Mumbai: Hindustan Zinc could do nothing wrong in FY25. It mined, smelted and sold as much metal as possible. It cut its costs as much as it could. Coupled with favourable prices of zinc and silver, the company ended the fiscal on a record high, giving more returns on capital than any other manufacturing company, as per its chief financial officer (CFO).
The cash cow of the diversified Vedanta Group delivered ₹3,003 crore in profit during the January-March quarter, almost a half more than last year and the best it has ever done. The ₹9,087 crore consolidated top line for the quarter was a fifth more than the same period last year.
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Earnings before interest, taxes, depreciation and amortization (EBITDA), a profitability metric, improved 32% on-year to ₹4,816 crore. EBITDA margin for the quarter improved 5 percentage points year-on-year to 53%.
The robust financial performance during the quarter was a continuation of preceding quarters, which saw it end the fiscal with a consolidated profit of ₹10,353 crore on ₹34,083-crore revenue.
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“Fortune favours the brave. We have good prices going on while we are also reducing cost,” said chief executive officer (CEO) Arun Misra.
What went right for the company? Nearly everything.
Its metal production was highest-ever for a year at 1,053 kilo tonnes. The average prices of zinc and silver were 16% and 29% more than the previous year, bringing in record revenues. Lead prices were 4% lower this year, but the metal has a relatively smaller contribution to the company’s profitability compared to zinc and silver.
While revenue grew, expenses fell. The company’s power cost during the year was 5% lower mainly because it due to cheaper coal prices. It modified its power plants to be able to interchangeably use different grades of coal, so it can buy domestic or imported coal, whichever is cheaper.
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The company also increased its procurement of renewable power, which tends to be cheaper. About 13% of its power needs are met by clean energy from group firm Serentica Renewables. Every 2% increase in clean power production helps the company shave $1 from its per-tonne consolidated cost of metal production, according to Sandeep Modi, chief financial officer.
Hindustan Zinc also invested in improving its metal recovery from mined earth and managed better sale of by-products—factors that helped it further lower operating costs.
This meant that the company’s aggregate cost of production per tonne of metal improved 6% year-on-year to $1,052 per tonne. Now, it targets a cost of $1,025-1,050 per tonne in FY26, Modi said.
During the year, the company posted a Return on Capital Employed (ROCE) of 58%, which Modi said was the best amongst manufacturing companies.
“We are at a sweet spot,” he said, adding that even at more moderate zinc prices, the company could manage to better its performance on the back of higher production and cost cutting guidance for FY26.
What could the company have done better? CEO Misra said that the company could have managed its assets and maintenance schedules better to eke out another 20-25 kilo tonnes of metal production.
The company’s board on Friday gave Misra another year at the helm from 1 June 2025 to 31 May 2026, subject to shareholder ratification. He has occupied the office since August 2020.
The Hindustan Zinc stock shed 3.34% on Friday to close at ₹444 on the BSE compared to a 0.74% slide in benchmark Sensex. The stock has given flat returns since the beginning of the year.
The performance of Hindustan Zinc is vital to the Vedanta Group and its founder Anil Agarwal as he strives to whittle the mountain of debt sitting on the group’s privately-held holding company in London. The zinc company gave out ₹12.250 crore as dividend in FY25, 63.4% of which went to its promoters.