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Informist, Saturday, Oct. 19, 2024

 

MUMBAI – Hindustan Zinc Ltd. is still talking to the government regarding the bifurcation of the company into silver and metals, the management told analysts in a post-earnings conference call Friday. The company's chief executive officer Arun Misra said during the call in response to a question from an analyst, the issue "is not on the backburner...all the issues we are discussing with the government and whenever both sides agree, it will happen."

 

The company is into mining activity for the production of two key base metals, zinc and lead, and precious metal silver. The silver operations were proposed to be demerged into a separate company. But the government, which holds nearly 30% stake in Hindustan Zinc, the largest after promoter company Vedanta Ltd.'s 63.42%, had earlier this year rejected this proposal on ground that it would hurt shareholder value. Misra said that the government's disinvestment effort is going on currently and "there are so many things parallely".

 

In the earnings call with analysts on Apr. 19, following the announcement of its March quarter and 2023-24 (Apr-Mar) financial results, Misra had addressed a similar question. He said then that the government had written to the company "saying that perhaps the timing is not appropriate considering they (government) are in the process of disinvestment of the company on the 29% stake that they have and at this point a demerger may create confusion in the minds of potential investors when they do the OFS (offer for sale) route."

 

The company was, however, attracted by the rally in zinc prices at that time and Misra had said, "We have spoken to government and we feel that this is the right time for government to disinvest and also help us to demerge these entities and create a silver as a separate entity because we continuously believe that it will unlock another $3 billion to $4 billion on the market cap. However, after the board comes to a consensus and a decision on this, then we can come back."

 

The quarter ended September was the best quarter in last few quarters in terms of metal production and volume growth. The company produced 198,000 tonnes of saleable refined zinc in Jul-Sep, up 7% on year. The volume sold matched the production. Similarly, Hindustan Zinc produced and sold 63,000 tonnes each of saleable refined lead for the September quarter, up 12% on year. The company also produced and sold 184 tonnes of silver, up 2% on year.

 

In the first half of the current financial year, however, the silver production and sales volume declined 3% on year to 350 tonnes, while that in zinc increased by 4% on year to 409,000 tonnes and lead increased by 7% to 115,000 tonnes. Further, in Apr-Sep, zinc prices have risen 13% on year, while lead prices have declined 2% and silver prices jumped 22%.

 

To a question during Friday's conference call on whether a proposal by the company to set up a zinc smelter factory in Gujarat was still on the table, the company management indicated that it was off the table and not being considered any more. In FY24, Hindustan Zinc had commissioned a zinc fumer plant at Chanderiya in Rajasthan for recovery of metals from smelter residue. The company has produced 3.3 tonnes of silver and 1,500 tonnes of metal, but has faced "many technical difficulties" in recent months.

 

"We could not get Chinese experts at site because of various visa issues but we have been taking their help remotely," the management said in the call. The company expects the issues to be resolved soon and production resuming from the end of the December quarter or early part of March quarter.

 

Shares of Hindustan Zinc ended Friday at INR 506.50, down 0.3%, on the National Stock Exchange of India.  End

 

Reported by Rajesh Gajra

Edited by Akul Nishant Akhoury

 

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