1

Industry Profile

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 Industry Profile of Metals and Minerals

ORIGIN

The mining and mineral production interests in India were earlier represented by regional
associations of mine operators and individual lease holders. In 1966, the individual mine
operators and associations established an all-India federation a non-profit corporate
body under the Companies Act, 1956 to promote the interests of mining, mineral
processing, metal making and other mineral-based industries and to attend to the
problems faced by them in lease grants, renewals, tenures, production, taxation, trade,
exports, labour, etc. The Federation of Indian Mineral Industries (FIMI), which came
into existence with a small membership of about 40 federating associations and
individual units, is now a 350-member body. FIMI envelopes in its fold mining, mineral
processing, metal making, cement and other mineral-derived industries as well as granite,
stone, marble and slate industries — private, joint and public sectors — of the country.
It represents the entire non-fuel mining and mineral processing activities of the nation.

FIMI, while pleading for the promotion of these industries, interfaces with government,
trade and industry bodies, educational and R&D institutions etc. <![end if]>on — legal,
tenurial, fiscal, regulatory, forests and environmental — all matters connected with the
functioning of this sector on a continuing basis.

During the past 37 years of its existence, FIMI has organized a number of
international/national seminars, conferences, workshops to highlight the problems,
policies and perspectives of the resource (mineral) based industries.

FIMI imbued with the philosophy that individual initiative, enterprise and efforts are the
foundation of a nation’s progress and are the means for the community to precipitate in a
co-operative and complementary functioning, has striven for finding the common ground
and consensus in all its interfacing activities with government, avoiding confrontational
and conflicting facets. As a consequence, FIMI has emerged as an institution with
undoubted objectivity and unsullied credibility whose views are sought by the
Government of India and public institutions with confidence and faith for promoting the
interests of the nation and industry — public and private sectors. FIMI is now seeking to
promote for mineral, mineral derived processing and metallurgical sector, in an investor
friendly environment.

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 OBJECTIVES/GOALS

Being essentially a promotional body, FIMI's main objective is to establish a vibrant,

environmentally benign mineral industry (explorative, extractive and processing
activities related to minerals) that meets the mineral needs of the nation from the
existing resource endowment, import the mineral and metals that are scarce or absent,
and export the surplus minerals and metals that have an external market
Without prejudice to domestic needs. Nevertheless, while promoting mining and mineral-
based industries, through private initiative, effort and enterprise, FIMI has eschewed all
sectarian, confrontational and conflict-creating approaches and is actively engaged in all
its interfacing activities in pursuing a cohesive, complementary and co-operative
functioning of all —labor, capital, Government — to create a wealth and prosperity
generating activity for the greatest national benefit. FIMI can confidently proclaim that it
has succeeded to a large extent in its efforts, as Government, mine operators and labor
repose faith and confidence in the objectivity of FIMI.

CURRENT ACTIVITIES AND PROGRAMMES

The current activities have resulted in making deregulation and liberalisation of mineral
production and processing industry a ground reality. FIMI has found that while the
Government of India has liberalised the policies, dismantled regulatory regimes, these
policies are yet to percolate to the State level and to other implementing agencies. It is to
be noted that while federal Government is a development facilitating and regulatory
body, the Constitution of India provides that all minerals, fuels etc. are the property of
individual States. Hence it is imperative that policies that emanate from Government of
India should not only percolate to State level, but are also implemented in the sprit in
which the pronouncements are made. Towards this end, FIMI is persuading official
implementing agencies to bring out the necessary changes in procedures to avoid delays
in order to harmonise the policy and practice.

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 Introduction about metals

A metal is a chemical element that is a good conductor of both electricity and heat and
forms cations and ionic bonds with non-metals. In chemistry, a metal (from Greek
"μέταλλον" - métallon, "mine"[1]) is an element, compound, or alloy characterized by
high electrical conductivity. In a metal, atoms readily lose electrons to form positive ions
(cations). Those ions are surrounded by delocalized electrons, which are responsible for
the conductivity. The solid thus produced is held by electrostatic interactions between the
ions and the electron cloud, which are called metallic bonds.

Definition

Metals are sometimes described as an arrangement of positive ions surrounded by a cloud

of delocalized electrons. They are one of the three groups of elements as distinguished by
their ionization and bonding properties, along with the metalloids and non-metals.

Metals occupy the bulk of the periodic table, while non-metallic elements can only be
found on the right-hand-side of the Periodic Table of the Elements. A diagonal line
drawn from boron (B) to polonium (Po) separates the metals from the nonmetals. Most
elements on this line are metalloids, sometimes called semiconductors. This is due to the
fact that these elements exhibit electrical properties common to both conductors and
insulators. Elements to the lower left of this division line are called metals, while
elements to the upper right of the division line are called non-metals.

An alternative definition of metal refers to the band theory. If one fills the energy bands
of a material with available electrons and ends up with a top band partly filled then the
material is a metal. This definition opens up the category for metallic polymers and other
organic metals, which have been made by researchers and employed in high-tech devices.
These synthetic materials often have the characteristic silvery gray reflectiveness (luster)
of elemental metals.

Metallicity

In the specialized usage of astronomy and astrophysics, the term "metal" is often used to
refer collectively to all elements other than hydrogen or helium, including substances as
chemically non-metallic as neon, fluorine, and oxygen. Nearly all the hydrogen and
helium in the Universe was created in Big Bang nucleosynthesis, whereas all the "metals"
were produced by nucleosynthesis in stars or supernovae. The Sun and the Milky Way
Galaxy are composed of roughly 74% hydrogen, 24% helium, and 2% "metals" (the rest
of the elements; atomic numbers 3-118) by mass.[3]

The concept of a metal in the usual chemical sense is irrelevant in stars, as the chemical
bonds that give elements their properties cannot exist at stellar temperatures.

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Properties
Chemical

Metals are usually inclined to form cations through electron loss,[2] reacting with oxygen
in the air to form oxides over changing timescales (iron rusts over years, while potassium
burns in seconds). Examples:

4 Na + O2 → 2 Na2O (sodium oxide)

2 Ca + O2 → 2 CaO (calcium oxide)
4 Al + 3 O2 → 2 Al2O3 (aluminium oxide)
The transition metals (such as iron, copper, zinc, and nickel) take much longer to oxidize.
Others, like palladium, platinum and gold, do not react with the atmosphere at all. Some
metals form a barrier layer of oxide on their surface which cannot be penetrated by
further oxygen molecules and thus retain their shiny appearance and good conductivity
for many decades (like aluminium, some steels, and titanium). The oxides of metals are
generally basic, as opposed to those of nonmetals, which are acidic.

Painting, anodizing or plating metals are good ways to prevent their corrosion. However,
a more reactive metal in the electrochemical series must be chosen for coating, especially
when chipping of the coating is expected. Water and the two metals form an
electrochemical cell, and if the coating is less reactive than the coatee, the coating
actually promotes corrosion.

Physical

Gallium crystalsMetals in general have high electrical conductivity, thermal conductivity,

luster and density, and the ability to be deformed under stress without cleaving.[2] While
there are several metals that have low density, hardness, and melting points, these (the
alkali and alkaline earth metals) are extremely reactive, and are rarely encountered in
their elemental, metallic form. Optically speaking, metals are opaque, shiny and lustrous.
This is due to the fact that visible lightwaves are not readily transmitted through the bulk
of their microstructure. The large number of free electrons in any typical metallic solid
(element or alloy) is responsible for the fact that they can never be categorized as
transparent materials.

The majority of metals have higher densities than the majority of nonmetals.[2]
Nonetheless, there is wide variation in the densities of metals; lithium is the least dense
solid element and osmium is the densest. The metals of groups I A and II A are referred
to as the light metals because they are exceptions to this generalization[2]. The high
density of most metals is due to the tightly packed crystal lattice of the metallic structure.
The strength of metallic bonds for different metals reaches a maximum around the center
of the transition series, as those elements have large amounts of delocalized electrons in a
metallic bond. However, other factors (such as atomic radius, nuclear charge, number of
bonding orbitals, overlap of orbital energies, and crystal form) are involved as well.[2]

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Electrical

The electrical and thermal conductivity of metals originate from the fact that in the
metallic bond, the outer electrons of the metal atoms form a gas of nearly free electrons,
moving as an electron gas in a background of positive charge formed by the ion cores.
Good mathematical predictions for electrical conductivity, as well as the electrons'
contribution to the heat capacity and heat conductivity of metals can be calculated from
the free electron model, which does not take the detailed structure of the ion lattice into
account.

When considering the exact band structure and binding energy of a metal, it is necessary
to take into account the positive potential caused by the specific arrangement of the ion
cores - which is periodic in crystals. The most important consequence of the periodic
potential is the formation of a small band gap at the boundary of the Brillouin zone.
Mathematically, the potential of the ion cores can be treated by various models, the
simplest being the nearly free electron model.

Mechanical

Mechanical properties of metals include ductility, which is largely due to their inherent
capacity for plastic deformation. Reversible elasticity in metals can be described by
Hooke's Law for restoring forces, where the stress is linearly proportional to the strain.
Forces larger than the elastic limit, or heat, may cause a permanent (irreversible)
deformation of the object, known as plastic deformation or plasticity. This irreversible
change in atomic arrangement may occur as a result of:

The action of an applied force (or work). An applied force may be tensile (pulling) force,
compressive (pushing) force, shear, bending or torsion (twisting) forces.
A change in temperature (or heat). A temperature change may affect the mobility of the
structural defects such as grain boundaries, point vacancies, line and screw dislocations,
stacking faults and twins in both crystalline and non-crystalline solids. The movement or
displacement of such mobile defects is thermally activated, and thus limited by the rate of
atomic diffusion.

Hot metal work from a blacksmith.Viscous flow near grain boundaries, for example, can
give rise to internal slip, creep and fatigue in metals. It can also contribute to significant
changes in the microstructure like grain growth and localized densification due to the
elimination of intergranular porosity. Screw dislocations may slip in the direction of any
lattice plane containing the dislocation, while the principal driving force for "dislocation
climb" is the movement or diffusion of vacancies through a crystal lattice.

In addition, the nondirectional nature of metallic bonding is also thought to contribute

significantly to the ductility of most metallic solids. When the planes of an ionic bond
slide past one another, the resultant change in location shifts ions of the same charge into
close proximity, resulting in the cleavage of the crystal; such shift is not observed in
covalently bonded crystals where fracture and crystal fragmentation occurs.[4]

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Alloys

An alloy is a mixture of two or more elements in solid solution in which the major
component is a metal. Most pure metals are either too soft, brittle or chemically reactive
for practical use. Combining different ratios of metals as alloys modifies the properties of
pure metals to produce desirable characteristics. The aim of making alloys is generally to
make them less brittle, harder, resistant to corrosion, or have a more desirable color and
luster. Of all the metallic alloys in use today, the alloys of iron (steel, stainless steel, cast
iron, tool steel, alloy steel) make up the largest proportion both by quantity and
commercial value. Iron alloyed with various proportions of carbon gives low, mid and
high carbon steels, with increasing carbon levels reducing ductility and toughness. The
addition of silicon will produce cast irons, while the addition of chromium, nickel and
molybdenum to carbon steels (more than 10%) results in stainless steels.

Other significant metallic alloys are those of aluminium, titanium, copper and
magnesium. Copper alloys have been known since prehistory—bronze gave the Bronze
Age its name—and have many applications today, most importantly in electrical wiring.
The alloys of the other three metals have been developed relatively recently; due to their
chemical reactivity they require electrolytic extraction processes. The alloys of
aluminium, titanium and magnesium are valued for their high strength-to-weight ratios;
magnesium can also provide electromagnetic shielding[citation needed]. These materials
are ideal for situations where high strength-to-weight ratio is more important than
material cost, such as in aerospace and some automotive applications.

Alloys specially designed for highly demanding applications, such as jet engines, may
contain more than ten elements.

Categories
Base metal

In chemistry, the term base metal is used informally to refer to a metal that oxidizes or
corrodes relatively easily, and reacts variably with dilute hydrochloric acid (HCl) to form
hydrogen. Examples include iron, nickel, lead and zinc. Copper is considered a base
metal as it oxidizes relatively easily, although it does not react with HCl. It is commonly
used in opposition to noble metal.

In alchemy, a base metal was a common and inexpensive metal, as opposed to precious
metals, mainly gold and silver. A longtime goal of the alchemists was the transmutation
of base metals into precious metals.

In numismatics, coins used to derive their value primarily from the precious metal
content. Most modern currencies are fiat currency, allowing the coins to be made of base
metal.

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Ferrous and non-ferrous metals

The term "ferrous" is derived from the Latin word meaning "containing iron". This can
include pure iron, such as wrought iron, or an alloy such as steel. Ferrous metals are often
magnetic, but not exclusively.

Noble metal

Noble metals are metals that are resistant to corrosion or oxidation, unlike most base
metals. They tend to be precious metals, often due to perceived rarity. Examples include
tantalum, gold, platinum, silver and rhodium.

Precious metal
A precious metal is a rare metallic chemical element of high economic value.

Chemically, the precious metals are less reactive than most elements, have high luster
and high electrical conductivity. Historically, precious metals were important as
currency, but are now regarded mainly as investment and industrial commodities. Gold,
silver, platinum and palladium each have an ISO 4217 currency code. The best-known
precious metals are gold and silver. While both have industrial uses, they are better
known for their uses in art, jewelry, and coinage. Other precious metals include the
platinum group metals: ruthenium, rhodium, palladium, osmium, iridium, and platinum,
of which platinum is the most widely traded. Plutonium and uranium could also be
considered precious metals.

The demand for precious metals is driven not only by their practical use, but also by their
role as investments and a store of value. Palladium was, as of summer 2006, valued at a
little under half the price of gold, and platinum at around twice that of gold. Silver is
substantially less expensive than these metals, but is often traditionally considered a
precious metal for its role in coinage and jewelry.

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Extraction

Ore, Mining, and Extractive metallurgy

Metals are often extracted from the Earth by means of mining, resulting in ores that are
relatively rich sources of the requisite elements. Ore is located by prospecting techniques,
followed by the exploration and examination of deposits. Mineral sources are generally
divided into surface mines, which are mined by excavation using heavy equipment, and
subsurface mines.

Once the ore is mined, the metals must be extracted, usually by chemical or electrolytic
reduction. Pyrometallurgy uses high temperatures to convert ore into raw metals, while
hydrometallurgy employs aqueous chemistry for the same purpose. The methods used
depend on the metal and their contaminants.

When a metal ore is an ionic compound of that metal and a non-metal, the ore must
usually be smelted — heated with a reducing agent — to extract the pure metal. Many
common metals, such as iron, are smelted using carbon as a reducing agent. Some metals,
such as aluminium and sodium, have no commercially practical reducing agent, and are
extracted using electrolysis instead.[5]

Sulfide ores are not reduced directly to the metal but are roasted in air to convert them to
oxides.

Metallurgy

Metallurgy is a domain of materials science that studies the physical and chemical
behavior of metallic elements, their intermetallic compounds, and their mixtures, which
are called alloys.

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 MINERALS

A mineral is a naturally occurring solid chemical substance that is formed through

geological processes and that has a characteristic chemical composition, a highly ordered
atomic structure, and specific physical properties. By comparison, a rock is an aggregate
of minerals and/or mineraloids and does not have a specific chemical composition.
Minerals range in composition from pure elements and simple salts to very complex
silicates with thousands of known forms.[1] The study of minerals is called mineralogy.

Mineral definition and classification

To be classified as a true mineral, a substance must be a solid and have a crystalline

structure. It must also be a naturally occurring, homogeneous substance with a defined
chemical composition. Traditional definitions excluded organically derived material.
However, the International Mineralogical Association in 1995 adopted a new definition:

a mineral is an element or chemical compound that is normally crystalline and that has
been formed as a result of geological processes.
The modern classifications include an organic class – in both the new Dana and the
Strunz classification schemes.

The chemical composition may vary between end members of a mineral system. For
example the plagioclase feldspars comprise a continuous series from sodium and silicon-
rich albite (NaAlSi3O8) to calcium and aluminium-rich anorthite (CaAl2Si2O8) with
four recognized intermediate compositions between. Mineral-like substances that don't
strictly meet the definition are sometimes classified as mineraloids. Other natural-
occurring substances are nonminerals. Industrial minerals is a market term and refers to
commercially valuable mined materials

A crystal structure is the orderly geometric spatial arrangement of atoms in the internal
structure of a mineral. There are 14 basic crystal lattice arrangements of atoms in three
dimensions, and these are referred to as the 14 "Bravais lattices". Each of these lattices
can be classified into one of the seven crystal systems, and all crystal structures currently
recognized fit in one Bravais lattice and one crystal system. This crystal structure is based
on regular internal atomic or ionic arrangement that is often expressed in the geometric
form that the crystal takes. Even when the mineral grains are too small to see or are
irregularly shaped, the underlying crystal structure is always periodic and can be
determined by X-ray diffraction. Chemistry and crystal structure together define a
mineral. In fact, two or more minerals may have the same chemical composition, but
differ in crystal structure (these are known as polymorphs). For example, pyrite and
marcasite are both iron sulfide, but their arrangement of atoms differs. Similarly, some
minerals have different chemical compositions, but the same crystal structure: for
example, halite (made from sodium and chlorine), galena (made from lead and sulfur)
and periclase (made from magnesium and oxygen) all share the same cubic crystal
structure.

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Crystal structure greatly influences a mineral's physical properties. For example, though
diamond and graphite have the same composition (both are pure carbon), graphite is very
soft, while diamond is the hardest of all known minerals. This happens because the
carbon atoms in graphite are arranged into sheets which can slide easily past each other,
while the carbon atoms in diamond form a strong, interlocking three-dimensional
network.

There are currently more than 4,000 known minerals, according to the International
Mineralogical Association, which is responsible for the approval of and naming of new
mineral species found in nature. Of these, perhaps 100 can be called "common", 50 are
"occasional", and the rest are "rare" to "extremely rare".

Differences between minerals and rocks

A mineral is a naturally occurring solid with a definite chemical composition and a

specific crystalline structure. A rock is an aggregate of one or more minerals. (A rock
may also include organic remains and mineraloids.) Some rocks are predominantly
composed of just one mineral. For example, limestone is a sedimentary rock composed
almost entirely of the mineral calcite. Other rocks contain many minerals, and the
specific minerals in a rock can vary widely. Some minerals, like quartz, mica or feldspar
are common, while others have been found in only four or five locations worldwide. The
vast majority of the rocks of the Earth's crust consist of quartz, feldspar, mica, chlorite,
kaolin, calcite, epidote, olivine, augite, hornblende, magnetite, hematite, limonite and a
few other minerals.[5] Over half of the mineral species known are so rare that they have
only been found in a handful of samples, and many are known from only one or two
small grains.

Commercially valuable minerals and rocks are referred to as industrial minerals. Rocks
from which minerals are mined for economic purposes are referred to as ores (the rocks
and minerals that remain, after the desired mineral has been separated from the ore, are
referred to as tailings).

Mineral composition of rocks

A main determining factor in the formation of minerals in a rock mass is the chemical
composition of the mass, for a certain mineral can be formed only when the necessary
elements are present in the rock. Calcite is most common in limestones, as these consist
essentially of calcium carbonate; quartz is common in sandstones and in certain igneous
rocks which contain a high percentage of silica.

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Other factors are of equal importance in determining the natural association or
paragenesis of rock-forming minerals, principally the mode of origin of the rock and the
stages through which it has passed in attaining its present condition. Two rock masses
may have very much the same bulk composition and yet consist of entirely different
assemblages of minerals. The tendency is always for those compounds to be formed
which are stable under the conditions under which the rock mass originated. A granite
arises by the consolidation of a molten magma at high temperatures and great pressures
and its component minerals are those stable under such conditions. Exposed to moisture,
carbonic acid and other subaerial agents at the ordinary temperatures of the Earth's
surface, some of these original minerals, such as quartz and white mica are relatively
stable and remain unaffected; others weather or decay and are replaced by new
combinations. The feldspar passes into kaolinite, muscovite and quartz, and any mafic
minerals such as pyroxenes, amphiboles or biotite have been present they are often
altered to chlorite, epidote, rutile and other substances. These changes are accompanied
by disintegration, and the rock falls into a loose, incoherent, earthy mass which may be
regarded as a sand or soil. The materials thus formed may be washed away and deposited
as sandstone or siltstone. The structure of the original rock is now replaced by a new one;
the mineralogical constitution is profoundly altered; but the bulk chemical composition
may not be very different. The sedimentary rock may again undergo metamorphism. If
penetrated by igneous rocks it may be recrystallized or, if subjected to enormous
pressures with heat and movement during mountain building, it may be converted into a
gneiss not very different in mineralogical composition though radically different in
structure to the granite which was its original state.

Physical properties of minerals

Classifying minerals can range from simple to very difficult. A mineral can be identified
by several physical properties, some of them being sufficient for full identification
without equivocation. In other cases, minerals can only be classified by more complex
chemical or X-ray diffraction analysis; these methods, however, can be costly and time-
consuming.

Physical properties commonly used are:

Crystal structure and habit: See the above discussion of crystal structure. A mineral may
show good crystal habit or form, or it may be massive, granular or compact with only
microscopically visible crystals.

Talc
Rough diamond.Hardness: the physical hardness of a mineral is usually measured
according to the Mohs scale. This scale is relative and goes from 1 to 10. Minerals with a
given Mohs hardness can scratch the surface of any mineral that has a lower hardness
than itself.
Mohs hardness scale:
Talc Mg3Si4O10(OH)2
Gypsum CaSO4·2H2O

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Calcite CaCO3
Fluorite CaF2
Apatite Ca5(PO4)3(OH,Cl,F)
Orthoclase KAlSi3O8
Quartz SiO2
Topaz Al2SiO4(OH,F)2
Corundum Al2O3
Diamond C (pure carbon)
Luster indicates the way a mineral's surface interacts with light and can range from dull
to glassy (vitreous).
Metallic – high reflectivity like metal: galena and pyrite
Sub-metallic – slightly less than metallic reflectivity: magnetite
Non-metallic lusters:
Adamantine – brilliant, the luster of diamond also cerussite and anglesite
Vitreous – the luster of a broken glass: quartz
Pearly – iridescent and pearl-like: talc and apophyllite
Resinous – the luster of resin: sphalerite and sulfur
Silky – a soft light shown by fibrous materials: gypsum and chrysotile
Dull/earthy – shown by finely crystallized minerals: the kidney ore variety of hematite
Color indicates the appearance of the mineral in reflected light or transmitted light for
translucent minerals (i.e. what it looks like to the naked eye).
Iridescence – the play of colors due to surface or internal interference. Labradorite
exhibits internal iridescence whereas hematite and sphalerite often show the surface
effect.
Streak refers to the color of the powder a mineral leaves after rubbing it on an unglazed
porcelain streak plate. Note that this is not always the same color as the original mineral.
Cleavage describes the way a mineral may split apart along various planes. In thin
sections, cleavage is visible as thin parallel lines across a mineral.
Fracture describes how a mineral breaks when broken contrary to its natural cleavage
planes.
Chonchoidal fracture is a smooth curved fracture with concentric ridges of the type
shown by glass.
Hackley is jagged fracture with sharp edges.
Fibrous
Irregular
Specific gravity relates the mineral mass to the mass of an equal volume of water, namely
the density of the material. While most minerals, including all the common rock-forming
minerals, have a specific gravity of 2.5–3.5, a few are noticeably more or less dense, e.g.
several sulfide minerals have high specific gravity compared to the common rock-
forming minerals.
Other properties: fluorescence (response to ultraviolet light), magnetism, radioactivity,
tenacity (response to mechanical induced changes of shape or form), piezoelectricity and
reactivity to dilute acids.

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Chemical properties of minerals

Minerals may be classified according to chemical composition. They are here categorized
by anion group. The list below is in approximate order of their abundance in the Earth's
crust. The list follows the Dana classification system[1][7] which closely parallels the
Strunz classification.

Silicate class

QuartzThe largest group of minerals by far are the silicates (most rocks are ≥95%
silicates), which are composed largely of silicon and oxygen, with the addition of ions
such as aluminium, magnesium, iron, and calcium. Some important rock-forming
silicates include the feldspars, quartz, olivines, pyroxenes, amphiboles, garnets, and
micas.

Carbonate class

The carbonate minerals consist of those minerals containing the anion (CO3)2− and
include calcite and aragonite (both calcium carbonate), dolomite (magnesium/calcium
carbonate) and siderite (iron carbonate). Carbonates are commonly deposited in marine
settings when the shells of dead planktonic life settle and accumulate on the sea floor.
Carbonates are also found in evaporitic settings (e.g. the Great Salt Lake, Utah) and also
in karst regions, where the dissolution and reprecipitation of carbonates leads to the
formation of caves, stalactites and stalagmites. The carbonate class also includes the
nitrate and borate minerals.

Sulfate class

Sulfate minerals all contain the sulfate anion, SO42−. Sulfates commonly form in
evaporitic settings where highly saline waters slowly evaporate, allowing the formation
of both sulfates and halides at the water-sediment interface. Sulfates also occur in
hydrothermal vein systems as gangue minerals along with sulfide ore minerals. Another
occurrence is as secondary oxidation products of original sulfide minerals. Common
sulfates include anhydrite (calcium sulfate), celestine (strontium sulfate), barite (barium
sulfate), and gypsum (hydrated calcium sulfate). The sulfate class also includes the
chromate, molybdate, selenate, sulfite, tellurate, and tungstate minerals.

Halide class

HaliteThe halide minerals are the group of minerals forming the natural salts and include
fluorite (calcium fluoride), halite (sodium chloride), sylvite (potassium chloride), and sal
ammoniac (ammonium chloride). Halides, like sulfates, are commonly found in evaporite
settings such as salt lakes and landlocked seas such as the Dead Sea and Great Salt Lake.
The halide class includes the fluoride, chloride, bromide and iodide minerals.

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Oxide class

Oxide minerals are extremely important in mining as they form many of the ores from
which valuable metals can be extracted. They also carry the best record of changes in the
Earth's magnetic field. They commonly occur as precipitates close to the Earth's surface,
oxidation products of other minerals in the near surface weathering zone, and as
accessory minerals in igneous rocks of the crust and mantle. Common oxides include
hematite (iron oxide), magnetite (iron oxide), chromite (iron chromium oxide), spinel
(magnesium aluminium oxide – a common component of the mantle), ilmenite (iron
titanium oxide), rutile (titanium dioxide), and ice (hydrogen oxide). The oxide class
includes the oxide and the hydroxide minerals.

Sulfide class

Many sulfide minerals are economically important as metal ores. Common sulfides
include pyrite (iron sulfide – commonly known as fools' gold), chalcopyrite (copper iron
sulfide), pentlandite (nickel iron sulfide), and galena (lead sulfide). The sulfide class also
includes the selenides, the tellurides, the arsenides, the antimonides, the bismuthinides,
and the sulfosalts (sulfur and a second anion such as arsenic).

Phosphate class

The phosphate mineral group actually includes any mineral with a tetrahedral unit AO4
where A can be phosphorus, antimony, arsenic or vanadium. By far the most common
phosphate is apatite which is an important biological mineral found in teeth and bones of
many animals. The phosphate class includes the phosphate, arsenate, vanadate, and
antimonate minerals.

Element class

The elemental group includes native metals and intermetallic elements (gold, silver,
copper), semi-metals and non-metals (antimony, bismuth, graphite, sulfur). This group
also includes natural alloys, such as electrum (a natural alloy of gold and silver),
phosphides, silicides, nitrides and carbides (which are usually only found naturally in a
few rare meteorites).

Organic class

The organic mineral class includes biogenic substances in which geological processes
have been a part of the genesis or origin of the existing compound.[2] Minerals of the
organic class include various oxalates, mellitates, citrates, cyanates, acetates, formates,
hydrocarbons and other miscellaneous species.[3] Examples include whewellite,
moolooite, mellite, fichtelite, carpathite, evenkite and abelsonite.

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Meaning and introduction

One of the most important techniques of financial analysis is a

preparation of funds flow statement. It is the statement which portrays the
changes in the financial position of an enterprise. Balance sheet and income
statement do not present a comparative picture, even if placed side by side in
that much clarity as the statement of changes in financial position which
focuses on the sources and uses of funds.

Funds flow statement is a technical device designed to highlight the

changes in the financial condition of a business enterprise between the opening
and closing balance sheet dates. The flow of funds results in mainly profits of a
business due to business operations. And as has been well said that “a business
with an income at its heals furnishes always oil for its own wheels”, it is the
profit which becomes main sources of funds for a business. However
profitable companies can also be anemic with respect to working capital and
since working capital is the life blood of an enterprise, its shortage can disturb
the operating cycle of the business. It is this concept of ‘funds’, the flow
which is to be examined in detail as to its sources and applications so as to
know the net increase or decrease in working capital over a period of time,
usually a year.

17
DEFINITION:
(A) Funds flow statement in “a statement either prospective or re-
retrospective setting out the sources and application of the
funds of an enterprise. The purpose of the statement is to
indicate clearly the requirement of funds and how they are
propose to be raised and efficient utilization and application
of the same.

(B) A financial statement with summary for the period covered

by it, the changes in financial position including the sources
from which funds were obtained by the enterprise and
specific uses to which funds were applied.

(C) A statement of funds received and expanded a statement of

changes in financial position or sources and application of
funds in which elements of net income and working capital
contributing to an understanding of the whole of financial
operation during the reporting period replace total of these
items.

18
 CONCEPT OF FUNDS
Funds in the narrowness sense of the term as be equated to cash. But in
the broader sense and appropriate one here, it refers to working capital that is
current assets less current liabilities.

A still broader interpretation of the term “funds” has been given by some
accountants, and according to them funds includes all resources used in the
business whether in the form of men, material, money, machinery and other.
But it is not relevant for the purpose of flow statement. The most common
definition of fund is working capital since they use the term working capital as
synonym to current assets. How ever for the purpose of this book and present
chapter too, the term working capital has been taken as equivalent to the
difference of current assets and current liabilities.

Concept of flow:

The dictionary meaning of the word flow is movement denoting change

Therefore, whenever there is a change of funds that is either increase or
decrease there is a flow of funds. There must be some cause of change- the
cause may result in either raising the funds inflow of funds there by becoming a
source of fund or the cause may lead depletion of funds that is out of funds,
implying there by an application or use of funds in other words source of funds
show the reasons of increase in funds that is working capital and application of
funds reveal the reasons of decrease in funds that is working capital.

19
 Concept of funds flow statement

The meaning of funds flow or flow of funds illumination the concept of

funds flow statement clearly the statement which analysis the flow of funds that
is the reasons for changes in working capital is a funds flow statement.

The reasons are set by the sources and application of funds and therefore
the statement can be called as the statement of sources and application (uses)
of funds. Some accountants prefer to call it in short as fund and to which place
have gone. It is also designated as where got and where (movements) of
working capital, movements of flow statements etc.

The statement focuses on various media by which resources were

obtained during a particular period and the ways to which there resources were
employed the financial operations for a period are summarized in such a
manner as to indicate by what means new financing was obtained and for what
purposed it was utilized.

20
 Difference between Funds Flow Statement and

Income Statement

Fund Flow Statement Income Statement

1. The Statements narrates the item of

1. It is disclosing the reasons for
cost and revenue to arrive at the
change in working capital i.e., where
figures of profit and loss earned /
from the working capital funds has
incurred during a particular period of
been applied.
time.

2. Income Statement helps the 2. Funds Flow Statement doesn’t help

preparation of Funds Flow Statement in preparation of income statement
as much as one source of funds i.e.,
funds from operation is found out from
the income statement

3. Funds raised are matched with funds 3. Expenses are matched with income
used. No distinction is made between in order to find out the result of
capital and revenue items operation. Only revenue items are
considered

21
 Difference between Funds Flow Statement and

Position Statement

Fund Flow Statement Position Statement

1. It is a Statement changes in financial 1. It is statement of financial position
position.

2. It show the amount of changes during 2. It present the amount of assets and
the particular period of time. liabilities at a particular point of time

3. It doesn’t analyze the change in 3. It shows all the accounting liabilities

current asset and current liability. whether current or non-current

4. It is a analytical statement analyzing 4. It is not a analytical statement hence

form where they have been used, hence not that much useful for decision making
more useful. as the fund flow statement

22
 Importance of funds flow statement:

The information which is provided by funds flow statement is neither available

in the balance sheet nor in the income statement and hence its important. The
changes which have taken place in between two accounting dates are
highlighted by funds flow statement. A lay man cannot grasp the underlying
significance of achievements and progress of the company simply by a personal
of the balance sheet and income statement of different years. The comparative
and analytical study presented by the statement giving the details of sources
and uses of funds during a given period of immense help to the users of
information. It is very useful tool in analytical kit of the management also,
besides the outsiders, in order to have ‘at a glance’ appraisal of the financial
and operating performance of a company. Since the statement shows the extent
to which the working capital has been effectively put to use, the
management’s task of taking policy decision regarding investment, dividends
etc, is great facilitated.

The projected funds flow statement can also be prepared and then
budgetary control and capital expenditure control can be exercised to the
benefit of the entire organization.

23
Uses of funds flow statement:

Funds flow statement of a company is of great value to management

share holders, creditors, bankers, money lending institutions etc.,

 Informative value:- The financial consequence of business operation

are clearly explained in details by a funds flow statement some of the
problems which crop up in the minds of investors are well solved by a
simple perusal of this statement for e.g.,
1. Where have the profit gone.
2. Why does an imbalance exist between liquidity position and profitability
position of enterprise?

 Forecasting value:- A projected funds flow statement can be prepared

and resources can be properly allocated after an analysis of the present
state of affairs. The optimal utilization of available funds in necessary
for the overall growth of the enterprise. The funds flow statement
prepared in advance given a clear direction to the management in this
raged.

24
  Testing value:- Whether the working capital has been effectively is
used or not by the management can well be tested by funds flow
statement. Whether working capital has been maintained at proper level,
and whether it is adequate or inadequate can be known by a study of the
statement. The management is warned against the injudicious uses of
funds.


Decision-making value:- Since over all credit worthiness of the enterprise is

known, creditors and money lenders can decide as to whether they have to
provide loans to company or not. The sources of raising funds and their
application help the shareholders to decide whether the management of the
business is an enlightened or not regarding managing funds. Mismanagement of
funds may be prevented. The management can be decide about the future
financing policies and capital expenditure programmers.

25
 STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS PREVIOUS CURRENT CHANGES IN WORKING

YEAR YEAR CAPITAL
INCREASE DECREASE

Current assets:
Inventories
******** ******* *******
Raw material
Consumable goods
******** ******* *******
Finished goods ******** ******* *******
Sundry debtors ******** ******** *******
Cash in hand ******** ******** *******
Balance with bank
******** ******** *******
Other current assets
Deposits ******** ******** *******
Income tax ******** ******** *******
Sales tax ******** ******** *******

Total current assets(a)

******** ********
Current liabilities:
Trade creditors ******* ******** *******
Dealers deposit
******** ******** *******
Expenses payable
******** ******** *******

Total current liabilities(b) ******** ********

Working capital(a-b)
******** ********

Net increase/decrease in ******** ********

working capital

******** ********* ******* *******

26
Funds From Trading Activities of Operating Profit:
The profit or loss disclosed by profit and loss account doesn’t indicate
the funds generated by trading activities, because it contains a variety of write
offs and adjustments, which do not involve any corresponding movement of
funds. Therefore appropriate adjustments are to be made to profit or loss as to
arrive at the funds from business operations. For this purposes items debited to
profit & loss account is to be added to profit, which do not involve any flow of
funds. Further ;items credited to profit and loss account are to be deducted
which do not belong trading activities.
Operating Profit = Net Profit + Non-Operating Expenses – Non-Operating
Income

PARTICULARS AMOUNT AMOUNT

Net profit:

Add: Non-Operating Items Debited to P&L *********

a/c:
Depreciation *********
Write off depreciation on non-tangible
assets *********
Discount on issue of shares and debentures
Loss on sale of non current asset *********
Provision for income tax ********
Proposed dividend
All transfers to reserves ********

Less: Non-Operating Items credited to P&L

a/c ********
Profit on sale of non-current asset *******
Dividend and interest received
Non-Operating income *******
Gain on evaluation of non-current assets

Funds from operations ********

27
Statement of Sources and application of funds

Funds flow statement is a statement, which indicates various sources from

which funds have been obtained during a chain period and the uses or
applications to which these funds have been put during that period.

• Sources of funds
• Application of Funds.

Statement of sources and Applications

PARTICULARS AMOUNT PARTICULARS AMOUNT

Sources of funds: Application of
funds

Funds from trading Funds costs in

********* ********
operations
Operating profit *********
Repayment of
Issue of shares and
debentures ******** debentures *********

Sale Proceeds of Non- ******** Reduction in share

current assets Capital

*********
Long- term borrowings Interest and dividend
********* paid ********

Payment of Long term

loans
*********
Decrease in working
Increase in working
capital ******** **********
capital

*********** **********

28
 One of the valuable aids to the financial manager or the creditor
is funds flow statement, with which evaluates how a firm uses funds and
determines how these uses are financed. In addition to studying the past flow,
the analyst can evaluate the future flows by means of the funds statement based
on forecasts. Such as statement provides an efficient method for the financial
manager to assess the growth of the firm and its resulting financial needs as
well as to determined the best way in which those needs may be financed. In
particular, funds statements are very useful in planning intermediate and long-
term financing.

The main purpose of preparing funds flow statement is that it reveals

clearly the important items relating to sources and applications of funds fixed
assets, and long-term loans including capital. It also informs how far the assets
derived from normal activities of business have been utilized properly with
adequate consideration

It also reveals how much out of the total funds is collected by disposing
of fixed assets, how much from issuing shares or debentures, how much from
long-term or short-term loans how much from normal operational activities of
the business.

It also provides information about the specific utilization of such funds,

that is, how much has been applied for acquiring fixed assets, how repayment
of long-term or short-term loans as well as for payment of tax and divided etc.

29
2.1 SCOPE OF THE STUDY:

The general scope of funds flow analysis is wider it covers almost all
the items in the asset side and liability side of the balance sheet and non cash
flow items in the profit and loss account. The analysis itself is dividend into
3 parts where one part deals with current assets, preparation of funds flow
statement which takes the items of profit and loss account, the preparation of
sources and application of funds statement which takes the remaining items
in the balance sheet after preparing working capital statement. The
implications of this three documents enables to draw more number of
qualitative in sights regarding the financial position and status.

2.2OBJECTIVES OF THE STUDY:

a. To evaluate the changes in working capital position in JBS POWER

SYSTEM PVT.LTD, during the study period year wise and trend wise.
b. To examine the fluctuations in the funds from operations.
c. To analyze the sources and applications of funds in the year wise pattern
as well as combined pattern.

2.3SOURCES OF STUDY:
Since it is a financial analysis of financial statements, secondary
sources of data are used in this study. They include profit & loss account
statements given by the company which are presented in their annual
reports. This report includes all the needed information for the preparation of
major part of this project work. In the study books on financial management,
financial journals and news papers are also used. They are used in the
preparation of the industry profile, company profile and for explaining of
theoretical frame work of choosen topic i.e., funds flow analysis.

30
2.4 SAMPLING:

Convenience sampling technique is used in the study. In this study

data pertaining to only 6 years is taken for evaluation. There are different
forms of financial blocks in balance sheet and profit & loss account. Only
few of them are selected for analysis.

2.5 TOOLS USED FOR ANALYSIS:

The two basic financial statements namely profit & loss account
and Balance sheet contain wealth of information. The only thing that is
needed is its proper analysis one such analysis tool is funds flow analysis. It
is comprising of using 3 types of constitutionally stated formats, they are

1. Schedule of Changes in Working Capital.

2. Funds From Operation statement.
3. Sources and Application of funds flow statement.

2.6 LIMITATIONS:
1. The entire analysis is made with the help of historical data. It just
states what actually happened but fails to state why it is happened.
2. It helps for taking curative action and it does not provide a facility
to take a prevention action.
3. It is a static statement where figures are manipulated according to
our convenience.

31
Position of wo

The comp
variation are p
can be observe
nearly 50% an
increased by 8
32
Position of wo

The comp
variation are p
can be observe
38% and the to
56.01%.
33
Position of wo

The comp
variation are p
can be observe
34
Position of wo

The comp
variation are p
can be observe
are very high
35
Position of Fu

36
In th
Position of Fu

In th
year, fixed asse
secured loans in
37
Position of Fu

In th
year, fixed asse
unsecured loan
38
Position of Fun

In the
year, fixed assets
increased.
39
 Funds from Operation Table
Particulars 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
Closing Balance 9.08 21.51 30.89 21 30.48
Add: Depreciation 2.37 2.3 3.24 4.38 4.23
Reserves 6.67 18.8 0.04 56.54 20.81
Dividends (-)0.16 1.12 0.88 0 0.97
Tax 0.13 0.31 0.66 2.05 1.51
Miscellaneous 0.39
Expenses 0.46 0.25 0.27 0.64
18.48 44.5 35.96 84.24 58.64
Less:Opening Balance 6.84 9.08 21.51 30.89 21
Funds from Operations 11.64 35.42 14.45 53.35 37.64

40
Funds Flow S
In the yea
capital, fixed ass

Table 3.3.1
41
Funds Flow
In the ye
capital, fixed a

Table 3.3.2
42
43
44
Funds Flow S

45
In the ye
 CHAPTER-4

4.1 FINDINGS

The findings of my study are presented under three heads.

1. FINDINGS FROM SCHEDULE OF CHANGES IN WORKING CAPITAL:

a. During the study period of 5 years the net working capital increased in first 3
years and decrease in 4 year and again increase in 5 year.A maximum increase is
identified in the year 2007-2008 i.e., 8,169.77 cr. Highest decrease is identified in
the year 2008-2009 i.e., 1,900.32 cr.

b. Among all the current assets inventories is very high in the year 2005-2006
(42% of total current assets). Inventories is high in the year 2006-2007(40% 0f
total current assets). Loans and advances are high in the year 2007-2008(40% of
the total current assets). Fixed deposits are high in the year 2008-2009( 41% of
total current assets). Fixed deposits are high in the year 2009-2010(41% of the
total current assets).

c. Among all the current liabilities provisions are very low in the year 2005-
2006(15% of the current liabilities). In the year 2006-2007(19% of total current
liabilities). In the year 2007-2008 (9% of the total current liabilities). In the year
2008-2009(7% of the total current liabilities). In the year 2009-2010(7% of total
current liabilities).

2. FINDINGS FROM THE FUNDS FROM OPERATIONS:

a. In the year 2008-2009 the funds from operations are very high. When they are
added with the non-cash flow items like depreciation, the funds from operation
amounted crores on an average.

b. Funds from operation are very high in the year 2008-2009 (53,577.47 cr). Funds
from operations in the year 2005-2006(26,893.67Cr). in the year 2006-
2007(27,739.02cr). In the year 2007-2008(27,737.97Cr). In the year 2008-
2009(53,577.47Cr). In the year 2009-2010(31,398.29Cr).

46
3. FINDINGS FROM SCHEDULE OF SOURCES AND APPLICATION OF
FUNDS:

a. Among the source of funds the company depend on the issue of shares In the
Year 2009-2010 nearly 1,696.84 crores are gathered through the sources.

b. Another important source of funds which requires repayment is under the name
Of secured loans and which doesn’t requires repayment is under the name of
Share application.

c. Among various applications purchase of fixed assets stood almost in every year.
Hence, the company increase the financial position.

47
 4.2 SUGGESTIONS

a. Firm is maintained more amount of current assets which are not actually
required .Even though it increases the liquidity position- profitability decreases.

b. In the year 2008-2009 there is decrease in working capital due to increase in

current liabilities. This situation will be over come by maintaining additional
reserve.

c. The proportion of debt. Secured loans and current liabilities is more than the
owners worth this situation is not good to raise additional funds.

d. Among various sources of funds, the company is using share application money is
to be avoided.

e. Secured loan are increasing every year they must be repay to reduce the interest
burden and reach to solvency status.

48
 BIBLIOGRAPHY

 FINANCIAL MANAGEMENT -I.M.Panday

 FINANCIAL MANAGEMENT -Prasanna Chandra

 FINANLCIA MANAGEMENT -M.Y.Khan & P.K.Jain

 PRINCIPLES OF MANAGEMENT -Man Mohan & Goyal S.N

 FINANLCIA MANAGEMENT -Maheswari S.N

49