Hindustan Zinc Limited: history, ownership, mission, how it works & makes money

A Brief History of Hindustan Zinc Limited

Hindustan Zinc Limited (HZL), a subsidiary of Vedanta Limited, is one of the largest producers of zinc and lead in India. The company was established in 1966, with the primary purpose of producing zinc and lead, as well as incorporating other minerals.

In 2002, Hindustan Zinc was privatized when Vedanta Resources acquired a 51% stake in the company for approximately US$1.7 billion. This move transformed the company's operational dynamics and significantly enhanced its production capabilities.

By the end of the fiscal year 2021-2022, Hindustan Zinc reported a consolidated revenue of ₹25,288 crore (about US$3.4 billion), showcasing a significant growth trajectory. The company’s Profit After Tax (PAT) stood at ₹10,572 crore (US$1.4 billion), reflecting an increase of about 27% year-on-year.

Recent fiscal assessments show that as of September 2023, HZL's total zinc production capacity is around 1.2 million tonnes per annum. The company has also been focusing on expanding its mining capacity, with an ongoing project to enhance its underground mining operations.

As of October 2023, HZL's market capitalization hovers around ₹2.09 lakh crore (approximately US$28 billion), making it one of the top players in the metal and mining sector in India.

Hindustan Zinc's operational footprint extends to various states in India, with major mining activities concentrated in Rajasthan. The company also emphasizes sustainability and responsible mining practices, aiming to reduce its carbon footprint by implementing advanced technologies.

As for stock performances, HZL shares have shown resilience in the market. As of October 2023, the stock price is approximately ₹335, with a year-to-date increase of about 25%.

The company has consistently paid dividends, with a dividend yield of around 6.3% as of the latest financial year, making it an attractive option for investors seeking regular income.

Hindustan Zinc has also initiated several capital expansion projects, including the construction of a new smelter and a refinery, which are expected to further boost overall production and operational efficiency.

A Who Owns Hindustan Zinc Limited

Hindustan Zinc Limited (HZL) is primarily owned by Vedanta Limited, which is a subsidiary of Vedanta Resources Limited. As of the end of FY2022, Vedanta Limited holds a 64.92% stake in Hindustan Zinc. The remaining shares are held by public shareholders, domestic institutional investors, and foreign institutional investors.

In terms of market capitalization, Hindustan Zinc was valued at approximately ₹2.85 trillion (approximately USD 35 billion) as of October 2023. This significant size places HZL among the top mining companies in India.

In the latest earnings report for Q2 FY2023, Hindustan Zinc reported a revenue of ₹34,617 crore (approximately USD 4.3 billion), reflecting a growth of 15% year-on-year. The company also posted a net profit of ₹7,223 crore (approximately USD 872 million), up from ₹6,536 crore in the same quarter of the previous year.

Shareholding patterns show significant institutional interest in Hindustan Zinc. As of September 2023, the following ownership details are noted:

Hindustan Zinc predominantly operates in the zinc, lead, and silver mining sectors. The company has reported production figures of 2,217 kilotonnes of zinc and 422 kilotonnes of lead in FY2023. HZL's strategic initiatives focus on expanding its production capacity and sustaining its market leadership.

In terms of governance, the company is managed by a board with diverse expertise. As of October 2023, the board consists of 10 members, including prominent figures from the mining and finance sectors. This diverse leadership supports Hindustan Zinc's operational and strategic objectives.

Hindustan Zinc Limited Mission Statement

Hindustan Zinc Limited (HZL), a subsidiary of Vedanta Resources, aims to be the world's largest and most efficient zinc producer. Its mission statement emphasizes sustainable development, operational excellence, and commitment to stakeholder value. The core elements of their mission statement include:

• Safety and Sustainability: The company focuses on sustainable mining practices while ensuring the safety of its operations and workforce.
• Leadership in Zinc Production: HZL aims to be the most reliable, responsible, and sustainable zinc producer globally.
• Community Engagement: Enhancing the quality of life in communities where they operate.
• Technological Innovation: Continuously leveraging technology for improved efficiency and lower environmental impact.

As of the fiscal year ending March 2023, Hindustan Zinc reported an impressive production capacity of approximately 1.2 million tonnes of zinc. The company is also noted for its strong financial performance, illustrating its commitment to its mission.

HZL operates primarily in Rajasthan, with key installations in places like Zawar and Rampura Agucha, which bolster their mission of sustainable mining. The company has continued to invest heavily in technology, enhancing operational efficiencies, which reflects its commitment to innovation.

In line with its mission statement, Hindustan Zinc has actively engaged in various community development programs. In FY 2022-23, the company invested over INR 200 crores in social initiatives, focusing on education, healthcare, and livelihood enhancements in local communities.

Moreover, HZL is committed to reducing its carbon footprint. The company has set a target to achieve a 50% reduction in greenhouse gas emissions by 2030 compared to its 2020 levels. This aligns with global sustainability goals and reinforces its mission of environmental responsibility.

Lastly, Hindustan Zinc's dedication to stakeholder engagement, combined with its robust operational strategies, solidifies its position as a leader in the zinc industry while adhering to its mission of sustainable practices and community development.

How Hindustan Zinc Limited Works

Hindustan Zinc Limited (HZL) is a leading producer of zinc, lead, and silver in India, which operates under the ownership of Vedanta Resources Limited. The company plays a critical role in the country's mining sector, targeting sustainability and efficiency through its operations.

As of the financial year 2023, HZL reported a total income of ₹38,136 crore, up from ₹33,385 crore in FY 2022, achieving a growth of approximately 14%. The net profit for FY 2023 stood at ₹16,210 crore, an increase of 20% compared to ₹13,492 crore in the previous fiscal year.

Operational Model

HZL operates through various segments including mining, smelting, and refining. The company has an extensive mining capacity, which is complemented by its advanced smelting facilities. In FY 2023, HZL produced around 1,032,000 tonnes of zinc metal, an increase from 935,000 tonnes in FY 2022.

The production process can be broken down as follows:

• Mining: HZL operates major mines like Rampura Agucha, Zawar, and Kayad. Rampura Agucha is one of the world's largest zinc mines.
• Smelting: The company has four smelters with a total production capacity of 1.5 million tonnes of zinc per annum.
• Refining: HZL also refines metal to improve purity and deliver high-quality products to meet industry standards.

Financial Overview

Sustainability Initiatives

HZL is committed to sustainable mining practices. The company has invested in green technologies and initiatives to minimize its carbon footprint. It aims to reduce its greenhouse gas emissions by 30% by 2030. The company also undertakes afforestation and biodiversity conservation projects in surrounding areas.

Market Position

Hindustan Zinc holds a dominant position in the Indian zinc market, covering approximately 75% of the domestic production. The price of zinc, which was around $2,600 per tonne in October 2023, influences the overall profitability of HZL.

Furthermore, HZL's stock performance has shown resilience, with shares trading at approximately ₹350 as of October 2023, reflecting an increase of 15% over the past year. The company's strong fundamentals and robust operational efficiency continue to attract investor interest.

Future Outlook

Looking forward, HZL plans to expand its production capacity by investing approximately ₹5,000 crore for new projects. The company is also exploring opportunities in new areas such as lithium and other non-ferrous metals to diversify its portfolio.

How Hindustan Zinc Limited Makes Money

Hindustan Zinc Limited (HZL) primarily generates revenue through the mining and smelting of zinc and lead, as well as the production of silver. In FY 2023, the company reported a total revenue of ₹30,508 crores (approximately $4.1 billion), with a significant portion derived from the sale of zinc metal, which accounted for over 75% of the total revenue.

The company operates several mines across Rajasthan, including the Rampura Agucha mine, which is one of the largest zinc mines in the world. As of 2023, HZL had a total mined metal production of 1,153,000 tonnes of zinc and 228,000 tonnes of lead.

HZL’s production capacity has consistently improved, with the company’s integrated operations enabling it to lower costs. The company's cash cost of production for zinc was around ₹93,000 per tonne for FY 2023, showcasing a competitive edge in the market.

In addition to mined products, HZL also generates income through value-added products like zinc alloys and compounds. The company's strategic focus on operational efficiency and sustainability has led to a reduction in environmental footprint, which is increasingly important for stakeholders.

Hindustan Zinc's cost leadership is further supported by its access to low-cost power, which is crucial to its smelting operations. The smelting division accounted for approximately 23% of the total revenue in FY 2023, benefiting from a favorable market environment for base metals.

On the financial front, the company's EBITDA margin stood at 45% in FY 2023, indicating strong operational performance. Net profit for the fiscal year was reported at ₹12,956 crores (approximately $1.7 billion), representing an increase of 9% year-over-year. Hindustan Zinc continues to capitalize on its competitive advantages while investing in future growth initiatives.

Internationally, HZL benefits from the increasing demand for zinc in infrastructure and construction, particularly in Asia. The global zinc market is projected to grow at a CAGR of 3.5% from 2023 to 2028, which bodes well for HZL’s prospects.

With a focus on sustainable mining practices and advancing its technology, Hindustan Zinc Limited is positioned to leverage its existing assets while exploring new opportunities in the mining sector. The company's ongoing investment in exploration and capacity expansion aims to enhance its production capabilities and maintain its market leadership.