Hindustan Zinc to invest around Rs 2,200 crore to set up fertiliser, roaster plant

Vedanta Group-owned Hindustan Zinc (HZL) will invest around Rs 2,200 crore to set up a 0.5 million tonne per annum (mtpa) fertiliser unit and a 0.16 mtpa roaster plant, the company said. It reported a 56% year-on-year (y-o-y) rise in consolidated net profit at Rs 3,092 crore in Q1FY23.

The HZL board approved the setting up of the two units. The fertiliser plant, which will come up at Chanderiya in Rajasthan, will mainly produce phosphatic fertilisers (DAP/NPK). The fertiliser plant will source around 60-70% of the raw material from HZL’s smelters and rock phosphate from Rajasthan. Any shortage of raw material will be imported.

The cash-rich HZL, which has Rs 24,254 crore gross investments and cash and cash equivalents as of June 30, 2022, intends to market fertilisers in Rajasthan, Uttar Pradesh and Madhya Pradesh among others which are mainly catered through imports.

Work on the fertiliser plant will start in six months and the plant will be operational in the next 22-24 months post commencement of the project work. The unit will be operated through a wholly-owned subsidiary, “since fertiliser is a different ball game altogether,” said CEO Arun Misra in an earnings call.

The roaster plant will come up with an investment of around Rs 800 crore. The location of the roaster plant is yet to be decided.

Meanwhile, HZL’s sales in Q1 FY23 rose to Rs 9,387 crore, a 44% increase on year. Higher zinc prices in the London Metal Exchange (LME ) as well as favourable exchange rates contributed to the rise, the company said, adding that it was partly offset by lower silver prices.

Zinc LME prices and zinc metal sales increased 34.2% and 10.2% respectively as compared to Q1 FY22. Earnings before interest taxes depreciation and amortisation (Ebitda) for the quarter was Rs 5,278 crore, up 48% y-o-y. In volume terms, sales of refined zinc, lead and silver were up by 10-11% during the reporting quarter compared with a year ago period.

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