To Hindustan Zinc fourth quarter and full year FY23 earnings call. As a reminder, all participants lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Jhalak Rastogi, Associate Director, Investor Relations. Please go ahead.
Thank you. Good afternoon, everyone. I welcome you all to Hindustan Zinc's fourth quarter and full year FY23 ending 31st March 2023 results briefing. In this call, we refer to Q4 FY23 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 slide number 2 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 financial performance. After which we'll open the floor for questions. I now request Mr. Misra to begin today's call. Over to you, sir.
Thank you, Jala. A very good afternoon to all of you. Thank you for joining us today for the fourth quarter and FY23 results briefing. At the outset, I am very happy to share with you that Hindustan Zinc has achieved highest ever metal production in FY23, crossing 1 million ton metal mark which was promised at the beginning of the year. We could do this through relentless efforts on our operational efficiencies in our smelters backed by consistent mine metal production in our mines. With our ever-increasing silver production, it brings me great pleasure to share that Hindustan Zinc has now become the fifth-largest silver producer globally. A quick snapshot of developments made in the year are given on page six and seven for reference.
Coming to our key priorities on safety front, in line with our commitment to ensure zero harm to employees, the leadership has undertaken the prime responsibility of providing a safe workplace for all employees entering our premises. We have started implementing critical risk management to prevent further fatalities, and it gives me satisfaction to report fatality-free operation during last 2 quarters. Safety of our people is the topmost priority for us at Hindustan Zinc, and it is our commitment to ensure that all our employees return home safely. An update on key priority. On ESG front, we continue to make progress on our sustainability journey to achieve net zero by 2050 via multiple pathways.
During the quarter, we entered into another power delivery agreement with Serentica Renewables for sourcing renewable power up to 50 megawatts, thereby aggregating such contracts to 450 megawatts under the group captive scheme. We inaugurated 550 ton per hour electrical plant at Rajpura Dariba Complex which affirms our commitment towards a safe, smart and sustainable operation. I am also delighted to inform you that Hindustan Zinc is transitioning towards a low carbon vehicle fleet. We flagged off the first underground mining EV in HP mine, first LNG vehicle for transportation and first EV truck for carrying concentrate from mines to smelter. Hindustan Zinc ranked amongst top 5% ESG scorers in the metals and mining sector in FTSE Global Sustainability Yearbook 2023. We have been featured for the sixth consecutive year reaffirming our best-in-class sustainable practices.
We have also been recognized with prestigious A rating for climate change and A-minus rating for water security. In addition, Rampura Agucha Mine became India's first mine to be GreenCo certified, and four of our mines are now five-star rated under A-list category of mines by Indian Bureau of Mines. These endorsements play a significant role in motivating us to consistently march ahead on our ESG journey. Coming to an update on our on-ground CSR activities, it gives me immense satisfaction to inform that we are progressing well on our social sustainability goal. We could outreach an ever highest number of more than 1.72 million beneficiaries in FY23 through our sustained CSR initiatives. Strengthening our commitment towards education, sessions on digital literacy and life skill training were imparted to different students.
Promoting sustainable livelihood and skill development, Hindustan Zinc's social center trained successfully its first all-female batch for unarmed security guards with 100% placement in reputed organizations. Reinforcing the goal of diversity and inclusion, we achieved 19.5% gender diversity as of March 2023, inclusive of all genders and sexual orientation. I would like to share that Hindustan Zinc signed MoU with Rajasthan Cricket Association for developing India's second-largest cricket stadium in Jaipur. Zinc Football Academy bagged second position in the Khelo India under 17 World Football League. At Rajsamand we also supported regional cricket match of Aladia Panchayat League held at Pratapgarh with about 150+ participants across Udaipur. Moving on to the market. The global economy continues to remain impacted by extraneous factors.
Though the previous quarter did begin with optimism on the global economic outlook on account of easing supply chain disruptions and expectations of China's economic recovery supported by positive hope on broad-based recession avoidance. However, the same was short-lived with the potential banking meltdowns and mounting inflation in the U.S., supplemented by China showing few signs of strong economic recovery yet. Broader market sentiments continue to remain weak. Further, as per IMF, 2023 will be another challenging year with global growth of less than 3%, majority impacted on account of monetary tightening, COVID aftermath, and the war in Ukraine. Zinc supply and demand forces remain underperforming. The LME stocks stood at 45,000 tons as compared to 140,000 tons at the start of April 2022.
Stocks in [SHFE] warehouse at the end of March stood at 97,000 tons as compared to 176,000 tons at the start of April 2022. Stocks are thus at multi-decade low levels. On demand side, there has been a fall in global consumption by 3% in 2022 amidst the slowdown of China economic recovery and possibility of U.S. banking crisis impacting the construction and the automotive sector for the first half. Global consumption is forecast to grow by 1.5% in 2023. Touching briefly on lead. Lead prices in Q4 exhibited an improvement of 2% Q-on-Q closing at $2,145 a ton.
Global lead demand exceeded supply in 2022, with lead metal supply down by 0.7% and demand up by a modest 0.5%, predominantly in China, India, Japan, and U.S. In the first half of 2023, muted and balanced lead prices are expected, driven by changed supply and demand expectations on account of lead smelters going into maintenance in China, combined with off-season of lead acid battery market. Coming to silver. Prices have been on an upside, closing at $23.89 per troy ounce. Silver inventory in London vaults touched six-year low levels in November 2022 and continues to trend downwards. For 2023, silver demand is expected to be bullish, driven by increasing industrial offtake, augmented by rising focus on green economy, including renewable energy products like solar cells, vehicle electrification, and investment in 5G infrastructure.
On the domestic front, the Indian economy continued to show strong resilience. This was reflected in the S&P Global Manufacturing PMI in March 2023, which was at 56.4, indicative of expansion in the manufacturing activities. Q4 experienced a strong demand on account of industries maximizing outputs in the last quarter. Coming to an update on operational performance. This financial year, we surpassed our own records and happy to report mined metal production of 1,062 kilotons, up 4% year-over-year and record high refined metal production of 1,032 kilotons, up 7% year-over-year. This was supplemented by highest ever mine development during the year, crossing 110 kilometer mark, with life of mine ventilation system fully commissioned and operational at Agucha and in progress at SK and Zawar mine.
This ensures continuity of superior performance while maintaining our mine life at 25+ years. During the quarter, our mined metal and refined metal production was ever highest at 301,000 tons and 269,000 tons respectively, demonstrating our capability to produce 1.2 million tons MIC. Record performance was majorly driven by higher ore production, improved grades, and better plant availability. We also delivered ever highest silver during the year in line with lead metal production. We entered the new financial year on the back of such stellar performances. Such resilient efforts blended with softening input costs enabled delivery of strong operational performance, successfully achieving the annual guidance with an EBITDA margin of 52%. Some of the automation projects like stope cover drilling have helped increase volume with marginal operating costs.
Projects front, happy to inform that our alloy plant execution is in process and commissioning is scheduled in Q1 of this financial year. For fertilizer plant, order placement is scheduled in this quarter, and RD Mill commissioning is also targeted in Q1 of FY 2024. Also, we have successfully maintained a mine life of 25+ years with strong R&R, demonstrating an increase of 2.7% year-on-year and factoring production of FY 2023, the increase is 7%. Maintaining a portfolio of mines with long life remains one of our key focus areas. Before I hand over the call to Sandeep for an update on financial performance, I would like to present our production guidance for the fiscal year 2024.
We expect mined metal for the year to be in the range of 1,075-1,100 thousand tons, and refined metal production for the year to be in the range of 1,050-1,075 thousand tons, while FY 2024 sellable silver production is expected to be between 725-750 tons. With this, I hand over the call to Sandeep for an update on the financial performance.
Thank you, Mr. Misra, a very good afternoon to everyone. Supported by a consistent financial performance across the quarters, Hindustan Zinc experienced yet another record-setting annual performance, delivering historic high revenue, EBITDA, net profit, and cash flow generation. This splendid performance is an accurate demonstration and a testimony of our continued efforts on operational efficiency, volume enhancements, cost optimization, backed by agile decision-making and a favorable LME environment. All of this has enabled us in sustaining robust and resilient margins even in an input commodity inflationary environment. Coming to an update on the financial performance for the fourth quarter and the full year ended March 2023. Revenue from operation for the year was recorded to be INR 34,098 crore, an improvement of 16% YOY.
This was supported by improved zinc LME and volumes gained from strategic hedging of approximately INR 800 crore, favorable exchange rates and better lead and silver volume. It was partially offset by lower lead and silver prices. Revenue from operation during the quarter was INR 8,509 crore, down 3% YOY, mainly on account of lower zinc, lead and silver prices, which was partially offset by improved refined metal and silver volume and favorable exchange rates. Sequentially, revenue improved by 8% primarily due to improved metal and silver volume along with the better zinc, lead and silver prices.
Zinc cost of production before royalty during the quarter stood at USD 1,214 per ton, the lowest quarterly COP in FY 2023, which was 6% better sequentially, though 7% YOY in USD, 17% higher in INR terms if you compare with the YOY. The sequentially improvement was mainly on account of better volume, improved grades, strong operational efficiency and supported by smoother coal cost. For the full year, zinc COP stood at USD 1,257 per ton, 12% higher YOY in USD terms and 21% higher in INR terms, though well within the guidance given in October 2022. The COP was up mainly on account of elevated coal prices, poor domestic coal linkage availability till December 2022, and input commodity inflation partially offset by large higher volume and improved operational efficiency.
The resulting EBITDA for the full year was at record INR 17,590 crore, an increase 8% YOY driven by improved metal and silver volume, higher zinc LME prices, gains from strategic hedging of INR 800 crore and favorable exchange rate partially offset by higher costs and lead, lower lead and silver prices. EBITDA for the quarter was INR 4,208 crore, down 16% YOY and up 13% sequentially. The quarter-on-quarter improvement was primarily driven by better revenues due to higher volume and prices coincided with improved cost on account of relaxing input commodity inflation, further supported by better volume, mining grades and operational efficiency. Please refer to EBITDA bridge from slide 23 to 25 for further details.
Consolidated net profit for the year was a historic high level of INR 10,511 crore, a growth of 9% YOY, majorly led by higher EBITDA, partially offset by an increase in tax. Net profit for the quarter stood at INR 2,583 crore, up 20% quarter-on-quarter. The patient improvement was majorly on account of higher EBITDA and lower tax expenses. Effective tax rate for the fourth quarter was 26.8% and for the full year was 31.2%. The tax expense and ETR was lower in Q4 mainly on account of a one-time adjustment. As the company is opting for the new tax regime from FY 2024, paying tax at 25.17% instead of current ETR of 24.9%. Therefore, tax rate and liabilities have reinstated at 25.17%.
That said, our cash tax outflow has gone up for the year due to lesser amount of accumulated net credits. Further as well, we're moving to the new tax regime from the fiscal year. Our tax rate will be around 25%. I'm also happy to state on record that in March 2023, the board had approved an interim dividend of INR 26 per equity share with a 1,300% basis face value of INR 2 per share in amounts to INR 10,986 crore. This reinforces our commitment of providing superior shareholder returns continuously. Further, during the year, we contributed INR 24,949 crore rupees to exchequer, including the dividend paid to Government of India and associated tax of INR 10,855 crore. Coming to our cost and CapEx guidance for the fiscal year 2024.
We expect our zinc cost of production to be in the range of now the 1,125 to 1,175 per ton for the upcoming fiscal year, which is inclusive of iron mine development extended to support future volume growth. The guidance is contingent on the macroeconomic factors impacting input commodity prices. Having said that, given the fact that we have maintained our leadership position in the global cost curve, we remain confident to protect and improve our margin going forward as well. Project CapEx for this year is expected to be in the range of $175 million-$200 million. We will continue to have a focused approach to invest in strategic projects with a higher IRR and towards the sustainability aspect of the business. With this, I open the floor for your questions. Thank you.
Thank you. Ladies and gentlemen, at this time, we will be starting a question-and-answer session. If you wish to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we request you to restrict to one question per participant and one follow-up. We will wait for a moment while we poll for questions. Our first question comes from the line of Abhiram Iyer from Deutsche Bank. Please go ahead.
Thanks for taking my question. Just pertaining to the current cash position the company has, Given the fact that, you know, you paid the dividend primarily by taking a smaller short-term debt, is the company looking to use this cash for any or inorganic acquisition or what's the sort of medium-term goal here?
The currently company, any acquisition which will happen will be on the basis on the board approved decision and any valuation or due diligence done. Given the fact as of now our focus is to invest in the fertilizer and roaster projects, currently the company has INR 10,000 crores of gross investment in cash and cash equivalents. The borrowing is smaller and compared to the borrowing, our quarter one cash flow should be basically recouping the whole, whatever the negative we are having. If you see our guidance which we have given, I am sure you can do your math and comfortably we can generate in a year one more than INR 10,000 crore of the cash flow.
Got it. Broadly, this is not gonna be debt that the short term debt would be converted to a more longer term debt because as per your statement, it was roughly around INR 11,000 crores.
Yeah. We don't intend to do any short term to long term. Given that our cash flow position, which I am again saying that we reinstate our position of the cash flow generation and historically we have been generating the cash flow, we should be able to give pay within this financial year.
Got it. Just a follow-up to that, given, could you just give the nature of investments which are present? Are all of these liquid investments in mutual funds?
I think that is not a tender disclosure, but we invest in the high quality debt instruments as per our investment policy.
Got it. Thank you very much. I'll get back into you.
Thank you. Our next question comes from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah. Hi. Congratulations for a good set of numbers, and thanks for taking my question. My question is with respect to the mined metal production guidance. If I look at your guidance, I mean it is, the upper edge of guidance is also at 5% high YOY. We have hit the mine metal rate of 1.2 million tons in this quarter. While I understand that, you know, it's not that every quarter is uniform. Just wanted to understand why we have given such a subdued guidance. And what are the key enablers for reaching 1.2 million tons per annum, and when we will reach it?
If I can remind you, we started off the discussion of the growth project as 1.2 million ton MIC. While we can still produce 1.2 million ton MIC, what we have demonstrated in quarter four, our focus going forward is actually moved from MIC to finished metal. We are looking at now putting one roaster and then we will try to do some debottlenecking of the leaching circuits to actually build up a capacity of 1.2 million ton.
Our immediate focus is to, with the available capacities, produce more than 1,100 thousand tons of metal first, and then whatever is that metal that we produce correspondingly back up by MIC production. That's why the numbers are set. The focus moves from MIC to metal. Somewhere around 1,050 to 1,075 thousand tons of metal if we can produce, then we have calculated the MIC accordingly. Otherwise, with the roaster and through debottlenecking in the leaching, we will be able to go to that 1.2 million ton metal capacity instead of talking about MIC capacity.
Okay, just a follow-up. When can we expect to reach this 1.2 million ton in metal then?
After this roaster, we are taking, say, 18 months of commissioning from the time of construction, which will begin somewhere in June or July, then another 18 months. Maybe FY 2025, 2024-2025 or 2025-2026, one of these two years should be close to 1.2 million ton.
Okay. Thanks a lot. I will get back into queue.
Thank you. Our next question comes from the line of Love Sharma from Lombard Odier. Please go ahead.
Hi. Thank you for taking the question. I had a question about I think from this year from April 2024 onwards, you are going to pay some brand and royalty fee. Can I understand that amount has already been paid in April? If so, how much is that? The engineering question would be, is it directly to
There's some background noise, I'm sure you are trying to ask what is the brand fee expenditure. During the year, the brand fees was approved from the 1st October. This financial year you see the impact of INR 318 crore. The next year will be depending upon the turnover. It will be 2% of the turnover. Roughly it should be between INR 650-700 crore.
Okay. Okay. Thank you. Can I ask one more question on the, on the, you know, the GE to ITM conversion? I know that the shareholders vote for that. Do you still need any other stakeholders vote to happen, or is the process pretty much done and only NCLT approval is pending?
All the processes have been done and there is a formal procedure is going for the second motion to the NCLT, which has also been filed on the tenth of April by Hindustan Zinc. Once it is done, then it will require a board approval. No separate stated approvals are required.
Okay. What is the base, sorry, for the NCLT meeting with the NCLT approval?
We have filed on the tenth of April. NCLT, whenever will give the hearing, then only we can comment on that.
Okay. Understood. Thank you so much. Thank you. Bye.
Thank you. Our next question comes from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, thanks. My first question is on the dividend payout. Now dividends will be moved to a marginal net debt level. Now should we expect, dividend payouts to be restricted by the cash flow, or they are also okay by taking more debt and pay higher dividend like we did in FY 2023? Given our FY 2023 remains so much beyond our cash in our internal approval, I mean, should we consider this as, I mean, frontloading of FY 2024 dividend in FY 2023, given [Sandeep] commented that, FY 2024 cash flows will be used to repay the short-term debt?
Thanks for the question. First of all, dividend payment is I think a board decision. Whenever it will happen, you will come to know. Obviously, any decision which will be taken up by the board, it will be dependent upon the strong financial management. I am sure board will consider all these facts before approving any dividend which will happen in the future.
Okay, all right. Just one last thing on this Zinc International acquisition. Is it completely on the back burner or there were reports that the government is suggesting that we should continue with the payment terms like a non-cash method of acquiring or something of that is under consideration?
No. All we can comment here is that Zinc International acquisition was a great idea. We are, we have got the board approval, and we have filed it in the stock exchange. There is a letter which has been received from Government, where they are a majority of the minority shareholder. Their view is in public place. We are working on it, and we still believe that this is something that we must do for the sake of Hindustan Zinc. We will see where it ends, but we are very hopeful and we are on the job all the time.
As of now, it's not been called off, it is still under work, right?
No, unless we, the board passes a resolution, withdrawing this, till that time it is not called off.
Okay, thank you, and all the best.
Thank you. Our next question comes from the line of Rahul Jain from Citigroup. Please go ahead.
Yeah, hi. Thanks for taking my questions. Two things. One is on the cost of production that you have mentioned, does it include the brand fee? Secondly, we have given some annual reduction in cost, which I think could have been a lot higher because the way coal prices have come off. Can you give us some color as how, what has been our coal procurement cost and how we see going forward? Thanks.
Rahul, thanks for the question. The cost which we report to the market is the given cost. This is for the conversion cost, total cost of production, that does not include the brand fee. Second, coming to the cost of coal. If we talk about that, as we said in the last quarter, that we were having certain high cost coal inventory. Obviously, that was taken for decision for the purpose of protecting the coal for the purpose of production. That has been depleted and our coal cost has gone drastically reduced. That's why you see compared to quarter three versus quarter four, $80 cost reduction. We believe that current import coal prices are around $150-$160 per ton for the import prices.
We have also got the almost 26% linkage coal in the last quarter four. I'm sure this will continue. With that, we are quite confident that this guidance what we have given for the cost, we are achievable. Given that, our volumes will be also higher, and since our 30%-35% cost remains semi-variable or largely fixed, the volume benefit will come to us.
Just one more I want to add to that. We also have a captive coal mine development. Any progress on that?
We don't have any captive coal mine development, Rahul.
No. Okay. Thanks.
Thank you. Our next question comes from the line of Pinakin Parekh from JP Morgan. Please go ahead.
Thank you. My first question is, if you look at Hindustan Zinc balance sheet, it has materially weakened from its peak days of having a very large net cash balance. Now, the gross debt is closer to INR 10,000 crore. At this point of time, what is the management view on the debt on the books on a gross basis? Will management use the operating cash flow to reduce the gross debt on its books or should the debt increase through the course of FY 2024?
I will say, Pinakin, that this, as I answer for the earlier question also. At the current level of the guidance, we are sure that we'll achieve this guidance 100%. If I take the current LME level also, we are comfortably should be able to generate the cash flow INR 10,000 crore. If you are bifurcating the quarters also, we should be by May end even, we should be able to recoup whatever the margin is, INR 1,700-1,800 crore, and that is still there. Coming back to this cash flow generation, I am sure at the March end, we should be able to, in a position if we generate that INR 10,000 crore of the cash, it will get netted off with the debt.
Sir, that will only happen if there are no dividend payouts, right, in the course of FY 2024. If the company pays out dividends, effectively this debt balance won't come down, right? Are you saying that the dividend payouts will reduce from here and hence, the cash flows will be reserved to reduce the debt?
I would like to answer in the same manner, different manner also. First of all, dividend is a board decision, whenever it will happen, you will come to know. Secondly, if even something happens from the dividend point of view, you will always have a investment against those, whatever the borrowings are there. You will never be in a position where, like you are saying marginally, that because the retained earnings is also now limited. That retained earning whatsoever is there, we won't be able to give the dividends beyond that retained earning.
just to simply ask, you don't expect on an absolute basis Hindustan Zinc to pay down the debt, right? do you, would you reduce on an absolute basis the gross debt that is sitting on its books?
Our target is to reduce the debt as per whatever the maturity is coming from the generating of the cash or the investment which we have in our books.
Understood. Thank you very much.
Thank you. Our next question comes from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity, sir. My first question is, what is the exact quantum of retained earnings as of 31st of March, please?
Hi, Ritesh. exact quantum of the retained earning excluding the general reserve is INR 1,700 crore and general reserve is INR 10,384 crore.
Perfect. That helps. Second question is, when we look at the holding at Hindustan Zinc, we find 88% either pledged or encumbered. Can you please detail what this corresponds to and, how should we look at this number? Can it go down going forward, or are we okay with this number at 88%?
I think pledge of the shares is something in the hands of Vedanta. I don't think we can comment upon this. What we read in the media is that yesterday that 91% of total is there. I think there's something non-disclosure undertaking or some things are all there. I think me and Nishad, we will not be in a position to comment upon that part.
Right. Sir, is it pledged or is it encumbered?
Please, please. This is something to be, you may ask, I think, in the Vedanta after board meeting. They would be open up for questioning. It is better to keep that question there.
Sure, sir. Any update on the OFS?
Update on the OFS. No, right now I have not heard. Since we were expecting before March 31st, but it has not happened. I'm sure government will be looking at some suitable opportune time in the market. When the market will have the capacity to absorb, they would release maybe.
That's right. sir, hedges.
Ritesh Shah, sorry for the interruption. If you could please join back in the queue. Our next question comes from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
In terms of the capital projects ahead, apart from the fertilizer and the roaster plant that we are discussing, are there any other projects on the drawing board at this stage?
Of course, we have our next target will be 1.5 million ton. It may have its internal, you know, some stage of 1.6 million ton before actually going to 1.5 million ton. Maybe another one month we should be able to come clean on what will be the next dates, when should we launch the project, what will be investment outlay. All that we are on the drawing board. We are close to finalization now.
Thank you, sir. If you can clarify the hedges, what Ritesh was asking.
As of now, we don't have any open hedge position.
Thank you, sir.
No problem.
Thank you. Our next question comes from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah, hi. Thanks for taking my question again. Just wanted to understand the grade of ore in this quarter and how does it compare Q-over-Q?
Amit, the grade of ore this quarter was 7.42% compared to the last quarter of 6.96%.
Great. Thank you.
Thank you. Our next question comes from the line of Ritesh Shah from Investec. Please go ahead.
Yeah, hi, sir. Sir, one question. The brand fee element which is there, does it accrue to Vedanta India or does it go to the parent?
it goes to Vedanta Limited directly as we already disclosed in our annual results, as the results also last time gave the brand fee agreement has been signed with the Vedanta Limited.
Perfect. Sir, just one question. Hypothetically, GR to RE will come to you with another INR 10,000 crores of reserve on the books. What is the ideal capital structure that you will be comfortable with?
I think this is a forward-looking thing. We will have to see what will be the ideal. I think GR to RE, what will be the manner of the use, it is up to the board. Whenever it will happen, I think we'll be able to tell, comment that point of time.
Sure, sir. This is helpful. Thank you so much.
Thank you, Ritesh. Thanks.
Thank you. Our next question comes from the line of Abhiram Iyer from Deutsche Bank. Please go ahead.
Yeah. Hi, sir. I'm just wanted a clarification on the difference in gross cash mentioned in the presentation, which is around INR 10,000 crores, versus, you know, adding up the investments, cash balances and bank accounts in the balance sheet given, which is around INR 11,300 crores. Any particular reason why the INR 1,000 crores has not been accounted for as gross cash?
I'm not sure where you are seeing the... INR 11,920 crores is the debt we are having, and INR 10,061 crores is the gross investment in cash and cash equivalent.
Yeah. What I'm saying is if I add up the investments, cash and bank balances given in the balance sheet, I get INR 11,200 crores. Just asking.
Okay.
You to think about it.
Yeah, yeah. I got your point. There are certain unpaid dividend because if you see the way they, it is deposited the dividend on February first. There are certain dividends account which is there, in which the dividend money is there, which is a restricted cash, which we can't use because that is funded for the dividend purpose.
Understood, sir. This would be part of the bank balances, is it?
It will be part of the bank balance. At the same time there will be a dividend liability sitting on the liability side.
Understood. Understood. Thank you. Thanks for the clarification.
Thank you. Our next question comes from the line of Pallav Agarwal from Antique Stock Broking Limited. Please go ahead.
Yeah, good evening, sir. Just on the guidance for silver production, you know. We were targeting about 1,000 tons, you know, some time back, but even for the next year, you know, we're targeting about 750 tons at the upfront. Is the lead production a constraint or, you know, or when can we actually achieve this 1,000 tons of silver production?
No. fantastic. I must appreciate your question. This has to do with. Absolutely, you have hit the nail on the head. Our entire operating flow sheet is comprising of zinc plus lead as a medium of production in the pyro. Instead of doing only lead production in the pyro plant of Chanderia. Whenever we do this, we always have lead MIC getting un-converted to metal, and that is lying in stock. Even last year also, we ended up with having a lot of lead MIC in stock, which if we could convert, we could have produced some more silver. We always preferentially use SMIM lead concentrate to get to maximize the silver production with the strategy we adopted this year. Going forwards, we have to unlock the lead production.
To do the unlock the lead production, we have to increase the zinc production capacity in the existing circuit. That is where the investment in roaster, and it will be followed by some debottlenecking proposal in the lead heating circuit. In the pyro can operate only in lead mode, and then the 750 number for us, it go to 800 or 825 kinds of tons once we do that. It will be in one year away.
Sure, sir. Also, you know, in terms of, you mentioned the project CapEx and, but, what about What is the normal maintenance CapEx levels, you know, that we incur every year?
It will be around $400 million.
Total you're talking about, or it'll be INR 400 plus INR 200?
400 plus 200 .
Sure. This covers, you know, any expenditure on fertilizer and other projects as well, sir.
$150 million-$200 million primarily comprise of fertilizer and roaster and captive power investment, and $400 million is largely for, you know, mine development and mining equipments.
Sure, sir. Yeah. Thank you. That's it from my side.
Thank you. Our next question comes from the line of Vishal Kulkarni from S&P. Please go ahead.
Thank you. My question is about the your cash management generally, because in the past we have seen some cash in the form of unquoted mutual funds and digital securities. Can I understand how easy this is to liquidate when you have to, let's say, for dividends or any other purposes? That's first question. Second, on the status of your transfer of retained earnings to your reserves, where do we stand on that one? Thanks.
If you see the investment, there, investments are quite liquid whenever we want to scale. While it is a long-term investment remained in the market, however, we have been able to liquidate, and we also can have a repurchase borrowings from these investments. Beyond that, I won't be able to comment upon the investment part. In GR to RE, I think I've already answered that INR 10,384 crore is there. The second motion has been filed in the NCLT on the second of late, and we await the hearing from them.
Okay. Thank you.
Thank you. Our next question comes from the line of Ritesh Shah from Investec. Please go ahead.
Sir, thanks for taking the question. Sir, I just want to rewind a bit back. This is pertaining to Hindustan Zinc International transaction. I just wanted to understand, sir, how will the flow of capital work? To my limited understanding, I think that we had taken an approval to create a wholly owned subsidiary, an overseas subsidiary. I think it was called HZWOS. Then basically, we had to purchase, subscribe to the shares of Zinc International, which was THL Zinc. And this was like up to $3 billion, $2.98 billion, if I'm not mistaken. I just wanted to understand, sir, how will the capital flow? You have an overseas subsidiary which has been created. Will the money flow from India to that particular entity and then to Vedanta? How does that work, sir?
Till now we have not incorporated any wholly owned subsidiary. It is part of the whole proposal. Since the proposal is yet to be approved, how can we create the subsidiary?
Sir, hypothetically, if it had been done, how would have the money flowed?
Money, if hypothetically will happen, it will happen from here to wholly owned subsidiary, and wholly owned subsidiary buying from THL Zinc. Till now, I think we'll be unable to comment given that it is not yet approved by the board, yet not taken up from the shareholder purpose.
Okay. Sure. Thank you. Thank you so much. Bye.
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the conference over to Jhalak Rastogi 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.
Thank you.
Thank you.
Thank you. On behalf of Hindustan Zinc, this concludes this conference. Thank you for joining us. You may now disconnect your line.