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Hindustan Copper Ltd.

BSE: 513599 Sector: Metals & Mining
NSE: HINDCOPPER ISIN Code: INE531E01026
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VOLUME 143649
52-Week high 51.55
52-Week low 18.30
P/E
Mkt Cap.(Rs cr) 1,934
Buy Price 20.75
Buy Qty 2000.00
Sell Price 20.90
Sell Qty 500.00
OPEN 20.90
CLOSE 20.20
VOLUME 143649
52-Week high 51.55
52-Week low 18.30
P/E
Mkt Cap.(Rs cr) 1,934
Buy Price 20.75
Buy Qty 2000.00
Sell Price 20.90
Sell Qty 500.00

Hindustan Copper Ltd. (HINDCOPPER) - Director Report

Company director report

The Shareholders

Hindustan Copper Limited

Kolkata

Your Directors have pleasure in presenting the fiftieth Annual Report of HindustanCopper Ltd. (HCL/the Company) together with the audited statement of accounts andAuditors’ Report thereon for the year ended 31.3.2018.

1. Performance

Financial Summary or highlights

The comparative working results for the FY 2017-18 vis-a-vis FY 2016-17 are as under:

(Rs. in crore)

Particulars 2017-18 2016-17
(a) Turnover 1647.90 1216.94
(b) Profit before depreciation amortization finance charges & tax 307.98 245.46
(c) Less : Depreciation & Amortization 164.65 141.90
(d) Less : Finance Charges 21.29 9.01
(e) Profit/ (Loss) Before Tax from continuing operation 122.04 94.55
(f) Profit/(Loss) Before Tax from discontinuing operation (0.35) (0.35)
(g) Profit/(Loss) Before Tax from continuing & discontinuing operation 121.69 94.20
(h) Less : Provision for Taxation (Current & Deferred Tax) 42.09 32.26
(i) Profit after tax from Continuing & Discontinuing Operation 79.60 61.94
(j) Other Comprehensive Income 5.00 (4.10)
(k) Profit for the year 84.60 57.84
(1) Add: Balance brought forward from the previous year 700.80 642.96
(m) Balance available for appropriation 785.40 700.80
(n) Less : Dividend 18.50 0.00
(o) Less : Tax on Dividend 3.77 0.00
(p) Balance to be carried forward 763.13 700.80
(q) Earnings per Share(Rs) (Both Basic & Diluted) 0.861 0.670

During 2017-18 the turnover of the Company was Rs. 1647.90 crore as against Rs.1216.94 crore during FY 2016-17 registering an increase of 35.41%. The Company posted aProfit Before Tax from continuing & discontinuing operation of Rs. 121.69 crore duringthe year as against Rs. 94.20 crore clocked during the previous year registering anincrease of 29.18%. The Profit After Tax from continuing & discontinuing operationduring FY 2017-18 is Rs. 79.60 crore as against Rs. 61.94 crore in FY 2016-17 registeringan increase of around 28.51%.

Physical performance:

The comparative physical performance of production and sales for the year 2017-18vis-a-vis 2016-17 is as under:

Particulars 2017-18 2016-17
Ore (Lakh Tonnes) 36.75 38.45
Metal in concentrate (MIC) (Tonnes) 31793 30587
Cathode (Tonnes) 25949 18602
CC Wire Rod (Tonnes) 22211 18167
Sales (Tonnes):
CC Rod 22812 16817
Cathode 4490 1532
MIC 9133 10539
Total 36435 28888

Highlights/ Comments on physical performance:

i. Total Copper sales during the year 2017-18 was best in last seven years.

ii. Copper cathode production was 39% higher than the last year.

iii. Copper wirerod production was 22% higher than the last year.

iv. Metal-in-Concentrate production was 4% higher than the last year.

v. Total Annual copper Ore and MIC production from Khetri Copper Complex is the highestafter year 1998-99.

vi. Reopened Kendadh mines at Jharkhand in December 2017 and Commissioned Banwas mine(new mine) at Khetri Copper Complex Rajasthan in June 2017.

The MIC production of the Company crossed the MoU target however following factorshampered better performance further:

i. Surda mine operations were affected due to sudden and unilateral termination ofcontract by M/s Eastern Goldfields Ltd for ore production from Surda mine at Indian CopperComplex (ICC) in the month of May 2017.

ii. ICC smelter furnace is in the last leg of its campaign life. Major flash furnaceoverhauling was undertaken in May 2013. Repeated breakdown of the furnace has affectedthe production of cathode

Remedial action taken to improve the performance are as under:

i. A short term contract was awarded for the operations of Surda mine at ICC and themine restarted from August 2017.

ii. A long term contract for operation of Banwas mine of Khetri mine has been awarded.The ore production from Banwas mine has since commenced from January 2018.

iii. To sustain the ore production at Malanjkhand mine thrust on excavation is givenand an additional contract for loading and hauling of 36 Lakh Bank Cubic meter of rock hasbeen awarded.

iv. At ICC Ghatsila major overhauling of flash furnace has been planned in May 2018.

2. Dividend

The Board of Directors of your Company has recommended payment of dividend @ 5% onequity i.e. Re 0.25 per share of Rs. 51- face value for the year 2017-18 for approval ofshareholders in the Annual General Meeting. The outgo on this account will be Rs. 23.13crore for dividend and Rs. 4.75 crore towards tax on dividend aggregating to a totaloutgo of Rs. 27.88 crore. The dividend is as per a Board approved Dividend DistributionPolicy which is available at the Company’s website at www.hindustancopper.com.

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. Projects:

i. Malanjkhand Conner Project 1MP1

Work is under progress to expand the production capacity of Malanjkhand mine frompresent 2 Mtpa to 5 Mtpa (2nd phase to 8 Mtpa by FY 23-24) by developing an undergroundmine below the existing open cast mine at an estimated cost of Rs. 1856.74 crore (upto Rs.2900 crore in 2nd phase). All the approvals are in place Environment Clearance andapproval of National Board for Wild Life has been obtained in 2014-15 and EPC contractorfor implementation of the project has been appointed. Scheduled Completion date is April2020. Progress so far sinking of Service Shaft has been completed and Production Shaft isup to 643 meters. The development work of North Decline and South Decline is up to 2025meters and 1308 meters respectively. The progress ofunderground development during the FY2017-18 was satisfactory.

ii. Khetri Kolihan and Banwas mine ('Rajasthan!

The proposed expansion of Khetri and Kolihan mine and development of Banwas depositwill increase ore production from existing 1.1 to 5.0 million tonne per annum in twophases. Mine wise status is given below:

a. Kolihan Mine: For additional shaft sinking & creation of ore handling facilitiesbelow 0 mRL environmental clearance obtained on 2.2.2015. Further 2000 m of Diamonddrilling work has been undertaken to establish the ore body at depth and tenderingactivities has also been undertaken.

b. Khetri mine: The Engineering Procurement & Construction agency for executing theKhetri mine expansion project had started the work on 16.9.2011. Independent wastehandling system commissioned deepening of production and service shaft had beeninitiated. During execution bad ground / fault plane encountered at (-) 120 mRL nearproduction shaft. Contract period ended on 14.1.2017. New contract for tacking bad groundfor deepening of the existing shaft and other related activities are under process.

c. Banwas Mine: Mine construction work has been completed in February 2017. TheCompany has appointed M/s SMS Nagpur mine developer and operation agency for long termoperation of the Banwas where production ramp up has commenced.

iii. Surda mine expansion ('Jharkhand!

The plan envisages increase in the depth of the mine and enhancement of productioncapacity from 0.4 million tonne per annum to 1.0 Mtpa. On 19-20 September 2016 ExpertAppraisal Committee of Ministry of Environment Forest and Climate Change (MoEFCC) hasrecommended the proposal for Environment Clearance subject to clarification regardingforest clearance for forest land involved in underground mining. Matter is under scrutinyat Forest Clearance division ofMoEFCC.

iv. Re-opening of closed mines at ICC Ghatsila ('Jharkhand!

Company initiated action to re-open closed mines at Singhbum Copper Belt of ICC namelyKendadih and Rakha mines to produce 0.21 and 2.5 million tonne of ore per annumrespectively. Mine wise status is given below:

a. Kendadih mine: The Kendadih mine was reopened in December 2017 after all the miningequipping work including mine dewatering work was completed. Mine development work is inprogress and Environmental clearance from MoEFCC obtained on 20.1.2015 Stage IIFC for theproject has been obtained on 28.11.2016. Equipment are being mobilized in a phased mannerand the work has commenced.

b. Rakha mine: Considering the change in market scenario the Company will implementthe project through a EPC route. Environmental clearance of Rakha mining lease obtained on1.8.2014 Stage II Forest Clearance for the project has been obtained on 15.9.2016.

v. Chapri Sideshwar ('Jharkhand!

Chapri-Sideshwar mine fall within the Rakha and Kedadih mining lease area. The projectis under tendering stage which is to be implemented on EPC route.

vi. Manufacturing of Conner Cathode through Hvdrometallurgv Technology - The Companyhas plans to set up a plant of capacity 1.0 lakh tonne per annum to manufacture coppercathode through cost effective hydro-metallurgy technology. The site of the project hasbeen finalized and investment in the project is Rs. 3025 crore. The investment proposalafter approval of the Board has been sent to the Ministry to obtain CCEA approval. Theproposal is under scrutiny ofthe Ministry.

vii. Extraction of minerals from copper ore tails 1MP1

The Company is in advance stage of erection of Copper Ore Tailing (COT) recoveryfacility of capacity 3.3 Million tonne per annum to recover the valuable metals andminerals from the tailing and reduce the mass in the existing tailing storage facility(TSF) so as to extend active life of TSF and unlock the value in the waste/Tailing atMalanjkhand Copper Project (MCP). A contract has been awarded for the construction of theplant on EPC mode at a cost of Rs. 200 crore. It is expected that the plant will becommissioned by June 2018.

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

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

7. Awards and Accolades

i. HCL was conferred with Kolkata Best Employer Brand Award by World HRD Congressduring the award ceremony held on 8.11.2017 at Taj Bengal Kolkata.

ii. HCL was awarded the National CSR Leadership Award by World CSR Day on 20.9.2017 atVivanta by Taj Yeshwantpur Bangalore.

iii. The Quality Circle teams ‘Dinkar’and ‘Sahyog’ of ICC won inGold Category during the Chapter Convention on Quality Concepts (CCQC)2017 on 12.9.2017at Taj Bengal Kolkata. They were also placed in ‘Excellence’and ‘ParExcellence’ Category respectively during the National Convention on Quality Concepts(NCQC) 2017 held during 1.12.2017 to 4.12.2017 at Mysore.

iv. Shri Anupam Anand Director (Personnel) was identified as one of India’s BestHR Leaders in PSUs by Times Ascent Presents - Asia Pacific HRM Congress &Awards - 16thEdition on 19.9.2017 at Vivanta By Taj Yeshwantpur Bangalore. Jury and Council of Boardmembers of World HRD Congress conferred HR Super Achievers - PSUs to Shri Anupam Anand on16.2.2018 atTaj Lands End Mumbai.

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

During the year from 1.4.2017 to 31.3.2018: 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.hindustancopper.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 ForeignExchange 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 in largeopencast mine category in 2017-18 under the aegis ofDGMS (Nagpur region I&II):

1st Prize on Vocational Training and First Aid

3rd Prize on Mechanical & Electrical equipment & Installations and SMS &emergency Preparedness

Kolihan Copper Mine received Runner up Prize for achieving Longest Accident - Freeperiod (LAFP) in Prestigious National Safety Award-2013 on 17.08.2017 fromHon’blePresident of India.

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 at Annexure-III.

17. Vigilance Activities

HCL has a vast potential for growth and Vigilance department has to play an enablingrole to strengthen the systems and processes to achieve the higher growth trajectory. Thesame requires a more proactive role in strengthening of systems and procedures adoptionof rules to changing processes updation of manuals minimizing discretionary spaceenhancement of transparency and fostering e-friendly environment through technologicalupgradation and capacity building thereby minimizing human interface. Although stress isbeing laid on preventive and proactive vigilance to achieve the above end surveillanceand detection cannot be neglected. For this purpose there is a need for conductingregular inspections particularly those of high value items and processes and to suggestfurther improvements. The focus is on the vigilance activities being an enabling processrather than being reactive. There is also anecessity to plug delays and identify areasprone to leakages.

18. Official Language Implementation

During 2017-18 HCL made constant endeavour to increase the use of Hindi inofficialwork in its Units/Offices. ‘Raj Bhasha Pakhwara’ was celebrated in theUnits/Offices during 14.9.2017 to 28.9.2017 incorporating ‘Hindi Diwas’celebration on 14.9.2017. The messages of Hon’ble Home Minister Govt of India andCMD HCL were circulated/ read out in all Offices/Units on this occasion. Variouscompetitions were organized to enhance interest among employees towards use of OfficialLanguage and winners were honoured.

Hindi Workshops were conducted in the Units/ Offices at regular intervals. Employeeswere motivated to use Hindi in their day- to-day official work. Regular review of progressin use of Hindi and difficulties faced was done in Quarterly meetings of Official LanguageImplementation Committee under the Chairmanship of CMD at Corporate Office and Unit Headsin Units. The progressive use of Hindi is being reviewed regularly at the Board meetingstoo. Hindi books were also purchased during the year.

An e-copy is available on the Company’s website www.hindustancopper.com too. Effort iscontinuously made to ensure that the Company’s advertisements for recruitment/tenders etc. are published bilingually. "One Hindi Word Every Day" scheme isoperational for improving the Hindi vocabulary of employees. The use of Hindi in computershas been reinforced and advanced Unicode Software Hindi Open Office has been provided toall Units/Offices of the Company. The Hindi translation of Annual Report MoU OutcomeBudget Annual Report ofMinistry ofMines and various other jobs ofthe Company were done.

The Company’s in-house journal "Tamralipi" is published in Hindi andEnglish and distributed among employees regularly. It is also mailed to the members oftheHindi Advisory Committee.

During 2017-18 the Company participated in the half-yearly meeting of Town OfficialLanguage Committee (PSUs) Kolkata held on 12.8.2017. HCL/CO received the ‘BestPerformance Award’ by Town Official Language Committee (PSUs) Kolkata for successfulimplementation of Official Language under the "Rajbhasha Award Scheme-2016-17"on 12.8.2017.

19. Business Responsibility Report:

Pursuant to Regulation 34 (2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 {SEBI (LODR) 2015} Business Responsibility Report for 2017-18describing 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) ofthe 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 Certificate on Corporate Governance.

22. Number of meetings ofthe Board:

During 2017-18 five Board meetings were held on17.5.201712.8.201725.8.201710.11.2017 and 31.1.2018.

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 2018the 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 2018 and oftheProfit 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 / FamiliarizationProgramme has 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 2018.

27. Directors

Shri V VVenugopal Rao ceased to be Director (Finance) from 5.7.2017.

Shri Kailash Dhar Diwan ceased to be CMD from 31.8.2017.

Shri Santosh Sharma took over charge of CMD from 1.9.2017.

Shri Bipul Pathak was appointed in place of Shri Subhash Chandra as part time officialDirector with effect from 16.2.2018.

Shri Anil Kumar Nayak was appointed in place of Shri Bipul Pathak as part time officialDirector with effect from 26.3.2018.

Shri Niranjan Pant ceased to be part time non-official (Independent) Director from1.4.2018.

Shri Alok Chandra was appointed in place of Shri Anil Kumar Nayak as part time officialDirector with effect from 22.6.2018.

Shri Sukhen Kumar Bandyopadhyay has joined as Director (Finance) with effect from9.7.2018.

Shri Subhas Sharma has been appointed as Non-official Independent Director with effectfrom 18.7.2018.

The Board places on record its appreciation for the valuable services rendered andcontribution made by S/Shri V V Venugopal Rao K D Diwan Subhash Chandra Bipul PathakNiranjan Pant and Anil Kumar Nayak during their tenure on the Board.

28. Secretarial Audit Report

Shri Arup Kumar Roy Practicing Company Secretary has been appointed as SecretarialAuditor for FY 2017-18. 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 2017-18three posts of part time nonofficial (Independent) Directors were laying vacant (one postsince 19.3.2016 and two posts since 22.10.2016). HCL being a Government Company and interms of its Articles of Association appointment of all Directors on its Board is made bythe President of India through orders issued by the Ministry of Mines (MoM). The Companyhas requested MoM to fill up the vacant posts of Independent Directors.

29. Auditors

M/s. J Gupta & Co Kolkata was appointed as Statutory Auditors to audit theaccounts of the Company for the year 2017-18.

M/s. Chatterjee & Co Kolkata was appointed as Cost Auditor of the Company forcarrying out the cost audit of Copper Ore Concentrate Cathode Continuous Cast CopperRods other Processed Copper and articles along with Sulphuric acid for the year 2017-18.

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 2018 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 ofthe recognized 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
Santosh Sharma
Chairman and Managing Director
(DIN-07431945)
Place: Kolkata
Date: 14.8.2018