42nd Annual Report 2007-08

8/4/2019 42nd Annual Report 2007-08

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Hindustan Zinc, a saa oeemplar rowth with anoutstandin perormance onsustainale development, is

the Worlds second larestinterated zinc producerwith a minin and metalscapacit o 754,000 tonnesper annum.

ENDURINGVALUETHROUGH

VALUES

42ND ANNUAL REPORT 2007-08

Hindustan Zinc Limited


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OVERVIEw

01 HIgHLIgHTS

02 HINDUSTAN ZINC AT A gLANCE

04 OUR gROWTH HISTORy

06 CHAIRMANS STATEMENT08 ENDURINg VALUE THROUgH VALUES

BUSINESS REVIEw

10 KEy PERfORMANCE INDICATORS

12 ZINC DEMAND AND MARKETS14 LEAD DEMAND AND MARKETS

18 ExPLORATION20 OPERATIONAL PERfORMANCE

20 MININg

24 SMELTINg26 PROjECTS

28 HUMAN RESOURCES AND

INfORMATION TECHNOLOgy

30 fINANCIAL PERfORMANCE

SUSTAINABILITy

34 SUSTAINAbLE DEVELOPMENT

GOVERNANcE

46 bOARD Of DIRECTORS

48 CORPORATE INfORMATION

49 DIRECTORS REPORT52 ANNExURE 1

53 fORM A

54 CERTIfICATE Of COMPLIANCE WITH

THE CODE Of CONDUCT POLICy55 CORPORATE gOVERNANCE REPORT

63 ADDITIONAL SHAREHOLDER INfORMATION

67 CERTIfICATION by CHIEf ExECUTIV E OffICER

AND CHIEf fINANCIAL OffICER OfTHE COMPANy

68 AUDITORS CERTIfICATE

69 AUDITORS REPORT70 ANNExURE TO THE AUDITORS REPORT

FINANcIALS

72 bALANCE SHEET

73 PROfIT AND LOSS ACCOUNT

74 CASH fLOW STATEMENT

75 SCHEDULE ANNExED TO AND fORMINg

PART Of THE ACCOUNTS103 bALANCE SHEET AbSTRACT AND COMPANyS

gENERAL bUSINESS PROfILE

104 fI NANCIAL HIgHLIgHTS


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HINDUSTAN ZINC LIMITEDANNUAL REPORT 2007-08 01

highlights

overview

Another year of excellent performance for Hindstan Zinc

RevenuesofRs 7,878 croresdrivenbyhighervolumesinbothZincandLead.

PBDITofRs 6,231 croresdrivenbyexcellent

costperformanceEPSofRs 104.04pershare

Stableoperatingcostsdespiteindustry-widepressures

Continuestodeliverprojectsaheadofscheduleandwithinbudgetinachallengingindustryenvironment

StrongbalancesheetwithshareholdersfundbaseofRs 11,848 crores

ROCE of 50.7%

TotaldividendrecommendedatRs 5.00pershare

Growth proects

Rs 3,600 croresofneartermgrowthprojectsunderimplementation

Actionsongroundtocross1milliontonnesofmetalproductioncapacity


4/10802HINDUSTAN ZINC LIMITEDANNUAL REPORT 2007-08

hiNDUstAN ZiNC At A glANCe

1. rAMPUrA AgUChA MiNe

Ore Prodced in FY 2008: 4,068,215 tonnesTypeofMine: OpenCastReserves: 63.56milliontonnesResources: 43.77milliontonnesAverageReservesGrade: Zinc12.97% Lead1.94%OreProductionCapacity:5.00milliontonnesperannum

2. siNDesAr KhUrD MiNe

Ore Prodced in FY 2008: 295,200 tonnesTypeofMine: UndergroundReserves: 1.96milliontonnesResources: 35.31milliontonnesAverageReservesGrade: Zinc5.32% Lead2.08%OreProductionCapacity:0.30milliontonnesperannum

3. rAjPUrA DAribA MiNe


4. ZAwAr MiNes


5. ChANDeriyA sMelter CoMPlex

Prodction FY 2008: 293,541 tonnes of Zinc58,247 tonnes of Lead

Capacity: 525,000tonnesofZinc 85,000tonnesofLead

6. DebAri ZiNC sMelter

Prodction FY 2008: 78,511 tonnes of ZincCapacity: 88,000tonnesZinc

7. viZAg ZiNC sMelter

Prodction FY 2008: 54,271 tonnes of Zinc

Capacity: 56,000tonnesofZinc

MINING OPERATIONS

1. Rampura Agucha Mine2. Sindesar Khurd Mine3. Rajpura Dariba Mine4. Zawar Mine5. Chanderiya Smelter Complex6. Debari Zinc Smelter7. Vizag Zinc Smelter8. Samana Wind Power Project9. Gadag Wind Power Project

Smelting operations Power plants

SMELTING OPERATIONS

5. ChANDeriyA sMelter CoMPlex

Type: CoalbasedcaptivepowerplantCapacity: 234MW

8. sAMANA wiND Power ProjeCt

Type: WindenergyfarmsCapacity: 88.8MW

9. gADAg wiND Power ProjeCt

Type: WindenergyfarmsCapacity: 18.4MW

POWER OPERATIONS


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4

overview

Be a world-class zinc company, creating value, leveragingmineral resources and related core competencies.

VISION

rAjAsthAN

ANDhrA PrADesh

Be a lowest cost zinc producer on a global scale,maintaining market leadership

One million tonne zinc-lead metal capacity by 2010 Be innovative, customer oriented and eco-friendly,

maximising stake-holder value

MISSION

gUjArAt

KArNAtAKA

Note: map not to scale



UNrivAlleD growth

1966

HindustanZincLimitedwasincorporatedfromerstwhileMetalCorporationofIndiaon10January1966

1991 ChanderiyaPyo-metallurgicalLeadZincSmelterandRampuraAguchaMinebeganproduction

2002

AcquiredbySterliteIndustries(India)Limitedon11April2002

2003

32,000tonnesofzincdebottleneckingcompletedatDebariZincSmelterandVizag

ZincSmelter DebottleneckingofRampuraAguchaMinefrom1.37milliontonnesperannumto2.30milliontonnesperannum

2004

35,000tonnesofzincdebottleneckingcompletedatChanderiyaSmelterComplex

2005

Commissioned170,000tonnesperannumofHydrometallurgicalZincSmelter(HydroI)atChanderiyaSmelterComplex

Commissioned2x77MWCaptivePowerPlantatChanderiyaSmelterComplex

RampuraAguchaMineexpansionfrom2.30milliontonnesperannumto3.75milliontonnesperannum

2006

Commissioned50,000tonnesperannumofAusmeltLeadSmelteratChanderiyaSmelterComplex

SindesarKhurdMinebeganproductionwithaninitialcapacityof0.3milliontonnesperannum

oUr growth history

Driven by the capability of 6,359 employees,Hindustan Zinc Limited is the worlds secondlargest integrated zinc producer.


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overview

2007

Commissioned170,000tonnesperannumofHydrometallurgicalZincSmelter(HydroII)inabenchmarktimeof20monthsatChanderiyaSmelterComplex

Commissioned38.4MWofWindEnergyFarmsatGujarat

2008

88,000tonnesperannumzincdebottleneckingcompletedatChanderiyaSmelterComplexandDebariZincSmelter

RampuraAguchaMineexpansionfrom3.75milliontonnesperannumto5.00milliontonnesperannum

Commissionedadditional68.8

MWWindEnergyFarmsmakingtheCompanystotalWindEnergycapacityto107.2MWason31March2008



2008 HIGHLIGHTS2008 was another excellent year forHindustan Zinc. A signicant increasein volumes combined with productivitygains and stable operating costsdelivered industry-leading growthand returns for our shareholders.

Our portfolio of existing assets andcompleted expansion projects continueto yield superior performance and wecontinue to make investments thatdrive sustainable long-term growth.We are emerging as an exceptionalmining company with world classresources. We continue to offer aunique investment story by deliveringour expansion projects ahead ofschedule in a challenging environment.

During the year metal in concentrateproduction was 629,019 tonnes, anincrease of 10% over prior year

production of 572,319 tonnes. OurFY 2008 nished zinc metal productiongrew to 426,323 tonnes, with leadproduction at 58,247 tonnes, anincrease of 22.4% and 30.7%,respectively over FY 2007. The increasein zinc and lead metal production wasprimarily due to the output from ournew Chanderiya Hydro II zinc smelterand increased output from our existingzinc and lead smelters.

I am delighted to report that weachieved net sales of Rs. 7,878 crorein 2008 with accompanying PBDIT ofRs. 6,231 crore. Despite higher metal

production and operating efciencies,net sales were lower compared to theprevious year on account of lower LMEprices and an appreciation of the Indian

rupee vis--vis the US dollar. ProtAfter Taxes of Rs. 4,396 crores wasmarginally lower than Rs. 4,442 croresrecorded in FY 2007 due to theaforementioned reasons.

2008 ACHIEVEMENTSWe commissioned our new 170,000tonne Chanderiya Hydro II zinc smelterat Chanderiya during the year, withina record time of 20 months and threemonths ahead of schedule. Thissmelter was also ramped up withinone quarter of its commissioning.We added 80 MW of Captive Power atChanderiya in FY 2008. Subsequentto the year end, we also successfullycompleted our 88,000 tonne zincdebottlenecking project at Chanderiyaand Debari. With this, our total zinc-lead capacity is now 754,000 tonnesmaking us the second largestintegrated zinc producer in the world.

A total of 68.8 MW of wind powercapacity was commissioned during theyear, taking our total installed greenwind energy capacity to 107.2 MW.

Our exploration philosophy has beento replace every tonne of ore minedwith at least one tonne of resource.I am pleased to report that our ongoingexploration activities have yieldedsignicant success with an increaseof 28.7 million tonnes to reserves andresources, prior to a depletion of 5.8million tonnes in FY 2008. Containedzinc-lead metal has increased by 4.0

million tonnes, prior to a depletion of0.6 million tonnes during the sameperiod. Total reserves and resourcesat 31 March 2008 were 232.3 million

tonnes containing 27.5 million tonnesof zinc-lead metal.

During the year, we successfullyachieved LME registration of zincmetal from the Chanderiya Hydro Ismelter and the lead metal from ourChanderiya Lead Smelter. The LMEregistration is recognised worldwideas one of the most demandingstandards and signies highestproduct quality, uniform physicalcharacteristics and consistency ofmetal production. This underpins thecapability and commitment of HZL tomeet best quality standards.

GROWTH PROjECTSWe also recently announced expansionprojects that will increase our totalintegrated zinc-lead capacity to1,065,000 tonnes per annum, makingus the worlds largest integrated zinc-

lead producer. This expansion is alsoexpected to gradually increase oursilver production from the currentlevels of 2.8 million ounce per annumto 16.1 million ounce per annum.

DIVIDENDThe Company paid an interim dividendof Rs.2.5 per share. To maintainconsistency and continuity and keepingin view future fund requirements forexpansion, your Board of Directorshave recommended a nal dividend ofRs.2.5 per share, resulting in a totaldividend of Rs.5.0 per share for the yearunder review.

PEOPLEDriving our achievements and successis our dedicated and talented workforce

CHAIRMANS STATEMENT

2008 was another excellent year for HindustanZinc. A signicant increase in volumes combinedwith productivity gains and stable operatingcosts delivered industry-leading growth andreturns for our shareholders.


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overview

of 6,359 people. I would like to thankeach one of them for their superiorefforts this year. We remain committedto continue to provide a challengingand rewarding work environment forall our employees, and building a highperformance organisation wherecareers are nurtured, capabilities arevalued, leaders are developed fromwithin and performance is rewarded.

SuSTAINAbLE DEVELOPMENTWe see sustainable development ascentral to the way that we conductour business and recognise that ourobligations to society include ensuringthat we manage our health, safety,environmental and social impacts,risks and opportunities effectively.

I am pleased to report that our safetyrecord measured in terms of Lost TimeInjury Frequency Rate (LTIFR) reduced

44% from 5.46 in FY 2007 to 3.07 inFY 2008.

During the year we undertook the BalChetna Anganwadi Project coveringover 16,000 children in 400 anganwadicentres spread across four districtsof Rajasthan. A Public-Private-Partnership model has been createdfor the holistic development of underprivileged children in the age groupof three to six years, by providing themsupplementary nutrition, health care,and joyful learning services.

Our Model Village development

initiative addresses the sustainableand inclusive growth of thecommunities where we operate 32

villages situated around our operationshave been declared as Model villagesas per the social audit conducted byOperations Research Group (ORG).

The tripartite partnership between theState Government of Rajasthan, NaandiFoundation and Hindustan Zinc toprovide nutritious meals daily to nearly200,000 children in Chittorgarh,Udaipur and Bhilwara districts ofRajasthan is delivering splendidly. Theresults are encouraging as this socialinvestment is one of the main factorscontributing to widening primaryeducation and we intend to replicatethis success story in the Rajsamanddistrict of Rajasthan.

I am pleased with our achievementsin sustainable development in the yearunder review. Going forward, we aimto be an industry-leading company in

this area and to work closely with allof our stakeholders.

AWARDS AND RECOGNITIONI am happy that our efforts areacknowledged by external agencies.During the year we won over 20 awardsin the areas of operational excellence,governance, and health and safety,notable among them being the Dun& Bradstreet American ExpressCorporate Award 2007 for being theBest Company in the Non-FerrousMetals Sector, the Golden PeacockAward for Excellence in CorporateGovernance 2007 and the Golden

Peacock Award for Corporate SocialResponsibility 2007.

OuTLOOkGlobal demand for metals continuesto be strong and we are well placedto serve this growing demand. Theindustry faces challenges in terms ofcost pressures and the ability to bringnew capacities to production on timeand within budget. We believe that wehave an unrivalled track record in thischallenging environment in our abilityto deliver projects at global benchmarkcosts and aggressive timelines.

We will continue to build upon our 2008achievements responsibly and I eagerlylook forward to reporting on ourprogress on various initiatives in 2009.

AGNIVESH AGARWALCHAIRMAN



eNtrePreNeUrshiPWefosteranentrepreneurialspiritinourbusinessandvaluetheabilitytoforeseeopportunitiesearlyinthecycleandactonthemswiftly.Whetheritisdevelopinggrowthprojectsoritisdebottleneckingtheexistingassetsweensureanentrepreneurialspiritintheheartofouremployees.

oUr vAlUes

growthWecontinuetodeliverindustry-leadinggrowthandgeneratesignicantvalueforourshareholders.Ourgrowthisuniqueandwearecondentthatwewillcontinuetodeliversignicantgrowthforshareholdersinthefuture.Wearenottheonlybeneciaryofourgrowth.Weseegrowthasameanstoenhancethewealthandprosperityofthesocietyatlarge.

exCelleNCeAchievingexcellenceinallthatwedoisourwayoflife.Weconsistentlydeliverprojectsaheadofscheduleatindustry-leadingcostsofconstructionandwithinbudget.Weareoneofthelowestcostzincproducersandourongoinginitiativesshouldhelpustofurthersharpenourcostperformance.Equallyimportanttousisachievingexcellenceinhealth,safetyandenvironmentperformance.

trUstWevalueandcherishthetrustreposedinusbyourstakeholders.Werecognizethatwemustresponsiblydeliveronthepromiseswemaketoearnthattrust.Weconstantlystrivetomeetstakeholderexpectationsandtrytodeliveraheadofexpectations.Wealwaysbehaveinamannerthat

isconsistentandupholdsourvaluesystem.Ourdesireandabilitytoactinacompetentmannerwouldhelpustofurtherbuilduponthetrustofourstakeholders.

sUstAiNAbilityWepursuesustainabilitywithintheframeworkofwelldenedgovernancestructuresandpoliciesandwiththedemonstratedcommitmentofourmanagementandemployees.Oursustainabilityteamcomprisesofover280fulltimeresourcesincludingeldworkers.Withtheuseofappropriatetechnologyandbestinclasspractices,wealwaysendeavourtominimizethedamagetotheenvironment,andwedonotmissanyopportunitytoleaveapositivemark.Ourgrowthandbusinesspolicyhingesaroundthephilosophyofinclusivegrowthwithaclearfocusonneighbourhoodcommunities.

eNDUriNg vAlUe throUgh


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overview

88,000 tonnes zinc capacity debottlenecking in Chanderiya and Debari, and newroaster commissioned in April 2008

Metal Recovery initiatives through innovative ideas of our people

Thousands of improvement projects voluntarily undertaken by our employeesincluding research on benecial use of solid wastes

34% CAGR in revenue (ve years)

61% CAGR in prots (ve years)Rs 4,210 crores gross assets addition in last ve years (including CWIP)

Rs 3,600 crores expansion projects under implementation

Asian Power Plant of the Year Award (2007) by Asian Power, Singapore

170,000 tpa Chanderiya Hydro II zinc smelter commissioned in a benchmark timeof 20 months

184 kwh/tonne of cathode of specic power reduction in FY 2008 over previous yearExploration led 28.7 million tonnes increase in mineral resource in FY 2008

Several National and International Awards in the areas of Operational Excellence,Human Resources, Environment, Safety, Quality and Corporate SocialResponsibility.

Several Public Private Partnership social development projects implemented

Proactive discussion with the policy makers in the areas of mining, safety,environment and social development

Our ability to attract the talent and its retention

TERI Corporate Social Responsibility Award 2007

44% reduction in LTIFR in FY 2008 over the previous year

107.2 MW Wind Energy commissioned in Gujarat and Karnataka

5% and 4% reduction in power consumption per tonne of metal and ore overprevious year at smelters and mines respectively.

12% and 6% reduction in water consumption per tonne of metal and ore overprevious year at smelters and mines respectively

More than 500,000 people positively beneted across 173 villages through ourcorporate social responsibility initiatives.

vAlUes



Key PerforMANCe iNDiCAtors

STRATEGIC ObjECTIVE kEY PERFORMANCE INDICATOR

Shareholder value Revenue (net sales)

PBDIT

ROCE

EPS

Safety LTIFR

Environment

Corporate Social Responsibility

People


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DESCRIPTION RESuLTS

Hindustan Zincs main revenue sources comprise zinc andlead. Revenue (net sales) in FY 2008 was Rs. 7,878 crore againstRs. 8,560 crores in FY 2007 driven by highest ever zinc and

lead production.

NET SALES OF

Rs. 7,878crores

Prots before interest, taxes and depreciation (PBDIT) wasRs. 6,231 crore in FY 2008 against Rs. 6,639 crores in FY 2007.The PBDIT margin (PBDIT-to-total income) was 71%. Stableoperating costs.

PBDIT

Rs. 6,231croresReturn on Capital Employed (ROCE or EBIT-to-capitalemployed) was 50.7% in FY 2008 against 84.98% in FY 2007.

ROCE

50.7%Earnings per share (EPS) was Rs. 104.04 in 2007-08, versusRs. 105.12 in the previous year.

EPS

104.04Lost time injury frequency rate was reduced from 5.46in 2006-07 to 3.07 in 2007-08.

LTIFR

44% redction overprevios year Continued efforts of the Company have resulted in the reduction of specic energy and water consumption year onyear in smelters and mines. For more details please see page 38.

HZL identied 59 villages lacking in basic amenities for transforming them into model villages. During the year,transformations of 32 villages into model villages were completed. For more details please see page 41.

During the year 3,425 employees were trained clocking 6.24 average training man-days for executives.For more details please see page 28.



DeMANDs AND MArKets

ZiNC

economies and rising production ofgalvanised sheets. There was alsostrong zinc demand from Brazil andRussia, where the construction sectorhas been beneting from highergovernment spends on infrastructure.Faster growth in demand fromemerging markets more than offseta slowdown in the US, Japanese andEuropean zinc demand.

Global zinc mine production rose by 6%during 2007 to 11 million tonnes, on theback of increased production in China,Kazakhstan, India and Australia, andthe starting of new mines in Peru,Bolivia, and Portugal.

The largest increase in zinc metaloutput came from China, where renedzinc production grew by 17% to 3.7million tonnes, or one-third of theworlds output. Rened zinc production

also increased signicantly in Russia,Mexico, Brazil and India. The marketfor zinc concentrates eased somewhatfrom the very tight levels seen in theprevious three years, enabling thesmelters to improve capacity utilisationand obtain higher TC.In 2008, global zinc consumption isexpected to rise by 3.7% to 11.9 milliontonnes, in response to the continuingstrong demand arising out of Asia.Usage in China is expected to rise byanother 10.4%, primarily due to majorinvestments in infrastructure projects.Demand is also expected to increase

in India, Japan, the Republic of Koreaand Russia.

In terms of use of metallic elements,zinc ranks fourth after iron, aluminiumand copper. Its major uses are:

Galvanising: Zinc is one of the bestforms of protection againstcorrosion, and is used extensivelyin building, construction,infrastructure, householdappliances, automobiles, steelfurniture, and many more.Zinc Oxide: The most widely usedzinc compound, zinc oxide is usedin the vulcanisation of rubber, aswell as in ceramics, paints, animalfeed, pharmaceuticals and otherapplications. A special grade ofzinc oxide has long been used inphotocopiers.Die Castings: Zinc is an idealmaterial for die casting and isextensively used in hardware,electrical equipment, automotiveand electronic components.

Rolled Zinc: Zinc sheets are usedextensively in the building industryfor roong, ashing and weatheringapplications. These are also usedin graphic art to make plates andblocks, as well as battery calloutsand coinage.Alloys: Zinc is extensively used inmaking alloys, especially brass,which is an alloy of copper and zinc.

Charts A and B show the rst use andend use applications of zinc.

GLObAL MARkET: ZINCDuring 2007, global rened zinc

consumption rose by 3% to 11.5 milliontonnes, driven mainly by the rapidgrowth of the Chinese and Indian


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In Europe, predicted rise in demand inBelgium, France, Poland, the RussianFederation and Spain will be partiallyoffset by reductions in Germany andItaly, resulting in an overall increaseof 0.9%. After falling by 11.8% in 2007,demand in the US is forecast to riseby 4.8% in 2008.

The increased demand of 2008 will bemet from higher output of establishedmines and the opening of new sites.However the newer mines are notcoming into operations as quickly asoriginally envisaged, the marginalmines are poorer in metal content and,

hence, carry greater cost per tonne ofconcentrate. As a result the demandsupply of zinc might reach equilibriumsooner than forecasted and zinc pricesare also expected to stabilise sooner.

World output of rened zinc metal isforecast to rise by 8.3% to 12.1 milliontonnes in 2008 thus maintaininga very narrow gap between metaldemand and supply. The mostsignicant increases are expectedin India and China.

Chart C gives the trend in averagemonthly LME zinc prices. It shows

that while prices have come down from$4,405 in December 2006 to $2,511in March 2008, the long-term trendis upward.

INDIAN MARkET: ZINCSpurred by industrialisation andinfrastructure demand, India has thepotential to see high growth in zincconsumption. In 2007, Indian zincdemand rose strongly by 9.5% to 0.47million tonnes, the increase in zincdemand is led by Indias fast growinggalvanising sector which accounted forabout 70% of the total zinc demand.For 2008-09, the rise in demand of zincis expected to remain robust driven byrealty growth, manufacturing sectorand infrastructure.

bUsiNess review



DeMANDs AND MArKets CONTINUED

leAD

The battery sector is the single largestconsumer of lead, accounting foraround three-quarters of demand.It can be sub-divided into thefollowing groups:

SLI (Starting-Lighting-Ignition)batteries, which currently accountfor around half of all lead demand.These are mainly used in cars andlight vehicles, but are also found inother applications such as golfcarts and boats. SLI batterydemand in turn can be split intooriginal equipment (OE) andreplacement, with replacementdemand outstripping OE demandby about 4:1 in mature markets.Industrial batteries, which currentlyconsume approximately a quarterof all lead produced. This sectorcan be split roughly 50:50 intostationary and traction batteries.Stationary batteries are principally

used in backup power supplysystems; traction batteries areused for motive power in equipmentsuch as forklift trucks andmotorised wheelchairs.

The remainder is used in non-batteryapplications. This comprises severalsmall uses, which have proportionatelydeclined over time as the batterysectors market share has increased.The second largest current end use oflead for non-battery applications, andaccounting for approximately 8% oflead consumption, is in the chemicalindustry, in the form of lead-based

pigments and other compounds.Principal markets are for cathoderay tubes used in television screensand computer monitors, and forPVC stabilisers.


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GLObAL MARkET: LEADGlobal lead consumption rose by 3.1%to 8.2 million tonnes in 2007. It was thesixth consecutive year in which globalrened lead consumption was abovethe 25-year trend growth of 1.8%per annum.

In 2007, China showed the highestgrowth in the lead consumption, onthe back of major increase in thecountrys battery production. It alsoinstituted a 10% export tax on renedlead in June 2007. Consequently,exports dropped from an average of26,000 tonnes per month in the rsthalf of 2007 to 13,000 tonnes per monthin the second half reducing availablemetal for the rest of the world. Whileit is believed that growth in leadmetal demand will be strong in 2008,supply will again play a pivotal part inthe market.

Global lead mine production increasedby 2.7% to 3.3 million tonnes in 2007.Due to the recent increase in leadprices, mine production is expectedto grow at a higher rate of 9.4% to 3.7million tonnes in 2008, and then on to4.03 million tonnes by 2010. Secondaryrened lead output also increased to3.6 million tonnes in 2007, and isexpected to grow to about 3.7 milliontonnes in 2008, roughly in line with therise in scrap supplies.

Rened lead recorded another yearof decit in 2007. In 2008 it is expected

that the rened lead and concentratemarkets will, at best, move into a verymodest surplus one that could easilybe wiped out by the closure or delay ofone mine or renery.

telecommunication and estimatedpower shortages over the next few

years should boost the need forindustrial and inverter batteries, andkeep demand growing at over 15%per annum for the next three years.

As Chart D shows, international priceof lead rose steeply between June 2006

and October 2007 when it reached anall-time high of $3,720 per tonne.

INDIAN MARkET: LEADThe Indian lead market is expectedto grow from 0.28 million tonnes in2007-08 to 0.31 million tonnes in2008-09, with most of the growthcoming from the automobile batterysector. If the automobile sector canmaintain its impressive double-digitgrowth rates over the next few years,one can continue to expect stronggrowth in lead demand. It is expectedthat the demand for lead by the batterysector will grow from 0.25 million

tonnes in 2007-08 to 0.275 milliontonnes in 2008-09. The inverterindustry, too, is expected to growover the years. Rapid growth in

bUsiNess review



sUCCessfUl

exPlorAtioN efforts

outtooutlinemineralisationbelowadepthof550metres.Ofthese,29holesintersectedorewidthswithsignicantgradesaveraging15.5%zincand2.0%lead.

TheCompanyhasadded110.7milliontonnesofreservesandresourcesintheperiodofApril2003toMarch2008,grossofdepletionof22.1milliontonnes.

InFY2008alone,HindustanZincaddedfreshreservesandresourcesof28.7milliontonnes,beforedepletionof5.8milliontonnes.Ason31March2008,thetotalreservesandresourceswere232.3milliontonnes,containing27.5milliontonnesofcontainedzinc-leadmetal.

Explorationsuccesshasincreased

theminelifetoover20yearsatexpandedcapacityofover1milliontonnesperannum.

InlinewiththeGroupsexplorationphilosophytoreplaceeverytonneoforeminedwithatleastonetonneofresourceandtoensureresourceinventoryof1720yearsminelife,HZLisengagedincontinuous

explorationinandarounditsexistingandnewprospectivetenements,withateamof40geologists.Theyemploythelatestgeophysical,geochemicalandGIStechnologiesandhighspeeddeepdrillingequipment.

ThesuccessofexplorationhasprimarilybeenintheSindesarKhurdandRampuraAguchamines.InFY2008,thedrillingprogrammesuccessfullyincreasedthestrikelength,by300metres,to1,600metresaveraging5.8%zinc,3.8%leadand215gramspertonneofsilveratSindesarKhurd.

AtRampuraAgucha,28,000metresofdrillingin32holeswerecarried

Panoramic view of Rampura Agucha Mine


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exPlorAtioN

hiNDUstAN ZiNCs

exPlorAtioN resUlts

Ason31March2008,thetotalreserves(provedandprobable)andresources

(measuredandindicatedaswellasinferred),netofdepletionin2007-08,stoodat232.3milliontonnes,including27.5milliontonnesofcontainedzinc-leadmetal

TheCompanyhasadded110.7milliontonnesofreservesandresourcesduringtheperiodApril2003toMarch2008,beforedepletionof22.1milliontonnes

In2007-08alone,HindustanZincaddedfreshreservesandresourcesof28.7milliontonnes,beforedepletionof5.8milliontonnescontaining4.0milliontonnesofmetal(zincandlead)

The Companys objective is to becomea 1 million tonnes metal producer by2010. Exploration is a key componentof this growth plan. Hindustan Zincsexploration team, comprising 40 well-trained geo-scientists, continues toexpand the reserves and resourcebase in its existing operating areasand prospecting tenements.

During 2007-08, exploration activitiescontinued at an accelerated pace,especially at the Companys mines atSindesar Khurd and Rampura Agucha.Chart E shows the substantial increasein drilling activity by Hindustan Zincover the last couple of years.

In FY 2008, the Company drilled a totalof 65,800 metres an increase of 55.6%over 2006-07. The drilling programmesuccessfully increased the strikelength at Sindesas Khurd 300 metresto 1,600 metres, averaging 5.8% zinc,3.8% lead and 215 grams per tonne ofsilver. At Rampura Agucha, 28,000metres of drilling in 32 holes werecarried out to outline mineralisationbelow a depth of 550 metres. Of these,29 holes intersected ore widths withsignicant grades averaging 15.5%zinc and 2% lead.

Chart F gives the reserves andresources position of the Company


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at the end of 2006-07 and 2007-08, netof depletion.

The Companys combined reserve andresources position has increased by22.9 million tonnes from 209.4 milliontonnes as on 31 March 2007 to 232.3million tonnes as on 31 March 2008.

The combined reserves andresources at Rampura Agucha alone

have been augmented to 107.3 milliontonnes as on 31 March 2008 thusachieving a landmark crossing of100 million tonnes.

Focused exploration at Sindesar Khurdhas resulted in the resource base goingup to 37 million tonnes making it thesecond largest ore body in HindustanZincs portfolio after Rampura Agucha.

Exploration has established a goodpotential for outlining of resourcesin deeper extension of Rajpura Daribamine. Test drilling has commencedin prospective areas in Zawar.

There have been technologicalimprovements and modernisationin database management, computing

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facilities and ground geophysicalsurveys. Application of hyper-spectralremote sensing data for regionalexploration is under implementation.2008-09 will see the use of newertechnology, such as remote sensinginterpretation, airborne geophysicalsurveys and advanced geochemical-mineralogical investigations, thisindeed will help us to further enhanceour resources in near mine as well as

in regional exploration.

ZINC AND LEAD MINE RESOuRCE AND RESERVE SuMMARY

Resource|

Reserves

Proved andMeasured Zinc Lead Zinc Lead probable Zinc Lead

and indicated grade grade Inferred grade grade reserves grade gradeMine million MT % % million MT % % million MT % %

Rampura Agucha 22.8 15.7 2.2 21.0 14.9 1.9 63.6 13.0 1.9Rajpura Dariba 6.6 8.3 2.5 11.0 5.8 1.3 7.1 6.2 1.5Zawar 22.9 5.0 1.8 19.0 3.9 3.0 7.2 3.9 2.1Kayar 2.3 12.6 1.9 6.7 10.0 1.7

Sindesar Khurd 21.0 6.4 4.0 14.2 5.0 3.8 2.0 5.3 2.1Bamnia Kalan 1.7 5.3 1.8 3.4 4.7 3.7

TOTAL 77.3 9.1 2.6 75.3 8.0 2.5 79.9 11.4 1.9



oPerAtioNAl PerforMANCe

Hindustan Zinc is the second largest integratedproducer of zinc in the world. Its main productsare zinc and lead, besides sulphuric acid,cadmium and silver

Hindustan Zincs operations can beclassied into mining and smelting.Currently, it has operating facilitiesat seven locations, of which four aremining operations, and the remainingthree are smelting. Barring thesmelting facility at V ishakhapatnamin Andhra Pradesh, all other facilitiesof the Company are in the state of

Rajasthan. Apart from Sindesar Khurd,which is a new mining site, the other sixunits are accredited with ISO 9001:2000for quality, ISO 14001: 2004 forenvironment, and OSHAS 18000 forhealth and safety.

MININGThe Companys mining operations arelocated in Rampura Agucha, RajpuraDariba, Sindesar Khurd and Zawar, allin Rajasthan. Rampura Agucha, anopen cast zinc-lead mine, is locatedin Bhilwara district 225 km north ofUdaipur, Rajasthan. It is worlds thirdlargest open cast mine for zinc andlead, with a capacity of 5.0 million

tonnes per annum after a recentexpansion. It is also one of the lowestcost zinc mines in the world, and hasa 5S certication and a four star ratingfrom the British Safety Council.

The other three mines, viz. SindesarKhurd, Rajpura Dariba, and Zawar,are underground mines with anannual capacity of 0.3 million tonnes,0.6 million tonnes and 1.2 milliontonnes of ore respectively. Table 1 givesthe overall production summary of theCompanys mining operations during2006-07 and 2007-08.

TAbLE 1: MINING OPERATIONS, PRODuCTION: 2006-07 AND 2007-08

Ore mined (tonnes)|

Zinc concentrate (DMT)|

Lead concentrate (DMT)

Location Type of mine 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07

Rampura Agucha Open Cast 4,068,215 3,748,840 914,917 851,089 74,874 69,905Rajpura Dariba Underground 518,049 512,634 42,213 43,859 11,284 10,042Sindesar Khurd Underground 295,200 66,441 24,022 5,785 12,422 2,168

Zawar Underground 901,635 812,000 54,676 46,654 27,175 25,219TOTAL 5,783,099 5,139,9151,035,828 947,386 125,755 107,334

Note: DMT is Dry Metric Tonnes


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During the year, the total quantity of

ore mined by the Company increasedby 12.5% from 5.1 million tonnes in2006-07 to 5.8 million tonnes in2007-08. Production of zincconcentrate increased by over 88,442DMT from 947,386 DMT to 1,035,828DMT during the same period.

Hindustan Zinc is one of the mostefcient zinc and lead producers inthe world. Productivity of the miningoperations has increased consistentlyin the last few years.

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Mining productivity increased by

9.8% from 143 tonnes per personin 2006-07 to 154 tonnes per personin 2007-08. Between 2003-04 and2007-08, mining productivityincreased at a compounded annualgrowth rate (CAGR) of 12.5%.This rise in productivity has beencomplemented with substantialimprovements in recovery ratesin the last few years. Recovery ofzinc in the mining operations hasconsistently increased from 88.7%in 2002-03 to 91.2% in 2007-08.Recovery of lead has improved from64.4% to 68.8% over the same period



training.Tomakethewholeprocess

robust,thepeopleweretakenthroughaseriesofteststoenhancetheirunderstandingofthesmelteroperations.Mocksituationsweresimulatedwithoperatorsmadetoreacttoadversesituationsandcheckedforadherencetostandardoperatingprocedures.Inaddition,over50operatorsandmaintenanceengineerswerealsotrainedoverseas.

Astringentprocessofcoldcommissioningwithhandoverandtakeoverprotocolswasimplementedbetweentheprojectsandcommissioningteams.Mostimportant

ofallwasthesingleuniedvoiceacrosstheentireteamtomaketheFastestCommissioningandDreamRamp-Uphappenthedrivingforcebehindtheteamsdeterminationandenthusiasm.

TheChanderiyaHydroIIzincsmelter

achievedthedistinctionoffastestcommissioninginthehistoryofthezincindustrygloballywithin20monthsofprojectgroundbreaking.TheadditionalfocusofthisprojectwastoachieveaDREAMRAMPUPwhichsuccessfullyachievedthesmoothestramp-uptoratedcapacityandqualitywithin10daysofthesmelterstart-up.

HZLchartedoutPhaseIIofitsexpansiontoincreasecapacityto670,000tpaofmetalby2008.ThekeylearningsfromtheearlierPhaseIexpansionwerecollatedafterseveralsessionsofintensebrainstormingand

madeavailabletotheprojectteam.ACommissioningChampionwasnominatednearlyoneyearinadvanceoftheactualstartupofthecommissioning.

TheoperatingteamwasthoroughlytrainedandtheirknowledgeenhancedthroughastructuredOn-The-Job

View from Chanderiya II cell house control room

the fAstest globAl


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sMelter CoMMissioNiNg



TAbLE 3: PRODuCTION OF METALS (TONNES)

Saleable metal|

Saleable zinc|

Saleable lead

2007-08 2006-07 2007-08 2006-07 2007-08 2006-07

Chanderiya 351,788 268,408 293,541 223,855 58,247 44,552Debari 78,511 74,353 78,511 74,353 Vishakhapatnam 54,271 50,107 54,271 50,107 TOTAL 484,570 392,868 426,323 348,316 58,247 44,552

SMELTINGHindustan Zincs smelting facilities arelocated at Chanderiya and Debari inRajasthan and Visakhapatnam inAndhra Pradesh. Chanderiya SmelterComplex with a capacity of 525,000tonnes of zinc in the worlds largestsingle location zinc smelting complex.

At the beginning of 2007-08, HindustanZinc had a smelting capacity of 496,000tonnes. In FY 2008, it successfullyadded a second hydrometallurgical zincsmelter (Hydro II) at its Chanderiyaplant in a record time of 20 months,with a capacity of 170,000 tonnes perannum. As a result, on 31 March 2008,the Companys metal productioncapacity had gone up to 666,000 tonnesper annum. Subsequent to thecommissioning of 88,000 tonnes perannum zinc debottlenecking in April2008, Hindustan Zincs metal capacity

(Zinc and Lead) stands at 754,000tonnes per annum.

During 2007-08, Hindustan Zincreceived the coveted London Metal

Exchange (LME) registration for zincmetal produced from its Hydro Ismelter at Chanderiya under the brandof Hindustan Zinc SHG 99.995 and itslead Ingots under the brand ofVEDANTA 99.99. Table 2 and Chart Ggive the details of capacities andproduction of the smelting operations.

TAbLE 2: CAPACITY OF METALS (TONNES)

Total capacity as on

31/3/08 31/3/07

Chanderiya 530,000 360,000Debari 80,000 80,000Vishakhapatnam 56,000 56,000

TOTAL 666,000 496,000

Production of saleable metal hasincreased substantially in the last fewyears. During the year, saleable metalproduction grew by 23.3% from

392,868 tonnes in 2006-07 to 484,569tonnes in 2007-08. This was driven byboth zinc and lead, which increased at22.4% and 30.7% respectively. Table 3has the details.

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While increase in saleable metal outputwas driven by the increase in Hydro IIfacility at Chanderiya coming on-stream in third quarter of FY 2008,production of the existing capacitiesat Chanderiya and other locations alsocontributed to this growth. Duringthe year, production at Debari andVishakhapatnam increased by 5.6%and 8.3% respectively.

As in the case of mining, productivityof smelting operations has alsoincreased signicantly in the last fewyears. During 2007-08, productivityin smelting increased by 9% from90 tonnes per person in 2006-07to 98 tonnes per person in 2007-08.

Apart from these improvements, theCompany has also been successfulin bringing down its consumption ofenergy and water. Moreover, with

its emphasis on safety and bettermonitoring across its manufacturinglocations, Hindustan Zinc has made itsoperations much safer with signicantreductions in accidents.

uNIT COSTSThe Company succeeded in maintainingthe stable cost of production of nishedmetal at the back of greater efcienciesin the operations. Unit costs ofproduction in 2007-08 excludingroyalties were stable at Rs. 27,625 pertonne of zinc compared with FY 2007,due to higher operational efciencies,increase in volumes and better

realisation of by-products which wereoffset by higher energy prices andgeneral inationary pressures.Royalties, which are LME-linked,were Rs 7,966 per tonne of zinc in FY2008 compared with Rs 11,587 pertonne of zinc in FY 2007.

COALCoal is one of the most importantinputs that Hindustan Zinc procuresfrom the market. During 2007-08,the Company consumed 630,265tonnes of coal.

Government of India allocated a coalblock to a group of six consumers ofcoal; Hindustan Zinc is one amongthem, having a share of 31.5 milliontonnes. A joint venture namedMadanpur South Coal CompanyLimited has been formed to implementthe project. Progress of this venture

is on track, and it is expected tocommence production by 201011.This project will reduce the cost ofcoal and enhance our long-termenergy securities.Recognising the importance ofsecuring its supply of coal, theCompany had entered into a jointventure in 2006 called Madanpur SouthCoal Company Limited, which has coalreserves of 175 million tonnes. With a21.8% interest, Hindustan Zinc has ashare of 31.5 million tonnes in the coalblock. Progress of this venture hasbeen on track, and it is expected to

commence production by 2010-11, onceoperational, this project will reduce thecost of procuring coal.

MARkETINGHindustan Zinc has a dedicated teamwhich services customers in Indiausing an extensive network of salesdepots across the country. Theseoperations are managed through fourofces in Mumbai, Kolkata, Delhi andHyderabad. The domestic and exportsmarketing headquarters is in Mumbai.

Apart from its presence in India, theCompany is also a signicant playerin the export market. During 2007-08,Hindustan Zinc exported to around 26countries in Europe, US, South EastAsia, Middle East, China, Japan andin the SAARC region and 32.3%of the Companys revenues camefrom exports.

During 2007-08, the Companystrategically widened its customerbase for sulphuric acid, by commencingexports. As a part of its logisticsimprovement initiative, the Companybecame the rst company in Indianhistory to transport the sulphuric acidby rail rake. In terms of volume, salesof sulphuric acid increased by almost7% from 610,263 tonnes in 2006-07to 651,592 tonnes in 2007-08.

The Company is actively usingtechnology such as online auctionsto improve efciencies in marketing.

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growth Next stAge

TheCompanyhasrecentlyannouncedalistofnewprojectsinminingsmeltingandcaptivepowerplants,whichwillbemadeoperationalby2010.Theseare:

Mining:Expansionfrom5.0milliontonnesperannumto6.0milliontonnesperannumatRampuraAgucha;expansionfrom0.3milliontonnesperannumto1.5milliontonnesperannumatSindesarKhurd;andanewminewithaninitialcapacityof0.3milliontonnesperannumatKayarinRajasthan.

Smelting:Setupa210,000tonnesperannumzinchydrometallurgicalplantanda100,000tonnesperannumleadplantatRajpuraDariba.

CaptivePower:Tomeettheenergyrequirementsfortheseoperations,theCompanywillalsoadd2x80MWcaptivepowerplantsatRajpuraDariba.

Completionoftheseprojectswilltakeourannualminingcapacitytomorethan1milliontonnes(1,065,000tonnes)perannummakingHindustanZinctheworldslargestzincproducerby2010,withfullyintegratedminingandcaptivepowergenerationcapabilities.

Inadditiontotheabove,wealsoexpecttoprogressivelyincreaseoursilverproductionfromthecurrentlevelsof2.8millionounceperannumtoalevelofapproximatelyover16.1millionounceperannum.

ProjeCts

PROjECTSIts success in project execution has todo with a set of interrelated factors.

First, the core project team is bothsmall and integrated, with eachmember having end-to-endownership and accountability.Each project is divided into severalpackages and each package inits entirety is the responsibility ofone person.Second, project planning andexecution is based on robustmonthly and rolling schedules.This allows greater visibility of eachpart of the project in the contextof the overall execution.Third, the Company always usesreputable and established vendorsand contractors for greaterreliability and control over theexecution. Most are repeat vendors.Thus, there is a built-in assurance

of quality and timely delivery. Inaddition, it employs an appropriatemix of incentives to assist in theseamless execution of projectsfrom one stage to another.

Hindustan Zinc has a strong track record ofefcient execution of projects, and in crashingtimelines and budgets in the process.


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The Company successfully completedthe following projects:

170,000 tonnes per annum ofsecond hydrometallurgical zincsmelter at Chanderiya (Hydro II)was commissioned with a capacityof 170,000 tonnes per annum in arecord time of 20 months. Thisproject achieved ramp-up to fullcapacity within the rst quarterof its operations and is registeringrecovery rates of over 96%.The Company added an 80 MWthermal power plant for captiveuse at Chanderiya.During the year, it alsocommissioned 68.8 MW of windpower capacity in Gujarat andKarnataka, taking Hindustan Zincswind energy capacity to 107.2 MWas on 31 March 2008.In the rst quarter of FY 2009, thecapacity of Rampur Agucha mine

was increased from 3.75 milliontonnes per annum to 5.0 milliontonnes per annum. With this, thetotal ore production capacity ofthe Company has increased to7.10 million tonnes per annum.

The Company also concluded thedebottlenecking of 88,000 tonnes

per annum of zinc smelting capacity 80,000 tonnes at Chanderiya and8,000 tonnes at Debari in the rstquarter of 2008-09. This hasincreased rened metal capacityto 754,000 tonnes per annum.

Other ongoing projects of HindustanZinc are an 80 MW captive power

plant in Zawar, and 17 MW wind powercapacity expansion at Gadag, inKarnataka both of which areon schedule.

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HuMAN RESOuRCESHindustan Zinc is committed to buildinga high performing workforce where

capabilities are valued, careers arebuilt, leaders are developed from withinand performance is cherished.

Over the years, Hindustan Zincsrobust HR policies and practises havebuilt a dedicated and highly competentworkforce which has enabled theCompany in continuously improvingits operational performance andin successfully executing theexpansion projects.

To meet our additional manpowerrequired for expansions, during theyear we recruited 190 professionals

6.24 average executive training man-days. 78 employees were givenexposure to the best in class practisesacross mines and smelters globally.

Company runs a systematic ACT-UP(Accelerated Competence andUpgradation Programme), processto identify the talent and nurture themto take up the leadership position infuture. During the year, under thisprogramme 43 high performingindividuals were identied as Starsof the Business who will be groomedto take up leadership positions.

Besides the Production IncentiveScheme several reward schemes likeCEO Reward, Achievement Awardsare in place with an objective to giverecognition and boost employee moraleand motivation.

Improvement Initiatives like SixSigma, Quality Circles and HighImpact Projects have increasedthe engagement and involvement ofemployees at the shop oor. TheCompany has also ensured higheremployee engagement with theimprovement in the quality of lifeat the workplace as well as at thetownships. All our townships havefacilities like schools, recreationalclubs, gymnasium, medical facilities,shopping centres, playgrounds,landscape gardens, etc. OurChanderiya School topped inthe district.

oPerAtioNAl PerforMANCeCONTINUED

including engineers, charteredaccountants, MBAs and sciencegraduates from the best institutes,

of which 16% are women. Company hasa systematic programme for inductionand training for freshers. They aretrained in prestigious institutes like IIT,BITS-Pilani, premier managementinstitutes, Hofncons MaintenanceInstitute Chennai, etc. to equip themwith required skills.

To enable our employees to enhancetheir competencies and upgradetheir skills, the Company organisesextensive training programmescovering all facets of professionaldiscipline. During the year 3,425employees were trained clocking


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During the year, HR has moved a stepahead and introduced several onlineHR systems making performancemanagement a more transparent andobjective process. Also, with theintroduction of an online HR Manual,the Company policies, Code of Conductand SOPs are more accessible.

The Company believes in its ongoingtwo way communication with all theemployees including the workers,Unions at various levels and it enjoyscordial relations with the Unions.

INFORMATION TECHNOLOGY (IT)Operational efciencies and plantand mining technology have beencontinuously upgraded over the yearsand to effectively monitor managerialeffectiveness, the Company hasadequately invested in setting up state-of-the-art IT facilities across its

multiple locations.All manufacturing facilities, ofces anddepot locations of the Company areconnected using hybrid technology namely, MPLS, leased line VPN, andVSATs with adequate failover links.Hindustan Zinc has an advanced ERPsolution based on SAP R/3, whichenables it in real time processing oftransactions in the areas of nanceand control, materials, production,maintenance, sales and distributionand quality management. During theyear, the coverage of the ERP systemwas extended to the new Hydro II zinc

smelter plant in Chanderiya.

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Since the implementation of SAP R/3,Hindustan Zinc has enhanced thesystem for better and stringentcontrols, as well as more effectivereporting. Many critical areas suchas transportation and logistics,exports, imports and key value drivershave been taken up for implementation.The Company has also recentlyupgraded SAP R/3 to SAP ECC 6.0 toimprove the functionality of the system.

Hindustan Zinc also uses IT in processcontrol, mine planning and geologicalexploration. Some of the tools used areData Mine, Geosoft, Mapinfo, EncomDiscover, ArcGIS and Plant Informationand Management System. TheCompany has a separate HumanResources Management System(HRMS) to assist the HR function.It also has a fully functional e-salesportal for its customers where they

can place new orders and trackpast ones. Similarly, it has ane-procurement portal, where itconducts reverse auctions and throughwhich vendors get information relatedto their deliveries and payments. Apartfrom these, the Company also has aDocument and Policy ManagementSystem, Legal Case ManagementSystem, Project Information andRetrieval System, Note for ApprovalWorkow System, and a system fortracking customers complaints.

Hindustan Zinc has invested to buildin redundancy into the system so that

a system failure at any point of the

chain does not affect the overallinfrastructure. It has also built adisaster recovery site at a differentseismic zone to ensure continuity ofbusiness in the case of any disasterat the primary site.

Going forward, Hindustan Zinc plansto implement a Business Intelligencesolution to convert raw data intointegrated, meaningful and actionableintelligence that helps in streamliningprocesses further to reduce costs.This solution will enhance theanalytical capabilities of the users andresult in real time reporting for betterdecision making.



Table 4 presents the summary ofHindustan Zincs nancial performanceduring the year 2007-08 and comparesit with the previous year.

TAbLE 4: HINDuSTAN ZINCS AbRIDGEDPROFIT AND LOSS STATEMENT (RS.CRORE)

2007-08 2006-07

Net Sales fromoperation 7,878 8,560

Total income 8,729 8,791

PBDIT 6,231 6,638PBIT 6,009 6,482PBT 5,985 6,454

Income Tax 1,589 2,012PAT 4,396 4,442

The Company achieved record zinc andlead metal production in FY 2008 of426,323 tonnes and 58,247 tonnesrespectively, an increase of 22.4% and30.7% compared with the previous year.The increase in production wasprimarily on account of the productionfrom the newly commissioned Hydro IIsmelter and the improved performancefrom the existing smelters.

Total mined metal production duringFY 2008 was 629,019 tonnes, anincrease of 10% compared with thecorresponding previous year.

We sold 338,000 tonnes of zinc metalin the domestic markets during

FY 2008, an increase of 65.7%compared with FY 2007, by improvingsales to major domestic customersthereby generating better contributionvis--vis exports. Consequently,exports were limited to 88,000 tonnesof zinc metal in FY 2008, down 39.3%compared with FY 2007. In additionto rened zinc metal, we also sold232,000 dry metric tonnes of zincconcentrate and 65,000 dry metrictonnes of lead concentrate, in FY 2008.

Despite 22.4% increase in saleable zincand 30.7% increase in saleable leadproduction volumes and stableoperating costs, PBDIT in FY 2008 waslower at Rs 6,231 crores compared withFY 2007 primarily due to the signicantfall (about 17%) in LME zinc prices andthe appreciation of the Indian rupeeagainst the US dollar by more than11%. However, the Company was able

to contain these negative impactsthrough its volume growth,improvements in operationalefciencies and higher by-productcredits and net prot was down onlymarginally from Rs.4,442 crore inFY 2007 to Rs.4,396 crore in FY 2008.

The other income increased to Rs 851crores in FY 2008 compared to theprevious year of Rs.231 crore inFY 2007, mainly on account of higherlevel of investible surplus cash whichincreased from Rs 4,403 crores to Rs6,632 crores in FY 2008, arising fromstrong operational cash ows. Further

the investments also generated higherrate of return. Other income alsoincludes the write back for excessprovision of royalty made earlier yearsas per court decision in favour ofCompany.

Despite facing higher energy prices,Hindustan Zinc succeeded inmaintaining the stable cost ofproduction of nished metal at the backof greater efciencies in the productionprocesses. Unit costs of production inFY 2008 excluding royalties were stableat Rs. 27,625 per tonne of zinccompared with FY 2007, due to higheroperational efciencies, increase involumes and better realisation of by-products which were offset by higherenergy prices and general inationarypressures. Royalties, which are LME-linked, were Rs 7,966 per tonne of zincin FY 2008 compared with Rs 11,587 per

tonne of zinc in FY 2007.During the year, the effective tax ratewas 25.8% compared to the previousyears rate of 30.5% in FY 2007. We havetaken a number of steps to improve ourefciencies in tax management. Thereare several tax incentives available tocompanies operating in India; we havemade effective use of these tax benetsin our operations.

In summary, the adverse impact oflower zinc LME prices and appreciationof rupee have been effectivelycountered by increasing the volumes,

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maintaining stable operating costs,improving yield on investments,generating strong cash ows andeffective tax management. The resultof these actions is net prot hasremained stable with Rs 4,396 crorescorresponding to the previous year.We have taken a number of steps tominimise working capital used in thebusiness and have primarily focusedon gross working capital i.e.receivables and inventory. Effectsof all theses measures have yieldedsubstantial decrease in the operatingcycle of receivables and inventoryperiods; these results can be seenin the Table 6.

TAbLE 6: ACTIVITY RATIOS

2007-08 2006-07

Receivables period 20.6 23.7

Inventory period 75.7 84.6Operating cycle 96.2 108.4

We generated strong cash ows fromoperating activities of about Rs 4,000crores, operating prot before workingcapital changes were lower by about Rs1,000 crores, which have been largelyoffset by improved working capitalmanagement and efcient taxmanagement resulting in lower cashgenerated from operating only of aboutRs 400 crores.

Our continued strong nancial

performance more than adequately

takes care of our long termrequirement in the form of investmentsand capital expenditures and stillhaving a large investible surplus. ThusHindustan Zinc continues to be a ZeroDebt Company.In summary we continue to have astrong balance sheet with shareholdersfund equity of Rs 11,848 crores. Ourcontinued focus on operationalefciencies and higher volumes enableus to operate at healthy margins andwe generate strong cash ows therebyputting us in a robust liquidity positionwhich can be leveraged effectivelywhen a need arises.

RISkS AND uNCERTAINTIESOur business is subject to a varietyof risks and uncertainties which areno different from any other companyin general and our competitors in

particular. Such risks are the resultof not only the business environmentin which we operate but also of otherfactors over which we have little or nocontrol. We have well documented andpracticed risk management policiesthat act as an effective tool in mitigatingvarious risks to which our businessis exposed in the course of its day-to-day operations as well as in thestrategic actions.

Risks are identied through a formalrisk management programme withactive involvement of businessmanagers and senior management

personnel. Each signicant risk has

an owner at a senior level, and theimpact to the Company if a riskmaterializes and its likelihood ofcrystallization is regularly updated.

RISk MANAGEMENT PRACTICEHindustan Zincs risk managementprocess, approved at the highest levelby its Board of Directors, is set upacross the enterprise. It is designedto identify potential events that mayaffect the entity, manage such riskswithin clearly laid down parameters,and to provide reasonable assuranceregarding the achievement ofentities objectives.

The Companys risk managementframework includes:

Hindustan Zincs riskmanagement policyThe risk organisation structureRoles and responsibilities for

managing risksGuidelines on the riskassessment processPossible response toidentied risksTemplates for documenting andreporting risks

Risk assessment is carried out in allkey operations and projects of theCompany. At the unit level, risks are theresponsibility of the SBU heads/operating managers or supervisors.Once a risk is identied, it is necessaryto design and document controlmeasures to mitigate/minimise the

risk. These controls are checked

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internally and are reviewed by theManagement Assurance System (MAS) a team that is not connected with theday-to-day management of theCompany. Risk registers are kept andupdated; and residual risks aremeasured on a regular basis. TheBoard of Directors are regularlyapprised by the management of highlevel risks and what mitigating stepsare being taken.

COMMODITYThe revenues of Hindustan Zinc aredirectly linked with the global marketfor its products, viz. zinc and lead.Adverse uctuation in prices of thesecommodities could have a signicantimpact on nancial performance.However, the Company has beensuccessful in containing the impact oflower LME prices for zinc by anincrease in its volumes and more cost

efcient operations which we continueto deliver in order to minimise theimpact of adverse market uctuation.

The Company aims to achieve averageLME prices for a month or a year;average realised prices may notnecessarily reect the LME pricemovements because of a variety ofreasons including uneven sales duringthe year. Any uctuation in the pricesof metal that we produce and sell willhave an immediate and direct impactupon the protability of our business.

As a general policy, we aim to sell ourproducts at prevailing market prices.Hedging activity in commodities isundertaken on a strategic basis toa limited degree and is subject to strictlimits laid down by our Board and issubject to strictly dened internalcontrols and monitoring mechanisms.

FOREIGN CuRRENCYHindustan Zincs exposure to thecurrency markets comes from its USdollar determined pricing of zinc andlead. Appreciation of the Indian rupeevis--vis the US dollar can affectrevenues. To mitigate this risk foreigncurrency exposures are managedthrough the Companys hedging policy.This policy is reviewed periodically toensure that the risk from uctuatingcurrency exchange rates isappropriately managed.

SAFETY, HEALTH AND ENVIRONMENTRISkSOur operations, by its nature aresubject to extensive health, safety andenvironmental legislation likeanywhere else in the world. Signicantchanges in these regulations can havean adverse impact on the operationsand nancial performance of theCompany. We are engaged in miningactivities which are inherentlyhazardous and any accident orexplosion may cause personal injuryor death, property damage or

environmental damage at or to itsmines, smelters, reneries or relatedfacilities and also to communities thatlive near the mines and plants. Suchincidents not only result in expensivelitigation, damage claims and penaltiesbut also cause loss of reputation.

To mitigate such risks, Hindustan Zincproactively uses state-of-the-arttechnologies to make its operationssafe and environment friendly. Today,it is one of the most energy efcientcompanies in the world, and a leaderin meeting safety and environmentalnorms in the industry. We accord veryhigh priority to safety, health andenvironment matters.

OTHER RISkSApart from these, some other risksfacing the Company include risksassociated with completing new

projects within timelines and budgets,especially given the current inationaryoutlook and continued rise in globalenergy prices. Hindustan Zinc has astrong track record in completing itsproject ahead of schedules and withinbudget which in turn mitigates this riskto a greater extent.

The Company regularly reviews theserisks and takes appropriate steps tomitigate.

fiNANCiAl PerforMANCeCONTINUED


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INTERNAL CONTROL SYSTEMSHindustan Zinc has a strong andadequate internal audit and controlsystems commensurate with the sizeof its business to ensure that alltransactions are authorised, recordedand reported correctly. Regularinternal audit visits to the operationsare undertaken to ensure theCompanys high standards of internalcontrol are maintained. These consistof comprehensive internal andstatutory audits which are conductedby top international audit rms.Independence of the audit andcompliance function is ensured by thedirect reporting of the internal auditsto the Audit Committee of the Board.Details on the composition andfunctions of the Audit Committee canbe found in the chapter on CorporateGovernance of the Annual Report.

CAuTIONARY STATEMENTThis report on Management Discussionand Analysis contains forward-lookingstatements that is, statementsrelated to future, not past, events.In this context, forward-lookingstatements often address our expectedfuture business and nancialperformance, and often contain wordssuch as expects, anticipates,intends, plans, believes, seeks,should or will. Forwardlookingstatements by their nature addressmatters that are, to different degrees,

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uncertain. For us, uncertainties arisefrom the behaviour of nancial andmetals markets including the LondonMetal Exchange, uctuations in interestand or exchange rates and metalprices; from future integration ofacquired businesses; and fromnumerous other matters of national,regional and global scale, includingthose of a political, economic, business,competitive or regulatory nature. Theseuncertainties may cause our actualfuture results to be materially differentthan those expressed in our forward-looking statements. We do notundertake to update our forward-looking statements.



SuSTAINAbLE DEVELOPMENT COMMITTED TO IMPROVINGPERFORMANCEAs a responsible corporate citizenHindustan Zinc has a clear focus onsustainable development, it is a keyelement of our business and corporatephilosophy. Our ability to maximizerelated opportunities and minimizingthe risks is unique in itself and in turncreating value for our shareholders.

Our approach towards managingenvironment is one of the best in classin our sector. We follow best practisesin the management of environmentalimpact and related opportunities.Employing environment friendlytechnologies, optimizing the usageof energy and resources throughrecycling and reuse procedures,emissions are kept to an absolute

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minimum, driving a number ofinitiatives to create value from wasteand continuously striving to surpassthe best industry standards.

We continuously strive to uplift theeconomic wellbeing of ourneighbourhood communities throughvarious initiatives like sustainablelivelihood, health care, and education.Invariably all specic initiatives followidentication of need in consultationwith the beneciaries.

Hindustan Zinc works in the socialdevelopment of the neighbourhoodcommunity through involving likeminded partners like StateGovernments, NGOs, etc., to forma partnership in which the area ofexpertise is shared for effectiveimplementation of the projects.

We see ourselves as a facilitator inaddressing the problems of our localcommunity, and strive to nd a solutionthrough consultative process withthe local stakeholders.

Our work towards sustainabledevelopment has been recognizedthrough various local, national andinternational bodies.

HEALTH, SAFETY AND ENVIRONMENT(HSE)Health and safety of Hindustan Zincsemployees is of paramount importanceto the Company. Preventing workplaceaccidents and controlling the incidenceof occupational diseases is a toppriority, and several technological andadministrative controls have been putin place to achieve health, andenvironment objectives. These include:

Safety reviews and audits by

internal and external experts.Routine safety inspection.Employing environment friendlytechnologies.Incentives linked with safetyperformance.Compliance with all the legislationsapplicable.Safety score-card.Ensure all our employees includingcontract labours implement healthand safety policies and procedures.Implementing learnings from nearmiss incidents/accidents/rst aids.Safety stewardship: driving safetyinitiatives down the line.

HEALTHIn addition to various healthcare campsacross 173 operational villages in theneighbourhood of its mines and plants(see the next section on Corporate


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Social Responsibility), Hindustan Zinchas six hospitals/dispensaries at itsoperating locations with all requisitefacilities, and with qualied doctorsand nurses being available round theclock. The Company also has tie-upswith reputed hospitals in the countryto provide best health and medicalfacilities to the employees andtheir dependents.

SAFETYThe index used is the lost time injuryfrequency rate (LTIFR). It is the numberof injuries involving loss of work timeper million working hours.

In April 2007, Hindustan Zinc set atarget of reducing LTIFR by 20% at itsoperations. The actual performance:LTIFR reduced by 44% from 5.46 in2006-07 to 3.07 in 2007-08.

Despite the Companys continued focuson safety, there were, unfortunately,ve fatalities all related to contractworkers. This is a cause of concern.Hindustan Zinc continues to strengthenits focus on safety by imparting trainingprogrammes to all contractedpersonnel and better monitoring ofsafety related processes to minimisethe risk of such incidents.

To sensitise the workforce on healthand safety issues, the Companyconducts both introductory andspecialised training. Safety trainingis compulsory for all new employees

and refresher training is periodicallycarried out in the different facilities.In 2007-08, HSE training was givento 17,378 employees includingcontract workmen.

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Hindustan Zinc will continue to learnand evolve its safety and occupationalhealth systems according to itschanging needs and best practisesin the Industry. Considering theenvironment in which the Company isoperating increased emphasis will nowbe placed on behavioural aspects of

industrial safety.



foCUsiNg oN sAfetyView from Chanderiya II leaching control room


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Inadditiontothis,toassessthesafetyperformance,safetyscorecardsandphysicalconditiontourauditsystemshavebeenintroducedthisyear.SafetyscorecardisapointbasedsystemwhichassesseskeyperformanceindicatorslikeLTIFR,TIFR,safetytraining,reviewmechanism,nearmissesrecorded,etctojudgethesafetyperformanceoftheunitonamonthlybasis.Physicalconditiontourisaeldauditgivingthrusttoassess

theconditionsinareasofgeneralconditionofworkplacematerialhandling,equipmenthealth,hazardcontrol,emergencysystemsandPPEcompliance.

Inordertoimproveoursafetyperformancecontinuouslywehaveinitiatedexternalsafetyauditswhichhavebeencarriedouttoassessthefunctionality,adequacyandadherenceofsafetymanagementsystemsacrossallouroperationstofurtherimprove.

HindustanZincgivesparamountimportancetoitsemployeesafety,withafocustoreduceitsLTIFR(LostTimeInjuryFrequencyRate)yearafteryear.RidingonthesuccessstoryofHSEstewardsystemandnearmissreportingimplementedlastyear,thesafetycultureisstrengthenedfurtherwiththeintroductionofexclusivecontractorsafetyofcersforlargecontractorsandHZLappointedexclusivesafetyofcerforpoolof

smallercontractors.Wehavealsogiventhrusttovehicle/drivingsafetyandinitiatedguidelinesinthisrespect.Theseinitiativeshavepromotedsafebehaviouramongcontractworkmenandreducedrisksatouroperations.

AlltheeffortsofimplementationonsafetyperformancehaveresultedincontinuousreductionoftheCompanysLTIFRfrom5.46inFY2007to3.07inFY2008,areductionof44%year-on-year.

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ENVIRONMENTHindustan Zincs approach towardsenvironmental sustainability is tooptimise resource use, minimisethe carbon footprint and conservebio-diversity in and around itsoperating locations.

The Company has a qualied team ofenvironment professionals consistingof certied ISO auditors, environmentengineers, scientists and ecologists.The team is governed by HindustanZincs HSE policy, and its functions arereviewed at various fora such as dailyoperations meetings, monthly reviewmeetings at the plant and Companylevels, and quarterly HSE Committeemeetings at the group corporatelevel. All employees from topmanagement to shop oor workmenare expected to champion the causeof environmental protection.

2007-08 has seen signicantimprovement in energy and waterutilisation, reduction in emissions andadoption of environment friendlytechnologies across all the operations.

ENERGY CONSERVATIONHindustan Zincs total energy useduring 2007-08 was 10.53 terra-joules(TJ). This included 1.87 terra-watt-hours (TWh) of electricity (equivalentto 6.7 TJ), most of which was producedin captive power plants. About 3.8 TJof energy was produced and usedat-source for the smelting operations.

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DisAster MANAgeMeNt PrePAreDNess

TheCompanyvoluntarilydecidedtocoordinatewiththeNationalDisasterManagementAuthority(NDMA)andtheDisasterManagementInstitute(DMI),Bhopal,toconductanon-siteandoff-siteemergencymockexerciseon24September2007atitsChanderiyaLeadZinc

Smelter.Thedrillwasaimedattestingthepreparednessofplantmanagementandthedistrictadministrationtotackleemergencysituationsunderthreescenarios:1.Leakageofpropaneandconsequentialreandexplosion.2.Leakageofchlorine.3.Leakageofsulphurdioxide(SO

2)gas.

ThedrillwastherstofitskindinRajasthanandwasconductedinthefullviewofmedia,externalobservers,thedistrictadministrationandtheChiefInspectorofFactories,GovernmentofRajasthan.ThethreescenarioswereenactedsequentiallyandthedisastercontrolmachineryofHindustanZincwasputtotestinordertocontrolthem.

Aleakagefromthepropanetankwasannouncedtothecontrolroomat9.55am.Immediatelythesprinklercoolingsystemwastriggered;rescueteamsandambulancearrivedwithinveminutes;andthesituationwasundercontrolinlessthan10minutes.Themockdrillalsoincludedferryinginjuredonestothenearesthospital.

Thiswasfollowedbytheannouncementofleakageinthechlorinehouse.Theneutralisationsystemwasimmediatelyactivatedandthecontrolroomdirectedmedicalandreunitstoreachtheincidentpoint.Awatercurtainwasformedandsprinklersweredeployedtodissolvethechlorinegas.

InthethirdscenarioofSO2leakage,evacuationplansforaffected

villageswereenacted.Off-siteemergencywasdeclaredbytheDistrictCollectorandallroadandrailwaytrafctoandfrom

Chittorgarhwasstopped.Theexercisegotrecognisedasoneofthebestoff-siteexercisebytheNationalDisasterManagementAuthority.


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Under Six-Sigma initiatives, dedicatedteams have taken up a number ofprojects to reduce energy consumption.Their projects have resulted in asustained decrease in specic energyconsumption over the last three years.Charts I and J show the general trendin reduced energy use both in smeltersand mines.

WATER CONSERVATIONSimilarly, there has been a signicantreduction in the usage of water in theCompanys operations. As shown inCharts K and L, water consumptionhas come down signicantly for bothsmelting and mining operations.

WIND ENERGYMost of the power generated in India isproduced by thermal power plants thatare fuelled by the large coal reservesin the country. We run our captive

power plants to meet the requirementsof our mining and smelting operations.Our power plants operate at theoptimal capacity compared to thestandard power utility plants leadingto more efcient power generation.

In the previous nancial year wereported the commissioning of 38.4MW wind energy in Gujarat, and thisyear we added another 68.8 MW windenergy capacity making a total installedcapacity of 107.2 MW as on 31 March2008. Further to this we shall addanother 17 MW of wind energy whichis progressing as per schedule.



30 child welfare centres are beingrun in joint collaboration with theSterlite Foundation for 1,200children aged between 2 and 5years. All these children havebeen immunised.LEAD (Literacy for Empowermentand Development), a programme onliteracy, was launched in vevillages of Chittorgarh, targetingthe age group of 18 and above.Within a year, these villages will bedeclared 100% literate.During the year we undertook theBal Chetna Anganwadi Projectcovering 16,000 children in the agegroup 36 years in 400 anganwadicentres spread across four districtsof Rajasthan.Computer education programmeshave been initiated in 200 schoolsand 50 Literacy Centres at Udaipur,Rajsamand, Bhilwara and

Chittorgarh Districts incollaboration with the DistrictEducation Department. A total of1,000 computers have beeninstalled. The project benets some48,000 students from Class 6 to 12.Under the Mid-Day Meal Scheme,the centralised kitchens inChittorgarh, Udaipur and Bhilwaradistricts are now reaching out tomore than 200,000 children.161 students were awardedscholarships under the AcademicExcellence and Talent Promotionprogramme in Udaipur andChittorgarh district.

Evening coaching classes areoperational for 900 students fromClass 10 and 12.Representing local talent at theinternational forums. Ms. Mala

Corporate Social Responsiility (CSR)is an integral part of Hindustan Zincsbusiness philosophy. Its centrality hasled the Company to undertake severalprojects aimed at achieving sustainablesocio-economic development of thevillages in the vicinity of its plantsand mines.

Our approach towards sustainabilityis to generate and establish socio-economic wealth and creatingopportunities of entrepreneurship,employment, and self-sustainedbusinesses for the local communityin which we operate. More importantlywe see ourselves as a major facilitatorin their socio-economic development.Through our various initiativesand a team of 150 qualied CSRprofessionals, specialists and eld-workers, we are positively impacting

the lives of 54,209 families across173 operational villages in theneighbourhood of its mines and plants.

HEALTH AND HYGIENEThe health of our local communitieswhere we are based is an importantaspect of all of our activities, some ofthe projects undertaken during the yearon health and hygiene of the localcommunities are:

Over 56,000 villagers have benetedthrough general rural medicalcamps and specialised medicalcamps such as Child Health Camps,Pulse Polio Camps, Eye Care

Camps and Family Planning Camps.Three super-specialised campswere organised in Chittorgarh andUdaipur districts, which focused onorthopaedics, skin, eye care,paediatrics and gynaecology.

Approximately 6,300 people werebeneted through these medicalcamps.All 173 Operational Villages in theneighbourhood of mines andsmelters of the Company weretargeted for the National PulsePolio drive, resulting in 75%coverage. This was done incollaboration with District HealthDepartment and Primary HealthCentres (PHCs).More than 200 family planningoperations were conducted. Inaddition, vasectomy camps wereconducted in collaboration withDistrict Administration of Bhilwara,which beneted 700 people.An ambulance has been providedto Help Age India for conductingrural medical camps in theremote villages.Reproductive Tract Infection and

Sexually Transmitted Infectioncases have gone down from18% to 6%.Supplying potable water in27 villages around Debari,Visakhapatnam, RajpuraDariba and Rampura Agucha.Approximately 500,000 litres ofwater per day is being supplied tonearby localities of Chittorgarhfrom the Chanderiya unit.

EDuCATIONWe have developed a systematicstructure to address and manageour responsibilities within the local

communities where we operate.Special attention is also given to thearea of education through variousinitiatives like:

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Sukhwal was sponsored byHindustan Zinc to participate inthe Commonwealth LiftingChampionship held at New Zealandand she returned to India with FourGold medals and one silver medal.

SuSTAINAbLE LIVELIHOOD

Our approach to our local communitiesand their development is holisticand robust and takes into accountthe remoteness of our locations.We intend to be a benchmark inaddressing the real needs of our localcommunities through the application ofsustainable initiatives for their longterm inclusive growth. Few of theinspiring initiatives were:

850 village youth were trained invarious livelihood skills like retail,tailoring, tter, electrical equipment,bandhej, block printing, homeappliances and pumps set repairs.

Entrepreneurial training wasimparted to 220 young peoplefrom the operational villages ofaround Debari.157 Self Help Groups (SHGs), 1,791members have a cumulative fundbase surpassing Rs.720,000. Ofthese, 37 SHGs have been linkedto micro enterprise.5,900 farmers were impartedtraining in soil, seed, watermanagement and vermiculture forbetter yield. 150 vermi compostunits were established by some ofthese farmers.Certied seeds were distributed to

450 farmers in 41 villages.Veterinary camps were organisedover for over 60,000 cattle.Drip irrigation and sprinklers wereinstalled in 12 villages, beneting

120 farmers. Micro irrigationpractices were promoted among 50farmers, which resulted in a 45%reduction of water use over 200acres of land.More than 2,600 acres of land werebrought under irrigation and multi-crop cultivation.

MODEL VILLAGE DEVELOPMENTOur approach to communitydevelopment is holistic, robust,integrated, intensive, long term andsustainable, given the remotenessof our locations. Our stakeholder

engagement process, coupled withbase line study and need assessmenthelps us develop and shape ourprogrammes for a three to ve yearperiod for select villages.

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The module is intensive and long term.We apply the single principle ofpartnership between all ourstakeholders including thecommunities in which we operate,NGOs local and state government.

Hindustan Zinc identied 59 villageslacking in basic amenities fortransforming them into Model Villages.This project will be accomplished overa period of three to four years in threephases, through active participation ofall the stakeholders. During 2007-08,32 villages were successfully declared

as Model Villages. The social audit ofthese villages has already beenconducted by Operations ResearchGroup, New Delhi.



ProviDiNg

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solUtioNsWomans self help group


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toourtransformation.Ithastaken

usthreetofouryearstoevolveasanempoweredvillageunit.Theelectricityconnectivityfor94ofourhouseholdswasensuredthroughinvolvementofeachhouseholdincludingvoluntarycontributionforthesame.Thetimeissetforsignicantenhancementinthequalityofourlife.remarkedGaneshDangi,villageleaderGodwa.

ThenitenessoftheeffortswasvalidatedbyOperationalResearchGroup,NewDelhiwhoevaluatedthisvillageaspartofoursocialaudittotheentire32ModelVillageDevelopmentProgramme.

TheGodwavillageinRajasthanlacked

basicamenitieslikeelectricity,primaryschool,roadetcsinceindependence.Therstchallengewastomobilisepeopletocometogethertoaddressthechallenge.Theworkthenexpandedtoformvillageinstitutionstotaketheprocessforward.ThemostimportantwasensuringaccesstoservicesratherthanbeingaserviceproviderandweweremotivatedtobeselfsustainablefromthebeginningremarkedtheSHGgroupleader.

Denitely,roadandelectricityarebasicamenities.HZLscontributionandthevillagecollectivenesswasthekey



THE GODWAThe Godwa village near Debari inRajasthan lacked basic amenitieslike electricity, primary school, roadetc since independence. The rstchallenge was to mobilise peopleto come together to address thechallenge. The work then expandedto form village institutions to take theprocess forward. Four self help groupswith 52 members and a cumulativefund of Rs. 60,000/-, vocationaltraining for rural youths by SANKALP,development of 10 organic farmingdemonstration sites, fruit plantationin six acres through 24 farmerscollective, resource mobilisationfrom district administration forconstruction of 3 km road connectingto local market hub, facilitating primaryschool, child welfare centre for 40preschool children, facilitating theestablishment of primary school

ensured sustainability. The mostimportant was ensuring access toservices rather than being a serviceprovider and we were motivated to beself sustainable from the beginningremarked the SHG group leader.

Denitely, road and electricity arebasic amenities. HZLs contribution andthe village collectiveness was the keyto our transformation. It has taken usthree to four years to evolve as anempowered village unit. The electricityconnectivity for 94 of our households

was ensured through involvement ofeach household including a voluntarycontribution for the same. The time isset for signicant enhancement in thequality of our life. remarked GaneshDangi, village leader Godwa.

The niteness of the efforts wasvalidated by Operational ResearchGroup, New Delhi who evaluated thisvillage as part of our social audit to theentire 32 Model V illage DevelopmentProgramme. The impact of SHG andorganic farming initiatives wereappreciated. Apart from this, the villageautonomy and empowered institutionswere the value addition to the desiredresults. The signicant improvementin nutrition level of preschool childrenthrough child welfare centre was alsoestablished. Such results arewelcoming and would facilitate theprocess of graduation remarked the

CSR team of the Debari Zinc Smelter.AWARDS AND RECOGNITIONThe Company has received severalawards in 2007-08, both at an overallcorporate level as well as for itsindividual operating units. However ourefforts towards being a responsiblecorporate through various sustainabledevelopment initiatives wererecognised at the local, national andinternational levels. Some of these aregiven below.

CORPORATEGolden Peacock Award forExcellence in CorporateGovernance, 2007.Dun & Bradstreet AmericanExpress Corporate Award 2007 forbeing the Top Indian Company inthe Non-Ferrous Metals Sector.

ENVIRONMENT/INDu

Documents

42nd Annual Report 2007-08