hatti gold mines
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HUTTI GOLD MINES COMPANY LIMITED
EXECUTIVE SUMMARY
The summer project was undertaken at Hutti Gold Mines Company
limited, Hutti. The training was undertaken to understand the WorkingCapital Management at Hutti Gold Mines Company.
My in-plant training project conducted at Hutti Gold Mines Company
consists of two parts:
1. The first part belongs to overall study relating to the organization.
Gold is considered as the king of metals inthe world. The study also
consists of various departments, how they function, policies and
strategies used by each department and how they are able to
achieve their organizational goals.
2. The second part belonging to the finance project is specially focused
on working capital management.
Working Capital plays an important role in the successful operation of
business activities. The need for managing working capital is very
necessary for any business house. Working capital management is a matter
of top priority, as it has a bearing on creditworthiness, liquidity, solvency
and profitability.
Working capital management is a process of determining quantum ofcurrent assets to be held at right time, so as to discharge current liabilities
and there by utilizing them to their optimum extent and at the same time
increasing overall value of the firm by keeping the liquidity position intact.
Objectives:
To study the pattern & procedure followed regarding working capital
management.
To study the different components of working capital of the
corporation.
To understand how effectively the working capital management is in
HGML.
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HUTTI GOLD MINES COMPANY LIMITED
To offer suggestions for improving the efficiency in working capital
management.
To fulfill the requirement of Masters Degree in Management.
Methodology of the Study
1. Primary Data:
It is collection of first hand information. This data is collected
through discussion. The required primary data is collected from the
concerned officers of the Hutti gold mines company limited, Hutti.
The data collected is processed and presented in the data analysisthrough various tables and explanations. The tables are analyzed by
individual current assets and current liabilities and by calculating
working capital for every year.
2. Secondary Data:
It is reviewing relevant information, which is already collected
and making inferences based on the information collected from
secondary data from annual reports of the company. The present
study is mainly based on the secondary data.
Scope of Study:
Scope of the study in General terms is 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.
Study is limited to the information that could be gathered from
personnel and records that were made available.
INTRODUCTION TO GOLD COMPANY
Gold mining has been part of some of the greatest achievements in
history,from early NIZAMS time. Gold sparked off the cultural & heritage
revolution. At the close of 20th century, it was gold revolutionizing the way we live
and are the material of choice for countless products for this millennium. The gold
industry has an important role to play in the development of any industry of a
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HUTTI GOLD MINES COMPANY LIMITED
nation. It is a critical intermediate for the industrialtion and the strength for gold
smith.
The turn of the century saw the Indian gold industry reaching a stage of
development determined largely by the economic policies. These policies have led
to the decontrol of the gold industry and most other sector of the industrialeconomy. The gold sector in particular saw a series of reforms starting with
removal of licensing control, disbanding of pricing and distribution controls,
discontinuation of gold development fund.,withdrawal of freight equalization fund
and removal of trade restriction on imports along with progressive reduction in
tariff rates.
In India the Hutti Gold Mines company Ltd is the only mine and producer of Gold.
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 Nizams 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.
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HUTTI GOLD MINES COMPANY LIMITED
After the war, the Hyderabad gold mines company Ltd was found
in1947 and regular mine production started in September 1948 at the rateof 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.
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 Companys 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
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HUTTI GOLD MINES COMPANY LIMITED
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 mare 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
Oakleys Reefs.
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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 inmining 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.
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HUTTI GOLD MINES COMPANY LIMITED
Miners today do more than just dig tunnels in the Earths 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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HUTTI GOLD MINES COMPANY LIMITED
HUTTI GOLD MINES AT A GLANCE:
Location : Hutti, Raichur District, Karnataka, India.
Distance : 80 km west of Raichur,
300 km south west of Hyderabad,
480 km north of
Bangalore.
Railway station : South central railway, Raichur.
Mining History :
1. Ancient mining 2000 years old (Pre Ashokan times )
2. Modern mining 1902 to 1918 (Nizams period)
3. Modern mining-re discovery of parallel lodes and mining from 1947
onwards.
Present Mine depth : 810 meters, 26th level.
Nature of deposit : Arahen lode gold deposit shear zones
controlled gold-quartz-sulphide mine station.
Ore Mined and Gold
produced so far from Hutti
Mines.
Ore
(Million
Tones)
Grade
(gm/Tone)
Total Gold
(Tones)
1. Ore already Mined in
the Main Mine
(During the period
1902 to 1918)
0.38 19.49 7.41
2. Ore Mines so far
from 1948 Onwards
in the present minedon the other parallel
lodes up to 840 m
depth on
31.03.2008.
9.87 5.85 67.10
Total ore mined and 10.25 6.60 74.51
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HUTTI GOLD MINES COMPANY LIMITED
gold produced so far
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 harmonious and cordial industrial relationship.
Promote Human Resource Development.
Promote Welfare and Community Development.
Have environment friendly and healthy mining and production
process.
Have good health and well being of workers, staff, and employees.
VALUE
Like other precious metals, gold is measured by troy weight and by
grams and when it is alloyed with other metals the term carat is used to
indicate the amount of gold present, with 24 carats being pure gold. The
purity of a gold bar can also be expressed as a decimal figure, known as
the millesimal fineness, such as, 0.995.
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.
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HUTTI GOLD MINES COMPANY LIMITED
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, government attempted to
control the price of gold by setting values at which they would exchange it
for currency. For a long period the United States government set the price
of gold at $20.67 per troy ounce but in 1934 the price of gold was set at
$35.00 per troy ounce. By 1961 it was becoming hard to maintain this
price, and a pool of US and European banks began to act together to
defend the price against market forces. But on March 17, 1968, economic
circumstances caused the collapse of this gold pool, and a two-tiered
pricing Scheme was established whereby gold was still used to settle
international accounts at the old $35.00 per ounce ($1.13/g) but the price
of gold on the private market was allowed to fluctuate: this two-tiered
pricing system was abandoned in 1975 when the price of gold was left to
find its free market level. Since 1968 the price of gold on the open markethas ranged widely, with a record high of $850 on 21st January 1980,
slumping to a low of $252.90 on 21st June 1999 (London Fixing). Increased
demand has led to price rising to the $310 mark in 2008.
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 primary goal of the alchemists was to produce gold from other
substances, such as lead-presumably by the interaction with a mythical
substance called the philosophers stone. Although they never succeeded
in this attempt, the alchemists promoted an interest in what can be done
with substances, and this laid a foundation for todays chemistry. Their
symbol for gold was the circle with a point as its center which was also the
astrological symbol, the Egyptian hieroglyph and the Chinese character for
the sun.
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
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HUTTI GOLD MINES COMPANY LIMITED
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 Companys 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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HUTTI GOLD MINES COMPANY LIMITED
The Hutti GoldBullion Buttons
BOARD OF DIRECTORS:
Sri.Renuka archery (MLA) : Chairman
Miss.Manjulla (IAS) : Managing Director
Sri.D.Y.Venkateh : Executive Director
Smt. Latha Krishna Rao (IAS) : Director
Sri.Yogendra Tripathi (IAS) : Director
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HUTTI GOLD MINES COMPANY LIMITED
Sri.Mahendra Jain (IAS) : Director
Sri.Ganga Ram Baderiya (IAS) : Director
Sri.Ajay Seth (IAS) : Director
Sri.Arvind G Risbud (IAS) : Director
M/S. P.Rangaswamy & Co. : Auditors
Sri.Vijay Krishna K.T : Company Secretary Consultant
Banks : State Bank of Hyderabad (Hutti)
State Bank of India (Hutti)
Canara Bank (Blore &
Chitradurga) Syndicate
Bank (Hutti) ING VISYA
Bank (Bangalore) Indus
Ind Bank Ltd. (Bangalore)
Axis Bank Ltd. (Bangalore)
FUTURE PLANS OF HGML:
Hutti underground exploration by diamond drilling from 26th 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.
Follow fair, sound and acceptable ethical practices in relation to
share holders, customers, suppliers, employees, and other public
authorities.
Strengthen effective and adequate internal control system.
Standardize management information system and computerization.
Ensure and adopt transparent procurement, sale, financial reporting,
audit and practices.
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HUTTI GOLD MINES COMPANY LIMITED
Implementation of Kannada.
Wind mill power generation:- The company has completed 1st phase
of errectio and commissioning of 4.8 mw mind wind mill along with
polling station bay extension at KPTCL and transmission line. Power
generation started from 19th June 2006. This has added Rs.270 lakhsof revenue generation.
Rationalization of use of compressed air system.
Rationalization of underground pumping system.
Reclamation and development of Greys 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.
GMLs Production Performance of the Decade (1993-2008)
Year Ore hoisted
Hutti only (in
tons)
Ore treated
(Hutti +
NP) (in
tons)
Feed
grade
(G/T)
Net grade
(G/T)
Gold
produce
(in kgs)
1993-
94
179924 178338 5.73 5.42 966.40
9
1994-
95
232460 246481 5.51 5.04 1242.7
6
1995-
96
256812 232626 4.82 4.35 1011.2
4
1996-
97
263727 283083 5.52 4.97 1408.0
5
1997-
98
277430 293640 5.3 4.9 1438.0
7
1998-
99
291214 323974 4.93 4.4 1427.1
02
1999- 254529 349084 4.4 4 1395.8
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HUTTI GOLD MINES COMPANY LIMITED
00 2
2000-
01
260199 335845 5.62 5.31 1784.9
9
2001-
02
379251 409437 6.11 5.67 2333.5
0
2002-
03
460637 525928 5.4 5.02 2640.4
96
2003-
04
483263 623125 5.77 5.4 3096.5
44
2004-
05
480826 592685 6.22 5.9 3507.6
07
2005-06
454351 513722 5.86 5.54 2848.340
2006-
07
484723 522374 5.04 4.7 2336.3
6
2007-
08
470682 562921 5.87 5.27 2808.6
0
ORGANISATION STRUCTURE
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HUTTI GOLD MINES COMPANY LIMITED
PRODUCTION DEPARTMENT
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HUTTI GOLD MINES COMPANY LIMITED
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
HGMLs 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.
HGMLs 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.
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HUTTI GOLD MINES COMPANY LIMITED
Gold is recovered through two routes:
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 nos 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 nos of short head and two nosof 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 one8dia*16 long primary mill and three nos 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.
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HUTTI GOLD MINES COMPANY LIMITED
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.
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 jointogether 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 nos 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 nos 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 nos 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.
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HUTTI GOLD MINES COMPANY LIMITED
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 second stage 2 Nos. of 3 standardSymons 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.
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HUTTI GOLD MINES COMPANY LIMITED
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 arepassed 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 passedthrough 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 to11 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:
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Crushing of Underground samples
Filtering and drying of grinding samples
Fluxing
Parting
Making cupels
Scrapping of crucibles
Refractory work
Preparation of standard solution and cyanide antidotes
Other miscellaneous work to find Assay value of mine and millsamples
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.
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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.
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.
Financial performance:-
Total income amounted to Rs.32220 lakhs as against Rs.23356
lakhs in the previous year, an increasing of 38%.
Operating profits of Rs.16899 lakhs, against Rs.10065 lakhs in
2006-07, registering a jump of 68%.
Net profit before tax of Rs.14494 lakhs, against Rs.8528 lakhs
in the corresponding previous financaial years.
Earnings per share for the year Rs.3252.
Net worth as at the end of the March 2008 amounted to
Rs.28080 lakhs as against Rs.18932 lakhs in 2006-07.
Foreign exchange transaction:-
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Transaction is foreign currencies are recorded at the exchange rates
prevailing at the time of transaction except in the case of forward contracts
where transactions are recorded at forward contract rates.
Liability in respect of foreign currency transactions at the end of year
recovered by forward exchange contract is update at end of year recoveredby forward exchange contract is updated at end year rates and exchange
difference is adjusted to P&L A/C.
Functions to finance department:-
It prepares and maintains journal books, cash and bank books, ledger
a/c, and a trial balance.
To prepare Trading a/c.
To prepare Balance sheet
To prepare Profit and Loss a/c.
Maintenance of account in which undertaken.
Rate fixing
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 HGMLs Company having Authorized Capital of Rs.10,00,00,000
Issued Capital of Rs.3,07,93,328
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Subscribed & Paid up Capital of Rs.2,96,20,371.47
HGML Companys Finance department is having the following department:-
1. Inventory accounting
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 tothe material descriptions. All the materials cannot do in one place thats
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
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Fuel, oil, Lubricants, Petrol and Diesel.
Explosives
Used for the Underground department
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, Assaylab)
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.
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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 andclosing 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.
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
days 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 thestores. 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
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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:-
The HGML Companys entire employees accounts are preparedseparately 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 is provide to the employees basic
schemes like Employees Provident Fund, Education Loans, Sick Loans,
Building or House Construction Loans are provided for the purpose ofemployees satisfaction.
Depreciation:-
1. Depreciation on Fixed Assets is provided on straight line method.
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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 theypurchase 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.
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
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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 favorablequotations, 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.
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 philosophy:-
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Hutti gold mine Company limited believes that people are greatest
asses and have the potential to grow and be creative with increased
efficiency. In turn, should demonstrate that no compromise can be made by
debiting to traditional respect for the individual and must provides support
and encouragement by creating opportunities and challenges with equity
to.
Make Hutti gold company a peoples organization
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 tharrow 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 wellas his/her colleagues function.
Main Human Resource Policy at HGML:
1. Human Resource Policy on Welfare:-
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 companys colony functioned well.
The company had a 150 bedded fully fledged hospital to caterto 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 2006-07 was 2,10,311.
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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 HGMs 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 vide 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, Raichur to the Science education.
5. Safety:-
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
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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 familiesto 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
organizations 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 toreduce 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,
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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.
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
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:
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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.
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 ofSouthern India.
THREATS:
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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.
INTRODUCTION TO FINANCIAL MANAGEMENT
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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 in 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 objective.
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 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 togreater risk.
A business enterprise with adequate working capital is always 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 ofworking capital management, receivable management. The project
primarily deals with the study of financing and utilization of available
resources and measuring the perform 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 firms current assets
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and current liabilities in such a way that an acceptable level of networking
capital is maintained.
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 firms
current assets and current liabilities in such a way that, it will help to
reach the organizational goals.
Current Assets:
Its referring to those assets which in the ordinary course of business
can be, converted into cash within one year without undergoing a
diminution in value and without disrupting the operations of the firm. The
major current assets are cash, marketing securities, accounts receivable
and inventory.
Current Liabilities:
These are those which are intended, at their inception to be paid in the
ordinary course of business, within a year, out of the current assets orearnings of the concern. 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
them of the working capital management. Because if the firm cannot
maintain a satisfactory level of working capital, it is likely to because
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insolvent and may even be forced into bankruptcy. The current assets
should be managed efficiently in order to maintain the liquidity of the firm.
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.
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 to run the day to day business
activities be over emphasized.
Every firm should aim at maximizing the wealth of its
shareholders. In this case a firm should earn sufficient return from itsoperations. Earning a steady amount of profit requires successful
sales do not convert into cash instantaneously.
Working capital categories into:
1. Fixed or permanent working capital
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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 hand investment in
raw material work in progress and finished goods will fall if the
market is slack.
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 firms requirement for permanent capital is decreasing over a
period.
Objective of working capital:
To ensure adequate liquidity of a firm
To minimize the risk and
The contribution to the maximization of firms value.
Principles of Working Capital:
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Principles of risk assumption.
Net worth position.
Maturity of payment and
Cost of capital.
Importance of working Capital
Adequate working capital creates certainty, security and confidence
in the minds of the persons in the management as well as in the minds of
creditors and workers.
It creates a good credit standing for the firm because credit standing
depends upon the ability to pay promptly. A Company with adequate
working capital is always able to meet current liabilities.
It ensures solvency and stability of the enterprises it also ensures
continuity in production and sales. It enables the company to take
advantage of cash discount offered by the suppliers of raw materials or
merchandise. It enhances the prestige of the company and moral of its
workers because a company with adequate working capital is always able
to pay wages and salaries promptly.
It enables the company to procure loans from banks on easy and
competitive terms. In times of boom, it enables the company to meet
increasing demands for its products. In times of depression the company to
overcome the crisis successfully. It enables the company to hold carry on
its business successfully and active continued progress and prospective. It
enable the company to carry on its business successfully and active
continued progress and prosperity.
Operating efficiency:
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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, labors 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.
Credit period granted by the sundry creditors and
Time gap in the payment of wages, salaries and other operating
expenses.
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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 firms
operating cycle which is usually less than a year.
Figure-1
Operating cycle of manufacturing company
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HUTTI GOLD MINES COMPANY LIMITED
Figure-2
Operating cycle of mining company
Design of the Study
Title of the Study: A study on WORKING CAPITAL MANAGEMENT IN HUTTI
GOLD MINES COMPANY LIMITED, HUTTI.
Project field: Finance
Project duration: 6 weeks
Introduction:-
The most profitable function of an organization is to make the
working capital. Sanctioning credit to customers and others out of current
assets and current liabilities at its disposal is one of the principal services of
an organization. It is the current assets and current liabilities, which bring
most of the earnings for an organization and establish valuable ties with
the community.
It is concerned with the management of sources, control and
effective utilization of working capital management. The study helps in
evaluating of working capital management in Hutti gold mines Company
limited.
Need for study:
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HUTTI GOLD MINES COMPANY LIMITED
I have selected this topic for the study because Working Capital
management plays an important role in the company; so as it to be
maintained in a good and better way so as to fulfill the present and future
need of the company. Every firm should aim at maximizing the wealth of its
shareholders. In this case a firm should earn sufficient return from its
operations. Earning a steady amount of profit requires successful sales do
not convert into cash instantaneously.
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 practicalexperience.
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 on profitability.
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.
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HUTTI GOLD MINES COMPANY LIMITED
To offer suggestion for improving the efficiency in working capital
management
To fulfill the requirement of Master Degree in 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 financialstatements, 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
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:
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HUTTI GOLD MINES COMPANY LIMITED
It is reviewing which relevant information, which is already collected is 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 rations 2001-02 isconsidered be base year whose value is equal to 100.then. The values for
subsequent years i.e. 2001-02 to 2007-08 are calculated with the base
year value on year to year basis.
FINANCE DEPARTMENT STRUCTURE
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HUTTI GOLD MINES COMPANY LIMITED
The working capital is calculated for a period of six years i.e. 2001-02
to 2007-08. 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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HUTTI GOLD MINES COMPANY LIMITED
Section-I
1. Current assets and current liabilities during the year 2001-02
and 2002-03, the following information is relating to different currentassets and current liabilities during the 2001-02 & 2002-03 presented in
table-1
Table No-1
Current Assets 2001-02 & 2002-03
Sl.
No
Particulars Amount
(2001-02)
(Rs. Inlakhs)
Amount
(2002-03)
(Rs. Inlakhs)
Percent
age
(2001-02)
Percent
age
(2002-03)
1 Inventories 1401.65 1607.41 54.07 48.61
2 Sundry Debtors 133.69 0 5.16 0
3 Cash and Bank 61.72 785.96 2.38 23.77
4 Other Current
Asset
34.59 32.45 1.33 0.98
5 Loans andAdvances
960.60 881.06 37.06 26.64
Total 2592.25 3306.88 100.00 100.00
Table No-1 A
Current Liabilities 2001-02 & 2002-03
Sl.
No
Particulars Amount
(2001-02)
(Rs. inlakhs)
Amount
(2002-03)
(Rs. inlakhs)
Percent
age
(2001-02)
Percent
age
(2002-03)
1 Current Liabilities
(Sundry
Creditors)
1983.96 3558.31 49.68 83.25
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HUTTI GOLD MINES COMPANY LIMITED
2 Provisions 2009.45 716.07 50.32 16.75
Total 3993.41 4274.38 100.00 100.00
Working Capital = Current assets Current liabilities
Working Capital (2001-02) = Rs.2592.25- Rs.3993.41
= Rs.-1401.16
Working Capital (2002-03) = Rs.3306.88 4274.38
= Rs.-967.50
Information relating to various current assets and current liabilities
included in the year 2001-02 and 2002-03.
Graph No-1 Current Assets 2001-02 & 2002-03
Graph No-1 A Current Liabilities 2001-02 & 2002-03
The total current assets of Rs.3306.88 lakhs (2002-03) has increased
compared to Rs. 2592.25 lakhs (2001-02) and this indicates better
improvement of current assets. The total current liabilities of company as
increaed in 2001-03 (Rs.4274.38 lakhs) as compared to 2001-02
(Rs.3993.41 lakhs). Give to raise in current liabilities the production
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HUTTI GOLD MINES COMPANY LIMITED
activities also increased. But the working capital is negative and it is not so
good to the company in both the years 2001-02 and 2002-03.
2. Current assets and current liabilities during the year 2003-04
and 2004-05, the following information is relating to different current
assets and current liabilities during the 2003-04 and 2004-05 presentedin table-2
Table No-2
Current Assets 2003-04 & 2004-05
Sl.
No
Particulars Amount
(2003-04)(Rs. in
lakhs)
Amount
(2004-05)(Rs. in
lakhs)
Percent
age
(2003-
04)
Percent
age
(2004-
05)
1 Inventories 2776.68 3953.32 53.74 30.77
2 Sundry Debtors 0 0 0 0
3 Cash and Bank 302.94 745.71 5.86 5.80
4 Other Current
Asset
16.17 15.98 0.31 0.12
5 Loans and
Advances
2070.83 8134.07 40.09 63.31
Total 5166.62 12849.08 100.00 100.00
Table No-2 A
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Current Liabilities 2003-04 & 2004-05
Sl.
No
Particulars Amount
(2003-04)
(Rs. inlakhs)
Amount
(2004-05)
(Rs. inlakhs)
Percent
age
(2003-04)
Percent
age
(2004-05)
1 Current
Liabilities
(Sundry
Creditors)
2922.04 1781.98 60.47 19.93
2 Provisions 1910.19 7157.75 39.53 80.07
Total 4832.23 8939.72 100.00 100.00
Working Capital = Current assets Current liabilities
Working Capital (2003-04) = Rs.5166.62 4832.23
= Rs. 334.39
Working Capital (2004-05) = Rs.12849.08 8939.73
= Rs.3909.35
Graph No-2 Current Assets 2003-04 & 2004-05
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HUTTI GOLD MINES COMPANY LIMITED
Graph No-2 A Current Liabilities 2003-04 & 2004-05
The total current asssets of 2004-05 as increased to Rs.12849.08
lakhs as compared to Rs.5166.62 lakhs in 2003-04. And also the total
current liabilities ofcompany as increased to Rs.8939.72 lakhs (2004-05)as compared to above three years report is considered. Give to rise in
both current assets and current liabilities short term working capital
requirement as increased in 2004-05 to Rs.3909.35 lakhs as compared
to Rs.334.39 lakhs in 2003-04 year. The increased in working capital
shows a pasitive sign to improve production activities in the company.
3. Current assets and current liabilities during the year 2005-06
and 2006-07, the following information is relating to different current
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HUTTI GOLD MINES COMPANY LIMITED
assets and current liabilities during the 2005-06 and 2006-07 presented
in table-3
Table No-3
Current Assets 2005-06 & 2006-07
Sl.No
Particulars Amount
(2005-06)(Rs. inlakhs)
Amount
(2006-07)(Rs. inlakhs)
Percentage
(2005-06)
Percentage
(2006-07)
1 Inventories 3749.47 4969.88 43.05 27.54
2 Sundry Debtors 0 6.24 0 0.03
3 Cash and Bank 241.80 741.59 2.78 4.114 Other Current
Asset15.10 16.07 0.17 0.09
5 Loans andAdvances
4704.02 12312.51 54.00 68.23
Total 8710.39 18046.29 100.00 100.00
Table No-3 A
Current Liabilities 2005-06 & 2006-07
. No
Particulars Amount
(2005-06)(Rs. inlakhs)
Amount
(2006-07) (Rs.in lakhs)
Percentage
(2005-06)
Percentage
(2006-07)
1 Current Liabilities(Sundry Creditors)
1304.33 3231.44 22.23 24.48
2 Provisions 4563.11 9968.28 77.77 75.52
Total 5867.44 13199.72 100.00 100.00
Working Capital = Current assets Current liabilities
Working Capital (2005-06) = Rs. 8710.39 5867.44
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HUTTI GOLD MINES COMPANY LIMITED
= Rs. 2842.95
Working Capital (2006-07) = Rs. 18046.29 13199.72
= Rs. 4846.57
Graph No-3
Current Assets 2005-06 & 2006-07
Graph No-3 A
Current Liabilities 2005-06 & 2006-07
As compared to previous years total current assets and total current
liabilities of the company as increased to this year. The total current assets
of the company as gone up by Rs.18046.29 lakhs (2006-07) from
Rs.8710.39 lakhs (2005-06). As, well as the total current liabilities as gone
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HUTTI GOLD MINES COMPANY LIMITED
up by Rs.13199.72 lakhs (2006-07) as that of Rs.5867.44 lakhs(2005-06). It
is said that more working capital is flowing into the company this leads to
more production processes.
4. Current assets and current liabilities during the year 2007-08,
the following information is relating to different current assets and
current liabilities during the 2007-08 presented in table-4
Table No-4
Current Assets 2007-08
Sl.
No
Particulars Amount
(Rs. inlakhs)
Percenta
ge
1 Inventories 5028.68 18.45
2 Sundry Debtors 76.88 0.28
3 Cash and Bank 9096.11 33.37
4 Other Current
Asset
94.90 0.35
5 Loans andAdvances
12959.84 47.55
Total 27256.41 100.00
Table No-4 A
Current Liabilities 2007-08
Sl.
No
Particulars Amount
(Rs. in
lakhs)
Percent
age
1 Current Liabilities
(Sundry Creditors)
3070.76 22.40
2 Provisions 10640.30 77.60
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Total 13711.06 100.00
Working Capital = Current assets Current liabilities
= Rs. 27256.41 13711.06
= Rs. 13545.35
Information relating to various current assets and current liabilities
included in the year 2007-08.
Graph No-4
Current Assets 2007-08
Graph No-4 A
Current Liabilities 2007-08
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HUTTI GOLD MINES COMPANY LIMITED
By seeing all years report this years total current assets and total
current liabilities as gradually increased to Rs.27256.41 lakhs in 2007-08
and also current liabilities as rised to Rs.13711.06 lakhs. Altimately
increase in current assets and current liabilities as let in increase inworking capital and this leads to increase in production of Gold.
ESTIMATION OF CURRENT ASSETS
Raw material inventory:-
The investment in raw material inventory is estimated on the basis of
the following formula.
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).
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Cost of raw material * Average inventory holding periods
(months/days)
12 Months/365da s
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Finished goods inventory:-
Working capital required for financing the finished goods inventory is
given by factor summed up as follows.
Debtors:-
The working capital tied up in debtors should be estimated in relation
to total cost price (excluding depreciation) symbolically.
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Estimated WIP cost (Rs) * Average time spend of WIP
inventory (months/days)
12 Months 365da s
Cost of goods produced (Rs) * finished goods holding
periods (months/days)
12 Months 365da s
Cost of Sales (Rs) * Average debt collection periods
(months/days)
12 Months 365da s
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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:-
Time lag in payment of :-
Wages and Salaries:-
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Raw Material Cost (Rs)* Credit period allowed by creditors
(months/days)
12 Months/365days
Wages & Salaries Cost (Rs)* Time lag in payment of
wages & salary
12 Months/365days
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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.
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