Hindustan Zinc Ltd (NSE: HINDZINC) Q1 2026 Earnings Call dated Jul. 18, 2025
Corporate Participants:
Raksha Jain — Director – Investor Relations
Arun Misra — Chief Executive Officer
Sandeep Modi — Chief Financial Officer
Analysts:
Manav Gogia — Analyst
Pallav Agarwal — Analyst
Anirudh Nagpal — Analyst
Amit Dixit — Analyst
Sumangal Nevatia — Analyst
Ashish Kejriwal — Analyst
Ritesh Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the First Quarter FY ’25 — First Quarter FY ’26 Earnings Conference Call of Hendustan Linc. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Raksha Jain, Director of Investor Relations of Hindustans, Inc. Thank you, and over to you, Ms Jain.
Raksha Jain — Director – Investor Relations
Thank you, Father, and good evening, ladies and gentlemen. Thank you for joining us today to discuss the first-quarter results of FY ’26. In this call, we will refer to our investor presentation available on our company’s website. Please note that today’s entire discussion will be covered by the Safe-Harbor clause mentioned on Slide 2 of the presentation.
Today, we have our CEO, Mr Arun Mishra; and CFO, Mr Sandeep Modi. The management will be discussing the operational and financial update for the quarter, followed by a Q&A session. Now I would like to invite Mr Arun Mr to present the results. Over to you, sir.
Arun Misra — Chief Executive Officer
Thank you, Raksha. A very good evening to all of you. Thank you for joining us today for the first-quarter FY ’26 results briefing. The current financial year has commenced on a steady note with the company achieving its highest-ever first-quarter mined metal production with the lowest ever first-quarter cost of production since underground transition. This reinforces our position as the world’s largest integrated zinc producer and one of the lowest-cost producers globally.
The quarter was also marked by zero fatalities, underscoring a positive beginning on the safety front. We have established globally practiced critical fatality risk management-based safety management system, CRM, and have ensured tracking and reviewing at senior most levels of management.
Continuing our effort in water conservation as a part of our ESG initiatives, we have become 3.32 times water positive. On the sustainability front, we have launched our Sustainability Goals 2030, spanning across various thematic areas such as climate action, water stewardship, biodiversity conservation, safety and well-being at workplace, responsible sourcing, circular economy, workforce diversity and social performance. These targets reflect our determination to set new sustainability benchmarks for the metal and mining industry. The certification process for Chandya and Rampuragucha is currently underway. Once obtained, this certification will affirm our commitment to responsible production.
During the first-quarter, we also completed the ICMM assessment, which will help in strengthening our present position as a sustainable global leader among metal and mining companies through the adoption of globally benchmark practices across the organization. Currently, Hindusan Zinc is engaged with more than 40 technology start-ups on over 60 different projects and is further engaging with nearly 50 startups through Vedanta Spark program to explore potential use cases.
Vedanta Spark is Verantha’s unique global corporate accelerator where Hindustan Zinc participates and innovation-led transformation projects that addresses critical business challenges. Under Spark program, Hindustan Zinc has unlocked high-potential opportunities by leveraging technologies such as artificial intelligence, machine-learning, computer vision, drone technology, the Internet-of-Things and augmented reality and virtual reality issues. These projects cover diverse areas, including process optimization, enhanced metal recovery, asset reliability, productivity and sustainability.
Turning to the market update, global economies faced multiple uncertainties during the quarter, including rising US tariffs, the hero Israel conflict and other macroeconomic challenges. While major economies like China and Japan continued to experience subdued production demand, India stood as a bright spot.
The country’s manufacturing PMI climbed to a 14-month high of 58.4 in June 2025, reflecting strong domestic momentum, positioned as an attractive alternative investment destination and supported by strong government focus on infrastructure development, India is poised to be significant driver of global economic growth.
During the quarter, zinc and lead prices softened amid prevailing global headwinds. However, both metals saw a swift recovery closing the quarter at $2,764 and $2,025 per ton respectively. Silver, on the other hand, recorded a strong performance with prices surging 17% year-on-year, even currently running over $37 per ounce, creating new all-time high levels. This rally was driven by heightened industrial demand and silver’s appeal as a safe asset. Looking ahead, zinc and lead prices are expected to remain resilient near current levels, while silver prices are likely to stay buoyant in the coming quarters.
Moving to quarter performance. As I have already mentioned, the quarter witnessed highest-ever first-quarter mined metal production of 265,000 tonnes with the lowest ever first-quarter cost of production since underground transition. The driver that this drives our profit-after-tax for the quarter to INR2,234 crores despite the softened output commodity prices. Our zinc alliy plant also clocked a record quarterly production of 5,000 tonnes, taking the overall value-added product portfolio to around 24%.
During the quarter, our refined metal production stood at 250,000 tonnes in-line with the plant availability and impacted by ongoing maintenance activities. We recorded $1,010 per ton of zinc cost of production during the quarter, lowest quarter one figure since underground transition. The reduced cost of production is driven by better mine grades, high renewable energy usage, increased domestic coal consumption, better byproduct realization and softened input commodity prices.
Our soluble silver production during the quarter stood at 149 metric ton and our precious metal portfolio continues to contribute significantly to the overall profitability of roughly around 41% during the quarter. As the company progresses with multiple growth projects, commissioning activities for the new 160,000 tonnes per annum roaster at Dewari have commenced and is expected to be commissioned by mid of quarter two and we will complete all our debottlenecking activities in smelter well before the scheduled timeline in-quarter two, starting from August at followed by.
With these developments, we are confident in achieving the full-year guidance as guided earlier. As you already know, in June, our Board approved the initial phase of growth plan to double the capacity where initially we will add 250,000 tons per annum integrated metal capacity with associated mining capabilities with a capital expenditure of around INR12,000 crores. The expansion will increase our refined metal capacity to 1.38 million tons per annum and our mining capability to 1.5 million ton per annum. We remain committed to meeting India’s rising zinc demand and may announce additional projects over the course of the year.
Advancing our vision to become a multimetal enterprise and becoming a leader in India’s strategic mineral ecosystem, I’m happy to share that we have secured LOI for all the three new critical mineral blocks in Rajasthan with 1,841 hectare block size, rare earth element in Uttar Pradesh with 201 hectare block size and in Hyunda Pradesh with 308 hectare block size. This is India’s time to drive resource nationalism and we are proud to play a part in it in alignment with our country’s goal and critical mineral security.
Looking ahead, we remain steadfast in our commitment to expedit expedite expanding our capacity to meet rising domestic and global demand while upholding the highest standards of ESG excellence. Our strategic focus on portfolio diversification, including our strategic entry into critical minerals, continued exploration to sustain long mine lines, and investment in innovative technologies will further reinforce our position as a cost leader in the industry.
With these priorities at the The forefront, we are confident of delivering sustainable growth and creating long-term value for all our stakeholders. With this, I now hand over to Sandeep for an update on the financial performance.
Sandeep Modi — Chief Financial Officer
Thank you, Mr Mishra, and very good evening, everyone. Amid the evolving global economic landscape, we have seen a notable decline in NME prices, with green down by 7% and led by 10% Y-o-Y.
On the positive side, silver prices maintained their upward momentum, registering a 17% increase over last year. Despite this challenging price environment, our steadfast focus on the operational efficiencies and cost discipline has helped us to deliver resilient and sustainable financial performance and consistent EBITDA margin of around 50%. Before we dive into details, I am pleased to share that we have recently published our tax transparency report of eight additions, reinforcing our commitment towards voluntary disclosure for transparency. The company has contributed around INR19,000 crores to the in financial year ’25, taking the cumulative contribution over the last five years to INR87,000 crores, adding another figure to our strong governance framework, our ESG risk management practices were recognized at the India Risk Benefit Awards organized by CNBC TV 18 in the large gap category.
Coming to the numbers, in the first-quarter, we delivered revenue from operations at INR7,771 crores, it was down 4% year-on-year on account of the lower production volume, lower zinc and lead prices, which was partly offset by higher prices, stronger dollar and better byproduct realizations.
During the quarter, we recorded zinc cost of production of $1,010 per tonne. It is the lowest ever first-quarter cost performance since underground transitioning. It is pertinent to note that Q1 average costs normally remain around 4% higher than the full-year average. So with the present cost performance, we are highly confident to achieve lower-end of the guidance for the full-year. It was better 9% Y-o-Y, driven by improved metal rates, higher domestic coal utilization, a renewable energy increase and softened commodity prices, especially the imported coal. This was also supported by the increased share of renewable energy, as I mentioned, which currently stands at around 19% of the overall power requirement as compared to 13% during the last fiscal year. It has increased on account of largely with the capacities getting commissioned and supplying the power and benefiting to the cost.
Resultantly, the EBITDA for the quarter stood at INR3,860 crores. It was marginally down by 2% Y-o-Y despite zinc and lead commodity prices lower in volume. This was partly offset by higher similar prices, lower and stronger dollar. We continue to maintain industry-leading margin of around 50%. Our PAT for the quarter stood at INR2,234 crores, bit down 5% Y-o-Y.
During the quarter, we also forward 119.5 metric ton of the silver, which is around 17% of our expected production for the year, in-line with our commitment to sustain and deliver lucrative shareholder value. Further, the company also paid INR10 per share as the interim dividend, totaling the overall dividend payout during the quarter to INR4,225 crores. Looking into the future, the Jinx COP is consistently advancing towards our desired target of INR1,000 per ton, which we have set for. With the newly announced 250 KTPA integrated metal capacity expansion, revenue and EBITDA are projected to increase approximately INR40,000 crores and INR21,000 crores in next three to four years, respectively.
Reiterating from our last investor call with the pre-growth capex, free-cash flow generation of around INR45,000 crore to INR50,000 crores and an estimated capex of around INR32 crore INR35,000 crore over the next five years, we are comfortably positioned to create long-term shareholder value.
In conclusion, what lies ahead is a new beginning for built on stronger momentum and transformative vision aligned with the priorities of a greener world and a stronger nation. We remain deeply invested in the metal of the future, supported by premium assets and our position as one of the lowest-cost producers globally. Our precious metal continued to contribute significantly to our profitability, while our leadership in the domestic market reinforce our competitive strength. With a sharp focus on high IRR projects and disciplined capital allocation, we are committed to delivering sustainable growth and creating long-term value for all our shareholders.
With this, I now hand over the operator for Q&A. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star then 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press star when 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.Our first question comes from the line of Manav Gogia from YES Securities Limited. Please go-ahead.
Manav Gogia
Yes, hi. Good evening and thank you so much for the opportunity. It was good to see that the COP was on the lower-end of the core guidance and you 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?
Sandeep Modi
So current energy — in the overall basket, renewable energy is 19% in our overall power consumption compared to the last year-around 13%. So overall remaining 80% is the coal.
Manav Gogia
Yes. And can you give the breakup of the coal mix as well, locally coal and imported one?
Sandeep Modi
So domestic was 55% during the quarter and 45% was the imported coal.
Manav Gogia
Okay. Got it. Sir, my second is
Sandeep Modi
The highest-level domestic coal materialization and utilization.
Manav Gogia
Okay, okay, sure. Sir, my second question is on the silver front. And Q1 saw lower silver volumes. So I just wanted to know what steps would be taken ahead for the company to achieve that 700 to 710 tonnes guidance that was given earlier.
Arun Misra
So if you look at the silver volume, partly a part of it can be attributed to lower metal production by itself. Since you have produce not metals, associated silver is also lower. Other part is also in the beginning of the year, the current location in and where we are, we are encountering lower-grade of silver in the overall grade. I think the overall grade at zinc level is around 88 ppm, which is lower by about 5 to 10 points compared to what we had sometime 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’ve stated in my speech and also our commissioning of new roaster is expected in the middle of this Q2. So Q3, Q4, we’ll see much better numbers of silver and metal, which will compensate for the loss and help us to reach the guidance almost.
Manav Gogia
Okay. And where are we in terms of the tumor ramping-up for the volumes or any updates on that?
Sandeep Modi
So tumor is running at 60% of its capacity. So as you are aware, we still had issues of Chinese visa did not get. So our team has the operating team has done wonderful job by enginezing it. And at this point of time, while we have been talking 33 tonnes equivalent to silver cake coming from the route 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 will also be less and it is also reflecting that rate.
Manav Gogia
Okay, okay. Got it. So basically, you’re maintaining the guidance for FY ’26 also. We are comfortable on that front, right, that. Okay, sure. Sir, my last question is basically on the roaster and DAP or 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?
Arun Misra
So Diwari is already almost 99.9% of the construction work is over and quarter two is the time when we’ll see the commissioning. We have started coal trial and all that on-the-ground. As I said, 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 that 0.5 million tonne project, we’ll try to get the phosphoric acid plant earlier so that we can start generating some revenue out of it.
Manav Gogia
Okay, okay. Sure. Thank you so much, sir. But I’ll turn back-in queue for more.
Arun Misra
Sure, guys.
Operator
Thank you. A request to all the participants, please limit yourselves to two questions each per participant. If you have any follow-up questions, you can rejoin the queue. Our next question comes from the line of Pallav Agarwal from Antique Stock Broking. Please go-ahead.
Pallav Agarwal
Yeah, good evening, sir. So first question was, I think this quarter mine metal production was fairly good, but to refined metal was impacted. So was there any shutdown and now has other plants operating at normal levels down?
Arun Misra
No, there were few shutdowns and we had to time it because we had expected additional capacity to kick-in from the roaster. But at the same time, we had prepared for some shutdowns. We thought the furnaces would run till quarter two, while in the quarter one itself, we started losing production from them and him we had to take the shutdown earlier and that has impacted But nevertheless, by quarter one and quarter two, all shutdowns we are putting behind us so that we will have a fantastic run from other till about the end-of-the year.
Pallav Agarwal
Sure, sir. So that should help us meet the production guidance.
Arun Misra
Absolutely.
Pallav Agarwal
Sir, secondly, I think it’s commendable that you’ve recorded $1,010 of COP. So now with the increasing refined metal production, so we should probably see this can — I mean, this should go down with the higher benefits of all everything that is coming in.
Arun Misra
Yeah, 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 is first cost will spread. So we should be going towards — as Sandeep told in his speech itself, our loss term was $1,000 COP and it looks like we are headed that way.
Pallav Agarwal
So you don’t see any inflation in coal during the monsoon quarter or reauction premiums going up.
Arun Misra
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 on today, we are in that direction.
Pallav Agarwal
Right, yeah. Thank you so much.
Operator
Thank you. Thank you. The next question comes from the line of Natal from JM Financial. Please go-ahead.
Anirudh Nagpal
Hi, good afternoon, sir. So thank you for the opportunity. 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 moat to increase the silver volumes in the coming quarters and to maximize the benefits from this rally, and also?
Arun Misra
Very, very important question what you have asked. But if you — the way we have operated is, since we had lesser production of metal, we maximize from the choice of concentrates, the concentrate with best silver, which we finished it first-in quarter one, 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 plus to its 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 fumor is running well. So we should be able to make-up for that by not running lead, running in lead plus zinc road 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 had left with us in the stock.
Anirudh Nagpal
Got it, sir. Thank you.
Operator
Thank you. Our next question comes from the line of Amit Dixit from Goldman Sachs. Please go-ahead.
Amit Dixit
Yeah, hi. Good evening, everyone. Thanks for the opportunity and congratulations for a good performance in a testing. Let me 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 first-quarter they seem to have gone up. I mean just actually highest-level since FY ’22 maybe. Maybe while we have increased the RE power proportion. So just wanted to understand the reason for that, whether it is a typical first-quarter phenomenon or it is the higher usage of domestic coke or how is it? And how do we see the trajectory of this emissions going good in the near-term?
Arun Misra
So as the quarter two, quarter three, quarter-four pans out, we will have one increase in percentage of renewable power. By September, almost all of wind power will come into the place. So we’ll have more renewable power in the night 10 than what we are having now. That is number-one point. Number two, yes, we have had lesser production in-quarter one, which has also impacted on the intensity. So that will also will get corrected and will produce more going-forward. So both together, we will come back. We will reduce overall emission numbers in-quarter two then correspondingly quarter three and quarter-four. Absolutely.
Amit Dixit
So this 4.86 number that we have in the — in Q1, I mean where do we see it going, let us say by the end of FY ’27 also?
Arun Misra
We should go down below 4.6, 4.5 levels.
Amit Dixit
Okay, got it. The second question is on the recent LOIs that we have opened, so for mines actually the potash one are we planning to detail it with the fertilizer plant that is stated for commissioning?
Arun Misra
Yeah. The whole basket of diversification from silver idea is, of course to add more value to the fertilizer business. So if we add that 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 a rare magnet material because it is likely to have and we should be able to if exploration proves that we have got enough of reserve and we can crack the technology problem of extracting alumium from and yes, we have a new has again a huge bright spot in the future.
Amit Dixit
So, sir, coming to the two blocks, Tungsten and Earth, have we done any preliminary study over there when — 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 now.
Arun Misra
So the first two you have to do the exploration itself. There is not much of a data of a proven result there. So because it’s 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’ll have to first-place order for exploration that we are currently going through.
Amit Dixit
Okay. All right. Got it. Thank you so much and all the best..
Operator
Thank you. Our next question comes from the line of Sumangal Nevatia from Kotak Securities. Please go-ahead.
Sumangal Nevatia
Thank you. Yeah. Thank you, sir, for the chance. Sir, first question is on the capital structure and balance sheet. So our net-debt is now almost INR4,000 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?
Sandeep Modi
So Sandeep, 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 INR10,000 crores overall. So even if you factor-in the overall, if you see the horizon of three to four years, INR45,000 crore to INR50,000 crores, you take it up and around INR30 crores INR32,000 crores the pre-gro, this overall capex, so still you have availability of INR18,000 crores, which can be distributed up subject to the Board approval from the shareholders’ reward point-of-view.
Sumangal Nevatia
Okay. Understood. So 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?
Sandeep Modi
So I think from a modeling point-of-view, you should factor what you said at this point of time.
Sumangal Nevatia
Okay, only the surplus. Okay. Got it. 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 a base-case, while we were evaluating these projects, what sort of royalty increase have we baked-in? Just wanted to know that.
Arun Misra
So we have seen the worst-case and the most positive case. Most positive case remaining 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.
Sumangal Nevatia
Understood. Sir, can you share what could be the worst-case number of royalty increase?
Arun Misra
That will give an indication to the what price will be there so I should be.
Sumangal Nevatia
Okay. Okay, understood. All right. Sir, just one last question on this 0.5 million tonne fertilizer plant. What would be the — if you can remind what would — what is — what is the total capex that will be spent and what sort of asset turn are we looking at?
Sandeep Modi
So fertilizer total capex cost is around INR1,800 crores. And around INR1,000 crores has already been — is spent and remaining will be spent in the next by nine months-to get a company to 5 lakh ton of the fertilizer.
Sumangal Nevatia
Okay. And what sort of revenue or say EBITDA potential on a steady-state basis are we looking at?
Sandeep Modi
So as you said earlier, in case of fertilizer, we are expecting around INR400 crores INR450 crores of the EBITDA and around INR2,000 crores to INR2,500 crores of the revenue.
Sumangal Nevatia
Understood. Understood. And the ramp-up, so we are looking at 1Q ’27, so Should we expect ramp-up over what two years or something or is it?
Arun Misra
Slow, low. The ramp-up voice should be two years, maximum three months, we will have the ramp-up.
Sumangal Nevatia
Okay. Okay. So potentially second-half FY ’27, we can do this one day.
Arun Misra
Correct. At least most of the chemical process. It is not a hot far less process, so it will be easier.
Sumangal Nevatia
Got it. Got it. All right, sir. Thank you and all the best.
Arun Misra
Thank you.
Operator
Thank you. Our next question comes from the line of Ashish Khejriwal from Nuvama Wealth Management. Please go-ahead.
Ashish Kejriwal
Yeah. Hi, good evening, everyone. Thanks for the opportunity. Sir, a question on IR expansion. When we — when will we start ordering our equipment because we mentioned earlier that it will take 36 months from the date of ordering. And as well as in last call, we said that we will give some indication of our second phase also. That’s my first question.
Arun Misra
So the last 250,000 tonnes per annum smelting complex that we have spoken about for the melter portion of that, we have already placed orders. For the mining portion of it, we will place order in 10 15 days’ time and we are — then we will do the concentrator, we should be able to place order by other second week. So that is the first phase. Now in the second part, we should be placing all the orders for 2 million ton expansion should be placed by September 30th.
Ashish Kejriwal
Okay. So we have formed up the plan for second phase also.
Arun Misra
Absolutely. Absolutely, absolutely.
Ashish Kejriwal
That’s good. 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 brand fee to 3% of the revenue versus 2% earlier. And we just want to get more comfort also that you know whether it’s going to change further or not.
Sandeep Modi
So I will give the answers on this grade. So grade was 7.53% this quarter compared to the last year quarter one Y-o-Y around 7.41%. So there is an improvement in the grade. That has 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 has reduced on about three reasons. One is the the power coming better compared to the last year Y-o-Y as they are commissioning the facility.
Secondly, the imported coal prices being softened and third, which I talked about the highest-ever domestic coal utilization of 54%. These are the reason for you can see the power cost is towards the INR5 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 INR1,060 crore rupees and the — this is a number which I talked about.
Arun Misra
There is no change.
Sandeep Modi
There is no change in the — any other things in terms of the terms and conditions.
Ashish Kejriwal
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 to this approval.
Arun Misra
As of now, it will remain at 3% till the end of approval that we get.
Ashish Kejriwal
And what is the context period sir?
Arun Misra
It’s beyond next to fiscal levels.
Ashish Kejriwal
So that means at least till FY ’28, it will remain at 3% margin
Arun Misra
Model up to FY ’27, it will remain sell.
Ashish Kejriwal
Okay. And sir, in power cost, actually I was looking at more of a Q-on-Q basis, not Y-on-Y basis.
Arun Misra
Power cost on Q-on-Q basis.
Sandeep Modi
Quarter-over-quarter basis also it has reduced only.
Ashish Kejriwal
And that is mainly because of renewable power.
Sandeep Modi
Absolutely.
Arun Misra
More domestic coal and more.
Sandeep Modi
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 over 20% reduction has happened compared to last quarter in the per unit basis.
Ashish Kejriwal
Sure. And sir, lastly, just to get more comfort, we have already seen some reports going on, but we are in sync with the government nominee Directors also in all the proposals which we are taking right now. So no issues at all right on that. So that will give a good comfort.
Arun Misra
Absolutely. There is only one proposal that the Board approved, which is effort from routine business matter is that expansion program and everybody is fully supporting expansion of Hindusan Zinc and the first phase of 250 ATPA 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.
Ashish Kejriwal
That’s cool, sir. Thank you so much. That gives the comfort.
Operator
Thank you. Thank you. We’ll take last question from the line of Ritesh Shah from Investec. Please go-ahead.
Ritesh Shah
Yeah, hi, sir. Thanks for the opportunity. Couple of questions. Sir, first is if you could detail the status on Bania Kalan mine and if you could put in context physically if you look at the grades from Rampur, Argucha, SKRD, it has been deteriorating if you look at the trend-line over the last seven 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?
Arun Misra
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 packages to ensure that we have a consistent grade, if not better grade overall. And that’s a strategic call we take which part to mine when depending upon, suppose if I take quarter one last quarter, if you look at that we had a grade which was worse than the grade that we had in-quarter four. Typically in-quarter four, we tried to maximize production to get the best at that point of time. And so we’ve also pick and choose where to mine, how to mine. Basically, the 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 grids that we take.
So that stage will continue. But seeing that, you will also appreciate much is the best grade then followed by SK and Hardi and then followed by Javar, which is the world grade. 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% of work has happened on the development of the mine and we expect the mine to open somewhere in 2026 end or 2027 early.
Sandeep Modi
The only thing that in case you want to model in your number, the R&R — SRC audited numbers which we publish, that is the final number from the minable grade point-of-view, which is 7.2% that you can model in your financial model for the QP purpose.
Ritesh Shah
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.
Arun Misra
Okay, finish your question.
Ritesh Shah
Yeah. And on — once basically it gets operationalized, what is the sort of contribution that we expect from roasters to come through?
Arun Misra
So roasters primarily produce calcine, which help us to produce zinc. They do not produce silver. However, when we — from calcine, when we produce zinc by the leasing process, the residue that we have, then that residue, weak acid leasing 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 send to furnaces to produce silver. That is the whole circuit.
So roaster per se does not produce silver. But if we — 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 added fumor. So as long as that fumer 33 tonne 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 residue, the leaching and purification circuits that we’ll make, it will all come with new fumors. So that from the zinc circuit, we can produce more silver the way actually you have been hinting.
Ritesh Shah
Sure. 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 sales?
Arun Misra
No. So the brand fee is a thing that has been widely discussed in the book that the rationals are estate bundled services, there are various strategic services and you will all appreciate that this Company when it was taken over, it had only Five-Year of remaining live, had only 100,000 tonnes of production that complete transformation of this company to a 1 million tonne production with about 25 30 years of life left, huge amount of risk taken in exploration. There was no silver production making it a world’s third-largest silver producing country, 700 tons of silver, a migration from open fit 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 a existing management that was when the thing was disinvested. So there we — there is something brand and services which help that transformation that new is there and all that justification was discussed in the Board duly vetted by external consultant with similar fee arrangement in all other conglomerates and then panelize. In this correct, it’s not 1.7%, it was 2%. It’s not 1.723, it’s 2% to 3%.
Ritesh Shah
Okay. Fair. And what should we make of — I think Vedanta is 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 wins 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?
Arun Misra
No, we have as Hindustan Zing 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 given at a much lesser holding of the company. So as long as management control is there, then as well as strategic directions have said the strategic services are provided, the also is there.
Ritesh Shah
Sure. And sir, just last one question. Is it possible to convert silver sand to gold? I think this was one of the points and one of the recent reports has popped. I just wanted to understand like has there been any movement of silver sand from Hindustan rink to Fujara Gold? And how should one understand the mass balance and the underlying economics and grades?
Arun Misra
So we have — we sell silver and residues of silver also we sell. So we sell many of these metal residues as it is based on the primary metal existence to people. But if there are trace element somewhere and really it’s — that’s not the way the metal business is done. Silver tank contains 93% of the silver. And it goes — so we sell many other suppose the SAG we say it might have some presence of something we don’t know.
Sandeep Modi
So Government of India has also put a lot of IBM and other thing to see if there are any critical minerals there out of these 24 strategic minerals in any of the minerals we are mining, they are also searching. If there may be traces which become commercially viable, it can always be recoverable. At this point on it doesn’t become commercially viable to recover.
Ritesh Shah
Right. Sir, my simple question is basically, do we sell something called silver to gold and is it possible to recover gold out of silver because honestly, I haven’t thought of anything of the salt.
Sandeep Modi
Silver sand is being sold to — on the basis of the NBMA prices, which contain the 93% silver, which goes to Fujarat Gold as well.
Ritesh Shah
Okay. And in the annual report, is it possible to figure this particular line-item?
Sandeep Modi
It won’t be possible, Ashish, because it is not my finished goods. You will see lot of other income, which will be there. It is a part of other income. First, revenue due.
Ritesh Shah
Okay.
Sandeep Modi
I think you’re getting the bias because of somebody putting that it should be a separate segment. It cannot be. It’s a byproductor. It can be repeat you for me.
Ritesh Shah
So I think, sir. I honestly wasn’t aware of anything of this just the clarification.
Arun Misra
Yeah, like we sell flag and all that, many of the clients we sell so.
Sandeep Modi
So ISM growth is being sold, slag is being sold, which also contains a zinc and lag. So that’s why, Ashish, just to take the conversation forward to give you the perspective, that’s why how the facilities were better because there are two options, either the residu do in as it is form or you recover the zinc led matter out of it. More-and-more you recover, it become beneficial for us. So that’s why the facilities are getting better.
Ritesh Shah
Sure, sir. Thank you so much. I really appreciate it.
Arun Misra
Thank you,
Sandeep Modi
Thanks.
Operator
Thank you. Ladies and gentlemen, I now hand the conference over to Ms Jaint for closing comments.
Raksha Jain
Thank you. 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.
Operator
Thank you. On behalf of Hindustan Zinc, that concludes this conference. Thank you for joining us and you may now disconnect your lines.