THE NEWSMAN OF INDIA.COM
27th September, 2018 Kolkata

Santosh Sharma,Chairman,Hindustan Copper Limited in his maiden speech as the Chairman of HCL addressed the Shareholders, Members of the Board and Distinguished Guests in the 51st Annual General Meeting held in Kolkata. He extended his profound gratitude to all for placing the trust and overwhelming support which is very important for the success of your Company he said.

The Annual Report for 2017-18 containing the 51st AGM notice, Directors’ Report, the audited statement of Accounts of the Company for the year ending 31st March, 2018 was circulated to the guests present in the AGM.

Santosh Sharma,Chairman,Hindustan Copper Limited shared the Company’s performance in the fiscal year 2017-18, and discussed plans and future growth strategy of the Company.

Santosh Sharma, Chairman, Hindustan Copper Limited speech’s some parts are as follows;

Economic Prospective
World economic outlook report of International Monetary Fund (IMF) has estimated global economic growth of 3.8 percent in the year 2017 which is the highest since 2011. Global economic activity is forecasted to remain strong and global growth for the year 2018 and 2019 is forecasted to be 3.9 percent.

The Indian economy grew 8.2% in the first quarter of the current year and the Reserve Bank of India expects Indian economy to grow 7.4% in the fiscal year 2018-19.

During the last two years, the Government of India has been able to implement significant key economic policy reforms like roll out of nationwide GST, demonetization, passage of the Insolvency and Bankruptcy Code(IBC). These measures have have given boost to Industrial production.

The Industry:
Global Perspective

As per International Copper Study Group (ICSG), World mine production decreased by 1.5% in 2017 but is expected to grow by around 3% in the year 2018 to a level of 20.67 million tonnes.

During the year 2017, world refined copper production was 23.5 million tonne registering a growth of 0.7%. In the 2018, the production of refined copper is estimated to grow by 5% to a level of 24.5 million tonne.. .

With regards to the global demand of refined copper, sustained growth in the demand is expected to continue because copper is essential to economic activity..

In the year 2017, the world consumption of refined copper was around 23.76 million tonne, registering a growth of only 0.7%. However, it is forecasted that world refined copper demand is expected to increase by 3% in 2018 to a level of 24.68 million tonne. China remains the largest consumer of refined copper in the world, consuming around 50 percent of the world demand..
Indian Copper Scenario

Refined copper production during fiscal year 2017-18 of the country was 8.43 lakh tonnes as compared to 7.98 lakh tonnes in FY 2016-17. With regards consumption. it is estimated that during FY 2017-18, the consumption of refined copper was around 6.6 lakh tones compared to 6.5 lakh tonnes in 2016-17.
Investment in upcoming infrastructure projects and increased Government spend on housing, rural and railway electrification, the refined copper demand will grow at a very rapid rate in the coming years. The growth rate of domestic copper consumption is likely to increase around 6 to 7% in the year 2018.
One of the major challenges that the domestic copper industry facing is huge surge in imports of refined copper from the countries we have Free trade agreements. The imports have increased from 65,000 tonnes in the 2010-11 to around 2.50 lakh tonnes in 2017-18, which is equivalent to one third of the total domestic demand.
Let me now take you briefly through the Company’s performance during the year gone by.

Dear Shareholders, Despite the difficult market situation your company had to face with in fiscal year 2017-18, your Company has posted good results as compared to last year.
Production
During the fiscal 2017-18, overall sale volume was 36,435 tonnes as against 28,888 tonnes in the previous year thereby registering a growth of 26% and was the best in last seven years.

During the year, the production of Metal in Concentrate of 31,793 tonnes was higher by 4%, cathode of 25,949 tonnes was higher by 39% and wire rod of 22,211 tonnes was higher by 22% during 2017-18 as compared to 2016-17.

During the last fiscal year, it is heartening to inform that Kendadih mines at Jharkhand was reopened in December, 2017 and Banwas mine, a new mine at Khetri Copper Complex, Rajasthan was commissioned in June,2017. During the year, the Company expects significant progress in mine development activity with MDO for Banwas mine at Khetri have been appointed.

Financial
During the year, the Revenue from Operations (Net) of the company during the FY 2017-18 was Rs 1684.25 crore which was around 39.89% higher as compared to the corresponding previous year at Rs 1203.96 crore. EBITDA of the company during the FY 2017-18 was Rs 307.98 crore which is 25.5% higher as compared to the corresponding previous year at Rs 245.46 crore.

Profit Before tax has registered 29% increase in the fiscal 2017-18 to Rs.121.69 crore against Rs.94.20 crore in 2016-17. Profit After Tax (PAT) also increased by 20% to Rs 79.60 crore in fiscal 2017-18 from Rs 61.94 crore in the FY 2016-17. CAPEX of your company during the fiscal year 2017-18 was Rs 589.81 crore which was around 47.21% increase as compared to the corresponding previous year recorded at Rs 400.66 crore.
Dividend

Keeping in view the Capex and business expansion needs, the Board of Directors of your Company has recommended payment of dividend at the rate 5% on equity, i.e. Re 0.25 per share of Rs. 5/- face value for the year 2017-18, for approval of shareholders in the Annual General Meeting.
Growth Initiatives:
You all are aware that your Company is implementing mine expansion plan to increase the mine production capacity to 12.4 million tonne per year.

The above mine expansion was further reviewed by the Ministry in the context of the huge gap between supply and demand of copper mineral in the Country and it was felt that the Company has a potential for growth and with the infusion of capital it can further increase its mine production. I am happy to inform that the current mine expansion plan has been increased from 12.4 to 20 million tonne per year i.e the mining capacity will be increased by around 6 times from its present production capacity in next six years. Total capital outlay of the above expansion projects is 5,500 crore.

With regards to funding of the above projects, Cabinet Committee on Economic Affairs, in its meeting held on 1.8.2018 has given its approval to your Company to issue fresh 13,87,82,700 equity shares to the extent of 15% of paid up equity capital of face value of Rs. 5/- each by HCL through the Qualified Institutions Placement (QIP) route as per SEBI and other applicable guidelines. HCL will use the proceeds of QIP to meet its capex plan.

The Company’s flagship project, Malanjkhand underground mine of annual capacity 50 lakh tonne is progressing well. Fifty percentage of the physical progress has been completed. Plans have been firmed up to commence ore production from the underground mine in the coming fiscal year. Likewise, tender has been issued for construction and operations of Chapri- Sidheswar mine, a new mine at Ghatsila of capacity 1.5 million tonne per year.

Exploration is the key thrust area to identify new mineral prospects and opportunities for growth. I take this opportunity to inform you that Rs 200.0 crore has been earmarked to undertake depth exploration across all the mining lease area of your Company. It is planned to undertake 1.30 lakh meters of drilling activities with state of the Art technology in the next three years. In the existing mines of your Company, the exploration for copper mineral has been carried out to a depth of around 500 meters maximum. It has been found that copper mineral exists beyond the levels explored . During the year 2017-18, around 4,646 meters of exploration drilling was completed in 2018-19, around 28,000 meters of exploration drilling activities has been planned. You may be happy to note that Government of India has notifies your company status of an exploration agency under sub section(1) of section 4 of MMDR Act 1957.

New Avenues of Growth:

The Last few years have been challenging, because on the one side we need to be sustainable on the face of falling copper prices and on the other hand funds need to be made available for the ongoing mine expansion projects. In the last three years our focus to identify new business verticals to insulate the Company from the vagaries of LME copper price.

The Company initiated a project on “Waste to Wealth”. A compatible technology has been developed to extract minerals and materials from copper ore tails (CoT), a waste generated during copper ore beneficiation. A contract has been awarded for installation and commissioning of CoT processing plant of annual capacity 3.3 million tonne at flagship Unit at Malanjkhand, Madhya Pradesh. The project shall be commissioned in this fiscal year. It shall be a significant value creator for the Company.

Waste Rock is generated when ore burden is to be removed while extraction of copper ore at Malanjkhand open cast mines. This ore burden is essentially waste rocks which are granite or quartzite in nature. At present more than 100 million tonnes of such waste rock is available at Malanjkhand. Tests results indicate that it has the potential to be used at Railway Ballast and aggregate for the construction industry..
Joint Ventures:
I am glad to inform that your Company has formed a Joint Venture Company with Chhattisgarh Mineral Development Corporation Ltd (CMDC), a PSU of Chhattisgarh Government. The JV company namely, Chhattisgarh Copper Limited has been incorporated on 21.5.2018 for undertaking exploration, mining and beneficiation of copper and its associated minerals in the State of Chhattisgarh.

The registered office of the JV Company is located at Bhilai, Chhattisgarh. The shareholding pattern between Hindustan Copper and CMDC is in the ratio of 74% and 26%, thus Chhattisgarh Copper Ltd. has become the subsidiary of Hindustan Copper. The number of Directors nominated by Hindustan Copper and CMDC is in the ratio of 3:2. With this milestone, Hindustan Copper has extended its footprint in the sixth State and will commence its operations very soon there.
Corporate Governance
Your Company is committed to comply with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 relating to the Corporate Governance and the guidelines on Corporate Governance for Central Public Sector Enterprises issued by the Department of Public Enterprises, Government of India.

Your Company has achieved ‘Excellent’ grade for compliance of Corporate Governance for 2016-17 as per report notified by Department of Public Enterprise. Based on self evaluation of compliance of Corporate Governance for 2017-18, your Company has scored ‘Excellent’ grade..
Responsibility Towards Society
Your Company is committed to fulfil its social responsibilities for making positive impact on society through a planned set of initiatives as per the relevant provisions of The Companies Act, 2013 and Companies CSR Policy Rules, 2014 and DPE Guidelines.

During FY 2017-18, the Company has spent an amount of Rs 3.43 Crore on CSR activities against the mandated amount of Rs 1.47 Crore.

Under Corporate Social Responsibility (CSR), your Company has taken up several projects like Promoting Preventive Health Care and Sanitation and making available safe Drinking Water Facility, Promoting Education and Employment Enhancing Vocational Skills and Livelihood Opportunities, Promoting Environmental Sustainability, Promoting Sports and various Rural Development Projects. Your Company has allocated 18 % of its CSR fund in FY 2017-18 for Skill Development activities

Accolades & Recognitions :

Your Company has been consistently receiving recognitions in various spheres of its activities. A few of the significant recognitions received in the field of CSR is detailed below.

1. Hindustan Copper Limited was conferred with KOLKATA BEST EMPLOYER BRAND AWARD by World HRD Congress during the Award Ceremony on 08/11/2017 at Taj Bengal Kolkata.

2. HCL was awarded the National CSR Leadership Awards by World CSR Day on 20/09/2017 at Vivanta by Taj, Yeshwantpur, Bangalore.

3. 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 in March 2018 at Constitution Club of India, New Delhi.

Industrial Relations:
a. The Industrial Relations throughout the year was peaceful and harmonious across HCL.
b. Full co-operation and commitments were shown/ extended to Management on important issues relating to HCL by Trade Unions and Officer’s Association across HCL.
c. For flood victims in the Country especially in Kerala, all employees contributed their one day salary in the Prime Minister Relief Fund.

Acknowledgement
Before I conclude, on behalf of the Board of Directors of your Company, I wish to convey earnest thanks to all the Shareholders for your continued support and trust in us. It will certainly be our endeavor to put in our best efforts for sustained growth, expansion and prosperity of the Company benefitting all stakeholders.