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Hindustan Zinc slips after Q4 PAT declines 33% to Rs 1,339 cr

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Hindustan Zinc skid 0.88% to Rs 169.05 after net profit dropped 33.44% to Rs 1,339 crore on 19.74% fall in revenue from operations to Rs 4,321 crore in Q4 March 2020 over Q4 March 2019.

The revenue from operations were down primarily due to an average 19% decline in LME prices, lower lead & silver volume and lower zinc premium, partly offset by higher silver prices and rupee depreciation. Profit before tax (PBT) slipped 31.53% to Rs 1,865 crore in Q4 March 2020 as against Rs 2,724 crore in Q4 March 2019. Current tax expenses fell 46.65% to Rs 311 crore in Q4 March 2020 as compared to Rs 583 crore paid in Q4 March 2019.

EBITDA slumped 30% to Rs 1,961 crore in Q4 March 2020 over Q4 March 2019 on account of lower revenue partly offset by lower operating costs.

Mined metal production for the quarter was up 2% y-o-y (year-on-year) to 249kt despite operations shutdown from 22 March onwards in compliance with lockdown to combat Covid-19. Mined metal was higher y-o-y on account of higher ore production and better overall grade. Sequentially, mined metal production was up 6% on account of continued improvement in ore grades across mines. For the full year, mined metal production was 917kt, down 2% y-o-y primarily on account of fewer days to production due to lockdown related to Covid-19 and low grades at Sindesar Khurd during H1 & Kayad mines.

With regards to the ongoing COVID-19 pandemic, the company's operations were halted from 22 March 2020 and most employees were encouraged to work from home barring some employees who attended the call for duty to keep production assets safe including critical care and maintenance. To ensure business continuity, Hindustan Zinc has also set up a committee to COVID-19 response called 'War Room' which aims to identify and implement critical business decisions to restart mines and plants in a safe manner and ramp-up while ensuring restoration of supply-chain. The operations gradually resumed from 8 April 2020 and all the mines and smelters were operational in a couple of weeks. In the month of April 2020, Hindustan Zinc ramped up its mines and smelters to 40% and 80% of capacity respectively.

In its outlook, the company stated that owing to uncertainty around the ongoing lockdowns and business disruption risk, it is are deferring guidance for FY 2021 to end of Q1. Hindustan Zinc's current focus remains around sustaining normal level of productions, active management of costs and capital conservation.

Speaking on the Q4 performance, Sunil Duggal, the chief executive officer (CEO) of Hindustan Zinc, has said that: "Industrial activity across the globe is undergoing a level of disruption unforseen since the second world-war. In these challenging times, our focus is business continuity and safety of our people & operations and supporting our communities affected by the pandemic. We have ramped up our operations back to normal levels and are confident of delivering good performance in FY 2021."

Swayam Saurabh, the chief financial officer (CFO) of Hindustan Zinc, has stated that: "We are accelerating our sustainable cost reduction programs and finding new opportunities to control costs & conserve capital in a rapidly evolving ecosystems. We are confident to emerge stronger from the current economic crisis and generate superior returns for our shareholders."

Hindustan Zinc is engaged in the mining and smelting of zinc, lead and silver metal in India. The firm's segments include mining and smelting of zinc, lead and silver, and wind energy.

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First Published: Thu, May 21 2020. 17:12 IST