AGM 2024

Jul 29, 2024

Summary

Record metal and silver output and lower zinc costs partly offset a 15% YoY revenue decline from weaker prices in FY2023/24. FY2025 guidance targets higher production, alongside capacity expansion and sustainability initiatives.

Dear shareholders, good afternoon and a very warm welcome to you all to the 58th Annual General Meeting of Hindustan Zinc Limited through video conferencing. As a reminder, for the smooth conduct of the meeting, the speaker members will be on mute mode and audio and video will be enabled when they will speak at the AGM as per their pre-registration. I will now hand over the proceedings to Ms. Harsha Kedia, Company Secretary of Hindustan Zinc Limited. Good afternoon, ladies and gentlemen. I welcome you all to the 58th Annual General Meeting of your company being held today through audio-video means. For today's meeting, we have Ms. Priya Agarwal as Chairperson of the company, Mr. Kannan Ramamirtham, Independent Director and Chairperson of Audit and Risk Management Committee of the company, Mr. Akhilesh Joshi, Independent Director and Chairperson of Nomination and Remuneration Committee, and Ms. Pallavi Joshi Bakhru as Woman Independent Director of the company. Besides them, we also have Mr. Arun Misra, Chief Executive Officer and Whole Time Director of the company, and Mr. Sandeep Modi, Chief Financial Officer of the company. We also have representatives of statutory auditors, secretarial auditors, and Mr. Manoj Maheshwari, the scrutinizer, to oversee the virtual e-voting process. The required quorum for the meeting is present. The company has taken all the feasible efforts for conducting this AGM in a smooth manner to enable the participation of voting through electronic mode. During the course of the meeting, if any shareholder is facing any technical issues, may kindly contact the helpline numbers provided in the notice. The members are further requested to refer to the questions which are provided in the FAQs available on the company's website and on the NSDL's website for seamless participation through video conferencing. The statutory registers and documents required under the act are available electronically for inspection by members during the AGM by sending request as per the guidelines stated in the notice. I shall now request Chairperson to call the meeting to order and deliver her speech. Over to you, ma'am. Thank you. Welcome, my distinguished guests, esteemed shareholders, and fellow members of the board. A little over a year ago, I had the honor of assuming the role as Chairperson at Hindustan Zinc. Today, I reflect with pride on the journey so far, characterized by the company's commitment to holistic growth, innovation, and sustained value creation, and nation building. For long, minerals have been the foundation of human progress. 6,000 years ago, we had the Copper Age, which was followed by the Bronze Age and the Iron Age, all of which were revolutionary for civilization. Now, we are at the cusp of another mineral age, the most advanced epoch in our country history yet. Characterized by major technological advances, whether it's the energy transition or artificial intelligence, the backbone of this will be minerals, some of which are largest in the Hindustan Zinc portfolio. Your company, India's most valuable in the minerals and metal sector, already produces zinc and silver, two metals which will see ever-increasing demand given their new use in new emerging technologies, along, of course, with the traditional demand. For the latter, India is a tremendous market even now. So much of our country's infrastructure is yet to be built, and we have only seen a fraction of our potential demand for consumer durables like automobiles. Zinc is critical to both. By galvanizing steel, it lends strength, durability, and longevity. Coming to the slides. The unique positioning in the metal and mining landscape that we have. The story of Hindustan Zinc is not dissimilar to zinc itself. A strong, durable, and productive asset. It is an important contributor to nation building. Our journey over the last two decades mirrors India's rise and the quest for Viksit Bharat. We will stay in the course and deliver more and more value to all stakeholders. In FY 2023-2024, we achieved significant improvements in our operational efficiencies and saw remarkable reduction in cost of production. We advanced into the first decile of cost curve and recorded the lowest annual production cost in the past three years at US$1,117 per ton. Coming to slide 3, about company's performance FY 2023-2024. We delivered industry-leading production growth, achieving our highest ever annual metal production, while constantly replenishing our reserves. These stand at 456.3 million tons of reserves and resources and 25+ years of mine life. We have taken great strides in our silver business, registering the highest annual silver production till date, a 5% increase year-on-year. This also proudly makes us the third-largest producer of silver in the world. Coming to Slide 4. At Hindustan Zinc, the interests of our shareholders are always priority. In FY 2023-2024, your company's dividend payout was INR 5,493 crores. In the past 15 months, our total shareholder value return was four times the Nifty 50 return and two times the Nifty Metal return. Our market capitalization today is at about INR 2.8 lakh crores, with the highest among all metal and mining peers in India. This marks a growth of nearly 477 times in market capitalization from a mere INR 600 crores two decades ago. Coming to slide 5, sustainability, which is really the core of everything that we do. At Hindustan Zinc, we are conscious of our responsibility towards the planet. In fact, it is at the core of all business practices. Our efforts have met with recognition. Last year, Hindustan Zinc ranked number one, not in India, but in the world, in the mining and metals industry by the S&P Global Corporate Sustainability Assessment. We have adopted a two-pronged approach of mitigating and offsetting our carbon footprint. Through the strategic use of advanced technology, Hindustan Zinc has recorded a 14% decrease in GHG emission intensity compared to the base year 2020, even while increased production each year. Significant progress has been made on sourcing green energy for our operations. Last year, we integrated renewable power from Serentica Renewables' 180 megawatts solar project. This is the first phase of a 450-megawatt round-the-clock RE power delivery agreement that we have signed. We have made other efforts to go green. We have deployed EV trucks, India's first underground EV truck in fact, and LNG power trucks as a step towards reducing Scope 3 emissions by 25% by 2023, making us the industry pioneers in sustainable logistics. We are trying to minimize waste and maximize metal production. By commissioning India's first fumer plant to extracting metal from waste using cutting-edge technology, we have reached new milestones in our journey towards green metal production. At Hindustan Zinc, we have always prioritized water positivity. The A- Leadership band scores from the Carbon Disclosure Project for climate change and water security excellence exemplify the global recognition of our sustainability efforts. As the only Indian company in the mining sector with validated and approved SBTi targets aligning with the 1.5 degree Celsius Paris Agreement goal, we are proud to have launched India's first Taskforce on Nature-related Financial Disclosures report. The report encapsulates a holistic view of Hindustan Zinc's biodiversity strategy and aligns our targets with the Kunming-Montreal Global Biodiversity Framework. Your company remains committed to achieving net zero by 2050 or sooner. Slide 6, please. People practices. We are truly breaking barriers here. Diversity and inclusion are the bedrock of our workplace culture. We want to nurture a progressive workplace where every individual feels valued, supported, and empowered to excel. With over 600 women employees, including more than 200 women engineers, Hindustan Zinc is leading the way in increasing women's participation in this traditionally male-dominated mining sector. Currently, women make up approximately 22% of our executive positions and 21% of your company's executive committee. Our women at Hindustan Zinc are continuously breaking barriers. We have established India's first all-women underground mine rescue team, which has excelled in several national competitions and is now prepared to compete in international competitions. There is now a second team ready to emulate the first. I am pleased to announce that Hindustan Zinc has been honored with the prestigious 3rd National Transgender Award 2024, also known as the Ardhanarishvara Award. This is a recognition of our efforts in breaking societal barriers within the workplace. The award also validates our industry-leading initiatives such as the Zinclusion program, gender affirmation policy, comprehensive parenthood policy, and the recently launched policy on financial support for higher education for transgender employees, all aimed at ensuring a fair and equitable work environment free from bias and discrimination. Above all, for the welfare of all our employees, we are committed to maintaining a safe workplace and are continuously enhancing our safety measures across all levels with the use of the latest technologies like computer vision, AI, and data science. Coming to Slide 7, our social impact, truly transforming communities. In order to sustain and succeed, every business must be embedded in society. At Hindustan Zinc, partnering with communities is a way of life. Our social impact initiatives now span over 3,685 villages, benefiting 1.9 million people through our projects focused on women empowerment, sustainable livelihoods, skill development, healthcare, safety, and sports. We are supporting 3,000-plus Nand Ghars, which are providing nutrition to children and income opportunities to women across Rajasthan and U.P., either in the form of construction or in their operations and maintenance. In 2023-2024, we started an innovative project with India Post Payments Bank to foster financial inclusion in rural communities. This collaboration ensures financial assistance for over 3.5 lakh beneficiaries, including self-help group women, farmers, and youth. Our world-class Zinc Football Academy, a standout element of social impact efforts, continue to receive accolades, earning the prestigious Elite 3-star rating from the All India Football Federation. Additionally, ZFA's Mohammad Kaif made us proud by playing a crucial role in India's victorious campaign at the SAFF Under 16 Championship in Bhutan. The prestigious CSR Journal has listed Hindustan Zinc as one of the top 10 companies for CSR in India 2023, but our real award and reward is seeing the transformation in the lives of the children, women, and youth in our communities. Any organization is only as good as its team. At Hindustan Zinc, we are proud to have the best, whether they are business optimization efficiencies and maximizing savings, whether they are in ESG finding innovative ways to cut our carbon footprint, whether they are in HR ensuring inclusion, or in social impact, ensuring that society grows along with us. I thank them all. I also wish to express gratitude to our business partners and all our stakeholders, including the government. On behalf of the board, I would like to thank all of you for your continued faith. Together, let us continue to galvanize this company and our Bharat. Thank you. Jai Hind. Thank you, Chairperson. Now I request Mr. Arun Misra, CEO and Whole-Time Director of the company, to deliver his speech. Over to you, sir. Thank you, Harsha. Dear all, a warm welcome to the 58th annual general meeting of Hindustan Zinc Limited. We meet virtually after another eventful year, and it is a privilege to share the company's stellar performance in financial year 2023/2024 with you. I look forward to outlining our strategic vision for continued success. Your trust, your support, and commitment have been crucial to our progress. This year, we became the third-largest silver producer globally and remain India's largest and world's second-largest integrated producer of zinc, lead, and silver. Sustainability is extremely close to our hearts, with our commitment to propelling sustainable growth as an important pillar of our business strategy. Our dedication to a greener tomorrow is evident in our development of Asia's first lowest carbon zinc, branded as EcoZen, marking a significant milestone in our dedication to product innovation strategy and customer centricity in alignment with our net zero goals. The new product offering is produced using renewable energy and has a carbon footprint of less than one ton of CO2 equivalent per ton of zinc produced and has a global warming potential value of 75% lower than global average. Before delving into the details of the past year, I would like to point out that copies of Hindustan Zinc's integrated annual report 2023/2024, the board report, and the audited annual accounts have been handed over to you. I now seek your permission to take them as read. Financial year 2023/2024 was a year of solid growth of Hindustan Zinc, demonstrating our resilience in navigating challenges such as fluctuating commodity prices, supply chain disruptions, and high inflation amidst geopolitical vagaries. Our efforts in steering through these challenges have yielded impressive results with historic high production levels across our business. At Hindustan Zinc, we closely monitor the external industry and market environment to identify growth opportunities across our offerings. Despite the challenging global environment, the Indian economy remained on a growth trajectory in financial year 2023/2024, catalyzing enhanced zinc and steel production. In the domestic market, a stronger Purchasing Managers' Index has led to 20% year-on-year increase in zinc consumption on the back of India becoming the top country in terms of percentage increase in steel production. The demand for zinc is expected to remain robust, driven by rapid urbanization, increased disposable income, and the government's focus on quality infrastructure growth. Your company is also exploring different application of zinc to help the world with its imminent but challenging energy transition. Global dependence on fossil fuels has to be reduced through transition to sustainable sources of energy. Batteries have the potential to accelerate this transition, but lithium availability and geographical concentration of lithium processing pose some key challenges for the global energy transition. Over here, zinc presents itself as the credible source to replace lithium. I am pleased to share that your company has taken the first step with a proposed partnership with U.S.-based zinc battery company, AEsir Technologies. With our vast zinc reserves, your company is well-poised to accelerate India's mission to a cleaner tomorrow. Our zinc battery initiative will also help in saving exchequer's funds since zinc is abundantly available in the country while lithium is not, and it poses as a better alternative to the new age battery technology, as zinc-air batteries are not prone to overheating and explosion like lithium does. Business and financial performance. The past year has been exceptional for Hindustan Zinc, with milestones exceeding expectations despite volatile market conditions. We maintained momentum even as metal prices plunged. Your company's revenue from operations for the full year stood at INR 28,932 crore, down 15% year-on-year due to lower metal prices. However, this was partially offset by the highest ever metal production, crossing one million tons, and silver production at 746 tons, along with a sharp reduction in costs and global best performance in ESG. We also generated highest ever sales in our value-added portfolio at about 20%. This achievement is testament to leveraging your company's strengths to respond efficiently and effectively, and apply concerted efforts to drive operational efficiencies and cost optimization. This ability also helps your company to embrace the future with an enhanced focus on innovation and sustainability. It is important to note here that all the achievements are against a backdrop of six consecutive quarters of fatality-free operations, reflecting our utmost emphasis on a safety-first culture in line with our core values of zero harm. Further, we drastically reduced our cost of production, claiming a spot in the first decile of the global zinc mining cost curve. We ended the financial year with a zinc cost of production of $1,117 per ton, an 11% improvement. With a current market cap of about $30 billion and a market share of 75% of India's primary zinc market, our leadership is well established. We contributed INR 13,195 crore to the government exchequer during the year. Our financial health is affirmed by CRISIL, which rates us as AAA consistently. On operational highlights, financial year 2023/2024 has been a milestone year for Hindustan Zinc's global leadership. We have become the world's second-largest integrated zinc producer and third-largest silver producer. We set new benchmark with record production, achieving the highest ever mined metal production of 1,079 Kt, crossing the one-million-ton mark for the third consecutive time, and refined metal production of 1,033 Kt, little over one million ton, crossing the one-million-ton mark for the second consecutive time. This reflects an impressive four times growth in metal productions since this investment in 2002. Our reserves and resources strategy has increased the total reserves and resources by about 35% in the last 45 years. In the end of financial year 2024, our total reserve and resources stand at 456.3 million tons, with a total metal content of 30.8 million tons, ensuring an overall mine life of 25 plus years. We recorded our highest ever silver production at 746 tons, driven by the global rise in silver demand. Our silver production has grown over twofold in the last decade and 15 times in the last two decades, with a 5% year-on-year increase. Here, I would request you to please have a look at the historical production trend of the company. You would notice that in the last few years, we have achieved a stability in production, corroborating our improved expertise in insulating our operations from the global macro volatilities. On project updates, projects are crucial to Hindustan Zinc's future growth. Our fumer and alloy plants commenced commercial production in quarter 2 and quarter 3 of this financial year respectively. With a full ramp up currently underway, our revamped Rajpura Dariba Mill now boasts state-of-the-art technology, enhancing our mining capabilities. The new 160,000 ton per annum roaster at Debari and Hindustan Zinc Fertilisers Private Limited, with a 510,000 tons per annum capacity in Rajasthan are on track. We have received regulatory approvals for the Bamnia Kalan mines, and are finalizing a business partner to initiate site activities. Further, we have also started working on the conceptual design of a growth plan towards doubling our metal production capacity to 2 million ton per annum, reinforcing our market leadership. On the ESG front, sustainability is extremely close to our hearts with our commitment to propelling sustainable growth as an important pillar of our business strategy. It is with immense pleasure I share with you that your company is ranked as the world's most sustainable metals and mining company as per S&P Global Corporate Sustainability Assessment 2023. We remain dedicated to delivering responsible growth to all our stakeholders, focusing on the long-term sustainable development. During the year 2023/2024, Hindustan Zinc invested in multiple initiatives to drive inclusive and sustainable development. Your company published the environment product declaration, EPD, for zinc offering, underlining our commitment to sustainable and transparency. Your company also commissioned a 4,000 KLD zero liquid discharge plant at Zawar mines, first of its kind in mining, marking another milestone in our water stewardship journey. To reduce dependence on fossil fuels, your company signed power delivery agreement are progressing well, and the first flow of power has been started, reaching our various business units. This places Hindustan Zinc amongst the very few zinc producers globally to integrate renewable power for eco-friendly operations. Moreover, we are actively exploring ways to expand our recycling business to tap into the potential of recovering over a million tons of metal and about 3,000 tons of silver solely from our accumulated waste stockpile. On people practices, I would like to extend my heartiest congratulations to our Zinc Parivar, without whom our success would not have been realized. We are at the forefront of building a more diverse workforce with our principles of equal opportunity and inclusivity. Your company's army of 600 women employees and over 200 engineers in various domains of mining and smelting are breaking stereotypes in the male-dominated core manufacturing industry. With a goal of 30% diversity by 2025, your company has established the first of its kind, all-women mine rescue team in the country, and now has an accolade of having the country's first and second all-women underground mine rescue teams. Promoting diversity, equity, and inclusion is paramount to us, and the launch of Zinclusion program strengthened this proposition by enabling us to bring 16 LGBTQ members into the Hindustan Zinc team. On CSR, community is integral to Hindustan Zinc, as we have always believed in creating shared value. Our initiatives have transformed the lives of 1.9 million people in over 3,500 villages under the thematic areas of education, sustainable livelihood, women empowerment, community asset creation, health, water and sanitation, sports and culture, and environment and safety. Your company's CSR vision is to enhance the quality of life and economic wellbeing of the communities around our operational areas, and we have stayed invested in ensuring responsible growth for the larger community. It underlines your company's resolute commitment towards raising the quality of life and enabling financial empowerment for the communities. Launch of digital annual report. In a first of its kind initiative this year, we take immense pride in presenting India's first GenAI-supported, eco-friendly, digital integrated report. This innovative approach not only demonstrates our commitment to transparent communication, but also showcases our determination to lead by example in our commitment towards technology and innovation. This year's e-report pioneers usage of GenAI named Zinki for easy and quick information relay. Now, the process of accessing this document is not just engaging than ever before, but also paving a way for sustainable future. Thank you. This generative AI-backed annual report puts us ahead of the technology curve, and we are extremely proud of that. Ask Zinki is the line to be remembered. In conclusion, we are quite positive about Hindustan Zinc's prospects in the coming year, considering the recovery we are seeing in the zinc and lead markets and the significant potential growth in the silver market. The demand for zinc, lead, and silver is tied to the country's robust growth and development, with strong emphasis on sustainable world-class infrastructure. With the rise in high-speed mobility, like Vande Bharat trains, metro connectivity, and upcoming bullet trains, your company is poised to deliver the country's requirement of critical metals. From zinc and galvanization to these wonders, to its applications in the ongoing global energy transition to silver in development of electric vehicles, 5G network, your company is in ideal position to capitalize on this growth potential in the coming years. In line with this potential, we have set an aggressive guidance for FY 2025 with 1,100 to 1,125 thousand tons of mined metal, 1,075 to 1,100 kilotons of refined metal, 750 to 775 tons of silver at a cost of $1,050 to $1,100 per ton on cost of production of zinc and a project CapEx of $270 million to $325 million. Our vision is set and we aim to be supporter of India's rapid growth to become the third-largest economy in the world. We are a company that is designed to celebrate the future where zinc supports sustainable development for a greener tomorrow and supports the global energy transition. We see our metals as the beacon of hope for the world's journey towards net zero, where it will play its part of supporting climate action with a multitude of uses and galvanize a greener tomorrow as the critical metal of strength and protection. Thank you once again for your continued support. I now hand it over to Harsha Kedia for the proceedings ahead.