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Hindustan Copper Ltd.

BSE: 513599 Sector: Metals & Mining
NSE: HINDCOPPER ISIN Code: INE531E01026
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OPEN 62.95
PREVIOUS CLOSE 62.80
VOLUME 83789
52-Week high 74.70
52-Week low 50.10
P/E 76.91
Mkt Cap.(Rs cr) 5,764
Buy Price 62.30
Buy Qty 1715.00
Sell Price 0.00
Sell Qty 0.00
OPEN 62.95
CLOSE 62.80
VOLUME 83789
52-Week high 74.70
52-Week low 50.10
P/E 76.91
Mkt Cap.(Rs cr) 5,764
Buy Price 62.30
Buy Qty 1715.00
Sell Price 0.00
Sell Qty 0.00

Hindustan Copper Ltd. (HINDCOPPER) - Auditors Report

Company auditors report

To

The Members Of

Hindustan Copper Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Hindustan Copper Limited("the Company") which comprise the Balance Sheet as at 31st March 2016 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2016 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following matters in the Note No 35 of General Notes onAccounts to the financial statements:

1) Vide Clause No. 1(i)(a) & (b) which describes the uncertainty related to theoutcome of various lawsuits filed and claims of demand raised against the Company byvarious authorities/parties and its financial impact on the financial statements of thecompany. The Company has treated those demands as disputed and not acknowledged as debt inthe books and treated the same as Contingent Liabilities the total amount of which comesto '43526.66 Lac

2) Vide Clause No. 9 which describes the balances under the head Sundry CreditorsClaims Recoverable Loans & Advances Sundry Debtors and Deposits from and withvarious parties/Govt. Dept. etc. have not been confirmed in number of cases.

3) Vide Clause No. 30 which describes that domestic sales during the year have beenreduced by '582.65 lac being rectification of sales of anode slime wrongly credited to thesales account in the preceding F.Y. 2014-15.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required under the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the Annexure-I a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required under section 143(5) of the Act we give in the Annexure-II a statementof our replies to the directions /additional directions issued by the Comptroller andAuditor General of India (C & AG)

3. As required under section 143(3) of the Act we report to the extent applicablethat:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

(e) In our opinion provisions under section 164(2) of the Act regardingdisqualification of Directors are not applicable to a Government company in terms ofNotification No. G.S.R. 463(E) dated 05.06.2015 issued by Ministry of Corporate Affairs.

(f) With respect to the adequacy of internal financial control over financial reportingof the company and the operating effectiveness of such controls refer to our separatereport in the Annexure-III and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements (vide Clause No. 1(i) (a) of Note No. 35 of GeneralNotes on Accounts) and our comments made in paragraph 'Emphasis of Matter'.

ii. The Company did not have any material foreseeable losses on long term contractincluding derivative contracts.

iii. According to the information and explanations given to us there were no amountswhich were required to be transferred to Investor Education and Protection Fund by thecompany.

Place: Kolkata
Date : 30th May2016 For A.Kayes & Co.
Chartered Accountants.
Firm Registration No. 311149E
CA. A.K.GHOSH
Partner
Membership No. 052933

(Referred to in our report of even date)

(i) (a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of its Fixed Assets.

(b) Fixed Assets of the company have not been physically verified by the managementduring the year pursuant to company's accounting policies (Vide Clause No.3.6 of Note No.2 of Significant Accounting Policies read with Clause No 28 of Note No. 35 of GeneralNotes on Accounts) and as such question of material discrepancies if any and itstreatment in the books of account does not arise this year. However in terms of aforesaidpolicy the fixed assets were last physically verified in the preceding financial year2013-14.

(c) The Company has taken steps to maintain Register of Land and Building (ImmovableProperty) showing the details of title deeds held in the name of the Company or otherwiseincluding total number of such cases and whether the same are leasehold/freehold.

In the absence of complete maintenance of such Register we could not comment whethertitle deeds of all the immovable properties are held in the name of the Company orotherwise However as stated in Clause No. 3 of Note No. 35 of General Notes on Accountsthe title deed for leasehold land received from the State Government and certain freeholdlands acquired through nationalization in accordance with Indian Copper Corporation(Acquisition of Undertaking) Act 1972 in respect of Indian Copper Complex (ICC) have notyet been executed in favour of the Company and in Clause No 6 of Note No 35 of GeneralNotes on Accounts title deeds were not obtained/held in the name of the company inrespect of office flat at SCOPE Complex Delhi and Jaipur office for book value of '73.32Lac (Previous year '78.59 Lac) as well as Land & Building for book value of '6037.30Lac (Previous year Nil) of Gujarat Copper Project (GCP).

However the amount of gross block and net block of immovable property as on thebalance sheet date have been shown in the financial records.

(ii) (a) According to the information and explanations given to us the inventories ofFinished Goods Raw

Materials and Store & Spares except those lying with contractors/ third partieshave been physically verified by the management during the year. In our opinion theperiodicity of physical verification of inventory is reasonable. The company has noticedcertain discrepancies on such verification of Store & Spares between the physicalstock and book record which were not material considering the size of the company and thenature of its business and the same has been properly dealt with in the books of account.

(iii) According to information and explanations given to us the company has notgranted any loans secured or unsecured to companies firms Limited Liability Partnershipor other parties covered in the register maintained under section 189 of the CompaniesAct 2013 and as such reporting under this clause is not applicable to the Company.

(iv) According to information and explanations given to us the company has notadvanced any loan given any guarantee or provided any security in connection with suchloan and given/made any loan/ investment within the meaning of section 185 and 186 of theCompanies Act 2013 and as such reporting under this clause is not applicable to theCompany.

(v) According to the information and explanations given to us the company has notaccepted any deposit from the public within the meaning of Section 73 to 76 or any otherrelevant provision of the Companies Act 2013 and the rules framed thereunder and as suchreporting under this clause is not applicable to the Company.

(vi) According to the information and explanations given to us maintenance of costrecords by the Company has been specified by Central Government under sub section (1) ofsection 148 of the Companies Act 2013. We have broadly reviewed such cost records and weare of the opinion that prima facie such accounts and records have been made andmaintained.

(vii) (a) According to the records of the Company and information and explanationsgiven to us the Company is generally regular in depositing undisputed statutory duesincluding provident fund employee state insurance income tax sales tax service taxduty of custom duty of excise value added tax Cess and other statutory dues with theappropriate authorities where applicable. There is no arrear of outstanding statutory duesas at 31st March 2016 for a period of more than six months from the date they becamepayable excepting '1019.46 Lac towards Water Cess payable to Water Resources DepartmentGovt. of Jharkhand since the financial year 1999-2000.

(b) According to the records of the Company and information and explanations given tous the following are the details of disputed dues in respect of income tax sales taxentry tax service tax duty of custom duty of excise value added tax and Cess as on31st March 2016:

Name of the Statue Nature of Dues Period to which the amount relates Forum where dispute is pending Amount (Rs. in lac)
West Bengal Value Added Tax Act State Sales Tax/ VAT 2004-05 * (RSOE) Dy.Commissioner (Appeal) 10.46
West Bengal Value Added Tax Act State Sales Tax/ VAT 2006-07 * (RSOE) FAST TRACK COURT BENCH-V 20.96
West Bengal Value Added Tax Act State Sales Tax/ VAT 2008-09 * (RSOE) Sr. Jt. Commissioner (Appeal) 50.12
West Bengal Value Added Tax Act State Sales Tax/ VAT 2010-11 * (RSOE) Additional Commissioner (Appeal) 4.73
Central Sales Tax Act Central Sales Tax 2007.08 * (ICC) Commissioner of Commercial Taxes Jamshedpur 345.11
Central Excise Act Central Excise 1985-86 * (ICC) CESTAT 60.60
Central Excise Act Central Excise 1997-98 TO 1999-00 * (ICC) CESTAT 203.52
Central Excise Central Excise 1995-96 * (ICC) CESTAT 15.65
Central Excise Act Central Excise 2000-01 TO 2003-2004 * (ICC) CESTAT 1501.76
Central Excise Act Central Excise 2000- 2001 TO 2001- 2002 * (ICC) CESTAT 283.40
Central Excise Act Central Excise 1996-97 * (ICC) CESTAT 1.46
Central Excise Act Central Excise 1998 * (ICC) Supreme Court of India 16.00
Madhya Pradesh Value Added Tax Act Entry Tax 1994-95 * (MCP) Commissioner (Appeals) Jabbalpur 5.38

 

Madhya Pradesh Value Added Tax Act State Sales Tax/ VAT 2009-2010 * (MCP) Sales tax Authority (Bhopal) 34.47
Madhya Pradesh Value Added Tax Act State Sales Tax/ VAT 2011-12 * (MCP) Sales tax Authority (Bhopal) 16.66
Madhya Pradesh Value Added Tax Act State Sales Tax/ VAT 2012-13 * (MCP) Sales tax Authority (Bhopal) 99.89
Central Excise Act Central Excise 2006-07 TO 2011-12 * (MCP) Customes Excise & Service Tax Appalate Tribunal New Delhi 394.97
Central Excise Act Central Excise 2005-06 TO 2007-08 * (MCP) Commissioner Central Excise 64.19
Central Excise Act Central Excise 1998-99 TO 2014-15 * (KCC) Commissioner Central Excise 1717.24
Central Sales Tax Act State Sales Tax/ VAT 2007-08 * (KCC) Rajasthan Tax BoardAjmer 2.84
Rajasthan Value Added Tax Act Entry Tax 2007-08 TO 2014-15 *(KCC) Dy.Commissioner Appeal (Bikaner) 311.67
Central Excise Act Central Excise 2007-08 TO 2014-15 * (TCP) CESTAT 538.35
Maharashtra Value Added Tax Act State Sales Tax/ VAT 1994-95 * (TCP) Appellate Authority 18.81
Maharashtra Value Added Tax Act State Sales Tax/ VAT 2008-09 * (TCP) Joint Commissioner Sales Tax 51.17
Income Tax Act Income Tax 2005-06 2007-082009-10 & 2011-12 * (CO) Commissioner of Income Tax (Appeal) 404.42
GRAND TOTAL 6173.83

*RSOE - Regional Sales Office East *ICC - Indian Copper Complex *MCP -MalanjkhandCopper Project *TCP -Taloja Copper Project * KCC - Khetri Copper Complex *CO - CorporateOffice

(viii) According to information and explanations given to us the Company has no duefor repayment of loans or borrowings to financial institutions banks or government anddues to debenture holders. However the company has obtained term loan from Export ImportBank of India (EXIM Bank) during the year. The repayment of instalment of principal amountis not due in the year under audit and payment of interest thereon is being maderegularly.

(ix) According to information and explanations given to us the company did not raiseany money by way of initial public offer or further public offer (including debtinstruments) during the year. However the Company has obtained term loan from EXIM Bankand such term loan was applied for the purpose for which the same was raised.

(x) According to information and explanations given to us no fraud by the company orany fraud on the Company by its officers and employees has been noticed or reported duringthe year.

(xi) According to the information and explanations give to us provisions of section197 of the Companies Act 2013 regarding managerial remuneration are not applicable to theGovernment Company in terms of Notification No G.S.R. 463(E) dated 05.06.2015 issued byMinistry of Corporate Affairs and as such reporting under this clause is not applicableto the Company.

(xii) In our opinion and according to the information and explanations given to us thecompany is not a Nidhi company and as such reporting under this clause is not applicableto the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Companies Act 2013 where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards where applicable.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year and as such reporting under this clause is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him/her and as such reporting underthis clause is not applicable to the Company.

(xvi) In our opinion the Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934 and as such reporting under this clause is notapplicable to the Company.

Place : Kolkata

Date: 30th May2016

For A. Kayes & Co

Chartered Accountants

Firm Registration No. 311149E

CA. A.K.GHOSH

Partner

Membership No. 052933

Report pursuant to directions/additional company specific directions issued by officeof the Comptroller and Auditor General of India (C& AG) under Section 143(5) of theCompanies Act 2013

Sl Directions No. Actions Taken Impact on the Accounts & Financial Statements
1- Whether the company has clear/ title/ lease deeds for freehold land and leasehold land respectively Rs. If not please state the area of freehold and leasehold land for which title/lease deeds are not available Rs. In the absence of Register of Land showing details of freehold and leasehold land vis-avis title/lease deeds of those lands being reconciled with each other we are unable to state the area of freehold and leasehold land for which title/lease deeds are not available with the Company. However as stated in Clause No. 3 & 6 to Note No. 35 of General Notes on Accounts leasehold land received from State Government as well as freehold land acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act 1972 in respect of Indian Copper Complex (ICC) and leasehold land of '3461.23 lac in respect of Gujarat Copper Project (GCP) have not yet been executed in favour of the Company. Gross Block & Net Block of Leasehold/ Freehold Land wherever applicable have been duly shown in the accounts and financial statements. Hence there is no impact on the accounts and financial statements.
2. Whether there are any cases of waiver / write off of debts/ loans/interest etc. if yes the reasons there for and the amount involved. According to the information and explanations given to us there was no case of waiver of debts/loans/interest etc. during the year under audit. No such cases hence there is no impact on the accounts and financial statements.
3 Whether proper records are maintained for inventories lying with third parties & assets received as gift from Government or other authorities. Proper records are maintained for the inventories lying with third parties. The company has not received any gift from Government or other authorities during the year. Inventories of '1.64 lac as on 31.03.2016 are lying with third party and there is no impact on the accounts and financial statements. No such cases hence there is no impact on the accounts and financial statements.
Additional Company Specific Directions
1. Whether the accounting treatment of mine development expenditure in respect of open cast mines as well as underground mine is adequate Rs. The accounting treatment of mine development expenditure in respect of open cast mines as well as underground mine in our opinion is adequate as summarized below Since the accounting treatment of mine development expenditure in respect of open cast mines as well as underground mine is adequate there is no impact on the accounts and financial statements.
1. In respect of open cast mines: The~expenditure on removal of waste and overburden is capitalized and the same is amortized in relation to actual ore production during the year and the stripping ratio of the mine as determined by the company at the weighted average rate. Subsequently if any ore is reclaimed from overburden the same is valued on the basis of opening rate of mine development expenditure.
2. In case of underground mines: The~expenditure on development of a new mine in all cases and on subsequent development of a working mine is capitalized and amortized on the basis of ore raised during the year and the mineable ore reserves estimated from time to time. The ore obtained during development activity is adjusted against such expenditure at its derived realizable value.

 

For A. Kayes & Co
Place : Kolkata Chartered Accountants
Date: 30th May2016 Firm Registration No. 311149E
CA.A.K.GHOSH
Partner
Membership No. 052933

(Referred to in our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of HindustanCopper Limited ("the Company") as of 31st March 2016 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in place in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2016 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For A. Kayes & Co
Place : Kolkata Chartered Accountants
Date: 30th May2016 Firm Registration No. 311149E
CA.A.K.GHOSH
Partner
Membership No. 052933