Hindustan Zinc Ltd
NSE:HINDZINC
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Hindustan Zinc Ltd
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Ladies and gentlemen, good day and welcome to Hindustan Zinc Fourth Quarter and Full Year FY 2023 Earnings Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Jhalak Rastogi, Associate Director, Investor Relations. Please go ahead.
Thank you. Good afternoon, everyone. I welcome you all to Hindustan Zinc Fourth Quarter and Full Year FY '23 Ending 31st March '23 Results Briefing.
In this call, we will refer to Q4 FY '23 investor presentation available on our company's website. Some of the information on this call may be forward-looking in nature and is covered by the safe harbor language on Slide #2 of the said presentation.
Today on the call, we have with us our CEO, Mr. Arun Misra; and our CFO, Mr. Sandeep Modi. Mr. Misra will begin with an update on business performance, while Mr. Modi will walk you through financial performance. After which, we'll open the floor for questions.
I now request Mr. Misra to begin today's call. Over to you, sir.
Thank you, Jhalak. A very good afternoon to all of you. Thank you for joining us today for the fourth quarter and FY '23 results briefing.
At the outset, I'm very happy to share with you that Hindustan Zinc has achieved highest award metal production in FY '23, crossing 1 million tonne metal mark, which was promised at the beginning of the year. We could do this through relentless efforts on our operational efficiencies in our smelters backed by consistent mine metal production in our minds. With our ever increasing silver production, it brings me great pleasure to share that Hindustan Zinc has now become the fifth largest silver producer globally. A quick snapshot of developments made in the year are given on Page 6 and 7 for reference.
Coming to our key priorities on safety front, in line with our commitment, we ensure zero harm to employees. The leadership has undertaken the prime responsibility of providing a safe workplace for all employees entering our premises. We have started implementing critical risk management to prevent further facilities, and it gives me satisfaction to report fatality-free operation during last 2 quarters. Safety of our people is the top most priority for us at Hindustan Zinc, and it is our commitment to ensure that all our employees return home safely.
An update on key priorities on ESG front, we continue to make progress on our sustainability journey to achieve net zero by 2050 via multiple pathways. During the quarter, we entered into another power delivery agreement with Serentica Renewables for sourcing renewable power of 250 megawatt, thereby aggregating such contracts to 450 megawatt under the group captive scheme. We inaugurated 550 tonnes per hour paste-fill plant at Rajpura Dariba Complex, which affirms our commitment towards a safe, smart and sustainable operation.
I'm also elated to inform you that Hindustan Zinc is transitioning towards a low-carbon vehicle BEV fleet. We flagged off the first underground mining EV in SK mine, first LNG vehicle for transportation and first EV truck for carrying concentrates from mines to smelter. Hindustan Zinc ranked amongst top 5% ESG scores in the metals and mining sector in S&P Global Sustainability Yearbook 2023. We have been featured for the sixth consecutive year, reaffirming our best-in-class sustainable practices. We have also been recognized with prestigious A rating for climate change and A- rating for water security.
In addition, Rampura Agucha Mine became India's first mine to be greenco certified, and 4 of our mines are now 5-star rated under A list category of mines by [ Indian Guru of Mines ]. These endorsements play a significant role in motivating us to consistently march ahead on our ESG journey.
Coming to an update on our on-ground CSR activities, it gives me immense satisfaction to inform that we are progressing well on our social sustainability goal. We could outreach an ever-highest number of more than 1.72 million beneficiaries in FY '23 through our sustained CSR initiatives, strengthening our commitment towards education, sessions on digital literacy and life skill training were imported to different students. Promoting sustainable likelihood and skill development, Hindustan Zinc also can train successfully its first all-female batch for Hanam security guards with 100% catchment at reputed organizations.
Reinforcing the goal of diversity and inclusion, we achieved 19.5% gender diversity as of March 23, inclusive of all genders and sexual orientation.
I would like to share that Hindustan Zinc signed MOU with Rajasthan Cricket Association for developing India's second largest cricket stadium in Jaipur. Zinc Football Academy back second position in the Hello India under 17 rounds football league. And at [ Rassman ], we also supported regional cricket match of [indiscernible] league held at [indiscernible] with about 150-plus participants across Jaipur.
Moving on to the market, the global economy continues to remain impacted by external factors, though the previous year -- previous quarter did begin with optimism on the global economic outlook on account of easing supply chain disruptions and expectations of China's economic recovery supported by positive hope on broad-based recession avoidance. However, the same was short lived with the potential banking meltdowns and mounting inflation in the U.S., supplemented by China showing a few signs of strong economic recovery yet. Broader market sentiments continue to remain weak. Further, as per IMF, 2023 will be another challenging year with global growth of less than 3% majority impacted on account of monetary tightening, COVID aftermath and the war in Ukraine.
Zinc supply and demand forces remained underperforming. The LME stocks stood at 45,000 tonnes as compared to 140,000 tonnes at the start of April 2022, whereas stocks in [indiscernible] warehouse at the end of March stood at 97,000 tonnes as compared to 176,000 tonnes at the start of April 2022.
Stocks are done at multi-decade low levels. On demand side, there has been a fall in global consumption by 3% in 2022 amidst the slowdown of China's economic recovery and possibility of years' banking crisis, impacting the construction and the automotive sector for the first half. Global consumption is forecast to grow by 1.5% in 2023.
Touching briefly on lead. Lead prices in Q4 exhibited an improvement of 2% Q-on-Q, closing at $2,145 a tonne. Global lead demand exited supply in 2022, with lead metal supply down by 0.7% and demand up by a modest 0.5% predominantly in China, India, Japan and U.S. However, in the first half of 2023, muted and balanced lead prices are expected, driven by [indiscernible] supply and demand expectations on account of lead smelters going into maintenance in China, combined with off season of lead-acid battery market.
Coming to silver, prices have been on an upside, closing at USD 23.89 per [indiscernible] ounce. Silver inventory in London was holds last 6-year low levels in November 2022 and continues to trend downwards. For 2023, silver demand is expected to be bullish, driven by increasing industrial offtake augmented by rising focus on green economy, including renewable energy products like solar cells, vehicle electrification and investment in 5G infrastructure.
On the domestic front, the Indian economy continued to show strong resilience. This was reflected in the S&P Global Manufacturing PMI in March 2023, which was at 56.4 indicative of expansion in the manufacturing activities. Q4 experienced a strong demand for network of industries, maximizing output in the last quarter.
Now coming to an update on operational performance. This financial year, we surpassed our own reports. I am happy to report mine metal production of 1,062 kilotons, up 4% year-on-year and record high refined metal production of 1,032 kilotons, up 7% year-on-year. This was supplemented by highest-ever mine development during the year, crossing 110-kilometer mark with life-of-mine ventilation system fully commissioned and operational at Agucha and in progress at SK and Zawar mine. This ensures continuity of superior performance while maintaining our mine life at 25-plus years.
During the quarter, our mined metal and refined metal production was ever highest at 301,000 tonnes and 259,000 tonnes, respectively, demonstrating our capabilities to produce 1.2 million tonnes MIC. Record performance was majorly driven by higher ore production, improved grade and better plant availability.
We also delivered ever highest silver during the year in line with lead metal production. We entered the new financial year on the back of such stellar performances. Such resilient efforts blended with softening input costs, enable delivery of strong operational performance, successfully achieving the annual guidance with an EBITDA margin of 52%. Some of the automation projects like smoke hour drilling have helped increased volume with marginal operating costs.
On cost projects front, happy to inform that our [indiscernible] plant can represent hidden process, and commissioning is scheduled in quarter 1 of this financial year. For fertilizer plant, product placement is scheduled in this quarter, and [indiscernible] commissioning is also targeted in quarter 1 of FY '24.
Also, we have successfully maintained a mine life for 25-plus years with strong R&R, demonstrating an increase of 2.7% year-on-year and factoring production of FY '23. The increase is 7%. Maintaining a portfolio of mines with long life remains one of our key focus areas.
Before I hand over the call to Sandeep for an update on financial performance, I would like to present our production guidance for the fiscal year 2024. We expect mine metal for the year to be in the range of 1,075 to 1,100 tonnes and refined metal production for the year to be in the range of 1,015 to 1,075 tonnes while FY '24 saleable silver production is expected to be between 725 to 750 tonnes.
With this, I hand over the call to Sandeep for an update on the financial performance.
Thank you, Mr. Misra, and a very good afternoon to everyone. Supported by a consistent financial performance across the quarter, Hindustan Zinc experienced yet another record-setting for annual performance, delivering historic high revenue, EBITDA, net profit and cash flow generation. The splendid performance is an accurate demonstration and the testimony of our continued efforts on operational efficiencies, volume enhancement, cost optimization backed by other decision-making and a favorable LME environment. All of these have enabled us in sustaining robust and resilient margin even in an input commodity inflationary environment.
Coming through an update on the financial performance for the fourth quarter and of full year ending March '23. Revenue from operation for the year was a record INR 34,098 crores, an improvement of 16% Y-o-Y. This was supported by improving LME and volumes gained from strategic easing of approximately INR 800 crores, favorable exchange rates and better lead and silver volume, which was partially offset by lower lead and silver prices.
Revenue from operations during the quarter was INR 8,509 crores, down 3% Y-o-Y, majorly on account of lower zinc, lead and silver prices, which was partially offset by improved refined metal and silver volumes and favorable exchanges. Sequentially, revenue improved by 8%, primarily due to improved metal and silver volume along with a better zinc, lead and silver prices.
Zinc cost of production before royalty during the quarter stood at $1,214 per tonne, the lowest quarterly COP in FY '23, which was 6% better sequentially, though 7% Y-o-Y in USD -- 6% better sequentially, 17% higher in INR terms if we compare with the Y-o-Y. The sequential improvement was mainly on account of better volume, improved rates, strong operational efficiency and supported by [indiscernible] cost.
For the full year, things COP stood at USD 1,257 per tonne, 12% higher Y-o-Y in USD terms and 21% higher in INR terms. Though that within the guidance given in October '22, the COP was up mainly on account of elevated coal prices or domestic coal linked [indiscernible] until December '22 and input commodity inflation, partially offset by a large higher volume and import operational efficiency.
The resulting EBITDA for the full year was at record INR 17,590 crores, an increase 8% Y-o-Y driven by improved metal and silver volume, higher zinc LME prices, gains from strategic aiming of INR 800 crores and favorable exchange rate partially offset by higher cost and lead -- lower lead and silver prices.
EBITDA for the quarter was INR 4,208, down 16% Y-o-Y and up 13% sequentially. The quarter-on-quarter improvement was primarily driven by better revenues due to higher volume and prices coinciding with improved cost on account of reducing input commodity inflation further supported by better volume, mining grades and operational efficiency. Please refer to EBITDA brief from Slide 23 to 25 for further details.
Consolidated net profit for the year was at historic high level of INR 10,511 crores, a growth of 9% Y-o-Y majorly led by higher EBITDA, partially offset by an increased impact. Net profit for the quarter stood at INR 2,583 crore, up 20% quarter-on-quarter. The sequential improvement was majorly on account of higher EBITDA and lower tax expenditures.
Effective tax rate for the fourth quarter was 26.3% and for the full year was 23.2%. The tax expense and ETR was lower in Q4, mainly on account of a onetime adjustment, as the company is opting for the new tax regime from FY '24 paying tax at 25.17% and state of current APR of 34.9%. Deferred tax rate and liabilities have restated at 25.17%. That said, our cash tax outflow has gone up for the year due to a lesser amount of accumulated metal credits. Further, as well, we're moving to the new tax regime. From the fiscal year, our tax rate will be around 25%.
I'm also happy to share our report in March 23, the Board had approved a dividend of INR 26 per equity share with a 1,300% basis, sales value of INR 2 per share, an amount of INR 10,986 crores. This reinforces our commitment of providing superior shareholder return continuously. Further, during the year, we contributed INR 24,949 crores to [indiscernible], including the dividend paid to Government of India and associated tax of INR 10,855 crores.
Coming to our cost and CapEx guidance for the fiscal year '24, we expect our zinc cost of production to be in the rate of $1,125 to $1,175 per tonne for the upcoming fiscal year, which is inclusive of higher mine development expenditure to support future volume growth. The guidance is contingent on the macroeconomic factors impacting import commodity prices. Having said that, given the fact that we have maintained our leadership position and the global cost curve, we remain confident to protect and improve our margin going forward as well.
Project CapEx for this is expected to be in the range of USD 175 million to USD 200 million. We will continue to have a focused effort to invest in strategic projects with higher IRR and towards the sustainability aspect of the business.
With this, I open the floor for your questions. Thank you.
[Operator Instructions] Our first question comes from the line of Abhiram Iyer from Deutsche Bank.
This is for -- the current cash balance that the company has. Are you -- given the fact that we paid the dividend primarily by taking a smaller short-term debt, is the company looking to use this cash for any inorganic acquisition? Or what's the sort of medium-term goal here?
So currently, the company -- so any acquisition, which will happen, will be on the basis of the Board of new decision and any valuation of the reasons done. Given the fact, as of now, our focus is to invest in the fertilizer and roaster project. And currently, the company has INR 10,000 crores of the gross investment cash and cash equivalent. And the borrowing is smaller and compared to the quarter 1 cash flow should be basically recouping the whole -- whatever the negative we are having. And if you see our guidance, which was given, I'm sure you can do your net and comfortably, we can generate in general more than INR 10,000 crores of the cash flow.
Got it. So broadly, this is not going to be -- the debt -- the short-term debt would then be converted to more longer-term debt because as per your statement, it was INR 11,000 crores.
Yes. So we don't intend to do any short term to long term, given that our cash flow position, which I am again saying that I really state our position of the cash flow generation, historically, we have been generating the cash flow. We should be able to pay within this financial year.
Got it, sir. And just a follow-up to that. Given -- could you just give the nature of investments which are present? Are all of these liquid investments in mutual funds?
I think that is not a standard disclosure, but we invest in the high-quality debt instruments as per [indiscernible] policy.
Our next question comes from the line of Amit Dixit from ICICI Securities.
Congratulations on a good set of numbers. My question is with respect to the mine metal production guidance. So if I look at your guidance, I mean it is -- the upper end of guidance is also at 5% high Y-o-Y. You have hit the mine metal rate of 1.2 million tonnes into the quarter, while I understand that it's not that every quarter [indiscernible]. But I just wanted to understand why we have given such a subdued guidance. And what are the key enablers for us reaching 1.2 million tonnes per annum and when we will reach it?
So if I can remind you, we started off the discussion of the gross project at 1.2 million tonne MIC. So while we can still produce 1.2 million tonne MIC what we have demonstrated in quarter 4, our focus going forward is actually moved from MIC to the finished metal. So we are looking at now putting one roaster, and then we will try to do some debottlenecking of the leasing circuits to actually build up a capacity of 1.2 million tonnes. So our immediate focus is to, with the available capacities, produce 1,120,000 level more on than 1,100,000 tonnes of metal first. And then whatever is that metal that we produce correspondingly back up by MIC production. So that's why the numbers are set. The focus moves from MIC to metal. So somewhere around INR 1,050,000 to 1,075,000 tonnes of metal that we can produce, then we have calculated the MIC accordingly. Otherwise, with the roaster and few debottlenecking in the leasing, we will be able to go through that 1.2 million tonne metal capacity instead of talking about MIC capacity.
Okay. Just a follow-up. When can we expect to reach this 1.2 million tonne -- metal tonne?
After this roaster, we are taking, say, 18 months of commissioning from the time of construction, which will begin somewhere in June or July then another 18 months. So maybe FY '25 -- '24, '25 or '25, '26, one of these 2 years would be close to 1.2 million tonnes.
Our next question comes from the line of Love Sharma from Lombard Odier.
I had a question about [indiscernible] from FY '24 onwards. You're going to take some balance, I understand. And in that sense, that amount has already been saved in [indiscernible]. And if so, how much is that? And generic question would be [indiscernible] to stay in position.
There's some background noise, but I'm sure you are trying to ask what is the brand fee expenditure. So during the year, brand fees was approved from the 1st of October. So this financial year, you see the impact of INR 318 crores. And the next year will be depending upon the turnover, [ 2% ] of the turnover. But roughly, it should be between INR 650 crores to INR 700 crores.
Okay. Can I ask question on the GE to retain a mix conversion. I know that you got the shareholders both for that. Do you still need any other creditors both to happen? Or is the process pretty much done? And on the NCLT [indiscernible]?
So all the process have been done and then the former officer is going for the second motion to the NCLT, which has also been filed on the [indiscernible]. And once that is done, then it will require a Board approval. So no separate approvals are required.
Okay. And what is the base point for the NCLT meeting you say, NCLT approval?
So we have filed on [indiscernible]. If NCLT were able to give the hearing, then only we can comment upon it.
Our next question comes from the line of Sumangal Nevatia from Kotak Securities.
So my first question is on the dividend payout. Now given that we've moved to a marginal net debt level, should we expect dividend payouts to be restricted by the cash flow or we are also okay by taking more debt and pay higher dividend like we did in FY '23? And also, given our FY '23 payments was much beyond our cash internal approval, I mean, should we consider this as, I mean, frontloading of FY '24 dividend in FY '23, given that you commented that FY '24 cash flow will be used to repay the short-term debt?
So thanks for the question. So first of all, dividend payment is, I think, a Board decision. So whenever it will happen, we will come to know. Obviously, any decision which will be taken by the Board, it will be depending upon the strong financial management. So I'm sure the Board will consider all these factors before approving any dividend, which will happen in the future.
Okay. All right. And just one last thing on the international acquisition, is it completely on the backbone that is called out? There were reports that the government is suggesting that we should [indiscernible] some noncash method of acquiring or something of that is under consideration.
No. So all we can comment here is the investment acquisition was a great idea. We are -- we have got the Board approval, and we have filed it in the stock exchange. There is a letter which has been received from government that they are a majority of the minority shareholders. They're in the public place. So we are working on it, and we still believe that this is something that we must do for the sake of [indiscernible]. So we will [indiscernible], but we are really hopeful and we are on the job all the time.
As of now, it's not been called out. It is still under works, right?
No. Unless we both process its relation withdrawing this, until that time, it is not called out.
Our next question comes from the line of Rahul Jain from Systematix.
Two things. One is on the cost of production that you have mentioned. Does it include the brand fee?
And secondly, we have [indiscernible], which I think would have been a lot higher because the way coal prices have come off. And can you give us some color as how -- what has been the full procurement cost and how we see going forward?
So thanks for the question. The cost which we refer to the market is the reason cost, which is for the conversion cost, total cost of production, but that does not include the brand fee. Taking coming to the cost -- coal of cost -- cost of coal. If we talk about that, as we said in the last quarter, that we were having certain high cost coal inventory. Obviously, that was taken for decision for the purpose of protecting the coal for the purpose of production. That has been depleted, and our coal cost has gone drastically reduced. And that's why you see, compared to quarter 3 versus quarter 4, $80 cost reduction. And we believe that our current import coal prices are around $150 to $160 per tonne for the import prices. And we have also got almost 26% linkage coal in the last quarter or quarter 4. And I'm sure this will continue.
With that, we are quite confident that this guidance, what was the [indiscernible] for the cost, they are achievable. And given that our volume size will be also higher and [indiscernible] 30% to 35% cost remains fully variable in the last 6 years. The volume benefit will come to us.
So just one more to add to that. We also have a captive coal mine development. Any progress on that?
We don't have any captive coal mine development down.
Our next question comes from the line of Pinakin Parekh from JPMorgan.
So my first question is, if you look at Hindustan Zinc balance sheet, it has materially weakened from its peak days of having a very large net cash balance. Now the gross debt is closer to INR 12,000 crores. So at this point of time, what is the management view on the tech on the book on a gross basis? Will management use the operating cash flow to reduce the gross debt on its book? Or should the debt increase through the course of FY '24?
So I will say directly that this, as a quick answer for the earlier question also, at the current level of the guidance, and we are sure that we'll achieve this guidance 100%. And as I take the current LME level also, we are comfortably should be able to generate the cash flow of INR 10,000 crores. And if you bifurcate in the quarter also, we should be, by May and even, we should be able to recruit the -- whatever the margin is, INR 1,700 crores, INR 1,800 crores, net debt is there.
Coming back to this cash flow generation, I'm sure at the March end, we should be able to -- in a position if we generate the INR 10,000 crores of cash, it will get netted off with the debt.
But sir, that would be -- that will only happen if there are no dividend payout, right, in the course of FY '24. Because if the company pays out dividends, then effectively, this debt balance won't come down, right? So are you saying that the dividend payouts reduce from here, and hence, the cash flows will be reserved to reduce the debt?
So I would like to answer this in a different manner also. First of all, dividend is a Board decision. So whenever it will happen, you will come to know. And secondly, even if something happens from the dividend point of view, you will always have an investment against those whatever the borrowings are there. So you will never be in a position where -- like you are seeing marginally that because the retail earnings is also now limited. So that retail earning, whatever is there, we won't be able to give the dividends beyond that retail earnings.
So just to simply ask, you don't expect the -- on an absolute basis Hindustan is going to pay down the debt, right? Or do you -- would you reduce on an absolute basis the gross debt that is sitting on its books?
Our target is to reduce the debt as per the whatever the maturity is coming from the transitioning of the cash or the investments, which we have in our books.
Our next question comes from the line of Ritesh Shah from Investec.
So my first question is what is the exact quantum of retail earnings as of 31st of March, please?
Ritesh, so exact quantum of the retail earnings, excluding the general result is INR 1,700 crores, and general result is INR 10,384 crores.
Perfect. That helps. Sir, second question is when we look at the holding at Hindustan Zinc, we find 88% either pledged or encumbered. Sir, can you please detail what this corresponds to and how should we look at this number? Can it go down going forward? Or are we okay with this number at 88%?
I think play of the shares is something in the hands of the [indiscernible]. I don't think we can comment upon this. What we read in the media is that, yesterday, the 91% of total there, I think there is something wonderful and undertaking of some things that are there, but I think me and Misra will be in a position to comment upon that part.
All right. But sir, is it pledged or is it encumbered?
Please, this is something to be in [indiscernible] after Board meeting. They will open up for questions. We will get to that question there.
Sure, sir. Sir, any update on the warehouse?
Update on the warehouse. So no, right now, I have not heard. And since we were expecting before March 31, but it has not happened. And some numbers will be looking at some suitable opportunities timing in the market. When the market will have the capacity to absorb, then we would revive.
All right. And for hedges...
Ritesh, sorry for the interruption. If you could please join back in queue. Our next question from the line of Kirtan Mehta from BOB Capital Markets.
In terms of these capital projects ahead, apart from the fertilizer plant -- in the roaster plant that we are discussing, are there any other projects on the drawing board as this is?
Of course, we have -- our next target will be 1.5 million tonnes. It may have internal -- some stage of 1.35 million tonnes before actually going to 1.5 million tonnes. So maybe another 1 month, we should be able to come clean on what would be the next date, when should we launch the project, what will be investment outlay. So all that, we are on the drawing good. We are close to finalizing those.
And if you can clarify the hedges, what Ritesh was asking.
So as of now, we don't have any open hedge position.
Our next question comes from the line of Amit Dixit from ICICI Securities.
Just wanted to understand the grade of ore in this quarter and how does it compare Q-o-Q?
The metal grade of ore this quarter was 7.42% compared to the last quarter of 6.96%.
Our next question comes from the line of Ritesh Shah from Investec.
Sir, one question, the brand fee element, which is there, does it accrue to Vedanta India? Or does it go to the parent?
It goes to Vedanta Limited, Ritesh. As we already disclosed in our annual [ meeting ] these results also last time, if the brand fee agreement has been signed to Vedanta Limited.
Perfect. And sir, just one question. Hypothetically, you are unable to come through, you said another INR 10,000 crores of these are on the books. What is the ideal capital structure that you will be comfortable with?
I think this is a forward-looking thing. We will have to see what should be the ideal. And I think we are to -- I think what will be the manner of the use, it is up to the Board. And when it will happen, I think we'll be able to tell -- comment at that point of time.
Our next question comes from the line of Abhiram Iyer from Deutsche Bank.
I just wanted a clarification on the difference in the gross cash mentioned in the presentation, which is around INR 1,000 crores versus adding up the investments, cash balances and bank accounts in the balance sheet, given which is around INR 11,000 crores. Any particular reason why the INR 1,000 crores has not been accounted for as gross cash?
I'm not sure where you are seeing the INR 11,917 crores is a bit better. We are having -- INR 10,061 crores is the gross investment in cash and cash equivalent.
Yes, and one thing is if I add up the investment, cash and bank balances given in the balance sheet, I get INR 11,200 crores. So just asking...
Okay. Yes, yes. So I got your point. So there are certain unpaid dividend because if you the way the deposit of dividend on 31st, so there are certain dividends account, which is there. And this dividend money is there, which is a restricted cash, which we can't use because that's funded for the dividend purpose.
Understood, sir. And this would be part of the bank balances, is it?
It was part of the bank balance, but not -- because at the same time, there will be a dividend liability sitting on the liability side.
Our next question comes from the line of Pallav Agarwal from Antique Stockbroking Limited.
So just on the guidance for silver production. So we were targeting 1,000 tonnes of -- sometime back. So -- but even for the next year, we're just targeting about 750 tonnes at the upper end. So is the lead production constrained or -- of anything to actually achieve this 1,000 tonnes of silver production?
No. So fantastic, fantastic. I must appreciate your question. This has to do with -- absolutely, you have hit the nail on the head. Our entire operating proceed is comprising of zinc plus lead as a medium of production in the pyro. And instead of doing only lead production in the pyro plant, it has ended. Whenever we do this, we always have lead MIC getting on converted to metal and that is lying in stock. Even last year also, we ended up with having a lot of lead MIC in stock, which if we could convert, we could have produced some more silver. But we always preferentially use SK mine lead to concentrate to get to maximize the silver production with the strategy we adopted this year.
Going forward, we have to unlock the lead production. To do the unlock the lead production, we have to increase the zinc production capacity in the existing sectors. That is where the investment in roaster, and it will be followed by some debottlenecking proposal in the leasing circuit. Then in the pyro, it can operate only [indiscernible] both. And then the 750 number for us to go to 800 or 825 tonnes once we do that. So it is, again, 1 year away.
Sure, sir. Also in terms of -- you mentioned the project CapEx, but what is the normal maintenance CapEx levels that we incur every year?
It will be around $400 million.
The total you're talking about or it will be 400 plus 200?
The 400 plus 200.
Sure. And this covers any expenditure on fertilizer and other projects as well.
So $150 million, $200 million primary comprised of fertilizer and roaster and [ Ari Power ] investment, and $400 million is largely for mine development and mining equipments.
Our next question comes from the line of Vishal Kulkarni from S&P.
My question is about the -- your cash management generally, because in the past, we have seen some cash in the form of unquoted mutual funds and perpetual securities. Can I understand how easy this is to liquidate when you have to, let's say, for dividends or any other purpose? That's the first question.
And second, on the status of your transfer of retained earnings to general business, where do we stand on that one?
So if you see the investment, the investments are quite liquid whenever we want to sell. And while it is a long-term investment remain in the market, but however, we have been able to liquidate and we also can have a repurchase borrowing from these investments. So beyond that, I won't be able to comment upon the investment part.
In [indiscernible], I think I've already answered that INR 10,384 crores is there and the second motion has been filed in the NCLT on the 2nd April, and we await the hearing from them.
Our next question comes from the line of Ritesh Shah.
Sir, I just want to remind a bit back. This is pertaining to Hindustan Zinc International transaction. I just wanted to understand, sir, how will the flow of capital work. To my limited understanding, I think that we had taken an approval to create a wholly owned subsidiary and [indiscernible] subsidiary. I think it was called HZWOS. And then basically, we had to purchase -- subscribe to the shares of Zinc International or just [indiscernible] Zinc. And this was like a $3 billion, $2.9 billion, to be precise. So I just wanted to understand, sir, how will the capital flow. So you have an overseas subsidiary, which has been created. So does the money flow from India to that particular entity and then to Vedanta? How does that work, sir?
Until now, we have not incorporated any wholly owned subsidiary.
It is part of the whole proposal. Since the proposal needs to be approved, how can we create the subsidiary?
Okay. But sir, hypothetically, if it had been done, how would have the money flowed?
Money, if it will happen, it will happen from here to wholly owned subsidiary and wholly owned subsidiary buying from TSA. But until now, I think we'll not able to -- we'll be unable to comment given that it is not yet approved by the Board -- yet not taken up from the shareholder purpose.
Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the conference over to Jhalak Rastogi for closing comments.
Thank you, everyone. With this, we close today's earnings call. For any follow-up questions or clarifications on the results, please feel free to reach out to Investor Relations team. Thank you.
Thank you.
Thank you.
Thank you. On behalf of Hindustan Zinc, that concludes this conference. Thank you for joining us. You may now disconnect your lines.