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Hindustan Copper Ltd.

BSE: 513599 Sector: Metals & Mining
NSE: HINDCOPPER ISIN Code: INE531E01026
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OPEN 62.05
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VOLUME 14129
52-Week high 74.70
52-Week low 50.10
P/E 75.80
Mkt Cap.(Rs cr) 5,681
Buy Price 61.40
Buy Qty 571.00
Sell Price 61.60
Sell Qty 511.00
OPEN 62.05
CLOSE 61.60
VOLUME 14129
52-Week high 74.70
52-Week low 50.10
P/E 75.80
Mkt Cap.(Rs cr) 5,681
Buy Price 61.40
Buy Qty 571.00
Sell Price 61.60
Sell Qty 511.00

Hindustan Copper Ltd. (HINDCOPPER) - Director Report

Company director report

The Shareholders Hindustan Copper Limited Kolkata

Your Directors have pleasure in presenting the forty-eighth Annual Report of HindustanCopper Ltd. (HCL/the Company) together with the audited statement of accounts andAuditors' Report thereon for the year ended 31st March 2016.

1. Performance

Financial Summary or highlights

The comparative working results for the FY 2015-16 vis-a-vis FY 2014-15 are as under:

(Rs. in Crore)

Particulars 2015-16 2014-15
(a) Turnover 1068.95 1127.49
(b) Profit before depreciation interest & tax 62.82 100.86
(c) Less : Depreciation 16.00 19.73
(d) Less : Interest & Finance Charges 1.44 0.68
(e) Profit before tax 45.38 80.45
(f) Less : Provision for Taxes (including deferred tax) 1.82 12.85
(g) Profit after tax 43.56 67.60
(h) Distributable Profit 43.56 67.60
(i) Add: Balance brought forward from the previous year 1092.35 1059.26
(j) Balance available for appropriation 1135.91 1126.86
i) Dividend 0.00 13.88
ii) Corporate Dividend Tax 0.00 2.83
iii) Amount transferred to General Reserve 0.00 0.00
iv) Depreciation charged from Retained Earning 0.00 17.80
(k) Balance in P&L account to be carried forward 1135.91 1092.35
(l) Earnings per Share(Rs) 0.47 0.73

During 2015-16 the Company posted a Profit before tax (PBT) of ' 45.38 Crore asagainst '80.45 Crore clocked during the previous year registering a decline of around43.59%. The turnover of the Company was ' 1068.95 Crore during FY 2015-16 as against'1127.49 Crore during FY 2014-15 registering a decrease of around 5.19%. The Profit AfterTax (PAT) during FY 2015-16 is ' 43.56 Crore as against ' 67.60 Crore in 2014-15.

Physical performance

The comparative physical performance of production and sales in FY 2015-16 vis-a-vis FY2014-15 are as under:

Particulars 2015-16 2014-15
Ore ('000 Tonnes) 3908 3505
Metal in concentrate (MIC) (Tonnes) 31578 24878
Cathode (Tonnes) 23024 21205
CC Wire Rod (Tonnes) 26062 19576
Sales (Tonnes):
CC Rod 21125 16609
Cathode 285 5032
MIC 2702 -
Total 24112 21641

Ore production of 39.08 lakh MT in 2015-16 is the highest in last 17 years. Overall MICproduction during the year is 27% higher as compared to last year. The total sales hasincreased by 11% over last year and CCR sales has increased by 27%. Sale of 2756 MT CC Rod19.6 mm to venders of Indian Railways this year has successfully established HCL's newproduct.

While the physical performance has shown good improvement in 2015-16 the same couldnot be reflected in the financial performance mainly due to steep fall in London MetalExchange prices of Copper by around 21% as compared to previous year.

2. Dividend

Your Directors have not recommended any dividend on equity shares for the year underreview.

3. Material Changes if any

No material change and commitment affecting the financial position of the Companyoccurred between the end of the financial year to which the financial statements relateand the date of the report.

4. Mine Expansion Schemes

The ongoing mine expansion scheme envisages expansion of Malanjkhand Khetri Kolihanand Surda mines Banwas as an extension of Khetri Mine; re-opening of Rakha and Kendadihmines and development of new mine namely Chapri- Sideshwar to increase mine production to12.4 Million tonne per annum (Mtpa) from present 3.4 Mtpa. The mine-wise scheme and statusis given below:

i. Malanjkhand Copper Project

It is proposed to expand the production capacity of Malanjkhand mine from present 2Mtpa to 5 Mtpa by developing an underground mine below the existing open cast mine at anestimated cost of '1856.74 Crore. All the approval are in place Environment Clearance(EC) and National Board for Wild Life (NBWL) has been obtained in 2014-15. ContractAgreement was signed with L1 bidder. The Foundation stone laying of the project had beenheld on 12.4.2015. Sinking of North Ventilation Shaft and South Ventilation Shaft hascommenced during the year.

ii. Khetri and Banwas mine

The proposed expansion of Khetri & Kolihan mine and development of Banwas depositwill increase ore production from existing 1.0 million tonne to 3.1 million tonne perannum. Mine wise status is given below:

Kolihan Mines: For additional shaft sinking & creation of ore handling facilitiesbelow 0 mRL environmental clearance obtained on 02.02.2015. Action for floating tender isunder process.

Khetri mine: The Engineering Procurement & Construction (EPC) agency for executingthe Khetri mine expansion project had been appointed on 15.07.2011 and the work at sitestarted from 16.9.2011. Independent waste handling system commissioned deepening ofproduction and service shaft has been initiated.

Banwas Mine: Development of Banwas deposit started in May 2010 and the work isexpected to be completed by 2016.

iii. Surda mine expansion

The plan envisages increase in the depth of the mine and enhancement of productioncapacity from 0.4 million tonne per annum to 0.9 million tonne per annum. Terms ofReference received from Ministry of Environment & Forests (MoEF). Public hearing forEnvironment Clearance was held on 15.12.2015. Final EIA report prepared and being uploadedto MoEF website.

iv. Re-opening of closed mines at ICC

Company initiated action to re-open closed mines at Singhbum Copper Belt of ICC namelyKendadih and Rakha mines to produce 0.21 million tonne and 1.5 million tonnes of ore perannum respectively. Mine wise status is given below:

Kendadih mine: The contract for reopening and allied mine development has been awardedto the successful bidder on 04.02.2012. Environmental clearance from MoEF obtained on20.01.2015 stage-I forest clearance obtained stage-II forest clearance is awaited.

Rakha mine: Considering the change in market scenario the Company will implement theproject through a mine- developer-and-operator (MDO) route. Environmental clearance ofRakha mining lease obtained on 01.08.2014 stage -I forest clearance obtained stage -IIforest clearance is awaited.

v. Chapri Sideshwar

Considering the change in market scenario the Company will implement the projectthrough a mine-developer-and- operator (MDO) route. Environmental clearance has beenobtained on 01.08.2014 stage -I forest clearance obtained stage -II forest clearance isawaited. Chapri-Sideshwar mine fall within the Rakha and Kedadih mining lease.

5. Significant or material orders passed by the Regulators or Courts or Tribunals:

No significant or material orders have been passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future.

6. Management Discussion and Analysis

A report on Management discussion and analysis of the performance of the Company isgiven at Annexure-I.

7. Awards and Accolades

i. The Quality Circle team 'Dinkar' and 'Sahyog' from Indian Copper Complex and'Pragatisheel' and 'Sudhar' won in Gold Category during the Chapter Convention on QualityConcepts (CCQC) 2015 on 22.9.2014 at Kolkata.

ii. The Quality Circle team 'Dinkar' and 'Sahyog' from Indian Copper Complex won in"Excellent and 'Sudhar' and 'Pragatisheel' won in 'Excellent' and 'Distinction'Category during the National Convention on Quality Concepts (NCQC) 2015 during 6.2.2016to 8.2.2016 at Kolkata.

iii. HCL received the "Griha Patrika Protsahan Puraskar" for the year 2014-15from Nagar Rajbhasha Karyanwayan Samity (Upkram) Kolkata for the Hindi version of HouseJournal Tamralipi in a prize distribution ceremony on 29.8.2015.

iv. HCL received the "Protsahan Puraskar" for the year 2014-15 from NagarRajbhasha Karyanwayan Samity (Upkram) Kolkata for achieving excellence in implementationof the Official Language in day-to-day office work.

v. Mines Rescue Team of Khetri Copper Complex won 1st Prize in First Aid Theory andPractical Competition 2nd Prize in Rescue Practical Competition and 2nd Prize in RescueTheory Competition in the 46th All India Mines Rescue Competition held at ManendragarhRescue Station South Eastern Coalfields Ltd Manendragarh (Chhattisgarh) from 5.12.2015to 8.12.2015.

vi. Three members of the team namely S/Shri Naresh Kumar Katariya (Captain) SanketKumar Toshniwal (FAB Controller) and A T Alam (Member) also participated in thePromotional Competition of Rescue based on international norms and won the third prize outof six participating teams.

vii. HCL was awarded the National PR Day Award of Excellence for External &Internal Communication by the Public Relations Society of India PRSI Kolkata Chapter on21.4. 2015 the National PR Day.

viii. Tamralipi the house journal of HCL won the In-house Communication Excellence(ICE) Award 2015 conferred by the Shailaja Nair Foundation in the category of Best CoverPage as the First Runner-Up on 6.6.2015.

ix. Tamralipi the house magazine of the Company was awarded the Bronze Award at the9th Global Communication Conclave of the Public Relation Council of India PRCI held atNew Delhi on 13.3.2015 and 14.3 2015.

8. Particulars of Loan Guarantees or Investments u/s 186 of the Companies Act 2013

During the year from 01/04/2015 to 31/03/2016: NIL

9. Deposits

The Company has not taken any Deposits covered under or which are not in compliancewith the requirements of Chapter V of the Companies Act 2013.

10. Related Party Transactions (RPTs):

The Company has not entered into any contracts or arrangements with related partiesreferred to in section 188(1) of the Companies Act 2013. Policy on RPTs and dealing withRPTs has been formulated and put up at the Company's website at www.hindustancoppr.com.

11. Establishment of Vigil mechanism:

The Company has in place a Whistle Blower Policy which provide adequate safeguardsagainst victimization of employees / directors who avail of the mechanism and also providefor direct access to the chairman of the Audit Committee in exceptional cases. The Policyhas been posted at the Company's website at www.hindustancopper.com.

12. Risk Management Policy

The Board of Directors of the Company has developed and implemented a risk managementpolicy for the Company including identification therein of elements of risk which in theopinion of the Board may threaten the existence of the Company.

13. Internal Financial Controls

The Company has in place adequate internal financial control with reference tofinancial statements commensurate with its size and operations to be followed by theCompany detailing the policies and procedures to be followed.

14. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

Information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is given as Annexure-II forming part ofthis report.

15. Safety

Safety remains high priority area and the Company is always aiming to achieve"Zero Accident". The Company continues to maintain the tradition of attractingrecognition for its safety performance and like previous years received a number ofawards in mine safety as indicated below:

Malanjkhand open cast mine had won the following safety performance award on 13.12.2015in large opencast mine category under the aegis of DGMS (Nagpur region I&II):

2nd Prize on Use of explosives

3rd Prize on Mine Lighting HEMM and overall best performance

Five individual first prizes won in 28th Mines safety week competition and the prizesare received at Kotputli Rajasthan.

Khetri Copper Mine and Kolihan Copper Mine have received award/Prizes in all IndiaRescue Competition 2015 in the following categories:

1st Prize in First Aid theory and Practical competition 2nd Prize in Rescue Practicalcompetition 2nd Prize in Rescue Theory competition

Besides the above special training regular refresher training programmes andon-the-job training are provided to all employees. Safety Campaigns like "AnnualMines Safety Week" "Fire Services Day" "Fire services week" and"Industrial Safety Day" celebrations are conducted regularly with activeparticipation of employees in all the Units of HCL.

16. Corporate Social Responsibility (CSR)

The CSR Report in the prescribed format as per the Companies (Corporate SocialResponsibility Policy) Rules 2014 is given in Annexure-III.

17. Vigilance Activities

The Vigilance Department of HCL has been taking proactive preventive vigilancemeasures along with expeditious finalization of pending disciplinary cases. Systemsimprovement measures are being regularly brought to the notice of Management which hasimplemented most of the suggestions.

Efforts are also continuing to create more and more awareness about vigilance amongstthe officers and employees of the organizations. Besides organizing training a bookletwas also released during the Vigilance Awareness Week- 2015 containing inter-aliavarious Do's & Don't's and also 'Some Common Irregularities to be taken note of1.

18. Official Language Implementation

During 2015-16 HCL made constant endeavour to increase use of Hindi in itsUnits/Offices. Raj Bhasha Pakhwara and Hindi Diwas were celebrated in the Units/Officesfrom 14.9.2015 28.9.2015. The messages of Hon'ble Home Minister Government of India andCMD HCL were read out in all Units/Offices on this occasion. Various competitions wereorganized to enhance interest among employees towards Official Language. Prizes weredistributed to the winners. Employees are constantly motivated to use Hindi in theirday-to-day official work. Hindi Workshops were conducted in the Units/Offices at regularintervals. During 2015-16 the Company participated in the half-yearly meeting of TownOfficial Language Committee (PSUs) Kolkata held on 29.8.2015. The Company's in-housejournal "Tamralipi" is published in Hindi and English and distributed amongemployees regularly and also mailed to the members of the Hindi Advisory Committee. Effortis continuously made to ensure that the Company's advertisements for recruitment/ tendersetc. are also published bilingually. The progressive use of Hindi is being reviewedregularly at the Board meetings.

19. Business Responsibility Report:

Pursuant to Regulation 34 (2) SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 {SEBI (LODR) 2015} Business Responsibility Report for 2015-16describing various initiatives taken by the Company on social environmental andgovernance perspective is attached at Annexure-IV which forms part of this report.

20. Extract of Annual Return:

Extract of Annual Return pursuant to Section 92(3) of the Companies Act 2013 is givenin Annexure-V.

21. Corporate Governance

Corporate Governance Report as per SEBI (LODR) 2015 is given at Annexure-VI formingpart of this report together with Statutory Auditors' Certificate on Corporate Governance.

22. Number of meetings of the Board:

During 2015-16 seven Board meetings were held on 8.4.2015 28.5.2015 11.8.20156.11.2015 23.12.2015 14.1.2016 and 3.2.2016.

23. Directors' Responsibility Statement

In terms of Section 134(5) of Companies Act 2013 your Directors confirm:

(i) That in the preparation of the annual accounts for the year ended 31st March 2016the applicable accounting standards had been followed along with proper explanationsrelating to material departures.

(ii) That such accounting policies have been selected and applied consistently and madeadjustments and estimates which are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of 31st March 2016 and of theProfit and Loss of the Company for the year.

(iii) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

(iv) That the Directors have prepared the annual accounts on a going concern basis.

(v) That the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively.

(vi) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

24. Declaration by Independent Directors:

Independent Directors of the Company have given declaration to the effect that theymeet the criteria of independence as provided under Section 149(6) of the Companies Act2013.

25. Familiarization Programme for Independent directors

On joining Independent directors are familiarized through induction programme /presentation with the overview of business operations new projects and business model ofthe Company. Visit to Units is also organized as per their convenience. They are alsoupdated on the changes / developments including in the relevant statutory / regulatoryrequirements from time-to-time. Detail of Directors' Training / Familiarization Programmehas been hosted at the Company's website at www.hindustancopper.com.

26. Code of Conduct

The Company has in place a Code of Conduct applicable to the Directors as well asSenior Management and the same has been circulated to all concerned and posted at theCompany's website www.hindustancopper.com.All Board members and senior management personnel have affirmed compliance of the code forthe year ended 31st March 2016.

27. Directors

Shri Nikunja Bihari Dhal was appointed as part time official Director from 14.9.2015 inplace of Shri Arun Kumar who ceased to be Director from 4.8.2015.

Shri Sanjay Kumar Bhattacharya joined as Director (Mining) of the Company from15.9.2015.

Shri Hemant Mehtani and Smt Simantini Jena appointed as part time non-official(Independent) Director of the Company from 17.11.2015. Shri Dileep Raj Singh Chaudhary andShri Niranjan Pant appointed as part time non-official (Independent) Director of theCompany from 1.12.2015.

Shri S Nanda ceased to be Director (Operations) from 1.2.2016 on superannuation. ShriSantosh Sharma joined as Director (Operations) from 1.3.2016.

Smt. Bulbul Sen ceasesed to be Independent Director from 18.3.2016 on completion oftenure.

The Board places on record its appreciation for the valuable services rendered andcontribution made by Shri Arun Kumar Shri S Nanda and Smt Bulbul Sen during their tenureon the Board.

28. Secretarial Audit Report

M/s N K Associates Practicing Company Secretaries has been appointed as SecretarialAuditor for FY 2015-16. Report given by the Secretarial Auditor is given at Annexure -VIIto this report. With regard to the observations of the Secretarial Auditor aboutcomposition of the Board of Directors of the Company it is stated that during 2015-16four part time nonofficial (Independent) Directors were appointed by the Ministry of Mines(MoM) Govt. of India (vide order dated 17.11.2015 and 1.12.2015). However consequentupon completion of tenure of Smt. Bulbul Sen on 18.3.2016 one post of Independent Directorhas fallen vacant. HCL being a Government Company and in terms of its Articles ofAssociation appointment of all Directors on its Board are made by the President of Indiathrough orders issued by the MoM. The Company has requested MoM to fill up the vacant postof one Independent Director.

29. Auditors

M/s. A Kayes & Co Kolkata was appointed as statutory auditors to audit theaccounts of the Company for the year 201516.

M/s Chatterjee & Co Kolkata was appointed as Cost Auditor of the Company forcarrying out the cost audit of Copper Ore Concentrate Processed Copper and articlesthereof and Sulphuric Acid for the year 2015-16.

30. Comments of C&AG

The comments of C&AG under the Companies Act on the accounts of the Company for theyear ended 31st March 2016 are annexed to this report.

31. Appreciation

In conclusion your Directors wish to place on record their appreciation of the hardwork put in by all employees of the Company during the year under review. The Boardgratefully acknowledges the valuable guidance and co-operation received from the Ministryof Mines and other Ministries/Departments of the Government of India and the supportreceived from the State Governments of Rajasthan Jharkhand Madhya Pradesh MaharashtraGujarat and West Bengal and the Company's bankers customers and office bearers of therecognized trade unions of different Units / Head Office. The Board also thanks allshareholders and investors for the trust reposed by them in the Company.

For and on behalf of the Board of Directors
K D Diwan
Place: Kolkata Chairman-cum-Managing Director
Date: 30.5.2016