Hindustan Copper Ltd Directors Report.

The Shareholders Hindustan Copper Limited Kolkata

Your Directors have pleasure in presenting the fifty first Annual Report of Hindustan Copper Ltd. (HCL/the Company) together with the audited statement of accounts and Auditors Report thereon for the year ended 31.3.2019.

1. Performance

Financial Summary or highlights

The comparative working results for the FY 2018-19 vis-a-vis FY 2017-18 are as under:

(र in Crore)

Particulars 2018-19 2017-18 N
(a) Turnover 1753.44 *1612.47
(b) Profit before depreciation, amortization, finance charges & tax 538.70 307.98
(c) Less : Depreciation & Amortization 252.89 164.65
(d) Less : Finance Charges 55.46 21.29
(e) Profit/ (Loss) Before Tax from continuing operation 230.35 122.04
(f) Profit/(Loss) Before Tax from discontinuing operation (0.35) (0.35)
(g) Profit/(Loss) Before Tax from continuing & discontinuing operation 230.00 121.69
(h) Less : Provision for Taxation (Current & Deferred Tax) 84.49 42.09
(i) Profit after tax from Continuing & Discontinuing Operation 145.51 79.60
(j) Other Comprehensive Income (16.76) 5.00
(k) Profit for the year 128.75 84.60
(l) Add: Balance brought forward from the previous year 763.13 700.80
(m) Balance available for appropriation 891.88 785.40
(n) Less : Dividend 23.13 18.50
(o) Less : Tax on Dividend 4.76 3.77
(p) Balance to be carried forward 863.99 763.13
(q) Earnings per Share ( (Both Basic & Diluted) 1.57 0.86

*excluding excise duty of र 35.43 crore

During 2018-19, the turnover of the Company was र 1753.44 crore as against र 1612.47 crore during FY 2017-18 registering an increase of 8.74%. The turnover of the FY 2018-19 was highest since inception of the Company. The Company posted a Profit Before Tax from continuing & discontinuing operation of र 230.00 crore during the year as against र 121.69 crore recorded during the previous year registering an increase of 89.00%. The Profit After Tax from continuing & discontinuing operation during FY 2018-19 is र 145.51 crore as against र 79.60 crore in FY 2017-18 registering an increase of around 82.80%.

Physical performance:

The comparative physical performance of production and sales for the year 2018-19 vis-a-vis 2017-18 is as under:-

Particulars 2018-19 2017-18
Ore (Lakh Tonnes) 41.22 36.75
Metal in concentrate (MIC) (Tonnes) 32,439 31,793
Cathode (Tonnes) 16,215 25,949
CC Wire Rod (Tonnes) 21,450 22,211
Sales (Tonnes):
CC Rod 13,756 22,812
Cathode 2,564 4,490
MIC 21,953 9,133
Total 38,273 36,435

Cathode production during 2018-19 was less compared to last year due to shut-down of smelter plant at Indian Copper Complex (ICC), Ghatsila during the period from 3.5.2018 to 29.6.2018 for major overhauling of the plant. Plant at Gujarat Copper Project (GCP) to produce copper cathode though secondary route could not be operated at desired capacity due to non-availability of raw material of desired price.

Operations of Khetri concentrator plant during the year was affected due to acute water shortage. Action to ensure supply of water from Kumbharam project of Government of Rajasthan has been taken in addition to ensuring intake of water from extra bore well.

Highlights of Financial Year 2018-19

i. Copper ore production of र 41.22 lakh tonnes during 2018-19 is the highest in last 21 years. Ore production of 25.42 lakh tonnes at Malankjhand Copper Project (MCP) during the year is the best since inception.

ii. MIC production of 32,439 tonnes during 2018-19 is the highest in last 17 years.

iii. Total Copper sales of 38,273 tonnes during 2018-19 is the best in last 9 years.

iv. Major overhauling of flash furnace with technical upgradation in the slag cleaning furnace at ICC, Ghatsila completed during the year.

v. New coiler for continuous cast copper wire rods at Taloja, Maharashtra was commissioned to improve packaging.

vi. The Cabinet committee on Economic Affairs has given its approval to HCL for issue of fresh equity shares to the extent of 15% of paid up equity capital through the Qualified Institutions Placement (QIP) method.

vii. In view of vast gap between supply and demand of copper metal in the country, the Board of HCL has approved enhancement in mine production plan of the Company from present projection of 12.4 million tonne to 20.2 million tonne per annum in next 5-6 years at an estimated capex of र 5,500 crore.

viii. Chhattisgarh Copper Ltd (CCL) has been incorporated on 21.5.2018 as a Joint Venture Company between Hindustan Copper Ltd and Chhattisgarh Mineral Development Corporation Ltd (CMDC) for exploration, mining and beneficiation of copper and its associated minerals in the State of Chhattisgarh. The shareholding of HCL and CMDC is in the ratio of 74:26. In view of HCLs shareholding of 74%, CCL is also a subsidiary company of HCL.

2. Dividend

The Board of Directors of your Company has recommended payment of dividend @ 5.05% approx. on Net Worth, i.e. र 0.52 per share on र 5/- face value for the year 2018-19, for approval of shareholders in the Annual General Meeting. The outgo on this account will be र 48.11 crore for dividend and र 9.89 crore towards tax on distribution of dividend, aggregating to a total outgo of around र 58.00 crore.

3. Material Changes, if any

No material change and commitment affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relate and the date of the report.

4. Projects:

i. Malanjkhand Copper Project (MP)

Work is under progress to expand the production capacity of Malanjkhand mine from present 2 to 5 Mtpa by developing an underground mine below the existing open cast mine at an estimated cost of र 1856.74 crore. Scheduled Completion date is April, 2020. Progress So far, sinking of Service Shaft (665.5 M) and Production Shaft (693.6 M) has been completed during May,2018 and October, 2018 respectively. The development work of North Decline and South Decline is up to 2461 meters and 1580 meters respectively. The progress of underground development during the FY 2018-19 was satisfactory. Action has been initiated to commence production from the FY 2019-20.

ii. Khetri, Kolihan and Banwas mine (Rajasthan)

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

a. Kolihan Mine: For additional shaft sinking & creation of ore handling facilities below 0 mRL environmental clearance obtained on 2.2.2015. Further, 1650 m of Diamond drilling work under taken to establish the ore body at depth and 959.6 m drilling has been completed. Further drilling is in progress.

b. Khetri mine: Tendering action for new contract for deepening of the existing shaft and other related activities has been initiated as the earlier tender could not be awarded due to very high cost quoted by the single valid offer.

c. Banwas Mine: Mine construction work has been completed in February, 2017. The Company has appointed M/s SMS Nagpur, mine developer and operation agency for long term operation 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 production capacity from 0.4 to 0.9 Mtpa. On 19-20 September, 2016, Expert Appraisal Committee of Ministry of Environment, Forest and Climate Change (MoEFCC) has recommended the proposal for Environment Clearance subject to clarification regarding forest clearance for forest land involved in underground mining. Matter is under scrutiny at Forest Clearance division of MoEFCC & Department of Mines & Geology, Government of Jharkhand.

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

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

a. Kendadih mine: The Kendadih mine was reopened in December, 2017 after all the mining equipping including mine dewatering work was completed. Mine development work is in progress. Equipment are mobilized in a phased manner and mine has produced 21,641 MT of ore during this financial year which has also been treated in Mosaboni Concentrator Plant.

b. Chapri Sideshwar : Chapri-Sideshwar mine falls within the Rakha and Kedadih mining lease area. All mine plans and schedules were updated and tender for opening of Chapri mine has been initiated and Price Bid has been opened on 08.03.2019. Tender is under finalization on EPC route.

c. Rakha mine: Considering the change in market scenario, the Company will implement the project through a EPC route. Environmental clearance of Rakha mining lease obtained on 1.8.2014, Stage II Forest Clearance for the project has been obtained on 15.9.2016. Mine dewatering arrangement & work schedules have been prepared and dewatering will be taken up on start of Chapri mine immediately.

v. Extraction of minerals from copper ore tails (MP)

The Company is in advance stage of erection of Copper Ore Tailing (COT) recovery facility of capacity 3.3 Million tonne per annum to recover the valuable metals and minerals 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 at Malanjkhand Copper Project (MCP). The project besides generating additional revenue to the Company will also help to mitigate the risk to the environment. It is expected that the plant will be commissioned during the FY 2019-20.

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 or Tribunals impacting the going concern status and companys operations in future.

6. Utilization of funds raised through preferential allotment or QIP during the year

The Company has not raised funds through preferential allotment or qualified institutions placement and hence not applicable.

7. Management Discussion and Analysis

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

8. Awards and Accolades

a) HCL was conferred the best CSR Impact Initiative Award at the National Awards for Excellence in CSR & Sustainability, under the category of Best Corporate Social Responsibility Practices on 5.9.2018 at Vivanta by Taj, Yeshwantpur, Bangaluru.

b) HCL was awarded the "ET Now presents CSR Leadership Awards" by World CSR Day under the category of Safe Drinking Water held on 18.2.2019 at Taj Lands End, Mumbai.

c) HCL was awarded with Third prize for its Corporate Film (English) and Third prize for its Coffee Table Book (English) at the PRSI Nation Awards 2018 organized by Public Relation Society of India.

d) HCL was felicitated as one of the Top 50 organizations with Innovative HR Practices under PSU category in the Asia Pacific HRM Congress Awards 2018 held at Bengaluru.

e) The Quality Circle team "Sahyog" of ICC Refinery won in Gold category during the Chapter Convention on Quality Circle (CCQC) on 11.9.2018 at Kolkata and Excellent Award in Nation Convention on Quality Circle (NCQC) at Gwalior held during 21.12.2018 to 24.12.2018.

f) HCL has been conferred the "Skoch Order-of-Merit" for qualifying amongst Top 30 Skill Development Projects in India. Further, it was also recognized with Skoch Award "Skill Development Gold" for Skill Development Project.

g) Surda mine of ICC got 1st prize in Storage, Transport and use of Explosives in All India underground metal mines safety, cleanliness and silicosis awareness week 2018.

h) MCP won five awards in the category of fully mechanized mine at 28th Mines Environment and Mineral Conservation (MEMC) Week 2018-19 held under the aegis of the Indian Bureau of Mines, Jabalpur Region. The theme for MEMC Week celebration was "Jal Hai To Kal Hai".

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

HCL has invested र 18.50 Lakhs in the equity shares of its subsidiary Chhattisgarh Copper Ltd (CCL) during the year ended 31.3.2019. The total paid up capital of CCL as on 31.3.2019 is र 25 Lakhs out of which 74% equity is held by HCL and remaining 26% is held by Chhattisgarh Mineral Development Corporation Ltd. Particulars of investments as per section 186 of the Companies Act, 2013 are given in Notes to Financial Statements 2018-19.

10. Deposits

The Company has not taken any deposits covered under or which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

11. Related Party Transactions (RPTs)

No contract or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013 has been entered into during FY 2018-19 and hence report in Form AOC-2 is not applicable. Policy on RPTs and dealing with RPTs has been formulated and put up at the Companys website at www.hindustancopper.com .

12. Maintenance of Cost Records

The Company is required to maintain cost records as specified by the Central Government under section 148 of the Companies Act, 2013, and accordingly such accounts and records are being maintained.

13. Establishment of Vigil mechanism:

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

14. Risk Management Policy

The Board of Directors of the Company has developed and implemented a risk management policy for the Company including identification therein of elements of risk, which in the opinion of the Board, may threaten the existence of the Company.

15. Internal Financial Controls

The Company has in place adequate internal financial control with reference to financial statements commensurate with its size and operations.

16. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

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

17. Safety

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

i. Malanjkhand open cast mine had won the following safety performance award in large opencast mine category in 2018-19 under the aegis of DGMS (Nagpur region I&II):

a) 1st Prize on Safety Management Plan (SMP) and Emergency Preparedness, Dumper Trade Test and Diesel Mechanic Trade Test.

b) 2nd Prize on Mechanical and Electrical Installation.

ii. Khetri Copper Mine had received 1st Prize on Maintenance of Electrical Installations.

iii. Kolihan Copper Mine received 2nd Prize for Electrical Equipment & Installations.

Besides, Rescue Team of Khetri Copper Complex participated in the 49th All India Mine Rescue Competition from 09.12.2018 to 13.12.2018 at Sitarampur (ECL), West Bengal.

iv. Surda Copper Mine had received 1st prize on Storage Transport & Use of Explosives.

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

18. Corporate Social Responsibility (CSR)

The CSR Report in the prescribed format as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 is at Annexure-III.

19. Vigilance Activities

HCL is standing on the threshold of a massive expansion drive and to achieve the same, capacity building is essential. At this critical juncture, the stress needs to be provided on streamlining the systems and procedures as well as adoption to the latest government guidelines in the changing scenario. To achieve the same and to increase awareness amongst key executives dealing with contracts and procurements, an in-house training program was organized in collaboration with one of the premier institutes having faculty members with decades of experience in public procurement including critical imports and technological innovations. Competition ensures both quality and profitability and hence emphasis is also being provided for streamlining of the tendering processes and reduction of cost through more competitive bidding procedure. A campaign for creating awareness was taken up by organizing the Vigilance Awareness Week from 29.10.2018 to 3.11.2018 at all Units and at Head Office. Stress was given on preventive vigilance with a view to minimize scope for corruption and assisting the management in improving the systems and procedures.

20. Official Language Implementation

During 2018-19, HCL made constant endeavor to increase use of Hindi in its Units/Offices. Raj Bhasha Pakhwara and Hindi Diwas were celebrated in the Units/Offices from 14.9.2018 to 28.9.2018. On this occasion, the messages of Honble Home Minister, Honble Mines Minister, Govt. of India and CMD, HCL were circulated/read out. Various competitions were organized with a view to enhance interest among employees towards Official Language. Employees are constantly motivated to use Hindi in their day-to-day official work. Hindi Workshops were conducted in the Units/ Offices at regular intervals. Regular review of progressive use of Hindi and difficulties faced were carried out in Quarterly meetings of Official Language Implementation Committee under the Chairmanship of CMD at Corporate Office and Unit Heads in Units.

During 2018-19, the Company participated in the half-yearly meeting of Town Official Language Committee (PSUs), Kolkata held on 24.8.2018. Under the Official Language Award Scheme 2017-18 the Corporate Office of HCL was awarded for the successful implementation of the official language on 24.8.2018 by the Town Official Language Implementation Committee (PSUs), Kolkata.

The progressive use of Hindi is being reviewed regularly at the Board meetings. Hindi books have also been purchased during the year. The Companys in-house journal "Tamralipi" is published in Hindi and English and distributed among employees regularly and also mailed to the members of the Hindi Advisory Committee.

21. Business Responsibility Report

Pursuant to Regulation 34 (2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 {SEBI (LODR), 2015}, Business Responsibility Report for 2018-19 describing various initiatives taken by the Company on social, environmental and governance perspective, is attached at Annexure-IV which forms part of this report.

22. Extract of Annual Return

Extract of Annual Return pursuant to Section 92(3) of the Companies Act, 2013 is available at Companys website at www.hindustancopper.com .

23. Corporate Governance

Corporate Governance Report as per SEBI (LODR), 2015 is given at Annexure-V forming part of this report together with Certificate on Corporate Governance.

24. Number of meetings of the Board

During 2018-19, ten Board meetings were held on 21.4.2018, 25.5.2018, 30.5.2018, 26.7.2018, 9.8.2018, 5.9.2018, 27.10.2018,

13.11.2018, 11.2.2019 and 28.3.2019.

25. 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, 2019 the applicable accounting standards had been followed along with proper explanations relating to material departures.

(ii) That such accounting policies have been selected and applied consistently and made adjustments and estimates which are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of 31st March, 2019 and of the Profit and Loss of the Company for the year.

(iii) That proper and sufficient care has been taken for the 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 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 the Company and that such internal financial controls are adequate and operating effectively.

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

26. Declaration by Independent Directors:

Independent Directors of the Company have given declaration to the effect that they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013.

27. 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 of the Company. Visit to Units is also organized as per their convenience. They are also updated on the changes / developments including in the relevant statutory / regulatory requirements from time-to-time. Detail of Directors Training / Familiarization Programme has been hosted at the Companys website at www.hindustancopper.com .

28. Code of Conduct

The Company has in place a Code of Conduct applicable to the Directors as well as Senior Management and the same has been circulated to all concerned and posted at the Companys website www.hindustancopper.com . All Board members and senior management personnel have affirmed compliance of the Code for the year ended 31st March, 2019.

29. Directors

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

Shri Sukhen Kumar Bandyopadhyay has joined as Director (Finance) with effect from 9.7.2018.

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

Shri Arun Kumar Shukla has joined as Director (Operations) with effect from 1.10.2018.

Smt Simantini Jena and Shri Hemant Metani were reappointed as Independent Directors for a period of one year from 17.11.2018 and Shri Dileep Raj Singh Chaudhary was reappointed as Independent Director for a period of one year from 1.12.2018.

Shri Anupam Anand, Director (Personnel) is under suspension from 11.4.2019 in terms of Order No. A/05/1/2019-Vig. dated 11.4.2019 issued by Ministry of Mines, Government of India.

The Board places on record its appreciation for the valuable services rendered and contribution made by Shri Anil Kumar Nayak during his tenure on the Board.

30. Secretarial Audit Report

Shri Arup Kumar Roy, Practicing Company Secretary, has been appointed as Secretarial Auditor for FY 2018-19. Report given by the Secretarial Auditor is given at Annexure -VI to this report. With regard to the observations of the Secretarial Auditor about composition of the Board of Directors of the Company, it is stated that during 2018-19, three posts of part time non-official (Independent) Directors were laying vacant. HCL, being a Government Company and in terms of its Articles of Association, appointment of all Directors on its Board is made by the President of India through orders issued by the Ministry of Mines (MoM). The Company has requested MoM to fill up the vacant posts of Independent Directors.

31. Auditors

M/s. Chaturvedi & Co, Kolkata was appointed as Statutory Auditors to audit the accounts of the Company for the year 2018-19.

M/s. Chatterjee & Co, Kolkata was appointed as Cost Auditor of the Company for carrying out the cost audit of Copper Ore, Concentrate, Cathode, Continuous Cast Copper Rods, other Processed Copper and articles along with Sulphuric acid for the year 2018-19.

32. Comments of C&AG

The comments of C&AG under the Companies Act on the accounts of the Company for the year ended 31st March, 2019 are annexed to this report.

33. Appreciation

In conclusion, your Directors wish to place on record their appreciation of the hard work put in by all employees of the Company during the year under review. The Board gratefully acknowledges the valuable guidance and co-operation received from the Ministry of Mines and other Ministries/ Departments of the Government of India and the support received from the State Governments of Rajasthan, Jharkhand, Madhya Pradesh, Maharashtra, Gujarat and West Bengal and the Companys bankers, customers and office bearers of the recognized trade unions of different Units / Head Office. The Board also thanks all shareholders and investors for the trust reposed by them in the Company.

For and on behalf of the Board of Directors
Santosh Sharma
Place: Kolkata Chairman and Managing Director
Date: 04.06.2019 (DIN-07431945)