Q1 21/22

Jul 22, 2021

Quarterly report

Ladies and gentlemen, good day, and welcome to Hindustan Zinc First Quarter FY 2022 Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Rora, Head of Investor Relations, Hindustan Zinc. Thank you, and over to you, ma'am. Good afternoon everyone. I welcome each one of you today for Hindustan Inc. Q1 FY 'twenty two results call. Today on the call, we have with us our CEO, Mr. Arun Nishtha our Senior Vice President and Head of Finance, Mr. Vinay Jain and our VP Finance and Deputy CFO, Mr. Sandeep Poddi. Mr. Nishtha will begin with an update on business performance, while Mr. Jain will walk you through financial performance, after which we will open the floor for questions. I now request Mr. Mishra to begin today's call. Over to you, Mr. Mishra. Thank you, Shetha. Good afternoon and a very warm welcome to all of you. I trust that you and your family are staying safe and following all necessary precautions as well as taking dose of vaccination to fight against the spread of COVID-nineteen pandemic in our country. Before I start today's presentation, I regret to inform you that we lost 2 of our colleagues in an unfortunate accident that happened at our Rampurabhucha mine on 28th June 2021. I would like to offer my deepest condolences to the bereaved family and friends of the deceased. One life lost is one too many. We commit to stand by the families in this hour of distress. We have conducted an in-depth incident investigation by an independent investigation committee. The learnings from the incident have been reviewed, and we are being implemented across all our operating assets. Nothing is more important to us than safety of our people, and we reiterate our commitment and vision to ensure all employees go home safely. Hindustan Singh's safety team continuously drives various initiatives to meet our vision and work working committees identify critical areas for improvement to address any potential risk. In an unprecedented quarter, where second wave caught the country by surprise and took toll on lives and livelihood, our key strength lies in resilience of our people. The Hindustan Zinc family not only ensured continuity of operations, but also supported the local governing bodies in their fight against COVID-nineteen. With the supply shortage of medical grade oxygen, we immediately deployed resources to set up bottling plants in 5 days to refill 500 oxygen cylinders per day to support the state of Rajasthan in their fight against COVID-nineteen. We also supplied 5 tons of liquid oxygen every day to all the hospitals in the vicinity of our operating areas. We set up a 100 bed COVID filled hospital at Dhari Bas, which will come handy in case there is a 3rd wave, which is believed to be more fatal. In addition, we have handed over 5 50 oxygen concentrators to the state administration and a vaccination ban to the airport administration. It is our top priority to control and avoid any spread of the contagion amongst our employees, business partners and their families. Towards this end, we are running a mega vaccination drive under which 100% of eligible population have already been vaccinated with at least 1 dose of vaccine. We will continue this drive till 100 percent of our employees, business partners and their family members are administered both the doses of vaccines. We have also introduced new policies to support family members of employees in case of any loss of life due to COVID. These include paying last drawn fixed salary until notional date of retirement, education assistance for 2 children till graduation and enhanced medical insurance. In addition, we have supported our business partner employees by providing medical and life insurance policy and then take crushing amount for their family members in case of any loss of life due to COVID. Coming to an update on ESG front, I am happy to inform that Hindustan Brink has received Most Sustainable Company in the Mining Industry 2021 award from World Finance Sustainability Award 2021. This is to recognize our product, functional, strategic and managerial innovation and balancing it with commercial insight and market integrity while ensuring sustainability. I'm also proud to share that our Ampur Agucha mine, which is one of the largest underground tank led operations globally, has won CII's Best Application and Use of Renewable Energy Award in 5th edition CII National Energy Efficiency Circle 2021. During the quarter, we also continued our engagement in the CII Working Group to drive accelerated climate action by Indian businesses for actively promoting the climate actions across various businesses in India. I am also elated to share that our people practices were yet again recognized, and we have received great place to work award. We will continue our endeavor to make Hindustan Zing family stronger every passing day. In our overarching goal to create minds of the future, we have continued our digitalization and automation efforts in partnership with leading global experts. Close to 40 kilometers of high bandwidth Wi Fi network in our SK and Rakhpurabhucha mine forms the backbone of our digital framework. This enables us to track equipment in underground mine, fetch real time telemetry data from various equipment to improve asset utilization, productivity and optimize cost. We have set up control rooms both in Kske and R. A. Mines, which are then connected to central collaboration center in Udaipur. This ensures that senior management can review all operations based on real time data, initiate improvement projects based on data analytics and share information online across mines for better collaboration. Turning to market update. Zinc prices had hit a 3 year high of $3,085 a tonne in early June, but have slid since then. The decline in zinc prices is due to growing worries about inflation, a slightly less dovish toll from the U. S. Federal Reserve, strengthening of the dollar and news that China's state reserve will start selling parcels of metal, including zinc in the coming months. However, zinc prices subsequently recovered some of the lost ground. According to International Late Zinc Study Group, global demand for refined zinc metal is forecast to rise by 4.3% to 13,780,000 tonnes this year. This is against a 3.9% decline in demand last year. Power shortage in China's Southwest province of Yunnan could affect zinc smelting capacities to the tune of 1,200,000 tonnes and result in 20,000 tonnes of refined zinc production being affected. While mine production in Peru is recovering, controls in inner Mongolia to cut power consumption could also potentially impact global supply. LME exchange stocks at their current levels are only sufficient to meet 8 days of global demand, which is the lowest level for the current calendar year. Relatively low stocks and robust demand continue to put upward pressure on spot metal premiums globally. On domestic front, Indian economy showed some signs of cooling off in May due to 2nd wave. However, off late, the weakness has already begun to dissipate as the nation exited lockdown. The overall economic effect of the 2nd wave has been softer than the 1st wave of pandemic last year, and this is clearly visible in demand recovery. Speaking of zinc demand, galvanizing has been the key driving force for construction, infrastructure and automobile related demand. Government's focus on infrastructure development will continue to provide necessary impetus to zinc demand locally. Over the medium term, we also expect rising demand from transport and highway sector, which use road crash barriers and galvanized steel bridges. Similar to zinc, lead prices also saw an increase over the quarter and remained at $2,100 level owing to constrained supply. Indian domestic demand took a hit due to 2nd wave and muted demand from auto sector. The current quarter is already showing signs of recovery and demand from replacement auto battery is expected to rise as distribution networks have opened up. Coming to silver, prices have remained steady and stable globally. Indian demand for silver has been subdued due to the premiums have gone up due to limited global supply. Overall, our continued foresightedness on market demand recovery scenario, pricing environment and adaptive approach to selling that is striking a delicate balance between domestic and international sales has helped us to trade the part successfully in these uncertain times. Coming to an update on operational performance. During the quarter, mined metal production was up 9% year on year to 221,000 tonnes on account of higher ore production, partly offset by lower overall grade. Sequentially, MIC production was down 23% on account of lower ore production and overall grades. Integrated metal production was at 236,000 tonnes, up 17% year on year, in line with higher mined metal availability. Sequentially, it was down 8%, in line with lower ore production due to lack of operator availability in the mines in view of second wave of COVID-nineteen. Integrated zinc production was 188,000 tonnes, up 20% year on year and down 4% sequentially. Integrated lead production was 48,000 tonnes, up 9% year on year and down 21% sequentially. Integrated silver production was 151 tonnes, up 37% a year ago, in line with higher lead production, partly offset by lower grade at SK Mine, while it was down 21% sequentially, primarily in line with lower lead production. Coming to an update on our projects, I'm happy to share that post integration last quarter, the shafts at Rampuraguja mine and SK mine are fully operational. Ventilation and cooling systems or chiller units have been deployed to facilitate the same in a seamless manner. Moreover, increased use of advanced process control in both SK and RD mills for purpose of grinding are used to improve recovery. COVID-nineteen restrictions, including stringent visa guidelines for Sanddesh Nationals, continued during the quarter, which resulted in a delay of the commissioning of Fumur Plata at Sanhedrinha. We expect Fumur commissioning to be completed by the end of November 2021. Before I hand over the call to Vinay for an update on financial performance, I would like to reiterate our production guidance for the fiscal year 2022. We maintain mined metals and refined metal production guidance for the fiscal year in the range of 10.25 to 10.50 kilotons each and sellable silver production at 7.20 tonnes. With this, I hand over to Bina to update on the financial performance. Thank you, Arun, and good afternoon, everyone. As outlined by Arun, we continue to strengthen the foundation of our operations to deliver on the guided volume growth. Our focus and continued efforts on digitalization and automation will help us enhance our mining output. Internally and through our business partners, we are constantly looking at improving equipment reliability and availability. Our goal is to increase predictability of our operations, thus reducing downtime as well as overall cost. All of this is laying the strong foundation for us to protect margins amid an uncertain environment and deliver on the promised performance for the rest of the year. Going to an update on the financial performance for the Q1 fiscal year for the Q1 of fiscal year 2022. I'm happy to share that we delivered our best ever first quarter revenue, EBITDA and profit after tax. Revenue from operations during the quarter was at INR 6,328 crores, an increase of 64% year on year, led by higher metal and silver volumes as well as higher zinc lead, LME and silver prices. Zinc sales volume increased 15% year on year and led by 9% year on year, in line with the higher production and robust demand. Sequentially, revenue was down 5% owing to lower zinc, lead and silver volumes, lower metal premium, partly offset by higher zinc and lead LME prices and repeat depreciation. Zinc volume was down 5%, while lead and silver were both down 21%. This was mainly due to lack of operator availability in view of second wave of COVID-nineteen. Zinc LME prices were sequentially up 6%, while lead prices were up 5%. Zinc cost of production before royalty during the quarter was $10.70 per tonne, higher by 5% year on year and up 13% sequentially in USD terms. The upward pressure on COP, the cost of production, is primarily stemming from the surge in input commodity prices. The increase in coal and diesel prices, cement prices as well as higher power costs was only partly offset by higher sulfuric acid credits. Finally, the fixed costs of the business are allocated based on volumes. We were accordingly impacted by this allocation as compared to previous periods. We fully recognize the headwinds from rising input commodity prices and are doubling our efforts to address them through long lasting structural cost reductions that will lead us to greater operational efficiencies. EBITDA for the quarter came in at INR 3,558 crores, up 123% year on year and down 8% sequentially. Year on year EBITDA was up on account of higher zinc and net LME, an increase in silver prices, higher volumes as well as higher metal premiums. Sequentially, EBITDA was lower on account of lower volumes and higher costs. Net profit for the quarter was INR 19.83 crores, up 46% year on year and down 20% sequentially. Year on year increase was mainly due to recovery in metal prices and higher volumes. Moreover, effective tax rate for the quarter was approximately 34.4%. The higher tax is due to the change in profitability mix between business and treasury income and also partly due to end of certain tax benefits. Coming to our cost and CapEx guidance for the fiscal year 2022, we keep both our cost and CapEx guidance intact. As I mentioned in the previous quarter that we were anticipating upward pressure on commodity prices. I would like to reiterate that we are we will continue to closely monitor the situation this quarter and we'll take all necessary steps to address it. With this, I open the floor for your questions. Thank you. Ladies and gentlemen, we will now begin for the question and answer The first question is from the line of Amit Dixit from EDWISE. Please go ahead. Thanks for taking my question and congratulations to a good set of numbers in a tough quarter. I have two questions. The first one is on mined metal production and refined metal. If I look at mined metal and refined metal production, so mined metal was significantly lower than refined metal. So did we have some concentrate with us that we converted to refined metal? And so how much concentrate is left as of now? That is the first question. Yes. Sure, you are correct. After a very good quarter 4 exit, we had mined metal available with us, and we have diluted the stock that we had roughly about 22,000 tons of mined metal of opening stock that we had could be converted to finished goods. And how much would be still left with this concentrate stock, mined metal stock? Mine vinyl stock will be around 13,000 tonnes. Okay. And second question is what will be the capital mine development in the quarter and how did it change QOQ and YOY? So capital mine development is about 13 kilometers in the quarter and the same figure quarter 1 of last year was about 7.6 kilometers. So it was about it is more than y o y 72 percent and it is about slightly less than quarter 4. So capital development in quarter 4 was about 14 kilometers and this is about 13 kilometers, roughly 1 kilometer less. So this was also impacted by lower operator availability, is it? Development was impacted by lower quarter lower operator availability, but what we did this time was we balanced between deployment of operator and asset between production and development. Hence, in spite of COVID, this time we were aware how to manage and hence we could achieve 25 kilometers of development out of which, say, 13 kilometers would be capital and roughly about 12 kilometers on revenue development, whereas the same number last year after COVID effect was only 16 kilometers. Okay, great. Thanks a lot for the help of the energy. Thank you. The next question is from the line of Vishal Chandak from Dhan Capital. Please go ahead. Vishal, your line is in the talk mode. Please go ahead. Mr. Vishal Chandak, your line is in the talk mode. Please go ahead. As there's no response from the current participant, we'll move on to the next. That is from the line of Rahul Jain from Systematics. Please go ahead. Yes. Hi. So on your expansion that you in your annual report, you specified for Jawahar, it's from $4,000,000 to $4,800,000,000 and churned area, dollars 4,000,000 to $2,500,000,000 Could you give a time line for this? And also what is the outlay which is required to achieve this? So we are moving aggressively as far as the Java is concerned. And right now, we have just obtained the environment clearance for going up to 4.6. And then the next level also it requires amount of reserves so that your mine plan gets approved. So we are focusing on converting more and more resource into reserve. Once that is done, then the projects will be brought to approval stage and then we will be able to tell you exact number how much we will need to spend for this. So should we take this year's CapEx same similar to last year? I mean that is how we should look at it? As of now, we are not changing any CapEx guidance. Whatever we had, the CapEx this year, we have stated in the beginning, we continue with that. Right. And so how should we look at, say, over next 3 to 5 years in terms of volume trajectory? Are you more focused on taking silver to 100,000 and that is the primary goal and kind of just sustaining operations? Very, very, very nice and very, very valuable question. Thank you for that. So our expansion terms right now is from 1,200,000 tonne to go to 1,350,000 tonne, right? So we are on the drawing board for that. And that expansion is primarily also to move silver from 600, 700 tons level to maybe 800, 900 tons level, if not 1000. Then that has to come from SK mines and as well as Jawar mine. These are the 2 mines which would primarily provide silver bearing lead materials. So for that, the necessary work drawing board work that we are doing currently is how to expand entire SK mine and partly Adi mine and at the same time work on Jawor mine for doubling the production and go to about 8,000,000 tonnes. So this is the vision and accordingly the work is happening. The moment we convert to project, surely I'll be able to share better details on this. But the trajectory is going towards 1,350,000 tonne. Right. And then sir, in your initial comments, you said that the cost increase on Q o Q basis is transition, right? And what are the key components of this kind of cost increase? Yes. So the major cost increases that I said earlier was the input commodity prices that had run up recently. And also the kind of volume impacts will be there versus last year. Sequentially, our volume was down, so the allocation will be accordingly higher. But the input commodity prices is a significant impact both on diesel, coal, cement, all of these factors will impact our input costs and COP accordingly. Right. Yes, thank you so much. Yes, very helpful. Thank you. The next question is from the line of Bikash Singh from Philip Capital. Please go ahead. Good afternoon, sir. Good afternoon. Sir, I just want to understand, just now you have said 800 to 900 KT of silver volumes even with a higher capacity of 1,350,000 tonnes. With Fumor coming in, we should have previously adding that much in 1.2 only. So had it the problem with the Fumur or the problem with the grades where we are just loading our silver add ins? No. Fumur will add 30 tonnes of silver, Fumur will add plus how much of the SK we successfully able to take it up so that SK will give the primarily silver bearing material. That's why I said that with the fumer and with the further 1.35 expansion, I'm looking at anywhere close to 1,000 tonnes of silver if we can get. So there is no variation in the previous guidance, right? No. Yes. Sir, my second question pertains to us, still we are carrying some debts. I understand that some investment would have been a high yielding asset. So just wanted to understand by when we can see this debt to paid off or we would like to continue this debt carry on forward. Because going forward, our yields were supposed to come down on our investment, right? So how are we managing this, if you could explain to us? So on the debt side, there are predictable maturities on the debt and we will be paying down the debt for those maturities. So that starts from? Sorry, say that again, please. So the debt maturity basically starts from next year or any some maturity is having this year also, if you could This year as well as next year. This year as well as next year. Any numbers you would be able to give us? This year, how much is maturing? So around INR 1,000 crores is maturing in this year and remaining in the subsequent years. Understood. And so just one last question. In terms of 1,200,000 to 1,350,000 tonnes, is any time line has been set up plus the CapEx? And any update on our DAP, basically the fertilizer front? So from first part, as I say, we have to establish the basic R and R ratio for 1,350,000 tonne, and we want to assure ourselves that we have 8 to 10 years of reserve with that. So currently, we have at 1,350,000 tonne metal level. We would have about 6 to 7 years of reserve only. So while converting resource to reserve, we have to first ensure 10 years of reserve, and then we make ourselves of that capacity. So at the moment we have maybe another 1 year of exploration, then we should be on board, and we'll come back to you after getting the necessary approvals. And on the fertilizer plan, sir? On the fertilizer plant, we have almost completed the design work. We are in the current process of appointing the right CEO for the fertilizer business. And once that is done, we take Board approval by next Board meeting, which should be true. Thank you, sir. That answers my question. Thank you, sir. All the best. Thank you. Thank you. We'll move on to the next question that is from the line of Ashish Kejriwal from Centrum Broking. Please go ahead. Yes. Hi. Good evening, everyone. Thanks for the opportunity. Good evening. Two bookkeeping questions for me. One is, is it possible to share coal cost on a per ton basis, what it was in the Q1 versus Q4? Secondly, also if you can possibly because you said that sulphuric acid credit was higher this quarter, so what was the price for that in this quarter? And thirdly, what the project status of our Gujarat simulator which we are planning earlier? Thank you. So on the average cost cost for the Q1 last year was about INR7100 versus INR 8,300 this quarter. And on the sulphuric acid, it was about INR 13.50 last year quarter Q1 versus INR 3,100 this quarter. So I was asking, 4th quarter, is it possible to share both numbers for coal and sulphuric acid? Yes. So for coal, it was 6,700 approximately last quarter, but in Q4 and about INR 3,000 on sulphuric asset. Okay. So major is our coal cost increase, which led to higher cost of production because cement and all, that's very small actually. Yes. And the diesel as well, diesel was in Q4 was about INR 65 per liter versus INR 81 per liter now. So these are the 2 major factors. Of course, coal impacts us quite significantly. Sure. And sir, what about Gujarat smelter? So Gujarat smelter, we have done the MoU. We are in the process of enrollment clearance. So once that is done, at the same time, we are currently working on the design. Once the enrollment clearance is true, then we'll seek Board's approval for taking the project up. Okay. So that means the actual CapEx is at least 1, 1.5 years away from From here, roughly a year away. Okay. Thank you, sir. Thank you. The next question is from the line of Vishal Chandra from Dam Capital. Please go ahead. Yes. Thank you for taking my question. Sir, sorry, if there is a repetition because I got disconnected. This is with regard to your debt. So if you could just let us know, do you plan to raise further debt given the fact that your CapEx was never dependent on the debt, but you still went ahead and raised debt in the past. So in this year also, do we plan to raise debt or we plan to on a net basis push it down further? As of now, there's no plan to raise for the debt. So we will continue paying down the debt as in when the majority will happen. Okay. So my second question is to Arun. If you could help us with your plans for the Galila Zone Mining, how do we plan to go about it and what are the timelines? I didn't get you a plan, Sabot? The next level of mining that you mentioned there was a mine under a mine. Yes, the Galena zone, next level of mining. Yes, so next level of mining, there are basically 3 fronts. One front is in Agucha as we go to the Galena zone deep inside the mine. It will alter the ratio of zinc to lead. So that will be one area of Abuja, and we are continuously investing in development to reach the galena zone first, and it will also expected to give more silver out of Abuja mine. 2nd expansion is the SK Hardi belt. How do I increase resource reserve base in SK and then further go down into SK mine to open up new blocks? This year itself, we are working to open up 2 new blocks in SK mine itself. 3rd is the doubling the production in Jawor mine, which has got immense potential as far as reserve and resource is concerned, whereas the maximum potential lies in Jawor mine. And Jawor mine has a huge potential for expansion. These are the 3 areas in which we'll be working as far as expansion is concerned. And it should give result in, of course, ultimately more silver, more zinc and more less. Sir, if you would just help us with the time lines, why when we can expect the incremental output from these mines? See, it will anywhere between first is the exploration, I said, 1 more year of exploration is needed. And as far as projects are concerned within 3 years' time. Okay. Thank you, sir. Thank you. Thank you. We'll move on to the next question. That is from the line of Amit Ditscheit from Edelweiss. Please go ahead. Thanks for taking my questions again. I have two questions. The first one is on your coal sourcing mix. If you could split the coal sourcing between linkage, reauction and import in this quarter and what was it in last quarter? Yes. So coal linkage, roughly onethree linkage coal and twothree imported coal. And what was it in last quarter? Raza, about the quarter. So in the last year quarter, it was about 1 fourth linkage and 3 fourths was reported. You need 3 fourths if I could give. Last year, roughly about 25% linkage coal, 75% imported. So looking at the exponential rise in cost of imported coal, so this year, we have knowingly increased the linkage coal percentages, and we moved up to about 53%. And we are still working on engineering solutions so that we can consume more and more domestic coal in our power plant looking in view that the coal costs are high. Okay. And if you could help us with your grades this quarter on zinc and lead? So overall, grade, if you look at it, this quarter was 6.91, which was compared to last year same time, it was, I would say, higher than 6.9%, maybe about 7 point something. And in Q4? Total was 7.41% was Q4 of FY 'twenty one. 7.41%. 7.41%. It has reduced from 7.41% to 6.91%. Okay. This is a considerable reduction in the zillator quarter. I mean, what led to that? So it is a sequencing of the mine. As we are expecting last quarter, the areas that we are mining and this quarter, the areas we are mining are different, number 1. Number 2 is because of the COVID effect, many of the high yield, high grade stopes, we could not reach because of lack of development. So the mix shifted adversely to low grade stopes, but nothing is lost. Those high grade stopes are getting developed. And in the subsequent quarters, they will add to the grade. Okay. Wonderful. You also stated about tax rate at 30% to 34% in this quarter because of expiry of certain incentives. So what is the tax guidance for the year as a whole? It should be around 30%. So this will normalize a bit as the year goes on. And the year tax rate should be around 30%. Okay. Wonderful. Thanks a lot, sir. And I'll be back. Thank you. The next question is from the line of Avgad Joshi from Newberty Capital. Please go ahead. Good afternoon. Thanks for the opportunity. In your annual report, it mentions about silver paste used in PV modules and 80% of which is imported. So it has been mentioned that effort has been underway with IIT Mumbai to reduce the imported. So I would like to know what is the plan, how our company is getting involved into it so that these volumes come to us accordingly? So as of now, if you look at we are producing to about India's or not this COVID affected consumption, standard consumption of India, we are about 10% to 12% of the total silver consumption in India is supplied by us. And about half of it goes into jewelry and jewelry making. So we were looking at silver space, which goes into PV cells manufacturing, is a very refined product. In India, there are manufacturers who are manufacturing it. And mostly they are also importing the silver because it gives them tax advantage when they export the silver paste to the manufacturers who are manufacturing PV cells outside India. So we are looking at how to develop this product from the silvers that we have, number 1. Number 2, it has to come along with increase of solar cell manufacturing in India, which is likely to happen for various swaps that the government of India has given to promote green and renewable energy. So we are looking at working with IIT and then see what product we can make. This will be part of value added product that we can manufacture out of silver that we make. Okay. Understood, sir. So this will be value added from so margins will be greater in this area? Absolutely. We can consider, yes? Absolutely. Okay. Second question about the N Series what we have raised last year. If I'm correct, we have raised about INR 3,400 crores of NCDs. I was just triangulating it with the cash and cash equivalents. So currently, we have INR 17,000 crores of cash. So what was the reason to raise the MCDs when we are having this sort of cash with us? So there were temporary cash flow mismatches and because our investments were long term maturities. So there were temporary short term mismatches and that was the reason for raising this M Series at that time. If I read correctly, M Series are also for, I think, 10 years we have realized. And we will be paying it over 3 years period after 3 years period, right? Yes. So for 3 years, so it's for getting repayment of 20% in September 2021, then 20% in September 'twenty two and balance 60% in September 'twenty three. So as Vinay said timing mismatch and that time COVID time was there, so we were getting at a very attractive rate. So we wanted to keep the liquidity. So that's what we have stated purpose in the Board approval we raised. Okay, understood. Thank you. Thank you. We'll move on to the next question. That is from the line of Pallav Agarwal from Antech Stock Broking. Please go ahead. Yes, good evening sir. So I had a question on how the Wink and Debt premiums have moved. So I think this quarter, I think it will probably soften a little. So how will they move compared to 4Q and last year? Could you give us some indication? So if you say from compared to last year, it has moved a lot primarily of course LME and as well as ratio between domestic and exports. Last year because of COVID there was hardly any domestic demand almost more than 50% we had to export. So that has led to now better any realizations of premium this year. But if you look at quarter 4 to this one, again, there is a slight yes, there is a slight dip as far as from quarter 4 of last year to this year's Q1. And so are you seeing any pickup now? You expect that with activity levels picking up and more higher expense? Correct, correct. As the lockdowns are receding and the economy of course, India did well this time in COVID too, they did not stop the wheel of economy. Everything was running. People were fighting COVID along with while it is running. So that is showing more domestic demand also started picking up. And as we speak right now also, we were doing better than what we did in quarter 1. Okay. And what about the proportion of value added products? In FY 2021, that had reduced. I think we had a target of 25% of revenues coming from value added products. So if I so roughly, I mean, it should be close to 20% of the product is now currently value added product. And we are on our way to become 25%. Only the strategy change was instead of trying to produce all kinds of products, we have fixed our eyes on 2 products which is the maximum yielding. And we are producing it very, very consistently with very good feedback from the customer from the market. Which one is CGG and another is AJDA III. So these are the Paki, other the jumbo and all that we used to produce earlier, there is no change in that, but these are the 2 products which require some amount of control over all the impurities. So that is where we are trying to do our best and put CGG and HZF3 is the first. Then we will do HZF5 to make it 25%. And then also we are looking at zinc powder as a product and seeing how to start producing that. So more and more value added product in zinc will get added up as the year goes by. Sure. Okay. Thanks. Thank you. Before we take the next questions, we would like to remind participants that you may press star and want to ask a question. The next question is from the line of Vishal Chandak from Dhan Capital. Please go ahead. Thanks. Sir, if you could just help us with what was the premium that we have realized on zinc in this quarter over LME? Over LME, what is the premium? You want the exact number? So it is of course better than what we much better than what we did last year, I can tell you that. This is I will not be able to give you further details on that. Sir, actually, if we calculate it, then the premium works out through in excess of about $600 per tonne, while the average premium that we've generally realized is close to about $200 to $250 per tonne. So there's a huge difference. That's why I just wanted to reconfirm whether these numbers are near to the actual realized premiums. No. As long as your premium calculation is concerned, which you said, I think we should be in that range only. Great. Great. And any reason why this premium has shot up so drastically in this quarter because historically we have never seen such high premiums of $600 No, not $600,000,000 Your other base for calculating premium, not this base. Cannot be $600, no way. So maybe I'll take it offline, but that's the number which comes up. Take it offline, we'll discuss separately. So second question was with regard to the NCDs that you have mentioned. We have raised it for 10 years for a mismatch in cash flows. If you could just help us with some more details on what kind of interest rates are we carrying on the NCDs? So these are below the interest income that we are able to earn. So there's definitely a positive carry on these NCDs. So it's up 5%, around 5%. Okay. So this would be through the life of the NCD, these would be like a carryout. There would be a plus carry on these? That's right. Great. Thank you, sir. As of now, we are seeing that. So that's the expectation, yes. Sure. Sure. Yes. Thank you, sir. Thank you. The next question is from the line of Abhishek Modi from MK Global. Please go ahead. Yes. Thanks for taking my question. My question pertains to the cost of Production Ex Royalty. Your previous quarter guided to be below 1,000 per ton for the full year, now it is 10.70. So do you expect next 2 quarters to be lower? Yes. So Q1 was always expected to be higher than $1,000 because this is a year average and not a quarterly number that we provided. So Q1 was always expected to be a bit higher. But yes, we expect the costs to come down, and that's what we are shooting for, both driven by volumes and the other measures that we mentioned on the efficiencies. With respect to the third wave, do you see at least the domestic side of things to pick up in terms of volumes? As of now, the signs are the domestic demand will slowly go up. Hardware is more in the mind, but our hope the strategy that we have taken and I'm sure most of the big corporates in India have taken is 100% vaccination of all employees and families and Government of India also pushing vaccination on our hospital. So hopefully, we won't see any breakage in supply chain. And as people go out of the lockdowns, spending will increase. Government of India will also committed to spending on infrastructure. So we see the unless 3rd wave again, there's always uncertainty I cannot rule out. Unless 3rd wave strikes much more violently than even wave 2, unless that happens, I don't see any big change in the domestic demand as of now. Okay. Thanks. Thanks for the answers. Thank you. Ladies and gentlemen, that's the last question. I now hand the conference over to Mr. Shweta Arora for her closing comments. Thank you. Before we close today's call, I'm happy to share that we have continued our journey of comprehensive and holistic disclosures and our CET2 Independent report for the fiscal year 2021 is now available on our website. We look forward to your valuable feedback on the same. With this, I close today's call. For any follow-up questions or clarifications, please feel free to reach out to Investor Relations team. Thank you. Thank you. Thank you. Ladies and gentlemen, on behalf of Hindustan, Inc, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.