HINDUSTAN COPPER LIMITED
ANNUAL REPORT 2007-2008
Chairman's Speech at 41st AGM
It gives me great pleasure to extend a very warm welcome to all of you at
the 41st annual general meeting of your Company, Hindustan Copper Limited.
The Annual Report for the year ended 31st March, 2008 along with the
Directors' Report and audited Annual Accounts of the Company have been
provided to you, and I request your kind permission to take them as read.
At the outset, I feel a sense of pride in informing you that Government of
India have conferred the Miniratna (category-I) status on your Company
which is a recognition of Company's sustained vibrancy and viability.
Empowered with this status, the Board of Directors of your Company would
have greater operational autonomy to implement strategic objectives within
the framework of Government guidelines. This will greatly help placing new
projects, modernization, etc. on the fast track.
Now I would like to present briefly the salient features of your Company's
performance during 2007-08.
The volume of production during the year surpassed many past records and
targets. Production of copper ore was 32.45 lakh tonnes, metal in
concentrate (MIC) 31,378 tonnes, cathode 44,734 tonnes and wirerod 58,223
tonnes. When compared to the previous year, the production of MIC was
higher by 4%, cathode higher by 12.44% and wirerod higher by 36%. In fact,
with the wirerod production having crossed the 58,000 tonne mark, the
Taloja plant has achieved 97% capacity utilization which is a first time
During the year, sale of refined copper was 45,384 tonnes as against 42,303
tonnes in the previous year thereby achieving sales growth of 7.28%. The
sales turnover during the year was Rs.1839.79 crore which is the highest
since inception, registering 2.23% growth over 2006-07.
Regular customer meets have been organized in metro cities to keep abreast
of market developments and for developing long-term customer relationships.
Despite higher volumes of production, the net profit after tax (PAT) for
the year 2007-08 dipped 21% to Rs.246.46 crore against Rs.313.94 crore in
the previous year. This was mainly on account of downward movement in
currency exchange rate (US $ exchange rate during 2007-08 being Rs.40.54
compared to Rs.45.50 in the preceding year). This adversely affected price
realization, as also the bottomline.
Financial Restructuring of the Company:
As you would kindly recall that during the last year's AGM, I had informed
members that an application had been submitted by the Company to the
Ministry of Corporate Affairs (MCA) for their formal approval to give
effect to the capital reduction, which was previously sanctioned by
Government of India as part of the BRPSE restructuring package. The MCA
approval has since been received, and the capital reduction has been
effected in the accounts for 2007-08. Consequently, the net worth of the
Company as on 31.3.2008 stands at Rs.709.07 crore against Rs.567.58 crore
at the end of the previous financial year.
The Company has rolled out several strategic initiatives during the year in
almost all functional areas to ensure long-term growth and profitability.
As envisaged in the financial restructuring package sanctioned by the
Government of India , your Company continues to maintain sharp focus on
mining activities. The Company proposes to explore / exploit and develop
new copper deposits while optimizing production from existing mines.
Surda mine at Ghatsila which was lying closed since 2003 has been reopened
in December'07 which led to additional production of 314 tonnes of MIC upto
March'08. Upon stabilization of operation, Surda mine is capable of
producing 4,000 tonnes of MIC per annum.
Development of Banwas copper deposit in Rajasthan is planned as a separate
mine. The project will be implemented in association with a competent
mining company who would bring in new technology and investments. With ore
reserves of 22.5 million tonnes @ 1.69% copper content in the Banwas
deposit, the new mine is expected to produce 15,000 tonnes of MIC annually
when fully operational.
Company has also applied for grant of mining leases and prospecting
licences in potential areas in the States of Jharkhand, Madhya Pradesh,
Haryana and Rajasthan so as to develop long-term growth prospects.
Information technology and modern communication tools are essential for any
business enterprise in modern times. Having implemented e-payment and e-
procurement, the Company is now implementing Enterprise Resource Planning
(ERP) system to integrate business operations across the many functions and
locations of the organization. Satellite communication links have been
established with the help of service providers that will ensure speedy flow
of data across all units. The objective is to create an IT-enabled
automated business environment which supports speedy and seamless
information flow and real time management.
The geographical spread of Company's operations necessitates inter-unit
movement of finished and semi-finished goods, such as copper concentrates,
cathodes and wirerods. A professionally managed end-to-end multi-modal
logistics system has been introduced which is more secured and far more
efficient than the conventional system of fragmented transportation
contracts. Besides reduction in handling losses, there will also be direct
savings in the annual logistics costs.
World copper prices are characteristically volatile and at times display
wide fluctuations. Company has, therefore, introduced hedging as a tool to
mitigate the associated risks.
Copper demand in the country is estimated to grow at 7-8%. The boost in
telecom, power and infrastructural sectors, together with the boom in
automobiles and consumer durables, are major factors driving copper demand.
This presents excellent growth opportunities.
Country's total refined copper capacity is 10 lakh tonnes per year. Against
this, only about 30,000 tonnes of copper metal is being mined in India, and
the balance has to be imported by refining companies in the form of copper
concentrate. This under capacity at the mining stage vis-a-vis the refining
capacity provides excellent opportunities for growth in the mining segment.
Since HCL is holding all operating copper mining leases in the country,
your Company is advantageously placed and has, therefore, reoriented its
business strategy to take advantage of the situation. The future outlook
for HCL is, therefore, definitely promising.
Company's thrust for the year 2008-09 will be broadly:
* To explore / exploit and develop new mining deposits while optimizing
production from existing mines.
* To increase efficiency of process plants through technology upgradation.
* To improve capacity utilisation and reliability of plants and equipment.
* To dispose off non-performing assets to generate additional revenue.
* To bring about change in work culture by bringing about attitudinal
changes through training and development.
The philosophy of the Company is to ensure transparency in its dealings and
compliance of country's laws and regulations in order to promote ethical
conduct of business. Quarterly compliance report for corporate governance
is sent to the administrative Ministry as well as stock exchange
authorities as per applicable guidelines. Your Company has initiated an
exercise with a view to develop a structured risk management framework and
a suitable reporting mechanism in compliance of the corporate governance
During the year, six independent directors have been appointed on the Board
of HCL which will further improve corporate governance.
Responsibility towards Society:
With the underlying philosophy and a credo to make meaningful difference to
people's lives, your Company has always been in the forefront of fulfilling
its obligations to the society. Earlier under the concept of peripheral
development, and now under corporate social responsibility (CSR), your
Company has taken up several programmes for betterment of the community
located around project sites under a newly formulated CSR policy. The Board
have allocated 0.5% of the annual net profit of the preceding financial
year towards CSR projects / schemes. I am not repeating details of the
programmes as these are already detailed in the Directors' Report.
Your Company recognizes its responsibility towards environment
conservation. To protect the environment and maintain ecological balance in
the surrounding areas, Company undertakes tree plantation in and around its
production units on a regular basis. Effluent treatment facilities
installed at the units worked satisfactorily during the year and met
regulatory norms set by State Pollution Control Boards.
The Statutory Auditors' Report has already been circulated to all the
shareholders. I request that the same be taken as read. I am glad to inform
you that the C&AG after having reviewed your Company's accounts for the
year ending 31st March, 2008 have given a `Nil' report.
On behalf of the Board, I would like to thank you, our esteemed
shareholders, for your continuing confidence and support. I take this
opportunity to thank the Ministry of Mines for their unstinted support. I
also acknowledge the support extended by the State Governments and all
other authorities and agencies. I thank all the employees of HCL for their
commitment and devotion to duty. I thank the trade unions for their
constructive cooperation to the management.
Now I propose to take up the official agenda of the meeting and request the
Company Secretary to read out the proposed resolutions. One of the members
present may please propose the resolution and another member may second it.
I thank all of you once again and offer my best wishes to you for a very
joyous festive season ahead.
Satish Chandra Gupta
Chairman & Managing Director