ANALYSIS OF CAPITAL STRUCTURE OF HINDUSTAN ZINC LIMITED.

MASTER OF COMMERCE ACCOUNTANCY & FINANCE

PART-II (SEM IV) (2013-2014)

SUBMITTED BY: VISHAL ARUN GUPTA

ROLL NO. 18

SUBMITTED In Partial Fulfillment of the requirements for the Award of the Degree of

Master in Commerce Part II (Sem IV) (2013-2014)

PROJECT GUIDE: MISS. BHAVANA PATIL

K. J. SOMAIYA COLLEGE OF SCIENCE & COMMERCE VIDYAVIHAR (EAST), MUMBAI 400 077.

K. J. SOMAIYA COLLEGE OF SCIENCE & COMMERCE,

VIDYAVIHAR (EAST), MUMBAI 400 077.

CERTIFICATE

This is to certify that MR. VISHAL ARUN GUPTA of M.COM

ACCOUNTANCY & FINANCE PART-II Sem IV (2013-2014) has

successfully completed the project on ANALYSIS OF CAPITAL

STRUCTURE OF HINDUSTAN ZINC LIMITED. under the guidance of

MISS. BHAVANA PATIL.

-----------------------------------------------------------------------------------------------------------------------

COURCE CO-ORDINATOR PRINCIPAL

(MRS. DAMLE MAM) (Dr. VIJAY JOSHI)

--------------------------------------------- --------------------------------------- ------

EXTERNAL PROJECT GUIDE

EXAMINER (MISS. BHAVANA PATIL)

DECLARATION

I, MR. VISHAL ARUN GUPTA the student of M.COM-ACCOUNTANCY &

FINANCE PART-II (Sem IV) (2013-2014) hereby declares that I have

completed Project on ANALYSIS OF CAPITAL STRUCTURE OF HINDUSTAN

ZINC LTD.

Wherever the data/information has been taken from any book or other

sources have been mentioned in bibliography.

The information submitted is true and original to the best of my knowledge.

SIGANTURE OF STUDENT,

-------------------------------

VISHAL ARUN GUPTA

(ROLL NO : 18 )

ACKNOWLEDGEMENT

On the event of completion of my project ANALYSIS OF CAPITAL STRUCTURE

OF HINDUSTAN ZINC LIMITED. I take the opportunity to express my deep sense of

gratitude towards all those people without whose guidance, inspiration, & timely help

this project would have never seen the light of day.

Heartily thanks to Mumbai University for giving me the opportunity to work on

this project. I would also like to thank our principal DR. VIJAY JOSHI for giving us this

brilliant opportunity to work on this project.

Any accomplishment requires the effort of many people and this project is not

different. I find great pleasure in expressing my deepest sense of gratitude towards my

project guide MISS. BHAVANA PATIL, whose guidance & inspiration right from the

conceptualization to the finishing stages proved to be very essential & valuable in the

completion of the completion of the project.

I would like to thank Library staff, all my classmates, and friends for their

invaluable suggestions & guidance for my project work.

Lastly I would like to thank My Parents without whose consent & support it

would have not been possible for me to complete this project.

STUDENTS SIGNATURE

_______________

VISHAL A. GUPTA

(Roll No. 18)

Table of contents

Sr.No Topics Page

No.

Chapter

ANLYSIS OF CAPITAL STRUCTURE OF

HINDUSTAN ZINC LIMITED

1. Capital Structure (Definition) 7

2. Sources of Finance 10

3. Equity Finance 11

4. Debt Finance 15

5. Advantages of Sources of Finance 17

6. Disadvantages of Sources of Finance 18

7. Hindustan Zinc Limited 19

8. Operations 19

9. Balance Sheet 22

10. Statement of Profit and Loss 23

11. Cash Flow Statement 25

12. Analysis of Capital Structure of Hindustan Zinc

LTD 28

13. Conclusion 29

14. Bibliography 30

CAPITAL STRUCTURE

Definition of 'Capital Structure':

A mix of a company's long-term debt, specific short-term debt, common equity and

preferred equity. The capital structure is how a firm finances its overall operations and

growth by using

different sources of funds. .

Debt comes in the form of bond issues or long-term notes payable, while equity is

classified as common stock, preferred stock or retained earnings. Short-term debt such

as working capital requirements is also considered to be part of the capital structure.

Capital structure:

In finance, capital structure refers to the way a corporation finances its assets

through some combination of equity, debt, or hybrid securities. A firm's capital

structure is then the composition or 'structure' of its liabilities. For example, a firm that

sells $20 billion in equity and $80 billion in debt is said to be 20% equity-financed and

80% debt-financed. The firm's ratio of debt to total financing, 80% in this example, is

referred to as the firm's leverage.In reality, capital structure may be highly complex and

include dozens of sources. Gearing Ratio is the proportion of the capital employed of

the firm which come from outside of the business finance, e.g. by taking a short term

loan etc.

The Modigliani-Miller theorem, proposed by Franco Modigliani and Merton

Miller, forms the basis for modern thinking on capital structure, though it is generally

viewed as a purely theoretical result since it disregards many important factors in the

capital structure process. The theorem states that, in a perfect market, how a firm is

financed is irrelevant to its value. This result provides the base with which to examine

real world reasons why capital structure is relevant, that is, a company's value is

affected by the capital structure it employs. Some other reasons include bankruptcy

costs, agency costs, taxes, and information asymmetry. This analysis can then be

extended to look at whether there is in fact an optimal capital structure: the one which

maximizes the value of the firm.

Capital structure in a perfect market

Consider a perfect capital market (no transaction or bankruptcy costs; perfect

information); firms and individuals can borrow at the same interest rate; no taxes; and

investment returns are not affected by financial uncertainty. Modigliani and Miller

made two findings under these conditions. Their first 'proposition' was that the value of

a company is independent of its capital structure. Their second 'proposition' stated that

the cost of equity for a leveraged firm is equal to the cost of equity for an unleveraged

firm, plus an added premium for financial risk. That is, as leverage increases, while the

burden of individual risks is shifted between different investor classes, total risk is

conserved and hence no extra value created.

Their analysis was extended to include the effect of taxes and risky debt. Under a

classical tax system, the tax deductibility of interest makes debt financing valuable; that

is, the cost of capital decreases as the proportion of debt in the capital structure

increases. The optimal structure, then would be to have virtually no equity at all, i.e. a

capital structure consisting of 99.99% debt.

Capital structure in the real world

If capital structure is irrelevant in a perfect market, then imperfections which

exist in the real world must be the cause of its relevance. The theories below try to

address some of these imperfections, by relaxing assumptions made in the M&M model.

Trade-off theory

Trade-off theory allows the bankruptcy cost to exist. It states that there is an

advantage to financing with debt (namely, the tax benefits of debt) and that there is a

cost of financing with debt (the bankruptcy costs and the financial distress costs of

debt). The marginal benefit of further increases in debt declines as debt increases,

while the marginal cost increases, so that a firm that is optimizing its overall value will

focus on this trade-off when choosing how much debt and equity to use for financing.

Empirically, this theory may explain differences in D/E ratios between industries, but it

doesn't explain differences within the same industry.

Pecking order theory

Pecking Order theory tries to capture the costs of asymmetric information. It

states that companies prioritize their sources of financing (from internal financing to

equity) according to the law of least effort, or of least resistance, preferring to raise

equity as a financing means of last resort. Hence: internal financing is used first; when

that is depleted, then debt is issued; and when it is no longer sensible to issue any more

debt, equity is issued. This theory maintains that businesses adhere to a hierarchy of

financing sources and prefer internal financing when available, and debt is preferred

over equity if external financing is required (equity would mean issuing shares which

meant 'bringing external ownership' into the company). Thus, the form of debt a firm

chooses can act as a signal of its need for external finance. The pecking order theory is

popularized by Myers (1984)[1] when he argues that equity is a less preferred means to

raise capital because when managers (who are assumed to know better about true

condition of the firm than investors) issue new equity, investors believe that managers

think that the firm is overvalued and managers are taking advantage of this over-

valuation. As a result, investors will place a lower value to the new equity issuance.

SOURCES OF FINANCE

SOURCES OF FINANCE

Financing is needed to start a business and ramp it up to protability. There are several

sources to consider when looking for start-up nancing. But rst you need to consider

how much money you need and when you will need it.

The nancial needs of a business will vary according to the type and size of the

business. For example, processing businesses are usually capital intensive, requiring

large amounts of capital. Retail businesses usually require less capital.

Debt and equity are the two major sources of nancing. Government grants to nance

certain aspects of a business may be an option. Also, incentives may be available to

locate in certain communities and/or encourage activities in particular industries.

I. Equity Financing

Equity nancing means exchanging a portion of the ownership of the business for a

financial investment in the business. The ownership stake resulting from an equity

investment allows the investor to share in the companys prots. Equity involves a

permanent investment in a company and is not repaid by the company at a later date.

The investment should be properly dened in a formally created business entity. An

equity stake in a company can be in the form of membership units, as in the case of a

limited liability company or in the form of common or preferred stock as in a

corporation. Companies may establish different classes of stock to control voting rights

among shareholders. Similarly, companies may use different types of preferred stock.

For example, common stockholders can vote while preferred stockholders generally

cannot. But common stockholders are last in line for the companys assets in case of

default or bankruptcy. Preferred stockholders receive a predetermined dividend before

common stockholders receive a dividend.

1) PERSONAL SAVINGS

The rst place to look for money is your own savings or equity. Personal resources can

include prot-sharing or early retirement funds, real estate equity loans, or cash value

insurance policies.

Life insurance policies -A standard feature of many life insurance policies is the

owners ability to borrow against the cash value of the policy. This does not include

term insurance because it has no cash value. The money can be used for business needs.

It takes about two years for a policy to accumulate sufficient cash value for borrowing.

You may borrow most of the cash value of the policy. The loan will reduce the face value

of the policy and, in the case of death, the loan has to be repaid before the beneciaries

of the policy receive any payment.

2) HOME EQUITY LOANS

A home equity loan is a loan backed by the value of the equity in your home. If your

home is paid for, it can be used to generate funds from the entire value of your home. If

your home has an existing mortgage, it can provide funds on the difference between the

value of the house and the unpaid mortgage amount. For example, if your house is

worth $150,000 with an outstanding mortgage of $60,000, you have $90,000 in equity

you can use as collateral for a home equity loan or line of credit. Some home equity

loans are set up as a revolving credit line from which you can draw the amount needed

at any time. The interest on a home equity loan is tax deductible.

3) FRIENDS AND RELATIVES

Founders of a start-up business may look to private nancing sources such as parents

or friends. It may be in the form of equity nancing in which the friend or relative

receives an ownership interest in the business. However, these investments should be

made with the same formality that would be used with outside investors.

4) VENTURE CAPITAL

Venture capital refers to nancing that comes from companies or individuals in the

business of investing in young, privately held businesses. They provide capital to young

businesses in exchange for an ownership share of the business. Venture capital rms

usually dont want to participate in the initial nancing of a business unless the

company has management with a proven track record. Generally, they prefer to invest

in companies that have received signicant equity investments from the founders and

are already protable.

They also prefer businesses that have a competitive advantage or a strong value

proposition in the form of a patent, a proven demand for the product, or a very special

(and protectable) idea. Venture capital investors often take a hands-on approach to

their investments, requiring representation on the board of directors and sometimes

the hiring of managers. Venture capital investors can provide valuable guidance and

business advice. However, they are looking for substantial returns on their investments

and their objectives may be at cross purposes with those of the founders. They are

often focused on short-term gain.

Venture capital rms are usually focused on creating an investment portfolio of

businesses with high-growth potential resulting in high rates of returns. These

businesses are often high-risk investments. They may look for annual returns of 25 to

30 percent on their overall investment portfolio.

Because these are usually high-risk business investments, they want investments with

expected returns of 50 percent or more. Assuming that some business investments will

return 50 percent or more while others will fail, it is hoped that the overall portfolio

will return 25 to 30 percent. More specically, many venture capitalists subscribe to the

2-6-2 rule of thumb. This means that typically two investments will yield high returns,

six will yield moderate returns (or just return their original investment), and two will

fail.

5) ANGEL INVESTORS

Angel investors are individuals and businesses that are interested in helping small

businesses survive and grow. So their objective may be more than just focusing on

economic returns. Although angel investors often have somewhat of a mission focus,

they are still interested in portability and security for their investment. So they may still

make many of the same demands as a venture capitalist. Angel investors may be

interested in the economic development of a specic geographic area in which they are

located. Angel investors may focus on earlier stage nancing and smaller financing

amounts than venture capitalists.

6) GOVERNMENT GRANTS

Federal and state governments often have nancial assistance in the form of grants

and/or tax credits for start-up or expanding businesses.

7) EQUITY OFFERINGS

In this situation, the business sells stock directly to the public. Depending on the

circumstances, equity offerings can raise substantial amounts of funds. The structure of

the offering can take many forms and requires careful oversight by the companys legal

representative.

8) INITIAL PUBLIC OFFERINGS

Initial Public Offerings (IPOs) are used when companies have protable operations,

management stability, and strong demand for their products or services. This generally

doesnt happen until companies have been in business for several years. To get to this

point, they usually will raise funds privately one or more times.

II. DEBT FINANCING

Debt nancing involves borrowing funds from creditors with the stipulation of repaying

the borrowed funds plus interest at a specied future time. For the creditors (those

lending the funds to the business), the reward for providing the debt nancing is the

interest on the amount lent to the borrower.

Debt nancing may be secured or unsecured. Secured debt has collateral (a valuable

asset which the lender can attach to satisfy the loan in case of default by the borrower).

Conversely, unsecured debt does not have collateral and places the lender in a less

secure position relative to repayment in case of default.

Debt nancing (loans) may be short term or long term in their repayment schedules.

Generally, short-term debt is used to nance current activities such as operations while

long-term debt is used to nance assets such as buildings and equipment.

1) BANKS AND OTHER COMMERCIAL LENDERS

Banks and other commercial lenders are popular sources of business nancing. Most

lenders require a solid business plan, positive track record, and plenty of collateral.

These are usually hard to come by for a start- up business. Once the business is

underway and prot and loss statements, cash ows budgets, and net worth statements

are provided, the company may be able to borrow additional funds.

2) COMMERCIAL FINANCE COMPANIES

Commercial nance companies may be considered when the business is unable to

secure financing from other commercial sources. These companies may be more willing

to rely on the quality of the collateral to repay the loan than the track record or profit

projections of your business. If the business does not have substantial personal assets

or collateral, a commercial nance company may not be the best place to secure

nancing. Also, the cost of finance company money is usually higher than other

commercial lenders.

3) GOVERNMENT PROGRAMS

Federal, state, and local governments have programs designed to assist the nancing of

new ventures and small businesses. The assistance is often in the form of a government

guarantee of the repayment of a loan from a conventional lender. The guarantee

provides the lender repayment assurance for a loan to a business that may have limited

assets available for collateral. The best known sources are the Small Business

Administration and the USDA Rural Development programs.

4) BONDS

Bonds may be used to raise nancing for a specic activity. They are a special type of

debt nancing because the debt instrument is issued by the company. Bonds are

different from other debt nancing instruments because the company species the

interest rate and when the company will pay back the principal (maturity date). Also,

the company does not have to make any payments on the principal (and may not make

any interest payments) until the specified maturity date. The price paid for the bond at

the time it is issued is called its face value.

When a company issues a bond it guarantees to pay back the principal (face value) plus

interest. From a nancing perspective, issuing a bond offers the company the

opportunity to access financing without having to pay it back until it has successfully

applied the funds. The risk for the investor is that the company will default or go

bankrupt before the maturity date. However, because bonds are a debt instrument, they

are ahead of equity holders for company assets.

ADVANTAGES & DISADVANTAGES OF SOURCES OF FINANCE

Finance can sometimes be more appropriate than other sources of finance, eg bank

loans, but it can place different demands on you and your business.

ADVANTAGES OF SOURCES OF FINANCE

The main advantages of finance are:

The funding is committed to your business and your intended projects. Investors only

realize their investment if the business is doing well, eg through stock market flotation

or a sale to new investors.

You will not have to keep up with costs of servicing bank loans or debt finance, allowing

you to use the capital for business activities.

Outside investors expect the business to deliver value, helping you explore and execute

growth ideas.

The right business angels and venture capitalists can bring valuable skills, contacts and

experience to your business. They can also assist with strategy and key decision

making.

In common with you, investors have a vested interest in the business' success, ie its

growth, profitability and increase in value.

Investors are often prepared to provide follow-up funding as the business grows.

Bank Overdrafts is the system is simple and arrangements can be negotiated and set up

very quickly.

Bank Loan Refinancing of permanent/'hardcore' overdrafts.

The factor takes care of the maintenance of the trade debtors ledger and the collection

of debts.

DISADVANTAGES OF SOURCES OF FINANCE

The principal disadvantages of finance are:

Raising finance is demanding, costly and time consuming, and may take management

focus away from the core business activities.

Potential investors will seek comprehensive background information on you and your

business. They will look carefully at past results and forecasts and will probe the

management team. Many businesses find this process useful, regardless of whether or

not any fundraising is successful.

Depending on the investor, you will lose a certain amount of your power to make

management decisions.

You will have to invest management time to provide regular information for the

investor to monitor.

At first you will have a smaller share in the business - both as a percentage and in

absolute monetary terms. However, your reduced share may become worth a lot more

in absolute monetary terms if the investment leads to your business becoming more

successful.

There can be legal and regulatory issues to comply with when raising finance, eg when

promoting.

Bank Overdrafts The rate of interest charged rises with increases in the bank's base

lending rate & subject to renewal each year.

Bank Loan Business track record is usually required.

Equity There may be some loss of control; ownership of over 50% of shares gives

control over the business in most normal situations; ownership of over 75% of shares

gives total control.

HINDUSTAN ZINC LIMITED INTRODUCTION

Hindustan Zinc Limited (HZL) is an integrated mining and resources producer

of zinc, lead, silver and cadmium. It is a subsidiary of Vedanta Resources PLC. HZL is the

world's second largest zinc producer. Its FY2011 revenues were Rs. 108.91 billion.

HISTORY:

Hindustan Zinc Limited was incorporated from the erstwhile Metal Corporation

of India on 10 January 1966 as a Public Sector Undertaking.

In 2001 as part of the BJP Government's anti-corruption drive, the company was

put up for sale.

In April 2002, Sterlite Opportunities and Ventures Limited (SOVL) made an open

offer for acquisition of shares of the company; consequent to the disinvestment of

Government of India's (GOI) stake of 26% including management control to SOVL and

acquired additional 20% of shares from public, pursuant to the SEBI Regulations 1997.

In August 2003, SOVL acquired additional shares to the extent of 18.92% of the paid up

capital from GOI in exercise of call option clause in the share holder's agreement

between GOI and SOVL.

With the above additional acquisition, SOVL's stake in the company has gone up

to 64.92%. Thus GOI's stake in the company now stands at 29.54%.

Operations

MINING:

HZL operates the world's third largest open-pit mine, and World's largest Zinc

Mine in Rampur Gauche, Rajasthan. Other mines with HZL are located in Sidecar Kurd,

Rampur Arriba, Kayar and Zawar, all in Rajasthan.

HZL is also the world's lowest cost zinc producer.

SMELTING:

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

Debary (Udaipur) & Arriba (Rajsamand) in Rajasthan. A smelting facility was

established at Pantnagar in Uttarakhand. It was initially intended to serve as a smelting

facility for Silver production, but later Zinc and Lead melting and casting plants were

also established here. The total metal production was 840,000 tonnes for year 2010-

2011.

PRODUCTS:

We are India's largest and the world's second largest integrated zinc-lead

producer; and also one of the lowest cost zinc-lead producers in the world. We have

mining, smelting and power operations in multiple locations throughout India. Our

principal products are refined zinc metal and refined lead metal. In addition we also

recover silver and cadmium as by products.

Zinc and lead metal produced at our world class Chanderiya Smelting complex

are registered brands on the London Metal Exchange (LME). The LME brands are

recognized worldwide as one of the most demanding standards, signifying highest

product quality, uniform physical characteristics and consistency of ingots. This re-

emphasizes our capability and commitment to meet the world class standards.

We also have Quality Management Systems in place for all our products which

complies with the requirements of ISO 9001:2008 standards

GROWTH OPPORTUNITIES:

Identifying High Potential:

ACT-UP (Accelerated Competency tacking & Upgradation Program) is the

process of identifying high potential employees with a spark of leadership who can be

groomed to take up leadership positions. The process aims to identify high potential

employees based on Vedanta competencies.

Nurturing Talent:

Individual Development Plans (IDP's) for the high potential employees are prepared

outlining their short term, medium term and long term career paths. They are groomed

and are assigned a mentor, who ensures that the IDP is followed & the person moves as

per the career plan.

The high potential employees are provided with fast track growth & learning

opportunities through:

Foreign Exposure

Mentoring

L&D Inputs

BALANCE SHEET AS ON 31ST MARCH, 2013 (Rs. in Cores)

Particulars Note As at March 31, 2013 As at March 31, 2012

EQUITY AND LIABILITIES

Shareholder's funds

Share capital 3 845.06 845.06

Reserves and surplus 4 31,430.68 26,036.20

Total Shareholder's funds

32,275.74 26,881.26

Non-current liabilities

Deferred tax liabilities(net) 5 1,279.86 1,108.81

Other long term liabilities 6 28.23 17.15

Total Non-current liabilities

1,308.09 1,125.96

Current liabilities

Short term borrowings 7 0.39 0.39

Trade payable (other than

acceptance) 484.20 410.29

Other current liabilities 8 572.12 563.15

Short-term provisions 9 824.87 503.94

Total Current liabilities

1,881.58 1,477.77

TOTAL

35,465.41 29,484.99

ASSETS

Non-current assets

Fixed assets

Tangible assets 10.A 8,473.69 8,465.72

Intangible assets 10.B 10.05 47.10

Capital work-in-progress

1,081.85 444.96

Total Fixed assets(net)

9,565.59 8,957.78

Non-current investments 11 2.70 2.59

Long term loans and advances 12 1,898.29 875.80

Other non-current assets 13 239.19 14.61

Total Non-current assets

11,705.77 9,850.78

Current assets

Current investments 14 14,537.18 12,692.26

Inventories 15 1,111.09 797.94

Trade receivables 16 402.87 332.45

Cash and cash equivalents 17 6,942.10 5,255.32

Short term loans and advances 18 373.32 233.43

Other Current assets 19 393.08 322.81

Total Current assets

23,759.64 19,634.21

TOTAL

35,465.41 29,484.99

STATEMENT OF PROFIT AND LOSS

(Rs. in Cores)

Particulars Note FY 2012-13 FY 2011-12

Revenue from operations (gross)

13,658.14 12,061.09

Less: Excise duty

(958.30) (655.78)

Revenue from operations (net) 20 12,699.84 11,405.31

Other income 21 2,032.15 1,542.83

TOTAL REVENUE

14,731.99 12,948.14

Expenses:

Cost of materials consumed 22 793.06 217.69

Changes in inventories of finished 23 (112.54) 94.44

goods and working- progress

Employee benefits expense 24 649.91 534.64

Finance costs 25 29.10 13.95

Depreciation and amortization

expense (refer note 14B) 647.04 610.67

Other expenses 26 4,887.77 4,489.08

TOTAL EXPENSES

6,894.34 5,960.47

Profit before exceptional item and

tax 7,837.65 6,987.67

Exceptional items 39 (a) 17.53 43.13

Profit before tax

7,820.12 6,944.54

Tax expense (benefit):

Current tax expenses

1,542.98 1,408.95

(Less) : MAT credit

(798.47) (134.37)

Short / (Excess) provision for tax

relating to prior years 10.57 (19.89)

Net current tax expense

755.08 1,254.69

Deferred tax - for the year

165.56 135.63

Deferred tax - prior year

- 28.18

Deferred tax

165.56 163.81

Net tax expense / (benefit)

920.64 1,418.50

Profit for the year

6,899.48 5,526.04

Earnings per equity share (of Rs. 2 /-

each)

Basic and diluted

16.33 13.08

CASH FLOW STATEMENT (Rs. in Cores)

Particulars FY 2012-2013 FY 2011-2012

(A) CASH FLOW FROM

OPERATING ACTIVITIES :

Profit before tax 7,820.12 6,944.54

Adjustments for :

Depreciation and amortization

expenses(including

research and development

assets)

647.24 610.88

Finance costs 29.10 13.95

Interest and dividend earned (867.95) (597.57)

Mark to market adjustment on

financial instruments (535.78) (268.14)

Liabilities no longer required

written back (0.92) (7.75)

(Profit)/Loss on sale of fixed

asset (net) 19.26 (0.69)

Net gain on sale of current

investments

570.62

640.63

Operating profit before working

capital changes 6,540.45 6,054.59

Changes in working capital

Adjustments for

(increase)/decrease in

operating assets :

Inventories (313.15) (35.56)

Trade receivables (70.42) (123.56)

Short term loans and advances (139.87) 54.55

Long term loans and advances 43.83 (16.85)

Adjustments for

increase/(decrease) in

operating liabilities :

Trade payables 73.92 111.26

Other current liabilities 211.68 (44.05)

Other long term liabilities

11.08

(6.64)

Cash generated from operations 6,357.52 5,993.74

Income taxes paid during the

year 1,605.83 1,501.69

Net cash flows from operating

activities 4,751.69 4,492.05

(B) CASH FLOW FROM INVESTING

ACTIVITIES :

Purchase of fixed assets (1,755.82) (1,671.87)

Interest and dividend received 573.10 494.74

Bank balances not considered as

cash and cash equivalents

-Placed 6,520.17 5,725.59

-Matured 5,094.52 5,855.00

Purchase of current investments 24,675.87 30,266.11

Sale of current investments 24,047.23 27,811.09

Sale of fixed assets 3.24 4.16

Net cash flow used in investing

3,233.77

3,498.58

activities

(C) CASH FLOW FROM FINANCING

ACTIVITIES :

Interest and finance charges

paid (29.10) (13.95)

Dividend and tax thereon paid (1,277.69) (1,277.70)

Net cash flow used in

financing activities (1256.79) (1,241.65)

Net increase/(decrease) in

cash and cash equivalents 261.13 (248.18)

Cash and cash equivalents at the

beginning of tide year 29.05 277.23

Cash and cash equivalents at

the end of the year 290.18 29.05

Reconciliation cash and cash

equivalents with the balance

sheet

Cash and cash equivalents (refer

note 17) 6,942.10

5,255.32

Less:- Bank balances not

considered as cash and cash

equivalents

as defined in AS-3 Cash Flow

Statements

6,651.92

5,226.27

Cash and cash equivalents as at

the end of the year * 290.18 29.05

*Comprises

Cash on hand 0.02 0.03

Balances with banks

Current accounts 47.16 29.02

Deposit accounts 243.00

290.18 29.05

ANALYSIS OF CAPITAL STRUCTURE OF HINDUSTAN ZINC

LIMITED

Raises of Funds:

As per above balnace sheet Hindstan Zinc Limited Raise its fund by the way of

Equity Share, Short Term borrowing and other short term provisions.

They accept Rs. 845 Crore by the way of Equity Share.

39 Lakhs by the way of short term borrowings, 484 by the way of trade payables,

28 crore by the way of long term liabilities.

Overall 35,465 Crore raised by different ways,

which creates the same amount of liabilities.

Uses of Funds:

The above funds are used by the different ways.

It invested 8,475 Crore in Fixed asses and 1,082 Crore in Work-in-progress.

1,898 Crores are distributed as Loans and Advances.

239 Crores are invested in Other Non-Fixed Asses.

Rs. 1,111 Crore are invested in inventories.

And Rs. 402 are Trade Receivables.

Remaining are in the way of Cash and Cash Equivalent.

By the all above data the overall assets are 35,465 Crores.

CONCLUSION

This project consists of financial sources of HINDUSTAN ZINC LIMITED Limited:

As per above balnace sheet Hindstan Zinc Limited Raise its fund by the way of

Equity Share, Short Term borrowing and other short term provisions.

They accept Rs. 845 Crore by the way of Equity Share.

39 Lakhs by the way of short term borrowings, 484 by the way of trade payables,

28 crore by the way of long term liabilities.

Overall 35,465 Crore raised by different ways,

which creates the same amount of liabilities.

The above funds are used by the different ways.

It invested 8,475 Crore in Fixed asses and 1,082 Crore in Work-in-progress.

1,898 Crores are distributed as Loans and Advances.

239 Crores are invested in Other Non-Fixed Asses.

Rs. 1,111 Crore are invested in inventories.

And Rs. 402 are Trade Receivables.

Remaining are in the way of Cash and Cash Equivalent.

By the all above data the overall assets are 35,465 Crores.

Hindustan Zinc Limited Company Debt/Equity ratio is satisfactory during the period of

study. Company is efficiently utilizing its Fixed Assets and Current Assets in generating

sales Inventory Turnover ratio implies that the Inventory has been utilized efficiently.

The heads includes Executive summary, objective of the study, research methodology,

research framework, Types of data, how data was collected, company profile, theoretic

background, financial statements, analysis of financial statement, financial ratio

analysis, financial overview of HINDUSTAN ZINC LIMITED, ratio of HINDUSTAN ZINC

LIMITED, summary of ratio, observation &

finding,importance,advantages,lmitations,conclusion,bibliography.

The above study conducted in HINDUSTAN ZINC LIMITED Works, the departmental

structure and functioning of HINDUSTAN ZINC LIMITED and its other plants become

clear to a large extend. The factors related to the functioning of each department and of

the organization as a whole become clear from the study conducted in HINDUSTAN

ZINC LIMITED.

HINDUSTAN ZINC LIMITED has made significant contributions to the nation

building process by way of quality products, services and sharing expertise. Its

commitment to sustainable development, its high ethical standards in business dealings

and its on-going efforts in community welfare programmers have won it acclaim as a

responsible corporate citizen. HINDUSTAN ZINC LIMITEDs brand name is synonymous

with cement and enjoys a high level of equity in the Indian market. It is the only cement

company that figures in the list of Consumer Super Brands of India.

Bibliography:

http://www.hindustanzinc.com/aboutus/cg/annual_reports.htm

http://www.hindustan.com/htdocs/common/pdf/corporate/HDFC_Securities_Ann

ualReport_12-13.pdf

http://www.manageengine.com/products/eventlog/index.html?gclid=CNG31-

bim7oCFSgB4godbGgAqQ

http://www.webcrawler.com/info.wbcrwl.305.03/search/web?q=online+banking+

account&cid=126102544&ad.network=s&ad.keyword=hdfc%20online&ad.creative

=23392133584&ad.position=1t5&ad.placement=&ad.matchtype=b&ad.aceid=&ad.is

mobile=&ad.device=c&ad.devicemodel=&ad.segment=info.wbcrwl.305.03

http://www.hindustan.com/investors/cor_financials_annual_reports_request.asp