Hindustan Zinc Ltd

Dear Members,

The Directors have pleasure in presenting the 46th Annual Report together with theAudited Financial Statements for the financial year ended March 31, 2012.

FINANCIAL RESULTS AND DIVIDEND

(Rs. Crores)

DIVIDEND

The Board of Directors has recommended a final dividend of 45%, i.e., Rs. 0.90 pershare on equity share of Rs. 2.00 each. This takes the total dividend for FY2012 to 120%,i.e., Rs. 2.40 per share, which is the highest ever dividend proposed by the Company. Thetotal outgo on account of dividend including tax on dividend will be Rs. 1,179Crores during FY2012 as compared to Rs. 491 Crores in FY2011.

PERFORMANCE REVIEW

We reported revenues and PBDIT of Rs. 11,405 Crores and Rs. 7,569 Crores; up 14% and17% compared to FY2011. Strong volume growth, operational eficiencies and improved pricerealisation for Silver drove this growth.

This year overall mined metal production was 830,432 tonnes compared to 840,053 tonnesin the previous year. The marginal decline was due to a temporary decline in ore grade atRampura Agucha mine, partially offset by higher metal recoveries across all mines andincreased production at Sindesar Khurd mine, which ramped-up to 80% utilisation in Q4FY2012.

Refined Zinc production this year was 758,716 tonnes– up 6% compared to FY2011.This was primarily on account of higher utilisation of new generation smelters inRajasthan, partially offset by ramp-down of Vizag smelter during the fourth quarter. Weperformed extremely well in refined Lead and Silver production, which is the highest everat 98,724 tonnes and 242 tonnes – up 56% and 35% respectively. Production of refinedLead and Silver was boosted significantly by the ramp up of Sindesar Khurd mine andcommissioning & ramp-up of Dariba Lead smelter and the new Silver refinery. To add toour performance metrics, our captive power plants too increased generation by 21% to3,401.7 Million units, compared to FY2011. Our wind power generation capacity went up from171MW to 274MW and its power generation was up 67% at 335.7 Million units, compared toFY2011.

SUCCESS IN EXPLORATION

Driving our growth, be it in the past, present or future, is the expansion of reservesand resources. For this, we are continuously pursuing brownfield and greenfieldexploration. We have added 27.10 Million tonnes to our reserves and resources this year,prior to a depletion of 8.04 Million tonnes during the period. In the same vein, ourcontained net Zinc-Lead metal has increased by 1.2 Million tonnes, prior to a depletion of0.83 Million tonnes during the period. Contained net Silver has increased to 912 Millionounces from 885 Million ounces last year. Total reserves and resources at March 31, 2012were 332.30 Million tonnes containing 35 Million tonnes of Zinc-Lead metal and 912 Millionounces of Silver.

RENEWAL OF ZAWAR LEASE

The renewal of the mining lease for Zawar group of mines was applied on November 25,2008. As a part of the mining lease was falling on the forest land, approval from theForest department for diversion of the land was required. In view of the honourableSupreme Court’s order dated February 19, 2010, regarding mining in Aravali Hills ofRajasthan, forest clearance was kept pending. Company had represented the matter atvarious forums and also filed a writ in the Supreme Court. The Forest Advisory Committee(FAC) has already submitted its recommendation to the Supreme Court. All other approvals,as are required for renewal of the mining lease, are in place. Now the matter is pendingin the Supreme Court, awaiting final hearing.

SALES

The Zinc metal sales in the domestic market during the year were 438,171 tonnes, whileexport sales accounted for 320,328 tonnes. Lead metal sales in the domestic market duringthe year were 74,713 tonnes, with the export sales accounting for 16,988 tonnes.

FINANCIAL PERFORMANCE

The Company reported net profits of Rs. 5,526 Crores during the year, up 13% comparedto the previous year. This was primarily on account of higher sales volumes, improvedprice realisations for Silver, rupee depreciation, higher investment income and enhancedoperational eficiencies.

The Company’s financial performance has been discussed in detail in‘Management Discussion and Analysis’ which forms a part of this Annual Report.

PROJECTS

Our well thought-out rollouts have imparted a new growth momentum to our enterprise:

> Ramped-up Sindesar Khurd mine to 2.0 mtpa capacity

> Commissioned the 100 ktpa Lead smelter at Dariba, increasing Lead productioncapacity to 185 ktpa

> Commissioned the new Silver refinery, increasing Silver refining capacity to over500 tpa

> Commenced underground mine development work at Rampura Agucha mine and greenfieldKayar mine

> Commissioned 102MW expansion in wind power, increasing total wind power generationcapacity to around 274MW

CONTRIBUTION TO THE EXCHEQUER

Your Company has contributed Rs. 3,187 Crores in terms of taxes and duties to theexchequer.

DIRECTORS

During the year under review, following changes took place in the Board of Directors ofyour Company. Mr. Rajib Sekhar Sahoo and Ms Shaukat Ara Tirmizi were appointed asIndependent Directors by the Government of India on the Board of the Company w.e.f.October 25, 2011. Mr. Akhilesh Joshi, on completion of his tenure as Chief OperatingOfficer and Whole-time Director on January 31, 2011 was appointed as Chief ExecutiveOfficer and Whole-time Director of the Company w.e.f.

February 1, 2012. Mr. Agnivesh Agarwal and Mr. R K Malhotra retire by rotation andbeing eligible offer themselves for reappointment at the ensuing Annual General Meeting.None of the retiring Directors hold any shares in the Company. Your Directors recommendtheir reappointment.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report, which gives a detailed account ofoperations of your Company and the market in which it operates, including initiativestaken by the Company to expand its business and in areas such as human resources, and riskmanagement, forms a part of this Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a certificate from the Auditors of theCompany regarding the compliance of conditions of Corporate Governance as stipulated underClause 49 of the Listing Agreement is annexed to this report.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Directors herebyconfirm that

i. In the preparation of Annual Financial Statements, applicable accounting standardshave been followed along with proper explanation relating to material departures, if any

ii. The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year on March31, 2012 and of the profit of the Company for that year

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

iv. The Directors have prepared the Annual Financial Statements, on a ‘GoingConcern’ basis

AUDITORS

Your Company had appointed M/s. Deloitte Haskins & Sells, Chartered Accountants, asStatutory Auditors of the Company for the conduct of audit of Financial Statements for theyear ended March 31, 2012. Their term of appointment expires at the conclusion of theforthcoming Annual General Meeting, and being eligible, they offer themselves forreappointment. Your Directors propose their reappointment.

AUDITORS’ QUALIFICATION ON FINANCIAL STATEMENTS

Notes to the Financial Statements, as referred to in the Auditors Report areself-explanatory and a practice consistently followed, and therefore do not call for anyfurther comments and explanations.

PARTICULARS OFT ECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 217 (1) (e) of the Companies Act, 1956 and rules madetherein, the particulars of technology absorption and foreign exchange earnings and outgoare given in Annexure I, which is attached and forms a part of this report.

PARTICULARS OFE MPLOYEES

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)(iv) of the Companies Act, 1956 the report and theaccounts are being sent to all the shareholders excluding the aforesaid information. Anyshareholder, interested in obtaining such particulars may write to the Company Secretaryat 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 contributionmade by the employees and employees’ unions in the success of the Company. TheDirectors also sincerely thank the Central Government and the State Governments ofRajasthan, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Maharashtra, Jharkhand andUttarakhand; bankers, auditors, vendors, customers and the shareholders of the Company fortheir continued support.

For and on behalf of the Board of Directors

ANNEXURE 1

Particulars of technology absorption and foreign exchange earnings and outgo as perSection 217 (1) (e) of the Companies Act, 1956 and the rules made therein and forming partof the Directors’ Report for the year ended March 31, 2012.

A) Conservation of Energy

1. Removal of reaction tank pump motor set by elevating the tank by 3mts at Pyro unit-1Chanderiya Lead-Zinc Smelter (CLZS)

2. Installation of 110KW Kesher compressor in ZRP to stop the intermediate operation of395KW process air compressor at compressor house at Pyro unit-1 CLZS

3. Installation of LED lights at Zinc Nagar street light at Pyro unit-1 CLZS

4. Stoppage of one RC pump of TGT plant (presently two pumps are running) at Pyrounit-1 CLZS

5. Replacement of existing fan blade with FRP blades in cooling tower fans at Hydro-1unit-2 CLZS

6. In Hydro-2, Unit-2 at CLZS, dilution damper and start-up fan damper in roasterclosed tightly to restrict false air.

7. In Hydro-2, Unit-2 at CLZS, Pumps in all utilities audited for energy consumption

8. In Hydro-2, Unit-2 at CLZS, CT-5 Pumps modified with higher rating and will beoperated one at a time

9. Installation of energy saver for lighting at Dariba Smelting Complex (DSC) , CLZSand Rajpura Dariba Mine

10. Automation of pneumatic screw compressor at DSC

11. Reduction of filter spillage pump (199 A & B) from 45KW to 15KW at RampuraAgucha Mine

12. Installation of variable frequency drives in selected pumps

a. Specific areas in which R&D was carried out by the Company in FY2012.

1. A process developed to treat waste products together to realise Lead and Silvervalues. 1000 mt of low-grade Lead concentrate was treated with 250 mt of HGP dust. Theadditional Lead and Silver production was about 230 mt and 490 Kg respectively, whichaccounted for a net revenue generation of approx. Rs. 4.0 Crores

2. Flowsheet developed to float Silver from existing Moore cake stack. Plantimplementation is in progress. This will produce additional Silver of about 4.2 mt/year.

3. Test campaigns were undertaken for Rampura Agucha and Sindesar Khurd ores using Leadand Silver promoters, supplied from various sources. Selected reagents are being tried inplant for further verification and optimisation to understand the impact of recoveryimprovement.

4. Bulk flotation feasibility with Sindesar Khurd ore has been established determiningthe reagent and other process parameter combinations. Improved 4-5% Silver recovery overnormal recovery into Lead concentrate was established in close circuit.

5. Rock phosphate quality enhancement campaign was undertaken for Company’s Matonoperations, where 2 – 3% P₂O₅ quality upgradation was achieved.

6. Cadmium sponge quality for Zinc Smelter Debari was improved by 30% by optimisingsponging conditions.

7. Process has been developed and implemented for the reduction of chloride levels by70% in Zinc Smelter at Dariba.

8. Mineralogical studies and periodic plant audits of the grinding and flotationcircuits were conducted to understand mineral liberation/ locking and grain-size status.These have helped in taking suitable control actions and enhance circuit performance.

9. Flotation process responses have been established with different ratio combinations(CS:GMS and dificult-to-respond) of Rajpura Dariba ores. This has provided processparameters to be adopted for desirable plant performance.

10. Silver recovery audit conducted to establish the pyrometallurgical plantperformance.

11. Acid suppressants were explored to reduce acid mist in the Zinc cell house in pilotplant trials. This will improve equipment life in cell house. 12. A trial patch is beingconstructed using Jarofix as filler material in roads/ highways.

13. Plant scale trials at different cement industries are in-progress using Jarosite aspart of mineraliser during cement manufacturing.

b. Benefits derived as result of above R&D

1. Direct contribution in Lead and Silver production enhancement by treatingLead-Silver bearing residues and developing unique method of Silver concentrate flotationfrom old residue dump.

2. Lead and Silver recovery initiatives using alternate reagents in beneficiationplants, Sindesar Khurd ore bulk flotation and audit in smelter.

3. Reduction in cost of production due to lower energy and reagent consumptionresulting from process modifications in beneficiation plants through plant audits,mineralogical studies and testing different ore blend ratios.

4. Recovery initiatives of other metals like Lead, Silver, Antimony, Copper and Cobalt.

5. Optimisation of plant operations by improvement in existing processes atconcentrators and smelters.

6. Effective utilisation of Jarosite/ Jarofix, a major waste product at Smelter.

c. Future projects for R&D for FY2013

1. Beneficiation evaluation for Maton low grade Rock Phosphate ore.

2. Optimisation of flotation for treating higher proportion Graphite Mica SchistRajpura Dariba ore.

3. Production of acceptable quality Copper concentrate form Copper slag.

4. Silver recovery enhancement efforts in beneficiation plants.

5. Lead, Zinc and Silver metal recovery from beneficiation plant tailings.

6. New reagents evaluation for flotation.

7. Comminution circuits modeling and simulation for better plant performance.

8. Continuous treatment of waste residues like LGLC and HGP dust.

9. Utilisation of Antimony slag as a replacement of Pot. Antimony Tartarte inpurification.

10. Recovery of Antimony metal from Antimony slag.

11. Production of Pot. Antimony Tartarate from Antimony slag.

12. Process development to recover Zinc directly from Zinc concentrate augmenting withexisting leaching process.

13. Impurities and minor metal mapping for hydrosmelter.

14. Modeling-simulation studies for smelting operations.

15. Analytical process development for detection of Arsenic, Antimony, Germanium andTin in neutral solution and subsequent streams.

C) Foreign Exchange Earnings and Outgo

During the year, foreign exchange outgo was Rs. 1,369 Crores (which includes import ofcapital goods, stores and spares, Consultancy and travelling); while the foreign exchangeearned was Rs. 3,570 Crores. The details have been given under item nos. 44 to 46 of notesto financial statements.

Form for Disclosure of Particulars With Respect to Conservation of Energy

CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCT POLICY

As provided under clause 49 of the Listing agreement with the Bombay Stock Exchange andthe National Stock Exchange (India) Limited, the Board members and the Senior Managementpersonnel have confirmed Compliance with the Code of Conduct and ethics for the year endedon 31st March 2012.

For Hindustan Zinc Limited

Akhilesh Joshi

CEO & Whole-time Director

Place: Mumbai

Date: April 19, 2012

SECRETARIALCOM PLIANCE REPORT

To,

The Members,

Hindustan Zinc Limited,

Udaipur.

We have examined all relevant records of the Company relating to its compliance withthe provisions of Companies Act, 1956 and rules, regulations framed thereunder.

It is the responsibility of the Company to prepare and maintain the relevant necessaryrecords under the aforesaid Acts, Rules and Regulations framed thereunder. Ourresponsibility is to carry out an examination, on the basis of our professional judgementso as to provide a reasonable assurance of the correctness and completeness of the recordsfor the purpose of report.

We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of report and have been provided withsuch records, documents etc. as required by us.

We report that for the financial year ended on 31st March, 2012 the Company hascomplied with the provisions of Companies Act, 1956 and Rules, Regulations framedthereunder, as given hereunder:

1. Maintained all the statutory registers required under the Companies Act, 1956("the Act") and the Rules made thereunder.

2. Filed all the forms and returns and furnished all the necessary particulars to theRegistrar of Companies, Rajasthan, as required by the Act.

3. Filed all the quarterly, half-yearly and annual disclosures physically andelectronically with the Stock Exchanges and SEBI, as per the applicable clauses of theListing Agreement (as amended from time to time) and other rules, regulations, bye-laws,etc.

4. Issued all notices required to be given for convening of Board / Committee Meetingsand General Meeting, within the time limit prescribed by law.

5. Conducted the Board / Committee Meetings and Annual General Meeting as per therequirement of the Act.

6. Complied with all the requirements relating to the minutes of the proceedings of themeeting of the Directors / Committee and the Shareholders.

7. The Company closed its Register of Members from 18th June, 2011 to 25th June, 2011(both days inclusive) during the financial year.

8. The Board of Directors of the Company is duly constituted. The appointment ofdirectors has been made in accordance with the provisions of the Act.

9. Payment of Remuneration to the Directors including sitting fees, commission, etc. incompliance with the provisions of the Act.

10. Filed disclosures as on 31st March, as well as, from the record date fixed for thepurpose of declaration of Dividend, as required under Regulation 8(3) of the SEBI TakeoverCode.

11. The Company had constituted the Audit Committee as required under section 292A ofthe Act.

12. Paid dividend to the shareholders within the time limit prescribed and has alsotransferred the unpaid dividends to the Central Government within the time limit from timeto time.

13. Made due disclosure required under the other applicable provisions of the Act.

For V. M. & ASSOCIATES

Company Secretaries

Manoj Maheshwari

Partner

FCS: 3355; C P No. : 1971

Place: JAIPUR

Date: April 19, 2012