It is a privilege for me to represent a team of highly motivated
individuals who put in their best to create value for the trust you
have placed in us.
In our golden jubilee year, we have delivered our best ever
performance. We achieved new benchmarks and delivered record operating
profit, net profit and mined metal output along with significant
progress in expansion projects. While the higher zinc LME price
certainly helped, record treasury income and operational efficiencies
also contributed significantly to the year''s performance.
Forward on Global Market Scenario
The market expects refined zinc consumption growth to continue in FY
2016 with China maintaining about 50% share of global zinc consumption.
Infrastructure spending and strong automotive sales globally is likely
to bolster zinc demand by 4-5% p.a. in near term. Additionally, closure
of several zinc mines across the world bodes well for zinc price
outlook in the medium term and widens opportunities for resilient
players in the business.
Forward on Indian Scenario
Infrastructure, construction and automobile industries are the main
demand drivers for zinc in India. We have been consistently increasing
our production capabilities to make India self-sufficient in zinc.
Government''s focus on ''Make in India'', infrastructure development and
''Smart Cities'' is expected to provide further impetus to the Indian
metal market in FY 2016.
A significant event during the year was the enactment of Mines and
Minerals (Development and Regulation) Amendment Act, 2015 (MMDRA Act)
in March 2015. On the positive side, the MMDRA Act provides continuity
to our mining leases, at least till 2030. The Act also brings
transparency in grant of mineral concessions via auctions and reduces
disputes. However, it will increase outgo to government on existing
Royalty rates for zinc and lead in India are 10% and 14.5% respectively
on value of mined metal, which is amongst the highest in the world and
much higher compared to other base metals. Royalty rates were increased
recently in September 2014. MMDRA Act can further increase payments to
government by upto 100% on account of contribution to District Mineral
Foundation (DMF). Such a significant additional outgo can potentially
make several low grade and deeper deposits economically unviable and
may necessitate strategic review of some of the mines. We are therefore
hopeful that the government will rationalise the contribution to DMF in
Forward on Long-Term Objectives
Maintaining a balance between production, reserve growth and dividends
is paramount to us. Our disciplined approach to improve efficiency and
productivity is the key for delivering growth year after year.
During the year, the Board of Directors decided to extend the life of
the open cast mine, which will ensure that our overall production will
continue to grow over the next few years. The simultaneous operation of
open cast and underground mines at Rampura Agucha is a challenge for
which we are well prepared. We are pleased with the ramp-up of Sindesar
Khurd and Kayad mines, as also the enhanced performance of our smelting
and refining facilities.
In the last few years, we have laid the foundation for future growth.
Our track record for successful and timely project deliveries gives us
the experience and platform to deliver industry-leading performance.
Our strategy to eventually mine from shafts at Rampura Agucha and
Sindesar Khurd will bring down the mining cost in the medium term. The
approach has already begun to show positive signs and we are well on
our way to achieve our target of 1.2 million MT output in the next 3-4
The increase in our dividend pay-out ratio in recent years is
reflective of our confidence in the growth of our business.
Forward on Sustainability
Since the inception of our programme for safety culture transformation
in 2013, there has been a step change in our behaviour towards safety.
From being reactive to incidents, we are creating a safety environment
which is more interdependent and self-sustaining. We have created an
organisation where ensuring safety is the responsibility of line
managers. All leaders conduct safety interactions to recognise and
reinforce positive behaviour. Specifically, a lot of awareness has
been created for reporting unsafe acts and conditions in a bid to
prevent untoward incidents. The total recorded injuries continued the
downtrend and reduced by 27% during the year. However, I regret to
report that we had two fatalities during the year.
Over the next few years, our focus will be on reducing waste,
generating value from residues and reducing carbon footprint.
Forward on Social Initiatives
We believe in becoming an integral part of the communities residing in
the vicinity of our operations. Our CSR programmes focus on addressing
such local needs that generate immediate as well long-term benefits for
the society. Health, education, sanitation, sustainable livelihood,
women empowerment and community assets creation are the priority areas
for our CSR initiatives. We have aligned our project ''Maryadaa'', with
the Prime Minister''s vision of ''Swachh Bharat'' (Clean India) under
which we have already constructed over 11,000 toilets. We have signed
MoUs with government departments and also joined hands with various
local bodies and NGOs to ensure higher degree of effectiveness of such
projects. During the year, Hindustan Zinc invested Rs.59.28 Crore in
various CSR initiatives which are active across 184 villages, and
benefitting over 500,000 people.
The years ahead will have great challenges, but the rewards will also
be great. In the new era of Hindustan Zinc, we are committed to uphold
our worthy legacy for future generations of stakeholders and take our
place in the global arena as a prominent enterprise in the zinc
On behalf of Hindustan Zinc team, I thank all our stakeholders for
their continual support.
With Warm Regards