Hindustan Zinc

2009 Highlights
 
 I have great pleasure in reporting another strong year for Hindustan
 Zinc Limited.  We reported revenues of Rs 5,680 crore and PBDIT of Rs
 3,665 crore, despite a sharp deterioration in commodity prices and the
 economic environment.  Even in this uncertain environment, we are
 exceptionally well positioned due to our robust balance sheet, low cost
 operations, and strong organic growth pipeline with an exemplary track
 record of delivering capital projects within budget and timelines and
 continuous upgrading of mineral resources. This provides the foundation
 for delivering profitable growth and creating long term shareholder
 value.
 
 Higher Volumes
 
 We recorded the highest ever metal production in our history. Our mined
 metal production for zinc and lead in FY 2009was up 17% compared to FY
 2008, primarily as a result of commissioning the stream III
 concentrator at the Rampura Agucha Mine. There was an increase of 26%
 in refined zinc and lead metal production during the year, compared to
 the previous year, as result of new zinc smelter commissioned at
 Chanderiya and the zinc debottlenecking project.
 
 Production of saleable silver during the year was the highest ever, up
 31 % compared with the previous year.  During the year, our captive and
 wind power generation increased by 37% and 122% respectively, as
 compared to the previous year.
 
 Low Cost Operations
 
 We have succeeded in maintaining stable cost of production at the back
 of increased volumes and higher operational efficiencies despite higher
 input costs.
 
 Strong Organic Growth Opportunities
 
 Our portfolio of existing assets and recently completed expansion
 projects continues to yield superior performance and we continue to
 make investments that drive sustainable long-term growth. We continue
 to make excellent progress by delivering strong growth well above the
 industry average and are on track to produce 1 million tonnes of
 zinc-lead metal.
 
 Strong Balance Sheet and Liquidity Position
 
 Excellent cash conversion in FY 2009 has ensured that we exited the
 year with a strong balance sheet, even with the significant capital
 investment of Rs 1,340 crore in the period. Over the years, we have
 consistently generated strong free cash fl ow. We have taken several
 tax saving initiatives, which have helped push down the current tax
 rate from 25.8% in FY 2008 to 16.4% in FY 2009.
 
 Exploration
 
 I am happy to report that we have added signifi cant reserves and
 resources of 46.3 million tonnes, containing 4.7 million tonnes of
 zinc-lead metal, prior to a depletion of 0.7 million tonnes of metal.
 Total reserves and resources as on 31 March 2009 were 272 million
 tonnes, containing 31.5 million tonnes of zinc- lead metal. Expansion
 of our reserves and resources base through exploration is a part of our
 sustainable growth strategy.
 
 People
 
 In a business like ours, people are at the center of our operations and
 are critical in helping us achieve our objectives. Our performance and
 results speaks of the outstanding people we have across our
 organization. It is because of them that we have come a long way in a
 short time.
 
 On behalf of the Board I am thankful to all of them for all their hard
 work and efforts.  We continue to offer exciting growth opportunities
 for all our employees. We remain committed to provide a safe and
 supportive work environment for all.
 
 Sustainable Development
 
 Sustainable development is a key element of our business. We believe
 that businesses play an important role in tackling and driving
 sustainability and climate change challenges. We are determined to
 pursue value-creating projects for all our stakeholders effectively
 addressing opportunities and risks pertaining to environment, social,
 health and safety. Our aim is to establish sustainable accident- free
 operations. We strive to ensure that our business creates sustainable
 benefi ts for all our stakeholders.
 
 We continue to impact the lives of over 500,000 people in the vicinity
 of our operations.
 
 Dividend
 
 The Board of Directors has recommended a dividend of 40%, i.e Rs 4 per
 equity share, for the current year.
 
 Changes to the Board
 
 In October 2008, Mr Akhilesh Joshi was appointed as the Chief Operating
 Officer and Whole Time Director, to lead Hindustan Zinc through the
 next stage of development. Mr Akhilesh Joshi has worked with the
 Company for over 30 years and brings vast knowledge and experience in
 the mining industry.
 
 In addition Mr G Srinivas and Mr AR Narayanaswamy were appointed on the
 Board of Directors.
 
 Mr Nand Kishore Shukla, Mr Abhay Kumar Singh, Mr Anil Agarwal, Mr Tarun
 Jain and Mr Kuldip Kaura ceased to be Directors during the year.
 
 Awards and Recognition
 
 I am happy that our efforts and actions continue to be acknowledged by
 the external agencies. During the year, we won over 15 awards in the
 areas of operational excellence, quality, health and safety, corporate
 social responsibility; notable amongst them are #2 Best Employer in
 India – 2009 and Amongst the top 25 Best Employers in Asia – 2009 by
 Hewitt Associates, Dun & Bradstreet Corporate Award – 2008 for being
 the Best Company in the Non-Ferrous Metals Sector for the second
 successive year, IMC Ramkrishna Bajaj National Quality Certificate of
 Merit – 2008 and the Asian Corporate Social Responsibility Award –
 2008.
 
 Outlook
 
 The economic environment in FY 2009 remained uncertain and resulted in
 depressed commodity prices. We are already seeing some support for
 commodity prices driven by the demand coming from China and India who
 are continuing to invest in infrastructure projects.
 
 The inherent strength of our sustainable low cost operations ensures we
 are well positioned through the cycle in a period of difficult economic
 conditions and commodity prices. We have a robust balance sheet and
 strong liquidity position. We remain focused on reducing our cost of
 production, delivering our organic growth program on time and at
 benchmark low capital costs and generating strong free cash flow.
 
                                                  AGNIVESH AGARWAL 
                                                          Chairman