misra said, industry also has to be a competing industry. I'm sure government or anybody, the state which wants industry to be in their state, they will take a balanced view.
I understand, sir, but the only thing is, 2014, we have seen what happened when Supreme Court deallocated all the coal blocks and put sales on that. But anyway, that's okay. Sir, second question is, is it possible to give us a cash and debt balance as of first quarter end? I think we missed it in this, especially this time.
Yeah.
And-
We have the cash of INR 10,885 crore and around INR 11,200 crore as a debt.
Okay. And so lastly, we hedged 90,000 tons for this quarter, for this year, and, what will be the averaging price at which we have hedged this?
So we hedged at $2,906, and already 5,500 got unwinded in the month of June. So the open position as at June end, the hedged price is $2,901, $10, $2,910.
Okay, and this is for 90,000 or 85,000 tons?
Yeah, yeah. Absolutely.
Okay, okay. Thank you, and all the best, sir.
Thank you.
Thank you. Next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Thank you, sir, for giving this opportunity. In terms of your projects, I had a couple of questions. Am I audible?
Yes, yes, you are. Please go ahead.
Yeah. So Roster and Dadri, which we are targeting to sort of start during Q4 FY 2025, how long would it take to re-ramp up to the full production rate of 160 KT? And how would its contribution to EBITDA will develop over the period?
So we, we are looking to prepone the commissioning from Q4 to maybe end of Q3. That is the target, so that at least we get one quarter of additional production from that. And as per our calculation, that roaster is likely to add another 45 kilotons per annum of zinc production. If I get one quarter, that comes to 15 KT. Right?
Right.
Yeah.
What would be the additional cost of roaster operation?
No, no, this is roaster like any other roaster, so the cost structure doesn't change. Additional 15 KT that will come, that will come as a standard cost of production like any other. If the other, rest of the production today we are reporting, say 1,100, 70 or so, it will remain in that only.
So just to supplement, Mr. Misra, the 15 KT is a metal which he's talking, is only the part of FY 25.
Right.
But over a full-year basis, it has a capacity of 160 KTPA. Of course, we have a cell which is a bit debottlenecked.
Forty-five.
So it will be keep on like, it's a cat and mouse story. So when we develop the 160 KTPA, we will debottleneck cell house. We already given the order to L&T for 22 KT cell house debottlenecking, towards to achieve the 1.2 million ton of the metal. At the same time, this roaster is having the best of the technology, which will replace the roaster of the old roaster of the Debari. So that will be actually cost efficiency, point of view also the beneficial. And that's how we plan our $1,000 cost, because this has the benefit of the, having the best of the technology new roaster.
Understood, sir. The 45 KT zinc production can be delivered in FY 2026, visibility additional. Will we be able to ramp up to that rate? Okay.
That is the minimum.
Right. Second was about the fertilizer plant that we are targeting by Q2 FY26. How does it sort of place on the global cost curve with our technology?
That number as of now, we are looking at, cost-wise, see, being the sulfuric acid, we'll be evaluating at a market price only. It will be much cheaper compared to the imported DAP that we import from the rest of the world. It would have a good enough profit margin. It is, it has a payback on the project on equity basis of about 17-18%. Which is a good payback to have a good IRR to have on the project.
Right.
So I think just to supplement, Mr. Misra, I think we have two. We have better advantage, one is the acid, and second, the rock phosphate which is within the Rajasthan. I think we have two competitive advantage compared to other competitors.
Sure, sir. And in terms of, you also mentioned about the appointment of the global consultant for 2 million ton run rate development of mine. So what would be the timelines, and when would we know about the potential solutions?
The mining consultants are already in on ground and working. The plant consultant, which is another global consultant for smelter and mill, so they would be reaching Udaipur, maybe this week itself, and they'll start working on the ground. We are expecting by end of August or maybe middle of September, we'll get the pre-feasibility report, which would tell us that with our ambition of 2 million ton, how much would be the reality, and what would be the, you know, basic needs for achieving that. And then we'll go to board and take sanction further.
Sure, sir. Thanks for these answers. I'll get back in the queue.
Sure.
Thank you. Next question is from the line of Rashi from Citigroup. Please go ahead.
Just quick question, any change in our FY 25 volume target?
FY 25 volume target as in the given guidance? No, we are, we are holding the guidance as of now.
Okay. On the linkage coal materialization versus last year, what is the percentage this year and what was it last year?
This year, we have a 45% of the linkage coal consumption, and the last year, it was almost half of it.
All right. Thank you.
I just want to give the confidence that, it's not only now remain the linkage coal. We have revamped our coal-based power plant at two units, to consume 100% of domestic coal. So when I say domestic coal, Coal India coal. So not only the linkage coal, we are participating in the various e-auctions which comes from the CPP, and that also we are participating. That's how we are reaching the 45% overall domestic coal and reducing our dependency on the import coal.
The ultimate objective remain to reduce the power cost in the manner where we produce the power, towards the getting a $1,000 cost, and that's how the RE power will help us in the whole year basis, whereas Serentica power will be 8% in the total power bucket, 5% already we have our own solar and WHRB, and import will be 50%, remaining will be domestic.
So just to be clear, 45% is domestic coal, not linkage. I mean, it's linkage plus e-auction, right?
Absolutely.
You are targeting in a percentage terms, you know, by maybe in a year's time, how much you are expected to be, the percentage?
FY 25, our focus is to reduce the import, improve the linkage and get the 10% over 13% is the RE power. So you can assume 13% is the RE power, and remaining 50/50, linkage and domestic.
13% is the RE power, right? Mostly 8.5 now.
13% is RE power, and remaining 87, you can divide by two, which will be 42%, 42%, around, will be domestic and import.
Yeah. So 13% compared to 8.5 currently.
Yeah.
Yes.
Right. Okay, thank you.
Thank you. Next question is from line of Shweta Dikshit from Systematix Group. Please go ahead.
... Hi, sir. Good evening. Could you give us more details on,
Sorry, due to traffic, can you speak little louder, please?
Hi. Is it better now?
Yeah. Yes, yes, it's good.
Sir, could you provide more details on Bamnia Kalan mines commencing operations, and what is the expected outlook in terms of volumes from there, and when can that potentially come on stream?
So Bamnia Kalan mine, say, roughly we'll have a potential of about 5 million tons of ore. Upgrade will be similar to what RA mine, Rampura Agucha mine has. And it also switches between, say, anywhere between, I think, 4.5 to ... We have got permission, you know, to start the infrastructure activity. Typically, development of decline will take around maybe 1.5 years or so, so, and then, we will first time we'll hit the ore body, which is-
Thank you so much.
Thank you. Next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah. Good evening, sir. So just wanted your views on, you know, the recent decline in across non-ferrous metals. So, I think, you know, a lot of expectations were there on Chinese stimulus, you know, but we've not really seen any of that coming through. So do you think, you know, prices should stabilize at these levels because, given, you know, cost curve or there could be, you know, some further falls from now?
So as of now, see, we had that quarter one beginning was very nice. It was increasing, and then we reached up to $3,000 per ton. Although towards the end, we had the stocks reducing across the world on the metal stockhouses that we had, but the prices also started coming down. There was kind of some uncertainty. Also the expectation of Chinese economy coming back did not happen. The war did not end. Somewhere, European slowdown continued. So those uncertainties are still playing on the metal prices. I don't expect the situation to improve drastically anytime sooner from in between now till about December. Hope that by November when the U.S. elections are over and whosoever new government comes, may set right a new global agenda. There must be...
I'm expecting that there'll be a lot of, you know, global positiveness as far as, the infrastructural developments are concerned, and I'm sure by that time, Russia-Ukraine war also should, have a finality of settlement. If those things happen by December, I'm sure we are going to have a fantastic quarter four going forward.
Okay, sir. So you think any other, you know, probably some of the rate cuts also can help in the sentiment towards quantity pricing?
See, Fed rate cut also has to, what to do with U.S., own, you know, the own compulsions on their, inflation, inflationary trend. Although there is two opinions on U.S., that inflation is under control or the necessary items of day-to-day living inflations are higher, so that's a typical like us, we are also caught between the two. The only thing remains is the next government, will they continue the Biden's, agenda of infrastructure focus and U.S. economic growth more than 2.2%-2.5%? Europe comes to around 3%. In that case, the world will be different place in quarter four.
Sure, sir. So also, you know, I think you mentioned the $2.7 billion target EBITDA. So at what elemental assumptions, you know, are we factoring that in?
We are factoring the consensus of the $2,900-$3,000, and the silver at $30-$32.
Okay. Yeah. Thank you so much, sir.
Thank you. Participants, you may press star and one to ask a question. Next question is from line of Shivang Chauhan from Barclays. Please go ahead.
Hi. Good evening. Thank you for the invitation. My first question is on the zinc price guidance. So with the prices that they are now, do we still expect zinc price to reach $3,000 by September, October, and $3,200 by year end, like you previously guided? Or is there any change in guidance we can take?
So, to clarify, we never give guidance on price.
Mm-hmm.
I've never, but always, like anybody else, we also like to be more optimistic about future, right? Anybody in business are always optimistic about future. Only the time for we, that optimism to come to fruition has shifted from December to maybe January to March. Nothing else has changed.
Okay. Yeah. Thank you. My next would be on the general reserve and to Retained Earnings conversion. Have you effected the transfer after the approval?
Yeah. As you see in our financial reports, results, we have already affected the, this being, into our July month because it come after June. So we got the NCLT approval 16th of July, and we have made the scheme effective. We have got all necessary approvals.
Right. So just to follow up on this, if you could provide any colors on, you know, use of these additional balance that you have, maybe towards the effects or?
... Yeah, I think as we said earlier, this is an enabling proposal. It provides the flexibility to the board in case they want to reward the shareholders. So, and it being a board decision to reward the shareholder in form of dividend or anything, I will not be able to comment about the use of this profit, any timeline or something.
Yeah. Makes sense. Yeah. Thank you. Thank you. That's my,
A reminder to all the participants, you may press star and one to ask the question. Next question is from the line of Vikas Singh from PhillipCapital. Please go ahead.
Good afternoon, sir. Thank you for the opportunity. So just wanted to understand, we are already, in terms of cost of production, we are already at the higher end of our guidance, and as we see that the second half volumes are usually low. Can we expect the exit rate to be lower than even $1,050, which we have guided, or we are expecting some other cost improvements going forward?
So I think why, we are absolutely confident on living up to the guidance we have given, but like anybody else, everybody tries to outperform their own commitment, right? So we will surely try that, but as far as guidance is concerned, on which we can develop the model, we can predict the future, we would like to remain committed to the guidance first. Of course, the attempts will be there to beat the guidance. We will see as by quarter three, we'll know better, and if the requirement of correcting the guidance comes, it will come in quarter three only.
Understood, sir. Sir, silver customs duties have been tweaked sharply in the current budget. So how we should look at the silver part going forward, any inventory adjustment which could negatively impact us going forward? Or, how we should look at the pricing, because pricing part is it going forward for the silver?
So silver, if you're talking for the inventory which is lying in our stock, there's no impact, because we don't remain any finished good silver in the books, sir, any, at any month. It's always nil. So we don't have any impact coming to the financial. Of course, the duty has given the impact, which is a 9% impact. That I think in your model you would have already factored.
Understood. So no inventory adjustments would be required then?
No, no. We keep-
That's all.
Correctly. Yeah.
Yeah. Thank you.
Thank you. Participants, you may press star and one to ask the question. A reminder to all the participants, you may press star and one to ask the question. Next follow-up question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Thank you, sir, for giving me another opportunity. Just wanted to touch up based upon couple of aspects. One is basically we are increasing renewable power in our cost mix. So what is the difference with our marginal cost of power purchase between the renewable power and whichever is the highest cost of power for us?
So the marginal delta, I would not be able to quote, it's not part of standard disclosure quote, but you can assume from the marginal cost of production, it's 30% less than.
Right, sir.
In terms of price, cost.
Second thing, we also talked about the developing a low carbon zinc offering, and we are targeting probably the international market for this. So how do we see the global demand for this, and what kind of premium that we can derive for low carbon zinc?
So this product is primarily designed for our customers who are into galvanizing and export that galvanized steel primarily to European market. So there, the pressure is on them to reduce overall CO2 emission per ton of galvanized zinc landed in Europe. And there we play a crucial role, and that's where our value will be more appreciated by our customer. As far as we are concerned, the customer would surely appreciate the value in terms of, and were they to reduce 400 grams equivalent of CO2 emission in their production of steel, it would have taken them huge amount of CapEx or even technology import to get that thing done. Whereas by just by galvanization, they are able to get the similar reduction in CO2 by using our EcoZen.
ESo the value is clearly perceived, and how much of that value will transfer into premium, that will happen only when we actually bring the product to market and get into discussions with our customers.
How much quantum we will be able to produce in this market?
As of now, it's about 8.5% of our production. Roughly it would come to about 60,000 tons in a year.
It will be basically proportional to FR, RE power consumption. That would be exactly the sort of the-
Absolutely. Absolutely. And it will, it will, it will grow as the RE power percentage goes up, so this number will keep growing.
Sure. Just one last bookkeeping question. What was the mine development run rate during the quarter, and can you indicate between capital and revenue split?
So it was 25 km for the quarter, and you can assume 50/50% for both capital and revenue.
Thank you, sir. Thanks for the answers.
Thank you. A reminder to all the participants, you may press star and one to ask the question.
Thank you. Yes, sir.
A reminder to all the participants, you may press star and one to ask a question. As there are no further questions, I will now hand the conference to Miss Kritika Mehta for closing comments.
Thank you, everyone. With this, we close today's earnings call. For any follow-up questions or clarifications on the results, please feel free to reach out to investor relations team. Thank you, everyone.
Thank you very much. On behalf of Hindustan Zinc Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.