REPORT OF THE BOARD OF DIRECTORS 

The Shareholders

Hindustan Copper Limited

Kolkata

Your Directors have pleasure in presenting the forty-seventh Annual Report of the Company together with the audited statement of accounts and Auditors' Report thereon for the year ended 31 March, 2015.

1. Financial Summary or highlights

During financial year (FY) 2014-15 HCL posted a Profit before tax (PBT) of Rs. 80 Crore as against Rs.431 Crore clocked during the previous year registering a decline of around 81.44%. The turnover of the Company was Rs.1127.49 Crore during FY 2014-15 as against Rs.1615.90 Crore during FY 2013-14 registering a decrease of around 30.22%. The total expenditure of the Company declined by about 15.22% by posting a number of Rs.1016.36 Crore as against Rs.1198.75 Crore year-on-year. However the Profit after tax (PAT) during FY 2014­15 is Rs. 67.60 Crore as against Rs. 286.42 Crore in 2013-14.

2. Dividend

The Board of Directors of your Company have recommended payment of dividend @ 3% on equity, i.e., Re 0.15 per share of Rs. 5/- face value for the year 2014-15, for approval of shareholders in the Annual General Meeting. The outgo on this account will be Rs.13.88 Crore for dividend and Rs. 2.83 Crore towards tax on dividend, aggregating to a total outgo of Rs.16.71 Crore.

3. Material Changes if any

The Company has entered into an agreement to acquire plant & machinery including leasehold land of Jhagadia Copper Limited (JCL)(in liquidation) through Asset Reconstruction Company (India) Ltd. (ARCIL) at a value of Rs. 210 Crore through auction process. The Company has paid an amount of Rs. 105 Crore up to  31st March, 2015 and the balance amount of Rs.105 Crore has been paid in April,2015. The JCL Plant has facilities for manufacture of 50,000 tonnes per annum of LME 'A' grade Copper Cathodes by secondary smelting process.

4. Change in the nature of business:

There has been no change in the nature of Business of the Company

5. Physical performance

Factor Affecting Performance

During 2014-15, adverse performance of the Company can be attributed to the following:

• Steep fall in London Metal Exchange prices of Copper, prices have fallen by 20% by the last quarter of the financial year.

• 21% fall in copper ore grade of Malanjkhand mine which contributes around 65% of the ore production to the Company. Also, submerging of lower benches for a longer period to due to unseasonal rainfall affected by cyclonic storm.

• Stoppage of Surda Mine(Jharkhand) operation from 8.9.2014 due to State Govt. orders pursuant to Hon'ble Supreme Court judgment on operation of mines on deemed renewal basis.

• Extreme water shortage at Khetri Copper Complex (Rajasthan) Remedial Action

To improve the physical production, the Company has redesigned the Malanjhkhand open pit mine in consultation with IIT, Khagarpur. Jharkhand Government has extended the Surda Mine lease pursuant to the MMDR Amendment Act 2015 and production from the mine is likely to commence after the mobilization of resources is completed by the Contractor. Dewatering system at Malanjkhand mine has been strengthened to take care of excessive rainfall during the year. Necessary steps have been initiated to enhance excavation at MCP open pit mine to expose more ore face which will improve the copper ore grade.

To argument the water availability at Khetri in near term, deepening of four existing wells at Chaonra has been taken up to augment additional 1500 Cu. M / day water supply. As a long term measure, proposal for providing surface water @ 5000 Cu. M /day from Indira Gandhi canal was sent to Govt. of Rajasthan is being actively pursued.

6. Mine Expansion Schemes

The ongoing mine expansion scheme envisages expansion of Malanjkhand, Khetri, Kolihan and Surda mines, Banwas as an extension of Khetri Mine; re-opening of Rakha and Kendadih mines and development  of new mine namely Chapri-Sideshwar to increase mine production to 12.4 Million tonne per annum (Mtpa) from present 3.4 Mtpa. The mine-wise scheme and status is given below:

i. Malanjkhand Copper Project

It is proposed to expand the production capacity of Malanjkhand mine from present 2 Mtpa to 5 Mtpa by developing an underground mine below the existing open cast mine at an estimated cost of Rs.1856.74 Crore.. All the approval are in place, Environment Clearance (EC and National Board for Wild Life (NBWL) has been obtained in 2014-15.The Foundation stone laying of the project had been held on 12.4.2015.

ii. Khetri and Banwas mines

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

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

Khetri mine: The Engineering Procurement & Construction (EPC) agency for executing the Khetri mine expansion project had been appointed on 15.07.2011 and the work at site started from 16.9.2011.

Banwas Mine: Development of Banwas deposit started in May, 2010, and the work is expected to be completed by 2015.

iii. Surda mine expansion

The plan envisages increase in the depth of the mine and enhancement of production capacity from 0.4 million tonne per annum to 0.9 million tonne per annum.

Operation of Surda mine has been stopped since 08.09.2014 as per directives from Govt. of Jharkhand. TWP awaited from ED, Wasteland Development Board.

iv. Re-opening of closed mines at ICC

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

Kendadih mine: The contract for reopening and allied mine development for 4 years has been awarded to the successful bidder on 04.02.2012.Environmental clearance from MoEF obtained on 20.01.2015, stage -I forest clearance obtained, stage -II forest clearance is awaited.

Rakha mine: The contract for reopening and expansion of Rakha Copper mine for 5 years has been awarded to the successful bidder on 02.07.2013. Environmental clearance of Rakha mining lease obtained on 01.08.2014, stage -I forest clearance obtained, stage -II forest clearance is awaited.

v. Chapri Sideshwar

The Letter of Intent (LoI) was issued to the successful bidder on 08.11.2011 to develop an underground mine at Chapri-Sideshwar to produce 1.5 million tonne of ore per annum. The work shall start after obtaining statutory clearances and restoration of the power facility at site. Chapri-Sideshwar is part of Rakha and Kedadih mining lease. Environmental clearance from MoEF obtained on 20.01.2015, stage -I forest clearance obtained, stage -II forest clearance is awaited.

7. 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 company's operations in future.

8. Management Discussion and Analysis

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

9. Awards and Accolades 

i. During the year 2014-15, the Company received the Tritiya Puraskar (Third Prize) for successful implementation of Hindi as the official language from Town Official Language

ii. Committee (PSUs), Kolkata held on 8th September, 2014. The Hindi edition of House Journal "Tamralipi" of HCL was awarded First Prize by Town Official Language Committee (PSUs), Kolkata under "Rajbhasha Award Scheme-2013-14" on 8th September, 2014.

iii. The Quality Circle team 'Sanshodhan' from Khetri Copper Complex won in Silver Category and two other teams, i.e., 'Adarsh' from Khetri Copper Complex and "Udayan' from Taloja Copper Project won in Bronze Category during the Chapter Convention on Quality Concepts (CCQC), 2014 on 23.09.2014 at Kolkata.

iv. HCL was awarded as the "Organisation with Innovative HR Practices" at the Asia Pacific HRM Congress held during 2011-12 in Bengaluru.

v. HCL has been conferred the SKOCH Order of Merit for CSR project namely ' Systematic Rice Intensification' and has been selected as amongst the best projects in the Country in November, 2014

vi. HCL was endorsed the '50 Most Caring Companies of India' by the World CSR Day.

vii. HCL was awarded the 'The IME Journal Mining Innovation Award' in the field of 'Mining Technology & Ore Recovery with effective Environmental Management, & CSR Initiatives for Sustainable Development on 21st June, 2014 in New Delhi.

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

During the year from 01/04/2014 to 31/03/2015: NIL

11. 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.

12. Policy on Related Party Transactions (RPTs):

Policy on RPTs and dealing with RPTs has been formulated and put up at the Company's website at www.hindustancoppr.com.

13. Particulars of Contracts or Arrangements with Related Parties

The Company has not entered into any contracts or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013.

14. 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 Company's website at www.hindustancopper.com.

15. 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.

The Company has laid down the internal financial controls with reference to financial statements of the Company, to be followed by the Company, detailing the policies and procedures to be followed. The financial statements are passing through the processes of Internal and External (Tax, Cost and Statutory) Audits, before being approved at the meeting of the Board of Directors of the Company. 

17. 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.

18. 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:

Malanjkhand open cast mine had won the following safety performance award on 14.12.2014 in large opencast mine category under the aegis of DGMS (Nagpur region I&II):

1st Prize in Open cast working

2nd Prize on Use of explosives

2nd Prize on overall best performance

3rd Prize in HEMM.

Seven individual prizes & special prize on first aid were won by Mine rescue team in All India Rescue competition 2014-15 held at Ramgarh, Jharkhand.

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

Two first prize, two second prize and three 3rd prizes were won by individuals in trade test for mines workmen and the prizes were distributed at Kotputli, Rajasthan.

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.

19. Corporate Social Responsibility and Sustainability (CSR&S)

The CSR&S activities in the prescribed format as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure-III.

20. Vigilance Activities

The focus has been on preventive vigilance through institutional mechanism so as to make the preventive vigilance effective. A large number of suggestions for system improvement have been given by the Vigilance Department to the Management, primarily with the aim of making the systems more transparent. Vigilance Department is also making efforts to sensitize the employees about the need to exercise vigilance by one and all. Special seminars are being conducted both at the Corporate Office, as well as, various Units to create vigilance awareness in true spirit.

21. Official Language Implementation

During the year, HCL made constant endeavours to increase use of Hindi in its Units/Offices. Raj Bhasha Pakhwara and Hindi Diwas were celebrated in the Units/Offices from 14th to 28th September, 2014. The messages of Hon'ble Home Minister, Govt of India and CMD, HCL were circulated /read out in all Offices/Units on this occasion. Various competitions were organized with a view to enhance interest among employees towards Official Language. Prizes were distributed to the winners. 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. The progressive use of Hindi is being reviewed regularly at the Board meetings.

22. Integrity Pact:

The Company enters into an Integrity Pact with the suppliers/contractors with the threshold value of Rs.20 crores in case of Purchase Orders and Rs.10 crores for Works contract, in line with the MoU signed by HCL with TII.

23. Corporate Governance

A report on Corporate Governance as per SEBI directives and stock exchange listing requirement is given at Annexure-IV forming part of this report together with statutory auditors' certificate on corporate governance.

24. Extract of Annual Return:

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

25. Number of meetings of the Board:

During 2014-15, six meetings of the Board were held on 24.5.2014, 13.8.2014, 13.11.2014, 4.12.2014, 5.2.2015 and 3.3.2015.

26. 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 31 March, 2015 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 31 March, 2015 and of the Profit or 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.

27. 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.

28. Familiarization Programme for Independent directors as per Clause 49

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 of the changes / developments including in the relevant statutory / regulatory requirements from time to time. Detail of Directors' Training / Familiarization Programme has been posted at the Company's website at www.hindustancopper.com.

29. 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 Company's website www.hindustancopper.com. All Board members and senior management personnel have affirmed compliance of the code for the year ended 31 March, 2015.

30. Directors / key managerial Personnel

Shri Avijit Ghosh ceased to be Director (Mining) from the close of working hours on 31.12.2014 consequent upon his appointment as CMD, Heavy Engineering Corporation Limited.

S/Shri Gyan P Joshi, Puneesh Kumar Kapoor and Arvind Sahay ceased to be part-time non-official (Independent) Directors on completion of their tenure on 6.2.2015.

Shri Virendra Kumar Srivastava resigned from the post of part-time non-official (Independent) Director due to personal reason from 13.4.2015.

The Board places on record its appreciation for the valuable services rendered and contribution made by S/Shri Avijit Ghosh, Gyan P Joshi, Puneesh Kumar Kapoor, Arvind Sahay and Virendra Kumar Srivastaav during their tenure on the Board.

31. Secretarial Audit Report:

M/s N K Associates, Practicing Company Secretaries, has been appointed as Secretarial Auditor for FY 2014-15. Report given by the Secretarial Auditor pursuant to Section 204 (1) of the Companies Act, 2013 and Management reply on the comments / observations by the Secretarial Auditor are annexed to this report.

32. Auditors

M/s.A Kayes & Co, Kolkata was appointed as statutory auditors to audit the accounts of the Company for the year 2014-15.

M/s Chatterjee & Co, Kolkata was appointed as Cost Auditor of the Company for carrying out the cost audit of Copper Ore, Concentrate, Processed Copper and articles thereof and Sulphuric Acid for the year 2014-15.

The comments of C&AG under the Companies Act on the accounts of the Company for the year ended 31 March, 2015 are annexed to this report.

The Company did not have any employee in the category specified in Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.

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 and West Bengal and the Company's bankers, auditors, C&AG, 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 

K D Diwan

Chairman-cum-Managing Director 

Place: New Delhi

Date: 28.5.2015