Hindustan Zinc Q2 Profit Down 15% At Rs 1,902 Crore

New Delhi: Hindustan Zinc on Wednesday reported a 15 per cent fall in net profit at Rs 1,901.87 crore for the quarter ended September 30, 2016, on account of higher depreciation charges, among other factors.

The company had registered a net profit of Rs 2,248.42 crore for the corresponding period a year ago, it said in a filing to the BSE.

Total income of the firm declined 11 per cent to Rs 3,877.47 crore in July-September quarter of this fiscal year, from Rs 4,357.88 crore in the corresponding period of 2015-16.

Total expenses were, however, lower at Rs 2,232.44 crore from Rs 2,347.29 crore during the period under review.

"The y-o-y decrease for Q2 2016-17 was due to higher depreciation and lower investment income on account of smaller corpus despite higher mark to market gains," Hindustan Zinc said in a statement.

On the year-on-year decline in revenues, the firm said the decrease during the quarter was on account of lower volumes, partly offset by higher zinc and silver prices and rupee depreciation.

"The price rally in zinc continued this quarter with prices climbing 18 per cent from the previous quarter, consistent with its strong fundamentals. Silver prices too have rallied coupled with increasing silver volumes," HZL chairman Agnivesh Agarwal said.

Favourable market scenario and firm's smooth transition to underground mining has boosted investor confidence, heralding HZL's entry in the top 25 club in terms of market capitalisation in India, he added.

Zinc metal's cost of production per MT before royalty (COP) during the quarter was at Rs 54,186 ($809), down 12 per cent from previous quarter and up 8 per cent y-o-y (5 per cent in dollar terms), it said.

The sequential reduction in COP was mainly on account of higher volumes, while the y-o-y increase was attributed primarily to lower average grades due to change in mining mix, higher mine development and planned lower production.

Cost reduction initiatives for operational and commercial efficiencies were partly offset by higher petroleum product prices and lower acid prices, the firm added.

HZL said its net cash and cash equivalents was Rs 25,166 crore, out of which Rs 22,726 crore was invested in mutual funds and Rs 4,331 crore in bonds.

It also announced that in accordance with the recent Sebi guideline, the Board has approved the dividend policy, which entails a minimum dividend of 30 per cent of net profits or 5 per cent of net worth, whichever is higher.

Integrated zinc metal production during the quarter was at 149 kilo tonnes (KT), down 30 per cent y-o-y, in line with mined metal production.

Integrated lead and silver metal output during September quarter stood at 31 KT and 107 tonnes, respectively.

On a year-on-year basis, integrated lead production was down 22 per cent in line with mined metal production, while integrated silver production was down 3 per cent.

Shares in Hindustan Zinc ended 1.37 per cent higher at Rs 248.20 apiece on the BSE, whose benchmark Sensex index finished down 0.24 per cent.