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A PROJECT REPORT ON Cash Management Submitted in partial fulfilment for the Award of degree Bachelors of Business Administration
SUBMITTED BY: Ankit Jain BBA III
DECLARATIONThis is to certify that all the work contained in this research report titled as CASH MANAGEMENT is genuine work done by me as part of summer training project, Hindustan Zinc Ltd. during May-June 2011. Wherever some material is taken from website or other published literature, suitable references are given and sources are acknowledged.
PREFACEAbout three decades ago, the scope of financial management was confined to the raising of funds, whenever needed & little significance used to be attached to financial decisionmaking & problem solving. Today, financial managers perform the passive role of scorekeepers of financial data, information & arranging funds, they occupy key positions in top management areas & play a dynamic role in solving complex management and financial problems. The main advantage of using Cash Management is to make the optimum level of cash in the organisation and investing the additional fund into other activities where it needed. And To minimize the amount locked up as cash balances in the company. And To meet the cash disbursement need as per the payment Schedule. The Cash is uses in the company for the payment of day to day expenses which are occur in the organisation and to protect the firm against uncertainties characterizing its cash flows. And Cash is the most important factor in financial management. It is also the most important current asset for the operation of the business. Every activity in an enterprise revolves round the cash. While cash serves these functions, it is an idle resource which has an opportunity cost. The liquidity provided by cash holding is at the expense of profits sacrificed foregoing alternative opportunities. Hence, the finance manager should carefully plan and control cash. Cash is also helpful in maintaining the goodwill of the firm in the market. The company can gain the profit to purchases the material from the other firm on credit. And availing the cash discount to paid the payment in cash at the time .and it also help in managing the good relationship with banks.
I would like to express my gratitude to all those people who helped me in completing my project at Hindustan Zinc Ltd. My project title was cash management. I am deeply indebted to my project Guide Mr.S.N.LADDHA (SENIOR MANAGER) FINANCE Hindustan Zinc Ltd. for allowing me to undertake the project & making available all facilities for the successful completion of the study besides guiding me to pursue the study on proper lines.
VEDANTA is a London listed metals & mining company. The major metals produced are Aluminum, Copper, Zinc & Lead. Vedanta is Indias only integrated Zinc producer. The principle operations are in Rajasthan, dominated by Rampura Agucha Mine, Rajpura Dariba mine, Zawar mines. The Zinc business of Vedanta is managed with in Hindustan Zinc Limited. HZL is Indias only integrated Zinc company, operating from Mines to finished metal & supplies around 90% of Indias Zinc requirements. 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. 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 was a wholly owned company of the Govt. of India till disinvestments of shares by the Govt. in the 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 96000 TPA respectively. Sulphuric acid, cadmium and zinc Sulphate are produced as by-products. It also has installed capacities for phosphoric acid and super phosphate. The main products, zinc and lead, are used by the engineering and automobile industries. Working capital is the capital required for maintenance of day-to-day business operations. The present day competitive market environment calls for an efficient management of working capital. The reason for that is attributed to the fact that an ineffective working
capital management may force the firm to stop its business operations, may even lead to bankruptcy. Hence the goal of working capital management is not just concerned with the management of current assets & current liabilities but also in maintaining a satisfactory level of working capital. And the cash management is the part of working capital management. The main objectives of the study were to analyze by the for the day to day transaction to meet the company requirement that how much cash the company need to keep with it . because if the company keep more fund then required then the company loose the other investment opportunities or loose the interest with the company can gain to invest the money in some other place.
CONTENTS1. 2. 3.
Introduction to Industry-------------------------Introduction to Organization-------------------Research Methodology-------------------------3.1 Title of Study -----------------------------3.2 Duration of study ------------------------3.3 Objective of Study-----------------------3.4 Type of Research-----------------------3.5 Data Collection and Sampling-------3.6 Scope of Study---------------------------3.7 Limitations----------------------------------
4. Facts and Findings----------------------------------------5. Data Analysis and Interpretation---------------6. SWOT Analysis-----------------------------------------------7. Conclusion-----------------------------------------------------
8. Recommendation and Suggestions-------------------9. Questionnaire------------------------------------------------10. Bibliography-------------------------------------------------
INTRODUCTION TO INDUSTRY
INTRODUCTION TO INDUSTRYZinc was first introduced commercially in the United States during the 1850s, with small-scale smelting plants in New Jersey, Pennsylvania, Illinois, Missouri, and Arkansas, near sources of ore and fuel. The principal early use of zinc was in the production of brass, a zinc-copper alloy. The first known domestic zinc production was at the Washington, D.C., arsenal in 1835, by Belgian workers. A furnace was built primarily to produce zinc for making brass to be used in standard weights and measures. Early zinc production used oxidized forms of the ore, reduced by externally heating closed clay vessels containing a mixture of ore and coal. The vaporized zinc was condensed and cast into slabs. As ore deposits were worked to greater depths during the 1880s, larger quantities of sulphides and smaller quantities of oxides occurred. This required new technology for rotating the sulfides to form crude oxides. As a result of this technology, sulfuric acid became a by-product of the zinc industry. Development of zinc-lead ore fields in Missouri, Kansas, and Oklahoma in 1895 gave a great impetus to the building of gas-fired zinc smelters in the region. The discovery of natural gas in and west of this area fueled developments, and the tri-state region became known as the Gas Belt. Westward migration created a great need for galvanized, zinc-coated steel for fencing, corrugated sheet metal, and brass hardware. In 1852, Samuel Wetherill invented a grate furnace to produce zinc oxide from oxidized ores, a so called American process that was perfected in the last half of the nineteenth century.
During the first quarter of the twentieth century, as new mining districts were opened up in the Rocky Mountain area, in Tennessee, and in Virginia, the froth flotation technique for separating sulfide
minerals from associated rock became the major mode of production. Demand for zinc during World War I led to great expansion of the U.S. zinc mining and smelting industry. It also spurred introduction of the electrolytic process in 1916, which used electrical energy as a substitute for coal and gas in freeing zinc from its mineral compounds. In the course of improving the process, it became possible to produce high-purity zinc. The uses for this zinc were vast, enabling mass production of intricate, precision shapes. When alloyed with aluminium, zinc products were instrumental in the burgeoning automobile and appliance industries beginning in the 1930s. New smelting techniques recovered cadmium as a by-product, which is valuable for its attractive and durable finish when plated onto other metals.
Introduction To Organization
HISTORYHindustan Zinc Ltd. was created from the erstwhile Metal Corporation of India (MCI) on 10th January 1966 as a Public Sector Undertaking. 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 state in HZL by acquiring another 19.9% interest from the Government of India. Today HZL is Indias leading Zinc producer. HZL is a vertically integrated Mining & Smelting company, gearing up to: Zinc. Become a global leader in Zinc. Create value for all entities whether it is Customers, Investors or Constant innovation, meticulous attention to detail, extensive investments Harnessing mining resources to help India maintain self-sufficiency in
Employees. in R&D and technology are the hallmarks of HZL making it a multi-unit and multi-product company.
VEDANTA is a London listed metals & mining company. The major metals produced are Aluminum, Copper, Zinc & Lead. Vedanta is Indias only integrated Zinc producer. The principle operations are in Rajasthan, dominated by Rampura Agucha Mine, Rajpura Dariba mine, Zawar mines. The Zinc business of Vedanta is managed with in Hindustan Zinc Limited. HZL is Indias only integrated Zinc company, operating from Mines to finished metal & supplies around 90% of Indias Zinc requirements. Vedanta is a FTSE 100 metals and mining company. Our principal operations are in India, Zambia and Australia. The major metals produced are Aluminums, Copper, Zinc and Lead. Our mission is to create a world-class metals and mining group and generate strong financial returns. Sustainable development is an integral part of our business philosophy. Our processes and performance have evolved on safety, health and environment in tandem with our sustainable development goals. We stay committed to continue to improve our performance in line with our HSE & Social Policy. 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. 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.
MANAGEMENT PROFILE BOARD OF DIRECTORSShri Agnivesh Agarwal, Chairman. Shri M.S. Mehta, CEO & Whole-time Director Shri S.k. Mittal, Director Smt. Ajita Bajpai Pande, Director Shri G.Srinivas, Director Shri Nand Kishore Shukla, Director Shri Anil Agarwal, Director Shri Navin Agarwal, Director Shri Tarun Jain, Director
HINDUSTAN ZINC AT A GLANCE:Hindustan Zinc Ltd. was created from the erstwhile Metal Corporation of India (MCI) on 10th January 1966 as a Public Sector Undertaking. 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 state in HZL by acquiring another 19.9% interest from the Government of India. HZL produces Zinc, Lead and by-products viz. Sulphuric Acid and Silver. HZL achieved an all-time high production output of 293,699 tones Zinc and a record production of 999,007 tones of Zinc concentrate during 2005-06.Today HZL is Indias leading Zinc producer. HZL is a vertically integrated Mining & Smelting company, gearing up to: Zinc. Become a global leader in Zinc. Create value for all entities whether it is Customers, Investors or Harnessing mining resources to help India maintain self-sufficiency in
Employees. Constant innovation, meticulous attention to detail, extensive investments in R&D and technology are the hallmarks of HZL making it a multi-unit and multi-product company.
GROWTH HISTORY OF THE COMPANYDriven by the capability of 6,359 employees, Hindustan Zinc Limited is the worlds second largest zinc producer. 1966: - Hindustan zinc limited was incorporated from erstwhile metal Corporation of India on 10 January 1966 1991: -Chanderiya Pyro-metallurgical lead zinc smelter and Rampura Agucha mine began production. 2002: -Acquired by Sterlite industries (India) Limited on 11 April 2002. 2003: -32,000 tons of zinc debottlenecking completed at Debari zinc smelter and Vizag zinc smelter -Debottlenecking of Rampura Agucha Mine from 1.37million tones per annum to 2.30million tones per annum 2004: -35,000tonnes of zinc debottlenecking completed at Chanderiya Smelter Comp -Commissioned 170,000 tons per annum of hydrometallurgical zinc smelter (Hydro)at -Commissioned 2*77MW captive power plant at chanderiya smelter Complex. -Rampura Augucha Mine expansion from 2.30million tones per annum to 3.75million tones per annum. 2006: -Commissioned 50,000 tons per annum of Ausmelt Lead smelter at chanderiya smelter complex. 2005:
-Sindesar Khurd Mine began production with an initial capacity of 0.3million tones per annum. 2007: -Commissioned 170,000 tonnes per annum of hydrometallurgical zinc smelter (Hydro) ina benchmark time of 20month at chanderiya smelter complex. -Commissioned 38.4MW of wind Energy farms at Gujarat.
2008: -88,000 tonnes per annum zinc debottlenecking completed at chanderiya smelter complex and debari zinc smelter . -Rampura Augcha Mine expension from 3,75million tones per annum to 5.00million tones per annum . -Commissioned additional 68.8MW Wind energy farms making the companys total Wind energy capacity to 107.2MWas on 31March 2008
INDIAN MARKET: ZINCSpurred by industrialization and infrastructure demand, India has the potential to see high growth in zinc consumption. In 2007,India zinc demand rose strongly by 9.5%to 0.47 million tonnes, the increase in zinc demand is led by India fast growing galvanizing sector which accounted for about 70% of the total zinc demand. For 2009-10, the rise in demand of zinc is expected to remain robust driven by realty growth, manufacturing sector and infrastructure.
USE OF ZINC:
Zinc is the one of the best form of the protection against corrosion, and used extensively in building construction infrastructure, household appliances, automobile, steel furniture, and many more.
The most widely used zinc compound, zinc oxide is used in valcanisation of rubber, as well as a ceramics, paints, animal feed, pharmaceuticals and other application. A special grade of zinc oxide has long been used in photocopiers.
DIE CASTINGS Zinc is a ideal material for die castings and is extensively used in hardware, electrical equipment, automotive and electronic components.
PRODUCTION & OPERATION PERFORMANCEHindustan zinc is the second largest integrated producer of zinc in the world. Its main product are zinc and lead, beside sulphuric acid, cadmium & silver. Hindustan zincs operation can be classified into mining and smelting currently. It has operating facilities at seven location, of which four are mining operation and the remaining three are smelting, barring the smelting facilities at Vishakhapatnam in Andra-Pradesh , all other facilities of the company are in the state of Rajasthan. A part from sindesar khurd. Which is a new mining site , the other six units are accredited with ISO 14001:2004 for environment, and OSHAS 18000 for health and safety.
Hindustan Zinc Ltd. (HZL) is the only integrated Zinc producer in India and owns captive Zinc mines that supply all of HZLs Zinc concentrate requirements for its smelters. HZL operates open cast (Rampura Agucha Mine) as well as underground mines (Rajpura Dariba and Zawar Mines) with state of the art technology, with Rampura Agucha mines being one of the most cost-efficient Zinc mines in the world.
Rajpura Dariba Mines Commissioned Location Capacity
1993 75 km north-east of Udaipur, Rajasthan, India 1.3 MTPA ore Including Sindesar Kurd mines capacity of 0.3 MTPA
An underground mine with onsite concentrator and two vertical access shafts. Mining is done through vertical crater retreat and blast hole stopping. Ore is crushed underground before hoisting and stockpiling for secondary and tertiary crushing. Zinc 6.0%, Lead 1.7%(Grades are as on 31 March 2006)
Zawar mines Commissioned
Location Capacity Details
40 km east of Udaipur, Rajasthan, India 1.2 MTPA ore An underground mining complex consisting of four underground mines and one concentrator for all mines. Mining is done with sublevel stopping with matching infrastructure.
Zinc 4.3%,Lead1.9% (Grades are as on 31 March2006)
ISO 9001:2000, ISO 14001:1996, OHSAS 19001:1999
The company mining operations are located in Rampura agucha, Rajpura, dariba, Sindesar khurd and zawar mines all in Rajasthan. Rampura agucha, an open cast zinc-lead mine, is located in Bhilwara district 225 K.M. north of Udaipur, Rajasthan. it is words third largest open cast mine for zinc and lead ,with a capacity of 5.0 Million tones per annum after a recent expansion. It is also one of the lowest cost zinc mines in the world .and has a 55 certification and the for star rating form the British safety council. The other three mines Rampura agucha, Rajpura, dariba,Sindesar khurd and zawar mines with an annual capacity of 0.3 Million tones ,0.6 Million tones and 1.2 million tones of respectively:
SMELTING:Hindustan zincs smelting facilities are located at Chanderiya and Debari in Rajasthan and Visakhapatnam in Andhra Pradesh. Chanderiya smelter complex with a capacity of 525,000 tons of zinc is the worlds largest single location zinc smelting complex. During 2007-08, Hindustan zinc received the coveted London metal Exchange (LME) registration for zinc metal produced from its hydro I smelter at chanderiya under the brand of Hindustan zinc SHG 99.99 chart G give the details of capacities and production of the smelting operation.
While increased in saleable metal output was driven by the increased in Hydro-II facility at chanderiya coming on stream in third quarter of FY2008 production of the existing capacities at chanderiya and other location also contributed to this growth .during the year production at debari and vishkhapatnam increased by 5.6% and 8.3% respectively. Hindustan Zinc Ltd. (HZL) operates smelters using the ISP pyrometallurgical (Chanderiya Lead Zinc Smelter), RLE hydrometallurgical (Debari, Vizag and Chanderiya Smelters and Ausmelt (Chanderiya Lead Smelter) process routes.
Chanderiya Lead Zinc Smelters(CLZS) Commissioned Location Capacity 1991 120 km east of Udaipur, Rajasthan, India 105,000 TPA of refined Zinc, 35,000 tpa of refined Lead pyrometallurgical lead zinc smelter. 170,000 TPA of refined Zinc - Hydrometallurgical zinc smelter. Details 50,000 TPA of refined Lead Ausmelt lead smelter. A pyrometallurgical smelter using ISP technology. Main byproducts are Sulphuric Acid and Silver A hydrometallurgical smelter using the state-of-the-art RLE technology commissioned in the year 2005-06. Main by-product is Sulphuric Acid. An Ausmelt lead smelter commissioned in February 2006 Certifications Captive Generation ISO 9001:2000, ISO 14001:1996, OHSAS 19001:1999 (For Pyro
Plant) Power Coal based 154 MW captive power plant commissioned in 2005.
DEBARI ZINC SMELTER Commissioned 1969 Location Capacity Details 12 km east of Udaipur, Rajasthan, India 90,000 TPA of refined Zinc A hydrometallurgical smelter using RLE technology. Main byproducts are Sulphuric Acid and Cadmium. Plant is equipped with 29 MW of captive power generation capacity. Certifications ISO 9001:2000, ISO 14001:1996, OHSAS 19001:1999
VIZAG ZINC SMELTER Commissioned Location Capacity Details
1977 17 km from Vishakhapatnam, Andhra Pradesh, India 56,000 TPA of refined Zinc A hydrometallurgical smelter using RLE technology. Main byproducts are Sulphuric Acid and Cadmium. The plant obtains part of its power requirement at low-cost due to shareholding in a gas utility company in Andhra Pradesh.
ISO 9001:2000, ISO 14001:1996, OHSAS 19001:1999
VISION AND MISSION OF COMPANYVision: Be a world-class zinc company, creating value, leveraging mineral resources and relatedcompetencies.
Be a lowest cost zinc producer on a global scale, maintaining market leadership . One million tons zinc-lead metal capacity by 2010 Be innovative, customer oriented and eco-friendly, maximizing stake-holder value.
One of the worlds largest integrated zinc and lead producer. Refined zinc production capacity 669,000 tons per annum . Refined lead production capacity 85,000 tons per annum.
PROJECTS: GROWTH-NEXT STAGE:
The company has recently announced a list of new project in mining smelting and captive power plants, which will be made operation by 2010. These are: -Mining: Expansion from 5.0 million tones per annum to 6.0 million tones per annum at Rampura Agucha; expansion from 0.3 million tones per annum to 1.5 million tones per annum at sindesar khurd; and a new mine with an initial capacity of 0.3 million tones per annum at Kayar in Rajasthan. -Smelting: set up a 210,000 tons per annum zinc hydrometallurgical plant and a 100,000 tons per annum lead plant at Rajpura Dariba. -Captive power: to meet the energy requirements for these operation, the company will also add 2*80 MV captive power plants at Rajpura Dariba. Completion of .These project will take our annual mining capacity to more than 1 million tones (1,065,000 tons) per annum making Hindustan zinc the worlds largest zinc producer by 2010, with fully integrated mining and captive power generation capabilities. In addition to the above, we also expect to progressively increase our silver production from the current levels of 2.8 million ounce per annum to a level of approximately over 16.1 million ounce per annum.
TYPES OF ZINC PRODUCES BY HZL
Special Grade ZincFirst Use Die Casting and Gravity Casting End-Use Automotive equipment, household appliances, fittings, toys, tools, etc.
High Grade Zinc Special high grade zinc 99.995% Ingot weight Bundle weight Bundle configuration Bundle dimension 470 (+/- 10) mm width 475 (+/- 10) mm height First Use Corrosion Protection (galvanizing, zinc thermal spraying, electro plating, zinc rich paintings) Brass (copper-zinc alloys) Building/construction,fittings automotive and electrical equipments. Building/ construction. Automotive/transport, computers medical equipment, End-Use Building/construction, 25 kg each (+/- 2 kg) 1000 kg each (+/- 50 each) 4 ingot/ layer X 10 layer 960 (+/- 10)mm length
aluminum alloys, magnesium alloys Rolled Zinc Batteries Zinc Compounds
construction products. Food industry, animal feed, fertilizers, pharmaceutical industry, cosmetics industry.
Prime Western Grade Zinc
First Use Corrosion Protection (galvanizing, zinc thermal spraying, plating, zinc rich paintings) Zinc Oxide
End-Use Building/construction, energy/power, electro furniture, agriculture automotive/transport. Tyres, all rubber goods. steel
CHANDERIYA LEAD ZINC SMELTER
An Introduction Chanderiya Lead Zinc Smelter was established in the year 1989. It started raising Lead Zinc from its Agucha Mines in Udaipur. There are many places in our country, where we get different types of metallic substance as raw materials for industries. In these substances the metals are formed in compound form.
Plenty of minerals are, obtained in Rajasthan. The Jawar Mines in Udaipur are famous as a source of zinc all over world. Bhilwara the Beawar, Ajmer, Dungarpur, Banswara & Tonk are the famous places as a source of mica. There are basically 2 types of assets.
A) i) ii) iii) B) i) ii) iii) 1)
Mines :Zawar Mines Rampura Agucha Mines Dariba Mines Smelter :Deriba Smelter Chanderiya Smelter Vizag Smelter Raw Material Handling Plant (R.M.H.) In the Hydro plant the raw material used is Zinc- sulphide (ZNS) which is send to the Roaster Furnace through the chain conveyers.
Roaster plant -
2.1 Concentrate Storage
The zinc concentrate is delivered by trucks and is discharged into two underground bins. Several belt conveyors transport the concentrate from the underground bins to the concentrate storage hall. A Pay loader feeds the materials into two hoppers. By means of
discharging and transport belt conveyors including an over-belt magnetic separator, a vibro screen and a hammer mill, the materials are transported to the concentrate feed bin. Dross material from the cathode melting and casting process will be added to the feed material before the vibro screen. For moistening of the concentrate several spraying nozzles are foreseen in the concentrate storage hall, as well as on the conveying belt before the concentrate feed bin.
2.2 Material Feeding System and Fluid Bed Furnace
The roaster with a grate size of 123 square meters is designed to treat concentrates of varying compositions. The produced calcine has the following characteristics. Sulphide sulphur in calcine approx. 0,3% of sulphide sulphur. Sulphate sulphur in calcine approx. 1,8% of sulphate sulphur Blended feed from the concentrate feed bin is discharged onto a discharge belt conveyor, which in turn discharges onto a rotary table feeder. The roaster is fed then by two slinger belts. The average particle size distribution of a standard concentrate feed mix is given below: The loading level gate at the concentrate bin outlet, which changes the material loading level on the belt, coarsely controls the quantity of the feed flowing onto the discharge belt conveyor. The fine control occurs by means of the belt speed, which can be accelerated or slowed down by a remote-controlled PIV gear drive. The coarse adjustment is made only once, during start-up, with fine adjustments being made as necessary during operation. The rotary table feeder supplies concentrates to the slinger belts, which directly feed into the roaster. The slinger belts provide a very soft, equal, and fine distribution of the concentrates in the bed area. It is particularly important to distribute the fine material over the surface of the fluid bed to prevent local material deposits and the development of gas zones of varying S02 concentration.
For the initial charge of concentrates, the start-up burners and lances using fuel oil heat the roaster to ignition temperature. The grate itself is made of steel, lined with castable materials. The combustion air serves both as a carrier medium for the fluid bed and as a source of oxygen for the predominant reaction, which converts zinc sulphide to zinc oxide and sulphur dioxide. ZnS + 1.5 O2 -> ZnO + SO2 H = -446 kJ/mol
The reaction in the roaster is strongly exothermic, and the gases leave the roaster with a temperature of approximately 930C - 975C and with an S02 concentration of approximately 10,2% by volume, dry basis. A portion of the surplus reaction heat is absorbed by cooling coils installed in the fluid bed in the form of evaporator heating surfaces connected to the forced circulation system of the waste heat boiler, thus cooling the fluid bed by indirect heat transfer. The flexibility needed for the operation of treating concentrates with varying calorific values is provided by the combined direct/indirect cooling of the turbulent layer. A portion of the feed charged into the roaster agglomerates in the bottom of the fluid bed and would result in a continuously increasing pressure loss in the roaster if an appropriate quantity of material were not withdrawn. Bed material is withdrawn via: The continuous roaster overflow. The purge device for coarse agglomerates.
The roaster overflow functions by gravity and its barrier rim can be raised or lowered by the insertion of weir plates. The purge-discharging device is operated manually and withdraws the material from the grate level and thus prevents the accumulation of the coarser-sized particles. The operation frequency depends on the formation of coarse agglomerates, however as an indication and for 1st start-up the discharge should be operated once per shift.
The roaster has a cylindrical bed section, a conical intermediate section, a cylindrical enlarged top section, and a grate area of 123 square meters. The enlarged cylindrical section enables a complete roasting of even the finest calcine particles without the occurrence of a secondary combustion phenomenon. For process optimisation 10 secondary air nozzles are installed to be able to distribute additional roasting air above the bed. A slight draught is maintained at the roaster gas outlet to ensure the safety of the roaster operation. Before the first start-up, as well as for start-ups after extended shut-downs, the fluid bed furnace and the waste heat boiler have to be preheated. For this purpose, the roaster is equipped with a preheating unit for start-up purposes, which consists of 4 oil burners and 12 oil lances with accessories. The necessary combustion air is taken from the main roaster air fan and the start-up and cooling air fan. 2.3 Calcine Discharging System The calcine is discharged at four points during normal operation: Roaster Waste heat boiler Cyclones Hot electrostatic precipitator The cyclone and precipitator dust is received relatively cold (300-350C) and sufficiently fine in size, whereas the calcine of the roaster and waste heat boiler requires primary cooling as well as grinding to the size required for leaching. This results in the following arrangement of the calcine handling.
Roaster calcine and boiler dust are combined in a common chute and passed to a drum cooler. A water-cooled rotary valve provides the gas seal of the boiler chain conveyor. The cooling air blower cools the boiler chain conveyor. The material temperature at the drum cooler outlet is below 150C. The pre-cooled calcine is transferred into a ball mill via an inclined chain conveyor. This ball mill is designed to achieve the desired grain size, which is 90% below 0.075 mm and 70% below 0.050 mm for the total calcine.
The finest dust precipitated in the hot gas ESP is combined with the mill discharge and transferred to the calcine silos via the pneumatic transport system. A bag filter is provided to capture fugitive dust from the calcine handling ventilation system. The combined calcine from the ball mill, cyclones and hot-esp are transported via a chain conveyor to the calcine intermediate bin. Screw type compressors provide the air for the pneumatic transport pumps, which transport the calcine to the calcine silo. The calcine silo bin is equipped with a separate storage dedusting air fan. The hot dust laden gas stream leaving the roaster is drawn into the waste heat boiler under suction from the SO2 blower. In the boiler, the dust-laden gases are cooled down from the roasting temperature to about 350C before entering the dust precipitation system. The waste heat boiler is a forced-circulation-type boiler for the production of superheated steam. The convection heating surfaces of superheaters and evaporators are combined in bundles in a suspended arrangement. The waste heat boiler is equipped with a membrane tubed settling (drop-out) chamber ahead of the front convection bundles. In the settling chamber, part of the dust carried along with the gas is separated. Since the waste heat boiler handles roasting gases having very high dust content, a mechanical rapping device has to be provided. Pneumatic cylinders drive these rappers. Cooled gases leaving the waste heat boiler flow into the hot electrostatic precipitator (ESP) for final dust removal. The SO2 bearing gases goes to acid plant through Gas cleaning section. In Acid Plant SO2 is converted into SO3 in presence of of catalyst. SO3 is absorbed by H2SO4 SO2 + O2 =SO3 SO3 + H2O = H2SO4
LEACHING & PURIFICATION -
The purpose of leaching is to extract maximum zinc from the calcine into zinc sulphate form and to purify the solution from all other impurities like copper, cadmium, cobalt, arsenic nickel, iron, germanium etc. to the maximum extent before sending the solution to zinc electrolysis plant for extraction of zinc. The copper is recovered as copper cement and
cadmium as cadmium sponge. The iron present in calcine is also leached during hot leach operation and is precipitated out as sodium jarosite by addition of sodium sulphate. All other impurities go along with the jarosite cake. The leaching section is subdivided into various sections:
Calcine storage and feeding Neutral leaching To convert zinc oxide into ZnSO 4 solution at ~5 pH
in presence of excess calcine so as to get minimum impurities in neutral overflow solution. 3)The zinc oxide remaining un-dissolved during neutral leaching is leached at higher temperature (70-80C) and acidity (40-50 gpl) known as Hot Acid Leaching I (HAL I). Zinc Ferrite (ZnO Fe2O3) formed during roasting is not leachable even during HAL I. To dissolve zinc contained in zinc ferrite, more aggressive leaching (90-95C, 116 gpl acidity) is adopted wherein both zinc and iron go into solution. This stage is termed as Hot Acid Leaching II (HAL II). This step helps to achieve very high overall zinc recovery (97%).
Jarosite precipitation It is required to remove the iron from ZnSO4 solution,has leached during hot acid leaching II-stage. This is done at high temp (100 C)
and by adding sodium sulphate to precipitate iron as sodium jarosite. The other impurities are also precipitated along with jarosite during this stage.
Pre-Neutralisation This stage is to eliminate the residual iron in clear solution
from jarosite before entering the neutral leaching. Calcine is added and pH ~4.5 is maintained to precipitate iron as ferric hydroxide.
2.1 Neutral Leaching
The neutral leaching is the most important section of the leaching plant, because most of the zinc is dissolved here. Calcine from the calcine storage day bins will be fed via star feeder, weighing belt conveyor and screw conveyor into the first and third NL leaching tank. The homogenized solution made up of spent electrolyte, pre-neutralized solution, recirculation streams from the purification section and MnO2 as well as MnO2 slurry from the tank house is pumped to the first neutral leach tank via a flow control valve. The main amount of calcine added to the leaching section is fed to the first tank of the NL section. To eliminate all the iron in solution and to precipitate harmful impurities it is required to neutralise the solution to a pH of 5.2. This final pH-adjustment is done in the third NL tank by adding calcine.
The final acidity in the last tank of the NL leaching cascade should be maintained very exactly at a pH of 5.2 to 5.4). At this pH value the calcine added has been minimized, thus obtaining a very small amount of unreacted calcine in the neutral leach residues. The suspension from the last NL tank containing the un-leached calcine, iron precipitates and zinc ferrites flows via a launder to a thickener for solid-liquid separation. To accelerate the solid-liquid separation diluted flocculants are added to the solution. The solids, which settle on the thickeners conical bottom, are pushed towards the center by means of the thickener rake, from where they are pumped to the hot acid leaching section to recover the zinc from excess of calcine added to the NL section and from the undissolved zinc ferrites (ZnO x Fe2O3). The clear NL thickener overflow is collected in a pump tank, from where it is pumped to the purification section. The basic reaction during neutral leaching is as follows; ZnO + H2SO4 = ZnSO4 + H2O MeO + H2SO4 = MeSO4 + H2O Me = metals other than zinc present in concentrate.
LeachingSpent Calcine MnO 2 O/F Calcine Pre Neutralisation Thickening To Purification Spent Calcine O/F Sodium Sulphate Jarosite Precipitation Gypsum from Electrolysis Thickening U/F Filtration Pb-Ag residue to ISF Lime Neutralization Cake Cement Jarofix Jarofix for disposal Filtration Lime Mg Bleed treatment Filtrate Neutral Leaching
Hot Acid Leaching I & II Thickening U/F Filtration
O/F Cell Acid
Hot Acid Leach I and II
The neutral leach residue and the leaching residues from the pre-neutralization step, are leached in two counter current hot acid I, II leaching steps. The main purpose of this two-step counter current leaching step is to break up the incoming zinc ferrite to obtain an overall zinc recovery 97% and a lead-silver residue. Lead-silver residue shall be fed to the existing Imperial Smelting Furnace (ISF). Each hot acid leaching step consists of leaching tanks arranged in a cascade and a thickener. Both of the leaching steps, hot acid leach II and I, are run at elevated temperatures and higher acidity.
The acidity control is done by increasing or decreasing the addition of spent electrolyte into the hot acid leach II. Temperature is maintained by means of steam. During this aggressive leaching almost all of the zinc ferrites will go into solution. The resulting lead and silver residue obtained after the hot acid leach II is separated from the acid leaching solution in a thickener. The hot acid leach II thickener overflow is pumped to the acid leach I, whereas the acid leach I thickener overflow will be sent to the jarosite precipitation section. The Pb-Ag residue from the hot acid II leach thickener underflow is pumped to filter presses for filtering. The Pb-Ag filter press cake is collected in a concrete box from where it is sent to the existing plant for further treatment. The filtrate is returned to the thickener. During the hot acid leaching steps not only zinc but also iron from the zinc ferrites is dissolved. This iron must be removed before sending this solution to the neutral leaching step. The iron removal is achieved by neutralizing the solution with calcine to precipitate the dissolved irons as jarosite. To minimize the addition of calcine to the jarosite precipitation step and to pre-purify the jarosite thickener overflow prior to joining the neutral leaching step a pre-neutralization step will be provided. Main reaction steps are as follows; 3ZnOFe2O3 + 12H2SO4 === 3ZnSO4 + 3Fe2(SO4)3 + 12H2O
During the jarosite precipitation step the iron is precipitated selectively out of the solution as a basic iron sulphate jarosite. The total reaction is the following: 3 Fe2((SO4)3 + 10 H2O + Na2SO4 = (Na)2 (Fe6(SO4)4(OH)12) + 6 H2SO4
This reaction gives the end product of several intermediate reaction steps with partly hydrolysed iron sulphate. As an equivalent amount of sulphuric acid is liberated during the precipitation, calcine will be added continuously to maintain a fairly constant acidity of the solution. To optimize jarosite formation, Na-ions must be present.
Jarosite formation allows for the co-precipitation of a number of impurities brought into solution during the two hot acid leaching steps. Sodium sulphate (Na2SO4 x 10 H2O) will be added into the first tank of the jarosite tank cascade from a bin. The discharge from the last reaction tank flows to the jarosite thickener for solid liquid separation. To accelerate the solid-liquid separation diluted flocculent are added to the solution prior to entering the thickener.
The underflow from the jarosite thickener containing the jarosite formed during the iron precipitation and the residues from the calcine used for the neutralization is washed on vacuum belt filters to minimize soluble zinc losses, while adding a minimum amount of water.
2.4 Jarosite Disposal Jarosite residue is converted to an inert material Jarofix by blending and curing with cement and lime at certain proportion. The converted jarofix is transported by trucks to the waste disposal yard. There is also a provision maintained for repulping the jarosite redidue and pumping to an impervious storage pond located at about 2 kms from the place. 2.5 Purification
The purification of neutral leach solution is necessary to remove certain elements like copper, cadmium, cobalt, and nickel as major impurities and also small amounts of arsenic and antimony, in so far as these impurities have not been completely removed during the ferric hydroxide purification in the neutral leaching plant. The purification is carried out by the addition of zinc dust. The purification of the neutral solution will be carried out in three main steps:
The first step or cold purification for the removal of copper and cadmium as impurities. The second step or hot purification for the removal of cobalt and nickel as Impurities Third stage shall be polishing stage. The impure neutral solution coming from the neutral leach thickener is stored in a storage tank before being pumped to the purification tanks of the first purification step. 2.5.1 Cold Purification In cold purification step the neutral solution produced in the leaching plant is sent to strip the solution from copper-cadmium by means of zinc dust. The temperature for cementation is 60 to 650C, hence no heating or cooling of the solution during the cold purification is required. 2.5.2 Hot Purification In the hot purification section, cobalt and nickel are precipitated out of the solution. The process requires a temperature of >750C and the addition of
Potassium Antimony Trioxide (PAT) and copper sulphate in order to improve the zinc dust reactivity and accelerate the precipitation reaction. The main reaction in purification section is as follows; MeSO4 + Zn = ZnSO4 + Me Me is metals as Cd, Cu, Ni, Co etc. 2.5.3 Polishing Stage As the name suggests, in this stage the impurities not removed earlier gets removed by the addition of Zinc dust. The extra Antimony if any is also removed in this stage. The cake from polishing stage is recycled to first stage of purification as it is mainly of zinc dust. The final pure electrolyte after this polishing step is pumped to Electrolysis plant for extraction of zinc metal by electrolytic process.
Purification & Cadmium PlantImpure Zn SO4 Solution (from NL) Zn Powder & PAT Zn Powder Cold Purification Steam Filtration Cake SteamHE
Zn Powder Hot Purification Polishing
Filtration Co Cake Cake Re-leaching Filtration Filtrate Filtration Cake Pure Solution to Electrowining
Zn powder NaOH
Filtrate to Jarosite
2.6 Cadmium Plant The filter cake from the cold and hot purification contains all the Cadmium, Cobalt, Nickel as well as Copper together with the excess of zinc dust. This filter cake is treated in the cadmium plant to recover Copper cement, Cobalt residue and Cadmium as cadmium sponge with a purity of 95%. The cadmium plant operates in batch process and involves the following main steps: Filter cake leaching with spent electrolyte to leach excessive zinc Removal of copper cement after zinc and cadmium is dissolved Selective cadmium precipitation with zinc dust Disposal of products/wastes The copper cement shall be sold as by-product.Melting and Casting
3.1 Tank House The tank house contains 124 numbers RCC cell tanks with suitable acid proof lining. The cells are arranged in two bays,62 cells in each bay. Each cell is fitted with 114 Aluminium cathodes and 115 Lead-Silver alloy anodes. Pure zinc sulphate electrolyte is continuously circulated through the cells. DC power from rectifier is also continuously fed to the cells. zinc sulphate electrolyte dissociates resulting in formation of zinc metal coating on the cathode plate and dilute sulphuric acid. As the electrolyte depletes in zinc content , it is partly purged from the system and enriched with fresh electrolyte. The electrolyte during its circulation through the cells get heated. This is cooled in atmospheric cooling tower made of FRP. The zinc metal deposited on cathode plate is stripped out at every 48 hours in an automatic stripping machine. The cells are electrically connected by copper bus bras in closed circuit, the DC power supplied by two rectifiers each of 96 KA , 490 V DC output.
3.2 Melting & Casting Plant Zinc sheet stripped from cathodes is melted into electrical induction furnaces each having 22 TPH melting capacity. Zinc sheet is charged into the feed chute of the furnace. As the zinc melts, the metals is removed by the pumps to the casting machines. The melting furnace is provided with doors for periodical removal of dross from the top molten surface , ventilation system comprising hoods , ducts, fans and bag filter. Two casting machines are provided, one dedicated to each melting furnace, matching their melting rate capacity. One casting machine is for casting 25 Kg ingots and the other for casting 1Ton jumbo ingots.
FLOW CHART OF MELTING AND CASTING:-
Production in Hindustan zinc
Product Parameter Zinc Metal (Pyro Plant) Zinc Metal (Hydro 1 Plant) Zinc Metal (Hydro Installed Capacity Production volume Installed Capacity Production volume Installed Capacity Production volume
Saleble metal Production(MT) 2005-06 1,05,000 82798 2006-07 1,05,000 88187 2007-08 1,05,000 86080
2Lead Plant) Metal Pyro plant) &
Installed ( Capacity
Hydrometallurgical Zinc Smelter Hydro I Commissioned in 2005 Roast Leach Electrowinning Technology with Lead Silver Residue Recovery 210,000 tonnes per annum of Zinc Hydro II Commissioned in 2007 Roast Leach Electrowinning Technology with Conversion Process 210,000 tonnes per annum of Zinc Lead Smelter Australia Cansolv Technology for Sulphur Recovery 50,000 tonnes per annum of Lead Commissioned in 2006 TSL Technology from Ausmelt-
Coal Based Captive Power Commissioned Plant
in Built 2 x by 77 in by
2005 BHEL MW 2007 BHEL
Commissioned Built 80 MW Certification
ISO 9001:2000, ISO 14001:2004, OHSAS 18001:1999
Specification of lead product:Lead as per IS Element Lead, Min Copper, Max Antimony, Max Bismuth, Max Iron, Max Silver, Max Zinc, Max Arsenic, Max 27:1992 99.99% 30 ppm 20 ppm 50 ppm 30 ppm 20 ppm 20 ppm 20 ppm HZL Lead 99.99% 5 ppm 10 ppm 50 ppm 5 ppm 20 ppm 5 ppm 10 ppm 99.993% 5ppm 5ppm 25ppm 5ppm 20ppm 5ppm 5ppm Typical Analysis
Specification of product SHG zinc:
Element Zinc Min. Lead, Max Cadmium, Max Iron, Max Copper, Max
SHG as per IS 209:1992 99.99% 30 ppm 30 ppm 30 ppm 20 ppm
HZL SHG 99.9950% 30 ppm 20 ppm 20 ppm 10 ppm
Typical Analys Pyro is 99.9958% 27ppm 2 ppm 7 ppm 6 ppm
Typical Analys Hydro is 99.9956% 27ppm 1ppm 9ppm 7ppm
3 R :
REDUCE RECYCLE REUSE
SERE To keep useful things only SATON to arrange properly SESO to keep neat and clean SEKETSU to be trained SETSUKE to be self discipline
SUSTAINABILITY DEVELOPMENT: COMMITTED TO IMPROVING PERFORMANCE As a responsible corporate citizen Hindustan Zinc has a clear focus on sustainable development, it is a key element of our business and corporate philosophy. Our ability to maximize related opportunities and minimizing the risks is unique in itself and in turn creating value for our shareholders. Our approach towards managing environment is one of the best in class in our sector. We follow best practices in the management of environmental impact and related opportunities. Employing environment friendly technologies, optimizing the usage of energy and resources through recycling and reuse procedures, emissions are kept to an absolute minimum, driving a number of initiatives to create value from waste and continuously striving to surpass the best industry standards. We continuously strive to uplift the economic wellbeing of our neighborhood communities through various initiatives like sustainable livelihood, health care, and education. Invariably all specific initiatives follow identification of need in consultation with the beneficiaries.
HEALTH, SAFETY AND ENVIRONMENT (HSE) Health and safety of Hindustan Zincs employees is of paramount importance to the Company. Preventing workplace accidents and controlling the incidence of occupational diseases is a top priority, and several technological and administrative controls have been put in place to achieve health, and environment objectives. These include: Safety reviews and audits by internal and external experts. Routine safety inspection. Employing environment friendly technologies. Incentives linked with safety performance. Compliance with all the legislations applicable. Safety score-card. Ensure all our employees including contract labours implement health and safety policies and procedures. Implementing learning from near miss incidents/accidents/ first aids. Safety stewardship: driving safety initiatives down the line.
HEALTH In addition to various healthcare camps across 173 operational villages in the neighborhood of its mines and plants (Social Responsibility), Hindustan Zinc has six hospitals/dispensaries at its operating locations with all requisite facilities, and with qualified doctors and nurses being available round the clock. The Company also has tie-ups with reputed hospitals in the country to provide best health and medical facilities to the employees and their dependents. SAFETY The index used is the lost time injury frequency rate (LTIFR). It is the number of injuries involving loss of work time per million working hours. In April 2007,
Hindustan Zinc set a target of reducing LTIFR by 20% at its operations. The actual performance: LTIFR reduced by 44% from 5.46 in 2006-07 to 3.07 in 2007-08. Despite the Companys continued focus on safety, there were, unfortunately, five fatalities all related to contract workers. This is a cause of concern. Hindustan Zinc continues to strengthen its focus on safety by imparting training programmes to all contracted personnel and better monitoring of safety related processes to minimize the risk of such incidents. To sensitize the workforce on health and safety issues, the Company conducts both introductory and specialized training. Safety training is compulsory for all new employees and refresher training is periodically carried out in the different facilities. In 2007-08, HSE training was given to 17,378 employees including contract workmen. Hindustan Zinc will continue to learn and evolve its safety and occupational health systems according to its changing needs and best practices in the Industry. Considering the environment in which the Company is operating increased emphasis will now be placed on behavioural aspects of industrial safety.
Environment Hindustan Zincs approach towards environmental sustainability is to optimize resource use, minimize the carbon footprint and conserve bio-diversity in and around its operating locations. The Company has a qualified team of
environment professionals consisting of certified ISO auditors, environment engineers, scientists and ecologists. The team is governed by Hindustan Zincs HSE policy, and its functions are reviewed at various for a such as daily operations meetings, monthly review meetings at the plant and Company levels, and quarterly HSE Committee meetings at the group corporate level. All employees from top management to shop floor workmen are expected to champion the cause of environmental protection. 2007-08 has seen significant improvement in energy and water utilisation, reduction in emissions and adoption of environment friendly technologies across all the operations. Energy conservation Hindustan Zincs total energy use during 2007-08 was 10.53 terra-joules (TJ). This included 1.87 terra-watt hours (TWH) of electricity (equivalent to 6.7 TJ), most of which was produced in captive power plants. About 3.8 TJ of energy was produced and used at-source for the smelting operations. Under SixSigma initiatives, dedicated teams have taken up a number of projects to reduce energy consumption. Their projects have resulted in a sustained decrease in specific energy consumption over the last three years. Charts I and J show the general trend in reduced energy use both in smelters and mines. Water Conservation Similarly, there has been a significant reduction in the usage of water in the Companys operations. As shown in Charts K and L, water consumption has come down significantly for both smelting and mining operations.
Wind Energy Most of the power generated in India is produced by thermal power plants that are fuelled by the large coal reserves in the country. We run our captive power plants to meet the requirements of our mining and smelting operations. Our power plants operate at the optimal capacity compared to the standard power utility plants leading to more efficient power generation. In the previous financial year we reported the commissioning of 38.4 MW wind energy in Gujarat, and this year we added another 68.8 MW wind energy capacity making a total installed capacity of 107.2 MW as on 31 March 2008. Further to this we shall add another 17 MW of wind energy which is progressing as per schedule. Rural Infrastructure And Community Development: The creation of durable assets and the renovation repair and maintenance of the existing public utility infrastructure is a major part of the Group's community programme. HZL, as part of ongoing community support to local needs at all units, has undertaken the digging of tube wells and the maintenance of hand pumps. In partnership with the Government of Rajasthan, HZL is contributing INR 186 million towards the cost of constructing the Mansi-Wakal dam. This dam is due for completion in August 2005 and will augment the drinking water supply of Udaipur. Tuticorin
has contributed INR 716,000 to implement the Governments Sajaldhara Scheme which will provide drinking water to 43 villages around Tuticorin and benefit 20,000 people. MALCO undertook desilting operations at Yercaud Lake by using local youths. This was an important task in revitalising local drinking water sources. School children have planted saplings around the sake for better recharge and the use of plastic in and around the lake has been banned.
Child Care There are 16 child care centres in Tamil Nadu and two in Orissa for children between three and six years of age. This was developed in response to research looking into the needs of families below the poverty line. Female Empowerment The Female Empowerment Scheme encourages women to complete their higher education through Reengus College, founded in 1995. The programme is driven by the belief that if a woman in the family is educated then the entire family gets educated. Financial And Organisational Support To People In Distress Our deepest sympathies go out to all those who suffered in the unprecedented Tsunami disaster. The Group extended both financial and in-kind support. The
Group contributed INR 15 million to the disaster relief funds in addition to one days wages contributed by employees. Relief material in the form of clothes, blankets, stoves, food packets and utensils from the MALCO and Sterlite operations located in Tamil Nadu were distributed to the victims. HZL has undertaken various activities as part of drought and famine relief in the villages around its units in Rajasthan. The activities primarily focus on providing fodder to livestock, drinking water to humans and livestock, and digging/deepening of wells. Immediate relief in terms of food packets and clothes were distributed to an area near Rampura Agucha mine which experienced flash floods. Fire tenders, ambulance and medical aid are routinely offered in emergencies to assist in areas near to Group units.
Corporate Social Responsibility (CSR) is an integral part of Hindustan Zincs business philosophy. Its centrality has led the Company to undertake several projects aimed at achieving sustainable socio-economic development of the villages in the vicinity of its plants and mines. Our approach towards sustainability is to generate and establish socioeconomic wealth and creating opportunities of entrepreneurship, employment, and self-sustained businesses for the local community in which we operate. More importantly we see ourselves as a major facilitator in their socio-economic development. Through our various initiatives
and a team of 150 qualified CSR professionals, specialists and fieldworkers, we are positively impacting the lives of 54,209 families across 173 operational villages in the neighbourhood of its mines and plants.
AWARDS AND RECOGNITION The Company has received several awards in 2007-08, both at an overall corporate level as well as for its individual operating units. However our efforts towards being a responsible corporate through various sustainable development initiatives were recognised at the local, national and international levels. Some of these are given below.
Corporate: -Golden Peacock Award for Excellence in Corporate Governance, 2007. -Dun & Bradstreet American Express Corporate Award 2007 for being the Top Indian Company in the Non-Ferrous Metals Sector.
Environment/Industrial Activity/Operational Efficiencies: -Water Efficient Unit Award to Chanderiya Smelter Complex by Confederation of Indian Industry- GBC, Hyderabad.
-TERI Corporate Environmental Award 2007. -Asian Power Plant of the Year Award 2007 & Best Emission Reduction Project in Asia by Asian Power, Singapore. -Greentech Environmental Excellence Golden Award to Chanderiya Smelter Complex and Rampura Agucha Mine. -Greentech Environmental Excellence Silver Award to Debari Zinc Smelter and Vizag Zinc Smelter. -Excellence in All Round Performance in Industrial Activity to Vizag Zinc Smelter by Federation of Andhra Pradesh Chambers of Commerce & Industry. -Institute of Cost & Works Accountants of India Award for Excellence in Cost Management for 2006-07. Safety: -Golden Peacock Award for Occupational Health and Safety for 2007, for the Chanderiya Smelter Complex. -International Safety Award 2006 from British Safety Council, UK, for the Debari Zinc Smelter. -Safety Gold Award 2007 from Royal Society for Prevention of Accidents (UK), for the Debari Zinc Smelter.
-Meritorious Achievement in NSCI Awards 2006 by National Safety Council of India, for the Debari Zinc Smelter. -Safety Innovation Award by Institution of Engineers, Delhi, for the Chanderiya Smelter Complex and the Debari Zinc Smelter. Corporate Social Responsibility (CSR): -Golden Peacock award for Corporate Social Responsibility, 2007. -TERI Corporate Social Responsibility Award 2007. -Readers Digest Pegasus Corporate Social Responsibility Award 2007. -State Population Stabilisation Award 2007, Chanderiya Smelter Complex. -State Level Bhamashah Award 2007: Chanderiya Smelter Complex and the Debari Zinc Smelter. WORKING CAPITAL MANAGEMENT In day to day working of business concern, Working Capital plays an important role, because Working Capital is required for payment of wages, expenses, raw materials and payment to creditors. Whether a business firm is earning profit or incurring loss or facing financial crises can be seen with the help of quantum of Working Capital due to shortage of Working Capital a business firm is lame, because there is no sufficient Working Capital a business can not
run its business smoothly. Due to this reason working capital management has assumed greater importance in every business firm.
The Management of Working Capital is concerned with the management of the firms current accounts, which includes current assets and current liabilities. Working Capital plays equivalent vital role in the business as blood plays in the human body. Shortage fixed can be tolerated by a business concern for short period but shortage of working capital can create lots of serious problems within a period of few days. In this modern area of cut throat competition, it has become essential to provide certain facilities to customers to capture the market; the credit facility is one of them. Thus working capital is required as there is a time gap between credit self and collection proceeds from the customers.
Reciprocal relationship between current assets and current liabilities is the main these of the theory of working capital management.
CONCEPTS OF WORKING CAPITAL Working Capital means the funds available for day to day operation of an enterprise. There are two concepts of Working Capital. (1) (2) GROSS WORKING CAPITAL NET WORKING CAPITAL
(1) GROSS WORKING CAPITAL
Gross working capital, simply called as working capital refers to the firms investment in current assets. Current assets are the assets, which in ordinary course of business can be converted into cash within an accounting year. Current assets include cash and bank balances, short term loans and advances bills receivables, sundry debtors, inventory, prepaid expenses, accrued incomes, money receivable (within 12 months). The gross working capital focuses attention of two aspects of current assets management. a) Optimum investment in current assets and b) Financing of current assets. The consideration of the level of investment in current assets should avoid two danger points-excessive and inadequate investments in current arranging funds to finance current assets. Whenever a need for working capital funds arises due to the increasing level of business activity or for any other reason arrangement should be made quickly.
(2) NET WORKING CAPITAL Net working capital refers to the difference between the current assets and current liabilities. Current liabilities are those claims of outsiders, which are accepted, to measure for payment with an accounting year and include creditors, bills payable and outstanding expenses. Net Working Capital = Current Assets Current Liabilities Net working capital can be positive or negative. A positive net working capital will arise when current assets exceeds current liabilities. It is a quantitative concept, which indicates the liquidity position of the firm and
suggests the extent to which working capital needs may be financed by permanent sources of funds. Working capital can be classified into two categories i.e. 1. Permanent working capital. 2. Temporary or variable working capital. Permanent working capital: It is the minimum amount of investment in all current assets which is required at all times to carry out minimum level of business activities. Tandon committee has reserved to this type of working capital as Core Current Assets. Amount of permanent working capital remains in the business in one form or another. It also grows with the Size of the business. It is permanently needed for the business, and therefore be financed out of long-term funds. Variable working capital: The amount of working capital over permanent working capital is known as variable working capital. The amount of such working capital keeps on fluctuating from time on the business activities. It may further be divided into seasonal working capital and special working capital. Seasonal working capital is required to meet the seasonal demands of busy periods occurring at stated intervals. On the other hand, special working capital is required to meet extraordinary needs for contingencies. Events like strikes, fire, unexpected competition, rising price tendencies or initiating a big advertisement campaign require such capital. NEEDS OF WORKING CAPITAL
Funds are required for an enterprise for day to day running. These funds are generated usually through sales. However, sales dont convert into cash instantaneously. This is always time gap between the sales activity and receipt of cash. Working Capital is required for this period in order to sustain operating activity of an enterprise. Therefore, it is clear that Working Capital is required because of time gap between sales and actual realization of cash. This time gap is technically termed as operating or cash cycle of business.
Approaches for financing working capital: There are three approaches to financing the working capital: 1. Hedging approach 2. Conservation approach 3. aggressive approach Hedging approach: A firm is said to be following Hedging approach if it matches the maturity of the debt with the maturity of assets. For the firm following hedging approach, long term financing will be used to finance fixed assets and permanent current assets and short term financing for temporary or variable current assets. As the level of these assets increases, the long financing level also increases. However, it should be realized that exact matching is not possible because of the uncertainty about the expected lives of assets. 2). Conservative approach:
A firm in practice may adopt a conservative approach in financing its current and fixed assets. The financing policy of the firm is said to be conservative when it depends more on long term funds for financing needs. Under a conservative plan, the firm finances its permanent assets and also a part of temporary current assets, the idle long-term funds can be invested in the tradable securities to conserve liquidity. The conservative plan relies heavily on long term financing. 3). Aggressive approach: A firm may be aggressive in financing its assets. A firm follows aggressive policy when it uses more short-term financing than warranted by the matching plan. Under an aggressive policy, the firm financing a part of its permanent current assets with short term financing. Some extremely aggressive firms may even finance a part of their fixed assets with short-term financing.
Importance of working capital: A business firm must maintain an adequate level of working capital in order to run its business smoothly. It is worthy to note that both excessive and inadequate working capital positions are harmful. Out of two, inadequacy of working capital is more dangerous for a firm. Excessive working capital results in idle funds on which no profits are earned. Similarly insufficiency of working capital results in interruption of production. This will lead to inefficiencies, increase in costs and reduction in profits. Working capital is like the lifeblood of business. If it becomes weak, the business can hardly prosper and survive. No business can run successfully with out and adequate amount of working capital.
The following are the few advantages of adequate working capital in the business: Cash Discount: Adequate working capital enables a firm to avail cash discount facilitates offered to it by the suppliers. The amount of cash discount reduces the cost of purchase. Goodwill: Adequate working capital enables a firm to make prompt payment. Making prompt payment is a base to create and maintain goodwill. Ability to face crisis: The provision of adequate working capital facilities to meet situations of crisis and emergencies. It enables a business to with stand periods of depression smoothly. Credit-worthiness: It enables a firm to operate its business more efficiently because there is not delay in getting loans from banks and others on easy and favorable terms. Regular supply of raw materials: It permits the carrying of inventories at a level that would enable a business to serve satisfactory the needs of its customers. That is it ensures regular supply of raw materials and continuous production. Expansion of markets: A firm which has adequate working capital can create favorable market condition i.e., purchasing its requirements in bulk when prices are lower and holding its inventories for higher. Thus profits are increased. Increased productivity. Research programs. High Morale.
Problems of inadequate working capital: Firm may not be able to take advantage of profitable business opportunities. Production facilities cannot be utilized fully. Short-term liabilities cannot be paid because of non-availability of funds. Its low liquidity may lead to low profitability. In the same way, low profitability results in low liquidity. It may not be able to take advantages of cash discounts. Credit worthiness of the able get credit facilities. Danger of excessive working capital: A firm may be tempted to over trade and lose heavily. Unable to extract benefits of customers credit The situation may lead to unnecessary purchases and accumulation of inventories. This cause more chances of theft, waste, losses etc. There arises an imbalance between liquidity and profitability. Excessive working capital means funds are idle. The situation leads to greater production, which may not be having matching demand. The excess of working capital leads to carelessness about cost of production. Determinants of Working Capital: firm may be damaged because of lack of liquidity. Thus it may be lose its reputation; thereafter a firm may not be
The need of working capital is not always the same it varies from year to year or even month-to-month depending upon a number of factors. There is no set of rules or formulate to determine the working capital needs of the firm. Each factor has its own importance and its importance of the factors changes for firms over time. In order to determine the proper amount of working capital of concern, the following factors should be considered. Nature of business. Size of the business unit. Seasonal variation. Time consumed in manufacturing. Turnover of circulating capital. Need to stockpile raw material and finished goods. Growth and expansion. Business cycle fluctuations. Terms of purchase and sale. Pricing level changes. Inventory turnover. Dividend policy.
Ratio to measure the efficiency of working capital: Current Ratio : Current assets / Current liabilities Quick Ratio : (current assets Inventories) /Current liabilities
Sales to cash: Sales during a period / Average cash balance.
Average collection period: Debtors divided by annual credit sales and the resulting figure multiplied by 365. This ratio indicates how many days of credit is being obtained from the suppliers. Average payment Period: Creditors divided by annual credit purchase and the resultant figure is multiplied by 365. This ratio indicates how many days of credit are being obtained from the suppliers. Inventory turnover ratio: Sales /Average inventory. Working capital policy: Working capital management policies have a great effect on firms profitability, liquidity and its structural health. A finance manager should therefore, chalk out appropriate Working capital policies in respect of each competent of working capital so as to ensure high profitability, proper liquidity and sound structural health of the organization. In order to achieve this objective the financial manager has to perform basically following two functions: 1. Estimating the amount of working capital. 2. Sources from which these funds have to be raised. Objectives of Working Capital Management: The objectives of working capital management are two fold: 1. Maintenance of working capital and 2. Ability of ample funds at the time of need. The basic goal of working capital management is to manage each of the funds current assets and current liabilities in such a way that an acceptable level of net working capital is always maintained in the business.
Working capital is required because of the time gap between the sales and their actual realization in cash. This time gap is technically terms as operating cycle of the business. In case manufacturing company, the operating cycle of time necessary to complete the following cycle of event. Conversion of cash into raw materials. Conversion of raw materials into work in progress. Conversion of work in progress into finished goods. Conversion of finished goods into accounts receivables. Conversion of accounts receivable into cash. This cycle is continuous phenomena. In case of Trading Firm the operating cycle will include the length of time required to: a) Cash into inventories. b) Inventories into accounts receivables. c) Accounts receivables into cash. In case of Financing Firm the operating cycle includes the length of time taken for one year.
a) Conversion of cash debtors, and b) Conversion of debtors into cash. Working capital turnover ratio: It measures the efficiency of the employment of working capital. Generally higher the turnover, greater is the efficiency and larger the sale of profits. Working capital turnover ratio can be calculating with help of the following formula. Sales Working capital turnover ratio = Net working capital
Year Curren t Assets Curren t Liabilit
200102 692.88 0 294.54 4
200203 736.57 4 299.43 2
200304 1116.0 0 446.88 7
200607 1480.9 5 826.76
200708 2711.6 3 898.44
05 06 736.89 1309. 38 511.73 603.1 8
y Workin 398.33 g 6 Capital Sales 1418.4 07
437.14 2 1608.7 22
669.11 3 2079.0 13
225.16 706.2 0 2456.1 4326. 1 26
Workin 3.56 g Capital T/o Ratio
WORKING CAPITAL TURNOVER RATIOWorking Capital T/o Ratio 16 14 12 10 8 6 4 2 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Working Capital T/o Ratio
Interpretation: It measures the efficiency with which the working capital is being used by a firm. Higher ratio indicates effective utilization of working capital. Minimum ratio is of 3.11 in the year 2003-04 and the maximum is 14.09 in the year 2006-07. Increase in the ratio during the study period shows that the working capital has been utilized efficiently .The trend line shows upward trend in this ratio; which indicates that company can utilize working capital effectively in near future.
Cash in the business may be compared to the back bone of the human body, back bone gives the strength to the human body and cash gives profit and solvency to the business. In a business ultimately a transaction results either in flow or out flow of cash. The term cash is used in two senses. In narrow sense it is used for cash, cheques, drafts and demand deposits in bank. In broad sense it also includes near cash assets likemarketable securities and fixed deposits in bank. Cash in hand, as an asset it has no any earning power in itself. But a minimum cash balance is essential to meet the requirements of the business. The question arise that what is the proper level of cash or how much cash be kept by a business. There is no any formula to determine the proper level of cash, which should be kept by a business. The proper level of cash depends on various factors like- nature of business, period of credit sale and the position of receivables and inventory. Now the question arise that what is the aim ti keeping cash. According to Keynes there are three motives for keeping cash:
1) 2) 3)
Transaction motive Precautionary motive and Speculative motive
In general we can say that a business keeps cash to take day to day obligations, to take benefit from favourable market conditions and to allow for contingencies.
CASH MANAGEMENT Cash is the medium of exchange on the common purchasing power and which is the most significant components of working capital. Cash is the basis input required to keep the organization running on a continuous basis. At the same time it is the ultimate output which is expected to be realized by selling goods and services. An organization should hold sufficient cash, neither more, nor less. Since excessive cash remain idle which in turn increases the cost without contributing anything towards the profitability of the organization and in the opposite case, trading and / or manufacturing operation will be disrupted. In other words, it can be stated that the higher the level of unused cash, the greater is the cost of holding it in the form of loss of interest which could have been earned either by investing it in securities or by reducing the burdun of interest charges by paying off the loans taken previously. If the level of cash balance is more than the desired level it shows mismanagement of funds. Therefore, for smooth functioning and hjgher profitability, proper and effective cash management is of paramount importance.
Cash is the most liquid asset that a firm owns. It includes money and instruments like cheque, money orders or bank drafts which banks normally accepts for deposit and immediately credit to the depositers account. Sometimes near- cash items, such as marketable securities or bank time deposits are also included cash. The basis characteristic of near- cash assets is that they can easily be converted into cash.
Cash management can be seen from two different perspectives depending on how many responsibilities it includes: treasury management (basic cash management) and advanced cash management. Basic cash management: Treasury management or basic cash management propitiates the development of administrative techniques conducive to optimizing the level of disposable assets to be maintained by a company. To prevent breaks in the trading cycle due to lack of cash, administrators must calculate the cash amount to their level of activity, plan the timing of the relevant payments and collections and draw up a policy of investment in assets with high liquidity that can be converted to cash at a low transactional cost. It is essential to establish the right level of disposable assets to short-term financial investments at companies. Holding wrong amount in cash or cash equivalent may interrupt the normal flow of business activities. also the wrong safety margin may result in financial difficulties, with firms unable to meet needs that may arise at any given time or unable to take advantage of unexpected investment opportunities. Maintaining a cash surplus thus has a number of advantages. it enables companies to carry on the normal transactions that arise in the
course of their activities and avoid any treasury gaps. On the other hand it helps them cover any unexpected needs for cash by acting as a preventive balance. However, there are also disadvantages in being too conservative, as reflected in the opportunity costs entailed by assets with little or no profitability . Having liquid assets available constitutes an opportunity cost for a company, as the return on those assets is lower then the return on productive investments, but there may still be transaction costs arising from the sale or purchase of financial assets, and disadvantages in terms of taxation. This overall analysis should strive to shorten collection periods, lengthen payment periods and avoid idle resources that do not generate returns . advanced cash management:treasury management as a set of techniques that act on the short-term liquidity of a company, and at the same time affect those factors and processes that translate immediately into cash, with the ultimate aim of increasing the profitability of the company and improving working capital management . cash management as an overall, integrated service of which the customer takes that part that best suits him. The management of interest-exchange rate risk and the management of contractual relationships with financial institutions are other functions that have been added to cash management, with the purpose of increasing profitability with the minimum risk and in the best conditions . it is based perspective on payment and collection management, liquidity management and banking management which has taken on a broader includes the planning of disposable treasury assets and their
subsequent monitoring, a strategy for investing surpluses to obtain maximum profitability and finance deficits with minimum costs, management of interest-rate and exchange-rate risks and, finally, banking management . Cash management brings together actions concerned with liquidity management, payment and and and collection financing management, management treasury functions forecasts, and banking risk management, investment of treasury surpluses deficit financial management. advanced cash management, not only involves financial tools and techniques for managing liquidity but entails an entire corporate culture. Corporate culture means the set of beliefs, expectations and basic principles shared by the members of an organization .
MOTIVES FOR HOLDING CASH The term cash with reference to cash management is used in two senses. In a narrow sense, it is used broadly to cover currency and generally accepted equivalents of cash, such as cheques, drafts and demand deposits in banks. The broad view of cash also includes near cash assets, such as marketable securities and time deposits in banks. The main characteristics of these is that they can be readily sold and converted into cash. They serve as a reserve pool of liquidity that provides cash quickly when needed. There are four primary motives for maintaining cash balances : (i) Transaction motive; (ii) Precautionary motive; (iii) Speculative motive ; and (iv) Compensating motive.
TRANSACTION MOTIVE An important reason for maintaining cash balances is the transaction motive. This refers to the holding of cash to meet routine cash requirements to finance the transaction which a firm carries on in the ordinary course of business. A firm enters into a variety of transactions to accomplish its objectives which have to be paid for in the form of cash. Business concerns that have highly predictable inflows and outflows of funds can hold relatively less cash then firms that have irregular cash flows.
PRECAUTIONERY MOTIVE It is also related to the nature and level of business activity. Precautionary balances are those which are set aside because cash inflows and outflows are not synchronized. For example, precautionary balance may be used to meet an unanticipated expenses as the result of an unanticipated decline in sales revenues.
SPECULATIVE MOTIVE It refers to the desire of a firm to take advantage of opportunities which present themselves at unexpected moments and which are typically outside the normal course of business. The speculative balances are sensitive to interest rate changes and are usually hold in the form of interest hearing securities.
COMPENSATING BALANCE A compensating balance is the fourth motive for holding cash. This motive is with commercial banks that require borrowers to leave a portion of their borrowed funds in deposit at the bank. Banks may require, that 10% of a loan be left in deposit. There are two reasons for requiring a compensating balance; it raise the effective interest rate for banks and it provides banks with funds to make additional loans.
OBJECTIVE OF CASH MANAGEMENT The basic objectives of cash management are two fold : (a) to meet the cash disbursement needs (payment schedule); and (b) to minimize funds committed to cash balances. These are conflicting and mutually contradictory and the task of cash management is to reconcile them. MEETING PAYMENTS SCHEDULE The important of sufficient cash to meet the payment schedule can hardly be overemphasized. The advantages of adequate cash are: (i) it prevents insolvency or bankruptc arising out of the inability of a firm to meets its obligations; (ii) the relationship with the bank is not strained; (iii) it helps in fostering good relations with trade creditors and suppliers of raw materials, as prompt payment may help their own cash management; (iv) a cash discount
can be availed of if payment is made within the due date; (v) it leads to a strong credit rating which enables the firm to purchase goods on favourable terms and to maintain its line of credit with banks and other sources of credit; (vi) to take advantages of favourable business opportunities that may be available periodically; and finally, (vii) the firm can meet unanticipated cash expenditure with a minimum of strain during emergencies, such as strikes, fires or a new marketing campaign by competitors.
MINIMISING FUNDS COMMITTED TO CASH BALANCES The second objective of cash management is to minimize cash balances. In minimizing the cash balances, two conflicting aspects have to be reconciled. A high level of cash balance will, as shown above, ensure prompt payment together with all the advantages. But it also implies that large funds will remain idle, as cash is a non-earning assets and the firm will have to forego profits. CONTROL OVER CASH FLOWS Drawing of cash plan is not enough, a strict compliance of plan is required through proper control of cash collections and payments. On the other hand inflow is to be accelerated, so as to cope with the growing requirements whereas outflow must be checked. There must also be a proper channedl of arrangement of investment of surplus cash. For this cash periodical reports are very much helpful.
ALLOCATION OF CASH INFLOW-
Cash can be conserved through maximized inflow and lesser permanent investment. Collection can be accelerated by reducing the time gap caused by waiting time, To speed up collections the followings techniques may prove useful:
LOCK BOX SYSTEM In this system, a firm establishes the collection centers in accordance with the concentration of customers hires a post office box and instruct its customer to remit the bills of cheques directly to this box. The firms authorized bank picks up the remittance collects for the gain and supply the detail of cheques collected. Although it is a costlier system but the cheques are collected immediately. PROMPT PAYMENT BY CUSTOMERS Prompt billing with the notification what the custmer has to pay, the period of payment is the way to ensure prompt payment from customers. Use of modern devices for billing and enclosure of a sell addressed return envelope will speed up collection from customers. Another technique which is commonly used is trade discount. PROMPT CONVERSION OF PAYMENTS INTO CASH There is a time lag between the cheque is prepared and mailed by the customer and the time the funds are converted into cash by the bank. The early conversion of payments into cash, as a
technique to speed up collections, is done to reduce the time lag between posting the cheque by customer and the realization of cheque from bank. DECENTRALISED COLLECTIONS When a number of collection centers are operating instead of single collection centers at the head office, the time lag between mailing can be reduced. This is called decentralized system of collection of bill at multiply centers. This is useful technique to speed up the collection of accounts receivable. Besides, collection of payments personally is one of the important means to accelerate the inflow of funds. SLOW DISBURSEMTNS A firm should make its payments using the credit terms to their fullest extent. There is no advantage in paying the amount sonner than expected or agreed to as this source is free from interest. But a firm must not make undue delays which may endanger its credit standing. In disbursement the centralized system for payment is also very much helpful in conversation of funds. Payment flot is also one of the resources of funds. Once a cheque is issued, it takes a particular time in transit and on the basis flow can be calculated. Finance Manager of a firm can take advantage of flot in disbursement but he must be careful, as it may prove riskly. Advantages of sample cash funds: a) A shield for technical inefficiency.
b) Maintenance of goodwill. c) Availing of cash discount. d) Good bank-relations. e) Exploitation of business opportunities. f) Encouragement to new investment. g) Increase in efficiency. h) Over coming abnormal financial situations. Effective cash management req