A project report

ON

Study on working capital management

At

Submitted in partial fulfillment of the requirement of the course of

master of business management

SUBMITTED TO: SUBMITTED BY:

Prof. RAJESH MHEHROTRA ARVIND SINGH

(DIRECTOR OF SBM) MBA (Dual specialization)

 Overview
Chanderiya Lead-Zinc Smelter is the one of the largest zinc-lead smelting complexes in the
world. Its current metal production capacity is 610,000 tonnes per annum (525,000 tonnes per
annum of zinc and 85,000 tonnes per annum of lead). In the year ended March 2015, Chanderiya
produced 464,724 MT of zinc and 40,763 MT of lead. The main products are special high grade
(SHG) zinc, continuous galvanizing grade (CGG) zinc, prime western (PW) zinc and pure lead.
It also produces a number of valuable by-products including silver.

Chanderiya utilizes a combination of best proven technology and innovation to continuously

improve environmental and operational performance. This approach has enabled us to be one of
the largest and most efficient zinc and lead smelting complexes in the world.

Key Facts
Location : 110 kms north of Udaipur, Rajasthan, India
Technology : Imperial Smelting Technology
Roast Leach Electro-winning Technology
AusmeltTM Technology,
Products : SHG zinc and zinc Alloys, PW zinc, lead and silver
Annual Production Capacity :
Zinc 525,000 tonnes per annum
Lead 85,000 tonnes per annum
Silver 168 tonnes per annum

Certifications : ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 & 5S

 Preface

Jaipur national university of Business requires the students of master of Business Administration

(MBA) to undergo internship training at a business house of repute before awarding the degree.

I approached many business establishments out of which my internship programme was

arranged with Hindustan Zinc Ltd.(Chittorgarh,Rajasthan). Hindustan Zinc Ltd. (HZL) is a major

producer of sulphuric acid which is a by-product of their metal refining process.

Sulphuric acid is used in manufacturing of a variety of products. Clients of the acid business of

HZL are industrial houses engaged in manufacture of different commodities. Because the

company is in B2B (Business-2-Business) dealing, it did not necessarily require deployment of

any intensive marketing/advertising method.

However, it did require a built of customer relation and improvement in the services rendered to

boost its business and counter the competition .As a marketing intern in Hindustan Zinc Ltd.

(acid business), I found it fascinating to go deep into the arena of research and study the acid

business initiatives towards marketing.

Hence, in consultation with my industry guide, I decided to explore depth of the big picture and

undertake aproject for the same.

 AKNOWLEDGEMENT

On the very outset of this report, I wish to express my gratitude towards

Hindustan zinc limited and Mr. A.K Melena who helped me in this endeavor.

I would like to express my gatituted towards my other project mentors Mr.

A.K Melena without whose guidance help co-operation and encouragement, I

Would not have a head way in my project. My sincere thanks to all project for

the unconditional help and encouragement they gave me throughout the tenure

of the project, and for the knowledge they shared out of the scope of this project

I exten my sincre obligation to Hindustan zinc limited for giving me this opportunity.

Any omission in this brief acknowledgement does not mean lack gratitude.

Thank you,

Arvind singh

M.B.A (Finance)

Jnu jaipur
 TABLE OF CONTENT

Sr.no Content Pg.no

1 Executive summary 1
2 Introduction 2-4

3 Company profile 5-11

4 Vision mission and value 12

5 Objective of the study 13

6 Sources of raw materials 14

8 Production 15-22
Zinc
Lead
Silver
cadmium

9 working capital analysis 23-27

10 Working capital ratio 28-41

11 Methodology 42-43

12 Swot Analysis 44-46

Strength
Weaknees
Oppurtunities
Threats
13 Conclusion and recommendation 47

14 Case study 48

15 bibliography 49
 Executive Summary

Hindustan Zinc Ltd. (HZL), an ancillary of Vedanta Resources, is a major producer of zinc, lead,
and silver in the country. Huge quantity of Sulphuric acid is produced as a by-product of zinc
and lead refining process which is marketed to different manufacturing industries. This project
was taken up with the objects to quantify the current satisfaction level of the client industries.

Marketing procedures of HZL acid business, to identify the factors that may improve the
satisfaction level of the clients and to formulate long/short term plans to boost the acid business
of the company. Response of the clients was obtained though a scrupulously prepared on-line
questionnaire.

The survey was based on seven criteria for evaluation that included Product quality, Services
rendered, Responsiveness, e-Sales mate, Product pricing, Complaint handling, and overall
Experience with HZL. Responses were quantified on the basis of marks scored and were
categorized as Delight, Satisfied, Average, and Below Average.

Overall rating of the company was 82.8% which is in delight range. E-Sales mate was the most
appreciated service (87.7%) followed by services rendered (85.8%) and complaints handling
(85.4%). Product quality (79.7%) and responsiveness (77.2%) were found to be comparatively
weaker areas which need to be improved.

1
 Introduction

About Hindustan Zinc Limited

Hindustan Zinc Limited (HZL) was incorporated in January, 1966 as a public sector company,
after the takeover of the erstwhile Metal Corporation of India Limited, to develop mining and
smelting capacities and to substantially meet the domestic demand of zinc and lead metals.

Hindustan Zinc (HZL) was a wholly-owned company of the Govt. of India till disinvestment of
shares by the Govt., in favour of trust, financial institutions and banks, in May'92. The company
is engaged in mining and refining ore to produce non-ferrous metals - zinc, lead and silver with
installed capacities of 169000 tpa, 43000 tpa and 86000 tpa respectively. Sulphuric acid,
cadmium and zinc sulphate are produced as by-products. It also has installed capacities for
phosphoric acid and superphosphate.The main products, zinc and lead, are used by the
engineering and automobile industries.

Hindustan Zinc Smelter, Chanderiya, Chittorgarh

Hindustan Zinc Smelter, Chanderiya is a refinery located in 10 km north of Chittorgarh,

Rajasthan, India. It is active in the commodities like Copper, Lead and Silver etc. This is the
biggest and modern Zinc Refinery of India.

Address: Hindustan Zinc Ltd.,

Putholi, Chittorgarh
Phone: 01472 - 255574, 255395, 255754, 255647
Website : www.HZLIndia.com

2
Hindustan Zinc Ltd. was created from the erstwhile Metal Corporation of India (MCI) on 10th
January 1966 as a Public Sector Undertaking in the mining industry. Industrial policy Resolution

1956 kept the extraction of ferrous and non-ferrous mineral resources in the core sector keeping
the right of extracting the same exclusive to the government. Nationalization of Metal
Corporation of India is to been seen in the context. The authorized and paid up capital of the
company at the time of nationalization was Rs. 422.53 cores equally divided into 422531900
equity shares of Rs. 10 each .At the time of nationalization the company was having one mining
unit i.e. Zawar Mines, i n the State of Rajasthan, one smelting unit i.e. Tundoo Lead Smelter
in the State of Bihar and another smelting unit is under construction i.e. Debari Zinc Smelter in
the State of Rajasthan in its hand. The initial production capacity of Zawar Mines unit was 500
TDP and that of the Lead Smelter 500 TPA. After nationalization the government of Indias first
task was the completion of the Debari Zinc Smelter under construction and its commissioning.
The company has gradually increased its production capacity so as to match the demand supply
position of lead and zinc. Today the Companys market share is about 70% and it is continuously
striving for making the country a surplus one in respect of these two metals. In April 2002,
Sterlite acquired a 46% interest in HZL from the Government of India and the open market, and
it became a part of the Sterlite group. Since then HZL has been growing from strength to
strength. In August 2003, Sterlite acquired a majority stake in HZL by acquiring another 18.9%
interest from the Government of India.

HZL produces Zinc, Lead and by-products viz. Cadmium, Sulphuric Acid and Silver. HZL
achieved an all-time high production output of 81046.94 MT of Zinc concentrate during 2007-
08Today HZL is Indias leading Zinc producer mine. It is one of India's leading base metal
producers, and is unique in the context of its technological versatility
coupled with vertical integration in several metals. HZL hadentered into a Memorandum of
Understanding (MOU) with the Council of Scientific and Industrial Research (CSIR) for setting
up a nickel technology proving plant of 10 tonnes per day. The technology is for extracting
nickel from overburden of chromite at the Sukh inda Mines in Orissa.It has also signed an MOU
with BHP Minerals, Australia, and is working on a joint venture project for exploration of base
and precious minerals in Rajasthan. The company has entered into yet another MOU with
Vigego,Vietnam and La- Source, France, for exploration at Pac-Lang for gold prospecting in
Vietnam. HZL has also entered into an arrangement with Broken Hill of Australia for grassroots
exploration of zinc, lead and other minerals in Rajasthan.

3
 HZL was negotiating with another Australian company, Pasminco, for exploration in the Ajmer
district. The company has completed exploration for evaluation of Gossan resource in parts of
agpura. The Company has been declared a "Mini Ratna". Its Zinc Smelters are situated in
Chanderiya, Debari and Visakhapatnam. It has lead-zinc mines in Dariba, Rampura Agucha, and
Zawar. It has nearly 6400 employees.Hindustan Zinc Limited with its world class mines and
smelter has now become
world renowned lead zinc major. With the present tempo of work,the companys dream of
making India a surplus country in respect of thesetwo non-ferrous metals, no doubt, will soon
become reality

Hindustan Zinc Limited (HZL), which is an ancillary of Vedanta Resources Isa London listed
FTSE 100 diversified metals and mining company. The group produces aluminum, copper, zinc,
lead and iron ore and also commercial energy. HZL is the operating company of Vedanta in
Lead, zincand Sulphuric acid business. HZL is worlds leader in Zinc, Lead, silver and Sulphuric
acid business. It is the 3rd largest producer of Zinc and Lead in the world
Hindustan Zinc is Indias only integrated producer of zinc and lead and is among the worlds
leading integrated zinc and lead producers. Its metal production capacity is currently 754,000
tonnes per annum. The smelters are situated at Chanderiya, Debari and Visakhapatnam and the
mines are situated at Zawar, Dariba and Rampura Agucha. Hindustan Zinc has about6,400
employees. The company is a subsidiary of Sterlite Industries (India)Limited

4
 COMPANY PROFILE

Chanderiya is located 110 Kms North of Udaipur in the State of Rajasthan, India. It was
commissioned in the year 1991 with an initial production capacity of 70,000 MT per annum of
zinc and 35,000 MT per annum of lead. In the past 6 years, the capacity of the plant has been
expanded five folds to its current capacity of 525,000 MT per annum of zinc and 85,000 MT per
annum of lead.
Chanderiya Lead-Zinc Smelting complex comprises of one lead-zinc Pyrometallurgical smelter
(105,000 MT zinc and 35,000 MT lead), one Ausmelt lead smelter (50,000 MT) and two Hydro
metallurgical zinc smelters (Hydro I & Hydro II of 210,000 MT each). It employs Roast Leach
Electro-winning Technology in its Hydro metallurgical smelters, Imperial Smelting Process in
lead-zinc smelter, and Top Submerged Lance Technology (Designed by M/S Ausmelt Ltd.,
Australia) coupled with Cansolv Technology for its lead smelter.
The complex also has 234 MW (77 + 77 + 80 MW) of captive thermal power capacity to supply
the power requirements for its metallurgical operations. It also has 14.81 MW of DG set and 13.7
MW (9.4 MW+4.3 MW) of power generation capacity through waste heat recovery.

Certifications & Awards

Chanderiya Lead-Zinc Smelter complex is certified for Integrated Management System

comprising of: the Quality Management System (ISO 9001:2008), Environmental Management
System (ISO 14001:2004), Occupational Health and Safety Management System (OHSAS
18001:2007).The CSC is also certified by QCFI for 5-S workplace management system.
The Chanderiya Lead-Zinc Smelter complex has been bestowed many awards like Green
Manufacturing Excellence - Challenger Award in Sustainable Development by Frost & Sullivan;
Hydro 2 smelter was awarded Indian Manufacturing Excellence Award Gold Category by Frost
& Sullivan; IMC Ramakrishna Bajaj National Quality Award for Performance Excellence;
International Green Apple Award 2012 from the Green Organization London for gainful
utilization of its waste.

5
Roast Leach Electro-winning (RLE)
The hydrometallurgical smelting process is a roast, leach and electro-winning, or RLE, process.
In this process, zinc concentrate is first oxidized in the roaster and the gases generated are
cleaned and sent to the sulphuric acid plant. The primary output from the roaster, called calcine,
is sent to the leaching plant to produce a zinc sulphate solution that is then passed through a
cold/hot purification process to produce purified zinc sulphate solution. The purified zinc
solution then goes through an electrolysis process to produce zinc cathodes. Finally, the zinc
cathodes are melted and cast into zinc ingots.

Hindustan Zinc is a Vedanta Group company in zinc, lead and silver business. We are one of the
world's largest integrated producer of zinc and are among leading global lead and silver
producers. We are one of the lowest cost producers in the world and are well placed to serve the
growing demand of Asian countries. Hindustan Zinc is a subsidiary of the BSE and NSE listed
Vedanta Limited (ADRs listed on the NYSE;earlier know as Sesa Sterlite Limited), a part of
London listed diversified metals and mining major, Vedanta Resources plc.

Our core business comprises of mining and smelting of zinc and lead along with captive power
generation. We have a metal production capacity of over one million tonnes per annum with our
key lead-zinc mines in Rampura Agucha and Sindesar Khurd; and key modern smelting
complexes in Chanderiya and Dariba, all in the state of Rajasthan in India. We are focused on
operational excellence and long-term sustainability on the back of our high-quality assets, long
mine life of over 25 years and low cost base. With reserves and resources of 375.1 million
tonnes, our exploration programme is integral to our growth and future expansions. Successful
exploration and subsequent development of mineral assets underlines our mission and business
strategy.

We own 474 MW of coal based thermal captive power plants in Rajasthan to support our
metallurgical operations. In addition, our environment friendly power generation includes 274
MW of wind energy and 36MW from waste heat generation.
6
Sampling

Simple random sampling technique was adopted to identify thirty clients of acid business HZL.

List of the clients included in the study has been attached as appendix - I. The sample was quite

balanced as it consisted of traders, as well as agricultural industries which buy sulphuric acid

from Hindustan Zinc Ltd. The sample size makes 50% of the customers and hence is adequate in

reflecting the true sentiments of the clients.

Research design:

Descriptive research design was adopted to carry out the study. A descriptive research is

designed to provide further insight into the research problem by describing the variables of

interest. It can be used for profiling, defining, segmentation, estimating, predicting, and

examining associative relationships. Survey was conducted among the selected sample based

upon the questionnaire containing pertinent queries. It was coupled with ICT (Information

Communication Technology) and IT (Information Technology).Layout of the research design

is given below:

HZL has acid manufacturing plants in Chanderia, Debari and Vishakapatnam. A plant at Dariba

is expected to be operational in upcoming3-4 months

7
Plant location No.of Plant type Capacity per year
Units
Chanderiya 3 1pyro,2hydro 7.5 lakh tons per year

Debari 1 Hydron 3.6 lakh tons per year

Vishakhapatnam 1 Hydro 90 thousands tons per

year
Driba 1 -

DEFINING CUSTOMER

A person, willing to buy a product/service or having the ability to buy a product/service can be

called a customer. Every person who enters the business is a potential customer. Even though

they may not purchase something today, they may purchase something tomorrow. What a

salesperson needs is a better way of determining who the customer really is. One way of doing

this is by understanding the steps of the buying and selling process and then determining where

the customer is in this process at the moment the salesperson greets him.

For HZL, A customer is an industrial buyer, in other words a company who buys Zinc, Lead, or

Sulphuric Acid in bulk quantities for manufacturing, processing or resale purposes and the terms

of sale are mutually and mostly personally agreed upon.

8
CUSTOMER SATISFACTION

Customer satisfaction refers to the extent to which customers are happy with the products and

services provided by a business

. In simple, customer satisfaction level is an indicator of willingness of a consumer to continue

using the services/goods rendered by a services/goods provider. To determine the satisfaction

level of a consumer, ranges can be developed which can, then, be used to quantify the

satisfaction status of a consumer or the range of satisfaction in which a consumer falls.

Delight:

When the services provided by a business entity are better than the expectation of a customer.

9
Satisfied:

When the services provided by a business entity are as per the expectation of a customer.

Average:

When the services provided by a business entity are below the expectation of a customer but he

still continues the association.

Not satisfied:

When the services provided by a business entity are worse than the expectation of a customer

and he seeks to shift to some other services/goods pro

10
Safety Department

Safety is one of the fundamental needs of all living beings. Accident is an unwanted event held
due to carelessness. So precautions must be taken to avoid accidents. There are two main reasons
of accidents:
Unwanted Acts
Unwanted Conditions In accidents occurred by unwanted acts, the worker is directly
responsible. These occur due to carelessness, lack of concentration and over
confidence of the worker. It can be minimized by maintaining concentration and being
patient while working. The main reasons for accidents in form of unwanted acts are:
Use of machine or equipment without permission.
Loading material improperly.
Oiling or greasing machines in running condition.
Standing in unsafe manner or condition.
Use of unsafe tool and lack of safety equipment.
Disobey the instructions and rules.Some unsafe conditions which motivate accidents are:
Work on grade less machine.
Presence of grease on floor.
Bad housekeeping and unsafe clothing.
Breaking or absence of railing on platform.
There are many rules for safety but main golden rules are:
Follow all instructions and rules.
Correct or report unsafe conditions immediately.
Wear safety equipments whenever required.
Keep the workplace clean and tidy

11
 Vision:

Be the world's largest and most admired Zinc-Lead & Silver Company

Mission:
Enhance stakeholders value through exploration, innovation, operational excellence and
sustainability
Be a globally lowest cost producer
Maintain market leadership and customer delight

Values:
Entrepreneurship
Our people are our most important assets. We actively encourage their development and support
them in pursuing their goals.
Excellence
Our primary focus is delivering value of the highest standard to our stakeholders. We are
constantly motivated on improving our costs and improving our quality of production in each of
our businesses through a culture of best practice benchmarking.
Trust
We actively foster a culture of mutual trust in our interactions with our stakeholders and
encourage an open dialogue which ensures mutual respect.
Innovation
We embrace a conducive environment for encouraging innovation that leads to a Zero harm
environment and exemplifying optimal utilization of natural resources, improved efficiencies and
recoveries of by-products.
Integrity
We place utmost importance to engaging ethically and transparently with all our stakeholders,
taking accountability of our actions to maintain the highest standards of professionalism and
complying with international policies and procedures.
Respect
We lay consistent emphasis on Human Rights, respect the principle of free, prior, informed
consent, while our engagements with stakeholders give local communities the opportunity to
voice their opinions and concerns.
Care
As we continue to grow, we are committed to the triple bottom line of People, Planet and
Prosperity to create a sustainable future in a zero harm environment for our communities.

12
OBJECTIVES OF THE STUDY

1.To evaluate the present satisfaction level of the clients with operations of HZL (Acid Business)

2.To identify the factors whose improvement may bring about an upward shift in the satisfaction

level of the clients and to recommend appropriate steps for the same

3.To identify specific complaints of the clients

LIMITATIONS OF THE STUDY

1.The sample size is not expected to be adequate which may be a major limitation of the project.

2.Because the survey is going to be online. Response rate is expected to be low.

3.Extreme rating by few of the clients may affect the overall result of thesurvey.

13
SOURCES OF RAW MATERIALS

(A) Mines in Operation :

1.Zawar Group of Mines:

Zawar group of mines (Mochia, Balaria, Zawar Mala,& Baroi) is situated in the Girwa Tehsil
of Udaipur District of Rajasthan at a distance of about 35kms from Udaipur , amidst
a valley of Arawali hills.
2.Rajpura-Dariba Mines:
The multi-metal Rajpura-Dariba Mines, which is located about 85km away from Udaipur
(Raj.)has demonstrated ore reserve of about 16.4 million tones having metal content
of about 6.9%zinc& 2.2% lead.
3. Maton Rock Phosphate Mine(Udaipur) :
Maton mine has been developed to meet rock -phosphate requirements for the super-
phosphate &phosphoric acid plant at Debari.
4.Rampura Agucha Mining Complex:
The prestigious Rampura Agucha Open Cast Mining Complex is Asias richest &largest lead
zinc deposit.. It is situated in Tehsil Hurda, District Bhilwara in Raj. The discovery of a world
class diposie of 60.6 million tones at Rampura Agucha, containing 15.4% metal has dramatically
altered the prospect of not only reducing the cost of production of zinc and lead, but also the
expansion of HZLs production capacity resilting in increasing the demand satisfaction up to 82
%for zinc and 61%for lead.
5. Sargipali Mine (Orissa)6. Agnigundala Lead Mine (Guntur, A.P.)(B) Smelters in Operation :

1.Debari Zinc Smelter, Distt. Udaipur (Raj.)

2 . V i z a g Z i n c - L e a d S m e lt e r ( A. P . )
3.Tundoo Lead Smelter (Dhanbad), Bihar
4 . C ha n d e r i ya L e a d - Z i n c S m e lt e r

14
 Production :

zinc

We produce refined zinc metal, which is used in a number of applications including galvanising,
oxides, die castings and alloys
.
We produce zinc in a variety of grades

Special High Grade (SHG)

Continuous Galvanising Grade (CGG)
High Grade (HG)
Prime Western (PW)

Our Special High Grade zinc products are LME registered products under the brand names

HZL SHG 99.995

HZL Zn SHG 99.995
Vedanta SHG 99.995
Vedanta Zn SHG 99.995

Special High Grade and High Grade zinc are available in standard ingots of 25 kgs and Jumbo
ingots of 1,000 kgs each. Prime Western is also available in the standard ingots form of 25 kgs.

Application of zinc

About 13 million tonnes of zinc is produced annually worldwide. Around 58% of the amount is
used for galvanizing to protect steel from corrosion. Approximately 14% is used the production
of zinc die casting alloys. Nearly 9% of the zinc is also utilized for oxides and chemicals and
about 10% is used in Brass semis and castings.

15
Zinc

16
Lead

We produce refined lead, which is LME registered under the brand name of "Vedanta 99.99".
Lead metal is used in a number of applications including battery segment, lead-based pigments,
and cathode ray tubes. Our refined lead metal is available in standard 24 kgs ingots.

Application of lead

The battery sector is the single largest consumer of lead, accounting for around three-quarters of
the demand. It can be sub-divided into the following groups:

SLI (Starting-Lighting-Ignition) batteries, which currently accounts for over half of the total lead
demand. These are mainly used in cars and light vehicles, but are also found in other applications
such as golf carts and boats. SLI battery demand in turn can be split into original equipment and
replacement, with replacement demand outstripping original equipment demand by about 4:1 in
mature markets.

Industrial batteries, which currently consumes around a quarter of the total lead produced. This
sector can be split roughly 50:50 into stationary and traction batteries. Stationary batteries are
principally used in back up power supply systems; traction batteries are used for motive power in
equipment such as forklift trucks and motorised wheelchairs.
The remainder is used in non-battery applications. The second largest current end use of lead for
non-battery applications, accounting for around 20% of lead consumption, is the alloys and
chemical industry, in the form of lead-based alloys, pigments and other compounds. Principal
markets are for cathode ray tubes used in television screens and computer monitors, and for Poly
Vinyl Chloride (PVC) stabilisers. Cable and other industries account for the remaining 5% of
lead demand.

17
LEAD

18
Silver

We are India's largest and one of the world's leading primary silver producers. We produce

refined silver; it is recovered as a by-product of lead metal.

We produce high quality silver bullion having a minimum purity of 98.5% to 99.9% of silver; it

is casted in the form of bricks weighing 30 kgs.

Applications of silver

Silver is used in a number of varied applications, with the most important uses of silver being the

industrial and decorative uses, photography, and jewellery & silverware; together, these three

categories represent more than 95 percent of annual silver consumption. Silver's unique

properties restrict its substitution in most applications.

Industrial applications:

Brazing alloys, electrical contacts, high capacity silver-zinc or silver-cadmium batteries, printed

circuits and other electronic applications

Other applications:

Silver ware, jewellery, silver plating, photography, dental alloys and more.

19
SILVER

20
Cadmium

We are India's largest cadmium producer. We recover Cadmium from our zinc smelting process

as it is mainly found in association with zinc ores.2

We produce high quality cadmium pencils having a minimum purity of 99.95% to 99.99%; it is

casted in the form of pencils weighing from 250 gms to 500 gms.For more information view our

Product Fact Sheet

The single most important use of cadmium is in the production of nickel-cadmium ("Ni-Cad")

batteries. About three quarters of the cadmium consumed annually is used to make batteries.

Cadmium is also useful in a number of other applications as paint pigments, low-temperature

melting alloys, etc.

21
Cadmium

22
 Working capital analysis
RATIONALE OF THE STUDY

There is moderate level of competition in sulphuric acid business in the country. And there is
a need to retain the interest of the clients in dealing with HZL. It was therefore, considered
pertinent to evaluate the opinion of the clients about acid business of the company. It is
advantageous for a company to build firm relations with its clients because loyal customers are
not expected to shift away in turbulent times. As a marketing intern in Hindustan Zinc Ltd. (acid
business), it was fascinating for the author to go deep into the arena of research and study the
initiatives of the company towards marketing of sulphuric acid. The company is into B2B
(Business-2-Business) dealing and does not necessarily require implementation of any intensive
marketing/advertising method but does require a built of customer relation and improvement in
the services rendered. A survey was conducted across the clients of the acid business of HZl to
evaluate their satisfaction level.

Key Financial Ratios of Hindustan Zinc

Mar Mar Mar

'16 '15 ' 14

Investment Valuation Ratios

Face Value 2.00 2.00 2.00
Dividend Per Share 27.80 4.40 3.50
Operating Profit Per Share (Rs) 15.72 17.56 16.33
Net Operating Profit Per Share (Rs) 33.67 35.00 32.27
Free Reserves Per Share (Rs) -- -- --
Bonus in Equity Capita 50.00 50.00 50.00

Profitability Ratios
Operating Profit Margin(%) 46.67 50.17 50.60
23
Profit Before Interest And Tax Margin(%) 34.96 38.47 39.36
Gross Profit Margin(%) 41.66 45.81 44.84

Adjusted Cash Margin(%) 52.54 50.11 49.49

Net Profit Margin(%) 57.40 55.30 50.63
Adjusted Net Profit Margin(%) 48.16 46.44 44.44
Return On Capital Employed(%) 23.15 22.13 21.41
Return On Net Worth(%) 21.84 18.86 18.45
Adjusted Return on Net Worth(%) 21.92 18.87 18.45
Return on Assets Excluding Revaluations 88.48 102.60 88.56
Return on Assets Including Revaluations 88.48 102.60 88.56
Return on Long Term Funds(%)
23.15 22.13 21.41

Liquidity And Solvency Ratios

Current Ratio 0.43 1.82 1.99
Quick Ratio 0.38 1.61 1.71
Debt Equity Ratio -- -- --
Long Term Debt Equity Ratio -- -- --
Debt Coverage Ratio
Interest Cover 511.37 408.19 178.34
Total Debt to Owners Fund -- -- --
Financial Charges Coverage Ratio 553.46 435.59 195.80
Financial Charges Coverage Ratio Post Tax 525.47 376.25 172.10

Management Efficiency Ratios

Inventory Turnover Ratio 14.66 13.29 12.46
Debtors Turnover Ratio 31.51 27.95 33.99
Investments Turnover Ratio 14.66 13.29 12.46
Fixed Assets Turnover Ratio 0.91 1.03 1.01
Total Assets Turnover Ratio 0.38 0.34 0.37
Asset Turnover Ratio 0.35 0.37 0.39

Average Raw Material Holding -- -- --

Average Finished Goods Held -- -- --
Number of Days In Working Capital -196.01 172.35 140.56

Profit & Loss Account Ratios

Material Cost Composition 7.66 11.93 13.45
Imported Composition of Raw Materials Consumed 100.00 99.64 97.21
Selling Distribution Cost Composition -- -- --
Expenses as Composition of Total Sales
23.68 25.86 20.95

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 143.83 22.73 21.41
Dividend Payout Ratio Cash Profit 132.29 21.07 19.23
Earning Retention Ratio -43.30 77.28 78.59

Cash Earning Retention Ratio -31.84 78.94 80.77

--
AdjustedCash Flow Times

25
 ------------------- in Rs. Cr. -------------------
Balance Sheet of Hindustan Zinc

Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 845.06 845.06 845.06

Equity Share Capital 845.06 845.06 845.06

Reserves 36,540.13 42,508.01 36,572.55

Networth 37,385.19 43,353.07 37,417.61

Unsecured Loans 0.00 0.00 0.00

Total Debt 0.00 0.00 0.00

Total Liabilities 37,385.19 43,353.07 37,417.61

Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Application Of Funds

Gross Block 15,705.93 14,525.47 13,568.51

Less: Accum. Depreciation 5,764.60 5,079.30 4,421.26

Net Block 9,941.33 9,446.17 9,147.25

Capital Work in Progress 2,362.84 2,004.71 1,540.94

Investments 35,182.40 27,253.59 22,506.39

Inventories 1,058.22 1,211.75 1,198.24

Sundry Debtors 244.06 658.82 399.51

Cash and Bank Balance 52.73 3,531.51 3,031.42

Total Current Assets 1,355.01 5,402.08 4,629.17

Loans and Advances 6,402.26 4,885.45 3,852.92

26
Total CA, Loans & Advances 7,757.27 10,287.53 8,482.09

Current Liabilities 17,744.89 4,327.40 3,243.28

Provisions 113.76 1,311.53 1,015.78

Total CL & Provisions 17,858.65 5,638.93 4,259.06

-
Net Current Assets 4,648.60 4,223.03
10,101.38

Total Assets 37,385.19 43,353.07 37,417.61

Contingent Liabilities 6,192.43 4,808.65 6,753.15

Book Value (Rs) 88.48 102.60 88.56

27

Working capital
Working capital is a measure of both a company's efficiency and its short-term financial health. .
Capital required for a business can be classified under two main categories via,

1) Fixed Capital 2) Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- to-day
operations. Long terms funds are required to create production facilities through purchase of
fixed assets such as P&M, land, building, furniture, etc. Investments in these assets represent that
part of firms capital which is blocked on permanent or fixed basis and is called fixed capital.
Funds are also needed for short-term purposes for the purchase of raw material, payment of
wages and other day to- day expenses etc.

These funds are known as working capital. In simple words, working capital refers to that part of
the firms capital which is required for financing short- term or current assets such as cash,
marketable securities, debtors & inventories. Funds, thus, invested in current assts keep
revolving fast and are being constantly converted in to cash and this cash flows out again in
exchange for other current assets. Hence, it is also known as revolving or circulating capital or
short term capital.

Working Capital = Current Assets - Current Liabilities

Working capital management refers to a company's managerial accounting strategy designed to

monitor and utilize the two components of working capital, current assets and current liabilities,
to ensure the most financially efficient operation of the company.

28

NET WORKING CAPITAL=CURRENT ASSETS- CURRENT LIABILITIS

 Current assets Current liabilities NWC
2015 5102.08 4327.40 774.68
2016 1355.01 17744.89 17389.82

NET WORKING CAPITAL

5
4.5
4
3.5
3
2.5
NET WORKING CAPITAL
2
1.5
1
0.5
0
2015 2016

29
CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital

2. Net working capital

The gross working capital is the capital invested in the total current assets of the enterprises
current assets are those

Assets which can convert in to cash within a short period normally one accounting year.

WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business. Adequate
amount of working capital is very much essential for the smooth running of the business.
And the most important part is the efficient management of working capital in right time.
The liquidity position of the firm is totally effected by the management of working
capital. So, a study of changes in the uses and sources of working capital is necessary to
evaluate the efficiency with which the working capital is employed in a business. This
involves the need of working capital analysis.

The analysis of working capital can be conducted through a number of devices, such as:

1. Ratio analysis.

2. Fund flow analysis.

3. Budgeting.

30
1. RATIO ANALYSIS

A ratio is a simple arithmetical expression one number to another. The technique of ratio
analysis can be employed for measuring short-term liquidity or working capital position
of a firm. The following ratios can be calculated for these purposes:

1. Current ratio.

2. Quick ratio

3. Absolute liquid ratio

4. Inventory turnover.

5. Receivables turnover.

6. Payable turnover ratio.

7. Working capital turnover ratio.

8. Working capital leverage

9. Ratio of current liabilities to tangible net worth.

2. FUND FLOW ANALYSIS

Fund flow analysis is a technical device designated to the study the source from which
additional funds were derived and the use to which these sources were put. The fund flow
analysis consists of:

a. Preparing schedule of changes of working capital

b. Statement of sources and application of funds.

It is an effective management tool to study the changes in financial position (working

capital) business enterprise between beginning and ending of the financial dates.

31
3. WORKING CAPITAL BUDGET

A budget is a financial and / or quantitative expression of business plans and polices to be

pursued in the future period time. Working capital budget as a part of the total budge ting
process of a business is prepared estimating future long term and short term working
capital needs and sources to finance them, and then comparing the budgeted figures with
actual performance for calculating the variances, if any, so that corrective actions may be
taken in future. He objective working capital budget is to ensure availability of funds as
and needed, and to ensure effective utilization of these resources. The successful
implementation of working capital budget involves the preparing of separate budget for
each element of working capital, such as, cash, inventories and receivables etc.

ANALYSIS OF SHORT TERM FINANCIAL POSITION OR TEST OF LIQUIDITY

The short term creditors of a company such as suppliers of goods of credit and
commercial banks short-term loans are primarily interested to know the ability of a firm
to meet its obligations in time. The short term obligations of a firm can be met in time
only when it is having sufficient liquid assets. So to with the confidence of investors,
creditors, the smooth functioning of the firm and the efficient use of fixed assets the
liquid position of the firm must be strong. But a very high degree of liquidity of the
firm being tied up in current assets. Therefore, it is important proper balance in regard
to the liquidity of the firm. Two types of ratios can be calculated for measuring short-
term financial position or short-term solvency position of the firm.

1. Liquidity ratios.

2. Current assets movements ratios.

32
 A) LIQUIDITY RATIOS
Liquidity refers to the ability of a firm to meet its current obligations as and when
these become due. The short-term obligations are met by realizing amounts from
current, floating or circulating assts. The current assets should either be liquid or
near about liquidity. These should be convertible in cash for paying obligations of
short-term nature. The sufficiency or insufficiency of current assets should be
assessed by comparing them with short-term liabilities. If current assets can pay
off the current liabilities then the liquidity position is satisfactory.

1. CURRENT RATIO 2. QUICK RATIO

3. ABSOLUTE LIQUID RATIO

1. CURRENT RATIO

Current Ratio, also known as working capital ratio is a measure of general liquidity and
its most widely used to make the analysis of short-term financial position or liquidity of
a firm. It is defined as the relation between current assets and current liabilities. Thus,

CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITES

The two components of this ratio are:

1) CURRENT ASSETS 2) CURRENT LIABILITES

Current assets include cash, marketable securities, bill receivables, sundry debtors,
inventories and work-in-progresses. Current liabilities include outstanding expenses,
bill payable, dividend payable etc.A relatively high current ratio is an indication that the
firm is liquid and has the ability to pay its current obligations in time. On the hand a
low current ratio represents that the liquidity position of the firm is not good and the
firm shall not be able to pay its current liabilities in time. A ratio equal or near to the
rule of thumb of 2:1 i.e. current assets double the current liabilities is considered to be
satisfactory.

33
 2015 2016
Current Assets 5402.08 1355.01
Current Liabilities 4327.40 17744.89
Current Ratio 1.24:1 0.076:1

2. QUICK RATIO

Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be
defined as the relationship between quick/liquid assets and current or liquid liabilities.
An asset is said to be liquid if it can be converted into cash with a short period without
loss of value. It measures the firms capacity to pay off current obligations
immediately.

QUICK RATIO = QUICK ASSETS

CURRENT LIABILITES

Where Quick Assets are:

1) Marketable Securities

2) Cash in hand and Cash at bank.

3) Debtors.

A high ratio is an indication that the firm is liquid and has the ability to meet its current
liabilities in time and on the other hand a low quick ratio represents that the firms
liquidity position is not good.As a rule of thumb ratio of 1:1 is considered satisfactory.
It is generally thought that if quick assets are equal to the current liabilities then the
concern may be able to meet its short-term obligations. However, a firm having high
quick ratio may not have a satisfactory liquidity position if it has slow paying debtors.
On the other hand, a firm having a low liquidity position if it has fast moving
inventories.

34
 Year 2015 2016
Quick Assets 4190.33 296.79
Current Liabilities 4327.40 17744.89
Quick Ratio 0.96:1 0.016:1

3. ABSOLUTE LIQUID RATIO

Although receivables, debtors and bills receivable are generally more liquid than

inventories, yet there may be doubts regarding their realization into cash immediately

or in time. So absolute liquid ratio should be calculated together with current ratio and

acid test ratio so as to exclude even receivables from the current assets and find out the

absolute liquid assets. Absolute Liquid Assets includes :

ABSOLUTE LIQUID RATIO = ABSOLUTE LIQUID ASSETS

CURRENT LIABILITES

ABSOLUTE LIQUID ASSETS = CASH & BANK BALANCES

Year 2015 2016

Absolute Liquid Assets 3531.51 52.73
Current Liabilities 4327.40 17744.89
Absolute Liquid Ratio .0.816:1 .0.00297:1

35
CURRENT ASSETS MOVEMENT RATIOS

Funds are invested in various assets in business to make sales and earn profits.
The efficiency with which assets are managed directly affects the volume of sales. The
better the management of assets, large is the amount of sales and profits. Current assets
movement ratios measure the efficiency with which a firm manages its resources. These
ratios are called turnover ratios because they indicate the speed with which assets are
converted or turned over into sales. Depending upon the purpose, a number of turnover
ratios can be calculated. These are :

1. Inventory Turnover Ratio

2. Debtors Turnover Ratio

3. Creditors Turnover Ratio

4. Working Capital Turnover Ratio

The current ratio and quick ratio give misleading results if current assets include high
amount of debtors due to slow credit collections and moreover if the assets include high
amount of slow moving inventories. As both the ratios ignore the movement of current
assets, it is important to calculate the turnover ratio.

1. INVENTORY TURNOVER OR STOCK TURNOVER RATIO :

Every firm has to maintain a certain amount of inventory of finished goods so as

to meet the requirements of the business. But the level of inventory should neither
be too high nor too low. Because it is harmful to hold more inventory as some
amount of capital is blocked in it and some cost is involved in it. It will therefore
be advisable to dispose the inventory as soon as possible.

INVENTORY TURNOVER RATIO = COST OF GOOD SOLD

AVERAGE INVENTOR

36
 Inventory turnover ratio measures the speed with which the stock is converted
into sales. Usually a high inventory ratio indicates an efficient management of
inventory because more frequently the stocks are sold ; the lesser amount of
money is required to finance the inventory. Where as low inventory turnover ratio
indicates the inefficient management of inventory. A low inventory turnover
implies over investment in inventories, dull business, poor quality of goods, stock
accumulations and slow moving goods and low profits as compared to total
investment.

AVERAGE STOCK = OPENING STOCK + CLOSING STOCK

Year 2015 2016

Cost of Goods sold 13.51 205.83
Average Stock 1205 1134
Inventory Turnover Ratio 0.0112times 0.18times

2. INVENTORY CONVERSION PERIOD:

INVENTORY CONVERSION PERIOD = 365 (net working days)

INVENTORY TURNOVER RATIO

Ear 2015 2016

Days 365 365
Inventory Turnover Ratio 0.0112 0.18
Inventory Conversion Period 365days 365 days

37
3. DEBTORS TURNOVER RATIO :

A concern may sell its goods on cash as well as on credit to increase its sales and a
liberal credit policy may result in tying up substantial funds of a firm in the form of
trade debtors. Trade debtors are expected to be converted into cash within a short
period and are included in current assets. So liquidity position of a concern also
depends upon the quality of trade debtors. Two types of ratio can be calculated to
evaluate the quality of debtors.

a) Debtors Turnover Ratio

b) Average Collection Period

DEBTORS TURNOVER RATIO = TOTAL SALES (CREDIT)

AVERAGE DEBTORS

Debtors velocity indicates the number of times the debtors are turned over during a
year. Generally higher the value of debtors turnover ratio the more efficient is the
management of debtors/sales or more liquid are the debtors. Whereas a low debtors
turnover ratio indicates poor management of debtors/sales and less liquid debtors. This
ratio should be compared with ratios of other firms doing the same business and a trend
may be found to make a better interpretation of the ratio.

AVERAGE DEBTORS= OPENING DEBTOR+CLOSING DEBTOR

Year 2015 2016

Sales 15508.23 16100.08
Average Debtors 1211.75 1058.22
Debtor Turnover Ratio 12.7 times 15.2 times

39
4. AVERAGE COLLECTION PERIOD :

Average Collection Period = No. of Working Days

Debtors Turnover Ratio

The average collection period ratio represents the average number of days for which a

firm has to wait before its receivables are converted into cash. It measures the quality of

debtors. Generally, shorter the average collection period the better is the quality of

debtors as a short collection period implies quick payment by debtors and vice-versa.

Average Collection Period = 365 (Net Working Days)

Year 2015 2016

Days 365 365

Debtor Turnover Ratio 12.7 15.2

Average Collection Period 28 days 24days

40
5. WORKING CAPITAL TURNOVER RATIO :

Working capital turnover ratio indicates the velocity of utilization of net

working capital. This ratio indicates the number of times the working capital is
turned over in the course of the year. This ratio measures the efficiency with
which the working capital is used by the firm. A higher ratio indicates efficient
utilization of working capital and a low ratio indicates otherwise. But a very
high working capital turnover is not a good situation for any firm.

Working Capital Turnover Ratio = Cost of Sales

Net Working Capital

Working Capital Turnover = Sales

Year 2015 2016

Sales 16100.08 15508.23
Networking Capital 744.63 17389.82
Working Capital Turnover 21.62 0.89

41
 METHODOLOGY

Customer satisfaction level was evaluated on the basis of seven parameters namely
(1) product quality,
(2) services rendered,
(3) responsiveness,
(4) e-Sales mate,
(5) product pricing,
(6) complaints handling and
(7) Experience with HZL. Four customer satisfaction levels were devised which were:
(1)Delight,
(2) Satisfied,
(3) Average,
(4) Not Satisfied. Responses of the clients were collected through an online survey.
The survey questionnaire was e-mailed to the company clients.
The response/feedback received from the company clients/respondents was transformed into MS
Excel sheet. The excel sheet was designed in such a way that any rating filled in the sheet would
display a corresponding color and shade:
maximum satisfaction(dark green), just satisfied (light green), Neutral (yellow), below
average(light red), and dissatisfied (red).
At the same time it would be represented in a histogram. The questionnaire has been attached as
appendix II. The instructions for filling up the questionnaire were also sent along with the
survey questionnaire (Appendix III)
The data collected in this study is a mix of primary and secondary data ,majority of which is
primary.

PRIMARY DATA
Primary research (also called field research) involves the collection of data that does not already
exist. This can be through numerous forms, including questionnaires and telephone interviews
amongst others. This information may be collected in things like questionnaires, magazines, and
Interviews. The two basic types of primary research are
qualitative and quantitative
.
SECONDARY DATA
Secondary research involves the summary, collation and/or synthesis of existing research rather
than primary research, where data is collected from, for example, research subjects or
experiments. Also known as desk research, secondary research is the most common research
method employed in the industry today. It involves processing data that has already been
collected by another party.
42
ANALYSIS AND INTERPRETATION

The designed questionnaire had 35 questionnaires. A 5-pointer rating scale was developed using

ordinal ranking. In ordinal ranking, all items receive distinct ordinal numbers, including items

that compare equal. The assignment of distinct ordinal numbers to items that compare equal can

be done at random, or arbitrarily, but it is generally preferable to use a system that is arbitrary but

consistent, as this gives stable results if the ranking is done multiple times. An example of an

arbitrary but consistent system would be to incorporate other attributes into the ranking order

(such as alphabetical ordering of the competitor's name) to ensure that no two items exactly

match. With this strategy, if A ranks ahead of B and C (which compare equal) which are both

ranked ahead of D, then A getsranking number 1 ("first") and D gets ranking number 4

("fourth"), and eitherB gets ranking number 2 ("second") and C gets ranking number 3 ("third")

orC gets ranking number 2 ("second") and B gets ranking number 3 ("third"), each having

5options as the response. The first option was towards the extreme side ofnegativity and the fifth

option was towards the extreme side of positivity. Andthe third option is neutral. So, I got to

evaluate the rating in following man

43
 SWOT ANALYSIS

Hindustan Zinc Limited (HINDZINC) - Financial and Strategic SWOT Analysis Review

Hindustan Zinc Limited (HZL) is one of the India's largest and world's second largest integrated

producer of zinc and lead. The company is a subsidiary of Sterlite Industries (India) Limited and

Vedanta Resources plc. The company is involved in mining and smelting of zinc and lead as

well as presents in captive power generation. The companys mining operations at the following

four locations: Sindesar Khurd, Rampura Agucha, Rajpura Dariba and Zawar in Rajasthan. The

company carries out its smelting operations at Chanderiya Lead Zinc Smelter Complex and

Debari Zinc smelter in the State of Rajasthan, and Vizag Zinc smelter in the State of Andhra

Pradesh. The products produced by the company include refined zinc metal, refined lead metal,

silver, cadmium and sulphuric acid. HZL is also involved in wind energy business. It operates

through four regional offices in Mumbai, Kolkata, Delhi and Hyderabad. HZL is headquartered

at Udaipur in Rajasthan, India.

Hindustan Zinc Limited Key Recent Developments

44
Strengths

-skilled workforce
-experienced business units
-high growth rate
-existing distribution and sales networks
-barriers of market entry
-domestic market

Weaknesses

-cost structure
-future profitability
-brand portfolio
-small business units
-tax structure
-high loan rates are possible
-competitive market

45
Opportunities

-new acquisitions

-global markets

-growth rates and profitability

-new markets

-growing demand

Threats

-technological problems

46
Conclusions and Recommendations

Conclusions:
After further analysing the details of each criterion and the client feedback at individual level,
following conclusions were drawn.

1.Most of the buyers/clients/customers/traders feel that Hindustan Zinc Ltd. (acid business)
should provide a
quality certificate
with every supply of tanker stating the quality, impurity profile and concentration o fthe
Sulphuric acid supplied.

2.After issue of sales order customers are facing problem in release of sales order
.
3.Processing of despatch of material at respective plants is done veryleniently
.
4.Clients are dissatisfied with time taken to send account statements.

5.It was noted that sulphuric acid produced by HZL has lower quality ascompared to sulphur
based producers
.Sometimes, a customer desiring the material from a particular plant is not obliged but is
supplied through some other plant.

Recommendations:For improvement of Product quality :

1.The Acid business department of Hindustan Zinc Ltd. may provide quality certificate/reportto
every buyer/client with every tanker supplied/dispatched.

2.Bydecreasing impurity profile

of metals like iron (Fe), in sulphuric acid, HZL (acid business) may enter into new product
segment like battery and pharmaceuticals.

For improvement ofResponsiveness

1.There should be one person solely responsible for release of D.O.(Delivery Order) as soon as it
is issued by the marketing department. This will result inbetter efficiency and effectivenessin the
system.

2. At a particular sales office,responsiveness of the person

sitting at sales office should be high and he must guide /deal with customers in an appropriate
way to give a clear picture to the clients.

47
 Case study

Hindustan Zinc Limited (HZL) was incorporated in January, 1966 as a public sector company,

after the takeover of the erstwhile Metal Corporation of India Limited, to develop mining and

smelting capacities and to substantially meet the domestic demand of zinc and lead metals.

Hindustan Zinc is a Vedanta Group company in zinc, lead and silver business. We are one of the

world's largest integrated producer of zinc and are among leading global lead and silver

producers.

. We are focused on operational excellence and long-term sustainability on the back of our high-

quality assets, long mine life of over 25 years and low cost base .

Thus GOI's stake in the company now stands at 29.54%. SOVL was merged with Sterlite

Industries India Ltd in April 2011.

The above additional acquisition, SOVL's stake in the company has gone up to 64.92%.

Sterlite Industries merged with Sesa Goa Ltd to form Sesa Sterlite Limited in August 2013.

Hindustan Zinc is now a direct subsidiary of Vedanta Limited.

HZL operates Zinc and Lead smelters and refineries at Chanderiya (Chittorgarh), Debari

(Udaipur) & Dariba (Rajsamand) in Rajasthan with total zinc and lead production capacity of 1.0

million tonnes. A smelting facility was established at Pantnagar in Uttarakhand.

 BIBLIOGRAPHY

Website:

www.hzlindia.com

www.vedantaresources.com

www.moneycontrol.com

www.wikipedia.org

BOOKS USED:

Khan and Jain

Financial management-agarwal

49