Asian Paints held a conference call on 22 July 2021 to discuss the results for the quarter ended June'21 and way forward. Mr. Arun Misra- Chief Executive Officer, Mr. Vinaya Jain - Sr. Vice President and Head Finance along with other senior management of the company addressed the call.

Highlights of the Concall

• Mined metal production for the quarter was up 9% YoY to 221000 tonne 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 236000 tonne for the quarter, up 17% YoY in line with higher mined metal availability. Sequentially it was down 8% in-line with lower ore production due to lack of operator availability at the mines in view of second wave of COVID-19.

• Integrated zinc production was 188000 tonne up 20% YoY and down 4% sequentially. Integrated lead production was 48000 tonne, up 9% YoY and down 21% sequentially.

• Integrated silver production was 161 tonne, up 37% from a year ago in line with higher lead production, partly offset by lower grades at Sindesar Khurd (SK) mine, while it was down 21% sequentially primarily in-line with lower lead production.

• Volumes declined in Q1FY22 compared to previous quarter primarily due to lack of operator availability at the mines due to the second wave of Covid-19.

• Digitalisation drive across all mines continued during the quarter. Initiatives such as setting up of digital control room with short interval control to Reducing stope cycle time, Online analyser for impurity tracking to maintain higher current efficiencies are underway.

• Post integration, the shafts at Rampura Agucha mine and Sindesar Khurd mine are fully operational. Ventilation & cooling systems (chiller units) have been deployed to facilitate the same in a seamless manner. Moreover, increased usage of Advanced Process Control (APC) at both SK and RD Mills for purpose of grinding are used to improve recoveries.

• Covid-19 restrictions including stringent visa guidelines for Chinese nationals continued during the quarter which resulted in a delay in the commissioning of the Fumer plant at Chanderiya. The company expect Fumer commissioning to be completed by end of November 2021.

• As on June 30, 2021, the Company's gross investments and cash & cash equivalents were Rs.23,902 crore as compared to Rs.22,308 crore at the end of the fourth quarter (Mar'21).

• The company's net investments and cash & cash equivalents as at end of June 30, 2021 was Rs.17,249 crore as compared to Rs.15,130 crore at the end of the fourth quarter (Mar'21) and was invested in high quality debt instruments.

• The company expects both mined metal and finished metal production in FY2022 to be around 1025-1050 thousand tonne each. The company expects FY2022 saleable silver production at around 720 tonne.

• The company expects Zinc cost of production in FY2022 is expected to remain below $1000 per tonne.

• The company expects capex of US$250-300 million, which includes growth capex at US$100 million

• The company anticipates domestic demand to pick up driven by increased spends by the government and higher vaccination rates prompting faster opening up. However, this could change if the third wave is more severe than the second wave.

• The company has engaged experts for laying out designs and is evaluating the feasibility of the fertilizer plant project. The company is also planning to hire a CEO to head the fertilizer business by Q2FY22. The project remains at the design stage for now and the company expects to put a plan for board approval by end of Q2FY22.

• The company is currently evaluating the project economics for Zinc smelter and would proceed only if IRRs are higher than their internal hurdle rate. The project remains at the design stage for now and the company expects to put a plan for board approval by Q3FY22 and expect project capex to begin in FY2023.

• The company does not plan to raise any debt in FY2022 and has scheduled debt repayments of Rs1000 crore in FY2022

• The company expects tax rate of 30% in FY22 due to expiry of certain incentives