Q4 20/21

Apr 27, 2021

Quarterly report

Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Arora, Head of Investor Relations, Hindustan Singh. Thank you, and over to you, ma'am. Good afternoon, everyone. I welcome you all to the Vasant Inc. 4th quarter fiscal year 2021 earnings call with the management of this fiscal year results. Today on the call, we have with us Mr. Arun Lesh Shah, our CEO and Mr. Vinay Jain, who has joined us as Senior Vice President and Head of Finance, along with other senior members of the management team. Mr. Mischa will begin with an update on business performance, while Mr. Zheng will walk you through the 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, Shweta. Good afternoon and a very warm welcome to all of you. I trust that you, your families and friends are staying safe and following all necessary precautions against the spread of COVID-nineteen pandemic in the country. At the outset, I'm pleased to announce that Mr. Dinesh Jayant has joined us as Senior Vice President and Head Finance in Bhushan, Inc. Earlier this month. He has a rich and diverse experience of 25 years spanning across General Motors, Infosys and BERA 91, heading various finance functions and held CFO role at General Motors and Bira 91. We are excited to have him and wish him good luck for success in his new role. I would also like to thank Mr. Swayamp Sohrab, our Head CFO, for his immense contribution in the growth of the company and setting the stage right for next phase of structural initiatives. It gives me immense pleasure to share that the culture of holistic, inclusive and sustainable growth that we set as a leadership team for the company is starting to yield results and is evident in some of the external recognitions we have received during the quarter on various fronts, including sustainability, people practices, innovation and CSR activities. I'm happy to share that Hindustan Inc. Has featured in the Sustainability Yearbook for the 4th consecutive year and also in CDP Annual Report for being among the 1st Indian companies to be rated A in Climate Change CDP 2020. Additionally, Hindustan Zinc is also part of CII Working Group to drive accelerated climate action by Indian businesses and is actively engaged for promoting the climate actions in India. On environmental front, our zinc smelter at Deewari has received ICC Environmental Excellence Award. I'm delighted to inform you that our Chandaria led zinc smelter is the 1st in the world to reach current efficiency of 93% in Shell House and was bestowed with a Gold Medal National Award for Manufacturing Competitiveness. This truly raises our confidence and spirit to work towards many such new fetters in our innovations. There was no better time to be appreciative about the spirit and resilience of our people. I'm elated to share that our people practices were recognized in the form of People First HR Excellence Awards, and we will continue to strive to make Hindustan Zinc family stronger every passing day. At Hindustan Zinc, our ethos is to give back to society and make a difference. It gives me enormous happiness to see our flagship CSR project, Nanzur, being identified as the best CSR initiative in the country. Safety of our people and operations is our first priority. It gives me deep satisfaction as a leader to report that Hindustan Zinc recorded 22 months of fatality free operations, and we will strive to do everything necessary to sustain this achievement. I am also happy to share that we have signed an MoU with Keterok for battery electric vehicles and this makes us India's 1st mining company to use battery electric vehicles in underground mining. I would also like to take this opportunity to highlight that culture of continuous improvement across verticals. For instance, to talk about our typical practices, we have dedicated programs running for talent identification and development, especially focusing on young talent and diversity mentoring. We are aware of the importance of diversity at all levels and is reflected in our actions. To quote an example, our management commitment and segregated committee both have gender diversity about 40%. I am also related to share that we have appointed India's 1st woman underground mine manager. And also one of our women employees is India's 1st woman with 1st class certificate in both restricted and unrestricted category of mining. On learning and development side, we have tied up with IIM, Uddhirapur and BITS Pilani and around 118 executives were enrolled through Hindustan Zinc work integrated learning platform. Talking about the culture of innovation and focus on digitalization, our teams are fully dedicated and focused on areas including process improvements, the level of future growth, minor metal recovery and waste to vent initiatives. This is reflected in various projects ranging from improvement and recovery process to well detailed process audits and individual ore type characterizations, ongoing geometallurgical study at SK and R. A. Mine on advanced drill core and metallurgical characterization, in addition, conducting feasibility studies for 3% lead and silver recovery improvement by regrinding at Rampura Bhujia mine. On digitalization front, real time manpower and equipment tracking has resulted in 50% reduction in ramp jam durations and 10% reduction in cycle time for haulage. Predictive maintenance models for critical components of loaders and trucks has improved reliability of fleet by 2%. Other things like mill automation, daily remote operation of loaders and drills and also making use of technology for effective dewatering, ventilation and power reliability has made our operations more efficient and safer. Through all of this, we have improved mine overall equipment effectiveness by 15% with 0 harm. I truly believe that our constant endeavor to better ourselves every day on all fronts and proactive approach towards adapting global best practices to run our businesses and the culture of continuous improvement as well as out of the box thinking in everything that we do will help us stay ahead of the curve as a business and deliver through the good and tough cycles as well as. Turning to market update. Investor interest in base metals remain buoyant with the rollout of fast paced progression of vaccination programs globally. Wood Mackenzie estimates zinc colony prices to average around $2,800 per tonne in 2021. Rising manufacturing activity is providing a positive underlying narrative for investors. On the other hand, the recovery in international trade has not been uniform. In comparison to December 2020, the bulk of the growth can be attributed to the growth of imports and exports in China and developed Asian nations. There was little growth from the European Union and the rest of Asia and a modest decline for the United States and UK. Last year, the largest supply changes were attributable to Chinese mines. This reflects the poor performance of the small mine sectors where several mines in these provinces failed to restart post environmental crackdowns and exacerbated by the COVID impact. Hellenic SHSE arbitrage grew with SHSE price spiking in January to March quarter due to supply tightness of zinc concentrate as spot treatment costs fell to $70 per tonne in March. As per ILZSG, the world zinc mine production fell by 5.9 percent in 2020, which has led to concentrated deficit of 500 kt in the market. As for the zinc premium in Southeast Asia, the combination of improved demand and smelters directing shipment to China have tightened the market, helping premiums to shift to the upper end of $90 to $110 range in the January to March period. Global Essence stocks ended at 389 kilotons in March, marginally higher than in February, but remained at 10 days in terms of days of global consumption since December. Coming to domestic market, even though India witnessed a sharp rise in Netflix since March 2021, economy and its manufacturing sector particularly appears to have taken off much of the impact of the severe lockdown last year. After hitting a low of 27.4% in April 2020, the manufacturing PMI hit 54.6% in September. And since then, it has averaged 57% in the 4 months throughout the February 2021, pointing to a robust pace of expansion for the country's manufacturing sector. The strength of the rebound activity has driven a rapid recovery in Indian steel production with crude steel production hitting 9,700,000 tonne in December and its highest since the record high of just over 10,000,000 tonne in March 2019. With India's economy getting off to a robust start in 2020, the strong performance of India's steel sector seen in the latter part of 2020 should be sustained into 2021, which is likely to drive domestic consumption of zinc. Silver price has risen strongly, achieving an intra year gain of 32% as the pandemic led to surge of ships as an investment demand. Because of COVID related lockdowns by several major producers, especially in Mexico, Peru and China, silver mine production is expected to fall by over 5% in year 2021. Demand is expected to increase dramatically as the EV manufacturing activity kicks up. Turning to update on operational performance. I'm happy to share that we have continued our winning streak from last quarter and touched a few milestones both at quarterly and annual level. Feather on the cap was the highest ever annual silver production of 7 0 6 metric tonnes, which also included recovered WIP, which was stuck in the circuit during COVID shutdown. We also saw an ever highest annual ore and mine melter production supported by our proactive mine planning driven by increased use of technology and better targeting. Even for the quarter, we had highest ever ore and refined metal production. It is also noteworthy that we met and exceeded our promised volume and cost of production guidance for the fiscal year. This was a result of detailed planning and forecasting as well as out of the box solutions offered on various operational challenges posed by the pandemic. Our 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 deliver in these uncertain times. All these while also successfully managing our cost at lower levels. Our annual cost of production is at the lowest level since we transitioned into underground mining operations in March 2018. During this time, we also upgraded our mines in terms of safety practices, automation, connectivity and productivity as well as made our operations more sustainable through use of waste and water, improve metal recovery and ensure our R and R remains a life of 25 years throughout this growth journey. During the quarter, our mined metal production was up 15% year on year to 288 kilotons on account of higher ore production, partly offset by lower overall grade. Sequentially, MIC production was up 18% on account of higher ore production and better overall grades. For the full year, MIC production was up 6% year on year to 972 kt, primarily on account of higher ore production with overall grade almost maintained at the same level. This was despite losing 18 days equivalent of production in the fiscal year 2021 due to lockdown and other workforce related restrictions to combat COVID-nineteen. Integrated metal production was 2 56 kilotonne for the quarter, up 16% year on year and up 9% sequentially, in line with the higher mined metal availability and higher closing MIC inventory. Integrated zinc production was 195 kilotons, up 14% year on year and 7% sequentially. Integrated lead production was 61 kilotons, up 24% year on year and 16% sequentially, in line with higher mined metal availability. Integrated silver production was 203 tonnes, up 21% from year ago, largely higher lead production, partly offset by lower grades at Sindhorsukut mine, while it was up 11% sequentially on account of higher lead production and better grades at the same mine. For the full year, metal production was up 7% to 930-30.30 and silver production was higher by 16% to a record 706 tonnes, in line with higher lead production and better silver grades at SK. Most important of all that the current run rate of 1,200,000 tonnes per annum, we are well positioned to deliver our future growth with confidence and higher preparations to handle any roadblocks on the way. Coming to an update on our projects, I'm happy to share that shaft integration in Rampura Bhujang mine is complete. This has improved the accessibility of the shaft section, alternate emergency evacuation, ease in mine equipment deployment at lower levels, phase changing with emulsion phase charging with emulsion explosives, phase drilling with long feet jumbo. During the quarter, RKD Circuit of Fumor was also commissioned, and it is now in operation. Delay is primarily on final commissioning of complete plant. This is on account of restrictions around travel outside of China, which is something we are trying to resolve. However, given the first evolving situation with COVID-nineteen infections in the country, we expect to commission the complete slum air plant by Q2 of the year. Turning to reserve and resources, I'm happy to share that at current run rate of production, we have extended the reserve life closer to 9.5 years, almost 10 years from 8 years earlier, while maintaining total mine life basis reserve and resources at 25 years. Before I hand over the call to Vinaya for an update on financial performance, I would like to present our production guidance for the fiscal year 2020. We expect mined metal and refined metal production for the year to be in the range of 1025 to 10 50 kilotons each, while sellable silver production is expected to be approximately 7 20 tonnes. With this, I hand over Vinayar to update on the financial performances. Thank you, Arun, for the kind introduction, and good afternoon, everyone. It gives me immense pleasure to begin my journey at Hindustan Zinc at a time when the company is all set for a smooth next phase of growth and taking leaps towards new ageline practices. We will continue our endeavor to improve business efficiency and reduce costs through enhanced use of technology, digitalization efforts, data driven decision making and most importantly, investment in people's capabilities. Most of the cost optimization initiatives deployed across our operation units are already visible in our financial performance and yielding desired results. We will continue to strengthen the foundation of our operations with undulating focus to deliver on financial excellence and generate value for all stakeholders at these uncertain times. Coming to an update on financial performance for the Q4 fiscal year 2021. Revenue from operations during the quarter was at record INR 6,725 crores, an increase of 56% year on year, led by higher metal and silver volumes as well as higher zinc, lead and silver prices. Zinc sales volume increased 15% year on year and led by 29% year on year, in line with higher production and robust demand. Sequentially, revenue was up 14%, primarily driven by higher metal and silver volume and higher zinc, lead and silver prices, higher metal premium, partly offset by the depreciation. Zinc LME prices were sequentially up 5%, while lead prices were up 6%. Zinc, lead and silver sales volume improved sequentially as well as from a year ago. For the full year, revenue was up 20% to a record INR of INR 20,000 and 71 crores led by higher metal and silver volume and higher silver prices, further aided by rupee depreciation. Zinc cost of production before royalty, COP, during the year was INR 9.45 dollars per metric tonne, lower by 5% year on year, both in INR and USD terms and flat sequentially, down 1% in INR terms but down 1% in INR terms. The year on year decline in COP is primarily due to higher volume, lower power costs, higher security asset credits and lower cement costs, partly offset by higher met coke and diesel costs. For the full year, zinc COP excluding royalty was $9.54, low by 9% year on year. This was the lowest recorded COP since we conditioned to underground mining operations. The full year COP decrease reflects higher production volume, lower met coal and power costs, lower cement costs, partly offset by higher diesel costs and one time COVID related expenses and donations. Overall, the POP for the quarter and FY benefited from ongoing structured cost reduction initiatives, partly offset by increasing mine development. As outlined by Harul earlier, we are proud to share that for the fiscal year we are at the lowest cost in dollar terms since we transitioned to a fully underground mine operation. I would like to reiterate that focused cost remains measured on all fronts, including operational, contractual, procurement and fixed costs have resulted in sustained reduction of costs. Resulting record EBITDA for the quarter was INR3875 crores, maybe double versus last year same quarter and up 17% sequentially on account of higher prices, volume and well managed operating costs. EBITDA for the full year was INR 11,739 crores, up 33% from a year ago, primarily on account of higher volume, rise in MME prices, liquidation and lower power cost and net flow cost. Net profit for the quarter was INR24881 crores, up 85% year on year and 13% sequentially due to lower income and higher taxes because of income exchange. For the full year, net profit was INR7000 9.83 crores, up 17%, where the impact of higher EBITDA was partly offset by lower investment income due to declining interest rate environment. Tax rate for the year was at an average of approximately 24.5%. The higher level versus previous year was mainly due to one time reversal of deferred tax liability in previous fiscal year and also due to change in income mix this fiscal year in light of lower interest rate environment. Coming to our cost and CapEx guidance for the fiscal year 2022. We expect zinc COP below $1,000 per tonne for the fiscal year, which is inclusive of higher mine development expenditure to support future volume growth. We are keeping guidance on change given the uncertain environment amid COVID-nineteen pandemic and expectations of upward pressure on input commodity prices. CapEx for the year digit is expected to be around $100,000,000 We will continue to be have a focused approach to spending and exercise prudence in all inclusive business environment. With this, I open the floor for questions. Thank you very much. We will now begin the question and answer session. The first question is from the line of Raman Dixit from Edelweiss. Please go ahead, Mr. Dixit. Yes. Thanks for the opportunity and congratulations for a good set of numbers. So I have two questions. The first one is on the guidance part. So if I look at your guidance of mined metal and finished metal production, which is between 1.025 and 1.050,000 tonnes. So if I look at the run rate, which is running at almost 288 kt, the mined metal production rate. So I think that the guidance is a little bit conservative over there, both in terms of mined metal as well as silver production. In terms of cost of production also, there have been 3 complicated quarters when cost of production has been below 950, and the guidance says that it would be below 1,000. So can we assume that cost of production would be below 950 for the year as a whole? Of production would be below 950 for the year as a whole? That is the first question. Okay. So should I answer the first question? Yes. Okay. So as far as on the volume and volume numbers are concerned on the metal and silver boat, yes, we exited at a very good rate in Q4. And as we entered into April, we were forced to kind of correct our expectations more in view of the current circumstances. However, that doesn't rule out of us correcting the guidance as we experienced this Q1 fully. We are aware of the situation that we are facing on the ground, the vastness of the pandemic that is around us and the kind of fatalities we are seeing all around our society. So taking that into account, we have tried to limit our expectations for the year. However, I am open that once the quarter is finished, if we really in the situation improves, we should be able to correct. Okay. And on cost of production? In the cost of production, we'll continue with the same guidance of remaining below 1,000. Yes, our ambition remains doing better than last year as ever. Okay. The second question is on the grade essentially. So what was the grade in this quarter and how does it compare with the last thing? Thing? Just give me a second. Sandeep, would you take that? Hello? Can you repeat the question? Yes. So let me take that. Sorry, I was asking about the grade of what was the grade of material in this quarter and how does it compare with the last one? So this quarter, the grade was 7.41. And the quarter on the last quarter, year on year, it was last year, 50 or 7.06? 7.06, last year. Sorry, I didn't. Yes, it was in the Q3, 7.06, Q4, 7.41. Okay. Thanks, sir. All the best. Thank you. Thank you. The next question is from the line of Inakin Parekh from JPMorgan. Please go ahead. Yes. Thank you very much. The project CapEx is stands at roughly $100,000,000 Now there were plans earlier to increase the capacity from 1,200,000 to 1,350,000 tonnes and eventually to 1,500,000 tonnes. But there we don't seem to see any progress in F 'twenty one. And even the project guidance for F 'twenty two suggests that these projects seem to be stalled. What is the latest updates, sir, on these expansion projects? No. So if I may clarify, none of the projects are stalled. 1.35 is very much on the drawing board. It requires to increase your reserve and resource. So FY 2021, we spent time and money on increasing our reserve and resource through our exploration. And we have come to about roughly about 10 years kind of a reserve, which gives us confidence because to increase the mine capacity, we have to get the mine plan approved. And to get the mine plan approved, 1 is to have 6 years from the proposed mining quantity as a result. So that is the task we are finishing. Also, it requires lot of environment clearances. So we are in the process of environment clearances for some of the mines. Design and drawing for the expansion to 1,350,000 tonnes is nearing completion. And anytime between quarter 2 or quarter 3, we will approach both and post approval, we will come we will get it published. So just to clarify, to go from 1,200,000 tonnes run rate to 1,350,000 tonnes run rate, there is not materials CapEx required at the smelting level. Is that the mine legal approvals is more of a regulatory overhang? No, no, both mine and smelter, both are required. Smelter currently? Both are required. Both are required, including legal environment clearance as well as debottlenecking and expansion projects. So the actual spending it looks will be more in F23 and 2024, sir? It will come in next year, yes. It will come in next year, understood. And sir, just to clarify, from the project guidance of 1.05 for FY 2022 versus the run rate of 1,200,000 tonnes, the only issue essentially is the COVID environment, And if that were settled, if that were not the case, then you will have a 1,200,000 in guidance for F and G. We would have. We would have. We would have. Certainly. Understood. Thank you very much, sir. Thank you. The next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead. The next question is from Pallav Agarwal from Antique Stock Broking. Please go ahead with the So I have a question on the net debt. If I look at the reduction in debt sequentially, you almost had just about INR 5,000 crores of reduction. But you know how if I just add the fact and depreciation, it comes to lower and that's why we have we had some working capital release in this quarter? Vinay, would you like to take that? Yes. So yes, we've had working capital release during the quarter. And our this is a constant endeavor by us to make the operations more streamlined and that's towards that. So we streamlined our inventories and as well as our debtors. Sure. The other question was on if I just conclude the physical premiums for zinc, has there been a sequential decline in premiums for Zinc? Because lead seems to be okay, but I think that in Zinc, there seems to be a reduction in physical premium. Can you repeat that question or stop share? Sir, I'm talking about the physical premium. The LME plus physical premium, the realization that we have this quarter, there seems to be a reduction from Q3 in the physical premium. So is that a correct thing or I'm missing something over? Actually, it's still in the same range and yes, it's still in the same range. Sure. Okay. Okay. Thank you. The next question is from the line of Kirtan Mehta from BOB Capital. Please go ahead. Thank you for this opportunity for the question. I just had a couple of questions arising from the current strong market environment. While the guidance being shifted to continue the disciplined production approach, are there any opportunities being internally evaluated to accelerate mine production in the interim to utilize the current strong environment? And the second question is about the current market environment. I will give rise to sort of a very significant cash flows. So are there lease plans would be the return of this cash flow to the shareholders? Or are there any other lease plan under consideration? Okay. So the first part is, yes, the market was very strong as we are existing quarter 4. In fact, one of the highest numbers that we produced in quarter 4 are so supported by the market. However, going into April for the 1st 15 days, we are seeing a kind of a little bit of a slowdown in the domestic market. And we are seeing logistical disruptions because of various localized lockdowns, controls also people being too afraid, especially drivers, logistics, we are seeing some of that impact. But yes, if it turns around, I hope it turns around by May, if it turns around, we are perfectly geared up to produce and service the market. In fact, this particular month also, I will not be surprised if we have a little bit of extra stock at the end of the month because we are not the market is not able to absorb, the logistics are not permitting. Whole country and the society's focus being primarily towards COVID and that's what everyone is fighting for. And the second part on the cash flow, Binar, would you like to take? Yes. Let me take that. So just to reiterate, the second question was on dividend payments. What we intend to do with that? Yes. Question is about how would you plan to utilize the cash flow, which is coming in? Would it be primarily returned to the shareholders? Or are there any other growth plans under consideration as well? Sure. So historically, you can see that we have both invested back into the business and we have returned money to the shareholders and nothing is going to change going forward. So this is exactly what we intend to do going forward as well. Thank you. The next question is from the line of Inderjit Agarwal from CLSA. I had one question. Has your mix between domestic and export sales changed quarter over quarter? And what is the kind of price differential or realization differential between domestic and export? Okay. So to answer the first part of the question, yes, it has changed. Well, the quarter 1, if you can recall, we were primarily forced to export because of the lack of progress of opening up of the industries in the domestic sector. As the quarter moved, we changed the especially zinc domestic versus export, it favored towards more domestic. And I'm happy to report that overall, we have achieved 80% of domestic market in the zinc by our own supplies. So that's one plus point. In spite of the high exports in the beginning, we still finished at 80% of the domestic market. It also says shows that domestic market did not expand to the extent it should have. So we have been able to capture and be that part of that. As far as differential in earnings are concerned, I wouldn't be putting a number just to that. But yes, higher proportion of domestic helps us to increase our margins better if we otherwise if we had exported everything. In the 1st couple of weeks of April, have you seen again exports increasing with domestic markets being weak for the pandemic? No. We are still primarily on the domestic market in April. However, that absorption rate in the domestic market is lower than what it was in quarter 4. The next question is from the line of Sumangal Nivedhya from Kotak Securities. Yes, thanks for the opportunity. Just one question. Is it possible to share any update with respect to the Supreme Court hearings which you have been going on? I know we are not directly related, Abhi, but given that we will have good information on that subject. On which subject? The Supreme Court hearing, which are going on, sir, with respect to divestment of our government stake. Okay, okay, okay. No, so fine, since it is under sub duties, so when we it comes to a conclusion, then for us it will be better to discuss about it. But is it possible to share at what stage is it? Is the hearings concluded? Is the final what is pending or the hearings are going on? Any update we can share? I would refrain from commenting on that. So let's leave it at that. It's under Supreme Court and moreover, it is more with the shareholders. So let it come out first from there and then we'll share. No worries. Just one small clarification. So in the past, in a very strong commodity environment, we have hedged some bit of volume, zinc and lead. I think it was in 2017 or 2018 last. So any thought of doing something similar or principle that commodity exposure will be kept with the shareholders? Is that something which will continue? Would you please repeat that question? I didn't get you. I wanted to know whether we would be looking to hedge any part of our volume with zinc and lead like we had done I think in 2018 in the past? I think we are not clear to reach that point of decision making as of now with the kind of trend that we see in the domestic market. See the world over, if you look at currently the western part of the world is undergoing vaccination at a very fast rate and the return of the markets will be much faster than the eastern part of the world. The Southeast Asian market is still protected. India has bit of a thing because of the last 1 month events that are unfolding. I hope that after government has opened up the vaccination from 2nd May onwards till 18 years of age and if we can really do a good job on vaccination throughout the month of May, I don't find any reason why we will not be able to bounce we will not bounce back and especially Indian industry can export to the Western world, which by that time would have come back to normal. So I see good prospects in Q1 itself. I don't see that we have a situation where we have to hedge our metals as of now. Anything additionally Sandeep or Vinay want to add? Yes, let me add to this. So as a policy, we don't hedge. We retain the commodity exposure, although we do hedge at the average healthy LME prices. That's all. Otherwise, we don't really hedge our sales. Does that answer the question? Yes. So we have a policy of not hedging. So it's not a dynamic decision or distilling something which is subject to market output, but a policy. Got The next question is from the line of Ritesh Shah from Investec Capital. Hi, sir. Thanks for the opportunity. So a couple of questions. One is we have indicated project CapEx of $100,000,000 Sir, what is the maintenance CapEx that we should look at for modeling purpose? Would it be around $200,000,000 roundabout? So, Vinay, would you like to take that? Yes. Maintenance CapEx roughly in the range of $150,000,000 to $200,000,000 Okay. That is fine. So secondly, there is no comments on the Gujarat greenfield smelter and the fertilizer plant that the company was exploring. So any thoughts on these two particular variables on capital allocation or if you hold? Correct. So we have in the last board meeting, we had this RMB100 1,000,000 that was in CapEx has some provision for seeding expenditure for these two projects as well. We are aggressively working on the drawing board to finalize, 1, the scope of the project second, the business case third, the engineering design and cost estimation for both the soda plant, which is in Gujarat, on a stand alone smelter and second, fertilizer plant at Tenderia and third is overall mine volume expansion from 1,200,000 tonne to 1,350,000 tonne. I expect from the 3 projects, the first two that is Gujarat and Fertilizer, their projects should be over by next another 3 to 4 months. And then the moment that estimations are all ready and engineering design is ready, we are in a position to place order. We'll come to go take approval and then go public on the numbers. Okay. That's quite helpful. So my second question pertains to R and R. You have indicated an increase to 4.48. I checked in the annual report. It was around 400,000,000 tons last year. So commendable job over here. Sir, the question over here is, recently, there was an MDR amendment pertaining to sales leases. I'm assuming this number doesn't get impacted because of the MMDR amendment. But there have been lot of leases like SK North, SK South. So what is the legal standpoint of the company over here? So these leases, these numbers are purely bound by the mine leases where we have the full right to access and then we can explore. So this no way comes across the leases which are under dispute or which are under the legal cases or under 10A-ten-two B cases. So if I say that way, then these numbers are all protected and these are all formed up in the mining leases. And balance, some of the leases where we had prospective licenses given before and later on the MNDR Act underwent changes, we are in the legal recourse. And we are in our opinion, we are fully protected by the court decisions that have been taken till date. That's useful. Sir, lastly, let me just say my luck. Just specific question to what Sumangal had asked. Sir, can you give clarity on exactly what is being heard in the Supreme Court right now? Basically, what is it that has been contested? If you could give a broad idea about that, I don't want the case specificity, but the particular two variables that is something which has been talked about? No, it's the hearing if you all know that we should follow Supreme Court hearings. Hearing is not on argument over whether A is right or B is right. Arguments as they continue, newer things come up, which can be the very basic that remains of disinvestment to whether further disinvestment is in the rights of the government, not in the rights of the government and there are other stakeholders as well. So I would not like to get into specifics of that, but I believe that the Supreme Court will close that matter and government is also in an urgency to further disinvest all the successful disinvestment cases, also at the cases which are sick units and they want to disinvest. I see the government had approved Supreme Court that they need a quick judgment on the need for disinvestment. So I'll leave it at that and hope that SupernCo closes the matter soon. That's perfect, sir. I have more questions. I'll join back the queue. Thank you. Thank you. Next question is from the line of Rahul Jain from Systematics. Please go ahead. Yes. Thanks for taking my question. So if I see your guidance on SIVA, it appears to be a bit modest given that we had a disruption in the first half of last year. So and this tumor commissioning, so I mean what could be your run rate, say, 6 months down the line? So if I say 7 20 tonnes and if I compare last year, that was 706 tonnes, Out of that 706, if you look back at year before last, we closed abruptly all the silver plants and lead plants, everything closed abruptly because of COVID. So a lot of silver was stuck up in the circuit and some of and most of it got recovered. And in fact, lot of WAP material we could recover in the process, which also added to that 706 number. If I look at the realistic levels in the jump we are taking at 7 20 is for us about 60 to 70 tonnes, which should be good enough commensurate with the metal numbers I'm talking about. No. So this tumor plant commissioning is not much, is it? No, Sumer we are hoping that Sumer currently the part which we have commissioned is adding more zinc. So the zinc oxide which is produced during the our furnace operations in the river that zinc oxide goes into this part of the Sumer and we recover zinc out of it, which has been an innovation in the way we operate. 2nd part is the silver production and lead silver cake production from tumor. That part of the tumor will be commissioned. I expect that if these current problems are all over, then somewhere by H2, this balance part of the tumor would be commissioned and some metals have been factored will be factored in our guidance going forward. So that's why I said I'm keeping my options open. By next quarter, when I have a chance to revise the guidance, I will surely do looking at the progress. Got it. And so how deep have we gone in the mine? And given the mine topography that you've encountered and the because I'm sure you would be so the cost structure, say, 2 years down the line also are likely to be in a similar range? If most of the development work, as we go deep into the mine, the principal forecast is at least 3 to 4 levels must be open up in one mine, and that has been target. That's why last year we did a fantastic highest ever development about 98 kilometers of development in the mines. And this year we want to do more than that about 40 to 50 kilometers more than that development we would like to do. That's why it's adding to that bit of a cost. But once these developments are over, mines are matured, going forward, that need of development will be less and it will be more of an extraction and retreating mine. And in that case, the cost will further likely to come down by FY23 onwards. Right, right. And structurally, we also would maintain our policy on smelting all the ore we produce or we are also open to tolling outside given the high LME prices? Tolling, I don't know whether we can get a facility for zinc led tolling at we have that's why the our coastal smelter is basically fixed on where a lot of concentrate is floating around in the world and to tap that. But on the other part, we are committed to smelting all the concentrate that we produce. So that is where our entire expansion work of 1,350,000 tonne that goes around is only around that. That entire concentrate has to be smelted. There is no chance of selling any concentrate or sending any concentrate to any stand alone smelter outside. But there is nothing that stops you from doing that, right, if I'm not mistaken? No, nothing stops. Nothing stops. But we don't want to do that. We want to select all the concentrate that we want to do. Yes. Thank you. Thank you very much, sir. Thank you very much. In the interest of time, we'll take that as the last question. I would now like to hand the conference back to Ms. Shweta Arora for closing comments. Thank you, everyone, for joining us on the call today. For any follow-up questions or clarifications, please feel free to reach out to the Investor Relations team. Thank you. Thank you. Thank you very much. On behalf of Hindustan Sinc Limited, that concludes the conference. Thank you for joining us, Ladies and gentlemen, you may now disconnect your lines.