Making profit for three years in a row has helped Hindustan Copper Ltd steadily improve its financial position. The sole copper producing company in the country, which announced its highest ever profit after tax of Rs 323 crore today, is now on the government’s disinvestment list. In a telephonic interview with Jyoti Mukul, Chairman and Managing Director Shakeel Ahmed says the renewed focus on core areas of mining and exploration has helped the company maintain profitability. Edited excerpts:
With the company now poised on road to profitability, what are the future expansion plans?
We are planning to invest Rs 3,435 crore to quadruple our mining capacity to 12.4 million tonnes (mt) by 2017. We have not commissioned any capacity since 1982. In fact, the company had to shut down four mines at Ghatsila in Jharkhand in the late 1980s since they were commercially unviable. We have already been awarded projects in Khetri, Malanjkhand, Surda Kendadih and Chapri-Sideshwar.
How do you plan to fund this expansion?
It will be mainly through internal accruals. For the first time since 2004, we plan to raise Rs 208-250 crore through external commercial borrowings to bridge finance next year. But if our revenue improves further, we may not need to raise the funds. Earlier, we had resorted to foreign borrowings only to meet our working capital needs and not for capital expenditure.
How did the fall in copper prices affect the company’s performance this year?
Does the company plan to diversify, considering that it is focused only on copper?
We are looking at gold exploration and plan to expand into base metals. Overall, our business focus has changed. From a vertically integrated company that was present in the entire value chain, we are now focussing on our core area of exploration and mining for growth and profitability. We realised that smelting and refining was not giving us much returns.
How is expenditure being kept under control?
We have optimised our manpower and reduced workforce from 5,440 employees in 2008-09 to 4,810 at present. Though our wage bill has gone up by about 58 per cent during the period, since our employees are earnings on an average 85 per cent more after two wage revisions, the company has restricted the increase by rightsizing the organisation and keeping additions restricted to only areas of skill deficiency.
The company has been talking about acquisitions, but so far nothing has happened on this front.
Hindustan Copper, in a consortium with SAIL (Steel Authority of India), Nalco (National Aluminium Co Ltd) and MECL (Mineral Exploration Corporation Ltd), has been shortlisted for exploration of copper and gold reserves at Badakshan, Zarkashan, Balkhab and Shaida in Afghanistan. The process of due diligence is going on. In India, we will shortly form a joint venture with Rajasthan State Mineral Development Corp (RSMDC) for exploration and exploitation of copper and some other metals. RSMDC will hold 51 per cent in the company and the remaining equity will be with us.