Thank you very much. We will now begin the question -and-answer session. Our first question comes from the line of Manav Gogia from YES Securities Limited. Please go ahead.

Hi. Good evening and thank you so much for the opportunity. You know, it was very good to see that the Zinc COP was on the lower end of the cost guidance, and we have more or less stated the factors behind the same. I just wanted to have one question on what would be the current renewable power mix in the total energy mix and what would be our coal mix for the same?

So, current energy in the overall basket, renewable energy is 19% in our over all total power consumption compared to last year around 13%. So, overall, the remaining 80% is the coal.

Yes, and can you give the breakup of the coal mix as well, you know, locally sourced and imported ones?

Sir, my second question is on the silver front and Q1 saw lower silver volumes. So, just wanted to know what steps would be taken ahead for the Company to achieve that 700 to 710 tons guidance that was given earlier.

So, you look at the silver volume. Partly a part of it can be attributed to lower metal production by itself. Since you have produced lower metal, so associated silver is also lower. Other part is also in the beginning of the year, the current location in SK Mine where we are encountering lower grade of silver in the overall grade , I think the overall grade at Hindustan Zinc level is around 88 ppm, which is lower by about 5 to 10 points compared to what we had same time last year. So, this is what is the primary reason. Going forward, we are now, as we said, debottlenecking projects will be over, as I have stated in my speech, and also our commissioning of new roaster is expected in the middle of this Q2 . So, Q3, Q4 will see much better numbers of silver and metal, which will compensate for the loss and help us to reach the guidance numbers.

And where are we in terms of the fumer ramping up for the silver volume s? Any updates on that?

So, fumer is running at 60% of its capacity. So, as you are aware, we still had issues of Chinese Visa did not get. So, our operating team has done a wonderful job by Indianizing it. And at this point of time, while we have been talking 33 tons equivalent to lead -silver cake coming from the fumer root, at this point of time, the run rate is 20 metric tons.

Again, if you have lower input itself, so your availability of silver in the residues for fumer will also be less and it is also reflecting that way.

So, basically, we are maintaining the guidance for FY '26 also. We are comfortable on that front, right?

Yes.

So, my last question is basically on the Debari roaster and the DAP, NPK, the fertilizer plant. We are seeing that now these plants are basically delayed by a quarter each. Can you just highlight the factors behind this?

Debari is already almost 99.9% of the construction work is over and Quarter 2 is the time when we will see the commissioning. We have started coal trial and all that on the ground. On the other side, the fertilizer project is on, and we expect in the guided timeline, we will be doing the fertilizer project. We will try to bring in part of the project earlier. Even in that 0.5-million-ton project, we will try to get the phosphoric acid plant earlier so that we can start generating some revenue out of it.

Our next question comes from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.

Good evening, sir. First question was, I think this quarter, mine metal production was fairly good, but refined metal was impacted. So, was there any shutdown and now has other plants operating at normal levels now?

No, there were few shutdowns, and we had to time it because we had expected additional capacity to kick in from the Roaster 6 but at the same time we had prepared for some shutdowns. We thought the furnaces would run till Quarter 2 while in the Quarter 1 itself we started losing production from them and hence we had to take the shutdown earlier and that has impacted, but nevertheless by Quarter 1 and Quarter 2, all shutdowns we are putting behind us so that we will have a fantastic run from August till about the end of the year.

So that should help us meet the production guidance.

Absolutely. Absolutely.

Sir, secondly, I think, it's commendable that you have recorded $1,010 of COP. So now with the increasing refined metal production, so we should probably see this, I mean, this should go down with the higher benefits of operating leverage coming in.

Yes, all directions are looking like that. So, we are also equally enthusiastic as you are. And we hope that renewable power mix will go up, volumes will go up, fixed costs will spread. So, we should be going towards, as Sandeep told in his speech itself, our North Star was $1 ,000 COP and looks like we are headed that way.

Sir, you don't see any inflation in coal during the monsoon quarter or re-auction premiums going up?

No, that's how we see it. Looking at everything as it is happening currently, we are directed that way. Now, if we see suddenly rise in commodity costs and all that, that may put us back. But looking at current things, the way things stand as of today, we are in that direction.

The next question comes from the line of Anirudh Nagpal from JM Financial. Please go ahead.

My question is related to the recent rally in silver prices, which is already at a lifetime high. So, given we had lower volumes of silver in 1Q, is the Company planning to shift to lead mode to increase the silver volumes in the coming quarters and to maximize the benefits from this rally?

Very important question what you have asked, but the way we have operated is since we had lesser production of metal, we maximized from the choice of concentrates, the concentrate with best silver, we finished it first in Quarter 1, so that in the silver numbers we can get the maximum usage at the current prices. And yes, that direction is always in our mind, but since right now we are flushed with concentrate, and we have enough of concentrate with us, so we don't want to increase that stock further. But we will surely, because now the fumer is running well, so we should be able to make up for that by not running in lead, running in lead plus zinc load and yet producing good amount of silver, we are working on that. But I can assure you that no concentrate is left where there was a good quantity of silver. Only the concentrate with lower quantity of silver are left with us in the stock.

Our next question comes from the line of Amit Dixit from Goldman Sachs. Please go ahead.

Good evening, everyone. Thanks for the opportunity and congratulations for a good performance in a testing LME regime. Two questions. The first one is on if I look at the ESG scorecard, first of all, congrats for putting it up. If I look at the greenhouse gas emissions in 1st Quarter, they seem to have gone up. I mean, just actually highest level since FY '22, maybe while we have increased the RE power proportion. So, just wanting to understand the reason for that, whether it is a typical 1st Quarter phenomenon or it is the higher usage of domestic coal. How is it and how do we see the trajectory of this emissions going in the near term?

So, as the Quarter 2, Quarter 3, Quarter 4 pans out, we will have one increase in percentage of renewable power by September. Almost all of the wind power will come into the place. So, we will have more renewable power in the nighttime than what we are having now. That is number one point. Number two, yes, we have had lesser production in Quarter 1, which is also impacted on the intensity . So, that will also get corrected if we produce more going forward . So, both together, we will come back. We will reduce the overall emission numbers in Quarter 2, then correspondingly Quarter 3 and Quarter 4. Absolutely.

So, this 4.86 number that we have in Q1, I mean, where do we see it going, let us say by the end of FY ‘27 or so?

We should go down below 4.6, 4.5 level.

The second question is on the recent LOIs that we have obtained . So, for mines actually, the potash one, are we planning to curtail it with the fertilizer plant that is stated for commissioning in FY '27?

Yes, the whole basket of diversification from lead, zinc, silver idea is, of course, to add more value to the fertilizer business . So, if we add that for potash block and make it diversify into fertilizer, that will help there. Also, we are very upbeat about the block we have got in UP, which will look at rare earth magnet material because it is like ly to have monazite and we should be able to, you know, if exploration proves that we have got enough of reserve and we can crack the technology problem of extracting neodymium from monazite, then yes, Hindustan Zinc has again a huge, bright spot in the future.

So, sir, coming to the two blocks, tungsten and rare earth, have we done any preliminary study over there? I mean, are there any timelines that you would like to give? And what kind of ROE or ROI you can mention, we will be looking from these blocks?

First, we have to do the exploration itself. There is not much of a data of a proven reserve there. So, because it is a very preliminary exploration data that was there for during the auction, so we will have to do full exploration, establish the reserve, then look at the business case and all that. So, we are not yet ready with the business case . So, we will have to first place order for exploration that we are currently going through.

Our next question comes from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.

Sir, first question is on the capital structure and balance sheet. S ir, our net debt is now almost Rs. 4,000 crores. So, what sort of debt or leverage level should we look at as we start spending more CAPEX and also maybe looking for maintaining dividends?

So, Sandeep here. Thanks. I think as I said in my opening statement, the free cash flow generation at the current level of the LME and the volume pre -CAPEX is almost Rs. 10,000 crores overall. So, even if you factor in the overall, if you see the horizon of 3 to 4 years, Rs. 45,000 crores to Rs. 50,000 crores, you take it up and around Rs. 30 crores to Rs. 32,000 crores, this overall CAPEX. So, still you have availability of Rs. 18,000 crores, which can be distributed subject to the Board approval from the shareholder's reward point of view.

Should we expect the surplus after the CAPEX required to be shared with the shareholders, or we are okay with leveraging further and maintaining the payouts?

I think from your modeling point of view, you should factor what you said at this point of time.

Okay, only the surplus. Sir, my second question is with respect to our expansion plan for the mining and the smelting capacity. Now all the mines where we are putting capital and expanding are set to expire in 2030. So, in our base case, while we were evaluating these projects, what sort of royalty increase have we baked in? Just wanted to know that.

So, we have seen the worst case and the most positive case. Most positive case, meaning that we get a very, very minimal royalty increase. Worst case, we see there is a competition. But looking at our current margins, we are very confident with the worst kind of cases that we have planned in our mind , we will have a good amount of profitability, much better than all other metal businesses in India.

Sir, can you share what could be the worst-case number of royalty in the market?

Sir, just one last question on this 0.5-million-ton fertilizer plant. If you can remind, what is the total CAPEX that will be spent? And what sort of asset turn are we looking at?

So, fertilizer total CAPEX cost is around Rs. 1,800 crores and around Rs. 1,000 crores has already been spent and the remaining will be spent in the next 9 months to get a complete 5 lakh ton of the fertilizer.

And what sort of revenue or say EBITDA potential on a steady-state basis are we looking at?

So, as we said in earlier in case of fertilizer, we are expecting around Rs. 400-450 crores of the EBITDA and around Rs. 2,000-2,500 crores of revenue.

And the ramp up, so we are looking at 1Q , '27. So, should we expect the ramp up over what, 2 years or something? Or is it...

No, no. The ramp up, why should it be 2 years? Maximum 3 months, we will have the ramp up.

So, potentially second half FY 27, we can see this run rate.

Yes, correct. It is most of a chemical process . It is not a hot furnace process . So, hence, it will be easier.

Our next question comes from the line of Ashish Kejriwal from Nu vama Wealth Management. Please go ahead.

Sir, question on our expansion. When will we start ordering our equipment s because we mentioned earlier that it will take 36 months from the date of ordering. And as well as in the last call, we said that we will give some indication of our 2nd Phase also. That is my first question.

So, the last 250,000 tons per annum smelting complex that we have spoken about. For the smelter portion of that we have already placed order. For the mining portion of it, we will place order in 10-15 days’ time. And then we will do the concentrator , we should be able to place order by August 2nd week. So, that is the 1st Phase. Now in the second part, we should be placing all the orders for 2-million-ton expansion which should be placed by September 30th.

So, we have formed up the plan for second phase also.

Absolutely, absolutely, absolutely.

Secondly, in terms of this quarter, a couple of data points. One is , what’s the grade, average grade this quarter versus last quarter? Secondly, power cost, is it possible to share on a per unit basis how it has changed ? Because the delta which you are talking about, that 19% renewable versus 13%, it could be maybe because of lower volume. But if you think that we can do 19% for the entire year, then please communicate that also. And thirdly, how much brand fee we have paid in this quarter? Because we have increased the brand fee to 3% of the revenue versus 2% earlier and we just want to get more comfort also that whether it is going to change further or not.

So, I will give the answers on this grade. So, the grade was 7.53% this quarter compared to the last year's Quarter 1 Y-o-Y around 7.41%. So, there is an improvement in the grade that also helped into the cost. And in case of the power cost, I think we don't specifically talk about the power cost, but it's lower. So, not on account of the renewable energy, it's 19%. Overall, as I said, the power cost is reduced on about three reasons. One is the Serentica power is coming better compared to last year Y-o-Y as they are commissioning the facility. Secondly, the imported coal price is being softened. And third, which I talked about the highest ever domestic coal utilization of 54%. These are the reasons for, you can see the power cost towards the Rs. 5 kind of thing , something like you can model in your numbers in case you wish to. Specifically, I can't quote. Thirdly, about the numbers of the brand fee payment , the brand fee payment of this quarter at the beginning of the year which goes as per the agreement has been around Rs. 1,060 crores. And this is the number which I talked about.

There is no change.

There is no change in any other things in terms of the terms and conditions.

So, because last year, brand fee was 2% of revenue and which increased to 3% now. And do we envisage that this can sustain at 3% or it can go up to 5% also because we don't need shareholders approvals again.

Now it will remain at 3% till the end of the contact period.

And what is the contact period, sir?

It is beyond next two fiscal years.

That means, at least till FY '28, it will remain at 3%.

If you can model up to FY '27, it will remain same.

And sir, in power costs, actually I was looking at more of our Q-on-Q basis, not Y-on-Y basis.

Power cost on Q-on-Q basis?

And that is mainly because of renewable power.

Absolutely.

And more domestic coal and more renewable power.

So, I think again repeating. More domestic coal has helped us and the better quality of the coal from the Coal India has helped us. Renewable energy has helped us. So, if you talk, coal, 20 paisa reduction has happened compared to the last quarter in the per unit basis.

And sir, lastly, just to get more comfort, we have already seen some reports going on, that we are in sync with the Government Nominat ing Directors also in all the proposals which we are taking right now. So, no issues at all yet of that. So, that will give a good comfort.

Absolutely. There is only one proposal that the Board approved which is, apart from routine business matter, is that expansion program. And everybody is fully supporting expansion of Hindustan Zinc and the 1st Phase of 250 Ktpa has brought in huge enthusiasm and entire Board of Directors were happy to see that finally Hindustan Zinc is getting out of comfort zone of 1 million ton plus production every year.

That's cool, sir. Thank you so much. That gives the comfort.

We will take last question from the line of Ritesh Shah from Investec. Please go ahead.

Couple of questions. Sir, first is if you could detail the status on Bamnia Kalan Mine, and if you could put in context physically if you look at the grades from Rampura Agucha, SK, RD, it has been deteriorating if you look at the trend line over the last 7 to 10 years. So, in the last call, we have given a COP number which is pretty much static. So, if you could just marry the two parts to the question and help us understand, one is the status and how should one comprehend the COP number.

See, practically speaking, overall grade, if you see, as you go down deeper into the mine, there is chances of the grade being worse. But it is a general statement. But then you look at the various patches of the mine, and we have to balance between those patches to ensure that we have a consistent grade, if not better grade overall. And that is a strategy call we take which part to mine when depending upon suppose if I take Quarter 1 last quarter if you look at that we had a grade which was worse than the grade that we had in Quarter 4. Typically, in Quarter 4, we try to maximize production to get the best at that point of time. And so we also pick and choose where to mine, how to mine. Basically mine is developed in three, four different levels, about some 15, 16 different areas so that always we have a choice to make among the grades that we take. So that stage will continue, but seeing that, you will also appreciate, Agucha is the best grade, then followed by SK and RD, and then followed by Zawar, which is the worst grade. Bamnia Kalan, when we develop, my expectation, it should be somewhere between RD Mine and SK Mine, between 5% to 6% grade material it will produce. And we are currently about 44 -45% work has happened on the development of the mine and we expect the mine to open somewhere in 2026, end of 2027 early.

Only thing that in case you want to model in your number, the R&R, SR K audited numbers which we publish, that is the final number from the mineable grade point of view, which is 7.2%. That you can model in your financial model for the COP purpose.

Sure, that's helpful. Sir, my second question is on roasters. Can you help us refresh what is the current status? Do we have silver contribution production coming out of roasters right now?

Finish your question.

And once basically it gets operationalized, what is the sort of contribution that we expect from roasters to come through?

So, roasters primarily produce Calcine, which helps us to produce Zinc. They do not produce silver. However, from Calcine, when we produce Zinc by the leaching process, the residue that we have, then that residue, weak acid leaching residue as we call it, we can take it to fumer. And after fuming from that residue, we can make lead silver cake. And that lead silver cake again sent to furnaces to produce silver. That is the whole circuit. So, roaster per se does not produce silver, but as long as if I have more capacity of leaching and purification circuit, then I will have more amount of silver being produced. As of now, we are not adding to leaching and purification circuit, but we have a dded fumer. So, as long as that fumer 33 ton capacity is there, even if I put 20 more roasters, that 33 ton is the only capacity I have. That's why you will see that our expansion plan, new leaching and purification circuits that we will make, it will all come with new fumers, so that from the zinc circuit we can produce more silver, the way actually you have been hinting.

This is helpful. Sir, two wider questions. One is how should one understand the increase in brand fee from say 1.7% to 3% or what is the underlying rationale for same?

No, so the brand fee is a thing that has been widely discussed in the books and the rationals are known it is a bundled services. There are various strategic services and you will all appreciate that this Company, when it was taken over , it had only 5 years of remaining life , had only 100,000 tons of production. That complete transformation of this Company to a 1 million ton production with about 25-30 years of life left , huge amount of risk taken in exploration , t here was no silver production , making it world's third largest silver producing country , 700 tons of silver , the migration from open pit Agucha Mine to complete underground without disruption in production, thousands and thousands of crores of wealth creation for shareholders. Imagine all that cannot be attributed to an existing management that was there when the Hindustan Zinc was disinvested. So, there is a something, brand and services which help that transformation that due is there and all that justification was discussed in the Board, duly vetted by external consultants , benchmarked with similar fee arrangements in all other conglomerates and then finalized.

And just to correct it, it is not 1.7. It was 2%. It is not 1.7 to 3. It is 2 to 3.

Fair. And what should we make of Vedanta reducing its stake in Hindustan Zinc during the quarter? So, on one side, the parent is reducing the stake and on the other side, basically the brand fee is actually increasing. Is there any relation between the two events and how should one understand the ownership of the promoter into Hindustan ? Like, will this number continue to reduce? How should one look at it?

No, as Hindustan Zin c Management, we cannot comment on any one of the or many of the owners of the Company, their strategic moves and what they do. But as far as the operations are concerned, we will appreciate that management control remains even at a much lesser holding of the Company. So, as long as management control is there, then as long as strategic directions are set, strategic services are provided, the brand fee also is there.

And sir, just last one question. Is it possible to convert silver sand to gold? I think this was one of the points in one of the recent reports which popped. I just wanted to understand like has there been any movement of silver sand from Hindustan Zinc to Fujairah Gold? And how should one understand the mass balance and the underlying economics and grades?

No, no, we sell silver and residues of silver also we sell . So, we sell many of these smelter residues as it is based on the primary metal existence to people. But if there are trace elements somewhere and really that is not the way the metal business is done.

Silver sand contains 93% of the silver.

Silver. So, we sell many other, like suppose the SHG zinc we sell, it might have some traces of something we don't know.

So, recently the Government of India has also put a lot of IBM and other things to see if there are any critical minerals there out of these 24 strategic minerals in any of the minerals mining. They are also searching. If there may be traces which become commercially viable, it can always be recoverable. At this point of day, it doesn't become commercially viable to recover.

No.

Silver sand is being sold on the basis of the LBMA prices which contain the 93% silver which goes to Fujairah Gold as well.

And in the annual report, is it possible to figure this particular line item?

It won't be possible Ashish, because it is not my finished goods , sir. You will see lot of other income which will be there. It is a part of other income. For me , it's a residue. I think you are getting a bias because of somebody's putting that it should be a separate segment. It cannot be. It's a by-product.

It is a residue.

It's a residue for me.

I honestly wasn't aware of anything of this sort, so just a clarification. Thank you so much for the answer.

Like we sell our ausmelt slag and all that. Many of the slags we sell.

So, ISF dross is being sold. Ausmelt slag is being sold, which also contains the zinc and lead . So, that's why, Ashish, just to take the conversation forward, to give you the perspective, that's why how the Runaya facilities were set up, because there are two options. Either you sell the residues as it is formed, or you recover the zinc-lead metal out of it. More and more you recover, it becomes beneficial for us. So, that's why the ancillary facilities are getting set up.

Thank you. Ladies and gentlemen, I now hand the conference over to Ms. Jain for closing comments.

Thank you, operator. Thank you, everyone, for joining us today on this call. If there are any follow-up questions or any clarifications required, you can reach out to the Investor Relations team. Thank you.

Thank you. On behalf of Hindustan Zinc, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.