Hindustan Copper Ltd Directors Report.

To

The Members of Hindustan Copper Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of Hindustan Copper Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2020, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to the Standalone Financial Statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the Standalone Financial Statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (“ the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2020 and its loss (including Other Comprehensive loss), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.

Emphasis of Matters

We draw attention to the following matters:

a) Note No.39 (1) “Contingent liabilities” of the accompanying Standalone Financial Statements which describes the uncertainty related to the outcome of the lawsuits filed and demands raised against the Company by various parties and Government authorities;

b) Note No.39 (6) of the accompanying Standalone Financial Statements which states that the title deeds for freehold and leasehold land and building acquired in respect of Gujarat Copper Project (GCP) with book value of H5578.11 Lakh (PY:- H5859.97 Lakh) are yet to be executed in favor of the Company. Title deeds for other leasehold and freehold lands available with the Company or other evidences of title are pending to be reconciled with the financial records.

c) Note No.39 (8) of the accompanying Standalone Financial Statements wherein, balances under the head Claims Recoverable, Loans & Advances, Deposits from and with various parties and certain balances of receivables, payables and other current liabilities have not been confirmed as at March 31, 2020.Consequential impact upon receipt of such confirmation /reconciliation / adjustments of such balances, if any is not ascertainable at this stage;

d) Note No.39 (28) the accompanying Standalone Financial Statements regarding Gujarat Copper project valuing H24536.34 Lakh (PY:- H27214.50 Lakh) as at March 31, 2020 where the Company has not been able to operate profitably due to various constraint, viability assessment needs to be done to evaluate and adjust for possible impairment loss, if any.

e) Note No.39 (31) which states that Closing stock as at 31st March, 2020 has been reduced aggregately by H25710.39 Lakh due to one-time adjustment through write-off in value of closing stock arising as a result of, reconciliation of metal content in copper concentrate on inter-unit transfer and sales, assessment of metal loss in generation of granulated Dump Slag, handling losses and old & oxidized concentrate. Further low grade Lean Ore and Mill Scat not presently in use in manufacturing process, for which provision of H18331.80 Lakh has been made in the books of accounts as

at March 31, 2020 by the management. As mentioned in the referred note, the Company has modified its Standard Operating Procedure on Inventory Management to strengthen the reconciliation of inventory as an ongoing activity and identification and segregation of unused stock for better control; and f) Note No.39 (33) which describes the uncertainties and the management assessment of possible impact of COVID-19 pandemic on its business operations, financial assets, contractual obligations and its overall liquidity position as at March 31, 2020. Management will continue to monitor in future any material changes arising on financial and operational performance of the Company due to the impact of this pandemic and necessary measure to address the situation.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sl. No. Key Audit Matters Auditors Response
1. Assessment of Stripping Ratio and charging of overburden expenditure during production stage of surface mines to Mines Development Expenditure and Profit and Loss account Principal Audit Procedures
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Referred in Note No.2 (11) and Note No.9 of the Standalone Financial Statements.
• We went through the current status of the mining at different mines
Assessment of Stripping Ratio is technically estimated initially at the beginning of the Mines and later on periodically assessed for which no standards written policy are there. Normally review done within a period of 3 to 4 years as informed to us.
• We discussed with the management about the stripping procedure adopted in the industry as well practice followed by the Company
• Procedure followed by the management towards Identification of expenditures incurred in surface mines during production stage
In case of open cast mines, the expenditure on removal of waste and overburden, is capitalized and the same is depleted in relation to actual ore production during the year on the stripping ratio which is re-assessed periodically based on the estimated ore reserve as well as the quantity of waste excavation in respect of open cast mines.
• Understanding the computation of Stripping ratio initially made and documents made available to us.
• We have checked the stripping ratio to be charged under amortization for mine development expenditure for balance period of mines
Assessment of Stripping Ratio is uniquely applied under the Mining industries which involves significant judgment to determine the ratio and that also keep on change from time to time. This ratio has been changed subsequently based on the actual output of overburden and Ore exposed during the production stage of the mines.
• Discussion with the core technical team involve in this process
• Reliance is placed on the representations of the management.
We have identified this area as key audit matter due to its nature as industry specific and involvement of technical assumptions and judgments in calculation of stripping ratio. Further it has a material impact on the financial statements being this year the Company has amortized H23904.06 Lakh (PY:-20074.56 Lakh) as Mine development expenditure in respect of open cast mines.
2. Modified Audit Procedures carried out in light of COVID-19 outbreak: Principal Audit Procedures
Due to the outbreak of COVID-19 pandemic that caused nationwide lockdown and other travel restrictions imposed by the Central and State Governments/local administration during the period of our audit, we could not travel to the Plants/ Projects/Regional Sales offices and carry out the audit processes physically at the respective Plants/ Projects/Regional Sales offices. Wherever physical access was not possible, necessary records/ reports/ documents/ certificates were made available to us by the management of the respective Plants / Projects / Regional Sales offices through E-Mail and to the extent generated from the ORACLE system at Head office, Kolkata. To this extent, the audit process was carried out on the basis of such documents, reports and records made available to us on which were relied upon as audit evidence for conducting the audit and reporting for the current period.
Due to COVID-19 pandemic, Nation-wide lockdown and travel restrictions imposed by Central / State Government / Local Authorities during the period of our audit wherever physical access was not possible, audit could not be conducted by visiting the Plants/Projects/ Regional Sales offices. As we could not gather audit evidence in person/ physically/ through discussions and personal interactions with the officials at the Plants/ Projects/Regional Sales offices, we have identified such modified audit procedures as a Key Audit Matter. Accordingly, our audit procedures were modified to carry out the audit remotely.
Accordingly, we modified our audit procedures as follows:
a) Conducted verification of necessary records/ documents/Trial Balances and other relevant application software electronically through remote access/emails in respect of Plants/ Projects/Regional Sales offices wherever physical access was not possible.
b) Carried out verification of scanned copies of the documents, records, certificates, deeds etc. made available to us through emails and remote access over secure network of the Company.
c) Making enquiries and gathering necessary audit evidence through telephonic communication and e-mails.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Report of the Board of Directors, Management Discussion and Analysis Report, Report on CSR activities, Business Responsibility Report, Corporate Governance Report and other annexure to Directors Report including Shareholders Information, but does not include the Standalone Financial Statements and our auditors report thereon. The Report of the Board of Directors including annexures and other related statements forming part of the Companys annual report is expected to be made available to us after the date of our this auditor report.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information when it becomes available only and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact.

When we read the Report of the Board of Directors including annexures and other related statements form part of the Companys annual report and made available to us after the date of our this auditor report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibility of Management and Those Charged with Governance for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis or our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Standalone Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditors Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub section (11) of Section 143 of the Act, we give in “Annexure A”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2) As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except as reported in Clause (b) & (c) of the “Emphasis of Matters” paragraph above;

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

c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

e) In pursuance to the Notification No. G.S.R 463(E) dated 05-06-2015 issued by Ministry of Corporate Affairs, Section 164(2) of the Act regarding disqualification of Directors, is not applicable to the Company, since it is a Government Company;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

g) As per Notification No. GSR 463(E) dated 05-06-2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 of the Act is not applicable to the Government Companies. Accordingly, reporting in accordance with requirement of provisions of Section 197(16) of the Act is not applicable on the Company.

h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its Standalone Financial Statements—[Refer Note No. 39(1) to the accompanying Standalone Financial Statements];

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

3) As required under Section 143(5) of the Act, we give in the “Annexure C”, a statement on the directions and subdirections issued by the Comptroller and Auditor General of India in respect of the Company.

For Chaturvedi & Co.
Chartered Accountants
(Firms Registration No.302137E)
Place: Kolkata CA R.K. Nanda
Date: July 21, 2020 Partner
(Membership No.510574)
UDIN: 20510574AAAABH1998

{Referred to in Paragraph (1) of “Report on Other Legal and Regulatory Requirements” section of our

Independent Auditors Report}

i. In respect of the Companys fixed assets:

(a) The Company has maintained records showing full particulars, including quantitative details and situation of fixed assets. Further asset identification numbers and codification of some movable tangible assets along with make/ model number needs to be assigned to the assets and to be updated in Fixed Asset Register. Location details and areas of freehold land and leasehold land held by the Company at different locations needs to be updated in the Fixed Asset Register and further needs to be reconciled with financial records. Quantitative details in case of few old assets along with their description, particulars of depreciation, amortization or impairment have also not been properly disclosed in the Fixed Asset Register.

(b) According to the information and explanations given to us, the fixed assets of the Company has been physically verified by the management every year so that all the assets of Units/offices are covered once in a block of three years interval, which in our opinion is reasonable having regard to the size of the Company and the nature of its business. As per the phased programme, during the year the Company had to conduct the physical verification at Malanjkhand Copper Project (MCP), Gujarat Copper Project (GCP), Indian Copper Complex (ICC) and Rakha Copper Project (RCP). However the verification procedure at ICC and RCP is not completed due to PAN INDIA lockdown for COVID 19 pandemic. The physical verification procedure is completed at MCP and GCP. According to the information and explanations given to us, no material discrepancies were noticed on such verification for adjustment/settlement in the books of account. The process of physical verification at Units/offices should be further improved by having the detailed list of assets with their identification numbers along with Group asset code, quantity and value as per Fixed Assets Register duly mapped with assets physically verified and also having a well-defined manual of physical verification especially looking into the various locations, quantum of assets physically available at each of the plant/office locations.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, lands (both freehold and leasehold) and Building acquired in respect of Gujarat Copper Project having book value of H5578.11 Lakh as at March 31, 2020 are yet to be executed in favor of the Company. The title deeds, conveyance deeds etc. in respect of certain freehold lands at Indian Copper Complex acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act, 1972 which as per the management, are not in possession of the Company. Further to as stated above, the management has not been able to produce title deeds/lease deeds/other evidence of title for rest of the lands & buildings situated at different Plants/ Projects/offices, for which the Company has to identify each of such lands with respect to their measuring areas as per the available records and reconcile the same with the value of the leasehold and freehold lands & buildings shown under Note No.3A & 3B (for freehold lands) and Note No.9 &17 (for leasehold lands) of the accompanying Standalone Financial statements.

ii. The physical verification of Semi-Finished and In-Process (WIP) stocks and Finished Goods as per the policy is conducted departmentally in all the units (Indian Copper Complex, Khetrinagar Copper Complex, Malanjkhand Copper Project, Taloja Copper Project & Gujarat Copper Project) at the end of the every financial year by a duly approved committee and again once in a block of three years along with an Independent external agency appointed in this regard by duly approved committee.

For this year although work orders were issued to independent agencies in all the units for carrying out physical stock verification, due to PAN INDIA lockdown for COVID 19 pandemic the same could not be completed at Khetrinagar Copper Complex & Indian Copper Complex since the work orders were issued to out-station parties through tendering process. The physical verification procedure has been completed at Taloja Copper Project, Malanjkhand Copper Project and Gujarat Copper Project by the Independent agencies while at ICC and KCC, stock was verified and certified by the Units management. The Units management has identified the differences in respect of copper content on stock of Inter-unit transfer and differential quantity of metal loss in Granulated Dump Slag and reconciled those differences which were further audited by appointing an Independent auditor by the Company. By virtue of these exercise, closing stock as at March 31, 2020 has been reduced aggregately by H25710.39 Lakh due to one-time adjustment through writeoff in value of closing stock at KCC and ICC arising as a result of, reconciliation of metal content in copper concentrate on inter-unit transfer and sales, assessment of metal loss in generation of Granulated Dump Slag, handling losses and

old & oxidized concentrate considered as dead stock. Further low grade Lean ore and Mill Scat presently not in use in manufacturing process, for which provision of H18331.81 Lakh have been made in the books of accounts as at March31, 2020 by the management. The Company has modified its Standard Operating Procedure on Inventory Management to strengthen the reconciliation of inventory process as an ongoing activity and identification and segregation of unused stock for better control. This has been further described in Note No.39 (31) of the accompanying Standalone Financial Statements.

In respect of stores and spares, physical verification has been conducted by the external agencies, located in and around the project site, in all the units during the year. Shortages/ (Excesses) identified on such physical verification which were not material as per the management, have been properly dealt with in the books of account.

iii. The Company has not granted any loans, secured or unsecured to any companies, firms, limited liability partnership or other parties, covered in the register maintained under section 189 of the Companies Act, 2013.

iv. According the information and explanations given to us, the Company has not given any loan, given any guarantee or provided any security in connection with such loan given/Investment made to which provisions of Section 185 of the Act apply. The provisions of Section 186 of the Act, in our opinion, are not applicable to the Company.

v. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits as per the provisions of the Act.

vi. According the information and explanations given to us, the maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013 in respect of mining activities of the Company. We have broadly reviewed such cost records and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

vii. (a) According to the information and explanations given to us and on the basis of our examination of books of accounts,

the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Goods and Service Tax, Customs Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues which were outstanding as at 31st March, 2020 for a period of more than six months for the date of becoming payable.

(b) According to the information and explanations given to us and as per the records of the Company, following dues of Income Tax, Sales Tax, Entry Tax, Excise Duty, Cess, local body tax and Value Added Tax were in arrears as at March 31, 2020 and have not been deposited on account of dispute:

Name of the Statue Nature of Dues Period to which the amount relates Forum where dispute is pending Gross Dispute Amount (J in Lakh)
Central Excise Act Central Excise 2014-15 to 2016-17 (ICC) High court of Jharkhand 560.60
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
Name of the Statue Nature of Dues Period to which the amount relates Forum where dispute is pending Gross Dispute Amount (J in Lakh)
Central Excise Act Central Excise 2010-11 to 2013-14 (MCP) CESTAT *627.60
Rajasthan value added tax act Central Excise 2007-08 to 2014-15 (KCC) Honble supreme Court *676.40
Central Excise Act Central Excise 2005-06, 2013-14, 2014-15, 2017-18 & 2018-19 (KCC) Commissioner central excise, Bikaner 1392.82
Central Excise Act Central Excise 2018-19 (KCC) CESTAT *361.69
Income tax Act Income tax 2016-17 & 2017-18 (KCC) Commissioner of Income Tax, Jaipur *1.15
Madhya Pradesh Value added Tax Act State Sales Tax/ Vat 1994-95,2011-12, 2012-13 & 2013-14 (TCP) Joint commissioner (sales tax) Maharashtra *777.60
Central Excise Act Central Excise 2010-11(TCP) CESTAT 5.26
Panvel Municipal Corporation Act Local body tax 01.01.2017 to 30.06.2017(TCP) Panvel municipal corporation 1906.36
Income tax Act Income tax 2001-02 to 2003-04, 200506 to 2007-08(HO) High Court of Kolkata 11508.52
Income tax Act Income tax 2007-08, 2011-12, 2012-13, 2016-17 & 2017-18(HO) ITAT/CIT(Appeals) *11603.76
Water (prevention and control of pollution) Cess act, 1977 Water Cess 1999-20 to 2019-20 (HO) Water resources department, government of Jharkhand 1799.38

*Aggregate amount of H752.59 Lakh have been deposited against the cases and shown as “Deposit with Government authorities” under Note No.-17 “Other Current Assets”.

viii. According to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not issued any debentures and also not borrowed any loans from financial institutions or government.

ix. According to the information and explanations given to us, the Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year. Based on the information available, the term loans taken by the Company have been applied for the purpose for which they were raised.

x. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.

xi. As per notification no. GSR 463(E) dated 5.06.2015 issued by the Ministry of Corporate Affairs, Government of India, section 197 for managerial remuneration is not applicable to the Government Company and as such, provision of paragraph 3(xi) of the said order are not applicable to the Company.

xii. In our opinion, the Company is not a Nidhi Company and as such, provisions of paragraph 3(xii) of the said order are not applicable to the Company.

xiii. According to the information and explanations given to us and based on our examination of books of accounts, transactions with the related parties are in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable and the details of such transactions have been disclosed in the Standalone Financial Statements as required by the applicable Indian Accounting Standards.

xiv. According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures during the year.

xv. According to the information and explanations given to us and based on our examination of books of accounts, the Company has not entered into any non-cash transactions specified under Section 192 of the Act with its Directors or persons connected to them.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and as such, reporting under this clause is not applicable to the Company.

For Chaturvedi & Co.
Chartered Accountants
(Firms Registration No.302137E)
Place: Kolkata CA R.K. Nanda
Date: July 21, 2020 Partner
(Membership No.510574)
UDIN: 20510574AAAABH1998

{Referred to in Paragraph (2)(f) of “Report on Other Legal and Regulatory Requirements” section of our Independent Auditors Report}

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Hindustan Copper Limited (hereinafter referred as “the Company”) as of March 31, 2020 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained which is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting of the Company.

Meaning of Internal Financial Controls over Financial Reporting

A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys 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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be

detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, internal financial controls system over financial reporting and such internal financial controls over financial reporting were generally operating effectively as at March 31, 2020, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by The Institute of Chartered Accountants of India. However in certain areas where design documentation need further improvement like Manual on Fixed Assets verification, Implementation of Centralized data base for Title deeds/lease deeds/ other evidences of titles in respect of both freehold and leasehold lands and Buildings, Fund Management including Cash and Bank and controls over issuance of Bank Guarantees shown as contingent liabilities, Comprehensive delegation of power, adequate departmental work allocation process, job rotation policy etc., Inventory Management, Receivable Management, Expenditure on CSR, Payable Management incorporating the process flow by which the transactions are initiated, authorized, processed, recorded and reported at department level at Plants/Projects as well as for financial reporting process. Modification of finance/accounts manual needs to be done incorporating the Indian Accounting Standards requirements to have effective internal controls over financial reporting. System integration to capture the transactions that relates to financial statements and events/ conditions and other transactions significant to the financial statement has to be designed properly so as to fulfill the objectives of control criteria established by the Company.

Internal controls over financial reporting process as well as testing of such control activities has to be further improved considering the discrepancies noticed in physical verification of fixed assets like non availability of prescribed format of reporting, reconciliation of mismatches out of such physical verification, timely adjustment of discrepancies noticed, team structure etc. and maintenance of Fixed Asset Register to be further improved. Identification of old account balances and action taken to settle/adjust the account balances after due assessments and reconciliation of account balances has to be carried out periodically. Utilization certificate related to funds disbursed under CSR programme have not been received in proper format explaining the date wise disbursements by company, various mode of spending the amount within a project, details of agency involved with their name, amount paid etc for better control. Further various control activities in Inventory management have to be established looking into the size of the Company and nature of its business especially like non-availability of defined formats of reporting upon completion of physical verification, fixing any tolerance limit for stock adjustment, Quantification of process stock and assessment of its quality, delay identification of unused stock lying on floor and its segregation process, Improper monitoring and recording of standard and actual average metal loss during manufacturing process, handling losses during the dispatch of copper concentrate from discharge point to bedding building for storage and reconciliation of metal content in copper concentrate on inter-unit transfer and sales. The Company has modified its Standard Operating Procedure on Inventory Management to strengthen the reconciliation of differences arise in physical verification process as an ongoing activity and identification and segregation of unused stock for better control. However, our opinion is not qualified in the above respect.

For Chaturvedi & Co.
Chartered Accountants
(Firms Registration No.302137E)
Place: Kolkata CA R.K. Nanda
Date: July 21, 2020 Partner
(Membership No.510574)
UDIN: 20510574AAAABH1998

{Referred to in Paragraph (3) of “Report on Other Legal and Regulatory Requirements” section of our Independent Auditors Report}

Sl. No. Details/Directions Auditors Reply Action Taken and Impact on Accounts and Financial statements
1. Whether the Company has system in place to process all the accounting transactions through IT System? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with financial implications, if any, may be stated Yes, the Company has system in place to process all the accounting transactions through IT System. There is no impact on the accounts and financial statements.
2. Whether there is any restructuring of any existing loan or cases of wavier/write off of debts/loans/ interest etc. made by a lender to the Company due to the Companys inability to repay the loan? If yes, the financial impact may be stated. Based on the information available to us, there is no restructuring of any existing loan or cases of wavier/write off of debts/ loans/interest etc. made by a lender to the Company during FY 2019-20. However, the Company has written back aggregate amount of H2280.83 Lakh towards trade liabilities pending since long and excess provisions made in accounts during the normal course of business, as stated under Note No. 39 (11) of the Standalone Financial Statements. Impact on the accounts and financial statements to the tune of H1453.37 Lakh has already been considered. Amount of H827.46 Lakh towards provision against feasibility study of Concentrator Plant at MCP, has been written back and equivalent amount of Capital work in progress has also charged to revenue resulting Nil impact in the accounts.
3. Whether funds received/receivable for specific schemes from Central/ State agencies were properly accounted for /utilized as per its term and conditions? List the cases of deviation. No funds received/receivable for specific schemes from Central/State agencies during FY 2019-20. There is no impact on the accounts and financial statements.

 

For Chaturvedi & Co.
Chartered Accountants
(Firms Registration No.302137E)
Place: Kolkata CA R.K. Nanda
Date: July 21, 2020 Partner
(Membership No.510574)
UDIN: 20510574AAAABH1998

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF HINDUSTAN COPPER LIMITED FOR THE YEAR ENDED 31 MARCH 2020

The preparation of financial statements of Hindustan Copper Limited for the year ended 31 March 2020 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under Section 139(5) of the Act is responsible for expressing opinion on these financial statements under Section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 21 July 2020.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit of the financial statements of Hindustan Copper Limited for the year ended 31 March 2020 under Section 143(6)(a) of the Act. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor and is limited primarily to inquiries of the statutory auditor and company personnel and a selective examination of some of the accounting records.

On the basis of my supplementary audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to statutory auditors report under Section 143(6)(b) of the Act.

For and on the behalf of the
Comptroller & Auditor General of India
(Suparna Deb)
Place : Kolkata Director General Audit (Mines)
Date : 03 September 2020 Kolkata