A COMPREHENSIVE PROJECT REPORT ON “Analysis of Hindustan Copper Ltd.” Submitted to SHREE SHAJANAND INSTITUTE OF MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ASMINISTRATION In Gujarat Technological University FACULTY INCHARGE Submitted by Hardik Baxi Pooja Narwani (107610592002) (Asst. Prof.) Zarana Shah (107610592054) MBA SEMESTER III
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A
COMPREHENSIVE PROJECT REPORT
ON
“Analysis of Hindustan Copper Ltd.”
Submitted to
SHREE SHAJANAND INSTITUTE OF MANAGEMENT
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ASMINISTRATION
In
Gujarat Technological University
FACULTY INCHARGE Submitted by
Hardik Baxi Pooja Narwani (107610592002)
(Asst. Prof.) Zarana Shah (107610592054)
MBA SEMESTER III
SHREE SHAJANAND INSTITUTE OF MANAGEMENT
MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
Students’ Declaration
We, __________________________________, hereby declare that the
report for Comprehensive Project entitled
“_____________________________” is a result of our own work and
our indebtedness to other work publications, references, if any, have
been duly acknowledged.
Place : ……..
Date :
By:
Pooja Narwani –
Zarana Shah –
Institute’s Certificate
“Certified that this Comprehensive Project Report Titled
“……………… ……………” is the bonafide work of Mr./ Ms………
…………………….. (Enrollment No………..), who carried out the
research under my supervision. I also certify further, that to the best of
my knowledge the work reported herein does not form part of any other
project report or dissertation on the basis of which a degree or award
was conferred on an earlier occasion on this or any other candidate.
Signature of the Faculty Guide
(Name and Designation of Guide)
(Certificate is to be countersigned by the
Director/HoD)
PREFACE
ACKNOWLEDGEMENT
About the Industry in India:
Copper in India industry profile provides top-line qualitative and quantitative
summary information including: market size (value and volume 2006-10, and
forecast to 2015). The profile also contains descriptions of the leading players
including key financial metrics and analysis of competitive pressures within the
market. Essential resource for top-line data and analysis covering the India
copper market. Includes market size data, textual and graphical analysis of
market growth trends, leading companies and macroeconomic information.
Highlights: - The copper industry, for this research purposes, consists of copper mine
production only. Industry volume is defined as the quantity of copper produced at
sites within each country or geographical region. Volumes are converted to
values using constant annual average LME prices. All currency conversions in
this profile were calculated using 2010 average exchange rate.
- The Indian copper production industry had total revenue of $264.4 million in
2010, representing a compound annual growth rate (CAGR) of 10% for the
period spanning 2006-2010.
- Market production volumes increased with a CAGR of 7.1% between 2006 and
2010, to reach a total of 35.4 thousand metric tonnes in 2010.
- The performance of the industry is forecast to accelerate, with an anticipated
CAGR of 14.1% for the five-year period 2010-2015, which is expected to drive
the industry to a value of $510.7 million by the end of 2015.
Features
- Save time carrying out entry-level research by identifying the size, growth, and
leading players in the copper market in India
- Use the Five Forces analysis to determine the competitive intensity and
therefore attractiveness of the copper market in India
- Leading company profiles reveal details of key copper market players’ global
operations and financial performance
- Add weight to presentations and pitches by understanding the future growth
prospects of the India copper market with five year forecasts by both value and
volume
- Macroeconomic indicators provide insight into general trends within the India
economy.
Company Profile:
Hindustan Copper Limited (HCL), a public sector undertaking under the
administrative control of the Ministry of Mines, was incorporated on 9th
November 1967. It has the distinction of being the nation’s only vertically
integrated copper producing company as it manufactures copper right from the
stage of mining to beneficiation, smelting, refining and casting of refined copper
metal into downstream saleable products.
The Company markets copper cathodes, copper wire bar, continuous cast
copper rod and by-products, such as anode slime (containing gold, silver, etc.),
copper sulphate and sulphuric acid. More than 90% of the sales revenue is from
cathode and continuous cast copper rods. In concluded financial year 2006-07,
as per provisional estimates, the Company has earned a all time highest net
profit pf Rs 331 crore (~USD 75 million ) against a sales turnover of Rs 1800
crore (~ USD 420 million). HCL’s mines and plants are spread across four
operating Units, one each in the States of Rajasthan, Madhya Pradesh,
Jharkhand and Maharashtra as named below:
Khetri Copper Complex (KCC) at Khetrinagar, Rajasthan
Indian Copper Complex (ICC) at Ghatsila, Jharkhand
Malanjkhand Copper Project (MCP) at Malanjkhand, Madhya Pradesh
Taloja Copper Project (TCP) at Taloja, Maharashtra
November
1967
Incorporated to take over from National Mineral Development
Corporation Ltd.
March 1972 M/S Indian Copper Corporation Limited, Private Sector
Company, located at Ghatsila, Jharkhand with Smelter and
Refinery was Nationalized and made part of HCL.
February
1975
Fully integrated Copper complex from mining to refining came
on stream at Khetri ( capacity 31,000 tonnes of refined copper)
November
1982
The largest hard rock open pit mine in the country came into
stream at Malanjkhand in Madhya Pradesh of capacity 2 million
tonnes ore
December
1989
Continuous Cast Wire Rod plant of South Wire Technology of
capacity 60,000 MT was commissioned at Taloja in Maharashtra.
Copper prices had melted, the new Central government was gung-ho about selling government-owned industrial undertakings, and unions were fighting a rearguard action. The word was out: Kolkata-based Hindustan Copper was to be sold.
The company had made profits up to 1996, but a bloated workforce, lack of economies of scale, and low metal prices had pushed it into the red. For the Bharatiya Janata Party-led National Democratic Alliance government, the company was a potential candidate for sale.
Hindustan Copper is a debt-free company with cash reserves of Rs 400 crore
It is a relatively lean organisation, following voluntary retirement schemes, the last of which was in 2006
With the price of copper at nearly $10,000 a tonne, reopening the sealed Rakha mines in Jharkhand seems viable
Then came a Supreme Court ruling in another case: a company nationalised by an Act of Parliament cannot be sold by administrative fiat. Someone remembered that the Ghatsila unit in Jharkhand, earlier the Indian Copper Complex, had been nationalised by an Act of Parliament in 1972. Besides, a new government replaced the BJP and scrapped the plan to privatise Hindustan Copper.
Shakeel Ahmed, who took over as chairman and managing director in October 2009, knows the company's woes well: surplus labour, locational disadvantages poor economies of scale, and low copper prices. He has a blueprint for success. "Our new focus is on mining, not smelting," he says.
Ahmed, who belongs to the Indian Railway Service Mechanical Engineering cadre, inherited a leaner organisation. At one time, Hindustan Copper had more than 26,000 employees, spread across the Ghatsila complex in Jharkhand, the Malanjkhand project in Madhya Pradesh, the now-closed Khetri complex in Rajasthan, and Taloja in Maharashtra. Now it has 6,000. The last voluntary retirement scheme was implemented in 2006.
Making copper, as Ahmed explains, is an enormously wasteful process. The copper content of Indian ore is one per cent. Even so, it is higher than the world average, as mining companies elsewhere have exhausted richer ore. The ore is treated to increase the copper concentration to 25 per cent, smelted to increase it to 90 per cent, and refined to raise it further to 99.99 per cent. But costs are high, and margins low, for smelting and refining. Privatesector majors such as the AV Birla group and Sterlite make money by smelting and refining imported ore at plants near the coast.
Hindustan Copper itself often has its ore processed by these companies. "Smelters are viable above capacities of one million tonnes," says Ahmed. Hindustan Copper can smelt just 50,000 tonnes a year, compared to five million tonnes at the Birla plant at Dahej, and four million at Sterlite's Tuticorin facility. "Smelting costs $80-100 per tonne, while copper sells for $9,650 per tonne," says Ahmed. "So 95 per cent of the value is in mining."
In 2002/03, when privatisation was in full swing, bureaucrats in Delhi ordered shafts at Rakha mines in the Ghatsila complex - one of the country's largest copper deposits - to be plugged with concrete. This is usually done only for mines that are exhausted. Today, the management is trying to reopen the shafts. At current prices, it makes sense.
To raise funds, the company has been planning to get 10 per cent fresh equity from the government, and offload 10 per cent in the market. "Now the thinking is, we may not go in for fresh equity, only divestment," says Ahmed. "But a final decision has not been taken." There will be no full sale though, he adds. Hindustan Copper is a debt-free company, with cash reserves of more than Rs 400 crore.
RESEARCH
METHODOLOGY
Research Design:
The above project is the analysis of the company so it does not have a sample space.
The analysis of company includes both fundamental analysis as well as technical analysis.
The part of technical analysis is to be done in 4th sem to get up-to-date information and its interpretation.