AISHWARYA INSTITUTE OF MANAGEMENT & IT

A PRESENTATION
ON
Working capital analysis of
HZL Debari

SUBMITTED BY
ARVIND SINGH RATHORE
MBA III SEM.
INTRODUCTION TO THE INDUSTRY

 Vedanta resources were listed in London in December 2003. They are

diversified and integrated in 250 metals and mining group with annual
sales of 1.9$ billion
 Their principle operations are located in India, where they have a major
market share in each of their main metals: Aluminum, Copper, Zinc, and
Lead. There are also substantial Copper operation in Zambia and a
copper mine in Australia.
 Vedanta has a strong track record in managing operations and
improving cost and output
 Their Indian Zinc and Copper operations rank in the top quartile of
global cost efficiency.
 Vedanta has extensive expansion projects across each of the
metal. Several major projects announced last year is now being
implemented. With an investment spending of 3.1 billion, half of
which has already been completed
INTRODUCTION TO THE ORGANIZATION

 Hindustan Zinc is India’s only integrated producer of zinc and lead and
is among the world’s leading integrated zinc and lead producers.
 Its metal production capacity is currently 754,000 tonnes per annum.
 The smelters are situated at Chanderiya, Debari and Visakhapatnam
and the mines are situated at Zawar, Dariba and Rampura Agucha.
 HZL is one of India's leading base metal producers with exceptional
technology versatility and vertical integration in several metals.
 Hindustan Zinc has about 6,400 employees
 RESEARCH METHODOLOGY

Title of the study: “Study of WORKING CAPITAL of Hindustan zinc.ltd”.

Duration of the study: 45 days
Objective of study :-
 To study various techniques of working capital used in HZL.
 To study the management of working capital. How to use its working cash.
 To study its current assets and liabilities
Type of Research:- Exploratory based research

Sample Size and method of selecting sample :- Convenience sampling is a non

– probability sampling method. Convenience sampling generally assumes a
homogeneous population, and that one person is pretty much like another.
Sample size: - 100 Respondents
SCOPE
Area of study:- Hindustan zinc limited, debari
No. of individual studies:- 100

Time of study:- 8 weeks

Units of analysis:- Executive, Workman
Place visited:- Roaster plant,Leaching plant
Mechanical engineering
department,Safety department
Sales department,Finance
department

Limitation of study:-
Every project work has its limitations further, a work in social sciences and
commerce can not be like that of any natural science where results
areuniversally true.
 Limited area
 Limited respondents
 In appropriate information
 Respondents were not so interested
 Respondents had no time for fill up the questionnaire
FACTS AND FINDINGS
Change in Working Capital
2008-2009
Amount (Rs. Million)
  Particulars 2008 2009 Inc. Dec.
(A) Current Assets        
  Inventory 145.31 161.86 16.55  

  Sundry Debtors 1854.23 859.5   994.73

  Cash & Bank Balances 11.03 -21.62   32.65

  Other Current Assets 0 2.04 2.04  

  Total (A) 2010.57 1001.78    

(B) Current Liabilities        
  Sundry Creditors 173.29 242.76   69.47

  Security and Other Deposits 20.13 18.9 1.23  

  Other Liabilities 45.27 55.93   10.66

  Total (B) 238.69 317.59    

  Sub Total (A - B) 1771.88 684.19    
  Dec. in working capital     1087.69  
   WC 1771.88 684.19 1107.51 1107.51
 Change in Working Capital
2009-2010
Amount (Rs. Million)
  Particulars 2009 2010 Inc. Dec.
(A) Current Assets        
  Inventory 129.29 145.31 16.02  

  Sundry Debtors 641.34 1854.23 1212.89  

  Cash & Bank Balances -8.75 11.03 19.78  

  Other Current Assets 0 0    

  Total (A) 761.88 2010.57    

(B) Current Liabilities        
  Sundry Creditors 155.05 173.29   18.24

  Security and Other Deposits 20.63 20.13 0.5  

  Other Liabilities 39.64 45.27   5.63

  Total (B) 215.32 238.69    

Sub Total
  (A - B) 546.56 1771.88    
Inc. in working
  capital     1225.32

  WC 546.56 1771.88 1249.19 1248.19

Analysis and Interpretation

 Interpretation
Through the graphical structure of inventory we can easily
asses that the average inventory Is not highly fluctuating and if
we talk about overall inventory of the following year the highest
is of year 2007 119506109.6 and minimum is of year 2005, .
088266365.
Debtor:
 cash flow can be significantly enhanced if the amounts owing to a
business are collected faster. Every business needs to know who owes
them money…How much is owned…How long it is owing…For what it is
owned.
 Slow payment has a crippling effect on business in particular on small
businesses who can least afford it.If you don’t manage debtors they will
begin to manage your business as you will gradually loss control due to
reduced cash flow and of course you could experienced an increased
incidents of bad debts.

Debtor
1500

1000

500

0 Debtor
2008-2009 2009-2010
-500

-1000

-1500
 Cash at bank :. If we talk about average cash that is 187166165.7 in the
exception we identify the year 2008 where the cash balance is in negative where
the cash may be raised by HQ.

Cash at bank
30

20

10

0
2008-2009 2009-2010 Cash at bank
-10

-20

-30

-40
Loans & advance

Lone & Advance

25500000
25000000
24500000
24000000
23500000
23000000 lone & advance
22500000
22000000
21500000
21000000
2009 2010
 Sundry creditors: Creditors are a vital part of
effecting cash management and should be managed carefully to enhance
the cash position.Purchasing initiates cash outflow and on overzealous
purchasing function can creat liquidity problems.

sundry creditor
0
2008-2009 2009-2010
-10

-20

-30

-40

-50

-60

-70

-80
 Total current asset
1500

1000

500

0 Total current asset

2008-09 2009-10
-500

-1000

-1500
Liabilities are that major feature of working capital that affect the
working capital direct by because of that deducting nature from the current
asset and the result that is said to be a working capital when a company has
more liabilities that means the company`s fund are not being properly utilized
from the current assets to the right liability so the management of liabilities is
very essential due to the reason of company`s fund in the proper way.

Total liabilities
0

-10 2008-09 2009-10

-20

-30

-40
Total liabilities
-50

-60

-70

-80

-90
 WORKING CAPITAL: As the graphical data is concerned
we can predict that the working capital of the HZL is fluctuating wather if we
talk about the year 2006 the working capital is so lesser and in 2008 and
2009 is approximately equal because in the production concern the
requirement of inventory and requisition of material may change that’s why
it is fluctuating nature and as on average we can say that the working
capital is about to be according to the table.

Working capital ( in million)

1500

1000

500

0 Working capital ( in million)

2008-09 2009-10
-500

-1000

-1500

W.C 2008-09 2009-10

Rs. (1087.69) 1225.32
SWOT ANALYSIS
The over all valuation of company’s strength, weakness, opportunities and threats is
called SWOT analysis.
STRENGTHS
 Well setup organizational structure
 It has been awarded by ISO – 14001, ISO 9002 and OHSAS 1800 and now it is
trying for ISA.
WEAKNESSES
 Aging work force with low skill levels: Majority of workforce has crossed the age of
50 yrs. Or near to it and therefore, the working efficiency has gone down.
 Due to complex organizational structures there is a less understanding of different
levels of management.
OPPORTUNITIES:
 Expansion of industry. DZS, itself is under the expansion to 10000 tones per year
capacity.
 Joint ventures and exports in the environment of changed import –export policies
THREATS
 Changing policies of the Government of the country is a major threats to all
business organization whether a private concern or a P.S.U
 Technology changes in the production world of the Zinc might be a big threat to the
production capacity of the company.
Conclusion

 Working capital of the company was increasing and showing positive working
capital per year. It shows good liquidity position.
 Positive working capital indicates that company has the ability of payments of
short terms liabilities.
 Working capital increased because of increment in the current assets is more
than increase in the current liabilities.
Recommendation and
Suggestions
 Stores department should be connected to various indenting depts. through
local area networking (LAN) and should utilize the facility of e-\commerce.
 All the non-moving items, which account to a considerable value of total
inventory, should be disposed off. These non-moving items incur cost o the
staff employed+ maintenance cost+ rent rate.
 Should use the technique of “just in time” for those items, which are easily
available in market.
 The organization should keep optimum level of investment of the inventor
instead of fixed calendar plan. They should introduce flexibility in annual
calendar plan.
BIBLIOGRAPHY
READINGS:
1. S.N Maheshawari: Cost & Management Accounting: Sultan Chand & Sons, New
Delhi
2. M.Y.Khan & P.K.Jain: Management Accounting; Tata McGraw Hill Publishing Co.
Ltd., New Delhi.
REFERENCES:-
 Annual Reports of HZL. From 2002 to 2006
 Company’s annual data & Financial Statements
 . Records, Journals & Magazines of HZL
Websites:
 www.vedantaresource.com
 www.hzlindia.com
Thank you