Hindustan Zinc expects "positive feedback" from govt on co rejig by next quarter
ETMarkets.com
Synopsis
The company’s board had on September 29, proposed a corporate restructuring to create three separate legal entities for zinc and lead, silver, and recycling business. The move, meant to unlock potential shareholder value, is in line with its parent Vedanta’s plans to create separately listed entities for aluminium, oil and gas, iron ore and steel.
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MUMBAI - Hindustan Zinc expects, by next quarter, a “positive feedback” from the government on its plans to rejig the business into three separate entities, its chief executive officer said in an interview on Friday.
The company’s board had in late September, proposed a corporate restructuring to create three separate legal entities for zinc and lead, silver, and recycling business. The move, meant to unlock potential shareholder value, is in line with its parent Vedanta’s plans to create separately listed entities for aluminium, oil and gas, iron ore and steel.
Given that the government owns a 29.54% stake in the company, a business restructuring will require the approval. The rest of the company is owned by Vedanta.
The country’s largest zinc miner reported its earnings for the December quarter on Friday, reporting its fifth straight quarter of decline in profit on a year-on-year basis. Its consolidated sales fell by 7% on year to Rs 7,310 crore, largely due to weakness in zinc operations, while consolidated net profit for the quarter stood at Rs 2,028 crore, down 6% on year.
Sales from zinc account for three-fifth of the company’s total topline, and volumes in this segment were 4% lower on year, while prices on the LME crashed by 17% year-on-year.
The company, though, managed to bring down its costs of production for zinc for the fourth quarter in a row to $1,095 per tonne in Oct-Dec. This is not only 15% lower as compared to the previous year, but also the lowest in 10 quarters.
Misra sees the cost benefits sustaining as these were done using structural changes such as increasing the proportion of domestic coal that can be used in operations, and the longer tenure of some mining contracts, which can bring in pricing efficiency.
For Oct-Dec, consolidated operating profit fell 4% on year at Rs 3,559 crore. Even though the sales volumes and prices of both silver and lead were higher as compared to the previous year, these could only partly offset the impact from the zinc operations.
“During the quarter, Hindustan Zinc has delivered steady margin of c.49%, bolstered by operational milestones and cost reduction,” chief financial officer Sandeep Modi was quoted in a statement.
Hindustan Zinc reported its earnings during market hours, and its shares closed at 315.15 rupees on the NSE, up 1% from the previous close. The benchmark Nifty 50 closed 0.7% higher.
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“We expect to hear from the government by the next board meeting,” Arun Misra told ET. The company’s board had in late September, proposed a corporate restructuring to create three separate legal entities for zinc and lead, silver, and recycling business. The move, meant to unlock potential shareholder value, is in line with its parent Vedanta’s plans to create separately listed entities for aluminium, oil and gas, iron ore and steel.
Given that the government owns a 29.54% stake in the company, a business restructuring will require the approval. The rest of the company is owned by Vedanta.
The country’s largest zinc miner reported its earnings for the December quarter on Friday, reporting its fifth straight quarter of decline in profit on a year-on-year basis. Its consolidated sales fell by 7% on year to Rs 7,310 crore, largely due to weakness in zinc operations, while consolidated net profit for the quarter stood at Rs 2,028 crore, down 6% on year.
Sales from zinc account for three-fifth of the company’s total topline, and volumes in this segment were 4% lower on year, while prices on the LME crashed by 17% year-on-year.
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The company, though, managed to bring down its costs of production for zinc for the fourth quarter in a row to $1,095 per tonne in Oct-Dec. This is not only 15% lower as compared to the previous year, but also the lowest in 10 quarters.
Misra sees the cost benefits sustaining as these were done using structural changes such as increasing the proportion of domestic coal that can be used in operations, and the longer tenure of some mining contracts, which can bring in pricing efficiency.
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For Oct-Dec, consolidated operating profit fell 4% on year at Rs 3,559 crore. Even though the sales volumes and prices of both silver and lead were higher as compared to the previous year, these could only partly offset the impact from the zinc operations.
“During the quarter, Hindustan Zinc has delivered steady margin of c.49%, bolstered by operational milestones and cost reduction,” chief financial officer Sandeep Modi was quoted in a statement.
ADVERTISEMENT
Hindustan Zinc reported its earnings during market hours, and its shares closed at 315.15 rupees on the NSE, up 1% from the previous close. The benchmark Nifty 50 closed 0.7% higher.
(You can now subscribe to our Economic Times WhatsApp channel)
