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Change Change %
4.20 1.69%

Updated:24 May, 2019, 15:58 PM IST

Change Change %
5.00 2.01%

Updated:24 May, 2019, 16:01 PM IST



The Directors are pleased to inform that your Company achieved new operational performance benchmarks during the year. On the occasion of the Golden Jubilee of your Company, a special one–time dividend was declared at the end of March 2016, the highest ever by any company in the country's private sector and second highest in Indian corporate history.

Total Revenue including Other Income

The Company reported total revenue including other income of Rs. 16,956 Crore, a decrease of 3.7% compared to FY 2015. The decrease was primarily on account of 16% and 13% lower zinc and lead LME respectively & 16% silver prices, largely offset by higher volumes and 7% rupee depreciation.

The other income was Rs. 2,729 Crore during the year, down 3.2% as compared to the previous year. The decrease in other income was on account of lower mark–to–market gains in long term debt mutual funds and bond investments.

Production Cost

Net zinc metal cost, without royalty, during the year, was lower by 1.1% in INR and 7.6% in USD term, at Rs. 52,646 ($804), compared with the previous year. The decrease was due to higher volumes of integrated production, better smelter efficiencies, lower coal & commodity costs, partly offset by lower average grades due to change in mining mix and higher mine development.

Operating Margin

The Company achieved profit before depreciation, interest and tax (PBDIT) of Rs. 9,340 Crore in FY 2016, down 8.8% from Rs. 10,238 Crore a year ago, as a result of total revenue (including other income) and higher royalty, partially offset by decrease in cost of production

Net Profit

The Company reported profits of Rs. 8,167 Crore for the year, flat from the previous year. The impact of lower PBDIT was mostly offset by lower tax during the year. The tax rate during the year reduced significantly largely due to higher proportion of tax efficient operational and investment income with significant investments now becoming long–term. In addition, substantial liquidation of investments took place at year end for payment of Golden Jubilee dividend, with corresponding realised profits being set off by carried forward tax losses. The higher silver volumes in the second half of the year also lowered the tax rate. Also, LME fall & shortfall in anticipated volume in the last quarter reduced the profit in taxable units thus reducing tax, since the Company maximised production from tax exempt units.

Earnings per Share (EPS)

The basic EPS for the year was Rs. 19.33 per share as compared to Rs. 19.35 per share in FY 2014–15.


On March 30, 2016, the Board of Directors declared a Special Golden Jubilee dividend of 1200% i.e. Rs. 24 per share on share of Rs. 2 each. This Directors’ Report Contd... dividend entails an outflow of 12,205 Crore, including dividend distribution tax (DDT). The special dividend was in addition to the first interim dividend paid (Rs. 3.80 per share) in October 2015.

The total dividend outflow including DDT for FY 2016 was Rs. 14,137 Crore (Rs. 27.80 per share or 1390%) against Rs. 2,207 Crore (Rs. 4.40 per share or 220%) a year ago. In view of the special dividend paid, the Board of Directors have not recommended any final dividend.

Credit Rating and Liquidity

CRISIL has reaffirmed the Company’s long–term rating of AAA/Stable and short–term & CP rating of A1+. The Company’s strong financial profile is driven by its sustained strong liquidity and conservative capital structure as well as its integrated operations, highly competitive cost position and high–grade reserves.

The Company follows a conservative investment policy and invests in debt instruments. As at March 31, 2016, cash and cash equivalents were Rs. 35,235 Crore, out of which Rs. 31,413 Crore was invested in mutual funds and Rs. 3,769 Crore in bonds. This was before payment of Special dividend of Rs. 12,205 Crore, including DDT.

Gross Working Capital

Gross working capital represented by inventory, sundry debtors and loans & advances decreased from Rs. 2,303 Crore to Rs. 1,812 Crore as at March 31, 2016 due to depletion of ore & own mined–metal inventory and reduction in debtors. The working capital cycle was 67 days in FY 2016 as compared to 57 days in FY 2015.

Gross Block

The gross block during the year increased from Rs. 16,555 Crore to Rs. 18,105 Crore. This was largely due to the on–going mining projects.

Capital Employed

The total capital employed as at March 31, 2016 was Rs. 2,114 Crore, as compared to Rs. 12,568 Crore at the end of previous fiscal year, reduction was caused primarily due to year end provision for Special Golden Jubilee dividend, despite efficiencies in working capital.

Contribution to the Exchequer

Your Company has contributed Rs. 4,738 Crore, in terms of royalties, taxes and duties to the exchequer on cash basis.

II. Operational Performance


Mined metal production was 888,924 MT, marginally higher from a year ago and the highest ever. While the production from the open cast mine at Rampura Agucha reduced by 17% during the year to 528,751 MT, the gap was bridged by higher production from underground mines which increased by 45% to 360,175 MT during the year.

Integrated refined zinc and saleable lead production this year were a record 758,938MT and 140,408 MT, an increase of 5% and 33% respectively. Refined metal production during the year was higher than mined metal production primarily on account of conversion of existing mined metal inventory and enhanced smelter efficiencies. The total refined zinc was 758,938 MT, up by 3% compared to previous year, while total saleable lead production was144,919 MT, an increase of 14% compared to FY 2015.

During the year, production of integrated saleable silver increased substantially by 58% to an all–time high of 422 MT on account of higher volume from Sindesar Khurd mine, supported by enhanced recovery. Total saleable silver production during the year was 425 MT, up 30% from a year ago. Our total power generation in FY 2016 increased marginally to 3,468 million units while wind power generation was down 7% at 415 million units. We delivered highest ever integrated metal production in FY 2016.


Refined zinc metal sales in the domestic market during the year was 525,763 MT, while export sales accounted for 234,637 MT. Global concerns around cheaper imports of steel and related value added products from China contained growth in domestic demand during the first half of the year, resulting in higher exports during that period. However, improved sentiments in the second half encouraged high tonnages in domestic market resulting in overall lower exports during the year compared to previous year.

Lead metal sales in the domestic market during the year increased marginally at 109,740 MT, with export sales being higher to reach 35,677 MT. Silver sales were 426 MT in FY 2016, all in the domestic market.

III. Reserve & Resource

Our exploration activity has consistently added to our R&R base over the last several years. Additionally, we have an active green field exploration strategy to add new tenements. We have added 25.3 million MT to our reserve and resource this year, prior to a depletion of 10.5 million MT during the period. Total R&R on March 31, 2016 was 389.9 million MT containing 36.13 million MT of zinc–lead metal and 1,007 million ounces of silver.

Our active exploration has led to over 25+ years of mine life.

IV. Projects

The Company remains on track for achieving 1.2 mtpa mined metal capacity in the next three years. The transition to underground mining is going on satisfactorily with about 40% of total mined metal production in FY 2016 coming from underground mining as against 28% a year ago. This is further expected to climb to around 60% in FY 2017 while the cost of production excluding royalty is expected to remain stable.

The ramp up of Rampura Agucha underground mine, which was slower than planned at the beginning of the year, has picked up pace and achieved its highest ever decline development in the month of March. The main shaft sinking project at Rampura Agucha has reached a depth of 60 metres where off shaft development work has commenced. The pit deepening work at Rampura Agucha open cast mine to increase the depth of the pit to 420 metres, or ‘Stage V’, commenced during the year and is progressing well.

During the year, two of our mines, Sindesar Khurd and Kayad, outperformed the plan and ramped up ahead of schedule to reach production capacity of 3 mtpa and 1 mtpa respectively. At Sindesar Khurd mine, work for the new 1.5 mtpa capacity mill is at full swing and is expected to be commissioned by end of the financial year in–line with the mine production ramp up. The main shaft has sunk to its ultimate depth of 1,052 meter and off shaft development is currently underway, which also continues to be ahead of schedule. Environment clearance of 3.75 mtpa capacity for Sindesar Khurd mine was received during the year. Directors’ Report Contd...

V. Outlook

In FY 2017, mined metal is expected to be marginally higher from FY 2016. First half of the year will be weak with Q1 being significantly weaker due to waste and ore sequence at Rampura Agucha open cast mine, partly offset by ramp up of underground mines. Volumes will gradually ramp up as the year progresses, as per mine plan. Integrated lead and silver metal production in FY 2017 will be higher from FY 2016, while integrated zinc metal production will be at similar levels of FY 2016 due to skewed availability of zinc mined metal.

Cost of production is expected to remain stable benefitting from various efficiency improvement programmes and cost reduction initiatives aided by a benign commodity environment, despite additional regulatory levies and lower average grades resulting from change in mining mix.

VI. Health, Safety and Environment (HSE)

The Company’s efforts towards reinforcing a positive safety culture have resulted in reduction of total Lost Time Injuries from 30 last year to 23 even as the Lost Time Injury Frequency Rate reduced from 0.64 a year ago to 0.50. However, despite all our earnest efforts, the Company lost four valued lives, two permanent and two contract employees, in work–related incidents.

During the year, no occupational illness case was reported and over 283,071 man–hours of training related to sustainability were imparted.

Due to our continued efforts towards conservation of water, specific water consumption reduced by 3 2.5% to 13.56 m per MT during the year. Specific energy consumption during the year was 21.88 GJ per MT against 21.44 GJ per MT in previous year. HSE initiatives have been discussed in detail from page no. 38 to 44 in ‘Business Review’, which forms a part of this Annual Report

VII. Corporate Social Responsibility (CSR)

Company’s CSR policy focuses in the areas of (a) education (b) sustainable livelihood (c) women empowerment (d) health, water & sanitation (e) sports & culture (f) environment (g) community development including community asset creation. During the year, Rs. 63.25 Crore was incurred on account of expenditure towards CSR excluding tax foregone of Rs. 16.27 Crore but including depreciation on assets amounting to Rs. 3.16 Crore.

Details of the same are provided in Annexure 5. For details on existing CSR projects, please refer to page 45 to 47 of ‘Business Review’, which forms a part of this Annual Report. Detailed CSR policy is available on our website

VIII. Directors

During the year under review, following changes took place in the Board of Directors of your Company.

Mr. Sudhir Kumar was appointed as an Independent Director during the year. Ms. Sujata Prasad retires by rotation and being eligible, offers herself for reappointment at the ensuing Annual General Meeting. Your Directors recommend her reappointment and none of the retiring Directors hold any shares in the Company. Further, during the year, Mr. Sunil Duggal was appointed as CEO & Whole–time Director for a period of three years w.e.f. October 1, 2015. Mr. Akhilesh Joshi continues as Whole–time Director w.e.f. ctober 1, 2015 to September 30, 2016.

IX. Management Discussion and Analysis

The Business Review section of this Annual Report gives a detailed account of your Company’s operations and the market in which it operates, including its initiatives in areas such as human resources, sustainability and risk management.

X. Corporate Governance And Business Responsibility Report

As a listed company, necessary measures are taken to comply with the listing agreements of the Stock exchanges. A report on Corporate Governance, along with a certificate of compliance from the statutory auditors, forms part of this report. Further, Business Responsibility Report, describing the initiatives taken by your Company from an Environmental, Social and Governance perspective, also forms a part of this report.

Various disclosures as required under section 134 and 135 of the Companies Act 2013 are annexed to this report or covered in the Corporate Governance Report such as related party transactions, information and details on conservation of energy, technology absorption, foreign exchange earnings and outgo, extract of annual return, constitution of various board level committees, CSR Policy & initiatives taken during the year, Board evaluation etc.

XI. Directors’ Responsibility Statement

As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:

i. In the preparation of the annual accounts, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departure from the same.

ii. The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

iv. The Directors have prepared the annual accounts on a ‘Going Concern’ basis.

v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively, and

vi. The Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

XII. Auditors

The Company had appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, as Statutory Auditors of the Company to conduct audit of Financial Statements for the year ended March 31, 2016. Their term of appointment expires at the conclusion of the forthcoming Annual General Meeting. The Board has approved the appointment of S. R. Batliboi & Co. LLP (part of Ernst & Young LLP) as Statutory Auditors for audit of financial statements for FY 2016–17 subject to shareholder approval. Batliboi & Co. LLP have confirmed their eligibility.

The notes to financial statement referred to in the Auditors’ Report are self–explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation or adverse remark, except for not fulfilling the criteria of adequate number of independent Directors as prescribed which is expected to be complied soon.

Pursuant to the orders issued by the Central Government under section 148 of The Companies Act, 2013, the Board of Directors of the Company has appointed M/s K G Goyal & Co. Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for all its products. As per provisions of Section 136 of The Companies Act, 2013, the Annual Report including the audited accounts for the year will be sent to all the shareholders.

XIII. Particulars of Employees

Disclosures pertaining to remuneration and other Directors’ Report Contd... details as required under Section 197(12) of the Act, read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report [Annexure 1].

In terms of the provisions of Section 197(12) of The Companies Act, 2013 read with Rules 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report.

However, having regard to the provisions of the first proviso to Section 136(1) of The Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary, at the registered office and the same will be furnished on request. Further the details are also available on the Company’s website:

XIV. Acknowledgements

The Board of Directors places on record its sincere appreciation of the contribution made by the employees and the employees’ unions in the success of the Company. The Directors also sincerely thank the Central Government and the State Governments of Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra, Jharkhand and Uttarakhand; and the bankers, auditors, vendors, customers and the shareholders of the Company for their continued support.

For and on behalf of the Board of Directors

Sunil Duggal  

CEO & Whole–time Director

A R Narayanaswamy


Place: Mumbai

Date: April 21, 2016