Mar 31, 2023
We share with you our 57th Annual Report, together with the Audited Financial Statements for the year ended March 31, 2023.
The Directors are pleased to inform that Hindustan Zinc delivered exemplary operational performance showcasing resilience while ensuring safe operations and continued to improve on its performance of various ESG metrics. The Company has taken a proactive approach to keep its assets and people safe, while increasing engagement with the communities.
The Company continued to deliver stellar results during the year, touching new operational milestones. Mine production continued to improve during the year with ore production for the full-year up 2% y-o-y to deliver a record 16.7 Mt, supported by strong production growth at Rajpura Dariba, Sindesar Khurd and Rampura Agucha mines, which were up 11%, 7% and 6% respectively. Mined metal production was up 4% y-o-y to record 1,062 kt driven by higher ore production, improved mined metal grades and operational efficiencies. The Company also recorded ever highest mine development, registering 4% growth y-o-y, crossing the 110 km mark in line with increasing production requirements and securing future resource base.
The Company crossed the 1 million tonne refined metal production mark for the first time producing ever highest 1,032 kt of refined metal supported by strong MIC production and better plant availability.
The Company diligently focussed on community upliftment in the areas of education, sustainable livelihoods, women empowerment, health, sports & culture, water & environment and community assets creation.
The Company is ranked #3 globally and #1 overall in Asia-Pacific at S&P Global Corporate Sustainability Assessment Score in metal and mining sector. The Company has also been selected as a leadership band âA'' listed company for âClimate Change'' and band âA-'' listed company for âWater Securityâ in CDP 2022.
I. HEALTH, SAFETY AND ENVIRONMENT
Occupational Health & Safety
In line with our commitment to ensure zero harm to employees, the leadership has undertaken the prime responsibility of providing a safe workplace for all employees entering our premises. While committed to operate a business with âzero harm'', it is with deep grief we report the loss of lives of six business partner colleagues and one Hindustan Zinc employee in work-related incidents at our managed operations. These incidents happened despite our constant efforts
to eliminate fatalities and attain a âzero harm'' work environment. A thorough investigation was conducted to identify the causes of these incidents and share the lessons learned across Hindustan Zinc, to prevent similar incidents in the future.
LTIFR for the year was 0.70 as compared to 0.81 in FY 2021-22.
During the year, to avoid fatalities and catastrophic incidents in Hindustan Zinc, âVihan'': a critical risk management (CRM) initiative was launched to improve managerial control over rare but potentially catastrophic events by focussing on the critical controls. We have reinforced the focus upon four critical risks i.e., fall of ground (FOG), fall of person/object from height (WAH), vehicle pedestrian interaction (VPI) and entanglement. Through these initiatives, we want to ensure that all identified critical controls are being monitored on a daily basis and systems are in place.
Safety pause was also conducted across all our operational units covering all shift employees under the theme âstop work if it''s not safe''. During this connect all recent safety incidents that happened across group companies were discussed and key learnings were shared.
A Community of Practice (CoP) on âStructure Stabilityâ was established during the year to institute a review mechanism of all prevailing civil and mechanical structures; further a specific categorisation was established to mark the structures based on which their repair/replacement will be planned.
Second half of the year has been a period of innovation for mining operations to avoid manual intervention and related risk with inclusion of:
Digitalised drilling of production stopes during blasting operations eliminating manpower requirement, machine drills in auto mode with interlock features and digital radio frequency identification (RFID) based cap lamps along with proximity sensors to avoid man-machine interaction underground.
Training and capability building was also a core theme during the year, few such key programmes were:
First underground practical cum digitised training gallery developed at Rampura Agucha Mines (RAM) to provide all facility of surface training to underground operations team, wi-fi network available at training place so that underground manpower can connect from underground to any kind of seminars/trainings, safety leadership development programme initiated for mines frontline supervisor through ex-DGMS officials and Dupont, launch of a unique virtual reality-based simulator training for jumbo operator at RAM.
Response during any emergency is a paramount parameter to ensure safety of the people. As a proactive measure, we have conducted emergency response and crisis plan (ERCP) gap assessment study across all the sites. Further, the 51st All India Mines Rescue Competition was hosted under the aegis of DGMS at Rajpura Dariba Complex, a 10-day capacity building training programme on âdisaster management'' was conducted at Zawar Mines (ZM), the training included medical first responder, collapsed structure search & rescue, fire management, chemical emergencies, etc. RAM has reaffirmed safety & rescue by establishing underground fire tender with remote operated foam unit and thermal imaging camera for blind zones.
Demonstrating the highest standards of health and safety management during the year, Dariba Smelting Complex received the prestigious âSword of Honour'' from British Safety Council for showing excellence in the management of health and safety risks at work. Kayad Mines received 5-Star Rating Award in safety and welfare by Rajasthan Government and Jaswant Singh Gill Memorial Industrial Safety Excellence Award 2022 for underground metal mining in India.
Environment
Hindustan Zinc commits to âlong-term target to reach net-zero emissions by 2050'' in line with Science Based Targets initiative (SBTi) aiming to have a clear and defined path to reduce emissions in line with the Paris Agreement goals. To achieve this target, we are working towards improving our energy efficiency, switching to low carbon energy sourcing, introducing battery operated electrical vehicles and increasing the role of renewables in our energy mixes.
We have entered into a power delivery agreement for sourcing up to 450 MW of renewable power by 2025 which will not only strengthen our commitment towards a clean future but will also help reduce emissions to the tune of 2.7 mn tCO2e. Pantnagar Metal Plant is sourcing 100% green power for its operations thus making it a one-of-a-kind initiative, leading towards reducing emissions by 30,000 tCO2e.
Technology and digitalisation are key to strengthening our ESG footprint and creating a net-zero future. It is our ambition to convert all our mining equipment to battery-operated electric vehicles (EVs). To make our mining operations environment-friendly, we plan to invest US$ 1 billion over the next few years towards mitigating climate change impacts.
EVs are a globally recognised means to reduce dependence on petroleum products and thus reduce CO2 emissions. Therefore, Hindustan Zinc signed a Memorandum of Understanding (MoU) with Epiroc Rock Drills AB, Normet Group Oy and Sandvik AB to introduce battery electric vehicles (BEV) in its underground mining operations making Hindustan Zinc the first Company in India to do so.
Hindustan Zinc has led by example by inducting an LNG powered truck for upstream and downstream transportation which shall reduce greenhouse gas (GHG) emissions. We are also using 5% biomass for power generation at our captive thermal power plants thereby reducing carbon footprint.
In line with Hindustan Zinc''s policy of a green value chain, our business partners have also started operating EVs and several electric forklifts have been introduced in our multiple business units.
At Hindustan Zinc, we recognise the reality of climate change. Therefore, our risk management processes embed climate change in the understanding, identification, assessment and mitigation of risk. We have published our second task force on climate-related financial disclosures (TCFD) report during the year which sets the adoption of the TCFD framework for climate change risk and opportunity disclosure.
Endeavouring towards being a sustainable organisation we have refreshed our materiality matrix and established the ESG governance at tier 3 level as well as at SBU level to implement ESG projects on ground.
Hindustan Zinc joined the taskforce on nature-related financial disclosures (TNFD) piloting with ICMM to access the challenges in implementing the LEAP process of TNFD.
Miyawaki afforestation was completed at Dariba Smelting Complex (DSC) and Chanderiya Lead-Zinc Smelter (CLZS). 12,000 indigenous plants and 6,500 native seeds were planted in an area of 1 hectare at each of the locations to create a self-sustaining forest in the span of 3 years.
A 3 year engagement with International Union for Conservation of Nature (IUCN) has also been initiated. Under this, we have prepared an Integrated Biodiversity Assessment Tool (IBAT) report for all Rajasthan based locations identifying species present in the core area, reframed our biodiversity policy, conducted ecosystem service review across the Rajasthan based locations, completed the biodiversity risk assessment and site visit by IUCN team members done for two seasons. These studies will help Hindustan Zinc prepare a strategy to achieve âno net loss'' towards biodiversity. Green cover study has been done by the State Remote Sensing Application Centre (SRSAC), Jodhpur for all Rajasthan based locations of Hindustan Zinc.
One of the most notable achievements has been the successful commissioning of a 3,200 KLD zero liquid discharge (RO-ZLD) plant at the Dariba smelter. Apart from that, ZM and RAM ZLD projects of 4,000 KLD capacity each have also been initiated to improve recycling and strengthen the zero discharge. Like ZM, dry tailing plant at Rajpura Dariba mine is also under final stage of commissioning and will result in significant amount of water recovery from the tailings.
Site inspection and updated Global Industry Standard on Tailing Management (GISTM) Conformance Assessment completed by ATC Williams for all tailing storage facility (TSF). Published the 1st Environmental Product Declaration (EPD), a type 3 ecolabel of our zinc product thus reinforcing our commitment to sustainability, transparency, and minimising environmental footprint.
Public hearing was conducted successfully at CLZS for proposed enhancement of zinc production capacity from 504 to 630 kt and installation of induction furnace, slab casting line, raw zinc oxide (RZO) unit, change in product mix in pyro unit on total metal basis & installation of lead refinery and minor metal complex etc.
Our sustainability related activities received several endorsements during the year:
⢠Hindustan Zinc ranked #3 globally and #1 overall in Asia-Pacific at S&P Global Corporate Sustainability Assessment Score in metal and mining sector. Scores improved from 77 last year to 80 this year
⢠Hindustan Zinc won the âIndustry Leadership Award - Base, Precious and Specialty Metalsâ and âCorporate Social Responsibilityâ at the prestigious S&P Global Platts Global Metal Awards
⢠I ncluded in Sustainability Yearbook 2023 amongst the top 5% most sustainable organisations globally
⢠GreenCo rating 2022: Dariba Smelting Complex (Gold rating), Chanderiya Lead-Zinc Smelter (Gold
rating), Debari Zinc Smelter (Silver rating), Zawar Mines (Silver rating), RAM (Silver rating)
⢠Hindustan Zinc received the Indian Patent for inhouse innovation for process to treat Antimonybearing by-product of zinc-lead smelters and convert it into a value-added product, Potassium Antimony Tartarate (PAT). Previously, we received the patent for the same category from the US and Europe patent offices in the years 2021 & 2019 respectively
⢠Climate Action Programme (CAP) 2.0° - Oriented Award in the Energy, Mining and Heavy Manufacturing Sector
⢠Sustainalytics ESG scoring improved from 46.6 to 29.6, management scores improved from Average to Strong
⢠Hindustan Zinc awarded with CII EXIM Business Excellence Award 2022
⢠Hind Zinc school awarded with prestigious Platinum Certification from the Indian Green Building Council
⢠Hindustan Zinc selected as leadership bands A/A-listed company by CDP âClimate Change Aâ and âWater Security A-â in CDP 2022 and has been recognised as leaders in supply chain
⢠CII - ITC Sustainability award to CLZS as Outstanding accomplishment in corporate excellence and Debari Zinc Smelter (DZS) as Excellence in environment management
⢠Hindustan Zinc''s 4 mines received 5 Star Rated Mines'' award by the Ministry of Mines, Government of India
II. OPERATIONAL PERFORMANCE Production performance |
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Production |
FY 2022-23 |
FY 2021-22 |
% Change |
Total mined metal (kt) |
1,062 |
1,017 |
4% |
Refined saleable metal production (kt) |
1,032 |
967 |
7% |
Refined zinc - integrated (kt) |
821 |
776 |
6% |
Refined lead - integrated (kt) |
211 |
191 |
10% |
Saleable silver production (in tonnes) |
714 |
647 |
10% |
Production
For the full-year, ore production was up 2% y-o-y to 16.74 Mt on account of strong production growth at Rajpura Dariba, Sindesar Khurd & Rampura Agucha mines, which were up 11%, 7% and 6% respectively. FY 2022-23 saw the best-ever mined metal production of 1,062 kt compared to 1,017 kt in the prior year in line with higher ore production across mines supported by better mined metal grades and operational efficiencies.
For the full year, we saw our ever-highest metal production, up 7% to 1,032 kt in line with consistent mined metal flow from mines and better plant availability, while silver production was 10% higher at 714 MT in line with higher lead metal production.
The Company generated 2,996 million units of thermal based power in FY 2022-23. Total green power generation was 713 million units as compared to 720 million units in FY 2021-22.
Sales
During the year, domestic refined zinc metal sales was 484 kt as against 506 kt last year, while export sales for the year stood at 337 kt as compared to 271 kt a year ago. The aggregate sales were higher by 6% than previous year, in line with production. Lead metal sales in the domestic market were 186 kt, while export sales were 25 kt leading to increase in aggregate sales by 10% from a year ago, in line with the increase in lead metal production. Silver sales were 714 MT in FY 2022-23, all in the domestic market and 10% higher than previous year.
III. FINANCIAL PERFORMANCE Financial Information |
('' in crore) |
|
Particulars |
FY 2022-23 |
FY 2021-22 |
Revenue from operations (incl. other operating income) |
34,098 |
29,440 |
Other income |
1,379 |
1,216 |
Profit before depreciation, interest, tax, and exceptional item |
18,885 |
17,441 |
Less: Interest |
333 |
290 |
Less: Depreciation and amortisation expense |
3,264 |
2,917 |
Less: Exceptional Item |
- |
134 |
Profit before tax |
15,288 |
14,100 |
Less: Net tax expense |
4,777 |
4,471 |
Net profit |
10,511 |
9,629 |
Earnings per share (''/share) |
24.88 |
22.79 |
Annual Performance
Details of the Company''s annual financial performance as published on the Company''s website and presented during the analyst meet, after declaration of annual results, can be accessed using the following link: https:// www.hzlindia.com/wp-content/uploads/Investor_ presentation 21042023.pdf
Revenue
The Company reported âRevenue from operations'' including other operating income of '' 34,098 crore, an increase of 16% y-o-y primarily on account of increase in zinc prices, higher metal and silver sales due to increase in production, strategic hedging and favourable exchange rate, partly offset by lower lead and silver prices.
The âOther income'' was '' 1,379 crore during the year compared to '' 1,216 crore in the previous year with support of higher rate of return in current year as against the previous year.
Production Cost
Zinc''s cost of production (COP) excluding royalty for FY 2022-23 was '' 1,00,893 (US$ 1,257) per tonne, higher by 21% y-o-y. The full year COP was higher, largely on account of higher coal prices & input commodity inflation, partly offset by higher volumes, better sulphuric acid realisation & improved operational efficiencies.
Operating Margin
The above revenue and production cost resulted in profit before depreciation, interest and tax (PBDIT) of '' 18,885 crore in FY 2022-23, up 8% on account of higher volumes, rise in LME prices, strategic hedging, partially offset by higher coal and input commodity prices.
Net Profit
Net profit was '' 10,511 crore, up 9% y-o-y where in the impact of higher PBDIT was partly offset by higher depreciation and amortisation. Effective tax rate for the year at 31.2% as compared to 31.7%.
Earnings Per Share (EPS)
The EPS for the year was '' 24.88 per share as compared to '' 22.79 per share in FY 2021-22.
Dividend
Interim dividend of 3,775%, i.e., '' 75.5 per share on equity share of '' 2 each amounting to '' 31,901 crore was declared in the FY 2022-23.
The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ) is available on the Company''s website on https://www.hzlindia.com/wp-content/uploads/Dividend-Policy-2016.pdf
Credit Rating and Liquidity
CRISIL has reaffirmed the Company''s long-term rating of AAA/Stable and short-term rating of A1 . The ratings continue to reflect the Company''s low-cost operations, strong market position, efficient and integrated operations, high reserve & resource and a strong balance sheet.
The Company follows a conservative investment policy and invests in high quality debt instruments. As on March 31, 2023, the Company''s gross investments and cash & cash equivalents were '' 10,061 crore.
Cash Flows |
('' in crore) |
|
Particulars |
FY 2022-23 |
FY 2021-22 |
Opening Cash* |
20,789 |
22,308 |
Add: EBITDA** |
17,590 |
16,289 |
Add: Net Interest Income |
1,151 |
604 |
Less: Income Tax |
3,140 |
2,391 |
Less: Dividend |
31,901 |
7,606 |
Less: Capital Account Payments |
3,561 |
2,998 |
Add: Borrowings |
8,978 |
(4,315) |
Add: (Increase)/Decrease in Working Capital & Others |
155 |
(1,102) |
Closing Cash* |
10,061 |
20,789 |
(*) Includes Cash & Cash Equivalents (refer note 11 of the Audited Financial Statements), other bank balances excluding earmarked unpaid dividend accounts balance (refer note 12 of the Audited Financial Statements) and Current & Non-Current Treasury Investments (refer note 9 of the Audited Financial Statements) |
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(**) Earnings before Interest, Tax, Depreciation and Amortisation expenses and Income on investments |
Gross Working Capital
Gross working capital represented by inventory, trade receivables and other current assets decreased from '' 3,132 crore to '' 2,578 crore as at March 31, 2023 primarily due to decrease in trade receivables and coal stock. The working capital cycle was 28 days in FY 2022-23 as compared to 40 days in FY 2021-22.
Gross Block
The gross block during the year increased from '' 37,453 crore to '' 40,426 crore. This was largely due to the ongoing mining projects and other sustaining capex.
Capital Employed*
The total capital employed as at March 31, 2023 was '' 14,712 crore, as compared to '' 16,315 crore at the end of previous fiscal year.
*Refer page 51 for description
Contribution to the Government Treasury The Company has contributed '' 24,892 crore during FY 2022-23, in terms of royalties, dividend and taxes to the Government treasury, aggregating to approximately 73% of the total operating revenue.
On an exclusive basis, total Ore Reserves at the end of FY 2022-23 stood at 173.49 million tonnes (net of depletion of 16.74 million tonnes during FY 2022-23) and exclusive Mineral Resources totalled 286.56 million tonnes. Total contained metal in Ore Reserves is estimated at 9.64 million tonnes of zinc, 2.7 million tonnes of lead and 310.2 million ounces of silver. The Mineral Resource contains approximately 12.8 million tonnes of zinc, 5.66 million tonnes of lead and 545.7 million ounces of silver. At current mining rates, the R&R underpins metal production for more than 25 years.
I n Hindustan Zinc journey of 1.25 Mtpa MIC expansion, only remaining project of RD beneficiation plant
revamping is under execution at RD mines which is scheduled to be commissioned in FY 2023-24. Fumer plant commissioning is delayed due to VISA issues of OEM from China. The plan is to complete commissioning of plant through OEM support in FY 2023-24. For further phase of expansion of mines and smelters, studies are under progress and results are expected in FY 2023-24.
The capacity of smelters is being enhanced by putting up a new roaster in Debari with latest technologies. The order placement is targeted by Q1 FY 2023-24.
With increasing focus on enhancing the value-added product portfolio, a new project of Alloys commissioned through a subsidiary - Hindustan Zinc Alloys Private Limited (HZAPL) in FY 2022-23, which is scheduled for completion in FY 2023-24. Hindustan Zinc is also setting up a new fertiliser plant at Chanderiya for which partner has been locked in. Project is scheduled for completion in 24 months. Through HZAPL and Hindustan Zinc Fertilisers Private Limited (HZFPL), the Company will move from a commodity-based to a product-based Company.
VI. SUBSIDIARIES/JOINT VENTURES
As on March 31, 2023, your Company had 4 wholly owned subsidiaries and 1 joint venture as per the Companies Act, 2013 (the Act) which have been classified as subsidiaries/JVs under Indian Accounting Standards (Ind AS). Same are as follows: -
1. Hindustan Zinc Alloys Private Limited
2. Vedanta Zinc Football & Sports Foundation
3. Hindustan Zinc Fertilisers Private Limited
4. Zinc India Foundation
5. Madanpur South Coal Company Limited
During the year under review, no changes occurred in your Company''s holding structure.
VII. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company''s CSR initiatives passionately focusses on community upliftment by strengthening the local
economy and improving the quality of life by working in the areas of education, sustainable livelihoods, women empowerment, health, water & sanitation, sports & culture, environment & safety and community assets creation.
During the year, the Company spent '' 276.34 crore on CSR programmes, more than the 2% of CSR mandate which was '' 214.38 crore. For further details, refer Annexure 3 and âOperational Review'' section of this Annual Report.
VIII. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Kannan Ramamirtham (DIN: 00227980) was appointed as Non-executive Independent Director on the Board of the Company for a period of 1 year effective from September 01,2022 to August 31,2023. The same was approved by the shareholders through postal ballot outcome dated October 31, 2022.
Mrs. Kiran Agarwal has ceased to be the Chairperson and Director of the Company w.e.f. January 18, 2023 (from the close of business hours) and Ms. Priya Agarwal has been appointed on the Board as Additional Director and Chairperson of the Company w.e.f. January 19, 2023. The same was approved by the shareholders through postal ballot outcome dated April 10, 2023.
Mr. Sandeep Modi, Interim Chief Financial Officer (CFO) has been elevated as Chief Financial Officer w.e.f. April 21, 2023 by the Board.
The Company''s policy on appointment of Directors and their remuneration is available on the Company''s website https://www.hzlindia.com/wp-content/uploads/ HZL-Nomination-Remuneration-Policy-20.1.2020.pdf
IX. MANAGEMENT DISCUSSION AND ANALYSIS
The âOperational Overview'' section of this Annual Report gives a detailed account of the Company''s operations and the market in which it operates. The âFinancial Performance'' section of this Board Report and the âKey Performance Indicators'' section of this Annual Report provide a discussion on the financial performance and key financial ratios of the Company. The initiatives in the areas of human resources, sustainability and risk management are covered in the respective sections of this Annual Report.
X. CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
As a listed company, necessary measures are taken to comply with the listing agreements of the Stock Exchanges. A report on Corporate Governance forms part of this report. Further, Business Responsibility and Sustainability Report describing the initiatives taken by the Company from an environmental, social and governance perspective, also forms a part of this report. In order to maintain transparency and efficient
governance, various disclosures as required under sections 134 and 135 of the Companies Act, 2013 are annexed to this report or covered in the Corporate Governance Report, such as Related Party Transactions; information and details on conservation of energy, technology absorption, foreign exchange earnings and outgo; extract of annual return; constitution of various Board level committees; annexure on CSR, etc.
XI. DIRECTORSâ RESPONSIBILITY STATEMENT
As required under section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgements & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period;
iii. t hey have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. the annual accounts have been prepared on a âGoing Concern'' basis;
v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant Board committees, including the Audit & Risk Management Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2022-23.
The Nomination and Remuneration Committee has devised a criterion for evaluation of the performance of the Directors including the Independent Directors. The said criteria provide certain parameters like attendance, acquaintance with business, communication inter se between Board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmarks established by global peers etc., which is in compliance with applicable laws, regulations and guidelines.
Board evaluation is done on an annual basis by a third party.
During the year, Company engaged Deloitte Haskins & Sells LLP (DHS) for carrying out the performance evaluation of all the Board members, Board as a whole and various committees.
The criteria used by them basis which the individual Director performance evaluation has been done included:
⢠preparation and participation in Board meetings
⢠personality and conduct
⢠quality of value added
⢠understanding of the Company''s mission, vision, philosophy and strategy
⢠understanding of the industry and the business in which the Company operates
⢠independence of judgement
⢠independent thinking ability to bring a divergent view, etc.
CEO & Whole-time Director evaluation was more focussed towards Company performance and leadership, team building and management succession, edge in execution of strategy formulated by the Board.
The evaluation of the various Board committees was more focussed towards:
⢠it''s charter/terms of reference
⢠number of meetings held and its appropriateness
⢠timely availability of information
⢠committee composition
⢠committee decisions are adequately conveyed and implemented
⢠meetings are conducted in a manner that ensures open communication, meaningful participation and timely resolution of issues
⢠independency of committee to contribute effectively
Assessment of each Director on the Board is done by the other Directors including that of various committees. The consolidated outcome from all the Directors is prepared by the Chairman of Nomination and Remuneration Committee and presented to the Board of Directors. All the Directors had been rated excellent
and overall finding shows that the Board and its various committees are working very well. All Board members come with very strong backgrounds and add lot of value & insights to the Company by making the meetings participative and engaging.
XIII. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
XIV. RELATED PARTY TRANSACTIONS
In line with the requirements of the Companies Act and the SEBI Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed using the following link: https://www.hzlindia.com/wp-content/uploads/HZL_ RPT-Policy Revised 21.04.2023.pdf
During the year under review, all transactions entered into with related parties were approved by the Audit Committee/Board of Directors of the Company as per the applicable case. Certain transactions, which were repetitive in nature, were approved through omnibus route. However, there were no material transactions of the Company with any of its related parties as per the Act. The disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is annexed as Annexure 2.
The Company has not accepted any deposits from public and as such no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.
The Company had appointed M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company to conduct audit of Financial Statements for the year ended March 31, 2023. The notes to Financial Statements referred to in the Auditors'' Report are selfexplanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification or reservation.
Certificate on the compliances with the conditions of Corporate Governance (CG) as per provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, has been issued by Vinod Kothari & Company, Practising Company Secretaries and Secretarial Auditors of the Company. The only adverse remark in CG certificate is for not fulfilling the criteria of adequate number of Independent Directors including at least one-woman Independent Director and for which the Company is in touch with two major shareholders, which is self-explanatory.
As per provisions of section 136 of the Companies Act, 2013, the Annual Report including the audited accounts for the year will be sent to all the shareholders whose e-mail addresses are registered.
Reporting of Frauds by Auditors
During the year, none of the auditors of the Company have reported any fraud as specified under the second proviso of Section 143(12) of the Act.
The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for Directors and employees in confirmation with section 177(9) of the Act and regulation 22 of SEBI Listing Regulations, to report concerns about unethical behaviour. This policy is available on the Company''s website on https:// www.hzlindia.com/wp-content/uploads/HZL-WHISTLE-BLOWER-POLICY-19.10.2015.pdf
Pursuant to section 92(3) read with section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the Company''s website https://www. hzlindia.com/investors/reports-press-releases/
Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report. In terms of the provisions of section 197(12) of the Companies Act, 2013 read with rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said rules forms part of the report. However, having regard to the provisions of the first proviso to section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at registered office of the
Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the registered office and the same will be furnished on request. Further the details are also available on the Company''s website: www.hzlindia.com.
I n line with the internal guidelines of the Company, no payment is made towards commission to the Executive Director of the Company, who is in full time employment with the Company.
The Company being one of the top companies in the country in terms of market capitalisation, has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the members to take well informed decisions and have a better understanding of the Company''s long-term perspective. The report also touches upon aspects such as organisation''s strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.
The key initiatives taken by the Company with respect to stakeholder engagement, ESG, health and safety of employees has been provided separately under various sections of this Integrated Annual Report.
We sincerely thank our customers, vendors, investors, business partners, worker unions, auditors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by employees at all levels. Our continued success was made possible by their hard work, solidarity, commitment and support. We thank the Government of India, the state governments of Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra and Uttarakhand for their continued support.
Mar 31, 2022
We share with you our 56th Annual Report, together with the Audited Financial Statements for the year ended 31st March, 2022.
The Directors are pleased to inform that Hindustan Zinc delivered exemplary operational performance while ensuring safe operations and continued to improve on its performance of various ESG metrics. The company has taken a pro-active approach to keep its assets and people safe, while increasing engagement with the communities during challenging times.
We delivered stellar results during the year touching new operational milestones. The company delivered historic-high ore production for the full year at 16.3 million MT driven by concerted efforts towards bolstering mine production across most of the mines. The company also crossed 1 million tonne mined metal production mark for the first time producing 1,017 kt of mined metal.
Mine development, registering 10% y-o-y growth, crossed 100 km mark for the 1st time in line with increasing production requirements and securing future resource base.
Rampura Agucha has successfully commissioned 2nd underground crusher along with conveyor system enabling full utilization of 3.75 Mt main shaft hoisting capacity.
The Company diligently focussed on community upliftment in the areas of Education, Sustainable Livelihoods, Women Empowerment, Health & Water, Sports & Culture, Environment and Community Assets Creation.
The Company is ranked 1st in Asia-Pacific and globally 5th in Dow Jones Sustainability Index in 2021 amongst Mining & Metal companies. (1st in environment Dimension among the metal and mining sector globally). The Company has also won the 1st Bronze Medal and has been featured in the prestigious Sustainability Yearbook for the fifth year in a row by S&P Global.
I. HEALTH, SAFETY AND ENVIRONMENT
Occupational Health & Safety Health & Safety Performance
LTIFR for the year was 0.81 as compared to 0.97 a year ago. It is with deep sadness that we report the regret of four colleagues (Business partners) in work-related incidents at our operations. These incidents happened despite continuous efforts to eliminate fatalities and attain zero-harm work environment. Thorough investigations were conducted to identify the causes of these incidents and to share lessons learnt across HZL operations, with the aim of preventing repeat or similar incidents.
There has been enhanced leadership focus on incident reporting, incident categorisation & incident investigation along with greater focus on horizontal deployment of learnings across HZL and critical risk management.
During the year, the Company commissioned first made-in-India emergency escape route (staircase type) in at Rajpura Dariba Underground Mine as well as underground rescue station at Rampura Agucha Mine, both of which will significantly improve the response time in case of an emergency. Qualitative and Quantitative Exposure Assessment is completed for all units and exposure mitigation plan is developed. 22 Digitized safety modules were launched for easy understanding of safety standard requirements.
Demonstrating the highest standards of health and safety management during the year, Chanderiya CPP and Debari both received the prestigious âSword of Honourâ from British Safety Council for showing excellence in the management of health and safety risks at work. Kayad Mine was also awarded the National Safety Award from the Government of India for the longest accident-free operations in the metal and mining sector as well as for the lowest injury frequency rate.
ENVIRONMENT
During FY 2021-22, waste recycling increased marginally to 31% (FY 2020-21: 30%), and water recycling rate increased to 44% in (FY 2020-21: 39%). Specific energy consumption for FY2021-22 was 48 GJ/MT of metal (FY 2020-21: 51 GJ/MT).
Hindustan Zinc commits to âLong-term target to reach net-zero emissions by 2050â in alignment with Science Based Targets initiative (SBTi) aiming to have clearly defined path to reduce emissions in line with the Paris Agreement goals. Company has made notable technological advancements in energy conservation. Zinc Smelter Debari has revamped the cell house and eliminated current losses through electrolytic cells by successfully replacing 600 concrete cells with poly-concrete cells. As a result, the power rating has improved. Additionally, the turbine revamping project is certified as a carbon reduction project by VERRA (the worldâs most widely used voluntary GHG program) resulting in avoidance of GHG emissions of 270,000 tCO2e per year. For decarbonizing the future of Indian mining, Hindustan Zinc has partnered with leading global manufacturers for introducing Battery Electrical Vehicles (BEVs) in its underground mines. All units of HZL are certified as ISO 50001 (Energy Management system).
Hindustan Zinc has published its first TCFD (Task Force on Climate-related financial disclosure) report during
Production performance
Production (kt)_FY 2021-22 FY 2020-21 % change
Total mined metal 1,017 972 5%
Refined saleable metal production 967 930 4%
Refined zinc - integrated 776 715 8%
Refined lead - integrated 191 214 -11%
Saleable Silver Production (in tonnes)_647 706 -8%
the year, adapting the TCFD framework for climate change risk and opportunity disclosure. HZL actively participated in âBusiness Leaders Group COP26â and contributed in shaping the agenda for COP26 which was held at Glasgow (UK) in Novâ21. Endeavouring towards sustainable organization, HZL enhanced the governance by establishing Board Level ESG & Sustainability Committee to overview the ESG progress of the organization.
Hindustan Zinc joined the Taskforce on Nature-Related Financial Disclosures (TNFD) forum to tackle nature-related risks. Miyawaki Method of Afforestation pilot project completed at Debari Zinc Smelter (DZS) and horizontal deployment will be done across HZL. 3-year Engagement with International Union for Conservation of Nature (IUCN) will help in development of Biodiversity Management Plan focusing No Net-Loss approach to achieve Sustainability Goals 2025.
One of the most notable achievements has been the successful commissioning of a 3,000 KLD Zero Liquid discharge plant at the Zinc Smelter Debari. The company has also commissioned 5 MLD Sewage Treatment Plant (STP) in Udaipur, bringing the total Udaipur STP capacity built by Hindustan Zinc to 60 MLD. In the area of water stewardship, Rampura Agucha Mine has also completed the execution of groundwater recharge intervention across 4 blocks of Bhilwara district having ground water recharge potential of 8.7 million cubic meter (MCM)/ annum.
Board has approved a long-term captive renewable power development plan up to a capacity of 200 MW. The project will be built under the Group captive norms
Production
For the full-year, ore production was up 6% y-o-y to 16.3 million tonnes on account of strong production growth at Zawar and Sindesar Khurd mines, which were up 12% and 8% respectively. Mined metal production for FY 2021-22 was 1,017 kt compared to 972 kt in previous year
For the full year, integrated metal production was up 4% to 967 kt due to higher plant & concentrate availability. Lead production was lower on account of operating the Pyro plant at CLZS at Zinc-Lead mode rather than Lead mode. Silver production was down by 8% to 647 MT in line with lower lead metal production.
The Company generated 3,891 million units of thermal based power in FY 2021-22. Total green power generation was 720 million units as compared to 649 million units in FY 2020-21.
and on Build Own Operate basis. The power delivery is
expected to start from 2025.
Hindustan Zincâs sustainability initiatives received
several accolades & endorsements during the year
⢠The Company is ranked 1st in Asia-Pacific and globally 5th in Dow Jones Sustainability Index in 2021 amongst Mining & Metal companies. (1st in environment Dimension among the metal and mining sector globally)
⢠Company won the 1st Bronze Medal and has been featured in the prestigious Sustainability Yearbook for the fifth year in a row by S&P Global.
⢠The company received the award for âOutstanding Accomplishment in Corporate Excellence and Dariba smelter received the award for excellence in Environment managementâ in 16th CII-ITC Sustainability Awards.
⢠HZL received IEI Industry Excellence Award 2021, instituted by The Institution of Engineers (India)
⢠HZLâs RAM and Kayad mines received 5 Star Rated Minesâ award by the Ministry of Mines, Govt. of India.
⢠Hindustan Zinc wins at ESG India Leadership Awards - Leadership in Environment and Green House Gas Emissions Reduction Categories organized by ESGRisk.ai, Indiaâs first ESG rating company.
⢠HZL has been awarded the Most Sustainable Company in the Mining Industry by World finance at their Sustainability Awards 2021
Sales
During the year, domestic refined zinc metal sales was 506 kt as against 437 kt last year. While export sales for the year stood at 271 kt as compared to 287 kt a year ago. The aggregate sales were higher by 7% than previous year, in line with production. Lead metal sales in the domestic market were 167 kt, while export sales were 25 kt leading to lower aggregate sales of 11% from a year ago, in line with the decrease in lead metal production. Silver sales were 647 MT in FY 2021-22, all in the domestic market and 12% lower than previous year.
We share with you our 56th Annual Report, together with the Audited Financial Statements for the year ended March 31, 2022.
Financial Information
('' in crore) |
||
Particulars |
FY 2021-22 |
FY 2020-21 |
Revenue from operations (Incl. other operating income) |
29,440 |
22,629 |
Other Income |
1,216 |
1,819 |
Profit before depreciation, interest, tax, and exceptional item |
17,441 |
13,491 |
Less: Interest |
290 |
386 |
Less: Depreciation and amortisation expense |
2,917 |
2,531 |
Less: Exceptional Item |
134 |
- |
Profit before tax |
14,100 |
10,574 |
Less: Net tax expense |
4,471 |
2,594 |
Net profit |
9,629 |
7,980 |
Earnings per share, ('' /share) |
22.79 |
18.89 |
Revenue
The Company reported âRevenue from operationsâ including other operating income of '' 29,440 crore, an increase of 30% y-o-y primarily on account of increase in LME prices supported by higher metal sales due to increase in production
The âOther incomeâ was '' 1,216 crore during the year compared to '' 1,819 crore in the previous year in line with lowering rate of return in current year to 4.7% as against 7.8% in the previous year.
Production Cost
Zincâs cost of production (COP), excluding royalty for FY 202122 was '' 83,511 (US$ 1,122) per tonne, higher by 18% y-o-y. The full year COP was higher impacted largely on account of higher coal prices & input commodity inflation, partly offset by higher volume, better Sulphuric Acid realizations & improved recoveries.
Operating margin
The above revenue and production cost resulted in profit before depreciation, interest and tax (PBDIT) of '' 17,441 crore in FY 2021-2, up 29% on account of higher volumes, rise in LME prices partially offset by higher coal and input commodity prices.
Net profit
Net profit was '' 9,629 crore, up 21% where in the impact of higher PBDIT was partly offset by lower investment income due to declining interest rate environment. Effective Tax rate
Cash Flows
for the year increased to 31.7% as compared to 24.5%, mainly due to end of certain tax benefits.
Earnings Per Share (EPS)
The EPS for the year was '' 22.79 per share as compared to '' 18.89 per share in FY 2020-21.
Dividend
Interim dividend of 900%, i.e. '' 18.0 per share on equity share of '' 2 each amounting to '' 7,606 crore was declared in December 2021.
The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ) is available on the Companyâs website on https://www.hzlindia.com/wp-content/uploads/ Dividend-Policy-2016.pdf
Credit Rating and Liquidity
CRISIL has reaffirmed the Companyâs long-term rating of AAA/Stable and short-term rating of A1 . The ratings continue to reflect the Companyâs low-cost operations, strong market position, efficient and integrated operations, high reserve & resource and a strong balance sheet.
The Company follows a conservative investment policy and invests in high quality debt instruments. As on March 31, 2022, the Companyâs net cash and cash equivalents was '' 17,966 crore as compared to '' 15,130 crore at the end of FY 2020-21 and is invested in high quality debt instruments.
Particulars |
FY 2021-22 |
FY 2020-21 |
Opening Cash* |
22,308 |
22,207 |
Add: EBITDA** |
16,289 |
11,739 |
Add: Net Interest Income |
604 |
1,258 |
Less: Income Tax |
2,391 |
1,755 |
Less: Dividend |
7,606 |
15,972 |
Less: Capital Account Payments |
2,998 |
2,481 |
Add: Borrowings |
(4,315) |
6,525 |
Add: (Increase)/Decrease in Working Capital & Others |
(1,102) |
787 |
Closing Cash* |
20,789 |
22,308 |
(*) Includes Cash & Equivalents (refer Note 11 of the Audited Financial Statements), other bank balances excluding earmarked unpaid dividend accounts balance (refer note 12 of the Audited Financial Statements) and Current Investments (refer Note 9 of the Audited Financial Statements (**) Earnings before Interest, Tax, Depreciation and Amortisation expenses and Income on investments.
Gross Working Capital
Gross working capital represented by inventory, trade receivables and other current assets increased from '' 2,180 crore to '' 3,132 crore as at March 31, 2022 primarily due to increase in raw material inventory, trade receivables and coal stock for ensuring coal security and to combat any potential price increase. The working capital cycle was 40 days in FY 2021 -22 as compared to 36 days in FY 2020-21.
Gross Block
The gross block during the year increased from '' 34,228 crore to '' 37,455 crore. This was largely due to the ongoing mining projects and other sustaining capex.
Capital Employed
The total capital employed as at March 31, 2022 was '' 16,315 crore, as compared to '' 17,183 crore at the end of previous fiscal year.
Contribution to the Government Treasury The Company has contributed '' 15,676 crore during FY 2021-22, in terms of royalties and taxes to the Government treasury, aggregating to approximately 53% of the total operating revenue.
On an exclusive basis, total ore reserves at the end of FY 2021-22 stood at 161.21 million tonnes (net of depletion of FY 2021-22 production of 16.34 million tonnes) and exclusive mineral resources totalled 286.73 million tonnes. Total contained metal in Ore Reserves is estimated at 9.57 million tonnes of zinc, 2.45 million tonnes of lead and 298.4 million ounces of silver. The Mineral Resource contains approximately 13.18 million tonnes of zinc, 5.86 million tonnes of lead and 576.3 million ounces of silver. At current mining rates, the R&R underpins metal production for more than 25 years.
I n HZL journey of 1.25 mtpa MIC expansion, some of key projects are under execution at RD Mines complex. We have successfully completed RD Mines Shaft & Conveyor upgradation for enhancement of ore hoisting capacity in Q3 FY 2021-22. In line with our ESG journey, we have completed installation of Dry Filtration & Paste fill plant to enable effective tailings managements by switching from Wet to Dry tailing management system. Commissioning of plant will start by Q1 of FY 2022-23. For enhancing metal recovery, we have placed order for RD Beneficiation plant revamping, enabling better Pb, Zn & Ag recoveries and improving plant reliability by replacing obsolete Grinding, Floatation & Filtration circuits. Civil construction is already ongoing and plant is scheduled to be commissioned in Q3 FY 2022-23.
At Zawar, in order to enhance the ventilation capacities and working conditions of West Mochia and North Baroi mines, installation of underground ventilation fans has started. For increasing the capacity of Tailing storage
Facility, design and stabilisation studies have been conducted and the dry stacking is under progress.
Treatment of Raw Zinc Oxide (RZO) in RKD circuit (component of overall Fumer project) continued during the entire year. For the Fumer commissioning, visa process is in advanced stages for the technical experts. The Fumer commissioning is targeted for completion by early FY 2022-23.
VI. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Companyâs CSR initiatives passionately focuses on community upliftment by strengthening the local economy and improving the quality of life by working in the areas of Education, Sustainable Livelihoods, Women Empowerment, Health, Water & Sanitation, Sports & Culture, Environment & Safety and Community Assets Creation.
During the year, the Company spent '' 190.92 crore on CSR programmes more than the 2% of CSR mandate which was '' 186.68 crore. For further details, refer Annexure III and âBusiness Reviewâ section of this Annual Report
Government of India, Ministry of Mines appointed Ms. Nirupama Kotru in place of Ms. Yatinder Prasad w.e.f. July 26, 2021. Ms. Veena Kumari Dermal also appointed as director w.e.f. July 29, 2021.
The companyâs policy on appointment of Directors and their remuneration is available on the Companyâs website https://www.hzlindia.com/wp-content/uploads/ HZL-Nomination-Remuneration-Policy-20.1.2020.pdf
VIII. MANAGEMENT DISCUSSION AND ANALYSIS
The âOur Operational Performanceâ section of this Annual Report gives a detailed account of the Companyâs operations and the market in which it operates, including its initiatives in the areas of human resources, sustainability and risk management.
IX. CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT
As a listed company, necessary measures are taken to comply with the listing agreements of the Stock exchanges. A report on Corporate Governance, along with a certificate of compliance from the statutory auditors, forms part of this report. Further, Business Responsibility and Sustainability Report describing the initiatives taken by the Company from an Environmental, Social and Governance perspective, also forms a part of this report. In order to maintain transparency and efficient governance, various disclosures as required under Sections 134 and 135 of the Companies Act, 2013 are annexed to this report or covered in the Corporate Governance Report, such as Related Party Transactions; Information and details on conservation of energy, technology absorption, foreign exchange earnings and outgo; extract of annual return; constitution of various Board level Committees; Annual Report on CSR, etc.
The criteria used by them basis which the individual director performance evaluation has been done included:
⢠preparation and participation in Board meetings,
⢠personality and conduct,
⢠quality of value added,
⢠understanding of the Companyâs mission, vision, philosophy and strategy,
⢠understanding of the industry and the business in which the Company operates,
⢠independence of judgement,
⢠i ndependent thinking ability to bring a divergent
view, etc.
CEO & Whole Time Director evaluation was more focused towards Company performance and leadership, team building and management succession, edge in execution of strategy formulated by the Board.
The evaluation of the various Board Committees was more focused towards:
⢠Itâs charter/ terms of reference
⢠Number of meetings held and itâs appropriateness
⢠Timely availability of information
⢠Committee composition
⢠Committee decisions are adequately conveyed and implemented
⢠Meetings are conducted in a manner that ensures open communication, meaningful participation and timely resolution of issues
⢠Independency of committee to contribute effectively
Assessment of each director on the board is done by the other directors including that of various committees. The consolidated outcome from all the directors is prepared by Chairman of nomination and remuneration committee and presented to the board of directors. All the directors had been rated excellent and overall finding shows that the Board and itâs various committees are working well. All Board members come with very strong background and add lot of value to the meetings by making them participative and engaging.
XII. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
XIII. AUDITORS
The Company had appointed M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company to conduct audit of Financial Statements for the year ended March 31, 2022. The Notes to Financial Statement referred to in the Auditorsâ Report are self-explanatory and do not call for any further comments. The Auditorsâ Report does not contain any
X. DIRECTORSâ RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. t hey have selected such accounting policies and applied them consistently and made judgements & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv. the annual accounts have been prepared on a âGoing Concernâ basis.
v. t hey have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Companyâs internal financial controls were adequate and effective during FY 2021-22.
The Nomination and Remuneration Committee has devised a criteria for evaluation of the performance of the Directors including the Independent Directors. The said criteria provides certain parameters like attendance, acquaintance with business, communication inter se between board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmarks established by global peers etc., which is in compliance with applicable laws, regulations and guidelines.
During the year, Company engaged Deloitte Haskins & Sells LLP for carrying out the performance evaluation of all the Board members, Board as a whole and various committees.
qualification or reservation. The only adverse remark in CG certificate is for not fulfilling the criteria of adequate number of Independent Directors including woman independent director and for which we are in touch with the two major shareholders, which is self-explanatory.
Pursuant to the orders issued by the Central Government under Section 148 of The Companies Act, 2013, the Board has appointed M/s. K G Goyal & Co. Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for all its products and M/s. Vinod Kothari & Company, Company Secretaries as the Secretarial Auditors for conducting the Secretarial audit of the Company. Their report does not contain any qualification or reservation. The only adverse remark is for not fulfilling the criteria of adequate number of Independent Directors including woman independent director, for which we are in touch with the two major shareholders and other procedural delays due to COVID-19, which are self-explanatory.
As per provisions of Section 136 of the Companies Act, 2013, the Annual Report including the Audited Accounts for the year will be sent to all the Shareholders whose e-mail addresses are registered.
The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behaviour. This Policy is available on the Companyâs website on https://www. hzlindia.com/wp-content/uploads/HZL-WHISTLE-BLOWER-POLICY-19.10.2015.pdf
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2022 is available on the Companyâs website https://www. hzlindia.com/investors/reports-press-releases/
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read
with Rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report. However, having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the registered office and the same will be furnished on request. Further the details are also available on the Companyâs website: www.hzlindia.com.
I n line with the internal guidelines of the Company, no payment is made towards commission to the Executive Director of the Company, who is in full time employment with the Company.
The Company being one of the top companies in the country in terms of market capitalization, has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Companyâs long-term perspective. The Report also touches upon aspects such as organisationâs strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.
We sincerely thank our customers, vendors, investors, business partners, worker unions, auditors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by employees at all levels. Our continued success was made possible by their hard work, solidarity, commitment and support. We thank the Government of India, the State Governments of Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra and Uttarakhand for their continued support.
For and on behalf of the Board of Directors
ARUN MISRA ANJANI K AGRAWAL
CEO & Whole-time Director Director
DIN :01835605 DIN :08579812
Place: Udaipur Place: Mumbai
Mar 31, 2021
Dear Members,
We share with you our 55th Annual Report, together with the Audited Financial Statements for the year ended 31st March, 2021.
The Directors are pleased to inform that Hindustan Zinc delivered exemplary operational performance while ensuring safe operations and continued to improve on its performance of various ESG metrics. We have taken a pro-active approach to keep our assets and people safe while increasing engagement with our communities during these difficult times.
Mine production progressively improved during the year with ore production for the full-year up 7% y-o-y to deliver a record 15.5 Mt, supported by strong production growth at Zawar mines and Rampura Agucha (RA) Mine, which were up 21% and 9% respectively. Operations were halted on account of nationwide lockdown to combat COVID-19 from 22nd March, 2020 and restarted gradually in April 20. Mined metal production was up 6% y-o-y to 972 kt primarily on account of higher ore production with overall grades remaining at same levels.
During the year, back fill plants were commissioned at Zawarmala and Mochia mines. The development of North Decline (ND1) was completed at Rampura Agucha Mine. COVID-19 restrictions including stringent visa guidelines for Chinese nationals continued during the year which resulted in delay in commissioning of Fumer plant at Chanderiya. Feasibility studies are underway at mining locations for expansion to 1.5 Mtpa capacity.
The Company diligently focussed on community upliftment in the areas of Education, Sustainable Livelihoods, Women Empowerment, Health & Water, Sports & Culture, Environment and Community Assets Creation. 1
reporting. During the year, the Company commissioned an underground Occupational Health Centre at Rampura Agucha Mine which significantly improves the response time in emergency cases.
During the reporting year, waste recycling continued at 31%, and water recycling rate increased marginally to 40% (FY2020: 39%). Specific energy consumption improved marginally to 19.9 GJ/ton of metal (FY2020: 20.4 GJ/ton).
Hindustan Zinc''s 22 MW solar power project at RA mine was registered under Gold Standard during the year. Dariba Smelting Complex (DSC) successfully commissioned a 4500 MTPA FPT (Freeze Precipitation Technology) plant to recover Sodium sulphate from final multi-stage RO rejects which will cater to 1/3rd of DSC Hydro smelter''s input salt requirements to support our circular economy goal. CPP Team conducted an innovative in-house recycling of the bottom ash to convert it into fly ash (saleable product) improving value realization and lowering environment footprint. Hindustan Zinc''s Udaipur Sewage Treatment Plants expanded to 55 MLD translating into over 90% treatment of city''s sewage.
HZL led an endorsement for ''UNGC (United Nations Global Compact) CEO Water Mandate'' giving our commitment towards water stewardship and initiating our journey to follow the six principles laid out by UNGC. As part of commitment towards biodiversity conservation, the Company is now a member of IUCN ''Leader for Nature India'' initiative. HZL actively participated in the 3rd meeting of ''Business Leaders Group COP26'' and actively engaged for shaping the agenda for COP26 which is to be held at Glasgow (UK) in Nov''21.
Our sustainability activities received several endorsements during the year including selection in ''Sustainability Yearbook 2021'' as Member for 4th consecutive year, 1st position in Asia Pacific region in metal and mining sector in Dow Jones Sustainability Indices and 7th Globally and CII-ITC Corporate Excellence Sustainability Award 2020. Hindustan Zinc was featured among the first Indian companies to be featured in CDP India Annual Report and was rated ''A'' in Climate change CDP 2020.
For the full-year, ore production was up 7% y-o-y to 15.5 Mt on account of strong production growth at Rampura Agucha Mine and Zawar mines, which were up 9% and 21% respectively. Mined metal production for FY2021 was 971,976 tons compared to 917,101 tons in the prior year in line with higher ore production.
For the full year, integrated metal production was up 7% to 930 kt in line with higher MIC availability, while silver production was up by 16% to a record 706 tons in line with higher lead production and slightly better grades at SK. These record numbers were delivered despite losing 3-4 weeks equivalent of production days in the year due to COVID related lockdown and other disruptions resulting from rising infections.
The Company generated 4,085 million units of thermal based power in FY2021 as compared to 3,880 million units in FY2020. Total green power generation was 649 million units as compared to 609 million units in FY2020.
The refined zinc metal sales in the domestic market during the year was 437kt, while export sales accounted for 287kt as compared to 486kt and 194kt respectively a year ago.
The aggregate sales were higher by 6% than previous year, in line with production. Lead metal sales in the domestic market were 181 kt, while export sales were 35kt leading to higher aggregate sales of 20% from a year ago, in line with the increase in lead metal production during the year. Silver sales were 735 tons in FY2021, all in the domestic market and 25% higher than previous year.
Hindustan Zinc Limited is the first investor requested company in India to respond to
CDP''s Forests questionnaire and also received Supplier Engagement Rating ''A'' from CDP.
II. OPERATIONAL PERFORMANCE Production performance |
|||
Production (kt) |
FY2021 |
FY2020 |
% change |
Total mined metal |
972 |
917 |
6% |
Refinery metal production |
930 |
870 |
7% |
Refined zinc - integrated |
716 |
688 |
4% |
Refined lead - integrated1 |
214 |
182 |
18% |
Production - silver (in tons)2 |
706 |
610 |
16% |
1. Excluding captive consumption of 6,424 tons in FY2021 vs. 7,088 tons in FY2020.
2. Excluding captive consumption of 34.6 tons in FY2021 vs. 36.7 tons in FY2020.
_('' in crore)
Particulars FY2021 FY2020Revenue from operations 22,629 18,561
Profit before depreciation, interest and tax 13,491 10,781
Less: Depreciation and amortisation expense 2,531 2,279
Profit before tax 10,574 8,390
The Company reported ''Revenue from operations'' including other operating income of '' 22,629 crore, an increase of 22% y-o-y primarily on account of increase in metal sales and higher silver prices.
The ''Other income'' was '' 1,819 crore during the year compared to '' 1,934 crore in the previous year on account of lower treasury income due to lower rate of return on fresh investments/ reinvestments during the year on account of lower interest rates.
Zinc''s cost of production (COP), excluding royalty for FY2021 was '' 70,681 (US$954) per ton, lower by 5% y-o-y (9% in US$). The full year COP decrease reflects higher production volume, lower power costs, lower metcoke and cement costs partly offset by higher admin expense (Covid donation), lower sulphuric acid credits and higher diesel costs.
The above revenue and production cost resulted in profit before depreciation, interest and tax (PBDIT) of '' 13,491 crore in FY2021, up 25% on account of higher revenue and lower cost of production.
Net profit was '' 7,980 crore, up 17% on account of higher PBDIT partly offset by higher D&A expense and higher effective tax rate. Tax rate for the year was 24.5% as compared to 18.9% due to reversal of deferred tax liabilities in FY2020 related to prior years pursuant to
Company''s expectation of moving to a lower tax regime under Section 115BBA of the Income Tax Act, 1961.
The EPS for the year was '' 18.89 per share as compared to '' 16.11 per share in FY2020.
Interim dividend of 1065%, i.e. '' 21.3 per share on equity share of '' 2 each amounting to '' 9,000 crore was declared in October 2020.
The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ) is available on the Company''s website on https:// www.hzlindia.com/wp-content/uploads/ Dividend-Policy-2016.pdf
CRISIL has reaffirmed the Company''s longterm rating of AAA/Stable and short-term rating of A1 . The ratings continue to reflect the Company''s low cost operations, strong market position, efficient and integrated operations, high reserve & resource and a strong balance sheet.
The Company follows a conservative investment policy and invests in high quality debt instruments. As on 31st March, 2021, the Company''s net cash and cash equivalents was '' 15,130 crore as compared to '' 21,596 crore at the end of FY2020 and is invested in high quality debt instruments.
Cash Flows |
('' in crore) |
|
Particulars |
FY2021 |
FY2020 |
Opening Cash* |
22,207 |
19,490 |
Add: EBITDA2 |
11,739 |
8,849 |
Add: Net Interest Income |
1,258 |
1,722 |
Less: Income Tax |
1,755 |
1,135 |
Less: Dividend |
15,972 |
0 |
Less: Capital Account Payments |
2,481 |
3,637 |
Add: Borrowings |
6,525 |
-1924 |
(Increase)/Decrease in Working Capital & Others |
787 |
-1,158 |
Closing Cash* |
22,308 |
22,207 |
(*) Includes Cash & Equivalents (refer Note 11 of the Audited Financial Statements), other bank balances excluding earmarked unpaid dividend accounts balance (refer note 12 of the Audited Financial Statements) and Current Investments (refer Note 9 of the Audited Financial Statements).
Gross working capital represented by inventory, trade receivables and other current assets decreased from '' 2,558 crore to '' 2,180 crore as at 31st March, 2021 primarily due to decrease of stores & finished goods inventory. The working capital cycle was 36 days in FY2021 as compared to 51 days in FY2020.
The gross block during the year increased from '' 32,106 crore to '' 34,228 crore. This was largely due to the ongoing mining projects and other sustaining capex.
The total capital employed as at 31st March,
2021 was '' 17,183, crore, as compared to '' 18,714 crore at the end of previous fiscal year mainly due to payment of dividend in current fiscal year.
Contribution to the Government Treasury
The Company has contributed '' 15,008 crore during FY2021, in terms of royalties and taxes to the Government treasury, aggregating to approximately 66% of the total revenue.
On an exclusive basis, total ore reserves at the end of FY2021 totalled 150.3 Mt and mineral resources totalled 297.6 Mt. Total contained metal in Ore Reserves is 9.16 Mt of zinc, 2.55 Mt of lead and 295.5 million ounces of silver.
The Mineral Resource contains 14.9 Mt of zinc, 6.3 Mt of lead and 618.7 million ounces of silver. At current mining rates, the R&R underpins metal production for more than 25 years. This year Company replenished 2.7 times more resource than it consumed during the year i.e. there is a gross resource addition of 61.9Mt with a contained metal of 3.1 Mt, which is highest resource addition in last decade.
We commissioned a 10 MLD STP plant in Udaipur and another 5 MLD STP is in its last leg of commissioning, which will take the total STP capacity set up by us to 60 MLD. This will treat almost the entire sewage of Udaipur city and the recycled water will be used by our plants, significantly reducing our fresh water intake.
During the year, Graphite floatation system was commissioned at Mill 3 of Sindesar Khurd Mines, which will enhance the smelter throughput and boost the recovery.
During the year, back fill plants were commissioned at Zawarmala and Mochia
mines. These plants will de-risk operations and provide opportunity to mine left-out high-grade ore in pillars. On similar lines, we have also started execution activities for combined paste-fill and dry tailing plant at Rajpura Dariba which will help in increasing ore production from 1.2 Mtpa to 2 Mtpa. This will also facilitate in additional utilization of tails by ~20% for backfilling and will reduce stope turnaround time.
The development of North Decline (ND1) was completed at Rampura Agucha Mine (RAM). This improves the accessibility of shaft section, alternate emergency evacuation, ease in mine equipment deployment at lower levels of mine, face charging with emulsion explosives, face drilling with long feed jumbo, etc.
We have started operations in RKD circuit (component of overall Fumer project) to treat Raw Zinc Oxide (RZO). COviD-19 restrictions including stringent visa guidelines for Chinese nationals continued during the year which resulted in delay in commissioning of Fumer plant at Chanderiya. We are following up with authorities to find a solution.
VI. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company''s CSR passionately focuses on community upliftment through Education, Sustainable Livelihoods, Women Empowerment, Health & Water, Sports & Culture, Environment and Community Assets Creation.
During the year, the Company spent '' 214 crore on CSR programmes as compared to '' 132 crore in previous year. For further details, refer Annexure 3 and ''Business Review'' section of this Annual Report.
During the year under review, following changes took place in the Board of Directors:
Pursuant to expiry of the appointed tenure of Mr. Sunil Duggal as CEO & WTD on 31st July, 2020, Mr. Arun Misra was appointed as CEO & WTD of the company w.e.f 1st August, 2020.
Similarly, Mr. Akhilesh Joshi and
Mr. Anjani Kumar Agrawal were appointed
as independent Directors w.e.f 1st August,
2020 upon the expiry of the appointed tenure of Mr. A R Narayanaswamy and Mr. Arun L Todarwal on 31st July, 2020.
Government of india, Ministry of Mines appointed Ms. Yatinder Prasad on the
Board w.e.f 7th August, 2020, in place of Mrs. Reena Sinha Puri.
The company''s policy on appointment of Directors and their remuneration is available on the Company''s website https://www.hzlindia. com/wp-content/uploads/HZL-Nomination-Remuneration-Policy-20J.2020.pdf
VIII. MANAGEMENT DISCUSSION AND ANALYSIS
The ''Our Operational Performance'' section of this Annual Report gives a detailed account of the Company''s operations and the market in which it operates, including its initiatives in areas of human resources, sustainability and risk management.
IX. CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT
As a listed company, necessary measures are taken to comply with the listing agreements of the Stock exchanges. A report on Corporate Governance, along with a certificate of compliance from the statutory auditors, forms part of this report. Further, Business Responsibility Report describing the initiatives taken by the Company from an Environmental, Social and Governance perspective, also forms a part of this report. In order to maintain transparency and efficient governance, various disclosures as required under Sections 134 and 135 of the Companies Act, 2013 are annexed to this report or covered in the Corporate Governance Report, such as Related Party Transactions; Information and details on conservation of energy, technology absorption, foreign exchange earnings and outgo; extract of annual return; constitution of various Board level Committees; Annual Report on CSR, etc.
X. DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgements & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv. the annual accounts have been prepared on a ''Going Concern'' basis.
v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY2021.
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.
The performance of the board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5th January, 2017.
In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and nonexecutive directors.
The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the Board members, excluding the independent director who is being evaluated.
XII. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
The Company had appointed M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company to conduct audit of Financial Statements for the year ended 31st March, 2021. The Notes to Financial Statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification or reservation.
The only adverse remark in CG certificate is for not fulfilling the criteria of adequate number of Independent Directors including woman independent director and for which we are in touch with the two major shareholders, and purchase of Bonds from holding company which is self-explanatory.
Pursuant to the orders issued by the Central Government under Section 148 of The Companies Act, 2013, the Board has appointed M/s. K G Goyal & Co. Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for all its products and M/s. Chandrasekaran Associates, Company Secretaries as the Secretarial Auditors for conducting the Secretarial audit of the
Company. Their report does not contain any qualification or reservation. The only adverse remark is for not fulfilling the criteria of adequate number of Independent Directors including woman independent director, for which we are in touch with the two major shareholders and other procedural delays due to COVID-19, which are self-explanatory.
As per provisions of Section 136 of the Companies Act, 2013, the Annual Report including the Audited Accounts for the year will be sent to all the Shareholders whose e-mail addresses are registered.
The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behaviour. This Policy is available on the Company''s website on https:// www.hzlindia.com/wp-content/uploads/HZL-WHISTLE-BLOWER-POLICY-19.10.2015.pdf
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31st March, 2021 is available on the Company''s website on https://www.hzlindia.com/investors/ reports-press-releases/
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report. However, having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the registered office and the same will be furnished on request. Further the details are also available on the Company''s website: www.hzlindia.com.
In line with the internal guidelines of the Company, no payment is made towards commission to the Executive Director of the Company, who is in full time employment with the Company.
The Company being one of the top companies in the country in terms of market capitalization, has voluntarily provided Integrated Report, which encompasses both financial and nonfinancial information to enable the Members to take well informed decisions and have a better understanding of the Company''s longterm perspective. The Report also touches upon aspects such as organisation''s strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.
We sincerely thank our customers, vendors, investors, business partners, worker unions, auditors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by employees at all levels. Our continued success was made possible by their hard work, solidarity, commitment and support.
We thank the Government of India, the State Governments of Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra and Uttarakhand for their continued support.
For and on behalf of the Board of Directors
CEO & Whole-time Director Director
Place: Udaipur Mumbai
Date: 27th April, 2021
HEALTH, SAFETY AND ENVIRONMENT
Occupational Health & Safety Health & Safety Performance
LTIFR for the year was 0.97 as compared to 1.38 a year ago. In the reporting year, there has been enhanced leadership focus on incident reporting, categorisation & investigation along with greater focus to bring a cultural change in encouraging reporting via felt leadership programmes, safety town halls, enabling tools like safety whistle-blower as well as reward & recognition for near-miss
Earnings before Interest, Tax, Depreciation and Amortisation expenses and Income on investments.
Mar 31, 2019
Board''s Report
Dear Members,
The Directors are pleased to inform that Hindustan Zinc delivered strong performance from all our underground mines and many benchmarks in operational performance were set during the year.
I. FINANCIAL PERFORMANCE
We share with you our 53rd Annual Report, together with the Audited Financial Statements for the year ended March 31, 2019.
FINANCIAL INFORMATION
Rs in Crore |
||
Particulars |
FY 2019 |
FY 2018 |
Revenue from operations (net of Excise Duty) |
21,118 |
22,082 |
Other Income |
1,782 |
1,716 |
Profit before depreciation, interest and tax |
12,452 |
14,226 |
Less: Interest |
113 |
246 |
Less: Depreciation and amortization expense |
1,883 |
1,483 |
Profit before tax |
10,456 |
12,497 |
Less: Net tax expense |
2,500 |
3,221 |
Net profit |
7,956 |
9,276 |
Earnings per share, ? |
18.83 |
21.95 |
REVENUE
The Company reported ''Revenue from operations'' (net of excise duty) including other operating income of Rs 21,118 Crore, a decrease of 4% y-o-y higher lead & silver volumes and rupee depreciation, offset by lower metal prices and zinc volume.
The ''Other income'' was Rs 1,782 Crore during the year compared to Rs. 1,716 Crore in the previous year on account of higher treasury income due to mark-to-market gains resulting from decline in interest rates, partly offset by decline in investment corpus on account of special interim dividend payment.
PRODUCTION COST
Net zinc metal cost per tonne, without royalty, during the year was higher by 11% in INR (3%in USD) at Rs 70,444 ($1008) MT and was impacted by higher mine development, lower metal volume, higher coal & commodity prices, LTS related expense and rupee depreciation (in case of rupee COP), partly offset by higher acid credits. The Company concluded a five-year long-term settlement with its recognised union impacting cost by $33 per tonne.
OPERATING MARGIN
The above revenue and production cost resulted in profit before depreciation, interest and tax (PBDIT) of Rs 12,452 Crore in FY 2019, down 12%. In addition to lower revenue and higher cost of production, operating income was impacted by one-time expense related to LTS arrears.
NET PROFIT
The Company reported record net profit of Rs. 7,956 Crore, 14% lower than previous year on account for lower PBDIT and higher depreciation, partly helped by lower tax rate.
Depreciation & amortisation has trended up due to higher capitalisation and increased underground ore production resulting in higher amortisation.
EARNINGS PER SHARE (EPS)
The EPS for the year was Rs. 18.83 per share as com pared to Rs. 21.95 per share in FY 2018.
DIVIDEND
On October 22, 2018, the Board of Directors declared a Special Interim Dividend of 1000% i.e. Rs. 20 per share on equity share of Rs. 2 each amounting to Rs. 10,188 Crore (including DDT). The Board has not recommended final dividend for the year.
CREDIT RATING AND LIQUIDITY
CRISIL has reaffirmed the Company''s long-term rating of AAA/Stable and short-term rating of A1 . The ratings continue to reflect the Company''s dominant position in India''s zinc industry, efficient and integrated operations and a strong financial risk profile.
The Company follows a conservative investment policy and invests in high quality debt instruments. As on March 31, 2019, the Company''s cash and cash equivalents was Rs. 19,490 Crore invested in high quality debt instruments and the portfolio continues to be rated "Tier-1" implying Highest Safety by CRISIL. During the year, the Company borrowed ? 5,000 Crore of short term commercial paper in to meet cash flow mismatch for special interim dividend funding requirement. Of this, Rs 3,000 Crore of commercial paper was paid off during the year. The net cash and cash equivalents at the end of the year was Rs. 16,952 Crore as compared to ? 20,395 Crore at the end of FY 2018.
CASH FLOWS
|
Rs. in Crore |
|
Particulars |
FY 2019 |
FY 2018 |
Opening Cash* |
20,395 |
23,972 |
Add: EBITDA** |
10,747 |
12,373 |
Add: Net Interest Income |
1,552 |
1,329 |
Less: Income Tax & Dividend |
14,518 |
13,497 |
Less: Capital Account Payments |
3,400 |
2,733 |
Add: (Increase) / Decrease in Working Capital & Others |
4,714 |
(1,049) |
Closing Cash* |
19,490 |
20,395 |
(*) Includes Cash & Equivalents (refer Note 11 of the Audited Financial Statements) and Current Investments (refer Note 9 of the Audited Financial Statements)
(**) Earnings before Interest, Tax, Depreciation and Amortization expenses and Income on investments.
GROSS WORKING CAPITAL
Gross working capital represented by inventory, trade receivables and other current assets increased from Rs. 1,956 Crore to Rs. 2058 Crore as at March 31, 2019 primarily due to increase of stores inventory. The working capital cycle was 36 days in FY 2019 as compared to 32 days in FY 2018.
GROSS BLOCK
The gross block during the year increased from Rs. 23,879 Crore to Rs. 28,096 Crore. This was largely due to the ongoing mining projects and other sustaining capex.
CAPITAL EMPLOYED
The total capital employed as at March 31, 2019 was Rs. 16,652 Crore, as compared to Rs. 15,537 Crore at the end of previous fiscal year mainly due to addition in fixed assets.
CONTRIBUTION TO THE GOVERNMENT TREASURY
The Company has contributed Rs. 11,563 Crore during FY2019, in terms of royalties, taxes and dividends to the Government treasury on cash basis, aggregating to approximately 55% of the total revenue.
II. OPERATIONAL PERFORMANCE PRODUCTION
The FY 2019 mined metal production was entirely from underground mines, which ramped up strongly by 29% to 936 kt on account of 27% increase in ore production and better grades. The closure of open-cast operations caused total mined metal production to decline marginally by 1% from a year ago.
Integrated metal production was 894 kt, down 7% from a year ago. Zinc production at 696 kt was lower by 12% year-over-year due to lower zinc mined metal availability during the year as underground mines ramped up to fill the vacuum from closure of open-cast operations and higher lead ratio in ore. Integrated lead and silver production were at record 198 kt and 679 MT, higher by 18% and 22% respectively from a year ago driven by higher lead mined metal production, retrofitting of pyro metallurgical smelter in Q2 FY 2019 to produce more lead in line with higher lead mined metal availability and better silver grades.
The Company generated 3,746 million units of power in FY 2019 as compared to 3,817 million units in FY 2018. Total green power generation was 449 million units as compared to 414 million units in FY 2018.
SALES
The refined zinc metal sales in the domestic market during the year was 513 kt, while export sales accounted for 181 kt as compared to 515 kt and 278 kt respectively a year ago. The aggregate sales were lower by 12% than previous year, in line with production. Lead metal sales in the domestic market were 154 kt, while export sales were 44 kt leading to higher aggregate sales of 17% from a year ago, in line with increase in lead metal production during the year. Silver sales were 676 MT in FY 2019, all in the domestic market and 21% higher than previous year.
III. RESERVE & RESOURCE (R&R)
During the year, gross additions of 5.4 million MT were made to reserves resource (R&R), prior to depletion of 13.8 million MT. As at March 31, 2019, the combined R&R were estimated to be 403 million MT, containing 34.6 million MT of zinc-lead metal and 965 million ounces of silver. Overall mine life continues to be more than 25 years.
IV. PROJECTS
The announced mining projects are nearing completion in line with the target of reaching 1.2 million MT per annum of mined metal capacity in FY2020.
UPDATE ON ONGOING EXPANSION PROJECTS
Capital mine development increased by 12% to 43 km in FY2019.
At Rampura Agucha underground mine, the ventilation system was commissioned earlier in the year liberating the mine from ventilation issues. The commissioning of mid shaft loading system in October 2018 allowed waste hoisting to be done through the shaft ahead of schedule, leading to improvement in ore production. The second paste fill plant was completed ahead of schedule in Q4 and the mine is equipped with paste fill capacity to support 5.0 mtpa production. The full shaft commissioning is expected to complete by September 2020 synchronising with completion of crusher and conveyor system.
During the year, Sindesar Khurd received environment clearance to produce 6.0 million MT of ore and 6.5 million MTof ore beneficiation.The new 1.5 mtpa mill accomplished smooth commissioning and began production in the third quarter of the year, taking the total milling capacity to 6.2 mtpa. The underground crusher and production shaft were commissioned during Q4 and ore hoisting from shaft is expected to start in Ql of the current year. The second paste fill plant is under mechanical completion and also expected to commission in Q1 of the current year.
Zawar mines: The new 2.0 mtpa mill was commissioned in Q4 while the dry tailing plant is under execution and expected to commission in Q2 FY 2020.
Rajpura Dariba mine has received Environment Clearance by the Ministry of Environment, Forest & Climate Change to increase ore production from 0.9 to 1.08 mtpa and regulatory approval for further expansion to 2.0 mtpa is under process. Ore production run-rate is already at 1.2 million MT per annum post major infrastructure enhancement. During the year, orders were place for a new 1.5 mtpa mill and paste fill plant which are expected to complete in FY2020.
OTHER PROJECTS
The Fumer project at Chanderiya is expected to commission in Q1 of the current year.
22 MW solar plant was completed at Rampura Agucha taking the total solar capacity to 38 MW.
25 MLD Sewage Treatment Project was commissioned at Udaipur taking the total capacity to 45 MLD which will help improve water availability at Dariba and treat over half of Udaipur city''s sewage.
Planning is underway for the next phase of expansion to 1.35 million MT perannum.
OUTLOOK
Both mined metal and finished metal production in FY2020 will be significantly higher than last year and expected to be about 1.0 million tonnes each. The Company expects to complete the underground mine expansion plan announced in early 2013 by Q2 of the current financial year, quadrupling its underground mined metal production capacity to 1.2 mtpa.
Zinc cost of production in FY2020 is expected to be under $1000 per MT. The guidance of FY 2020 silver production is in the range of 750 - 800 MT. The project capex for the year will be in the range of US$350 to US$400 million.
VI. HEALTH, SAFETY AND ENVIRONMENT
Safety, health and sustainability initiatives have been discussed in detail in ''Business Review'', which forms a part of this Annual Report.
VII. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company''s CSR focuses on Education, Sustainable Livelihoods, Women Empowerment, Health & Water, Sports & Culture, Environment and Community Development including Community Assets Creation.
During the year, the Company spent Rs. 130 Crore on CSR programs as compared to Rs, 92 Crore in previous year. For further details, refer Annexure 5 and ''Business Review'' section of this Annual Report.
VIII. DIRECTORS
During the year under review, Mr. Agnivesh Agarwal resigned as Director and Chairman of the Board on February 22,2019 after 13 years of being on the Board of Directors. We thank Mr. Agarwal for his leadership and guidance towards the growth of the Company. Mrs Kiran Agarwal was appointed as Additional Director and Chairman of the Board on March 02, 2019.
Mr. Sudhir Kumar, Independent Director and nominee of Government of India, completed his tenure on November 29, 2018. We thank Mr. Kumar for his contribution.
IX. MANAGEMENT DISCUSSION AND ANALYSIS
The Business Review section of this Annual Report gives a detailed account of the Company''s operations and the market in which it operates, including its initiatives in areas such as human resources, sustainability and risk management.
X. CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT
As a listed company, necessary measures are taken to comply with the listing agreements of the Stock exchanges. A report on Corporate Governance, along with a certificate of compliance from the statutory auditors, forms part of this report. Further, Business Responsibility Report describing the initiatives taken by your Company from an Environmental, Social and Governance perspective, also forms a part of this report. Various disclosures as required under section 134 and 135 of the Companies Act2013 are annexed to this report or covered in the Corporate Governance Report, such as Related Party Transactions; Information and details on conservation of energy, technology absorption, foreign exchange earnings and outgo; extract of annual return; constitution of various Board level Committees; Annual Report on CSR.
XI. DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards read with requirements set out under Schedule 3 to the Act, have been followed and there are no material departures in the same.
ii. The Directors have selected such accounting policies, applied them consistently and made judgements & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.
iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv. The Directors have prepared the annual accounts on a ''Going Concern'' basis.
v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
vi. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
XII. AUDITORS
The Company had appointed M/s. SR Batliboi & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company to conduct audit of Financial Statements for the year ended March 31, 2019. The Notes to Financial Statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification or reservation. The only adverse remark is for not fulfilling the criteria of adequate number of Independent Directors for which we are in touch with the two major shareholders.
Pursuant to the orders issued by the Central Government under section 148 of The Companies Act, 2013, the Board has appointed M/s K G Goyal & Co. Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for all its products and M/s Chandrasekaran Associates, Company Secretaries as the Secretarial Auditors for conducting the Secretarial audit of the Company.
As per provisions of Section 136 of the Companies Act, 2013, the Annual Report including the Audited Accounts for the year will be sent to all the Shareholders.
XIII. PARTICULARS OF EMPLOYEES
Disclosures pertainingto remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report. However, having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the registered office and the same will be furnished on request. Further the details are also available on the Company''s website: www.hzlindia.com.
XIV. ACKNOWLEDGEMENTS
The Board of Directors places on record its sincere appreciation of the contribution made by the employees and the employees'' unions in the success of the Company. The Directors also sincerely thank the Central Government and the State Governments of Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra and Uttarakhand; and the bankers, auditors, vendors, customers and the shareholders of the Company for their continued support.
For and on behalf of the Board of Directors |
|
Sunil Duggal |
A R Narayanaswamy |
CEO & Whole-time Director |
Director |
Camp: London |
|
Place: Mumbai |
|
Date: May 02, 2019 |
Annexure 1
Particulars of technology absorption and foreign exchange earnings and outgo, as per Section 134(3)(m) of the Companies Act, 2013 and the rules made therein and forming part of the Board''s Report for the year ended March 31, 2019.
A) CONSERVATION OF ENERGY
Trails of DROSRITE⢠zinc dross treatment process conducted at zinc melting section of Pantnagar Metal Plant. This process uses the heat generated by the oxidation of unrecoverable zinc metal, in the presence of oxygen, as a source of energy
B) TECHNOLOGY ABSORPTION
A) SPECIFIC AREAS IN WHICH R&D HAS BEEN CARRIED OUT BY THE COMPANY IN FY 2019
Feasibility testing of new technologies like Stage Flotation Reactor (SFR), flash floatation, graphite pre-float and lead re-grinding for suitability in our operations to address ore variability and improve recovery
Modification in floatation circuit configuration for increase in metal recovery in mills
Testing of new floatation reagents for improved metallurgical performance and cost benefits
Plant surveys of grinding and floatation circuit across all mines for optimised plant performance
Benchmarking of beneficiation plant performance and modelling and simulation studies to strengthen metallurgical accounting at Zawar
Process development for tailing re-processing to recover metal from tailings
Conversion of pre-graphite concentrate into saleable graphite product and to recover metal values from pre-graphite concentrate
Pilot scale testing for 18.75 MT antimony slag was successfully completed. About 3 MT of antimony trioxide of purity >96% and 17 MT of enriched lead residue suitable for internal consumption were generated
Pilot scale testing initiated for high grade cobalt cake generation from purification waste cake. The operating parameters have been optimised at lab and bench scale to generate purified cobalt cake of about 20% purity
Process for recovery of vanadium as ammonium meta vandate from spent acid catalyst validated at lab scale. Replacement of sodium peroxide is being explored
Cold bricks are being prepared with 3-5% cement and 80% of different wastes used in various composition. Enhancing of brick strength is in progress.
Process feasibility for magnesium bleeding through zinc dross treatment has done. Bench scale closed loop testing is in progress
B) BENEFITS DERIVED AS RESULT OF ABOVE R&D
Testing of new technologies suggest that its implementation will increase recovery of lead and silver in case of flash floatation and lead re-grinding and improve concentrate grade by using SFR and pre-graphite floatation
Circuit modification in zinc floatation circuit suggests that it will increase zinc recovery by 2%
Regular plant surveys across all mines gives an idea of plant operating status and any opportunity for improvement thereof
Metallurgical accounting will help in bridging gap between theoretical and actual recovery
Tailing re-processing at Rampura Agucha mine will give an extra 3% increase in overall metal recoveries 18.75 MT antimony slag treated and total realization of Rs 25.5 lacs is achieved from pilot plant operation. Expected realization is Rs. 11.5 Crore per annum
Drosrite process suggests the Improvement in 1st pass metal recovery by 0.35%. Also the final dross can be directly treated at leaching plant
The spent vanadium catalyst can be reused and disposal cost can be saved
Successful dross leaching signify zero dross to roaster
High grade cobalt cake serve the purpose of cost generation from waste
C) FUTURE PROJECTS FOR R&D IN FY2019-20
Modification in floatation circuit configuration for increase in metal recoveries
Plant optimisation through cell hydrodynamic and mineralogical characterization
Implementation of tailing recovery project
Process flowsheet validation for cobalt recovery at pilot scale
Exploration of solvent extraction to get high grade cobalt cake
Antimony slag treatment plant setup at Chanderiya ancillary plant
Establishment of vanadium recovery process to bench and pilot scale
Raw mix design and generation of high strength bricks & paver blocks
Zinc dross treatment for magnesium bleeding at pilot scale
Lab & bench scale testing and parameter optimisation of mercury stripper water
Recovery of manganese from manganese sulphate solution
C) FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year, foreign exchange outgo was Rs 1,700 Crore (which includes import of capital goods, stores & spares, coal, consumables, consultancy, travelling etc.), while foreign exchange earned was Rs 4,237 Crore.
FORM A
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
Particulars |
Unit |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
A) ELECTRICITY, POWER GENERATION & FUEL CONSUMPTION |
|||
Purchase Units |
Million Kwh |
206 |
191 |
Total Amount |
Rs.Cr |
172.90 |
149.33 |
Average rate of purchasing |
Rs/ /kwh |
8.39 |
7.82 |
CPP - Units generated from fuel oil |
|||
Own Generation Units (From Fuel Oil) |
Million Kwh |
0.28 |
0.21 |
Quantity Consumed |
|||
LSHS/FO |
MT |
0.42 |
0.42 |
HSD |
KL |
493 |
526 |
Total Amount |
Rs. Cr |
2.93 |
4.03 |
Average cost of fuel per Kg |
Rs./kg |
72.45 |
93.28 |
Average cost of generation |
Rs./kwh |
102.95 |
193.97 |
Unit generated per unit of fuel (LSHS/FO/HSD) |
kwh/kg |
0.70 |
0.48 |
CPP - Units generated from Coal |
|||
Own Generation Units (From Coal) |
Million Kwh |
3,633 |
3,693 |
Quantity Consumed |
|||
Coal |
MT |
17,42,116 |
17,84,862 |
LDO |
KL |
300 |
352 |
Total Amount |
Rs. Cr |
1,456.34 |
1359.91 |
Average cost per Kg (Coal) |
Rs. /kg |
8.36 |
7.62 |
Average cost per Kg (LDO) |
Rs./kg |
56.93 |
57.96 |
Average cost of generation |
Rs./kwh |
4.65 |
4.21 |
Unit generated per unit of fuel (Coal) |
kwh/kg |
2.27 |
2.26 |
B) FUEL CONSUMPTION FOR METAL PRODUCTION |
|||
(a) L.P.G./Propane |
|||
Quantity |
Million Kg |
3.70 |
5.61 |
Total Amount |
Rs. Cr |
17.27 |
23.17 |
Average cost per Kg |
Rs.//Kg |
46.69 |
41.27 |
(b) L.D.O./LSHS/FO |
|||
Quantity |
KL |
29,612 |
19,000 |
Total Amount |
Rs. Cr |
146.06 |
66.78 |
Average cost per Ltr |
Rs/Ltr |
49.32 |
35.15 |
(c) Coal for Steam & Others |
|||
Quantity |
MT |
26,250 |
26,424 |
Total Amount |
Rs. Cr |
22.61 |
20.03 |
Average cost per MT |
Rs./MT |
8,612 |
7,580 |
(d) Met Coke & Coke breez |
|||
Quantity |
MT |
99,819 |
1,34,822 |
Total Amount |
Rs. Cr |
277.37 |
353.69 |
Average cost per MT |
Rs./MT |
27,787 |
26,234 |
CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCT POLICY
As provided under clause 17 (5) (a) of the SEBI (LODR) Regulation 2015, all Board Members and the Senior Management personnel have confirmed compliance with the Business Ethics and Code of Conduct for the year ended on March 31, 2019.
For Hindustan Zinc Limited
Sunil Duggal
CEO & Whole-time Director Camp: London
Date: May 02, 2019
FORM NO. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2019
To,
The Members,
Hindustan Zinc Limited
Yashad Bhavan,
Yashadgarh,
Udaipur, Rajasthan - 313004
We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate governance practices by Hindustan Zinc Limited
(hereinafter called "the Company"). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.
Based on our verification of the Company''s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on March 31, 2019 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the Financial Year ended on March 31, 2019 according to the provisions of:
(i) The Companies Act, 2013 (the "Act") and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 ("SCRA'') and the rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder to the extent of Regulation 76 of Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018;
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (''SEBI Act''):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018;
(d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;Not Applicable
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; Not Applicable
(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client to the extent of securities issued;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; Not Applicable
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; Not Applicable
(vi) The Management has identified and confirmed the following laws as being specifically applicable to the Company:
1. The Mines Act, 1952 and Rules made thereunder, and
2. The Mines and Minerals (Development and Regulation) Act, 1957 and the Rules made thereunder.
We have also examined compliance with the applicable clauses/ Regulations of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India and notified by Ministry of Corporate Affairs.
(ii) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
During the period under review, the Company has substantially complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except as mentioned hereinafter.
WE FURTHER REPORT THAT:
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors except that with regard to the requirement of having at least one haIf of the Board of Directors comprising of Independent Directors in terms of Regulation 17 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company falls short by two Independent Director. The changes, if any, in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board/ Committee Meetings. Agenda and detailed notes on agenda were sent in advance (and at a shorter notice for which necessary approvals obtained, if any) and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
All decisions at Board Meetings and Committee Meetings are carried out unanimously as recorded in the minutes of the meetings of the Board of Directors or Committee of the Board, as the case maybe.
We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.
We further report that during the audit period, no specific events / actions took place having a major bearing on the Company''s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc.
Place: Delhi |
For Chandrasekaran Associates |
Date: May 02, 2019 |
Company Secretaries |
Shashikant Tiwari |
|
Partner |
|
Membership No. A28994 |
|
Certificate of Practice No. 13050 |
Note: This report is to be read with our letter of even date which is annexed as Annexure-A and forms an integral part of this report.
ANNEXURE-A
TO SECRETARIAL AUDIT REPORT
To,
The Members,
Hindustan Zinc Limited
Yashad Bhavan,
Yashadgarh,
Udaipur, Rajasthan -313004
1. Maintenance of secretarial record is the responsibility of the Management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on the random test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.
4. Whenever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of Management. Our examination was limited to the verification of procedures on random test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the Management has conducted the affairs of the Company.
Place: Delhi |
For Chandrasekaran Associates |
Date: May 02, 2019 |
Company Secretaries |
ShashikantTiwari |
|
Partner |
|
Membership No. A28994 |
|
Certificate of Practice No. 13050 |
Annexure 2
Particulars of contract or arrangements with related parties
FORM NO.AOC-2
FORM FOR DISCLOSURE OF PARTICULARS OF CONTRACTS/ARRANGEMENTS ENTERED INTO BY THE COMPANY WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013 INCLUDING CERTAIN ARM''S LENGTH TRANSACTIONS UNDER THIRD PROVISO THERETO
1. Details of contracts or arrangements or transactions not at arm''s length basis: NIL
(a) Names(s) of the related party and nature of relationship
(b) Nature of the contracts/arrangements/transactions
(c) Duration of the contracts/arrangements/transactions
(d) Salient terms of the contracts or arrangements or transactions including the value, If any
(e) Justification for entering into such contracts or arrangements or transactions
(f) Date(s) of approval by the board
(g) Amount paid as advances, if any:
(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188
2. Details of the material contracts or arrangements or transactions at arm''s length basis: NIL
(a) Names(s) of the related party and nature of relationship
(b) Nature of contracts/arrangements/transactions
(c) Duration of the contracts/arrangements/transactions
(d) Salient terms of the contracts or arrangements or transactions including the value, If any
(e) Date(s) of approval by the board
(f) Amount paid as advances, if any:
For and on behalf of the Board of Directors |
|
Sunil Duggal |
A.R. Narayanaswamy |
CEO & Whole-time Director |
Director |
Camp: London |
|
Place: Mumbai |
|
Date: May 02, 2019 |
Note: In item 2, material is defined as greater than 10% of the turnover
annexure 3
FORM NO. MGT-9
EXTRACT OF ANNUAL RETURN as on March 31,2019
[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]
I. REGISTRATION AND OTHER DETAILS:
i) CIN |
L27204RJ1966PLC001208 |
ii) Registration Date |
January 10, 1966 |
iii) Name of the Company |
Hindustan Zinc Limited |
iv) Category /Sub-Category of the Company |
Public Limited Company |
v) Address of the Registered office and contact details |
Yashad Bhawan, Udaipur - 313004 (Rajasthan) |
Email id: - [email protected] |
|
Phone No: - 0294-6604000 |
|
vi) Whether listed company Yes/No |
Yes |
vii) Name, Address and Contact details of Registrar and |
Karvy Fintech Private Limited |
Transfer Agent, if any |
(Formerly known as KCPL Advisory Services P Ltd) |
Karvy Selenium Tower B, Plot Nos. 31 & 32 | Financial |
|
District Nanakramguda |Serilingampally Mandal |
|
Hyderabad- 500032 | India |
|
P: 91 40 67161591 |
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
Mining and Smelting of Non-Ferrous metals (Zinc, Lead, Silver).
Wind energy All the business activities contributing 10% or more of the total turnover of the Company shall be stated: -
SI. No. |
Name and Description of main products / services |
NIC Code of the Product/ service |
% to total turnover of the company |
1 |
Zinc |
27204 |
69.5% |
2 |
Lead |
27209 |
15.2% |
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES -
S.No. |
Name and Address of the Company |
CIN/GLN |
Holding/ Subsidiary/ Associate |
% of shares held |
Applicable Section |
1 |
Vedanta Limited |
L13209GA1965PLC00044 |
HOLDING |
64.92% |
2(46) |
IV. SHARE HOLDING PATTERN (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY) (I) CATEGORY-WISE SHARE HOLDING
Category of Shareholders |
No. of Shares held at the beginning of the year |
No. of Shares held at the end of the year |
% Change during the year |
||||||
Demat |
Physical |
Total |
% of Total Shares |
Demat |
Physical |
Total |
% of Total Shares |
||
A. Promoters |
|||||||||
(1) Indian |
|||||||||
a) Individual/HUF |
- |
- |
- |
- |
- |
||||
b) Central Govt |
- |
- |
- |
- |
- |
||||
c) State Govt (s) |
- |
- |
- |
- |
|||||
d) Bodies Corp. - Vedanta Limited |
2743154310 |
0 |
2743154310 |
64.92 |
2743154310 |
0 |
2743154310 |
64.92 |
0 |
e) Banks /Fl |
- |
- |
- |
- |
|||||
f) Any Other |
- |
- |
- |
- |
- |
||||
Sub-total (A) (1) |
2743154310 |
0 |
2743154310 |
64.92 |
2743154310 |
0 |
2743154310 |
64.92 |
0 |
(2) Foreign |
|||||||||
a) NRIs- Individuals |
- |
- |
- |
- |
|||||
b) Other Individuals |
- |
- |
- |
- |
|||||
c) Bodies Corp. |
- |
- |
- |
- |
|||||
d) Banks/ Fl |
- |
- |
- |
- |
|||||
e) Any Other |
- |
- |
- |
- |
|||||
Sub-total (A) (2) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Total shareholding of Promoter (A) = (A)(l) (A) (2) |
2743154310 |
0 |
2743154310 |
64.92 |
2743154310 |
0 |
2743154310 |
64.92 |
0 |
B. Public shareholding |
|||||||||
1. Institutions |
|||||||||
(a) Mutual Funds/ UTI |
37304507 |
265000 |
37569507 |
0.89 |
13031140 |
265000 |
13296140 |
0.31 |
(-) 0.58 |
(b) Financial Institutions /Banks |
1623381 |
45000 |
1668381 |
0.04 |
2060017 |
45000 |
2105017 |
0.05 |
0.01 |
(c) Central Government/ State Government(s) |
1247950590 |
0 |
1247950590 |
29.54 |
1247950590 |
0 |
1247950590 |
29.54 |
- |
(d) Venture Capital Funds |
- |
- |
- |
- |
- |
||||
(e) Insurance Companies |
24668104 |
0 |
24668104 |
0.58 |
87492060 |
0 |
87492060 |
2.07 |
1.49 |
(f) Foreign Institutional Investors |
3338834 |
111000 |
3449834 |
0.08 |
1771758 |
111000 |
1882758 |
0.04 |
(-) 0.04 |
(g) Foreign Venture Capital Investors |
- |
- |
- |
- |
- |
||||
(h) Alternate Investment Funds |
876800 |
0 |
876800 |
0.02 |
- |
- |
(-) 0.02 |
||
(i) Any Other (specify) |
|||||||||
(i-i) Central Government |
1927464 |
0 |
1927464 |
0.05 |
2015181 |
0 |
2015181 |
0.05 |
- |
(i-ii) Clearing Member |
99297 |
0 |
99297 |
0.00 |
41006 |
0 |
41006 |
- |
|
(i-iii) NBFC |
8320 |
0 |
8320 |
0 |
10203 |
0 |
10203 |
- |
|
(i-iv) HUF |
1541374 |
0 |
1541374 |
0.04 |
1465708 |
0 |
1465708 |
0.03 |
(-) 0.01 |
Sub-Total (B)(1) |
1319338671 |
421000 |
1319759671 |
31.24 |
1355837663 |
421000 |
1356258663 |
32.10 |
0.86 |
2. Non-Institutions |
|||||||||
(a) Bodies Corporate |
22925813 |
135000 |
23060813 |
0.55 |
19729167 |
127000 |
19856167 |
0.47 |
(-) 0.08 |
(b) Individuals |
|||||||||
i) Individual shareholders holding nominal share capital up to Rs. 2 Lac |
40983618 |
1606269 |
42589887 |
1.00 |
39720417 |
1472866 |
41193283 |
0.97 |
(-) 0.03 |
ii) Individual shareholders holding nominal share capital in excess of Rs 2 Lac |
1921923 |
0 |
1921923 |
0.05 |
854870 |
0 |
854870 |
0.02 |
(-) 0.03 |
(c) Any Other (specify) |
|||||||||
(c-i) Trust |
79292 |
0 |
79292 |
0 |
86476 |
0 |
86476 |
0 |
0 |
(c-ii) NRI |
1828152 |
690000 |
2518152 |
0.06 |
1633165 |
690000 |
2323165 |
0.05 |
(-) 0.01 |
(c-iii) NRI Company |
- |
- |
- |
- |
|||||
(c-iv) Foreign Individual |
100 |
0 |
100 |
0 |
100 |
0 |
100 |
||
(c-v) Foreign Corporate Bodies |
92233912 |
0 |
92233912 |
2.18 |
61591026 |
0 |
61591026 |
1.46 |
(-) 0.72 |
(c-vi) IEPF |
940 |
0 |
940 |
0 |
940 |
0 |
940 |
||
Sub-Total (B)(2) |
159973750 |
2431269 |
162405019 |
3.84 |
123616161 |
2289866 |
125906027 |
2.98 |
(-) 0.86 |
Total Public Shareholding (B)= (B)(1) (B)(2) |
1479312421 |
2852269 |
1482164690 |
35.08 |
1479453824 |
2710866 |
1482164690 |
35.08 |
- |
C. Shares held by Custodians and against which Depository Receipts have been issued |
|||||||||
GRAND TOTAL (A) (B) (C) |
4222466731 |
2852269 |
4225319000 |
100.00 |
4222608134 |
2710866 |
4225319000 |
100 |
- |
(II) SHAREHOLDING OF PROMOTERS
SI. No |
Shareholder''s Name |
Shareholding at the beginning of the year |
Shareholding at the end of the year |
% change in shareholding during the year |
||||
No. of Shares |
% of total Shares of the company |
% of Shares Pledge/ encumbered to total shares |
No. of Shares |
% of total Shares of the company |
% of Shares Pledge/ encumbered to total shares |
|||
1 |
Vedanta Limited |
2743154310 |
64.92 |
0 |
2743154310 |
64.92 |
0 |
0 |
Total |
2743154310 |
64.92 |
0 |
2743154310 |
64.92 |
0 |
0 |
(Ill) CHANGE IN PROMOTERS'' SHAREHOLDING (PLEASE SPECIFY, IF THERE IS NO CHANGE)
SI. No |
Particulars |
Shareholding at the beginning of the year |
Cumulative Shareholding during the year |
||
No. of shares |
% of total shares of the company |
No. of shares |
% of total shares of the company |
||
1 |
At the beginning of the year |
2743154310 |
64.92 |
2743154310 |
64.92 |
2 |
Date wise Increase/Decrease in Promoters Shareholding during the year specifying the reasons for increase /decrease (e.g. allotment/ transfer/bonus/sweat equity etc.) |
-No Change- |
-No Change- |
-No Change- |
-No Change- |
3 |
Attheend of the year |
2743154310 |
64.92 |
2743154310 |
64.92 |
(IV) SHAREHOLDING PATTERN OF TOP TEN SHAREHOLDERS (OTHER THAN DIRECTORS, PROMOTERS AND HOLDERS OF GDRs AND ADRs):
SI. No |
For Each of the Top 10 Shareholder''s |
Shareholding at the beginning of the year |
|
No. of shares |
% of total shares of the company |
||
At the beginning of the year (01.04.2018) |
|||
1 |
PRESIDENT OF INDIA |
1247950590 |
29.54 |
2 |
LIFE INSURANCE CORPORATION OF INDIA |
16870025 |
0.40 |
3 |
JANUS OVERSEAS FUND |
8149485 |
0.19 |
4 |
INDIA OPPORTUNITIES III PTE. LIMITED |
8024214 |
0.19 |
5 |
GENERAL INSURANCE CORPORATION OF INDIA |
5800000 |
0.14 |
6 |
GOLDMAN SACHS INDIA LIMITED |
5717222 |
0.14 |
7 |
GOLDMAN SACHS FUNDS-GOLDMAN SACHS GROWTH & EMERGING MARKETS BROAD EQUITY PORTFOLIO |
4759052 |
0.11 |
8 |
HDFC STANDARD LIFE INSURANCE COMPANY LIMITED |
4463950 |
0.11 |
9 |
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS |
4338093 |
0.10 |
10 |
INDIA CAPITAL FUND LIMITED |
4050000 |
0.10 |
Net Increase/Decrease in shareholding during the year specifying the reasons for increase /decrease (e.g. allotment/ transfer/bonus/sweat equity etc.) |
|||
1 |
LIFE INSURANCE CORPORATION OF INDIA |
60793999 |
1.44 |
2 |
JANUS OVERSEAS FUND |
(-)8149485 |
(-) 0.19 |
3 |
INDIA OPPORTUNITIES III PTE. LIMITED |
(-)8024214 |
(-) 0.19 |
4 |
GENERAL INSURANCE CORPORATION OF INDIA |
200000 |
- |
5 |
GOLDMAN SACHS INDIA LIMITED |
(-)3149521 |
(-) 0.07 |
6 |
GOLDMAN SACHS FUNDS-GOLDMAN SACHS GROWTH & EMERGING MARKETS BROAD EQUITY PORTFOLIO |
(-)4759052 |
(-) 0.11 |
7 |
HDFC STANDARD LIFE INSURANCE COMPANY LIMITED |
(-)4463950 |
(-) 0.11 |
8 |
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS |
7020 |
- |
9 |
INDIA CAPITAL FUND LIMITED |
4000 |
- |
10 |
PTC CABLES PRIVATE LTD |
11267300 |
0.27 |
11 |
JANUS HENDERSON OVERSEAS FUND |
8149485 |
0.19 |
12 |
UTI- EQUITY FUND |
1590000 |
0.04 |
13 |
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND |
596822 |
0.01 |
14 |
JANUS HENDERSON OVERSEAS PORTFOLIO |
3692019 |
0.09 |
Change in holding is due to purchase/ sale of shares |
|||
At the end of the year (or on the date of separation, if separated during the year) (31.03.2019) |
|||
1 |
PRESIDENT OF INDIA |
1247950590 |
29.54 |
2 |
LIFE INSURANCE CORPORATION OF INDIA |
77664024 |
1.84 |
3 |
PTC CABLES PRIVATE LTD |
11267300 |
0.27 |
4 |
JANUS HENDERSON OVERSEAS FUND |
8149485 |
0.19 |
5 |
GENERAL INSURANCE CORPORATION OF INDIA |
6000000 |
0.14 |
6 |
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS |
4345113 |
0.10 |
7 |
INDIA CAPITAL FUND LIMITED |
4054000 |
0.10 |
8 |
UTI- EQUITY FUND |
3963341 |
0.09 |
9 |
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND |
3744691 |
0.09 |
10 |
JANUS HENDERSON OVERSEAS PORTFOLIO |
3692019 |
0.09 |
(V) SHAREHOLDING OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:
SI. No |
Particulars |
Shareholding at the beginning of the year |
Cumulative Shareholding during the year |
||
For Each of the Directors and KMP |
No. of shares |
% of total shares of the company |
No. of shares |
% of total shares of the company |
|
1 |
Mr. Arun L.Todarwal, Director |
||||
At the beginning of the year (01.04.2018)- |
1500 |
0.00 |
- |
||
Purchase during the year |
500 |
0.00 |
2000 |
- |
|
At the end of the year |
- |
2000 |
0.00 |
||
2 |
Mr. Rajendra Pandwal, Company Secretary |
||||
At the beginning of the year (01.04 .2018)- |
25000 |
- |
- |
||
Purchase/Sale during the year |
- |
- |
|||
At the end of the year |
- |
25000 |
- |
V. INDEBTEDNESS
INDEBTEDNESS OF THE COMPANY INCLUDING INTEREST OUTSTANDING/ACCRUED BUT NOT DUE FOR PAYMENT
Rs. in Crore |
||||
Particulars |
Secured Loans excluding deposits |
Unsecured Loans |
Deposits |
Total Indebtedness |
Indebtedness at the beginning of the financial year |
0 |
0 |
0 |
0 |
(01.04.2018) |
||||
i) Principal Amount |
||||
ii) Interest due but not paid |
||||
iii) Interest accrued but not due |
||||
Total (i ii iii) |
0 |
0 |
0 |
0 |
Change in Indebtedness during the financial year |
||||
Addition |
0 |
12000 |
0 |
12000 |
Reduction |
0 |
10000 |
0 |
10000 |
Net Change |
0 |
2000 |
0 |
2000 |
Indebtedness at the end of the financial year |
0 |
2000 |
0 |
2000 |
(31.03.2019) |
||||
i) Principal Amount |
||||
ii) Interest due but not paid |
||||
iii) Interest accrued but not due |
||||
Total (i ii iii) |
0 |
2000 |
0 |
2000 |
Note: 1. Interest is paid upfront on CP
2. Principal amount of CP is shown and not the CP issue proceeds, hence not matching with Balance Sheet numbers
3. On frequent basis overdraft is taken. As on 31.03.2019 amount of overdraft outstanding (unsecured) is Rs. 569.40 Crore
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. REMUNERATION TO MANAGING DIRECTOR, WHOLE-TIME DIRECTORS AND/OR MANAGER:
SI. No |
Particulars of Remuneration |
Name of MD/ WTD/ Manager |
Total Amount (Rs.) |
Mr. Sunil Duggal |
|||
1 |
Gross salary (a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 |
5,77,79,267 |
5,77,79,267 |
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 |
|||
(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961 |
|||
2 |
Stock Option |
- |
|
3 |
Sweat Equity |
- |
|
4 |
Commission |
- |
|
as % of profit |
|||
Others, specify |
|||
5 |
Others, please specify (ESOP of ultimate Holding Co.) |
2,41,88,682 |
2,41,88,682 |
Total (A) |
8,19,67,949 |
8,19,67,949 |
|
Ceiling as per the Act |
10% of Profit after tax i.e. Rs. 796 Crore |
B. REMUNERATION TO OTHER DIRECTORS:
SI. No |
Particulars of Remuneration |
Name of Director |
Total Amount (Rs.) |
||
1 |
Independent Directors |
Mr. A. R. Narayanaswamy |
Mr. Arun L Todarwal |
Mr. Sudhir Kumar |
|
Fee for attending Board / Committee meetings |
5,50,000 |
4,25,000 |
2,00,000 |
11,75,000 |
|
Commission |
15,00,000 |
15,00,000 |
9,98,630 |
39,98,630 |
|
Others, please specify |
- |
- |
|||
Total (1) |
20,50,000 |
19,25,000 |
11,98,630 |
51,73,630 |
|
2 |
Other Non-Executive Directors |
Mr. Navin Agarwal |
Mr. Agnivesh Agarwal |
Mrs. Kiran Agarwal |
|
Fee for attending Board / Committee meetings |
2,00,000 |
50,000 |
2,50,000 |
||
Commission |
15,00,000 |
22,46,575 |
2,05,480 |
39,52,055 |
|
Others, please specify |
- |
- |
|||
Total (2) |
17,00,000 |
22,96,575 |
2,05,480 |
42,02,055 |
|
Total (B)=(1 2) |
37,50,000 |
42,21,575 |
14,04,110 |
93,75,685 |
|
Overall Ceiling as per the Act |
1% of Profit after tax i.e. Rs. 79.6 crore |
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
SI. No |
Particulars of Remuneration |
KEY MANAGERIAL PERSONNEL |
|||
Company Secretary Mr. R Pandwal |
Chief Financial Officer Mr. Amitabh Gupta (Upto 21.01.2019) |
Acting Chief Financial Officer Mr. Swayam Saurabh (w.e.f 21.01.2019) |
Total |
||
1 |
Gross salary |
||||
(a) Salary as per provisions contained in section 17(1) of the Income-taxAct, 1961 |
85,11,150 |
2,82,20,401 |
30,92,947 |
3,98,24,498 |
|
(b) Value of perquisites u/s 17(2) of the Income-tax Act, 1961 |
|||||
(c) Profits in lieu of salary under section 17(3) of the Income-tax Act, 1961 |
- |
- |
|||
2 |
Stock Option |
- |
- |
||
3 |
Sweat Equity |
- |
- |
||
4 |
Commission |
||||
as % of profit |
- |
- |
|||
Others, specify. . . |
- |
- |
|||
5 |
Others, please specify (ESOP of ultimate Holding Co) |
26,41,644 |
1,38,08,592 |
1,64,50,236 |
|
Total |
1,11,52,794 |
4,20,28,993 |
30,92,947 |
5,62,74,734 |
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type |
Section of the Companies Act |
Brief Description |
Details of Penalty / Punishment/ Compounding fees imposed |
Authority [RD / NCLT/ Court] |
Appeal made, if any (give details) |
A. COMPANY |
|||||
Penalty |
|||||
Punishment |
|||||
Compounding |
|||||
B. DIRECTORS |
- |
||||
Penalty |
NIL |
||||
Punishment |
|||||
Compounding |
|||||
C. OTHER OFFICERS IN DEFAULT |
|||||
Penalty |
|||||
Punishment |
|||||
Compounding |
annexure 4
I) DISCLOSURE ON REMUNERATION OF MANAGERIAL PERSONNEL
(i) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year:
Name of Director |
Mr. Sunil Duggal |
Mean |
1:51 |
Median |
1:83 |
ii) The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year: |
|
Name |
Annual Increment (%) |
Mr. Sunil Duggal |
55 |
Mr. Amitabh Gupta |
11 |
Mr. Swayam Saurabh |
NA |
Mr. R Pandwal |
(-)6 |
(iii) The percentage increase in the median remuneration of employees in the financial year: Mean 11.1%, Median 8.2% (iv) The number of permanent employees on the rolls of Company: 4,199 (including 24 expats and retainers)
(v) The explanation on the relationship between average increase in remuneration and Company performance: The Company achieved record volumes and profitability in FY 2017-18.
(vi) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company: Remuneration of the KMPs as % of the PAT for 2018-19 is 0.17%.
(vii) Variation in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer in case of listed companies and in case of unlisted companies the variations in the net worth of the Company as at the close of the current financial year and previous financial year:
Date |
Market Price in (Rs.) |
EPS (Rs) |
P/E ratio |
Market Capitalization, Rs. Crore |
% Change |
March 31, 2018 |
300.95 |
21.95 |
13.71 |
1,27,161 |
|
March 31, 2019 |
276.40 |
18.83 |
14.68 |
1,16,788 |
(-) 8.16 |
Percentage increase over the last public offer price is not relevant as there has never been any public offer by the Company.
(viii) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last
financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
Average increase in the remuneration of all employees excluding KMPs: 10% Average increase in the remuneration of KMPs: 31%
Justification: KMP salary increases are decided based on the Company performance, inflation, prevailing industry trends and benchmarks
(ix) Comparison of remuneration of each of the Key Managerial Personnel against the performance of the Company; Each KMP is granted salary based on his qualification, experience, nature of job, industry benchmark, earlier salary and many other factors, comparison of one against the other is not feasible.
(x) The key parameters for any variable component of remuneration availed by the Directors: Only Whole-time Directors are given variable component, which is benchmarked against Company performance.
Note: The term remuneration includes value of the ESOP''s issued by the Holding company.
(xi) The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year: Nil
(xii) Affirmation that the remuneration is as per the remuneration policy of the Company: Yes
Note: For Director, only CEO & Whole-time Director, has been considered. All remuneration figures are for Executives only.
CEO compensation also considers financial returns (return on assets, equity, invested capital), total shareholder return and volume growth of integrated metal
annexure 5
ANNUAL REPORT ON THE CSR ACTIVITIES PURSUANT TO THE COMPANIES (CORPORATE SOCIAL RESPONSIBILITY POLICY) RULES 2014.
A brief outline of the Company''s CSR policy, including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes |
Company''s vision on CSR is to enhance the quality of life and the economic well being of communities around our operations. For detailed policy, please refer our website www.hzlindia.com. For projects please refer to section on CSR under Sustainability (Business Overview section) |
The composition of the CSR committee |
Mr. A R Narayanaswamy - Chairman |
Ms. Reena Sinha Puri |
|
Mr. Sunil Duggal |
|
Average net profit of the Company for last three financial years |
Rs. 10,196.36 Crore (PBT, as prescribed) |
Prescribed CSR Expenditure (two percent of the amount as in item 3 above) |
Rs. 203.93 Crore |
Details of CSR spent during the financial year |
|
a) Total amount to be spent for the financial year |
Rs. 203.93 Crore |
b) Amount Spent |
Rs. 130.20 Crore |
c) Amount unspent, if any |
Rs. 73.73 Crore |
d) Manner in which the amount spent during the financial year is detailed below |
Refer next page |
In case the Company has failed to spend the two percent of the average net profit of the last three financial years or any part thereof, the company shall provide the reason for not spending the amount in its Board report |
We spent Rs. 130.20 Crore as CSR this year. This is a 41% increase over last year''s expenditure and we are continuing to scale up many of our programmes. Several new projects were also launched this year, which are now ramping up. |
In addition to the above, the Company has provided Rs. 637.83 Crore as contribution to District Mineral Foundation which is also meant to be spent towards the well-being of persons and areas affected by mining operations. |
|
A responsibility statement of the CSR Committee that the implementation and monitoring of the CSR policy is in compliance of CSR objectives and Policy of the Company |
Yes. The CSR Committee of the Company hereby confirm that the implementation and monitoring of CSR policy, is in compliance with CSR objectives and Policy of the Company. |
Sunil Duggal |
A. R. Narayanaswamy |
CEO & Whole-time Director |
Director and Chairman of CSR Committee |
Camp: London |
|
Place: Mumbai |
|
Date: May 02, 2019 |
s. No |
CSR Project or Activity Identified |
Sector in which the Project is covered |
Project or Programme 1. Local area or otherwise 2. Specify the district |
Amount Outlay (Rs. in Lac) (budget) |
Amount spent (Rs. in Lac) |
Cumulative spend till reporting period (Rs. in Lac) |
Amount spent, director Implementing Agency |
Name of implementing agency |
|||
Area |
Name of District |
Direct |
Overheads |
Total |
|||||||
1 |
Vedanta Bal Chetna Anganwadi & Child care Project (KHUSHI Project) |
Education |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara & Ajmer |
2,030 |
1,805 |
1,805 |
5,188 |
Implementing Agency |
Seva mandir, Jatan Sansthan, CARE India, Gramin Evam Samajik Vikas Sanstha, Institute of Financial Management S Research |
|
2 |
Brownfield & Greenfield Nandghar |
Education |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara & Ajmer |
2,950 |
1,694 |
1,694 |
2,237 |
Direct& Implementing Agency |
Jatan Sansthan, Seva Mandir, Gramin Evam Samajik Vikas Sanstha, Care India |
|
3 |
Shiksha Sambal Project |
Education |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
400 |
420 |
420 |
1,027 |
Implementing Agency |
Vidya Bhawan Society, Avanti Learning Centers Pvt Ltd, Educational Initiatives Pvt Ltd |
|
4 |
Rural education Program & Company run School |
Education |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
2,423 |
1,098 |
1,098 |
6,681 |
Direct& Implementing Agency |
HZL, SUMEDHA, Dean Boy''s Fund, Udaipur; Muskaan Dream Creative Foundation, Resonance Eduventures Ltd, Vedanta Ringus PG Girls College, Round Table India Trust |
|
5 |
Jeevan Tarang, Zinc ke Sang |
Education |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
220 |
123 |
123 |
218 |
Implementing Agency |
Noida Deaf Society, National Handicapped Finance and Development Corporation, Viklang Kalyan Samiti, Badhir Bal Kalyan Vikas Samiti, Badhit Bal Vikas Samiti, V-Shesh Learning Services Pvt Ltd |
|
6 |
Health, Water & Sanitation including company run hospitals |
Health, Water & Sanitation |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
1,930 |
1,122 |
1,122 |
6,200 |
Direct & Implementing Agency |
HZL, Smile Foundation, Jimmedari Foundation, Dainik Bhaskar |
|
7 |
Hospital Upgrada-tion |
Health, Water & Sanitation |
Local area |
Udaipur |
- |
- |
636 |
Direct |
HZL |
||
8 |
Vocational training for youth (HZL Mining Acad-emy) |
Sustainable Livelihood |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
1,840 |
990 |
990 |
2,217 |
Implementing Agency |
Skill Council for Mining Sector & Indian Institute Skill Development, Team Lease Skills University, Ambuja Cement Foundation |
|
9 |
Agriculture Project (SAMADHAN Project) |
Sustainable Livelihood |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
1,130 |
642 |
642 |
1,392 |
Implementing Agency |
BAIF Institute of Sustainable Livelihood Development |
|
10 |
Animal Husbandry project |
Sustainable Livelihood |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara |
10 |
284 |
Direct & Implementing Agency |
BAIF, Government Animal Husbandry Dept. |
|||
11 |
Women Empowerment (SAKHI Project) |
Women Empowerment |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara |
943 |
540 |
540 |
1,295 |
Implementing Agency |
Saheli Samiti & Manjari Foundation, Center for Study of Values (COS-V) |
|
12 |
Rural Infrastructure |
Infrastructure Projects |
Local & Otherwise |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
1,432 |
944 |
944 |
7,360 |
Direct & lmplementing Agency |
HZL, Ashadham Ashram Society, Waterlife India Pvt Ltd |
|
13 |
Football Academy |
Sports & Culture |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
1,500 |
1,546 |
1,546 |
2,416 |
Implementing partner |
The Football Link, Sanjeev Gupte Architects, Young Monk Communications Pvt. Ltd |
|
14 |
Ajmer Dargah-Swachh Bharat Abhiyaan |
Sports & Culture |
Local area |
Ajmer |
1,000 |
176 |
176 |
272 |
Implementing partner |
Abhimanyu Dalai Architects, Sri Sri Rural Development Programme; N.B. Mercantile Co. Pvt. Ltd. |
|
15 |
Sports & Culture |
Sports & Culture |
Local & Otherwise |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
532 |
267 |
267 |
1,914 |
Direct& Implementing agency |
HZL, Maharana Kumbha Sangeet Parishad, Seher, Pandit Chaturlal Memorial Trust |
|
16 |
Social Forestry/ Environment |
Environment |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
493 |
258 |
258 |
767 |
Direct |
HZL, Frontier Markets Consulting Pvt Ltd |
|
17 |
Social Audit, Evaluation, CSR Communications, etc |
Programme evaluation |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara, Ajmer and Uttrakhand |
90 |
95 |
95 |
182 |
Direct |
HZL, Taru Leading Edge, Subhash Mittal & Associates |
|
18 |
STP- Maintenance and depreciation |
Health,Water& Sanitation |
Local area |
Udaipur |
900 |
840 |
- |
840 |
3,577 |
Direct |
HZL |
19 |
Program Management |
Programme & Administration |
Local area |
Udaipur, Rajsamand, Chittorgarh, Bhilwara and Ajmer |
577 |
458 |
458 |
1,946 |
Direct |
HZL, Adecco India Pvt Ltd, Shrushti Seva Samiti |
|
20 |
Miscellneous initiatives |
Local area |
Udaipur |
- |
- |
1,276 |
Direct |
HZL |
|||
Total CSR |
20,400 |
12,562 |
458 |
13,020 |
47,086 |
Mar 31, 2018
Dear Members,
The Directors are pleased to inform that Hindustan Zinc delivered strong performance from all our underground mines and many benchmarks in operational and financial performance were set during the year.
I. FINANCIAL PERFORMANCE
We share with you our 52nd Annual Report, together with the Audited Financial Statements for the year ended March 31, 2018.
FINANCIAL INFORMATION
Rs, in Crore
Particulars |
FY 2018 |
FY 2017 |
Revenue from operations (net of Excise Duty) |
22,084 |
17,273 |
Other Income |
1,751 |
2,474 |
Profit before depreciation, interest and tax |
14,263 |
12,213 |
Less: Interest |
283 |
202 |
Less: Depreciation and amortization expense |
1,483 |
1,811 |
Profit before tax |
12,497 |
10,200 |
Less: Net tax expense |
3,221 |
1,884 |
Net profit |
9,276 |
8,316 |
Earnings per share, '' |
21.95 |
19.68 |
REVENUE
The Company reported Rs,Revenue from operations'' (net of excise duty) of Rs, 22,084 Crore, an increase of 28% y-o-y driven primarily by higher metal volumes and prices partly offset by impact of rupee appreciation.
The âOther income'' was Rs, 1,751 Crore during the year compared to Rs, 2,474 Crore in the previous year on account of lower rate of return resulting from a broader decline in interest rates as well as lower investment corpus on account of special dividend payment.
PRODUCTION COST
Net zinc metal cost, without royalty, during the year was higher by 14% in INR (18% in USD) at Rs, 63,583 ($976) primarily due to 38% increase in imported coal prices and metcoke prices and about 15% increase in diesel prices as well as lower ore grades, partly offset by higher metal production.
OPERATING MARGIN
The above revenue and production cost resulted in profit before depreciation, interest and tax (PBDIT) of Rs, 14,263 Crore in FY 2018, up 17%.
NET PROFIT
The Company reported record net profit of Rs, 9,276 Crore, 12% higher than previous year on account for higher PBDIT and lower depreciation, partly offset by higher tax. With effect from April 1, 2017, the Company has changed its depreciation method and revised certain estimates relating to depreciation resulting in a lower charge for the full year by Rs, 321 Crore.
Net profit was also impacted by a one-time exceptional gain of Rs, 291 Crore related to the Supreme Court''s favorable judgment on District Mineral Foundation (DMF) levies leading to write back of excess DMF liability for the period January 12, 2015 to September 16, 2015. This was reduced by a one-time exceptional loss of Rs, 51 Crore related to gratuity provision for earlier years as per the ceiling enhancement announced towards end of the year.
EARNINGS PER SHARE (EPS)
The EPS for the year was Rs, 21.95 per share as compared to Rs, 19.68 per share in FY 2017.
DIvIDEND
On March 16, 2018, the Board of Directors declared second interim dividend of 300% i.e. Rs, 6 per share on equity share of Rs, 2. Together with the interim dividend of Rs, 2 (100%) paid in October 2017, the aggregate interim dividend paid during FY 2018 was Rs, 8 per share (400%) amounting to Rs, 4,068 Crore including DDT. In view of the second interim dividend, no final dividend is recommended.
CREDIT RATING AND LIQUIDITY
CRISIL has reaffirmed the Company''s long-term rating of AAA/Stable and short-term rating of A1 . The Company''s strong financial risk profile is driven by its sustained strong liquidity and conservative capital structure as well as its integrated operations, highly competitive cost position and high-grade reserves.
gross working capital
The Company follows a conservative investment policy and invests in high quality debt instruments. As on March 31, 2018, the Company''s cash and cash equivalents was Rs, 20,395 Crore invested in high quality debt instruments and the portfolio is rated âTier -1â implying Highest Safety by CRISIL. During the year, the Company paid off Rs, 8,000 Crore of short term commercial paper raised in March 2017 to meet the special interim dividend funding requirement.
cash flows
Rs, in Crore
Particulars |
FY 2018 |
FY 2017 |
Opening Cash* |
23,972 |
35,272 |
Add: EBITDA** |
12,376 |
9,734 |
Add: Net Interest Income |
1,291 |
2,166 |
Less: Income Tax & Dividend |
13,497 |
21,310 |
Less: Capital Account Payments |
2,733 |
2,008 |
(Increase) / Decrease in Working Capital & Others |
-1,014 |
118 |
Closing Cash* |
20,395 |
23,972 |
(*) Includes Cash and Equivalents (refer Note 11 of the Audited Financial Statements) and Current Investments (refer Note 9 of the Audited Financial Statements) |
||
(**) Earnings before Interest, Tax, Depreciation and Amortization expenses and Income on investments. |
Gross working capital represented by inventory, trade receivables and other current assets decreased from Rs, 2,486 Crore to Rs, 1,956 Crore as at March 31, 2018 primarily due to reduction of ore, mined metal and stores inventory. The working capital cycle was 32 days in FY 2018 as compared to 52 days in FY 2017.
GROSS BLOcK
The gross block during the year increased from Rs, 20,975 Crore to Rs, 23,879 Crore. This was largely due to the ongoing mining projects and other sustaining capex.
capital employed
The total capital employed as at March 31, 2018 was Rs, 15,537 Crore, as compared to Rs, 14,740 Crore at the end of previous fiscal year. The increase is mainly due to addition in fixed assets as reduced by reduction in gross working capital and repayment of temporary borrowings.
contribution to the government TREASURY
The Company has contributed Rs, 9,301 Crore during FY 2018, in terms of royalties, taxes and dividends to the Government treasury on cash basis, aggregating to approximately 42% of the total revenue.
II. OPERATIONAL PERFORMANCE
production
Mined metal production for FY 2018 was 947 kt, 4% higher from a year ago and the highest ever. This was driven by higher ore production from underground mines, partly offset by lower open-cast production and lower ore grades. Performance from underground mines remained robust, attaining best ever ore and mined metal production during the year.
In FY 2018, the Company delivered record integrated refined zinc-lead metal production at 960kt, up 18% from a year ago, driven by higher smelter efficiency and uniform availability of mined metal throughout the year. Integrated zinc production was 791kt as compared to 672kt a year ago, an increase of 18%, while integrated saleable lead production was 168kt as compared to 139kt from a year ago, an increase of 21%.
During the year, integrated saleable silver production was a record 558 MT as compared to 453 MT a year ago, an increase of 23%, in line with higher lead production.
The Company generated record 4,155 million units of power in FY 2018 as compared to 3,345 million units in FY 2017. Total wind power generation was 414 million units as compared to 448 million units in FY 2017.
SALES
The refined zinc metal sales in the domestic market during the year was 515 kt, while export sales accounted for 278kt. The aggregate sales were higher by 13.9% than previous year. Lead metal sales in the domestic market were 139 kt, while export sales were 30 kt leading to higher aggregate sales of 22.1% from a year ago. The increase was in line with higher metal production during the year. Silver sales were 556 MT in FY 2018, all in the domestic market and 23.9% higher than previous year.
III. RESERVE AND RESOURCE (R&R)
During the year, the Company added 19.5 million MT to its R&R, prior to a depletion of 12.6 million MT during the period. Total R&R on March 31, 2018 were 411.3 million MT containing 35.7 million MT of zinc-lead metal and approximately 28,500 MT of silver.
IV. PROJECTS
The announced mining projects are progressing in line with the target of reaching 1.2 million MT per annum of mined metal capacity in FY 2020.
UPDATE ON ONGOING ExPANSION PROJECTS
The announced mining projects are progressing in line with the expectation of reaching 1.2 million tonnes per annum of mined metal capacity in FY 2020. Capital mine development was 38.5 km during the year, an increase of 65% y-o-y.
Rampura Agucha underground reached an ore production run-rate of 3.0 mtpa towards the end of the year. The main shaft hoisting and south ventilation shaft systems were commissioned during the year, while off-shaft development is on track. Production from the main shaft is expected to start as planned from Q3 FY 2019.
Sindesar Khurd mine achieved its target capacity of 5 million tonnes towards the end of the year and is gearing up for higher production. The main shaft was equipped during the year and winder installation work has begun. Production from the shaft is expected to start as scheduled in Q3 FY 2019. Civil and structure erection for the new mill is ongoing and expected to be commissioned in Q2 FY 2019.
Towards the end of the year, orders were placed for paste fill plants for both the Rampura Agucha and Sindesar Khurd mines.
Zawar mines achieved record ore production of 2.2 million tonnes during the year and production capacity has been ramped up to 3.0 mtpa. The existing mill capacity was debottlenecked to 2.7 mtpa. Civil construction work for the new mill is progressing well, with commissioning expected by Q4 FY 2019.
Ministry of Environment, Forest and Climate Change (MoEF) has given environmental clearance for the expansion of ore production at the Kayad mine from 1.0 to 1.2 mtpa. The Kayad project is now operating at its rated capacity of 1.2 mtpa.
The Fumer project at Chanderiya is progressing as scheduled and expected to commission in mid FY 2019.
next phase of expansion announced
Based on a long-term evaluation of assets and in consultation with global experts, the Company is evaluating plans to increase its mined metal capacity from 1.2 to 1.5 million MT per annum. The Board has approved the Phase I of this expansion which will increase mined metal from 1.20 to 1.35 million MT per annum through brownfield expansion of existing at an estimated capital expenditure of Rs, 4,500 Crore.
Phase I includes incremental ore production capacity of 0.5 million MT per annum each at Rampura Agucha, Sindesar Khurd and Rajpura Dariba mines bringing the total capacity to 5.0, 6.5 and 2.0 million MT per annum respectively. The capacity of Zawar mines will be increased by 1.2 to 5.7 million MT per annum. These projects will take total ore production capacity to 20.4 million MT per annum and mined metal capacity from 1.20 to 1.35 million MT per annum. Phase I will be completed in three years and will be done concurrently with the ongoing expansion which is now in its final stages.
V. OUTLOOK
Mined metal and refined zinc-lead production in FY 2019 is expected to be slightly higher than that of last year, filling the gap caused by completion of open-cast production. Silver production is expected to be in the range of 650 to 700 MT.
COP before royalty is projected to be in the range of USD 950 to 975 per MT in FY 2019. Tax rate is expected to trend up while quarterly depreciation expense is expected to be in the range of Rs, 350 to Rs, 400 Crore.
The project capex on mining and smelter expansions is expected to be approximately USD 400 million in FY 2019.
VI. HEALTH, SAFETY And ENVIRONMENT
The Company''s efforts towards building a safety culture and achieving its goal of zero harm has led to reduction in Lost Time Injury Frequency Rate by 10% for the year and by 69% over the last 5 years to the lowest ever at 0.27.
Despite our best efforts, there were regrettably two fatalities during the year at Chanderiya Fumer and Rampura Agucha underground mine project sites. Both the accidents were investigated and corrective actions have been taken to make workplace safe. Safety and sustainability initiatives have been discussed in detail in âBusiness Review'', which forms a part of this Annual Report.
VII. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company''s CSR focuses on Education; Sustainable Livelihoods; Women''s Empowerment; Health, Water and Sanitation; Sports and Culture; Environment; and Community Development including Community Assets Creation.
During the year, the Company spent '' 92.18 Crore on CSR programs as compared to '' 49.40 Crore in previous year. For further details, refer Annexure 5 and âBusiness Review'' section of this Annual Report.
VIII. DIRECTORS
During the year under review, there has been no change in the Directors of the Company.
IX. MANAGEMENT DISCUSSION AND ANALYSIS
The Business Review section of this Annual Report gives a detailed account of the Company''s operations and the market in which it operates, including its initiatives in areas such as human resources, sustainability and risk management.
X. CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT
As a listed company, necessary measures are taken to comply with the listing agreements of the Stock exchanges. A report on Corporate Governance, along with a certificate of compliance from the statutory auditors, forms part of this report. Further, Business Responsibility Report describing the initiatives taken by your Company from an Environmental, Social and Governance perspective, also forms a part of this report. Various disclosures as required under section 134 and 135 of the Companies Act 2013 are annexed to this report or covered in the Corporate Governance Report, such as Related Party Transactions; Information and details on conservation of energy, technology absorption foreign exchange earnings and outgo; extract of annual return; constitution of various Board level Committees; Annual Report on CSR.
XI. DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards read with requirements set out under Schedule 3 to the Act, have been followed and there are no material departures in the same.
i i. The Directors have selected such accounting policies, applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.
iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv. The Directors have prepared the annual accounts on a âGoing Concern'' basis.
v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
vi. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively
XII. AUDITORS
The Company had appointed M/s. SR Batliboi & Co.
LLP, Chartered Accountants, as Statutory Auditors of the Company to conduct audit of Financial Statements for the year ended March 31, 2018. The Notes to Financial Statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.
The Auditors'' Report does not contain any qualification or reservation. The only adverse remark given by Statutory Auditors and Secretarial Auditors (M/s. V. M. and Associates) is for not fulfilling the criteria of adequate number of Independent Directors which is expected to be complied soon.
Pursuant to the orders issued by the Central Government under section 148 of The Companies Act, 2013, the Board has appointed M/s K G Goyal & Co. Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for all its products and M/s V M & Associates, Company Secretaries as the Secretarial Auditors for conducting the Secretarial audit of the Company.
As per provisions of Section 136 of the Companies Act, 2013, the Annual Report including the Audited Accounts for the year will be sent to all the Shareholders.
XIII. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 are attached to this report. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report. However, having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the registered office and the same will be furnished on request. Further the details are also available on the Company''s website: www.hzlindia.com.
XIV. ACKNOWLEDGMENTS
The Board of Directors places on record its sincere appreciation of the contribution made by the employees and the employees'' unions in the success of the Company. The Directors also sincerely thank the Central Government and the State Governments of Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra, Jharkhand and Uttarakhand; and the bankers, auditors, vendors, customers and the shareholders of the Company for their continued support.
For and on behalf of the Board of Directors
Sunil Duggal A. R. Narayanaswamy
CEO and Whole-time Director Director
Place: Mumbai
Date: April 30, 2018
Mar 31, 2017
Dear Members,
The Directors are pleased to inform that Hindustan Zinc achieved new operational performance benchmarks, highest ever profits and declared the highest ever dividend during the year.
I. FINANCIAL PERFORMANCE
We share with you our 51st Annual Report, together with the statement of Audited Financial Statements for the year ended March 31, 2017. The Companyâs performance, grouped in accordance with the new accounting standards Ind-AS, is summarized below:
Financial Information (Rs. in Crore)
FY 2017 |
FY 2016 |
|
Total Gross Revenues (excluding Other Income) |
18,798 |
15,463 |
Profit before depreciation, interest and tax |
12,213 |
9,385 |
Less: Interest |
202 |
17 |
Less: Depreciation and amortization expense |
1,811 |
745 |
Profit before tax |
10,200 |
8,623 |
Net tax expense/(benefit) |
-1,884 |
-448 |
Profit for the year |
8,316 |
8,175 |
Earnings per equity share, â |
19.68 |
19.35 |
Total Revenue Including Other Income
The Company reported total gross revenue excluding other income of Rs.18,798 Crore, an increase of 21.6% compared to FY 2016. The increase was primarily on account of strong zinc, lead & silver prices and higher production, partly offset by lower zinc volumes, due to lower mined metal availability in first half.
The âOther incomeâ was Rs.2,474 Crore during the year, down 9.3% as compared to the previous year, on account of smaller investment corpus subsequent to Golden Jubilee dividend payout during the year, partly offset by higher rate of return.
Production Cost
Net zinc metal cost, without royalty, during the year, was higher by 5.8% in INR and 3.2% in USD terms, at Rs.55,679 ($ 830), compared with the previous year. The increase was on account of lower integrated production, higher coal & input commodity prices, lower average grades due to change in mining mix and lower by-product credit.
Operating margin
The above revenue and production cost resulted in profit before depreciation, interest and tax (PBDIT) of Rs.12,213 Crore in FY 2017, up 30.7%.
Net Profit
The Company reported record net profit of Rs.8,316 Crore for the year, marginally higher than previous year. The impact of higher PBDIT was partly offset by higher tax, higher depreciation and lower other income during the year.
Earnings Per Share (EPS)
The EPS for the year was Rs.19.68 per share as compared to Rs.19.35 per share in financial year 2015-16.
Dividend
On March 22, 2017, the Board of Directors declared a Special Interim dividend of 1375% i.e. Rs.27.50 per share on every share of Rs.2 each. This dividend entails an outflow of Rs.13,985 Crore, including dividend distribution tax (DDT). The Special dividend was in addition to the first interim dividend paid (Rs.1.90 per share or 95%) in October 2016 of Rs.966 Crore, including DDT. The total dividend outflow including DDT for FY 2017 was Rs.14,951 Crore (Rs.29.40 per share of Rs.2 or 1470%), against FY 2016 dividend of Rs.14,137 Crore (Rs.27.80 per share or 1390%). In view of the Special dividend paid in March 2017, no final dividend was recommended.
Credit Rating and Liquidity
CRISIL has reaffirmed the Companyâs longterm rating of AAA/Stable and short-term rating of A1 . The Companyâs strong financial risk profile is driven by its sustained strong liquidity and conservative capital structure as well as its integrated operations, highly competitive cost position and high-grade reserves.
The Company follows a conservative investment policy and invests in high quality debt instruments. As on March 31, 2017, net cash and cash equivalents were Rs.16,065 Crore, which excludes Rs.7,908 Crore of short term commercial paper raised to meet the special interim dividend fund requirement to avoid tax inefficiencies. The gross investments were Rs.23,972 Crore in high quality debt instruments including Rs.19,336 Crore in mutual funds and Rs.4,446 Crore in bonds.
Cash Flows (Rs. in Crore)
Particulars |
FY 2017 |
FY 2016 |
Opening Cash* |
35,272 |
30,898 |
Add: EBITDA1 |
9,734 |
6,667 |
Add: Net Interest Income |
2,166 |
2,699 |
Less: Income Tax & Dividend |
-21,310 |
-5,025 |
Less: Capital Account Payments |
-2,008 |
-1,550 |
(Increase) / Decrease in Working Capital & Others |
118 |
1,583 |
Closing Cash Balance |
23,972 |
35,272 |
(*) Includes Cash & Equivalents (refer Note 11 of the Audited Financial Statements) and Current Investments (refer Note 9 of the Audited Financial Statements)
(**) Earnings before Interest, Tax, Depreciation and Amortization expenses and Income on investments
Gross Working Capital
Gross working capital represented by inventory, sundry debtors and loans & advances increased from Rs.1,639 Crore to Rs.2,486 Crore as at March 31, 2017 primarily due to accretion of ore and mined-metal inventory. The working capital cycle was 52 days in FY 2017 as compared to 40 days in FY 2016, calculated based on new Ind AS guidelines.
Gross Block
The gross block during the year increased from Rs.18,952 Crore to Rs.20,975 Crore. This was largely due to the on-going mining projects and other sustaining capex.
Capital Employed
The total capital employed as at March 31, 2017 was Rs.14,740 Crore, as compared to Rs.2,114 Crore at the end of previous fiscal year. The increase is mainly due to higher dividend liability last year and lower surplus cash this year
Contribution to the Exchequer
Your Company has contributed Rs.11,095 Crore during FY 2017, in terms of royalties, taxes and duties to the exchequer on cash basis.
II. OPERATIONAL PERFORMANCE
Production
Mined metal production was 9,06,984 MT up 2% from a year ago and the highest ever. The underground mines ramped up significantly during the year to achieve a substantial 44% y-o-y increase in ore production and 32% y-o-y increase in mined metal production.
Integrated refined zinc and saleable lead production this year were a record 6,70,078 MT and 1,39,009 MT, down 12% and 1% respectively. The total refined zinc was 6,71,988 MT, down 11% from a year ago, while total saleable lead production was 1,39,009 MT, which is lower by 4% compared to FY 2016. The decrease was on account of low availability of mined metal in first half due to the cyclical pattern of the Rampura Agucha open cast mine and as per plan.
During the year, production of integrated saleable silver increased by 7% to an all-time high of 453 MT on account of higher volume and grades from Sindesar Khurd mine.
Our total power generation in FY 2017 was 3,345 million units, down 3.5% from last year. Our wind power generation was up 8% at 448 million units.
Sales
The refined zinc metal sales in the domestic market during the year was 4,72,824 MT (inclusive of imported Zinc metal of 24,072 MT), while export sales accounted for 2,23,176 MT. The aggregate sales were lower by 8.5% than previous year. Lead metal sales in the domestic market were 1,17,313 MT, while export sales were 20,940 MT lower by 4.9% compared to previous year. This reduction was due to lower cyclical mine production in first half of the year resulting in lower metal volumes.
Silver sales were 449 MT in FY 2017, all in the domestic market and 5.4% higher than previous year.
III. RESERVE & RESOURCE (R&R)
Our exploration activity has consistently added to our reserve and resource base over the last several years. We have added 26.40 million MT to our R&R this year, prior to a depletion of 11.90 million MT during the period. Total R&R on March 31, 2017 were 404.40 million MT containing 36.09 million MT of zinc-lead metal and approximately 32 kT of silver.
IV. PROJECTS
The Company remains on track for achieving 1.2 mtpa mined metal capacity by FY 2020.
The transition to underground mining is progressing well as share of underground mined metal production increased from 40% in FY 2016 to 52% in FY 2017. Our ore production from underground mines increased by 44% compared to last year. Further, total mine development reached 66,545 meters during the year which is higher by 15% from a year ago.
During the year, Rampura Agucha underground mine produced 1.4 million MT of ore as compared with 0.2 million MT a year ago. The south ventilation shaft sinking was completed towards the end of the year, while the main shaft sinking reached its ultimate depth of 955 metres. Further, cold commissioning of both production & service winders was completed during the quarter as shaft equipping work continues to progress satisfactorily.
Sindesar Khurd mine achieved record ore production of 3.7 million MT of ore in this year against 2.97 million MT in the previous year. The winder foundation work for the shaft was completed while head gear erection is nearing completion. The new mill of 1.5 mtpa capacity was completed in record 14 months and is running smoothly. We plan to reach our targeted capacity of 4.5 million MT this year, ahead of schedule.
Zawar mine achieved record ore production of 1.8 million MT during the year. Environmental clearance of 4 mtpa ore production & beneficiation, along with other statutory permissions were received towards the end of the year. Zawar mill expansion and associated power up-gradation project are at advanced stages with completion planned in Q2 of FY 2018.
The recent fumer project, which has been undertaken to further improve profitability and metal recoveries from the Companyâs hydro metallurgical plant, is progressing with scheduled completion by mid FY 2019.
The Company successfully commissioned 16 MW of captive solar farms in March 2017.
This project will help the Company partly meet its renewable power obligation and has been set up on waste lands.
V. OUTLOOK
Projects: The Companyâs transition to underground mining is progressing well and we expect the share of mined metal to increase from 52% in FY 2017 to 80% in FY 2018. Both, Rampura Agucha and Sindesar Khurd shafts are on track for completion in FY 2019. The capex on the on-going mine expansion projects, fumer and smelter debottlenecking will be around $350-360 million in FY 2018.
Operations: In FY 2018, mined metal production is expected to be higher than FY 2017. Refined zinc-lead metal production will be around 950 kt, which will be evenly spread through the year. Silver production will be over 500 MT.
Financial: Dollar COP (excluding royalty) is expected to be marginally higher based on current levels of coal & input commodity prices. Treasury income is expected to be lower due to reduction in investment corpus and current softening in rates while tax rate for FY 2018 is expected to be slightly higher than MAT.
VI. HEALTH, SAFETY AND ENVIRONMENT (HSE)
The Companyâs efforts towards reinforcing a positive safety culture have resulted in reduction of total Lost Time Injuries from 23 last year to 15 this year, while the Lost Time Injury Frequency Rate reduced to 0.30 from 0.50 a year ago. However, the Company is deeply anguished to report an unfortunate accident at the project site post mill commissioning, where a rare crane collapse caused four fatalities of contractor employees. The accident was fully investigated and corrective action was taken at all our sites.
HSE initiatives have been discussed in detail from page 45 to 51 in âBusiness Reviewâ, which forms a part of this Annual Report.
VII. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Companyâs CSR policy focuses on Education, Sustainable Livelihoods, Womenâs Empowerment, Health, Water & Sanitation, Sports & Culture, Environment, and Community Development. Detailed policy is available on our website http://hzlindia.com/social_policy.aspx
During the year, we spent Rs.49.40 Crore on our CSR programs and also contributed Rs.50 Crore to Vedanta Foundation for setting-up Nandghars under our Bal Aanganwadi program. In addition, the Company has also provided Rs.543 Crore as contribution to District Mineral Foundation which will be utilized for the interest and benefit of the persons and areas affected by mining related operations, which is also quasi CSR. Details of the same are provided in Annexure 5.
For details on existing CSR projects, please refer to page 52 to 57 of âBusiness Reviewâ, which forms a part of this Annual Report.
VIII. DIRECTORS
During the year under review, following changes took place in the Board of Directors of your Company. Ms. Reena Sinha Puri, Ms. Farida M Naik and Mr. Nikunja Bihari Dhal were appointed as Directors on the Board, while Mr. Akhilesh Joshi, Ms. Sujata Prasad, Mr. Sudhaker Shukla and Mr. Nikunja Bihari Dhal ceased to be directors during the year.
IX. MANAGEMENT DISCUSSION AND ANALYSIS
The Business Review section of this Annual Report gives a detailed account of your Companyâs operations and the market in which it operates, including its initiatives in areas such as human resources, sustainability and risk management.
X. CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT
As a listed company, necessary measures are taken to comply with the listing agreements of the Stock exchanges. A report on Corporate Governance, along with a certificate of compliance from the statutory auditors, forms part of this report. Further, Business Responsibility Report, describing the initiatives taken by your Company from an Environmental, Social and Governance perspective, also forms a part of this report. Various disclosures as required under section 134 and 135 of the Companies Act 2013 are annexed to this report or covered in the Corporate Governance Report, such as Related Party Transactions; Information and details on conservation of energy, technology absorption, foreign exchange earnings and outgo; extract of annual return; constitution of various Board level committees; Annual Report on CSR.
XI. DIRECTORSâ RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:
i In the preparation of the annual accounts, the applicable accounting standards read with requirements set out under Schedule 3 to the act, have been followed and there are no material departures in the same.
ii. The Directors have selected such accounting policies, applied them consistently and made judgements & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.
iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv. The Directors have prepared the annual accounts on a âGoing Concernâ basis.
v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively, and
vi. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively
XII. AUDITORS
The Company had appointed M/s. SR Batliboi & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company to conduct audit of Financial Statements for the year ended March 31, 2017. The Notes to financial statement referred to in the Auditorsâ Report are self-explanatory and do not call for any further comments. The Auditorsâ Report does not contain any qualification or reservation. The only adverse remark is for not fulfilling the criteria of adequate number of Independent Directors which is expected to be complied soon and not having a Woman Director for part of the year.
Pursuant to the orders issued by the Central Government under section 148 of The Companies Act, 2013, the Board has appointed M/s K G Goyal & Co. Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for all its products and M/s V M & Associates, Company Secretaries as the Secretarial Auditors for conducting the Secretarial audit of the Company.
As per provisions of Section 136 of the Companies Act, 2013, the Annual Report including the Audited Accounts for the year will be sent to all the Shareholders.
XIII. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report.However, having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the registered office and the same will be furnished on request. Further the details are also available on the Companyâs website: www.hzlindia.com.
XIV. ACKNOWLEDGEMENTS
The Board of Directors places on record its sincere appreciation of the contribution made by the employees and the employeesâ unions in the success of the Company. The Directors also sincerely thank the Central Government and the State Governments of Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra, Jharkhand and Uttarakhand; and the bankers, auditors, vendors, customers and the shareholders of the Company for their continued support.
For and on behalf of the Board of Directors
Sunil Duggal A R Narayanaswamy
CEO & Whole-time Director Director
Place: Mumbai
Date: April 20, 2017
Mar 31, 2015
Dear Members
In the golden jubilee year of the Company''s operations, the Directors
are pleased to inform that Hindustan Zinc has achieved new performance
benchmarks and delivered the highest ever operating profit, net profit
and mined metal output.
Presenting the 49th Annual Report, together with the statement of
Audited Financial Statements for the year ended March 31, 2015, the
Company''s performance is summarized below:
Financial Highlights (Rs. in Crore)
FY 2015 FY 2014
Total Revenues (including other income) 17,609 15,535
Profit before depreciation, interest
and tax 10,238 8,799
Less: Interest 24 45
Less: Depreciation and amortization expense 644 785
Profit before tax 9,570 7,970
Net tax expense / (benefit) 1,392 1,065
Profit for the year 8,178 6,905
Earnings per equity share, Rs. 19.35 16.34
Dividend
The Board of Directors has recommended a final dividend of 125%, i.e. Rs.
2.50 per share on equity share of Rs. 2 each, subject to the approval of
shareholders. This takes the total dividend for FY 2015 to 220%, i.e.,
Rs. 4.40 per share, which is the highest ever proposed by the Company.
The total outgo on account of dividend, including tax on dividend, will
be Rs. 2,207 Crore during FY 2015, as against Rs. 1,730 Crore in FY 2014.
Corporate Governance and Business Responsibility Report
As a listed company, necessary measures are taken to comply with the
listing agreements of the Stock exchanges. A report on Corporate
Governance, along with a certificate of compliance from the statutory
auditors, forms part of this report. Further, Business Responsibility
Report, describing the initiatives taken by your Company from an
Environmental, Social and Governance perspective, also forms a part of
this report. Various disclosures as required under section 134 and 135
of the Companies Act 2013 are annexed to this report or covered in the
Corporate Governance Report, such as related party transactions;
Information and details on conservation of energy, technology
absorption, foreign exchange earnings and outgo; extract of annual
return; constitution of various Board level committees; CSR Policy and
initiatives taken during the year; Board evaluation; remuneration of
the Managerial Personnel; Secretarial Audit report etc.
Directors'' Responsibility Statement
As required under Section 134(5) of the Companies Act, 2013, the
Directors hereby confirm that:
i. In the preparation of the annual accounts, the applicable accounting
standards has been followed along with proper explanation relating to
material departures, if any.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profits of
the Company for that period.
iii. The Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act, for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
iv. The Directors had prepared the annual accounts on a ''Going Concern''
basis.
v. The Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively, and
vi. The Directors had devised proper system to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Auditors
The Company had appointed M/s. Deloitte Haskins & Sells LLP, Chartered
Accountants, as Statutory Auditors of the Company to conduct audit of
Financial Statements for the year ended March 31, 2015. Their term of
appointment expires at the conclusion of the forthcoming Annual General
Meeting and being eligible, they have offered themselves for
reappointment. The Directors propose their reappointment.
Pursuant to the orders issued by the Central Government under section
148 of The Companies Act, 2013, the Board of Directors of the Company
has appointed M/s K G Goyal & Co. Cost Accountants for conducting the
audit of the cost accounting records maintained by the Company for all
its products.
M/s. V. M. & Associates, Company Secretary in practice was appointed as
Secretarial Auditor of the Company
Particulars of Employees
The information required pursuant to Section 197 read with Rule, 5 of
The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, will be provided
upon request. In terms of Section 136 of the Act, the Report and
Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees'' particulars which is available
for inspection by the Members at the Registered Office of the Company
during business hours on working days of the Company up to the date of
the ensuing Annual General Meeting. If any Member is interested in
obtaining a copy thereof, such Member may write to the Company
Secretary in this regard.
Acknowledgments
The Board of Directors places on record its sincere appreciation of the
contribution made by the employees and the employees'' unions in the
success of the Company. The Directors also sincerely thank the Central
Government and the State Governments of Rajasthan, Andhra Pradesh,
Gujarat, Karnataka, Tamil Nadu, Maharashtra, Jharkhand and Uttarakhand;
and the bankers, auditors, vendors, customers and the shareholders of
the Company for their continued support.
For and on behalf of the Board of Directors
Akhilesh Joshi A R Narayanaswamy
CEO & Whole-time Director Director
Place: Mumbai
Date : April 20, 2015
Mar 31, 2013
Dear Members,
The Directors have pleasure in presenting the 47th Annual Report,
together with the statement of Audited Financial Statements for the
financial year ended March 31, 2013.
FINANCIAL RESULTS AND DIVIDEND
(Rs. Crores)
FY 2013 FY 2012
Total Revenues (including 14,731.99 12,948.14
Other Income)
Profit before depreciation, 8,496.26 7,569.16
interest and tax
Less: Interest 29.10 13.95
Less: Depreciation and 647.04 610.67
amortisation expense
Profit before tax 7,820.12 6,944.54
Taxation 920.64 1,418.50
Profit for the Year 6,899.48 5,526.04
Earnings per equity share, Rs. 16.33 13.08
DIVIDEND
The Board of Directors has recommended a final dividend of 75%, i.e.,
Rs. 1.50 per share on equity share of Rs. 2.00 each subject to the
approval of shareholders. This takes the total dividend for FY 2013 to
155%, i.e., Rs. 3.10 per share, which is the highest ever proposed by
the Company. The total outgo on account of dividend, including tax on
dividend, will be Rs. 1,527 Crores during FY 2013, as against Rs.
1,179 Crores in FY 2012.
PERFORMANCE REVIEW
We reported net revenue from operations of Rs. 12,700 Crores, an
increase of 11% compared to FY 2012. The increase was primarily on
account of increased silver sales and INR depreciation, partially
offset by lower metal prices. The Company achieved profit before
depreciation, interest and tax (PBDIT) of Rs. 8,496 Crores in FY 2013,
up 12%, benefiting from higher sales and other income, partially offset
by higher operating costs.
Mined metal production during the year was 870,200 MT compared to
830,432 MT in the previous year. The higher mined metal production was
primarily due to higher output at Rampura Agucha.
Integrated refined zinc production this year was 659,971 MT, compared
to 752,265 MT in FY 2012. The decline in zinc metal production was
mainly on account of uneven distribution of mined metal production
during the year with the second half much stronger than the first half,
as per the mine plan. We addressed it by selling 61,097 MT of zinc
mined metal in the second half. The total refined zinc production was
676,921 MT in FY 2013, compared to 758,716 MT in FY 2012.
We performed extremely well in total refined lead and silver
production, which are the highest ever at 124,816 MT and 408 MT - up
26% and 69% - respectively. Of this, integrated refined lead production
was 106,753 MT and integrated silver production was 322 MT, up 20% and
36%, respectively. Production of refined lead and silver was boosted
significantly by higher contribution from Sindesar Khurd mine and full
year of production at Dariba lead smelter and the new refineries in the
state of Uttarakhand.
Our generation from captive power plants in FY 2013 declined by 2% to
3,363 million units, compared to that in FY 2012. Our wind power
generation was up 52% at 511 million units, compared to that in FY
2012, boosted by addition of new wind mills.
SUCCESS IN EXPLORATION
Mineral exploration is a key component of our growth strategy. We are
actively pursuing brownfield and greenfield exploration. We have added
24.6 million MT to our reserves & resources this year, prior to a
depletion of 8.6 million MT during the period. In the same vein, our
contained gross zinc-lead metal has increased by 1.0 million MT, prior
to a depletion of 0.9 million MT during the period. Total reserves &
resources, on March 31, 2013, were 348.3 million MT containing 35.1
million MT of zinc-lead metal and 909.6 million ounces of silver.
Our exploration activities have maintained our mine life of over 25
years
ZAWAR MINES
Operations at three of the four mines comprising the Zawar mine complex
had been suspended since early 2010, pending forest clearance. In
January 2013, we obtained an ''in-principle'' approval for forest
diversion from Ministry of Environment and Forest (MoEF) and production
is now being ramped up to its full capacity.
VIZAG ZINC SMELTER
The operations at Vizag Zinc Smelter have been suspended since February
2012. Considering the environment limitations, large urbanisation
around the smelting complex and the viability of continuing operations,
we are evaluating all options related to the smelter.
SALES
The zinc refined metal sales in the domestic market during the year
were 447,877 MT, while export sales accounted for 227,081 MT. Besides,
we exported zinc mined metal of 61,097 MT in FY 2013. Lead metal sales
in the domestic market during the year were 114,471 MT, with the export
sales accounting for 2,974 MT. Silver sales were 374 MT in FY 2013, all
in the domestic market.
FINANCIAL PERFORMANCE
The Company reported record profits of Rs. 6,899 Crores for the year,
up 25% from the previous year. This was primarily on account of higher
sales and other income, partially offset by higher operating costs.
The Company''s financial performance has been discussed in detail in
''Management Discussion and Analysis'', which forms a part of this Annual
Report.
PROJECTS
During the year, we announced our plan for next phase of growth to
position the Company to deliver superior performance in future. Based
on long-term evaluation of assets and in consultation with mining
experts, this growth plan will involve sinking of underground shafts
and developing underground mines. These growth projects will result in
an increase in mined metal production capacity from 1.0 million MT per
annum to 1.2 million MT per annum. The growth plan includes:
- Development of 3.75 million MT per annum underground mine at Rampura
Agucha
- Expansion of Kayad mine, an extension of Rampura Agucha block to 1.0
million MT per annum,
- Expansion of Sindesar Khurd mine from 2.0 million MT per annum to
3.75 million MT per annum
- Expansion of Rajpura Dariba mine from 0.9 million MT per annum to 1.2
million MT per annum
- Expand Zawar Mine from 1.2 million MT per annum to 5.0 million MT per
annum
- Development of 0.5 million MT per annum underground mine at Bamnia
Kalan, an extension of Sindesar Khurd block
The mines will be developed using best-in-class technology and
equipment and in consultation with leading global mine experts,
ensuring the highest level of productivity at the lowest cost. The
projects will be completed in six years. The benefits of expansion
projects will start flowing in from the third year, even as projects
will continue till FY 2019. Annual capital expenditures for these
projects will average US$ 250 million a year over the next six years.
CONTRIBUTION TO THE EXCHEQUER
Your Company has contributed Rs. 3,916 Crores, in terms of royalties,
taxes and duties to the exchequer, an increase of 23% from last year.
DIRECTORS
During the year under review, following changes took place in the Board
of Directors of your Company. Mr. Durga Shanker Mishra and Mr. Naresh
Kumar were appointed as Directors and Mr. R. K. Malhotra and Mr. Naresh
Kumar ceased to be directors. Mr. Navin Agarwal and Ms. Anjali Anand
Srivastava retire by rotation and being eligible offer themselves for
reappointment at the ensuing Annual General Meeting. None of the
retiring Directors hold any shares in the Company. Your Directors
recommend their reappointment.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report, which gives a detailed
account of your Company''s operations and the market in which it
operates, including its initiatives to expand its business and in
areas, such as human resources and risk management, forms a part of
this Annual Report.
CORPORATE GOVERNANCE & BUSINESS RESPONSIBILITY REPORT
Your Company is a part of Vedanta Group and conforms to norms of
Corporate Governance adopted by them. As a listed Company, necessary
measures are taken to comply with the listing agreements of the Stock
exchanges. A report on Corporate Governance, along with a certificate
of compliance from Statutory Auditors, also forms part of this report.
Further Business Responsibility Report, describing the initiatives
taken by your Company from an Environmental, Social and Governance
perspective also forms a part of this report.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, the
Directors hereby confirm that:
i. In the preparation of Annual Financial Statements, applicable
accounting standards have been followed, along with proper explanation
relating to material departures, if any.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year on March 31, 2013, and
the Company''s profit for the year ending on that date.
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records, in accordance with the
provisions of the Act, for safeguarding the Company''s assets and for
detecting and preventing frauds and other irregularities
iv. The Directors have prepared the Annual Financial Statements on a
''Going Concern'' basis.
AUDITORS
Your Company had appointed M/s. Deloitte Haskins & Sells, Chartered
Accountants, as Statutory Auditors of the Company to conduct audit of
Financial Statements for the year ended March 31, 2013. Their term of
appointment expires at the conclusion of the forthcoming Annual General
Meeting and being eligible, they have offered themselves for
reappointment. Your Directors propose their reappointment.
Pursuant to the orders issued by the Central Government under section
233B of The Companies Act, 1956, the Board of Directors of your Company
has appointed M/s K G Goyal & Co. Cost Accountants for conducting the
audit of the cost accounting records maintained by the Company for all
its products.
PARTICULARS OF TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND
OUTGO
As required under Section 217 (1) (e) of the Companies Act, 1956, and
rules made therein, the particulars of technology absorption and
foreign exchange earnings and outgo are given in Annexure I, which is
attached and forms a part of this report.
PARTICULARS OF EMPLOYEES
As required by the provisions of Sub-Section (2A) of Section 217 of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975, as amended, particulars of the employees are set out in
the Annexure to the Directors'' Report. However, as per provisions of
Section 219 (1)(b)(iv) of the Companies Act, 1956, the report and the
accounts are being sent to all the shareholders excluding the aforesaid
information. Any shareholder, interested in obtaining such particulars
may write to the Company Secretary at the Company''s registered office
for a copy of the same.
ACKNOWLEDGEMENTS
The Board of Directors places on record its sincere appreciation of the
contribution made by the employees and the employees'' unions in the
success of the Company. The Directors also sincerely thank the Central
Government and the State Governments of Rajasthan, Andhra Pradesh,
Gujarat, Karnataka, Tamil Nadu, Maharashtra, Jharkhand and Uttarakhand;
and the bankers, auditors, vendors, customers and the shareholders of
the Company for their continued support.
For and on behalf of the Board of Directors
Akhilesh Joshi A. R. Narayanaswamy
CEO & Whole-time Director Director
Place: Mumbai
Date: April 25, 2013
Mar 31, 2012
The Directors have pleasure in presenting the 46th Annual Report
together with the Audited Financial Statements for the financial year
ended March 31, 2012.
FINANCILA RESULTS AND DIVIDEND
(Rs Crores)
FY2012 FY2011
Total Revenue (including Other 12,948.14 10,905.19
Income)
Profit before depreciation, 7,569.16 6,452.57
interest and tax
Less: Interest 13.95 18.28
Less: Depreciation 610.67 474.74
Profit before tax 6,944.54 5,959.55
Less: Taxation (1,418.50) (1,059.06)
Net Profit for the year 5,526.04 4,900.49
Earnings per equity share 13.08 11.60
DIVIDEND
The Board of Directors has recommended a final dividend of 45%, i.e., Rs
0.90 per share on equity share of Rs 2.00 each. This takes the total
dividend for FY2012 to 120%, i.e., Rs 2.40 per share, which is the
highest ever dividend proposed by the Company. The total outgo on
account of dividend including tax on dividend will be Rs 1,179 Crores
during FY2012 as compared to Rs 491 Crores in FY2011.
PERFORMANCE REVIEW
We reported revenues and PBDIT of Rs 11,405 Crores and Rs 7,569 Crores;
up 14% and 17% compared to FY2011. Strong volume growth, operational
efficiencies and improved price realisation for Silver drove this
growth.
This year overall mined metal production was 830,432 tonnes compared to
840,053 tonnes in the previous year. The marginal decline was due to a
temporary decline in ore grade at Rampura Agucha mine, partially offset
by higher metal recoveries across all mines and increased production at
Sindesar Khurd mine, which ramped-up to 80% utilisation in Q4 FY2012.
Refined Zinc production this year was 758,716 tonnes- up 6% compared to
FY2011. This was primarily on account of higher utilisation of new
generation smelters in Rajasthan, partially offset by ramp-down of
Vizag smelter during the fourth quarter. We performed extremely well
in refined Lead and Silver production, which is the highest ever at
98,724 tonnes and 242 tonnes - up 56% and 35% respectively. Production
of refined Lead and Silver was boosted significantly by the ramp up of
Sindesar Khurd mine and commissioning & ramp-up of Dariba Lead smelter
and the new Silver refinery.
To add to our performance metrics, our captive power plants too
increased generation by 21% to 3,401.7 Million units, compared to
FY2011. Our wind power generation capacity went up from 171MW to 274MW
and its power generation was up 67% at 335.7 Million units, compared to
FY2011.
SUCCESS IN EXPLORATION
Driving our growth, be it in the past, present or future, is the
expansion of reserves and resources. For this, we are continuously
pursuing brownfield and greenfield exploration. We have added 27.10
Million tonnes to our reserves and resources this year, prior to a
depletion of 8.04 Million tonnes during the period. In the same vein,
our contained net Zinc-Lead metal has increased by 1.2 Million tonnes,
prior to a depletion of 0.83 Million tonnes during the period.
Contained net Silver has increased to 912 Million ounces from 885
Million ounces last year. Total reserves and resources at March 31,
2012 were 332.30 Million tonnes containing 35 Million tonnes of
Zinc-Lead metal and 912 Million ounces of Silver.
RENEWAL OF ZAWARLEASE
The renewal of the mining lease for Zawar group of mines was applied on
November 25, 2008. As a part of the mining lease was falling on the
forest land, approval from the Forest department for diversion of the
land was required. In view of the honourable Supreme Court's order
dated February 19, 2010, regarding mining in Aravali Hills of
Rajasthan, forest clearance was kept pending. Company had represented
the matter at various forums and also filed a writ in the Supreme
Court. The Forest Advisory Committee (FAC) has already submitted its
recommendation to the Supreme Court. All other approvals, as are
required for renewal of the mining lease, are in place. Now the matter
is pending in the Supreme Court, awaiting final hearing.
SALES
The Zinc metal sales in the domestic market during the year were
438,171 tonnes, while export sales accounted for 320,328 tonnes. Lead
metal sales in the domestic market during the year were 74,713 tonnes,
with the export sales accounting for 16,988 tonnes.
FINANCIAL PERFORMANCE
The Company reported net profits of Rs 5,526 Crores during the year, up
13% compared to the previous year. This was primarily on account of
higher sales volumes, improved price realisations for Silver, rupee
depreciation, higher investment income and enhanced operational
efficiencies.
The Company's financial performance has been discussed in detail in
'Management Discussion and Analysis' which forms a part of this Annual
Report.
PROJECTS
Our well thought-out rollouts have imparted a new growth momentum to
our enterprise:
- Ramped-up Sindesar Khurd mine to 2.0 mtpa capacity
- Commissioned the 100 ktpa Lead smelter at Dariba, increasing Lead
production capacity to 185 ktpa
- Commissioned the new Silver refinery, increasing Silver refining
capacity to over 500 tpa
- Commenced underground mine development work at Rampura Agucha mine
and greenfield Kayar mine
- Commissioned 102MW expansion in wind power, increasing total wind
power generation capacity to around 274MW
CONTRIBUTION TO THE EXCHEQUER
Your Company has contributed Rs 3,187 Crores in terms of taxes and
duties to the exchequer.
DIRECTORS
During the year under review, following changes took place in the Board
of Directors of your Company. Mr. Rajib Sekhar Sahoo and Ms Shaukat Ara
Tirmizi were appointed as Independent Directors by the Government of
India on the Board of the Company w.e.f. October 25, 2011. Mr. Akhilesh
Joshi, on completion of his tenure as Chief Operating Officer and
Whole- time Director on January 31, 2011 was appointed as Chief
Executive Officer and Whole-time Director of the Company w.e.f.
February 1, 2012. Mr. Agnivesh Agarwal and Mr. R K Malhotra retire by
rotation and being eligible offer themselves for reappointment at the
ensuing Annual General Meeting. None of the retiring Directors hold any
shares in the Company. Your Directors recommend their reappointment.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report, which gives a detailed
account of operations of your Company and the market in which it
operates, including initiatives taken by the Company to expand its
business and in areas such as human resources, and risk management,
forms a part of this Annual Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance along with a certificate from the
Auditors of the Company regarding the compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement is annexed to this report.
DIRECTOR'S REPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, the
Directors hereby confirm that
i. In the preparation of Annual Financial Statements, applicable
accounting standards have been followed along with proper explanation
relating to material departures, if any
ii. The Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year on March 31, 2012 and
of the profit of the Company for that year
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and,
for detecting and preventing fraud and other irregularities
iv. The Directors have prepared the Annual Financial Statements, on a
'Going Concern' basis
AUDITORS
Your Company had appointed M/s. Deloitte Haskins & Sells, Chartered
Accountants, as Statutory Auditors of the Company for the conduct of
audit of Financial Statements for the year ended March 31, 2012. Their
term of appointment expires at the conclusion of the forthcoming Annual
General Meeting, and being eligible, they offer themselves for
reappointment. Your Directors propose their reappointment.
AUDITORS' QUALIFICATION ON FINANCIAL STATEMENTS
Notes to the Financial Statements, as referred to in the Auditors
Report are self-explanatory and a practice consistently followed, and
therefore do not call for any further comments and explanations.
PARTICULARS OF TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO
As required under Section 217 (1) (e) of the Companies Act, 1956 and
rules made therein, the particulars of technology absorption and
foreign exchange earnings and outgo are given in Annexure I, which is
attached and forms a part of this report.
PARTICULARS OF EMPLOYEES
As required by the provisions of Sub-Section (2A) of Section 217 of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended, particulars of the employees are set out in the
Annexure to the Directors Report. However, as per provisions of
Section 219 (1)(b)(iv) of the Companies Act, 1956 the report and the
accounts are being sent to all the shareholders excluding the aforesaid
information. Any shareholder, interested in obtaining such particulars
may write to the Company Secretary at the registered office of the
Company for a copy of the same.
ACKNOWLEDGEMENTS
The Board of Directors places on record its sincere appreciation of the
contribution made by the employees and employees' unions in the success
of the Company. The Directors also sincerely thank the Central
Government and the State Governments of Rajasthan, Andhra Pradesh,
Gujarat, Karnataka, Tamil Nadu, Maharashtra, Jharkhand and Uttarakhand;
bankers, auditors, vendors, customers and the shareholders of the
Company for their continued support.
For and on behalf of the Board of Directors
Akhilesh Joshi A R Narayanaswamy
CEO & Whole-time Director Director
Place: Mumbai
Date: April 19, 2012
Mar 31, 2011
The Directors have pleasure in presenting the 45th Annual Report
together with the statement of Audited Accounts for the fnancial year
ended 31 March 2011.
Financial Results and Dividend
(Rs. Crores) FY 2011 FY 2010
Total Revenue 10,891.35 8,734.65
Profit before depreciation,
interest and tax 6,453.69 5,392.28
Less: Interest 19.40 43.92
Less: Depreciation 474.74 334.25
Profit before tax 5,959.55 5,014.11
Taxation 1,059.06 972.70
Net Profit for the year 4,900.49 4,04141
Add: Balance brought forward
from the previous year 9,895.06 6,649.28
Amount available for appropriation 14,795.55 10,690.69
Appropriation
General Reserve 500.00 500.00
(a) Proposed dividend on
equity shares 491.08 295.63
(including corporate tax thereon)
Balance carried forward to next year 13,804.47 9,895.06
Share Capital and Dividend
During the year under review, the authorised share capital of the
Company was increased from Rs. 500 Crores to Rs. 1,000 Crores. The
existing equity share of Rs. 10/- each was sub-divided into 5 equity
shares of Rs. 2/- each, and bonus shares in the ratio of 1:1 (post split)
were issued to all the shareholders of the Company. After issue of the
Bonus shares, the paid up capital of the Company has increased from Rs.
422.53 Crores to Rs. 845.06 Crores.
The Board of Directors has recommended dividend of 50%, i.e., Rs. 1 per
equity share of Rs. 2/- each on the increased capital after issue of
Bonus shares for the year 2010-11. The total outgo on account of
dividend including tax on dividend will be Rs. 491 Crores during FY 2011
as compared to Rs. 296 Crores in FY 2010.
Performance Review
FY 2011 has been remarkable in terms of volume growth and capacity
additions. We have successfully commissioned our 1.50 mtpa concentrator
at Sindesar Khurd. It is ramping up well and is expected to achieve its
rated capacity in FY 2012. The 100 ktpa Lead smelter at Dariba is
expected to commission by Q1 FY 2012, post which our Zinc-Lead metal
production capacity will increase to 1,064 ktpa.
Driven by significant volume ramp-ups during the year, the Company
recorded its highest ever Zinc-Lead mined metal production of 840,053
tonnes, up by 9% compared to the previous year.
Refined Zinc metal production was highest ever at 712,471 tonnes in FY
2011, up by 23% compared to the previous year.
Refned Lead metal production was 12% lower at 63,192 tonnes in FY 2011,
compared to the previous year.
Refned Silver production for the year was higher at 179,079 kg,
compared to the previous year.
Exploration
Ongoing exploration activities have yielded significant success with an
increase of 22.1 million tonnes to the reserves and resources, prior to
a depletion of 7.5 million tonnes in FY 2011. Contained Zinc-Lead
metal has increased by 1.4 million tonnes, prior to a depletion of 0.84
million tonnes during the same period. Contained Silver has increased
to 885 million ounces from 832.8 million ounces last year. Total
reserves and resources as at 31 March 2011 were 313.2 million tonnes
containing 34.7 million tonnes of Zinc-Lead metal and 885 million
ounces of Silver. The reserves and resources position has been
independently reviewed and certified as per the JORC standard.
Renewal of Mining Lease
The renewal of the mining lease for Zawar group of mines was applied on
25 November 2008. As a part of the mining lease was falling on the
forest land, approval from the Forest department for diversion of the
land was required. In view of the honorable Supreme Courts order dated
19 February 2010, regarding mining in Aravali Hills of Rajasthan,
forest clearance was kept pending. Company had represented the matter
at various forums and also fled a writ in the Supreme Court. The Forest
Advisory Committee (FAC) has already submitted its recommendation to
the Supreme Court. All other approvals, as are required for renewal of
the mining lease, are in place. Now the matter is pending in the
Supreme Court, awaiting final hearing.
Sales
Zinc metal sales in the domestic market during the year were 411,617
tonnes, while export sales accounted for 300,986 tonnes. Lead metal
sales in the domestic market during the year were 57,204 tonnes, with
the export sales accounting for 25 tonnes. Sales during the year were
augmented by sale of 65,957 Dry Metric Tonnes (DMT) of surplus Zinc
concentrate and 38,457 DMT of surplus Lead concentrate.
Financial Performance
The Company reported Net profits of Rs. 4,901 Crores during the year, up
by 21% compared to the previous year. This was primarily on account of
higher volumes, increased LME prices and improved operational
efficiencies.
The Companys financial performance has been discussed in detail in the
chapter on Management Discussion and Analysis which forms a part of
this Annual Report.
Projects
The current fiscal has witnessed successful commissioning of the 1.50
mtpa concentrator at Sindesar Khurd. We have also added 160 MW (80X2)
captive power generation capacity at Dariba, during the year.
The pace of volume ramp up at Sindesar Khurd has been accelerated with
the commissioning of the 1.50 mtpa concentrator. The concentrator had
already achieved a production level of around 85% of the capacity, as
we exited the year. Our Silver production capacity is expected to leap
to 500 tonnes by the end of FY 2012, on the back of volume ramp up at
Sindesar Khurd & Rampura Agucha and various recovery improvement
measures.
After the commissioning of the 100 ktpa Lead Smelter, the Company will
cross the one million tonne landmark in metal production capacity.
We have also announced an addition of 150 MW in our existing 123.2 MW
wind power capacity. Of this 47.7 MW has been commissioned in March
2011. The balance is expected to get commissioned towards the end of Q2
of FY 2012.
Our existing portfolio of assets continues to deliver superior
performance; and we continue to pursue further organic/ inorganic
growth opportunities.
Contribution to the Exchequer
Your Company has contributed Rs. 2,602 Crores in terms of taxes and
duties to the exchequer.
Directors
During the year under review, following changes took place in the Board
of Directors of your Company. Mr. R. K. Malhotra and Ms. Anjali Anand
Srivastava were nominated as Directors on the Board in place of Ms.
Ajita Bajpai Pande and Mr. S. K. Mittal. Further Mr. M. S. Mehta
ceased to be director on the board of the Company w.e.f. 30 June 2010.
Mr. A. R. Narayanswamy and Mr. Navin Agarwal retire by rotation and
being eligible; ofer themselves for reappointment at the ensuing Annual
General meeting. None of the retiring directors hold any shares in the
Company. Your Directors recommend their reappointment.
Management Discussion and Analysis
The Management Discussion and Analysis Report, which gives a detailed
account of operations of your Company and the market in which it
operates, including initiative taken by the Company to expand its
business and in areas such as human resources, and risk management,
forms a part of this Annual Report.
Corporate Governance
Report on Corporate Governance along with a certifcate from the
auditors of the Company regarding the compliance of conditions of
corporate governance as stipulated under Clause 49 of the Listing
Agreement is annexed to this report.
Group
The Agarwal Group being a group defned under the Monopolies and
Restrictive Trade Practices Act, 1969, controls the Company.
A list of its group entities is given below:
Sr. No. Name of the Group Companies
1. Volcan Investments Limited
2. Vedanta Resources Plc.
3. Vedanta Resources Holding Limited
4. Vedanta Resources Jersey Limited
5. Vedanta Resources Jersey II Limited
6. Vedanta Resources (Jersey) Limited
7. Vedanta Resources Investments Limited
8. Vedanta Jersey Investments Limited
9. Bharat Aluminum Company Limited
10. Copper Mines of Tasmania Pty Limited
11. Fujariah Gold
12. The Madras Aluminium Company Limited
13. Monte Cello BV
14. Monte Cello Corporation NV
15. Konkola Copper Mines PLC
16. Sterlite Energy Limited
17. Sesa Goa Limited
18. Sesa Industries Limited
19. V S Dempo Private Limited
20. Dempo Mining Corporation Private Limited
21. Sterlite Industries (India) Limited
22. Sterlite Opportunities and Venture Limited
23. Sterlite Infra Limited
24. Thalanga Copper Mines Pty Limited
25. Twin Star Holding Limited
26. Vedanta Aluminium Limited
27. Richter Holding Limited
28. Westglobe Limited
29. Finsider International Company Limited
30. Vedanta Resources Finance Limited
31. Vedanta Resources Cyprus Limited
32. Welter Trading Limited
33. Lakomasko BV
34. THL Zinc Ventures Limited - Former THL KCM Limited
35. Twinstar Energy Holdings Limited - Former THL Aluminium
36. THL Zinc Limited - Former KCM Holdings Limited
37. Sterlite (USA) Inc.
38. Talwandi Sabo Power Limited
39. Allied Port Services Pvt. Ltd.
40. Konkola Resources Plc
41. Vizag General Cargo Berth Pvt. Limited
42. Twin Star Mauritius Holding Limited
43. Vedanta Namibia Holdings Limited
44. Skorpoin Zinc (Pty) Limited
45. Namzinc (Pty) Limited
46. Skorpion Mining Company (Pty) Limited
47. Amica Guesthouse (Pty) Ltd.
48. Rosh Pinah healthcare (Pty) Ltd.
49. Black Mountain Mining (Pty) Ltd.
50. THL Zinc Holding BV - Former Labaume BV
51. Lisheen Mine Partnership
52. THL Zinc Holding Cooperative U.A.
53. Pecvest 17 Pvt. Ltd.
54. Vedanta Lisheen Finance Limited
55. Vedanta Base Metals (Ireland) Limited
56. Vedanta Lisheen Mining Limited
57. Killoran Lisheen Mining Limited
58. Killoran Lisheen Finace Limited
59. Lisheen Milling Limited
60. Killoran Concentrates Limited
61. Killoran Lisheen Limited
62. Killoran Lisheen Holdings Limited
63. Azela Limited
64. Paradip Port Services Pvt. Limited
65. MALCO Power Company Limited
66. Malco Industries Limited
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act, 1956, the
Directors hereby confrm that:
i. In the preparation of Annual Accounts, applicable accounting
standards have been followed along with proper explanation relating to
material departures, if any.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year on 31 March 2011 and of
the profit of the Company for that year.
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and,
for detecting and preventing fraud and other irregularities.
iv The Directors have prepared the Annual Accounts on a Going Concern
basis.
Auditors
Your Company had appointed M/s. Deloitte Haskins & Sells, Chartered
Accountants, as statutory auditors of the Company for the conduct of
audit of accounts for the year ended 31 March 2011. Their term of
appointment expires at the conclusion of the forthcoming Annual General
Meeting (AGM), and being eligible, they offer themselves for
reappointment. Your Directors propose their reappointment.
Auditors Qualification on Accounts
Notes to the accounts, as referred to in the Auditors Report are
self-explanatory and a practice consistently followed, and therefore do
not call for any further comments and explanations.
Particulars of Technology Absorption and Foreign Exchange Earnings and
Outgo
As required under Section 217 (1) (e) of the Companies Act, 1956 and
rules made therein, the particulars of technology absorption and
foreign exchange earnings and outgo are given in Annexure I, which is
attached and forms a part of this report.
Particulars of Employees
As required by the provisions of Sub-section (2A) of Section 217 of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended, particulars of the employees are set out in the
Annexure to the Directors Report. However, as per provisions of
Section 219 (1)(b)(iv) of the Companies Act, 1956 the report and the
accounts are being sent to all the shareholders excluding the aforesaid
information. Any shareholder, interested in obtaining such particulars
may write to the Company Secretary at the registered office of the
Company for a copy of the same.
Acknowledgements
The Board of Directors places on record its sincere appreciation of the
contribution made by the employees, employees unions in the success of
the Company. The Directors also sincerely thank the Central Government
and the State Governments of Rajasthan, Andhra Pradesh, Gujarat,
Karnataka, Jharkhand and Uttaranchal; bankers, auditors, vendors,
customers and the shareholders of the Company for their continued
support.
For and on behalf of the Board of Directors
Akhilesh Joshi A. R. Narayanswamy
CEO & Whole-time Director Director
Place : Mumbai
Date : April 21, 2011
Mar 31, 2010
The Directors have pleasure in presenting the 44th Annual Report
together with the statement of Audited Accounts for the financial year
ended 31 March 2010.
Financial Results and Dividend
(RsCrore) FY2010 FY2009
Total Revenue 8,739.17 6,611.50
Profit before depreciation, interest,
tax and amortization 5,392.28 3,66539
Less: Interest 43.92 21.88
Gross Profit 5,348.36 3,64351
Less: Depreciation and amortization 334.25 285.27
Taxation 972.70 630.63
Net Profit for the year 4,041.41 2,727.61
Add:Balance brought forward
from the previous year 6,649.28 4,619.41
Amount available for appropriation 10,690.69 7,347.02
Appropriation:
General Reserve 500 500
(a) Proposedfinal dividend on equity
shares 295.63 19774
(including corporate tax thereon)
Balance carried forward to next year 9,895.06 6,649.28
Dividend
The Board of your Company has recommended dividend of 60% i.e. Rs 6 per
equity share of face value of Rs 10 each. The total outgo on account of
dividend including tax on dividend will be Rs 296 Crore during FY 2010
as compared to Rs 198 Crore in FY 2009. The record date for the payment
of final dividend will be 23 July 2010.
Performance Review
During FY 2010, the Company recorded its highest ever mined and refined
metal production of 768,620 tonnes and 650,038 tonnes respectively of
Zinc & Lead, up 4.5% and 5.3% respectively, compared to FY 2009. The
Company also recorded its ever highest Silver production at 176,381
kilograms, an increase of 33.9%, compared to the previous year. The
year also witnessed successful commissioning of the 210 ktpa zinc
smelter at Dariba and 1 mtpa concentrator at Rampura Agucha, around a
quarter ahead of schedule.
Exploration
Ongoing exploration activities have yielded significant success with an
increase of 33.7 million tonnes to the reserves and resources, prior to
a depletion of 7.1 million tonnes in FY 2010. Contained zinc-lead metal
has increased by 3.4 million tonnes, prior to a depletion of 0.8
million tonnes during the same period. Total reserves and resources at
31 March 2010 were 298.6 million tonnes containing 34.1 million tonnes
of zinc-lead metal. The reserves and resources position has been
independently reviewed and certified as per the JORC standard.
Renewal of Mining lease
The renewal of the mining lease for Zawar group of mines was applied on
25 November 2008. As part of the mining lease was falling on the forest
land, approval from the Forest department for diversion of the land is
pending. Company has represented the matter in the Supreme Court. On
receipt of the Forest Advisory Committee (FAC) approval, mining lease
will be renewed.
Sales
Company sold 386,000 tonnes of zinc metal in the domestic market, while
export accounted for 192,000 tonnes. Sale of Lead metal in the domestic
market was 51,000 tonnes, while the export sale accounted for 13,500
tonnes. Company also sold 223,500 Dry Metric Tonnes (DMT) of surplus
zinc concentrate and 30,900 DMT of surplus lead concentrate in FY 2010.
Financial Performance
Profit during the year was Rs 4,041.41 Crore, higher by 48% compared to
the previous year. This was primarily on account of higher volumes,
increased LME prices and improved operational efficiencies.
The Companys financial performance has been discussed in detail in the
chapter on Management Discussion and Analysis which forms a part of
this Annual Report.
Long Term Wage Settlement
The long term wage settlement expired on 30 June 2007. The new wage
settlement was signed with Hindustan Zinc Workers Federation on 13
November 2009 for a period of five years effective 1 July 2007. The
salient features of the same are:
- 100% neutralization of Dearness Allowance (DA)
- 26% increase on Cost To Company (CTC).
Projects
During the year, the Company successfully commissioned its 210 ktpa
Hydro Zinc smelter at Dariba and 1 mtpa concentrator at Rampura Agucha,
around three months ahead of schedule. Consequently, the total
zinc-lead metal production capacity has increased to 964 ktpa. The work
at the 100 ktpa lead smelter and the 160 MW CPP at Dariba, is
progressing well for scheduled completion in Q2 FY2011. The Sindesar
Khurd mine project is also on schedule for progressive expansion to
1.50 mtpa. Post completion of the 100 ktpa lead smelter, the Company
will become the largest integrated Zinc-Lead producer in the world,
having metal production capacity of 1,064 ktpa. We will also
progressively increase our Silver production from the current levels of
180 tonnes per annum to a level of approximately 500 tonnes per annum.
Contribution to the Exchequer
Your Company has contributed Rs 1,889 Crore in terms of taxes and
duties to the exchequer.
Directors
Mr Bhupal Nanda, Director Ministry of Mines was nominated as Director
on the Board in place of Mr G Srinivas, w.e.f. 19 October 2009 by the
Government of India.
Mr Agnivesh Agarwal and Ms Ajita Bajpai Pande retire by rotation and
being eligible; offer themselves for reappointment at the ensuing
Annual General Meeting. None of the retiring directors hold any shares
in the Company. Your Directors recommend their reappointment.
Management Discussion and Analysis
The Management Discussion and Analysis Report, which gives a detailed
account of operations of your Company and the market in which it
operates, including initiative taken by the Company to expand its
business and in areas such as human resources, and risk management,
forms a part of this Annual Report.
Corporate Governance
A Report on Corporate Governance along with a certificate from the
auditors of the Company regarding the compliance of conditions of
corporate governance as stipulated under Clause 49 of the Listing
Agreement is annexed to this report.
Group
The Agarwal Group being a group defined under the Monopolies and
Restrictive Trade Practices Act, 1969, controls the Company.
A list of its group entities is given below:
Sr.
No Name of Group Companies
1. Volcan Investments Limited, Bahamas
2. Vedanta Resources Plc, United Kingdom
3. Vedanta Finance jersey Limited, Jersey
4. Vedanta Resources Holdings Limited, United Kingdom
5. Twinstar Holdings Limited, Mauritius
6. WelterTrading Limited, Cyprus
7. Vedanta Resources Finance Limited, United Kingdom
8. Vedanta Resources Cyprus Limited, Cyprus
9. Richter Holding Limited, Cyprus
10. Westglobe Limited, Mauritius
11. Finsider International Company Limited, United Kingdom
12. Sesa Goa Limited, India
13. Sesa Industries Limited, India
14. Konkola Copper Mines Plc, Zambia
15. Vedanta Aluminium Limited, India
16. The Madras Aluminium Company Limited 17 Sterlite Infra Limited,
India
18. Sterlite Opportunities and Ventures Limited, India
19. Talwandi Saboo Power Limited, India
20. Hindustan Zinc Limited, India
21. Bharat Aluminium Company Limited, India
22. THLKCM Limited, Mauritius
23. KCM Holdings Limited, Mauritius
24. Vedanta Resources Investments Limited, United Kingdom
25. THL Aluminium Limited, Mauritius
26. Monte Cello BV, Netherlands 27 Sterlite Energy Limited, India
28. Copper Mines of Tasmania Pty Ltd, Australia
29. Sterlite (USA) Inc., USA
30. Fujairah Gold FZE, UAE
31. Thalanga Copper Mines Pty Ltd., Australia
32. Monte Cello NV, Netherlands Antilles
33. Anil Agarwal Discretionary Trust, Bahamas
34. Onclave PTC Limited, Bahamas
35. Lakomasko BV, Netherlands
36. Vedanta Jersey Investments Limited, Jersey
37. Vedanta Resources Jersey Limited, Jersey
38. Vedanta Resources Jersey 2 Limited, Jersey
39. V S Dempo & Co. Private Limited, India
40. Dempo Mining Corporation Private Limited, India
41. Goa Maritime Private Limited, India
42. Vizag General Cargo Berth Private Limited, India
43. Allied Port Services Private Limited, India
44. MALCO Industries Limited, India
45. MALCO Power Company Limited, India 46. Mr Anil Agarwal
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act, 1956, the
Directors hereby confirm that:
i. In the preparation of Annual Accounts, applicable accounting
standards have been followed along with proper explanation relating to
material departures, if any.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year on 31 March 2010 and of
the profit of the Company for that year.
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and,
for detecting and preventing fraud and other irregularities.
iv. The Directors have prepared the Annual Accounts, on a Going
Concern basis.
Auditors
Your Company had appointed M/s. Deloitte Haskins & Sells, Chartered
Accountants, as statutory auditors of the Company for the conduct of
audit of accounts for the year ended 31 March 2010. Theirterm of
appointment expires at the conclusion of the forthcoming Annual General
Meeting (AGM), and being eligible, they offer themselves for
reappointment. Your Directors propose their reappointment.
Auditors Qualification on Accounts
Notes to the accounts, as referred to in the Auditors Report are
self-explanatory and a practice consistently followed, and therefore
do not call for any further comments and explanations.
Particulars of Technology Absorption and Foreign Exchange
Earnings and Outgo
As required under Section 217 (1) (e) of the Companies Act, 1956 and
rules made therein, the particulars of technology absorption and
foreign exchange earnings and outgo are given in Annexure I, which
is attached and forms a part of this report.
Particulars of Employees
As required by the provisions of Sub-Section (2A) of Section 217 of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 as amended, particulars of the employees are
set out in the Annexure to the Directors Report. However, as per
provisions of Section 219 (l)(b)(iv) of the Companies Act, 1956 the
report and the accounts are being sent to all the shareholders
excluding the aforesaid information. Any shareholder, interested in
obtaining such particulars may write to the Company Secretary at the
registered office of the Company for a copy of the same.
Acknowledgements
The Board of Directors places on record its sincere appreciation of the
contribution made by the employees, employee unions in the success
of the Company. The Directors also sincerely thank the Central
Government and The State Governments of Rajasthan, Andhra
Pradesh, Gujarat, Karnataka jharkhand and Uttaranchal; bankers,
auditors, vendors, customers and the shareholders of the Company
for their continued support.
For and on behalf of the Board of Directors
M.S. Mehta Akhilesh joshi
Whole-time Director CO & Whole-time Director
Place: Mumbai
Date: May 4,2010