HUTTI GOLD MINES COMPANY LIMITED

INDUSTRIAL PROFILE

While exploration and mining can sometimes be conducted by individual entrepreneurs

or small business, most modern-day mines are large enterprises requiring large amounts of
capital to establish. Consequently, the mining sector of the industry is dominated by large,
often multinational, mostly publicly-listed companies. . However, what are referred to as the
‘mining industry’ are actually two sectors, one specializing in exploration for new resources, the
other specializing in mining those resources. The exploration sector is typically made up of
individuals and small mineral resource companies dependent on pubic investment. The mining
sector is typically large and multi-national production from their mining operations.

Miners today do more than just dig tunnels in the Earth’s subsurface. There are many
different jobs, direct and indirect, in the mining industry, ranging from engineers and lab
technicians to geologists and environmental specialists. Beyond employment directly linked to
mine-site activity, the modern mining industry also employs many other professionals,
including accountants, lawyers, sales representatives, public relations specialists, not to
mention thousands of men and women involved, who manufacture the machines and
equipment necessary to mine minerals.

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COMPANY HISTORY

This mine is probably one of the ancient metal mines in the world dating to the pre-
Ashoken period. Carbon dating of the old timber collected from old workings indicated about
2000 years of ancient mining activity. Between 1887 and 1920 nearly 7.40 tons of gold was
recovered from very rich ore at an average yield of 19 grams per ton. Most of the ore was from
the main mine which was worked by Hutti (NIZAMS) gold mine, an of shoot of Hyderabad
(DECCAN) Company. The main mines were up to a depth of 1056mts. The industry was closed
down in 1920 due to technical difficulties and the First World War.

In 1937 the Nizam’s decided to prospect the area with a view to response the mines. In
1940 based on favorable exploratory results, it was decided to install a plant to treat 100 TPS
per day. But before the plant could be commissioned, mining operation was suspended from
1942 to 1946 due to second world war, the mine was shut down and only pumping was carried
out.

After the war, the Hyderabad gold mines company Ltd was found in1947 and regular
mine production started in September 1948 at the rate of 130 tons per day. By 1972 this was
progressively increased to 600 tons per day. In the year 1999 increased to 910 tone per day.

With abolition of gold control at commencement of new mines policies HGML was in a
position to greatly expand its activities. It was proposed to increased production from 2.6 lakhs
tones of ore per annum to 5 lakhs tones of ore pre annum after completion of the
modernization and expansion programme by introducing mechanized mining & latest CIP
treatment process technology from the year 2000 to 2001.

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 HUTTI GOLD MINES COMPANY LIMITED

COMPANY PROFILE

Hutti Gold Mines Company Limited (HGML), Government of Karnataka Undertaking

(Established in 1947 as Hyderabad Gold Mines), has the unique distinction of being the only
producer of primary gold in the country.

HGML has been active in the exploration, development and exploitation of gold deposits
occurring in Karnataka.

The Company’s Corporate office is situated in Bangalore and it operates two units-The
Hutti Gold unit (HGU) in Raichur district and the Chitradurga Gold unit (CGU) in Chitradurga
district with an operating mine at Ajjanahalli (Tumkur District).

HGU and CGU are fully integrated units, with capacities to produce 600000 TPA and
261000 TPA of ore respectively. The HGML currently processes the ore from Hutti Mine and two
satellite mines at Uti (opencast) and Hira-Buddinni (Exploratory underground mine).

Geology & Reserves

Hutti is located at Latitude 16 12’ N. Longitude 76 43’ E.

The Hutti Gold Deposit is located in the Hutti-Maski Pre-Cambrian greenstone belt. The
auriferous lodes occur within the metaba salts and are gold quartz sulphide lodes, which are
confined to laterally and depth persistent shear zones.

Gold occurs in native state and is generally associated with quartz veins and also with
sulphide minerals viz., arsnopyrite, purrhotite and pyrite as inclusion, fracture filling and also
replacement in microscopic and submicroscopic particles.

Localization of gold mineralization is litho logically and mainly structurally controlled and
the ore shoots have typical geometric pattern of distribution. There are nine parallel lodes
exposed on the surface, of which six lodes are being mined. The Hutti deposit extends for about
4 km strike length and the width covered by all the parallel lodes is about 1.5 km. The parallel
lodes have a general strike of NNW – SSE and dips ranging from 600-700 due West.

The strike length covered by the present mining is 1.4 km and the proved and probable
ore reserves up to the present mine depth of 846 m are 6.76 million tonnes at 5.27 g/t grade.
The immediate northern and southern extensions of Hutti mines also have good potential and
detailed exploration by drilling and exploratory mines development is in progress on the
extensions of New East Reef, Strike Reef, Zone-I Reef, Middle Reef and Oakley’s Reefs.

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 HUTTI GOLD MINES COMPANY LIMITED

VISION AND MISSION:

The corporate vision is to become one of the most vibrant, self reliant, financially viable,
and steady growth oriented mining corporate. The corporate mission is:

 Improve productivity and profitability.

 Provide financial stability on long term.

 Register steady growth in terms of percentage of capacity utilization, production of

income and overall profitability.

 Provide safe working conditions in the mine.

 Introduction of modern and effective management apart from achieving day to day
production target.

 Promote Human Resource Development.

 Have environment friendly and healthy mining and production process.

 Have good health and well being of work

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 HUTTI GOLD MINES COMPANY LIMITED

PRODUCT PROFILE:

Gold has long considered one of the most precious metals, and its value has been used
as the standard for many currencies (Known as the gold standard) in history. Gold has been
used as a symbol for purity, value, royalty, and particularly roles that combine these properties.

The price of gold is determined on the open market, but a procedure known as the Gold
Fixing in London, originating in 1919, provides a twice-daily benchmark figure to the industry.

Historically gold was used to back currency in an economic system known as the gold
standard in which one unit of currency was equivalent to a certain amount of gold. As part of
this system, governments attempted to control the price of gold by setting values at which they
would exchange it for currency.

For all long period the HGML, Government of Karnataka Undertaking (Established in
1947 as Hyderabad Gold Mines), has the unique distinction of being the only producer of
primary gold in the country.

HGML has been active in the exploration, development and exploitation of gold deposits
occurring in Karnataka.

The Company’s corporate office is situated in Bangalore and it operates two

units-The Hutti Gold unit (HGU) in Raichur district and the Chitradurga Gold Unit (CGU) in
Chitradurga district with an operating mine at Ajjanahalli (Tumkur District).

HGU and CGU are fully integrated units, with capacities to produce 6,00,000 TPA and
2,61,000 TPA of ore respectively. The HGML currently processes the ore from Hutti Mines and
two satellite mines at Uti (opencast) and Hira-Buddinni (Exploratory underground mine).

Gold Bullion Bars Produced By Hutti Gold Mines

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The Hutti Gold Bullion Buttons

I) GML’s Production Performance of the Decade (1999-2009)

Year Ore hoisted Hutti Ore treated Gold produce

only (in tons) (Hutti + NP) (in (in kg’s)
tons)

1999-00 254529 349084 1395.82

2000-01 260199 335845 1784.99

2001-02 379251 409437 2333.50

2002-03 460637 525928 2640.496

2003-04 483263 623125 3096.544

2004-05 480826 592685 3507.607

2005-06 454351 513722 2848.340

2006-07 484723 522374 2336.36

2007-08 470682 562921 2808.60

2008-09 492369 591762 3002.20

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 HUTTI GOLD MINES COMPANY LIMITED

ORGANISATION STRUCTURE

BOARD OF DIRECTORS:

Sri.Renuka archery (MLA) : Chairman

Dr.V Chandrshekar(IAS) : Managing Director

Sri.D.Y.Venkateh : Executive Director

Sri B ramprasad (IAS) : Director

Sri.shivalinga murthy (IAS) : Director

Sri.S dayashankar (IAS) : Director

Sri.Ajay Seth (IAS) : Director

Sri.Arvind G Risbud (IAS) : Director

M/S. P.Rangaswamy & Co. : Auditors

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 HUTTI GOLD MINES COMPANY LIMITED

Sri.Vijay Krishna K.T : Company Secretary Consultant

PRODUCTION DEPARTMENT

Production is the basic activity of all industrial units. All other activities revolve around
this activity. The end product of the production activity is the creation of goods and services for
the satisfaction of the human wants. The production activity is nothing but the step-by-step
conversion of one form of material into another either chemically or mechanically. This is done
in factories which house manufacturing processes. The basic input of the production processes
are men, machines, plant, and methods.

An organization capabilities and the intent are strongly reflected in the product it
manufactures. The manufacturing competencies and facilities echo truly, the R&D extent and
the ability to implement it for the best of the market it targets. The product of mine is used as
raw materials on which the processing is done to create or enhance the form utility. It should
note that the finished product of one manufacturing unit does not always furnish a readymade
product for the ultimate consumption. In a chain of manufacturing activities, the finished
product of processor sometimes become the raw material (or component) for the other
manufacturing firms falling next in the sequence.

HGML Company has world class manufacturing facilities having to extract the Gold as
well as finished product will be completed through the manufacturing process.

MINING AND TREATMENT

HGML’s production has steadily increased over the years. In this process, HGML has
been able to develop much needed. Technological expertise in the field and prepare itself to
take new challenges of growth and development. Over the years, the Company smelting
leading to increased competitiveness of its operations.

HGML’s operation starts with mining of Gold ore. The use of bulk mining methods viz,
large Diablast, Hole stepping and sub-level mining have achieved higher safety and productivity.

The ore is Crushed ground to very fine Powder. The Grinding output is subjected to
Cyanidation and CIP (Carbon in Pulp) process, where Metallic Gold leaches and gets adsorbed
on activated carbon.

Gold is recovered through two routes:

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 Gravity Concentration

 Leaching, CIP, Elution, Electro winning Process and there after smelting to produce
Saleable Gold Bullion Bar.

The Brief Description about the Mineral Treatment Plant:-

ROM is of -8” size is crushed to -10” mm size in three stages.

In the first stage, there are three no’s of KueKen Jaw Crushes which act as primary
crusher and reduces the ore to -2-1/2” of size stored in 200MT.

In the second stage, 3” standard Simon cone crusher acts as secondary crusher and
reduces the ore to 1’ size.

To ease out the load on the Simon cone crusher a vibrating screen with 1” aperture size
is used. The secondary crusher product along with screen underflow stored in a 400 MT
capacity intermediate bin for further crushing.

In the territory stage, there are two no’s of short head and two no’s of 4’ short head
Simon cone crushers. These crushers opening are set at 10mm size and they are in close circuit
with vibrating screen.

The final product from crushing plant i.e. -10mm size is stored in a 1500 MT capacity
fine ore bin for subsequent treatment i.e. grinding.

The Milling/Grinding process of gold Ore in Hutti employs two distinct grinding
techniques.

In the first technique, grinding is done in two stages, i.e. Primary grinding and Secondary
grinding for further the communition and one 8’dia*16’ long primary mill and three no’s of 5-
1/2” dia*22-1/2” long tube mills constitute one stream of grinding in which pebble and smaller
size balls are used as composite grinding media. In the first technique, two such streams are
there and strake tables are used to collect coarse Gold as concentrate for this circuit.

In the second technique, Grinding is done by four ball mills of different sizes i.e. 9’*8’*,
8’*10 and 9’*12’ and each of them are independent circuits in which larger sizes balls are used
as grinding media and in these circuit Knelson concentrators are used to collect coarse gold as
concentrate.

In all the milling techniques, cyclones are in close circuit with the mills so as to get the
required sizes (i.e. 80% passing 75 HM) for the subsequent treatment process.

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The concentrates collected from both the techniques are upgrade on James table and
upgraded concentrate is roasted magneted and finally smelted into bullion buttons.

The entire Cyclone overflows i.e. finely ground ore in the form of slurry from two stream
of 1” technique and 4 stream of 2nd techniques join together in a distributor box from which
finely grind ore in the form of slurry is fed to a high rate Thickner for thickening purpose. The
thickened pulp (60% solid w/w) obtained from thickness are subjected to Cyanidation process
in which cyanide accessible gold in slurry makes complexes with cyanide in presence of oxygen
and dissolve in solution at high pts. To increase the oxygen potential of slurry H2O2 is added in
addition to compressed air. These Cyanidation or leaching process is carried in a serried of
mechanically agitated zones of agitators of different sizes i.e. 16*16”, 20*20” and 11m*11.5m
agitator.

The cyanide leached pulp then fed to three no’s of 1000 TPD capacity and one no 300
TPD which are parallel in circuit. The objective of CIP plant is to absorb dissolved gold in
activated carbon from the solution.

The Gold loaded carbon is removed from CIP plant periodically, selected to acid alkali
washed and then eluted in 4 no’s of elution columns with 1.0% NAOH and 0.1% NACN solution
qt 95*c for a period for 75 hours. The solution is then passed through 4 no’s of electro winning
cells in which gold is deposited on steel wool cathodes.

The gold loaded steel wool cathodes are manually removed periodically, subjected to
acid digestion, drying and smelted to obtain Bullion buttons. The bullion buttons thus obtained
from table concentrators and steel wool are cast in to Bullion and then Dispatched for sales.

Metallurgical Department

The Gold extraction process in HGML practices Mineral Processing, Hydro electro & Pyro
Metallurgical routes. The Major unit processes involved is described below:

Role: - To extract Gold of 91% pure from ROM at the optimal cost.

Crushing

Mine ore is drawn mainly from the adjacent Mallapa Shaft ore-bin of 1000 tonnes
capacity, while ore from the other shafts is brought in to the crushing circuit via a surface ore-
bin of about 200 tonnes capacity equipped with chain feeder and inclined conveyor belt etc.

ROM is crushed to -10 mm size in three stages. In the first stage there are three nos. of
KueKen Jaw crushers, which act as primary crusher and crushed ore stored in 200 MT. In the

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 HUTTI GOLD MINES COMPANY LIMITED

second stage 2 Nos. of 3’ standard Symons cone crusher act as secondary crusher and in the
tertiary stage, there are 2 nos. of 3’ short head and 2 nos. of 4’ short head symon cone
crushers. These crushers are in close circuit with vibrating screen. Crushed product is stored in a
fine ore bin of 1500 tons capacity before feeding to grinding plant.

Automatic sampler and weight meter and weighbridge provide the necessary
production input details.

Grinding

Mill Capacity: 1950 TPD

The milling/Grinding process of gold ore in Hutti employs two district grinding
techniques. In the first technique grinding is two stages i.e. one primary mill and 3 nos. of
secondary tube mills constitute one stream of grinding. Two such streams are there. The
discharges of these mills are passed on strake table spread with blankets which recover coarse
gold by gravity process, and system is in close circuit operation.

In the second technique, single stage grinding is done in four nos. of independent ball
mills in close circuit with cyclone classification system. The mill discharge is passed through
Knelson concentrators to recover the free gold. The stake tables concentrate and Knelson
concentrate is further upgraded on James table to produce smelt able grade of gold.

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 HUTTI GOLD MINES COMPANY LIMITED

Cyanidation and carbon in pulp process (CIP):

The cyclone overflow from both the techniques is subjected to thickening in a High rate
thickener to remove excess water, which is passed through a series of carbon column to
recover dissolved gold. The thickened pulp of specific solid content is mixed with cyanide for
leaching in a series of mechanical agitators at alkaline media. To facilitate leaching hydrogen
peroxide assisted with compressed air is used to improve oxygen potential in circuit. The
cyanide leached pulp is sent to carbon-in-pulp (CIP) unit, agitated with activated carbon in
suspension. The dissolved gold is then absorbed on carbon as sodium auro cyanide. The gold
loaded carbon is removed from the CIP periodically and carbon is washed with water and given
acid and alkaline treatment.

Elution and Electro-winning Plant:

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 HUTTI GOLD MINES COMPANY LIMITED

The clean & gold loaded carbon is elution columns by maintaining the specific
parameters. The gold in the pregnant solution is recovered in electrolytic cells using steel wool
as a cathode on which the gold is deposited. The stripped carbon that retails a very little gold is
activated and reused.

Refinery:

The upgrade James table concentrate is roasted, magneted and finally smelted into
bullion buttons. The gold loaded steel wool is manually removed periodically, subjected to acid
digestion, drying and smelted to obtain bullion buttons. The bullion buttons thus obtained from
table concentrate and steel wool are cast into salable bullion bars weighing 5 to 11 Kgs having a
purity of 88-91% of gild, 8-11% of silver and balance impurity.

Assay and R&D Lab:

Activities involved in Assay lab/Sample testing are:

 Crushing of Underground samples

 Filtering and drying of grinding samples

 Fluxing

 Parting

 Making cupels

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 Scrapping of crucibles

 Refractory work

 Preparation of standard solution and cyanide antidotes

 Other miscellaneous work to find Assay value of mine and mill samples

 To do any other work as assigned from the time to time

Activities carried out in R&D Lab:

 Quality Control

 Pollution Control

1. Air pollution (process emission, flue gas emission, ambient air monitoring)

2. Effluent analysis

3. Domestic sewage analysis.

 Mineral analysis

 To carryout/involve in R&D project works taken up by the company

 To prepare solutions required for R&D works

 To do any other work as assigned from time to time.

FINANCE DEPARTMENT

Accounting is the art of recording, classifying and summarizing in a significant manner

and in terms of money, transactions and events which are in part at least, of financial character
and interpreting the result thereof.

Introduction:-

Financial department is a vital department of an organization is a concerned with

providing and providing and using cash and credit for carrying on business correctly.

Finance is regarded as the life blood of a business enterprise this is because on the
modern economy finance is one of the basic needs of all kinds of economic activities. It is the
matter key, which provided access to all source to be employed in the manufacturing and
mechanizing activities. The finance department should decide when, where and how to achieve
funds to meet the firms, investment needs.

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 HUTTI GOLD MINES COMPANY LIMITED

The control issue before the finance department is to determine the proportion of
equity and debt the mix of equity and debt is known as the capital structure being one of the
best run co-operative mills in India, having following membership and paid up share capital
structure as on 31st March 2008.

Functions to finance department:-

 It prepares and maintains journal books, cash and bank books, ledger a/c, and a trial
balance.

 To prepare Balance sheet

 To prepare Profit and Loss a/c.

 Maintenance of account in which undertaken.

 Supplier bill paying

 Cash and Bank balance

 It makes calculation and decision regarding the funds of the company

Share capital:-

Authorized capital 10, 00, 000, 00

(1000000 of Rs.100, each)

Issued 3,07,93,328

(3,07,933 2/7 0f Rs.100 each)

Subscribed & paid up 2,96,20,371.47

The HGML’s Company having Authorized Capital of Rs.10,00,00,000

Issued Capital of Rs.3,07,93,328

Subscribed & Paid up Capital of Rs.2,96,20,371.47

HGML Company’s Finance department is having the following department:-

1. Inventory accounting

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2. Cost accounting

I. Billing section

II. Bill passing section

3. Employees account section

4. Trust account section

INVENTORY ACCOUNT SECTION:- The HGML Company has having a lot of stores material items
are to be divided into 8 parts (Ledger) according to the material descriptions. All the materials
cannot do in one place that’s way it is divided for the purpose of material stores maintain
activities in gold manner.

The ledgers are:

 Chemical and Billing Materials.

Such as, sodium cyanide, Hydrochloric acid, and other chemicals.

 Electrical and Underground Spares.

Drill rods, Drill bits, Diamond core bits etc.

 Machinery Spares.

Compression Spares, Generator Spares.

 Steel materials and Pipe fitting.

Walls, Nut bolt, Rails, Pipes etc.

 Tools and miscellaneous material.

General items and tools such as, Cutting blades, Spanners, Pipe rinch, Boots, Helmets,
Uniforms etc.

 Transfer Spares

Fuel, oil, Lubricants, Petrol and Diesel.

 Explosives

Used for the Underground department

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 Sand, Caesarian Poles, Ballasts

Sand is general

Caesarian poles used in Underground department.

Ballasts in Mill section. Especially in Grinding.

Cost codes are also prepared for the purpose of easy task. The codes decided according
to the departments.

Cost Codes:-

 Relates to the Administration department

(Hospital, Materials, Security department, Finance, Marketing, HR)

 Relates to the Capital items

 Relates to the Underground department (Shafts, Mills etc)

 Relates to the Milling department (Crushing, Grinding, Cyanide, Assay lab)

 Engineering department (Billing, Workshop, Transports)

The user department will be drawing the materials giving the Indent (Document for
evidence to draw the material for purpose of use in the section). How much they required
quantity and the descriptions of materials and cost code of materials it means the materials and
the particular allocation to be booked.

Brief description about Inventory:-

 Indent details like, number, Cost code, Material code and Quantity are entered.

 After processing the Bills the Material receipts notes (MRN) details like Material code,
Quantity, Bill amount, Freight, Insurance, Entry tax are entered to arrive at the unit rate
of each material.

 Through inventory software weighted average rate is arrived and the same is applied for
all material issues. Stores stock ledger and closing master reports are also computed.

 Stock ledger report is sent to stores for reconciliation with Bin card balances.

 Cost code with consumption report is given to costing for completion the cost sheet.

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Cost accounting section:-

The HGML maintained the standard Costing system. Costing section makes the
companies all department expenses checked and then exact cost will be shown according to
the expenses they are incurred while every day’s consumption. In every month this department
will shown the transaction expenses accurately in a print of copies. Also incomes from any
department will be prepared according to the Personnel Code and cost center of the company
provided for the different departments and different employees, on the basis of this Cost Sheet
will be prepared.

The main purpose of these formalities, in every month what the unit of Gold takes the
expenses will tally with the expenses of all other departments, then tallied both difference will
be profit or loss of the company. And also to ascertain the cost per metric ton and cost per
gram of the Gold.

Billing Section:-

Stores Ledger pass the Material Receipt Notes on the basis of this bill will be ordered.

MRN Base: - This is nothing but the Material Receipt Note received from the stores. On those
note bills order will be scrutinized then pass the bill and give the material code then bill wise
fabricate in account wise.

For Example: - A/c codes like,

214001 called as material stock account

215001 called as capital machinery in stock

Then according to the Vendors code wise individual debit or credit will be prepared or filled.

Bill passing section:-

On the basis of terms & conditions for the passing bill through purchase order which is
made by purchase department including MRN also prepared. Purchase department sends the
purchase order to bill section and the order includes material Description, Mode of Dispatch,
Name of Transport Company, Mode of Payment etc. are to verified accurately by bill officer
then the bill passes.

Employees Account Section:-

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The HGML Company’s entire employee’s accounts are prepared separately called the
employees section.

According to the seniority officer document code will maintained.

For Officers codes above 10000

For Staff codes above 20000

For Employees above 30000

For bellow 10000 codes made for the Non Employees like Co-Operative Society, Deputy
GM, MD, and Asst.Secratery.

According to these document codes members advance will pay for the purpose official
use and then return will be pay or not to pay according the their will and wish but entries will
be prepared accurately.

Trust Account Section:-

In this section the company provides to the employee’s the basic schemes like
Employees Provident Fund, Education Loans, Sick Loans, Building or House Construction Loans
are provided for the purpose of employee’s satisfaction.

Depreciation:-

1. Depreciation on Fixed Assets is provided on straight line method.

2. Additions to existing assets are depreciated over the remaining useful life of that asset.

Purchasing Department

This is also one of the important departments in this department they purchase the
materials, which require for production and also for the office work. Its main function is
purchasing the materials. It receives the requisition letter from the store department to know
what type of materials is required. After receiving this letter they make enquiry and then place
the order.

“Purchasing refers to the act of buying an item by price”.

Purchasing means procurement of goods and services from some outside agencies the
object of purchasing is to supply materials, semi finished goods etc. to the production
department.

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The object of purchasing is procurement of materials of the right type, right quality, and
right quantity and at a right time. Effective management and control over the use of materials
and equipment so as to avoid waste, duplication and obsolescence of materials and
equipments.

Purchase Procedure:

In the HGML Company following procedure is followed in purchasing department:-

1. RECEIVING PURCHASE REQUISITION:

The first step in the purchase procedure is the receive the purchase requisition
from various department. Request for purchase of materials are made on a from known
as “purchase requisition”. It specifies what kind of material is required.

2. EXPLORING THE SOURCE OF SUPPLY:

The purchase manager is usually in contact with several sources of suppliers of

different materials. If the materials are to be purchased in bulk, he invites quotations
from various suppliers in the form of a tender. When tenders are invited, then the
lowest tender should be accepted by the purchase department by considering other
factors like quality, terms of payment, modes of delivery etc.

3. PLACING AN ORDER:

After selecting the supplier who has quoted most favorable quotations, the next
step to be taken by the purchase manager is to place the order. The order must be
made on a printed form and must contain such information as number, date, address of
supplier, particulars of goods etc. this order from should prepare in 4 copies. The
original copy should be sent to suppliers, second copy to the stores department for its
future reference.

4. RECEIPT AND INSPECTION:

When the invoice is received from the concerned vendor, it will be compared
with the order form to ascertain whether the ordered good have been supplied or not.
Then these goods are physically inspected to ascertain whether goods received tally
with the invoice.

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5. ENTRIES IN THE BOOKS OF ACCOUNT:

After the goods received are closely checked and if found correct, the receiving
clerk prepares goods received note in three copies. Three copies along with goods
received will be sent to stores department which send one copy to purchase and
accounts department for payment.

HUMAN RESOURCE DEPARTMENT

Human Resource management is a management function that helps manager recruit,

select, train, and develops employees for organization. It is concerned with the people
dimensions in the organization. It is specialized field that attempts to develop programs,
policies and activates to promote the satisfaction of both individual and organizational needs
goals and objectives.

It is concerned with the people dimensions in management. Since every organization is

made up of people acquiring their services developing their skills, motivating them to higher
levels of performance and ensuring that they skills, motivating their commitment to the
organization are essential to achieving organizational objectives.

Human Resource policy at HGML:-

A policy is a plan of action. It is a statement of intention committee management to a

general course of action. Management drafts a policy statement to cover some feature of its
personnel programmes. The statement may often consist an expression of philosophy and
principal as well.

Objectives of HR policy at HGML:-

 To ensure uniformity of HR policies among the Hutti group of company.

 To ensure that all personnel have a thorough and uniform understanding of policies and
provide as a guide line in implementation of these policies.

 Enable a new entrant in the department to understand his/her as well as his/her

colleague’s function.

Main Human Resource Policy at HGML:

1. Human Resource Policy on Welfare:-

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The department supervised the functioning of the HGM Co-op society, Canteen
and the schools. The cable T.V. provided for the employees residing in the company’s
colony functioned well.

The company had a 150 bedded fully fledged hospital to cater to the employees
and the family members’ health care and treatment. During the year Doctor staff
rendered medical awareness & help to surrounding Villages to contain malaria, dengue
fever and Filaria. Aids awareness programs and pulse polio programmes were
conducted during the year. The total no. of patients treated during the year 2008-09
was 2,40,317.

Much importance given to the national programs of birth control and conducted
mass laparoscopic camp in a month. During the year 2006-07 some of the important
programmes conducted like free eye camp, free diabetic check up seminars. With the
cop-operation of Jayadeva institute of Cardiology Bangalore, Eardiac disease
investigation camp, cancer detecting programme & T.B leprosy detection camp were
conducted. Co-Doctors attended patients for chickengunya and joint pains etc. are
surrounding Village of HGM’s camp.

2. Housing :-

The company has having 2365 quarters. These have been allotted to eligible
officers, Staff and Employees. Regular visit made to colonies by Welfare officers to
regulate Health and Hygienic Camp area.

3. Hospital :-

HGML Company has also most modern Hospital facility with 120 wide capacity.
The existed hospital is equipped with modern in fractures like AC operation theatre,
ECG, X-ray, Ultrasound scanner, Defibrillator with cardiac monitor, Auto analyzer, Lung
function test in computer, Blood bank, Ventilator etc.

4. Education:-

The company organizes periodically training programmes to employees and

officers. Worker education class for staff and workers is being organized on a regular
basis. Merit awards are given to the children of employees excelling examinations. The
Board of Directors has approved payment of Rs.5 lakhs contribution for construction of
Mathematics, Laboratory by Science Education Trust, Raichur Science Center.

5. Safety:-

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“Safety first, Production must”

Safety of the employees, workers, guests and whoever else present in the
responsibility of the industry. JSW is legally and humanitarianly responsible for every
accident within the plant boundary. A steel plant is vary hazardous place to be in, no to
be opinion about it.

6. Safety Devices:-

There are many safety accessories available for worker:

Helmets, Protective glasses, Glass masks, Denim jackets, Hand gloves, Denim
trousers, Safety shoes etc. Depending on the work environment, aluminum jadels,
safety belt with hooks, welding masks, ear plugs, comonitors etc are some of the other
safety equipments used.

7. Counseling scheme:-

The welfare officers conducted several counseling programmes on Alcoholism,

Indebtedness to help the employees and their families to solve their problems. Special
importance was given to the employees who are habitual absentees and created among
them: as a result, they have improved their attendance.

Human Resource Policy on Establishment:-

 Recruitment

 Selection

 Promotion

 Leave Travel Concession

 Transfers

Recruitment:

Recruitment is understood as the process of searching for obtaining applicants for jobs
from whom right people can be selected. The process begins when new recruits are sought and
ends when their applications are submitted. The result is a pool of applicants from which new
employees are selected.

HGML comp. recruiting through the following methods:

 Advertisement

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 Employment exchange office

 News paper

 Trade associations

 Contractors

Selection:-

Next to recruitment, the logical step is selection of qualified and competent people. In
HGML selection is conducted through process of picking individuals out of pool of job
candidates with requisite qualifications and competence to fill jobs in the organization.

Promotion:-

Promotion is the upward reassignment of an individual in an organization’s hierarchy,

accompanied by increased responsibilities, enhanced status, and usually with increased income,
through not always so. On being promoted, the greater are the implications of the individual
decision on the enterprise.

In HGML Company, promotion committee, Central seniority, Concerned department

hand, Managers, HRD secretary, etc. are conducted the meeting according to senior employee
with roaster wise will be promoted.

Leave Travel Concession:-

The HGML company provides the leave travel concession for the employees once in a
two years and every year local fair Festivals the company must be paid Rs.1500 for every
employees.

Transfers:-

The HGML company also made the transfers one department to another department for
the purpose of employees different skills as to reduce the boredom.

Human Resource policy on Training:-

During the year regular refresher courses were conducted at VT Centre for workers in 34
batches and 335 workers were trained. 18 In-hours programs were conducted on various topics
for HGM workers, Supervisors, and officers. 51 workers, staff and officers attended for
residential. And non residential training and seminars conducted outside by various
organizations. Cordial industrial relationship between management and workers continued and
there was no strike, lockout during the year.

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Training methods followed by HGML

 On the job Training:

A. Job Rotation

B. Apprentices

C. Coaching

D. In house training

 Off the job Training:

A. Lecturing and Seminars

B. Work Conferences

C. Video presentation

D. Case study

Other various departments:-

 Main stores department

 Exploration department

 Mining department

 Engineer department

 Security department

FUTURE PLANS OF HGML:

 Hutti underground exploration by diamond drilling from 26 th level and up to 30th level to
establish strike and depth continuity of ore body for 2nd phase of mining.

 Improvement of mine ventilation.

 Develop core competence to effectively manage diversification and other activities.

 Ensure complance with various Corporate laws, Labour laws, Environment laws, and
other applicable laws.

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 Strengthen effective and adequate internal control system.

 Standardize management information system and computerization.

 Ensure and adopt transparent procurement, sale, financial reporting, audit and
practices.

 Wind mill power generation:- The company has completed 1 st phase of errection and
commissioning of 4.8 mw wind mill along with polling station bay extension at KPTCL
and transmission line. Power generation started from 19 th June 2006. This has added
Rs.270 lakhs of revenue generation.

 Rationalization of use of compressed air system.

 Rationalization of underground pumping system.

 Reclamation and development of Grey’s shaft working.

 Preparation of feasibility studies for eventual mining at Hira Buddini Gold projects.

Hutti south block exploration by diamond drilling from 3rd level to 5th level to establish parallel
reefs so as to increase reserves.

SWOT ANALYSIS

SWOT analysis is a analysis of STRENGTH, WEAKNESS, OPPORTUNITY AND THREATS of

the Company. This is used to analysis the company environment will help each and every
company to know the present situation of the company.

STRENGTH:

 This is only a reputed Gold Extraction Company in India.

 It has been producing the product as the standard specified by the Government of
Karnataka.

 Fully computerized environment.

 Its continuous and larger production unit in India.

 Product quality is the strength of the company.

 The work environment is full of excitement, creativity, and innovative atmosphere.

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 The company having the more number of manufacturing plants premises and around
the Karnataka State.

WEAKNESS:

 Absenteeism is the main problem in the Company.

 Huge sound and air pollution in the production department.

 Workers are not well qualified.

 Problems occur in the production process well lead to one hour stoppage which is cause
for loss of Rs.218400

OPPORTUNITY:

 Company is having the excellent growth opportunity because of different plants in

different location.

 Company is having the good hold in the market so it will help to earn more profit.

 In the capacity of the plant is the increasing direction.

 It ties in the vicinity of large potential and unexplored market of Southern India.

THREATS:

 There is no closer competition to the extraction industries of Gold but the liberalized
rates to import the gold is one of the problem from domestic companies.

 Gold is non abundant resource which cannot be available in future if company extract
continuously.

 Huge power consumption and power failure.

 Foreign currency fluctuation.

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INTRODUCTION TO FINANCIAL MANAGEMENT

Finance is defined as the money at the time when it is required. Every firm needs
finance whether it is small, medium, and big to carry on its operation and to a show its targets.
And it is rightly said that finance is lifeblood of an enterprise. Without adequate finance, no
enterprise can possibly accomplish its objectives.

Management is a vital function control with all aspects of business management,

have become a sort of pre-requisite for the successful carrier in dynamic business environment.
The present study is concerned in Hutti Gold Mines Company Limited, Hutti.

Technically analysis of working capital in which the present project report is an

important part of financial managing current assets, which is more difficult than management
of fixed assets and the finance management needs to strike a balance both profitability and
liquidity. If liquidity more there will be adverse effect of profitability is given more weight age is
to greater risk.

A business enterprise with adequate working capital is always in a position to evil

advantage of any favorable opportunities. The present study related to the working capital
management Hutti Gold Mines Company Ltd, Hutti. Sources control and effective utilization of
the working capital by the company.

An endeavor has been made to study and analyze the assisting pattern and
utilization of financial resources and analyze the five year of working capital management. The
project primarily deals with the study of financing and utilization of available resources and
measuring the performance of the company.

Working capital

Meaning:

Working capital management can be defined as that aspect of financial

management,which is concerned with the safeguarding and controlling of the firms current
assets, and planning for sufficient funds to pay current bills.

Working capital management is concerned with all decisions and acts that
influence the size and effectiveness of working capital. The goal of working capital management
is to manage each of the firm’s current assets and current liabilities in such a way that an
acceptable level of networking capital is maintained.

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The important aspects of working capital are:

 Determining the requirements of working capital.

 Financing the requirements and

 Efficient utilization of requirement of working capital.

Working capital management involves taking decisions regarding:

 The need to invest funds in current assets

 The amount of funds to be invested in each type of current assets and their relative
proportion.

 The proportion of long term and short term funds to finance the current assets and

 To finance these current assets through appropriate sources of funds.

The term working capital management means managing the firm’s current assets and
current liabilities in such a way that, it will help to reach the organizational goals.

Current Assets:

Current assets are the assetswhich can be converted into cash within an accounting. The major
current assets are cash, marketing securities, accounts receivable and inventory.

Current Liabilities:

Current liabilities are those claims of outsiders which are expected to mature for payment
within an accounting year. The basic current liabilities are accounts payable, bills payable, bank
overdraft and outstanding expenses.

The interaction between current assets and current liabilities is the main theme of the
working capital management. Because if the firm cannot maintain a satisfactory level of
working capital, it is likely to become insolvent and may even be forced into bankruptcy. The
current assets should be managed efficiently in order to maintain the liquidity of the firm.

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Concepts of Working Capital Management:

1. Gross working capital:

The term gross working capital refers to the firm's investment in current assets.
This includes cash, short term securities, debtors (accounts receivable book debts bills
receivable) and stock (inventory).

2. Net working capital:

The term net working capital refers to the difference between current assets and
current liabilities.

Working capital will arise when assets exceed current liabilities and a negative
working capital will occurs when liabilities are in excess of current assets.

x Net working capital is a qualitative concept. It indicates the liquidity position of the
firm and suggests the extent to which needs may be financed by permanent sources of
funds.

Need for Working Capital:

The need for working capital cannot be over emphasised. The need for working
capital rises due to the time gap between production and realisation of cash from sales.

Kinds of Working capital :

1. Fixed or permanent working capital

The need for current assets arises because of the operating cycle. Operating
cycle is a continues process and, therefore the need for current assets is felt constantly.
There is always a minimum level of current assets, which is continuously required by the
firm to carry on its business operations. This minimum level of current asset is referred
to as permanent or fixed working capital.

2. Fluctuating or temporary working capital

The change in production and sale, leads change in working capital.

For example: Extra inventory of finished goods will have to be maintained to

support the peak periods. On the other hand investment in raw material, work in
progress and finished goods will fall if the market is slack.

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The extra working capital needed to support the changing production and sales
activities called fluctuating or temporary working capital.

Permanent and temporary working capitals are necessary to facilitate production

and sale through the operating cycle, but temporary working capital is created by the
firm to meet liquidity requirements.

The permanent working capital line need not be horizontal if the firm’s requirement for
permanent capital is decreasing over a period.

Approaches to Working Capital

Depending upon the mixture of sources by which the working capital of a company is
financed, there may be different approaches. They are

 Aggressive approach

 Conservative approach

 Matching approach

1. Aggressive approach
A firm may be aggressive in financing its assets. An aggressive policy is followed by the
firm when it uses more short term financing than warranted by the matching firm. Under
aggressive policy, the firm finances apart of its current assets with short term funds.

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 and also a part
of temporary current assets with long term financing.

3. Matching approach
When the firm adopts matching approach, long term sources will be used to finance
fixed assets and permanent current assets and short term sources to finance temporary or
variable current assets. Thus a ten year loan may be raised to finance a plant with an expected

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life time of ten years; stock of goods to be sold within 30 days may be financed with a 30 day
commercial paper. Using long term financing for short term assets is expensive as funds will not
be utilized for the full period.

Factors influencing working capital

1 . Nature of the business: -

The nature of the business affects the working capital requirements of a concern to a
great extent. For instance, public utilities like railways, electricity companies etc need very little
working capital, because they need not hold large inventories, and their operation are mostly
on cash basis. On the other hand, ordinary manufacturing and trading firms requires sufficiently
large capital, as they have to invest substantially and accounts receivables

2 Scale of operations: -

The scale of operation affects the working capital requirement of a concern. Concern
carrying on small activities needs less working capital. On the other hand, a concern
undertaking activities on large scale needs large amount of working capital.

3 Growth and expansion of business

The growth and expansion of business also affects the working capital requirements.
When there is growth and expansion in the business of a firm, the working capital needs of
the firm also increases

4 Fluctuation in supplies: -

working capital requirements Fluctuation in supplies affects the working capital

requirement of a firm. For instance, certain raw materials may be available only during
certain seasons. Such materials have to be necessarily obtained and stored in large
quantities to provide for periods when supplies will not be available. This will cause
fluctuation in supplies will cause fluctuation in the

5 Credit policy: -

The credit policy of a firm will affect its working capital requirements. A firm, which
allows liberal credit tight customers credit facilities enjoyed by credit ion. The credit
facilities enjoyed by a firm from its creditors will also affect the working capital requirement

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of a firm. A firm enjoying liberal credit facilities from its suppliers or creditors will need
lower working capital then a firm that does not enjoy liberal credit facilities from its
suppliers.

6 Government regulations: -

Government regulations and restrictions affect the working capital requirements of a

firm. For instance, the tendon committee has prescribed norms for holding inventories and
debtors, which a concern is not expected to exceed. This will certainly affect the working capital
requirements of the concern

Importance or advantages of working capital

1. Solvency of business: - Adequate working capital helps in maintaining solvency of the

business by providing uninterrupted flow of production.
2. Goodwill: - Sufficient working unable a business concern to make prompt payments and
hence helps in creating and maintaining goodwill.
3. Easy Loans: - A concern having adequate working capital, high solvency and good credit
standing can arrange loans from banks and other on easy and favorable terms.
4. Cash Discounts: - Adequate working capital also enables a concern to avail cash discounts
on the purchase and hence it reduces cost.
5. Regular Supply Of Raw Materials: - Sufficient working capital ensures regular supply of raw
material and continuous production.
6. Regular payment of salaries, wages and other day-to-day commitments:- A company
which has ample working capital can make regular capital of salaries, wages and other
day- to-day commitments which raise the morale of its employees , increase their
efficiency, reduces wastage and costs and enhances production and profile.
7. Quick and regular return on investments:- Every investor wants a quick and regular return
on his investments. Sufficient working capital enables a concern to pay quick dividends
to its investors as there may not be much pressure to plough back profit. This gains the
confidence of its investors and creates favorable markets to raise additional funds.

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8. High morale:- Adequacy of working capital creates an environment of securities,

confidence and high morale and creates efficiency in a business.

Objective of working capital:

 To ensure adequate liquidity of a firm

 To minimize the risk and

 The contribution to the maximization of firm’s value.

Operating efficiency:

The operating efficiency of the management is also an important determine of the level
working capital position through operating efficiency. Management cannot control the rise in
prices; it can ensure the efficient utilization of resources by eliminating waste, improving
coordination and a fuller utilization of existing resources. Efficiency of operations and a fuller
utilization existing resources. By eliminating waste, improving co-ordination of resources the
pace of cash cycle and improves the working capital turnover. It releases the pressure on
working capital by improving profitability and improving the internal generation of funds.

The level of working capital is determined by a wide variety of factors which are partly
internal to the firm and party external (environmental) to it. Effective working capital
management requires effective planning and a constant review of the needs for an appropriate
working capital strategy.

Estimation of working capital requirements:

 Expenses on raw materials, labours and overhead.

 Length of time the raw material to be held in stock.

 Length of time the raw materials remain in manufacturing process in semi finished form.

 Length of time, finished goods are held in go down waiting sales.

 Credit period granted to the sundry debtors.

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 Credit period granted by the sundry creditors and

 Time gap in the payment of wages, salaries and other operating exp

 Operating cycle:

Operating cycle is time duration required to convert sales, after the conversion
of resources into inventories into cash. Investment in current assets such as inventories and
debtors is realized during the firm’s operating cycle which is usually less than a year.

Figure-1

Operating cycle of manufacturing company

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Figure-2

Operating cycle of mining company

Need for study:

I have selected this topic for the study because Working Capital management
plays an important role in the company; so it is to be maintained in a good and better way so as
to fulfill the present and future needs of the company. In this case a firm should earn sufficient
return from its operations. Earning a steady amount of profit requires successful sales ,which
do not convert into cash instantanly.

Therefore, it is important to manage the Working Capital management carefully

by using scientific and systematic techniques.

Statement of problem:

Project report is a systematic study of refuses associated with working capital

management or problem intended to resolve the problem with application of management
concepts and skills, it provides a practical experience.

 A study on working capital management in HGML company Hutti is done

because working capital one of the important requirement to have a smooth
flow of operation.

 If the company neglects the importance of level of working capital requirement,

there is a chance of adverse effect on liquidity and profitability.

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 Problem associated application of theoretical concepts to the practical problem.

 Problem raised due to inefficiency of working capital management.

Objective of the study:

The main objective of this study is:-

 To study the pattern and procedure following regarding working capital management

 To study the different components of working capital of the corporation.

 To understand how effectively the working capital management in HGM co.ltd Hutti.

 To offer suggestion for improving the efficiency in working capital management

Scope of study:

Scope of the study in General terms the extent to which it is possible to cover the
subject. This study attempts to cover almost all the tools and techniques for the purpose of
evaluating working capital management in HGM Co.ltd Hutti.

Limitation of the study:

1. The study is confined to the extent of interpreting financial statements, which are
provided by the company.

2. Restriction on behalf of the company.

3. Study of inter firm comparison is not made.

4. There is very less scope for collection of confidential financial data.

5. The study focuses only on working capital.

Methodology of the study:

The success of any study depends upon the methodology adopted i.e. the techniques on
the way of approaching to gather information from different sources.

Sources of Data:-

 Primary Data

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 Secondary Data

Primary Data:

It is collection of first hand information. This data is collected through discussion. The
required primary data collected from the concerned officers of the Hutti gold mines co.ltd Hutti.

Secondary Data:

It is reviewing the relevant information, which is already collected and making inferences
based on the information collected. The required secondary data collected from annual reports
of the company. The present study is mainly based on the secondary data.

Data Presentation:

The data collected have been presented in the form of tables and graphs.

Data analysis and Interpretation:

The data collected are used to calculate working capital by applying the following formula:

Working capital= Current assets – Current liabilities

The data have analyzed with the help of trend ratios 2003-04 is considered as
base year whose value is equal to 100. Then, the values for subsequent year’s i.e. 2003-04 to
2008-09 are calculated with the base year value on year to year basis.

FINANCE DEPARTMENT STRUCTURE

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The working capital is calculated for a period of six years i.e. 2003-04 to 2008-09. They
are presented in the form of tables and graphs. This is divided into three sections. Section-I
presents the analysis and interpretation of over all current assets and current liabilities.
Section-II presents the analysis interpretation of individual items of current assets while
section-III presents the analysis and interpretation on of individual items of current liabilities.

The following current assets and current liabilities:-

A. Current Assets:

1. Inventory

2. Sundry Debtors

3. Cash and Bank

4. Other Current Assets

5. Loans and Advances

B. Current Liabilities:

1. Sundry Creditors

2. Provisions

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Section-І

1. Current assets and liabilities during the year 2003-04 & 2004-05

The folowing is the information relating to different current assets during the year
2003-04 & 2004-05 presented in table no.1

Table no.1

Current assets for 2003-04 & 2004-05

Sl. No. Particulars Amount Amount Percentage Percentage

(2003-04) (2004-05) (2003-04) (2004-05)
(Rs.in lakhs) (Rs.in lakhs)
1 Inventories 2776.68 3749.47 53.74 43.04

2 Sundry debtors 0 0 0 0

3 Cash and bank 302.94 241.80 5.86 2.78

4 Other current 16.17 15.98 0.32 0.18

assets
5 Loans and 2070.83 4704.02 40.08 54.00
advances
Total 5166.62 8711.27 100 100

Graph no.1 A Graph no.1 B

Current assets 2003-04 Current assets 2004-05

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The folowing is the information relating to different current liabilities during the year
2003-04 & 2004-05 presented in table no.1 A

Table no.1A

Current liabilities for 2003-04 & 2004-05

Sl. No Particulars Amount Amount Percentage Percentage

(2003-04) (2004-05) (2003-04) (2004-05)
(Rs.in lakhs) (Rs.in lakhs)
1 Creditors 2922.04 1304.33 60.47 22.23

2 Provision 1910.19 4563.11 39.53 77.77

Total 4832.23 5867.44 100 100

Graph no.1C Graph no.1D

Current liabilities 2003-04 Current liabilities 2004-05

Working capital = current assets-current liabilities

(2003-04) = 5166.62 -- 4832.23

=334.39

(2004-05) = 8711.27 – 5867.44

= 2843.83

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Interpretation

In the year (2003-04)(2004-05) the current assets was 5166.62, 8711.27 respectively and
current liabilities was 4832.23, 5867.44 respectively. The percentage changes of different
components of currents assets and current liabilities is shown in pie charts. The increase in
currents is due to cash sales policy of the co and current liabilities is due to increase in
purchase of materials and non-payments of outstandings .Since the proportionate change in
current assets is greater than current liabilities the net working capital has also increased
from 2003-04 to 2004-05. The increase in working capital year by year is positive sign for
company and would help the company for increase in production.

2. Current assets and liabilities during the year 2005-06 & 2007-08.

The folowing is the information relating to different current assets during the year
2005-06 & 2007-08 presented in table no.2

Table no.2

Current assets for 2005-06 & 2006-07

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Sl. No. Particulars Amount Amount Percentage Percentage

(2005-06) (2006-07) (2005-06) (2006-07)
(Rs.in lakhs) (Rs.in lakhs)
1 Inventories 3953.32 4903.41 30.78 27.27

2 Sundry debtors 0 6.24 0 0.03

3 Cash and bank 745.71 744.53 5.80 4.14

4 Other current 15.98 16.07 0.12 0.09

assets
5 Loans and 8134.07 12312.51 63.30 68.47
advances
Total 12849.08 17982.76 100 100

Graph no.2 A Graph no.2 B

Current assets 2005-06 Current assets 2006-07

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The folowing is the information relating to different current liabilities during the year 2005-
06 & 2007-08 presented in table no.2 A

Table no.2 A

Current liabilities for 2005-06 & 2006-07

Sl. No Particulars Amount Amount Percentage Percentage

(2005-06) (2006-07) (2005-06) (2006-07)
(Rs.in lakhs) (Rs.in lakhs)
1 Creditors 1778.59 3231.44 19.90 24.48

2 Provision 7157.75 9968.28 80.10 75.52

Total 8936.34 13199.72 100 100

Graph no.2 C Graph no.2 D

Current liabilities 2005-06 Current liabilities 2006-07

Working capital = current assets – current liabilities

(2005-06) = 12849.08 – 8936.34

= 3912.74

(2006-07) = 17982.76 – 13199.72

= 4783.04

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Interpretation

In the year (2005-06)(2006-07) the current assets was 12849.08,17982.76 respectively and
current liabilities was 8936.34,4783.04 respectively. Changes in different components of
current assets and liabilities are measured in percentages and are shown in pie charts. The
increase in currents is due to cash sales policy of the company and current liabilities is due to
increase in purchase of materials and non-payments of outstandings .Since the proportionate
change in current assets is greater than current liabilities the net working capital has also
increased from 2005-06 to 2006-07. It can be seen that more and more working capital is
flowing in the company and that leads to increased production.

3. Current assets and liabilities during the year 2007-08 & 2008-09.

The folowing is the information relating to different current assets during the year
2006-07 & 2008-09 presented in table no.3

Table no.3

Current assets for 2007-08 2008-09

Sl. No. Particulars Amount Amount Percentage Percentage

(2007-08) (2008-09) (2007-08) (2008-09)
(Rs.in lakhs) (Rs.in lakhs)
1 Inventories 5028.68 5862.40 18.45 14.77

2 Sundry debtors 76.88 51.10 0.28 0.13

3 Cash and bank 9096.11 18353.91 33.37 46.23

4 Other current 94.90 385.62 0.35 0.97

assets
5 Loans and 12959.84 15044.73 47.55 37.90
advances
Total 27256.41 39697.76 100 100

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Graph no.3 A Graph no.3 B

Current assets 2007-08 Current asset 2008-09

The folowing is the information relating to different current liabilities during the year 2006-
07 & 2008-09 presented in table no.3 A

Table no.3 A

Current liabilities for 2007-08 & 2008-09

Sl. No Particulars Amount Amount Percentage Percentage

(2007-08) (2008-09) (2007-08) (2008-09)
(Rs.in lakhs) (Rs.in lakhs)
1 Creditors 2922.03 5200.81 21.31 24.84

2 Provision 10789.03 15736.62 78.69 75.16

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 HUTTI GOLD MINES COMPANY LIMITED

Total 13711.06 20937.43 100 100

Graph no.3 C Graph no.3 D

Current liabilities 2007-08 Current liabilities 2008-09

Working capital = current assets – current liabilities

(2007-08) =27256.47 – 13711.06

= 13545.41

(2008-09) = 39697.76 – 20937.43

=18760.33

Interpretation

In the year (2007-08)(2008-09) the current assets was 27256.47,39697.76 respectively and
current liabilities was 13711.06,20937.43 respectively. The percentage changes of different
components of currents assets and current liabilities is shown in pie charts. The increase in

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 HUTTI GOLD MINES COMPANY LIMITED

current assets was due to more and more sales of gold and non- payments of timely due to
creditors and other outstanding payments . Since the proportionate change in current assets
is greater than current liabilities the net working capital has also increased from 2007-08 to
2008-09. By observing we can say that the trend of working capital increasing year by year
and helping for company in increasing production of gold.

Section ІІ

1) Inventory

Table No-1 Inventory from 2003-04 to 2008-09

Year Amount (Rs.in lakhs) Difference %change

2003-04 2776.68 0 0

2004-05 3749.47 972.79 35.03

2005-06 3953.32 203.85 5.44

2006-07 4903.41 950.09 24.03

2007-08 5028.68 125.27 2.55

2008-09 5862.40 833.72 16.58

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Interpretation

The flow of inventory is smooth in the company. It is gradually increasing from year to year
to meet the requirement of the company in smooth manner in production process. The
company is having good inventory control system in it meet the requirements. The
percentage in every in shown in graph. The is increasing the level of inventory every
alternate year.

2) Debtors

Table no.2 Debtors from 2003-04 to 2008-09

year Amount (Rs.in lakhs) Difference %change

2003-04 0 0 0

2004-05 0 0 0

2005-06 0 0 0

2006-07 6.24 6.24 0

2007-08 76.88 70.64 0

2008-09 51.10 -25.78 -33.53

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Interpretation

Since there is no credit sales policy by the company there is no debtors. The debtors
shown above are the people who are liable to pay their loans to the company.The
amount of changes in debtors is shown in percentages and represented in graph. The
negative percentage of debtors in 2008-09 is due to recovery of debts from the
people.

3) Cash and bank balance

Table no.3 Cash and bank balance from 2003-04 to 2008-09

year Amount (Rs.in lakhs) Difference %change

2003-04 302.94 0 0

2004-05 241.80 -61.14 -20.18

2005-06 745.71 503.91 208.34

2006-07 744.53 -1.18 -.16

2007-08 9096.11 8351.58 1121.73

2008-09 18353.91 9257.8 101.78

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 HUTTI GOLD MINES COMPANY LIMITED

Interpretation

The cash and bank balances is increasing gradually year by year from 2003-04 to 2008-09
which was 302.94 to 18353.91 lakhs. The percentage change in cash and bank balances is
shown in graph. The company is maintaining minimum balance to meet the contingencies
requirement and it shows good cash position of a company.

4) Other current assets

Table no. 4 other current assets from 2003-04 to 2008-09

year Amount (Rs.in lakhs) Difference %change

2003-04 16.17 0 0

2004-05 15.10 -1.07 -6.62

2005-06 15.98 0.88 5.88

2006-07 16.07 0.09 .56

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 HUTTI GOLD MINES COMPANY LIMITED

2007-08 94.90 78.83 490.54

2008-09 385.62 290.72 306.34

Interpretation

The other current assets of the company is increasing year by year from 16.17 lakhs in
2003-04 to 385.62 lakhs in 2008-09. The changes in the other current assets are measured
in percentages and are shown in graph. The increase in the trend shows that the company
is managing current assets well and it would helpful for maintaining working capital and
running production activities continuously.

5) Loans and advances

Table no. 5 loans and advances from 2003-04 to 2008-09

Year Amount(rs.in lakhs) Difference %change

2003-04 2070.83 0 0

2004-05 4704.02 2633.19 127.16

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 HUTTI GOLD MINES COMPANY LIMITED

2005-06 8134.07 3430.05 72.92

2006-07 12312.51 4178.44 51.37

2007-08 12959.84 647.33 5.26

2008-09 15044.73 2084.89 16.09

Interpretation

The loans and advances provided by the company is also increasing from 2070.83
lakhs 2003-04 to 15044.73 lakhs in 2008-09. The company is providing loans to
workers for vechicals and education purpose and inter-corporate loans to others.

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Section ІІІ

Current liabilities and provisions

1) Credirors

Table no. 1 creditors from 2003-04 to 2008-09

year Amount(Rs.in lakhs) Difference %change

2003-04 2922.04 0 0

2004-05 1304.33 -1617.71 -55.36

2005-06 1778.59 474.26 36.36

2006-07 3231.44 1452.85 81.69

2007-08 2922.03 -309.41 -9.57

2008-09 5200.81 2278.78 77.99

Interpretation

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 HUTTI GOLD MINES COMPANY LIMITED

The creditors of the company increasing from 2922.09 lakhs in 2003-04 to 5200.81 lakhs
in 2008-09. The percentage changes are shown in graph. The increase in current
liabilities is not a good sign for a company and the company may face the problems in
maintaining working capital.

2) Provisions

Table no. 2 provisions from 2003-04 to 2008-09

Year Amount(rs in lakhs) Difference %change

2003-04 1910.19 0 0

2004-05 4563.11 2652.92 138.88

2005-06 7157.75 2594.64 56.86

2006-07 9968.28 2810.53 39.27

2007-08 10789.03 820.75 8.23

2008-09 15736.62 4947.59 45.86

Interpretation

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 HUTTI GOLD MINES COMPANY LIMITED

The provisions of the co regarding different liabilities like income tax and wealth tax has
increased every yr except in 2007-08. The provision was 1910.19 lakhs in the yr 2003-04
which has increased to 15736.63 lakhs in 2008-09, and it was decreased in 2007-08 to
10789.62 lakhs. The percentage increase of provisions every year is shown in graph.

ESTIMATION OF CURRENT ASSETS

 Raw material inventory:-

The investment in raw material inventory is estimated on the basis of the following
formula.

Cost of raw material * Average inventory holding periods (months/days)

12 Months/365days

 Work in progress inventory:-

The relevant costs to determine work in process inventory are the proportionate share
of costs of raw material and conversion costs (labors and manufacturing overhead costs
excluding depreciation).

Estimated WIP cost (Rs) * Average time spend of WIP inventory (months/days)

12 Months/365days

 Finished goods inventory:-

Working capital required for financing the finished goods inventory is given by factor
summed up as follows.

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 HUTTI GOLD MINES COMPANY LIMITED

Cost of goods produced (Rs) * finished goods holding periods (months/days)

12 Months/365days

 Debtors:-

The working capital tied up in debtors should be estimated in relation to total cost price
(excluding depreciation) symbolically.

Cost of Sales (Rs) * Average debt collection periods (months/days)

12 Months/365days

 Cash and Bank balance:-

After the above factor of working capital needs cash and bank balance are also very
important. Firms nowadays require keeping some amount of cash balance for
emergency purpose. It is difficult to lay down the exact procedure of determining the
amount.

ESTIMATION OF CURRENT LIABILITIES

The working capital needs of the business firms are lower to that extent such needs are
not through the current liabilities (other than the bank credit) arising in the ordinary course of
the business. The important current liabilities, in the context are trade creditor, time lag in the
payment of wages salaries and advance receipts.

 Trade Creditors:-

Raw Material Cost (Rs)* Credit period allowed by creditors (months/days)

12 Months/365days

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 Time lag in payment of :-

Wages & Salaries Cost (Rs)* Time lag in payment of wages & salary

12 Months/365days

ges and Salaries:-

 Advance received:-

Advance receipts are current liabilities. The advance payment received from
customers makes impact on working capital.

 Bills payables:-

Bills payables are also short term liabilities so it is taken in the current liabilities, so it
will be payable in a short period of time so it is a one of current liabilities.

 Short-term bank loans:-

The loan taken for the period of less than one year is called as short-term loan; it is
also a kind of current liability.

The following information relating to the percentage change in working capital from 2003-04 to 2008-
09.

Year Working capital Difference %change

(Rs.in lakhs)
2003-04 334.39 0 0

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 HUTTI GOLD MINES COMPANY LIMITED

2004-05 2843.83 2509.55 750

2005-06 3912.74 1065.51 37.47

2006-07 4783.04 937.23 23.97

2007-08 13545.35 8698.78 179.48

2008-09 18760.33 5214.98 38.50

Interpretation

The working capital of the company is increasing year by year from 334.39 lakhs in 2003-04
to 18760..33 lakhs in 2008-09. The percentage changes are shown in graph. The increase is
due to increase in current assets. the increased working capital shows that the company can
meet daily expenses in time and expand the production activities.

Interpretation of working capital with p&l after tax from 2003-04 to 2008-09

Year Working capital(Rs.in P&L after tax

lakhs) (Rs.in lakhs)
2003-04 334.39 2992.23

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 HUTTI GOLD MINES COMPANY LIMITED

2004-05 2843.83 4374.13

2005-06 3909.34 5770.83

2006-07 4846.57 5565.40

2007-08 13545.35 9635.15

2008-09 18760.33 9305.99

Interpretation

From the above graph it is clear that the company’s profit is increased more than the
working capital upto 2006-07. Due to global meltdown in 2007-08 the profit of the company
is decreased over working capital. But even in global meltdown the company is making
profit.

RATIO ANALYSIS

Ratio analysis is the one of the powerful tool of the financial analysis. A ratio can be
defined as “The indicates quotient of two mathematical expression and as the relationship
between two figures”. It is expressed where one figure is divided by another. If 10,000 divided
4,000 the ratio can be expressed as 0.4 or 2:5 or 40%.

 Important of Ratio Analysis:-

The following are the main point of ratio analysis:-

 Useful in financial position analysis.

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 HUTTI GOLD MINES COMPANY LIMITED

 Useful in simplifying accounting figure.

 Useful in assessing the operational figure.

 Useful in assessing purpose.

 Useful in forecasting purpose.

 Useful in comparison of performance.

 Classification of Ratio:-

1. Financial Ratio

2. Profitability Ratio

3. Turnover Ratio

4. Leverage Ratio

5. Coverage

TOOLS OF ANALYSIS

The analysis part is the important part of the research. In this project the tools used for the
analysis are.

 Ratio Analysis:-

a. Liquidity Ratio

b. Turnover Ratio

c. Profitability Ratio

Current Ratio

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Meaning – This ratio establishes a relationship between current assets and current liabilities to
measure the ability of the firm to meet its short-term obligations and to reflect the short-term
financial strength/solvency of a firm. In other words , it measures the safety margin available
for short-term creditors.

Interpretation: standard current ratio is 2:1. Higher ratio i.e. more than 2:1 indicates sound
solvency position. Lower ratio indicates insufficient short-term liquidity.

Current ratio = current assets

Current liabilities

Current ratio for 2008-09 = 5862.40+51.10+18353.91+385.62+15044.73

5200.81+15736.62

= 39697.76

20939.43

= 1.896

Similarly current ratio for the rest of the years:

Year Current assets (Rs. In Current liabilities (Rs. Current ratio

Year Lakhs) In Lakhs)

2003-04 5166.62 4832.23 1.069

2004-05 8710.39 5867.44 1.485

2005-06 12849.08 8936.34 1.438

2006-07 18046.29 13199.72 1.367

2007-08 27256.41 13711.06 1.988

2008-09 39697. 20937.4 1.896

76 3

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Interpretation

From the above table and graph we can observe the current ratios from 2003-04 to 2008-09.
The ratios shows the firm’s commitment to meet its short term liabilities. Generally 2:1 is
considered as ideal for a concern. If the ratio is less then 2 the firm may face difficult in
payment of current liabilities. Since ratios of the company are close to 2, it is maintaining
ideal ratio.

Quick assets ratio

Meaning- This ratio establishes a relationship between quick assets and current liabilities to
measure the ability of the firm to meet its short-term obligations as and when due without
relying upon the realization of stock.

Quick ratio = Current assets-Inventory

Current liabilities

Quick ratio for 2008-09 = 51.10+18353.91+385.62+15044.73

5200.81+15736.62

= 33835.36

20937.43

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 HUTTI GOLD MINES COMPANY LIMITED

= 1.61

Similarly quick ratio for the rest of the years:

Year Quick assets(Rs.in Current liabilities (Rs. Quick ratio

lakhs) in lakhs)
2003-04 2389.94 4832.23 0.49
2004-05 4960.92 5867.44 0.84
2005-06 8895.76 8936.34 0.99
2006-07 13076.41 13199.72 0.99
2007-08 22227.73 13711.06 1.62
2008-09 33835.36 20937.43 1.61

Interpretation

Liquid ratio establishes relationship between Liquid Liabilities and Liquid Assets. It is inferred
from the above table, that the Liquid Ratio which is increasing from 2003-04 to 2008-09.

The above table indicates the Quick Ratio has increasing above the standard level of 1:1
in recent years which is good sign for liquidity. Since it is maintaining 1.61:1 in recent years
we can say that the liquidity of the company is good.

Current assets turnover ratio

Meaning- This ratio establishes a relationship between net sales and current assets. The
objective is to determine the efficiency with which the current assets are utilized.

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Current assets turnover ratio = Net sales

Current assets

Current assets turnover ratio for 2008-09 = 31602.79

39697.76

= 0.80

Similarly current assets turnover ratio for the rest of the years:

Year Net sales Current assets Times

2003-04 16342.46 5166.62 3.16

2004-05 18059.78 8710.39 2.07

2005-06 20715.62 12849.08 1.61

2006-07 22164.14 18046.29 1.23
2007-08 30351.35 27256.41 1.11
2008-09 31602.79 39697.76 0.80

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 HUTTI GOLD MINES COMPANY LIMITED

Interpretation

From the above table we can see that the ratio is decreasing year by year which was 3.16 in
2003-04 to 0.80 in2008-09. A decrease in the ratio is a good indication of the performance of
the company . since the ratio is decreasing every year it shows ability of the company to
realize from debtors and less amount of money is blocked in inventories

4 cash ratio

year cash Current liabilities Times

2003-04 302.94 4834.23 0.06

2004-05 241.80 5867.44 0.04

2005-06 745.71 8936.34 0.08

2006-07 744.53 13199.72 0.06

2007-08 9096.11 13711.06 0.66

2008-09 18353.91 20937.43 0.88

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 HUTTI GOLD MINES COMPANY LIMITED

Interpretation

From the above table it is clear that the company is very good. The cash maintainance of
the company is increasing year by year from 302.94 lakhs in 2003-04 to 18353.91 lakhs in
2008-09. Good cash position of the company helpful to meet the expenses of the company.

Working Capital Turnover Ratio

Meaning – This ratio establishes a relationship between net sales and working capital. The
objective is to determine the efficiency with which the working capital is utilized.

Working capital turnover ratio= Net sales

Working capital

Working capital turnover ratio for 2008-09= 31602.79

18760.33

= 1.68

Year Net sales Working capital Times

2003-04 16342.46 334.39 48.87

2004-05 18059.78 2843.83 6.35

2005-06 20715.62 3909.34 5.30

2006-07 22164.14 4846.57 4.57

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2007-08 30351.35 13545.35 2.24

2008-09 31602.79 18760.33 1.68

Interpretation:

From the above table we can say that there is a downward trend in ratios. Since the firm is
making higher volume sales with less amount of working capital compared to sales, it is an
indicator of the operating efficiency of the company

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Findings :

 During the year 2003-04 inventory was highest (53.74%) and other current assets was
lowest (0.32%).

 During the year 2003-04 creditors was highest (60.47&) and provisions was lowest
(39.53%). And working capital was Rs.334.39 lakhs.

 During the year 2004-05 loans and advances was highest (54%) and other current assets
was lowest (0.18%).

 During the year 2004-05 provisions was highest (77.77%) and creditors was lowest
(22.23%). And working capital was Rs.2843.83 lakhs .

 During the year 2005-06 loans and advances was highest (63.30%) and other current
assets was lowest (0.12%).

 During the year 2005-06 provisions was highest (80.10%) and creditors was lowest
(19.90%). And working capital was Rs. 3912.74 lakhs.

 During the year 2006-07 Loans and advances was highest (68.47%) and other current
assets was lowest (0.09%).

 During the year 2006-07 Provisions was highest (75.52%) and creditors was lowest
(24.48%). And working capital was Rs.4783.04 lakhs.

 During the year 2007-08 Loans and advances was highest (47.55%) and sundry debtors
was lowest (0.28%).

 During the year 2007-08 Provisions was highest (78.69%) and creditors was lowest
(21.31%). And working capital is Rs. 13545.41 lakhs

 During the year 2008-09 cash and bank balance was highest (46.23%) and sundry
debtors was lowest (0.13%)

 During the year 2008-09 provisions was highest (75.16%) and creditors was lowest
(24.84%) and working capital was 18760.33 lakhs.

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 The quick ratio shows liquidity position of the company is good.

 The firm’s commitment to meet liabilities is good as the current ratios are closer to ideal
ratio.

 The company makes higher volume of sales with less working capital compared to sales.

 The company maintains the policy of increasing inventory every alternate year.

 The company has the policy of selling the gold in cash.

 There is a centralized decision making policy.

 The company produces 99.995% purity of gold.

 Employee’s co-ordination with staff was found to be good

 The employees are getting attractive bonus, salary, wages and other benefits

 There is high concentration towards the environment, health, & safety measures

 There is a close interaction between management & other measures

 Good training facilities are provided to newly appointed employees and workers.

 The working capital shows increasing trend.

 The only investment avenue that the company follows is fixed deposit.

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Suggestion

 The company should implement ERP system (Enterprise Resources Planning)

which enhances for speedy, accurate and convenient for accounting records.

 Company should recruit well qualified and skilled labor to maintain productivity.

 Motivating the employee and using the resources effectively with them, which
will reduce the cost of production.

 The company should invest excess of funds in other investment avenues other
then fixed deposit which generates revenues for shorter period of time

 The company should diverisify the excess of funds in other sector like power
which the country is neeeded very badly.

 The company should increase the current ratio.

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 HUTTI GOLD MINES COMPANY LIMITED

CONCLUSION

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BIBLIOGRAPHY

 Company Magazines and Journal

 Company Annual Reports

 Financial Management by Khan and Jain

 Project reports

 Financial Management by I.M.Pandy

 Financial Management by Shashi k.gupta

Internet source: www.huttigoldmines.com

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BALANCE SHEET FOR 6 YEARS (Rs. In lakhs)

31st 31st 31st 31st 31st 31st

march march march march march march
2004 2005 2006 2007 2008 2009

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SOURCES OF FUNDS:

1. Shareholders’ Funds

Share capital 296.20 296.20 296.20 296.20 296.20 296.20

Reserves and surplus 4883.71 9166.48 14775.21 19956.14 29240.98 36133.27

Total 5179.7 9462.68 15071.41 20252.35 29537.18 36429.47

1

2.Loan Fund

Secured loans 2392.54 1200.00 7014.64 1294.76 541.70 ------------

Unsecured loans 610.51 9.98 ---------- -------- --------- -----------

Total 3003.0 1209.98 7014.64 1294.76 541.70

5

3.Deferred Tax Liability 589.50 809.16 947.07 1339.91 2087.64 2687.51

(net)

TOTAL 8772.2 11481.81 22887.06 32166.52 39116.98

6

APPLICATION OF FUNDS:

1.Fixed Assets

Gross block 8637.33 8984.99 9236.91 12843.64 16971.44 17720.88

Less: Depreciation 3547.06 3831.48 4112.38 4733.96 5294.05 6139.79

Net block 5090.2 5153.51 5124.53 8109.68 11677.39 11581.31

7

Capital work in progress 97.31 134.21 2050.75 732.88 1118.97 6505.98

2.Investments 1676.80 2264.81 4895.06 7767.49 4368.06 1570.51

3.Deferred Tax Asset: 374.61 468.93

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3. Current Assets, Loans

and Advances

Inventories 2776.68 3749.47 3953.32 4903.41 5028.68 5862.40

Sundry Debtors --------- --------- --------- 6.24 76.88 51.10

Cash And Bank Balances 302.94 241.80 745.71 744.53 9096.10 18353.91

Other Current Assets 16.17 15.10 15.98 16.07 94.90 385.62

Loans and Advances 2070.83 4704.02 8134.07 12312.51 12959.84 15044.73

Total 5166.6 8710.40 12849.08 17982.76 27256.41 39697.76

1

4. Less: Current Liabilities

and provisions

Creditors 2922.04 1304.33 1778.59 3231.44 2922.03 5200.81

Provisions 1910.19 4563.11 7157.76 9968.28 10789.02 15736.62

Total 4832.2 5867.44 8936.35 13199.72 13711.06 20937.43

3

Net Current Assets 334.38 2842.29 3912.73 4783.03 13545.35 18760.32

5. Miscellaneous --------- ---------

Expenditure (to the
extent not written off or
adjusted)

Deferred revenue 1573.64 1086.33 736.70 1493.97 1082.14 229.91

expenditure

TOTAL 11481.81 22887.06 32166.52 39116.98

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