• The Company zinc sales volume increased 15% y-o-y and lead by 29% y-o-y in line with higher production and robust demand.

• The Company total mined metal production for the quarter (Q4FY21) was up 15% y-o-y to 288kt on account of higher ore production, partly offset by lower overall grade. For the full year, MIC production was up 6% y-o-y to record 972 kt primarily on account of higher ore production partially offset by slightly lower grades. 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-19.

• Integrated metal production was 256kt for the quarter, up 16% y-o-y in line with higher mined metal availability and higher closing MIC inventory. Integrated zinc production was 195kt, up 14%. Integrated lead production was 61 kt, up 24% in line with higher mined metal availability. Integrated silver production was 203 MT, up 21% from a year ago in line with higher lead production, partly offset by lower grades at Sindesar Khurd (SK) mine. For the full year, metal production was up 7% to 930kt and silver production was up 16% to a record 706 MT in line with higher lead production and better silver grades at SK.

• Zinc cost of production before royalty (COP) during the quarter was $945 (Rs. 68,969) per MT, lower by 5% y-o-y, both in INR & USD terms, primarily due to higher volume, lower power costs, higher sulphuric acid credits and lower cement costs partly offset by higher met coke and diesel costs. For the full year, zinc COP excluding royalty was $954 (Rs. 70,681), lower by 9% y-o-y (5% lower in INR terms).  The full year COP decrease reflects higher production volume, lower met coke and power costs, lower cement costs partly offset by higher diesel costs and Covid-related donation.

• During Q4FY21, LME Zinc prices rose 29% to $2,750 per MT and Lead prices rose 9% to $2,018 per MT. Silver prices gained 55% to $26.30/oz.

Management Comments

Commenting on the Q4 performance, Mr Arun Misra, Deputy CEO, said: "We are conscious of the fact that our country is going through COVID Pandemic the scale of which has not been seen before. We are doing whatever we can including supplying liquid oxygen from our smelters to hospitals in and around Udaipur. We are proud to announce that we delivered record production volumes of mined metal, finished metal and silver production, while ensuring 22-months of fatality-free operations. I am also happy to inform that we exited the year at run-rate of 1.2mtpa. We also maintained our first rank in Asia pacific region in the metals & mining category in Dow jones Sustainability Index for third consecutive year and amongst India's first companies to be rated ‘A' in climate change CDP 2020."

Mr Vinaya Jain, Sr. VP & Head Finance, said: "Our firm focus on operating efficiencies has led to cost optimization and improved profitability. We delivered highest ever quarterly EBITDA which nearly doubled from same quarter last year, Our PAT is up 85% Y-O-Y and we have achieved lowest ever annual dollar cost of production since the transition to underground mining operations. We will continue our endeavour to improve business efficiencies and reduce costs through enhanced use of technology, digitalization efforts, data-driven decision making and most importantly, investment in people capabilities to sustainably generate industry leading returns and create long term value for all stakeholders."

The total income from operation inclined by 58% to Rs 6,947 crore for fourth quarter ended March 2021. The gain in topline was primarily due to higher metal and silver volumes along with higher zinc, lead and silver prices. Zinc sales volume increased 15% and lead by 29% in line with higher production and robust demand.

The Zinc & Lead segment revenue, contributing 77% of total revenue, gained 45% to Rs 5,350 crore, while Silver segment revenue, contributing 19% of total revenue, rose 125% to Rs 1,350 crore. Sales of Wind Energy segment was down 11% to Rs 25 crore (accounting for 0.4% of total sales).  

Zinc cost of production before royalty (COP) during the quarter was $945 (Rs. 68,969) per MT, lower by 5% y-o-y, both in INR & USD terms, primarily due to higher volume, lower power costs, higher sulphuric acid credits and lower cement costs partly offset by higher met coke and diesel costs.

Operating margin (OPM) inclined to 56% from 45% corresponding previous quarter, leading to 97% rise in operating profit (OP) to Rs 3,875 crore.

At segment level, PBIT of Refined Zinc & Lead segment inclined 118% to Rs 1,972 crore, while Silver PBIT rose 137% to Rs 1,226 crore. Wind Energy segment PBIT was flat at Rs 12 crore.

Other income fell 37% to Rs 295 crore.  Provision for interest rose by 719% to Rs 131 crore.  Loan funds rose to Rs 6,473.00 crore as of 31 March 2021 from Rs 611 crore as of 31 March 2020.  Inventories declined from Rs 1,835 crore as of 31 March 2020 to Rs 1,4250 crore as of 31 March 2021.  Sundry debtors were higher at Rs 406 crore as of 31 March 2021 compared to Rs 379 crore as of 31 March 2020.  Cash and bank balance rose to Rs 9,376 crore as of 31 March 2021 from Rs 1,918 crore as of 31 March 2020.  Investments declined from Rs 20,329 crore as of 31 March 2020 to Rs 12,957 crore as of 31 March 2021.  

Provision for depreciation inclined 26% to Rs 696 crore.  Fixed assets declined from Rs 18,706 crore as of 31 March 2020 to Rs 18,369 crore as of 31 March 2021.  Intangible assets increased from Rs 252 crore to Rs 361 crore.  Profit before tax (PBT) grew 79% to Rs 3,343 crore.  Provision for tax was expense grew 64% to Rs 862 crore.  Effective tax rate was 25.8% compared to 28.208%. Thus, the net profit advanced by 85% to Rs 2,481 crore.  

For the financial year ended March 2021 (FY 2021), the total income from operation of the company was up 22% to Rs 22,629 crore. OPM increased by 390 bps to 51.6%, thus OP rose by 32% to Rs 11,672 crore. Other income fell 6% to Rs 1,819 crore, thus, PBIDT was up 25% at Rs 13,491 crore. With rise in interest cost by 245% to Rs 386 crore and rise in depreciation by 11% to Rs 2,531 crore, the PBT grew by 26% to Rs 10,574 crore. The taxation outgo increased 64% to Rs 2,594 crore. The effective tax rate rose by 560 bps to 24.5%. Thus, net profit rose by 17% to Rs 7,980 crore.

Expansion Projects

• During the quarter, Shaft Integration at Rampura Agucha Shaft was complete. This improved the accessibility of shaft section, alternate emergency evacuation, ease in mine equipment deployment at lower levels, face charging with emulsion explosives, face drilling with long feed jumbo.

• During the quarter, RKD circuit of Fumer plant was commissioned & is now in operation. Delay is primarily on final commissioning of complete plant. This is on account of restrictions around travel outside China. Given the fast-evolving situation with Covid-19 infections in the country, we expect to commission complete Fumer plant by Q2 of this year.

• Total ore reserves increased from 114.7 million tonnes at the end of FY 2020 to 150.3 million MT at the end of FY 2021 while mineral resources totalled 297.6 million MT. Total R&R increased to 448 million MT as we replenished more than we consumed during the year.

• Total contained metal in ore reserves is 9.16 million MT of zinc, 2.55 million MT of lead and 295.5 million ounces of silver and the mineral resource contains 14.9 million MT of zinc, 6.3 million MT of lead and 618.7 million ounces of silver. At current mining rates, the R&R underpins metal production for more than 25 years.

Contribution to the exchequer

During the year, the Company contributed Rs. 15,008 Crore to the Government treasury through royalties and taxes, which is 66% of revenue.

Liquidity and investment

• As on March 31, 2021, the Company's gross cash and cash equivalents was Rs.22,308 Crore as compared to Rs. 21,024 Crore at the end of the third quarter (Dec'20).

• The Company's net cash and cash equivalents as at end of March 31, 2021 was Rs.15,130 Crore as compared to Rs. 10,988 Crore at the end of the third quarter (Dec'20) and was invested in high quality debt instruments.

Outlook

The Company's expects both mined metal and finished metal production in FY2022 will be higher than last year and is expected to be 1025-1050 KT each. FY2022 saleable silver production is expected to be higher and projected at 720 MT. Zinc cost of production in FY2022 is expected to remain below $1000 per MT. The project capex for the year is expected to be approximately US$100 million.

The scrip closed trading at Rs 318.70 on 27^th April 2021 on the BSE.