Hindustan Zinc (HZL) today reported a 47 percent fall in net profit at Rs 1,037 crore for the quarter ended June 30 mainly on account of higher cost of production, taxes and depreciation.
The firm, part of billionaire Anil Agarwal-led Vedanta Ltd, had clocked a net profit of Rs 1,940.14 crore in the year-ago period, it said in a regulatory filing.
Total income of the company also took a hit and fell by 30 percent to Rs 2,530.61 crore in April-June this fiscal from Rs 3,630.17 crore during the same period in 2015-16.
On the decline in revenues, HZL said it was on account of lower volumes, primarily zinc, and lower LME (London metals Exchange) partly offset by higher rupee depreciation and higher silver price.
On a sequential basis, revenue decreased by 19 percent due to lower volumes, partly offset by higher zinc & silver prices, it added.
Zinc metal's cost of production per tonne before royalty (COP) during the quarter increased Rs 62,138 (USD 928) in line with production plan of lower volumes from Rampura Agucha open cast mine in the June quarter and thus lower average grades.
This was partly offset by lower coal and commodity prices, cost optimisation projects in procurement and the commercial and higher by-product credits, it said.
On lower profits, it said: "The above revenue and cost of production resulted in a 33 percent y-o-y decline in EBITDA during the quarter to Rs 1,130 Crore and 13 percent decline from previous quarter.
"The smaller investment corpus on account of dividend pay-out in beginning of the quarter led to lower investment income, which along with higher tax rate and higher depreciation resulted in net profit of Rs 1,037 Crore, lower by 47 percent y-o-y and 52 percent from previous quarter." HZL Chairman Agnivesh Agarwal said: "In line with strong zinc fundamentals and our expectations, zinc prices surged 14 percent in Q1 2016-17 as compared to the previous quarter, making it the best performing base metal." The firm also witnessed a rally in silver prices, which along with increasing volumes is accentuating its contribution in the profits, having reached almost 20 percent at present, he added.
"Our transition to underground mining is progressing well with robust mine development, especially during last few months. Production from our underground mines has also ramped up significantly," Agarwal said.
Ore production from Sindesar Khurd declined and reached the originally conceived capacity of 3.75 million tonnes per annum (MTPA) and production from Rampura Agucha underground mine crossed one MTPA production rate during the quarter.
Mined metal production during the quarter was 127 kilo tonne (KT), 45 percent lower y-o-y and 33 percent lower than previous quarter (January-March 2015-16).
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