Hindustan Zinc

The directors have pleasure in presenting the 42nd Annual Report
 together with the statement of audited accounts for the financial year
 ended 31 March 2008.
 
 FINANCIAL RESULTS AND DIVIDEND
 
                                                           [Rs.crore] 
                                                             2006-07
 
 Total revenue                                  8729.40      8791.49
 
 Profit before depreciation, interest, 
 tax and amortisation                           6231.55      6638.69
 Less: Interest                                   24.17        28.44
 Gross Profit                                   6207.38      6610.25
 Less: Depreciation and amortisation             222.04       156.59
 Taxation                                       1589.27      2011.85
 Net profit for the year                        4396.07      4441.81
 Add: balance brought forward 
 from the previous year                          970.50       122.72
 Amount available for appropriation             5366.57      4564.53
 Appropriation:
 General Reserve                                    500         3350
 a] Interim Dividend on equity shares 
 (including corporate tax thereon)               123.58       120.45
 b) Proposed final dividend on equity shares 
 (including corporate tax thereon]               123.58       123.58 
 
 Balance carried forward to next year           4619.41       970.50
 
 DIVIDEND
 
 The Company paid an interim dividend of 25 per cent for the year
 2007-08. Subsequently, the Board of your Company has recommended a
 final dividend of 25 per cent taking the total dividend to 50 per cent,
 i.e. Rs.5 per equity share of face value Rs.10 each. The total outgo on
 account of dividend including tax on dividend will be Rs.247 crore
 during 2007-08 as compared to Rs. 244 crore during the previous year.
 The record date for the payment of final dividend will be 13 August
 2008.
 
 PERFORMANCE REVIEW
 
 During the year the global market for zinc remained subdued. The
 appreciation of the rupee also created further pressures on
 realisations. However, the Company maintained its streak of volume
 growth at the back of higher output from mines and smelters and new
 capacity coming on stream. The Company produced a total refined zinc
 metal production in FY 2008 of 426,323 tonnes, up by 22.4% compared
 with 348,316 tonnes in FY 2007. The production of lead during FY 2008
 was 58,247 tonnes compared with FY 2007 production of 44,552 tonnes, an
 increase of 30.7%. The increase was primarily due to production from
 the Ausmelt plant which is now stabilised.
 
 EXPLORATION
 
 Ongoing exploration activities have yielded significant success with an
 increase of 28.7 million tonnes to its reserves and resources, prior to
 a depletion of 5.8 million tonnes in FY 2008. Contained zinc-lead metal
 has increased by 4.0 million tonnes, prior to a depletion of 0.6
 million tonnes during the same period. Total reserves and resources at
 31 March 2008 were 232.3 million tonnes containing 27.5 million tonnes
 of zinc-lead metal. The reserves and resources position has been
 independently reviewed and certified as per JORC standard.
 
 SALES
 
 Sales of zinc and zinc concentrate (metal in concentrate) increased by
 13% from 482,172 tonnes in 2006-07 to 544,660 tonnes in 2007-08 and
 sales of lead and lead concentrate (metal in concentrate) increased by
 30% from 73,267 tonnes in 2006-07 to 95,278 tonnes in 2007-08.
 
 FINANCIAL PERFORMANCE
 
 Despite of a 22.4% increase in saleable zinc and 30.7% increase in
 saleable lead production volumes and stable operating costs, PBDIT in
 2007-08 was lower at Rs 6,231 crores compared with 2006-07 primarily
 due to the significant reduction In LME zinc prices by about 17% and
 the appreciation of the Indian rupee against the US dollar by more than
 11%.
 
 As a result of poor realisations of zinc, net sales fell by 8 per cent
 from Rs. 8,560 crore in 2006-07 to Rs. 7,878 crore in 2007-08. However,
 the Company was able to contain the impact of poor market for zinc and
 high energy prices by a combination of increased production volumes,
 improvements in operational efficiencies and high by- product credit
 realisations. Net profit came down only marginally from Rs. 4,442 crore
 in 2006-07 to Rs. 4,396 crore 2007-08.
 
 Your Company continues to remain a debt free Company.  The Companys
 financial performance has been discussed in detail in the chapter on
 Management Discussion and Analysis which forms a part of this Annual
 Report.
 
 PROJECTS
 
 During the year, your Company successfully completed several projects
 ahead of schedule and within budget.  These include.comrnissioning of
 170,000 tonnes per annum Hydro II zinc smelter and 80 megawatts (MW)
 captive thermal power plant at Chanderiya; wind power project of 50.4
 MW in Gujarat and 18.4 MW in Karnataka. In the first quarter of FY
 2009, your Company concluded the expansion of Rampura Agucha Mine from
 3.75 mtpa to 5.00 mtpa, 88,000 tpa of zinc debottlenecking at
 Chanderiya and Debari along with the commissioning of new roaster at
 Debari two months ahead of schedule, increasing our total metal
 production capacity to 754,000 tpa.
 
 In line with achieving our stated production capacity goal of 1 million
 tonnes per annum and supported by our strong reserves and resources
 position as discussed earlier, we recently announced expansion projects
 at HZL that will take our total integrated zinc-lead capacity to
 1,065,000 tonnes per annum with fully integrated mining and captive
 power generation capacities, thereby making it the worlds largest
 integrated zinc-lead producer by 2010. Two brownfield smelter projects,
 which will increase the production capacities of zinc and lead by
 210,000 tpa and 100,000 tpa respectively, along with 2x80 MW captive
 power plant will be undertaken at Rajpura Dariba in Rajasthan, India.
 
 We also expect to increase our silver production from the current
 levels of nearly 2.8 million ounces per year to a level of
 approximately over 16.1 million ounces per year.
 
 To support the increased smelting capacities, your Company will expand
 its ore production capacity at the Rampura Agucha mine from 5 mtpa to 6
 mtpa. Ore production at the Sindesar Khurd mine will be increased from
 0.3 mtpa to 1.5 mtpa. The company also plans to start mining activity
 at the Kayar mine which will have a production capacity of 0.3 mtpa.
 
 CONTRIBUTION TO THE EXCHEQUER
 
 Your Company has contributed Rs.2,972 crore in terms of taxes and
 duties to the exchequer.
 
 DIRECTORS
 
 Mr. A.C. Wadhawan ceased to be a director with effect frorm 19 December
 2007. The Board of Directors records its appreciation of the valuable
 guidance and contribution made by him as Chairman of the Audit
 Committee and as a member of the Board.
 
 Mr. A.K. Singh, Director, Ministry of Mines has been nominated as a
 director on the Board of the Company with effect from 28 November 2007
 by the Government of India.
 
 Mrs. Ajita Bajpai Pande, Mr. Agnivesh Agarwal and Mr.  Tarun Jain
 retire by rotation and, being eligible, offer themselves for
 reappointment at the ensuing Annual General Meeting. None of the
 retiring directors hold any share in the Company. Your directors
 recommend their reappointment.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis Report, which gives a detailed
 account of operations of your Company and the market in which it
 operates, including initiative taken by the Company to further its
 business and in areas such as human resources, information technology
 and risk management, forms a part of this Annual Report.
 
 CORPORATE GOVERNANCE
 
 A Report on Corporate Governance along with a certificate from the
 auditors of the Company regarding the compliance of conditions of
 corporate governance as stipulated under Clause 49 of the Listing
 Agreement is annexed to this report.
 
 GROUP
 
 The Agarwal Group, being a group defined under the Monopolies and
 Restrictive Trade Practices Act, 1969, controls the Company. A list of
 its Group entities is given below:
 
 Sr. No Name of Group Companies
 
 1.  Volcan Investments Limited, Bahamas
 
 2.  Vedanta Resources Plc, United Kingdom
 
 3.  Vedanta Finance Jersey Limited, Jersey
 
 A. Vedanta Resources Holdings Limited, United Kingdom
 
 5.  Twinstar Holdings Limited, Mauritius
 
 6.  Welter Trading Limited, Cyprus
 
 7.  Vedanta Resources Finance Limited, United Kingdom
 
 8.  Vedanta Resources Cyprus Limited, Cyprus
 
 9.  Richter Holding Limited, Cyprus
 
 10.  Westglobe Limited, Mauritius
 
 11.  Finsider International Company Limited, United Kingdom
 
 12.  Sesa Goa Limited, India
 
 13.  Sesa Industries Limited, India
 
 14.  Konkola Copper Mines Plc, Zambia
 
 15.  Vedanta Aluminium Limited, India
 
 16.  Sterlite Industries (India) Limited, India
 
 17.  Sterlite Paper Limited, India
 
 18.  Sterlite Opportunities and Ventures Limited, India
 
 19.  The Madras Aluminium Company Limited, India
 
 20.  Bharat Aluminium Company Limited, India
 
 21.  THL KCM Limited, Mauritius
 
 22.  KCM THL Limited, Mauritius
 
 23. Vedanta Resources Investments Limited,
 United Kingdom
 
 24.  THL Aluminium Limited, Mauritius
 
 25.  Monte Cello BV, Netherlands
 
 26.  Sterlite Energy Limited, India
 
 27.  Copper Mines of Tasmania Pty Ltd, Australia
 
 28.  Fujairah Gold FZE, UAE
 
 29.  Thalanga Copper Mines Pty Ltd., Australia
 
 30.  Monte Cello NV, Netherlands Antilles
 
 31.  Anil Agarwal Discretionary Trust, Bahamas
 
 32.  Onclave PTC Limited, Bahamas
 
 33.  Mr. Anil Agarwal
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As required under Section 217 (2AA) of the Companies Act, 1956, the
 Directors hereby confirm that:
 
 i.  In the preparation of Annual Accounts, applicable accounting
 standards have been followed along with proper explanation relating to
 material departures, if any
 
 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 on 31 March 2008 and of
 the profit of the Company for that year;
 
 iii. the directors have taken proper and sufficient cure for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and,
 for detecting and preventing fraud and other irregularities: and
 
 iv.  the directors have prepared the Annual Accounts, on a Going
 Concern basis.
 
 AUDITORS
 
 Your Company had appointed M/s. Deloilte Haskins & Sells, Chartered
 Accountants, as statutory auditors of the Company for the conduct of
 audit of accounts for the year ended 31 March 2008. Their term of
 appointment expires at the conclusion of the forthcoming Annual General
 Meeting (AGM), and being eligible, they offer themselves for
 reappointment. Your Directors propose their reappointment.
 
 AUDITORS QUALIFICATION ON ACCOUNTS
 
 Notes to the accounts, as referred to in the Auditors Report are
 self-explanatory and a practise consistently followed, and therefore do
 not call for any further comments and explanations.
 
 PARTICULARS OF TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND
 OUTGO
 
 As required under Section 217 (1) (e) of the Companies Act, 1956 and
 rules made therein, the particulars of technology absorption and
 foreign exchange earnings and outgo are given in Annexure I, which is
 attached and forms a part of this report.
 
 PARTICULARS OF EMPLOYEES
 
 As required by the provisions of Sub-Section (2A) of Section 217 of the
 Companies Act, 1956 read with the Companies (Particulars of Employees]
 Rules, 1975 as amended, particulars of the employees are set out in the
 Annexure to the Directors Report. However, as per provisions of
 Section 219 (1)(b)(ivl of the Companies Act, 1956 the report and the
 accounts are being sent to all the shareholders excluding the aforesaid
 information. Any shareholder, interested in obtaining such particulars
 may write to the Company Secretary at the registered office of the
 Company for a copy of the same.
 
 ACKNOWLEDGEMENTS
 
 The Board of Directors places on record its sincere appreciation of the
 contribution made by the employees, and employee unions in the success
 of the Company. The directors also sincerely thank the Central
 Government and The State Governments of Rajasthan, Andhra Pradesh,
 Jharkhahd, Gujarat, Uttaranchal and Karnataka, also bankers, auditors,
 vendors, customers and the shareholders of the Company for their
 continued support.
 
                        For and on behalf of the Board of Directors
 
                        K.K. KAURA                     M.S. MEHTA
                          DIRECTOR    CEO AND WHOLE TIME DIRECTOR
 
 Date : 12 May 2008
 Place: Mumbai