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Notes to Accounts of Hindustan Copper Ltd.

Mar 31, 2016

OTHER DEMAND of Rs.36484.00 lac (Previous Year Rs.42722.14 lac)

The major pending litigation cases are as follows:

a. The Municipal Council, Malanjkhand, raised a demand on Malanjkhand Copper Project (MCP) amounting to Rs.7046.64 lac on account of penalty on Terminal Tax for the periods from 2000-01 to 2005-06 on the ground of short payment of Terminal Tax by adopting higher assessable value as well as higher of Metal in Ore (MIO) produced and Metal in Concentrate (MIC) dispatched. The matter was contested by the company before the Hon''ble High Court, Jabalpur, M.P. and the company paid Rs.352.33 lac towards penalty Terminal Tax as per the order of Hon''ble High Court, Jabalpur, M.P. Subsequently the matter was turned down by the Hon''ble High Court, Jabalpur, M.P. The Company filed writ petition before the Hon''ble Supreme Court of India. The Hon''ble Supreme Court vide its order dated 29.07.2011 directed the Company to deposit an ad-hoc amount of Rs.1000.00 lac to Municipal Council, Malanjkhand which has since been deposited by the company and shown as ''Deposits with Court'' and also ordered that the matter may be heard on the ground of merit by the Civil Court, Baihar. Further a demand of Rs.18867.56 lac for the periods from 2006-07 to 2011-12 was also raised on the above ground for which the appeal by the company is pending before the Hon''ble Supreme Court. Pending final decision, the full amount of Rs.25914.20 lac has been disclosed under ''Contingent Liability''.

b. The Municipal Council, Malanjkhand, Madhya Pradesh issued demands on MCP for Rs.1253.32 lac on account of Property Tax for several years against which the company filed writ petitions before the Hon''ble Madhya Pradesh High Court, Jabalpur challenging the demand notice. Out of the above demand, a sum of Rs.220.85 lac has been paid by the Company based on self assessment from time to time as per interim measure as directed by the Hon''ble Madhya Pradesh High Court, Jabalpur. The net amount of Rs.1032.47 lac Rs.1253.32 lac - Rs.220.85 lac) has been included under ''Contingent Liability''.

c. The State Deputy Registrar, Khetri, Rajasthan issued demands on KCC for Rs.3310.32 lac on account of Property/Land Tax for the years 2006-07 to 2012-13 against which the company filed writ petitions before the Hon''ble Rajasthan High Court, Jaipur challenging the demand notice. Out of the above demand, a sum of Rs.1655.16 lac has been paid by the Company as directed by the Hon''ble Rajasthan High Court, Jaipur. The net amount of Rs.1655.16 lac Rs.3310.32 lac-Rs.1655.16 lac) has been included under ''Contingent Liability''.

d. There was a trade dispute with M/S Bhagawati Gases Ltd (BGL) in connection with an agreement to supply of gaseous oxygen at Khetri Copper Complex. The dispute was referred to Arbitration. The claim of BGL is for an amount of Rs.1079.80 lac with a corresponding counter claim of Rs.534.62 lac by the company.

The arbitral award went against the company. The company had filed an appeal before the Hon''ble High Court of Rajasthan, and the same was admitted for hearing. Pending final decision, the said amount of Rs.1079.80 lac has been disclosed under ''Contingent Liability''.

e. There was a demand from M/S Uttkal Moulders amounting to Rs.1662.72 lac regarding interest for delayed payment against supply of grinding media balls at Malanjkhand Copper Project. The case is pending before the Sole Arbitrator. Pending final decision, the said amount of Rs.1662.72 lac has been disclosed under ''Contingent Liability''.

f. In addition there are number of pending litigation cases against the company claiming demand of Rs.5139.65 lac by retired employees, third parties etc. which the company is contesting before different Legal Forums / Courts.

The management as well as the legal advisors/consultants are of the opinion that its position will likely to be upheld in the appellate proceedings. The company also believes that ultimate outcome of these proceedings will not have a material adverse impact on the financial position of the company.

2. During the year, the company has made a provision amounting to Rs.75.00 lac in terms of DPE guidelines towards Performance Related Pay payable to the executives for F.Y. 2015-16 which is shown under ''Employees'' Benefit Expenses''.

3. In the absence of lease agreements with the State Government in respect of certain leasehold lands, the amortization has been made against the adhoc payment made so far. In case of certain freehold lands acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act, 1972, title deeds, conveyance deeds etc. are not in the possession of the company.

4. Lease premium paid for land for mining purposes including payment for Net Present Value (NPV) of forest area paid to forest department is capitalized under the head Leasehold Land.

5. The commercial operation of Smelter, Refinery and Sulphuric Acid Plant at Khetri Copper Complex (KCC) were suspended since December 2008. The Company got the loss on account of impairment of the said plants valued by an independent consultant and consequently a total sum of Rs.482.97 lac was provided in the accounts in the preceeding years for impairment loss in compliance with the guidelines of AS-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India. Total inventory valued Rs.841.52 lac after provision of Rs.17.79 lac which remained as process material in the above Plant is included in the Inventory of the company. The management is of the opinion that such inventories consisting mainly of metal content are realizable at least at the book value.

6. The title deeds in respect of office flat at SCOPE Complex, Delhi & Jaipur office with total book value of Rs.73.32 lac (Previous year Rs.78.59 lac) as well as for Leasehold Land and Building acquired during the year in respect of Gujarat Copper Project (GCP) with book value of Rs.6037.30 lac are yet to be executed (Previous year Rs. Nil).

7. At ICC, Pollution Control Plant under Package I & III amounting to Rs.2100.50 lac have not been capitalized for want of completion of trial / guarantee run as per terms of contract. As a matter of prudence, full provision for the same has been made in the accounts to take care of efflux of time over the years.

8. Consequent to the order of the Hon''ble High Court of Gujarat at Ahmedabad dated 27.01.2015, the company acquired existing unit namely M/S Jhagadia Copper Limited (JCL) situated at Jhagadia Industrial Estate, District Bharuch, Gujarat (renamed as Gujarat Copper Project, with installed capacity to manufacture 50,000 tonnes per annum of LME ''A'' grade Copper Cathodes by secondary smelting process, through auction process from Asset Reconstruction Company (India) Limited (Arcil) at a consolidated auction price of Rs.21000.00 lac comprising of Leasehold Land - Rs.3005.00 lac, Building - Rs.1838.00 lac and Plant & Machinery - Rs.16157.00 lac. In giving effect to the Hon''ble High Court order, sale certificate for sale of Leasehold Land and Building (immovable property) amounting to Rs.4843.00 lac was executed by Arcil on 30.04.2015 pending registration of title deed in favour of the company by incurring stamp duty and registration charges as applicable. Similarly, sale certificate for sale of movable items of Plant & Machinery amounting to Rs.16157.00 lac was executed by Arcil on 30.04.2015. The company paid Rs.10500.00 lac during the preceeding F.Y. 2014-15 and the balance amount of Rs.10500.00 lac has been paid in the current financial year.

The vendor Arcil has, in the meantime, raised a further demand of Rs.868.83 lac on the company towards reimbursement of VAT pertaining to sale/transfer of movable assets (Plant & Machinery) in addition to the total auction price of Rs.21000.00 lac approved by the H''onble High Court of Gujarat. The company approached the State Govt. of Gujarat seeking relief/concessions on the payment of VAT and other charges applicable in view of the State Government Industrial Policy 2015 which provides for financial support to the new promoter to revive the sick units to make it viable. The Ministry of Mines, Govt. of India has supported the request of the company and has taken up the matter with the State Govt. The matter is under active consideration of the State Govt. Therefore the company believes that State Govt. will accept the company''s plea of waiver of the applicable VAT and other charges. Pending receipt of the approval/concession of waiver of VAT from the State Govt., the VAT liability on the part of the company is therefore denied and is treated as Contingent Liability.

Since the unit was not in a working condition and needs to be thoroughly refurbished in order to bring the unit to its working condition, the auction price of Rs.21000 lac and subsequent amount incurred in this regard amounting to Rs.3688.93 lac has been shown under Capital Work in Progress (Total CWIP as on 31.03.2016 - Rs.24688.93 lac). The above closing CWIP at GCP includes borrowing cost of Rs.1642.04 lac comprising of exchange rate fluctuation, interest on borrowed fund and service fees capitalized during the year. Pending receipt of necessary details regarding arrear lease rent as well as current year lease rent from the lessor of the aforesaid Leasehold Land i.e. Gujarat Industrial Development Corporation (GIDC), provision for lease rent could not be made during the current year.

After taking over possession of the unit, the company made physical verification of Stores & Spares as available in the said unit by an independent CA firm. As per valuation report, net amount of Rs.987.81 lac (Gross amount Rs.1098.27 lac - Provision for Obsolescence Rs.110.46 lac) has been found. Since the company did not pay any extra amount for such surplus Stores & Spares, the said amount of Rs.987.81 lac has been credited to Capital Reserve Account.

9. Confirmation letters of majority of balances under the heads Sundry Creditors, Claims Recoverable, Loans & Advances, Sundry Debtors and Deposits from and with various parties/ Government Departments have been sent but in number of cases such confirmation letters from the parties are yet to be received.

10. Like last year, considering the present scenario of MCP mines and to sustain the planned production, management during the year also decided to process the lean ore along with the normal ore produced from the mine. At the end of the year, the value of closing lean ore was Rs.4321.96 lac (Previous Year Rs.5446.19 lac). The physical verification of lean ore has been conducted by the Malanjkhand Mining Department.

11. During the year, the company has utilized a sum of Rs.767.92 lac on account of Corporate Social Responsibility (CSR) expenses out of which Rs.609.81 lac is charged to Statement of Profit & Loss and the balance amount of Rs.158.11 lac has been appropriated out of unspent balance of CSR Fund.

13. Earlier there was a dispute with Madhya Pradesh State Electricity Board (MPSEB) (now renamed as M.P. Poorv Kshetra Vidyut Vitaran Co. Ltd.) regarding demand of interest on electricity dues amounting to Rs.7008.00 lac payable by MCP which has been pending for long time. The Hon''ble Supreme Court vide its judgement dated 19.11.2008 restrained MPSEB from making any recovery of interest. During the current year, it is apparent that MPSEB has ceased to show such demand of interest in their bills. Considering the above facts, the aforesaid sum of Rs.7008.00 lac, earlier shown as ''Contingent Liability'' is not being considered as ''Contingent Liability'' from this year.

14. Para 4 under Part C of Schedule II to the Companies Act, 2013 provides for mandatory componentization from the current financial year. Accordingly, during the year the management of the company, in line with the Guidance Note issued by the Institute of Chartered Accountants of India formed in-house technical committees in its four major units namely, KCC, ICC, MCP and TCP to assess and record material/significant components of the assets with same or different useful life than that of the main assets. However, the assets where component wise break up is possible, the life of the components are similar to the main assets based on the report of the in-house technical committees in its four major units. Hence componentization of assets are not required and there is no effect of such componentization to the revenue of the company during the year.

15. No fraud by the company or any fraud on the company by its officers and employees has been noticed or reported during the current financial year.

16. In giving effect to the wage agreement between Company Management and Workmen Union, in addition to the earlier provision made upto last year, the company made further provision of Rs.3355.00 lac towards wage revision of workmen upto 28th February 2016 and from the month of March 2016, the company has decided to disburse the actual revised pay as per wage revision agreement and accordingly the same has also been charged to revenue.

17. The Company has closed / suspended many of its mining operations located at various places, Fertilizer Plant at Khetri in different years due to their uneconomic operations. As per requirement of AS-24 on "Discontinuing Operations" the following information for the year are furnished:

18. Since the company is primarily engaged in the business of manufacture and sale of copper products, the same is considered to be the only primary reportable business segment and accordingly has been reported. As the Company operates predominantly within the geographical limits of India, no secondary segment reporting has been considered as per Accounting Standard "Segment Reporting (AS-17)".

19. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS IN TERMS OF AS-15 (REVISED) :

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded through Life Insurance Corporation of India and SBI Life Insurance Co. Ltd. and are managed by separate trust. During the year, the Company has also funded through Life Insurance Corporation of India and SBI Life Insurance Co. Ltd towards leave encashment. Expenses recognized in Statement of Profit & Loss and Mine Development Expenditure amounts to Rs.4163.07 lac in respect of Gratuity, Leave Encashment and Leave Travel Concession has been made as stated below.

The estimates of future salary increases were considered in actuarial valuation after taking into account inflation, seniority, promotion and other relevant factors. Further, the expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of asset management and historical returns from plan assets.

20. The physical verification of raw materials, WIP and finished goods have been conducted departmentally at reasonable intervals during the year. In respect of stores and spares, physical verification has been conducted by the external agencies once in a year during the year. Shortages/ (Excesses) identified on such physical verification which were not material in nature have been duly adjusted in the books of accounts.

21. Excise duty deducted from Gross Sales is the excise duty on Gross Turnover for the year under review. However, the excise duty related to the difference between the closing stock and opening stock is recognized separately in the statement of Profit & Loss as follows:

22. As per Accounting Policy No.3.6, the physical verification of fixed assets which is required to be conducted once in every three years has not been conducted during the year under review since such verification was last conducted in F.Y.2013-14.

23. Work in process includes stock of concentrate valued Rs.1.64 lac (Previous Year Rs.3222.83 lac) lying with third party at the end of the year.

24. Domestic sales during the year include debits of Rs.582.65 lac being rectification of sale of anode slime arising out of tolling of concentrate from the third party wrongly credited to the sales account in the preceeding F.Y. 2014-15.

31. The previous year''s figures have been regrouped / rearranged, wherever necessary.


Mar 31, 2015

CORPORATE INFORMATION

1. Hindustan Copper Limited is a public limited company domiciled in India and earlier incorporated under the provisions of Companies Act, 1956 now governed by Companies Act 2013. Its Shares are listed and traded on Stock Exchanges in India. The company is engaged in exploration, exploitation, mining of copper and copper ore including beneficiation of minerals, smelting and refining.

Year Year 2014-15 2013-14

2. (i) Contingent Liabilities not provided for in respect of

a. Estimated amount of commitments

i. Unexecuted Capital Contract 178366.00 895.60

(Net of advances and deposits)

b. Other money for which the company is contingently liable (Claim against the company not acknowledged as debt)

i. Disputed VAT / CST / Entry Tax / Property Tax Demand 2838.59 2949.05

ii. Disputed Excise Duty 4746.84 3533.88

iii. Disputed Income Tax 4538.86 3767.36

iv. Other Demand 41066.98 40855.54

TOTAL 53191.27 51105.83

(ii) LITIGATION

VAT/CST/ENTRY TAX/PROPERTY TAX

There are 13 demand notices totaling to Gross Demand of Rs. 2838.59 lac (Previous Year Rs. 2949.05 lac) from various State Tax Authorities regarding VAT/CST/Entry Tax/Property Tax. The company is contesting the demand and the management including the legal advisor believes that its position will likely be upheld in the appellate process. The company also believes that ultimate outcome of these proceedings will not have a material adverse effect on the financial position of the company.

EXCISE DUTY

There are 24 demand notices totaling to Gross Demand of Rs. 4746.84 lac (Previous Year Rs. 3533.88 lac) from Central Excise Authorities regarding Excise Duty. The company is contesting the demand and the management including the legal advisor believes that its position will likely be upheld in the appellate process. The company also believes that ultimate outcome of these proceedings will not have a material adverse effect on the financial position of the company.

INCOME TAX

There are 6 Income Tax demand notices totaling to Gross Demand of Rs. 4538.86 lac (Previous Year Rs. 3767.36 lac) before the Commissioner of Income Tax (Appeal). The company is contesting the demand and the management including the income tax consultant believes that its position will likely be upheld in the appellate process. The company also believes that ultimate outcome of these proceedings will not have a material adverse effect on the financial position of the company.

OTHER DEMAND of Rs. 41066.98 lac (Previous Year Rs. 40855.54 lac)

The major pending litigation cases are as follows :

a. The Municipal Council, Malanjkhand, raised a demand on MCP/HCL amounting to Rs. 7046.64 lac on account of penalty on Terminal Tax for the period 2000-01 to 2005-06 on the ground of short payment of Terminal Tax by adopting higher assessable value as well as higher of Metal in Ore (MIO) produced and Metal in Concentrate (MIC) despatched. The matter was contested by the company before the Hon'ble High Court, Jabalpur, M.P. and the company paid Rs. 352.33 lac towards penalty Terminal Tax as per the order of Hon'ble High Court, Jabalpur, M.P. Subsequently the matter was turned down by the Hon'ble High Court, Jabalpur, M.P. The Company filed writ petition with Hon'ble Supreme Court of India. The Hon'ble Supreme Court vide its order dated 29.07. 2011 directed the Company to deposit an ad-hoc amount of Rs. 1000.00 lac to Municipal Council, Malanjkhand which has since been deposited by the company and shown as 'Deposits with Court' and also ordered that the matter may be heard on the ground of merit by the Civil Court, Baihar. Further a demand of Rs. 18867.56 lac for the period 2006- 07 to 2011-12 was also raised on the above ground for which case is pending before the Hon'ble Supreme Court. Pending final decision, the full amount of Rs. 25914.20 lac has been disclosed under 'Contingent Liability'.

b. There was a dispute with Madhya Pradesh State Electricity Board regarding interest on electricity tariff amounting to Rs. 7008.00 lac payable by MCP/HCL which is pending for long time. Jabalpur High Court vide its order dated 01.12.2011 dismissed the writ petition filed by the company. Thereafter, the company preferred SLP before the Hon'ble Supreme Court praying for stay and the Hon'ble Supreme Court vide its judgment dated 13.04.2012 has granted ad-interim stay of the judgment / order dated 01.12.2011 of the Hon'ble High Court of Madhya Pradesh at Jabalpur. Pending final decision, the said amount of Rs. 7008.00 lac has been disclosed under 'Contingent Liability'.

c. The Municipal Council, Malanjkhand, Madhya Pradesh issued demands on MCP/HCL for Rs. 1253.32 lac on account of Property Tax for several years against which the company filed writ petitions with the Madhya Pradesh High Court, Jabalpur challenging the demand notice. Out of the above, an amount of Rs. 220.85 lac has been paid by the Company based on self assessment from time to time and also as per interim measure as directed by The Madhya Pradesh High Court, Jabalpur. The net amount of Rs. 1032.47 lac has been included under 'Contingent Liability'.

d. There was a trade dispute with M/S Bhagawati Gases Ltd (BGL) in connection with an agreement to supply of gaseous oxygen at Khetri Copper Complex. The dispute was referred to Arbitration. The claim of BGL is for an amount of Rs. 1079.80 lac with a corresponding counter claim of Rs. 534.62 lac on the part of the company. The arbitral award has gone against the company. The company has filed an appeal before the Jhun-Jhunu District Court, Rajasthan, and the same was admitted for hearing. Pending final decision, the said amount of Rs. 1079.80 lac has been disclosed under 'Contingent Liability'.

e. There was a demand from M/S Uttkal Moulders amounting to Rs. 1662.72 lac regarding interest for delayed payment against supply of grinding media balls at Malanjkhand Copper Project. The case is pending before Sole Arbitrator. Pending final decision, the said amount of Rs. 1662.72 lac has been disclosed under 'Contingent Liability'.

f. In addition there are number of pending litigation cases against the company claiming demand of Rs. 4369.79 lac by retired employees, third parties etc. which the company is contesting before different Legal Forums / Courts.

The company is contesting the above demands and the management including the legal advisor believes that its position will likely be upheld in the appellate process. The company also believes that ultimate outcome of these proceedings will not have a material adverse effect on the financial position of the company.

3. During the year, the company has made a provision amounting to Rs. 75.00 lac towards Performance Related Pay payable to the executives for F.Y. 2014-15 which is shown under 'Employees' Benefit Expenses'.

4. In the absence of lease agreements with the State Government in respect of certain leasehold lands, the amortization has been done against the adhoc payment made so far. In case of certain freehold lands acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act, 1972, title deeds, conveyance deed etc. is not under the possession of the company.

5. Lease premium paid for land for mining purposes including payment for Net Present Value (NPV) of forest area paid to forest department is capitalized under the head Leasehold Land.

6. The commercial operation of Smelter, Refinery and Sulphuric Acid Plant at Khetri Copper Complex were suspended since December 2008. The Company has got the loss on account of impairment of the said plants valued by an independent consultant and consequently a total sum of Rs. 482.97 lac including Rs. 14.39 lac during the year has been provided in the accounts for impairment loss in compliance with the guidelines of AS-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India. Total inventory valued Rs. 834.34 lac after provision of Rs. 17.79 lac which remained as process material in the above Plant is included in the Inventory of the company. The management is of the opinion that such inventories consisting mainly of metal content are realizable at least at the book value.

7. The title deeds are yet to be executed in respect of office flat at SCOPE Complex, Delhi and Jaipur office having book value of Rs. 78.59 lac (Previous year Rs. 83.85 lac).

8. At ICC, Pollution Control Plant under Package I & III amounting to Rs. 2100.50 lac have not been capitalized for want of completion of trial / guarantee run as per terms of contract. As a matter of prudence, full provision for the same has been made in the accounts to take care of efflux of time over the years.

9. During the year, the company has entered into an agreement of acquiring Plant & Machinery including Leasehold Land of Jhagadia Copper Limited (JCL) through Asset Reconstruction Company (India) Ltd. (ARCIL) at a value of Rs. 21000.00 lac through auction process out of which the company has paid Rs. 10500.00 lac during the year and the balance amount is agreed to be paid in next financial year. The JCL Plant has facilities for manufacture of 50,000 tonnes per annum of LME 'A' grade Copper Cathodes by secondary smelting process.

10. Confirmation letters of majority of balances under the heads Sundry Creditors, Claims Recoverable, Loans & Advances and Sundry Debtors have been sent but in number of cases such confirmation letters from the parties are awaited.

11. Like last year, considering the present scenario of MCP mines and to sustain the planned production, management during the year also decided to process the lean ore along with the normal ore produced from the mine. At the end of the year, the value of closing lean ore was Rs. 5446.19 lac, (Quantity 25.61 lac tonne) (Previous Year Quantity 27.50 lac tonne valuing Rs. 6543.29 lac). The physical verification of lean ore has been conducted by the Malanjkhand Mining Department.

12. During the year, the company has utilized a sum of Rs. 726.44 lac on account of Corporate Social Responsibility (CSR) expenses out of which Rs. 643.67 lac is charged to Statement of Profit & Loss and the balance amount of Rs. 82.77 lac has been appropriated out of unspent balance of CSR Fund.

13. Information related to Micro, Small and Medium Enterprises Development Act, 2006 is disclosed hereunder

a) i) Principal amount remaining unpaid to any supplier at the end of the accounting year - Rs 2057.36 lac

ii) Interest due on above - Rs 98.71 lac

b) Amount of interest paid by the buyer in terms of Section 16 of the Act, along with amount of payment made beyond the appointed date during the year - Rs NIL

c) Amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the due date during the year) but without adding the interest specified under the Act - Rs NIL

d) Amount of interest accrued and remaining unpaid at the end of the financial year - Rs NIL

e) Amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the Small enterprise, for the purpose of disallowance as a deductible expenditure under Section 23 of the Act - Rs NIL

The information has been given of such vendors to the extent they could be identified as "Micro and Small" enterprises on the basis of information available to the Company.

14. During the year the Company has written back old liabilities / provisions amounting to Rs. 306.21 lac (Previous Year Rs. 1510.51 lac) in the accounts, the details of which are as under :-

15. Export sales during the year include debits of Rs. 3581.17 lac arising out of final settlement of Copper Concentrate for which sales made earlier during F.Y.2013-14.

16. Consequent to enactment of the Companies Act, 2013 (the Act) and its applicability for accounting periods commencing on or after 01st April, 2014, the company has reworked depreciation with reference to the estimated economic life of fixed assets prescribed by Part C of Schedule II to the Act or actual useful life of assets, whichever is lower. In case of asset whose life has completed as above, the carrying value as at 01st April, 2014 amounting to Rs. 1780.46 lac has been adjusted against the opening balance of the Retained Earnings and in other cases the carrying value has been depreciated over the remaining of the revised life of the assets and recognized in the financial statements for the current period.

17. Special audit was conducted during the previous financial year 2013-14 in respect of financial irregularities in sales and customers records committed in earlier years regarding extending financial benefits to some customers which included allowing delivery of materials without receipt of payment for the same. Necessary provision was made for uncovered portion of interest and penal interest on overdue interest amounting to Rs. 50.59 lac in the financial year 2013-14. As the company has already recovered the principal amount and some portion of the interest, the management taking into account all relevant facts and circumstances of the case at that time did not categorize such occurrence as fraud.

Moreover such financial irregularities were further examined by a special committee constituted by the Management of the company. The same issue was also raised by C & AG and reported to Ministry of Mines. Appropriate action was initiated by Management to bring out the facts so that needful action can be taken accordingly.

However, no fraud on or by the company has been noticed or reported during the current financial year.

18. In giving effect to the bi-partite agreement between Company Management and Workmens' Union, the company has provided a sum of Rs. 2598.00 lac towards wage revision of workmen for the period 01st November 2012 to 31st March 2015.

19. The mining activities of Surda mines at ICC which was running on deemed extension basis was stopped w.e.f. 08th September, 2014 in terms of order issued by Government of Jharkhand on the contention that the mining lease period was not officially extended. However, Government of Jharkhand vide its order dated 18.03.2015, has extended the mining lease till 31.03.2020 and the company is legally entitled to carry on normal mining activities.

20. The Company has closed / suspended many of its mining operations located at various places, Fertilizer Plant at Khetri in different years due to their uneconomic operations. As per requirement of AS-24 on "Discontinuing Operations" the following information for the year are furnished:

21. Since the company is primarily engaged in the business of manufacture and sale of copper products, the same is considered to be the only primary reportable business segment and accordingly reported. As the Company operates predominantly within the geographical limits of India no secondary segment reporting has been considered as per Accounting Standard "Segment Reporting (AS-17)".

22. Sales for the period include FOB value of Export Sale:-

23. The Company has accounted for Deferred Tax in accordance with the guidelines of AS-22 on "Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India. The Deferred tax balances are set out below:-

24. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS IN TERMS OF AS-15 (REVISED) :

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded through Life Insurance Corporation of India and SBI Life Insurance Ltd. and are managed by separate trust. During the year, the Company has also funded through Life Insurance Corporation of India and SBI Life Insurance towards leave encashment. Expenses recognized in Statement of Profit & Loss and Mine Development Expenditure amounts to Rs. 5008.21 lac in respect of Gratuity, Leave Encashment and Leave Travel Concession has been made as stated below.

The following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the balance sheet for the respective plans.

Actual Return on Plan Assets during the year - Rs. 2327.44 lac. The principal assumptions used for actuarial valuation are :

The estimates of future salary increases were considered in actuarial valuation after taking into account inflation, seniority, promotion and other relevant factors. Further, the expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of asset management and historical returns from plan assets.

25. The physical verification of raw materials, WIP and finished goods have been conducted departmentally at reasonable intervals during the year. In respect of stores and spares, physical verification has been conducted by the external agencies once in a year during the year. Shortages/ (Excesses) identified on such physical verification which were not material in nature have been duly adjusted in the books of accounts.

26. Excise duty deducted from Gross Sales is the excise duty on Gross Turnover for the year under review. However, the excise duty related to the difference between the closing stock and opening stock is recognized separately in the statement of Profit & Loss Account as follows:

27. As per Accounting Policy No.3.6, the physical verification of fixed assets which are required to be conducted once in every three years has not been conducted during the year under review since such verification was conducted in F.Y.2013-14.

28. Work in process includes stock of concentrate valued Rs. 3222.83 lac (Previous Year Rs. 3460.06 lac) lying with third party at the end of the year for which confirmation from the party has been obtained.

29. Closing inventory of stores & spares includes a sum of Rs. 552.57 lac, arising out of physical verification conducted, being the stores earlier issued from the stores godown and shown as consumed remaining unused/unconsumed at the end of the year

30. The previous year's figures have been regrouped / rearranged, wherever necessary.


Mar 31, 2014

1. CORPORATE INFORMATION

Hindustan Copper Limited is a public limited company domiciled in India and earlier incorporated under the provisions of Companies Act, 1956 since replaced by Companies Act 2013. Its Shares are listed and traded on Stock Exchanges in India. The Company is engaged in exploration, exploitation, mining of copper and copper ore including beneficiation of minerals, smelting, refining of copper.

2 GENERAL NOTES ON ACCOUNTS (Rs. in lac)

Year Year 2013-14 2012-13

1. Contingent Liabilities not provided for in respect of :-

a. Estimated amount of commitments

i. Capital 895.60 1168.82

b. Other money for which the company is contingently liable

i. VAT / CST / Entry Tax / Property Tax 2949.05 511.11

ii. Excise Duty / Income Tax 7301.24 5069.97

iii. Others 40855.54 21756.94

TOTAL 52001.43 28506.94

2. The Municipal Council, Malanjkhand, raised a demand on MCP/HCL amounting to Rs.7046.64 lac on account of penalty on Terminal Tax for the period 2000-01 to 2005-06 on the ground of short payment of Terminal Tax by adopting higher assessable value as well as higher of Metal in Ore (MIO) produced and Metal in Concentrate (MIC) despatched. The matter was contested by the company before the Hon''ble High Court, Jabalpur, M.P. and the company paid Rs.352.33 lac towards penalty Terminal Tax as per the order of Hon''ble High Court, Jabalpur, M.P. Subsequently the matter was turned down by the Hon''ble High Court, Jabalpur, M.P. The Company filed writ petition with Hon''ble Supreme Court of India. The Hon''ble Supreme Court vide its order dated 29.07.2011 directed the Company to deposit an ad-hoc amount of Rs.1000.00 lac to Municipal Council, Malanjkhand which has since been deposited by the company and also ordered that the matter may be heard on the ground of merit by the Civil Court, Baihar. Further a demand of Rs.18867.56 lac for the period 2006-07 to 2011-12 was also raised on the above ground for which case is pending before the Hon''ble Supreme Court. Pending final decision, the full of Rs.25914.20 lac amount has been disclosed under ''Contingent Liability''

3. During the year, the company has made a provision amounting to Rs.500.00 lac towards Performance Related Pay payable to the executives for F.Y. 2013-14 which is shown under ''Employees'' Benefit Expenses''.

4. There was a dispute with Madhya Pradesh State Electricity Board regarding interest on electricity tariff amounting to Rs.7008.00 lac payable by MCP/HCL which is pending for long time. Jabalpur High Court vide its order dated 01.12.2011 dismissed the writ petition filed by the company. Thereafter, the company preferred SLP before the Hon''ble Supreme Court praying for stay and the Hon''ble Supreme Court vide its judgment dated 13.04.2012 has granted ad-interim stay of the judgment / order dated 01.12.2011 of the Hon''ble High Court of Madhya Pradesh at Jabalpur. Pending final decision, the said amount has been disclosed as a ''Contingent Liability''.

5. The Municipal Council, Malanjkhand, Madhya Pradesh issued demands on MCP/HCL for Rs.1253.32 lac on account of Property Tax for several years against which the company filed writ petitions with the Madhya Pradesh High Court, Jabalpur challenging the demand notice. Out of the above, an amount of Rs.220.85 lac has been paid by the Company based on self assessment from time to time and also as per interim measure as directed by The Madhya Pradesh High Court, Jabalpur. The net amount of Rs.1032.47 lac has been included under ''Contingent Liability''.

6. In absence of lease agreement with the State Government in respect of certain leasehold lands, the amortization has been done against the adhoc payment made so far. In case of certain freehold lands acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act, 1972, title deeds, conveyance deed etc. is not under the possession of the company.

7. Lease premium paid for land for mining purposes including payment for Net Present Value (NPV) of forest area paid to forest department is capitalized under the head Leasehold Land.

8. The mining lease for 479.90 hectare of land in respect of Malanjkhand Copper Project had expired on 26.08.2013. However, the Company applied for renewal of the same for a further period of 20 years from 27.08.2013 to 26.08.2033 vide renewal application dt 30.07.2012 before the Collector, Balaghat who has forwarded the same with recommendation for renewal on 12.07.2013 to the Secretary, Mineral Resources Department, Govt. of M.P, Bhopal. As per Sub Section (6) of Rule 24A of Mineral Concession Rules, 1960 if application is made for renewal of lease at least 12 months before the date of expiry of lease & the land is not disposed off by the State Government before the date of expiry of the lease, the period of that lease shall be deemed to have been renewed.

9. The commercial operation of Smelter, Refinery and Sulphuric Acid Plant at Khetri Copper Complex were suspended since December 2008. The Company has got the loss on account of impairment of the said plants valued by an independent consultant and consequently a sum of Rs.468.58 lac has been provided in the accounts for impairment loss in compliance with the guidelines of AS-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India.

10. The title deeds are yet to be executed in respect of office flat at SCOPE Complex, Delhi and Jaipur office having book value of Rs.83.85 lac (Previous year Rs.85.58 lac).

11. At ICC, Pollution Control Plant under Package I & III amounting to Rs.2100.50 lac have not been capitalized for want of completion of trial / guarantee run as per terms of contract. As a matter of prudence, adequate provision for the same has been made in the accounts to take care of efflux of time over the years.

12. Considering the present scenario of MCP mines and to sustain the planned production, management decided to process the lean ore along with normal ore produced from the mine. Therefore 27.50 lac tonne of already excavated copper bearing Lean Ore amounting to Rs.6543.29 lac is considered as closing work in progress as on 31.03.2014. The physical verification of lean ore has been verified by the Malanjkhand Mining Department. This has eventually increased the profit of the company by equivalent amount.

13. Majority of balances under the heads Sundry Creditors, Claims Recoverable, Loans, Advances, Sundry Debtors and bank balances are confirmed and wherever necessary, reconciliation process is in progress.

14. Information related to Micro, Small and Medium Enterprises Development Act, 2006 is disclosed hereunder

a) i) Principal amount remaining unpaid to any supplier at the end of the accounting year - Rs. 286.81 lac

ii) Interest due on above - Rs. 29.09 lac

b) Amount of interest paid by the buyer in terms of Section 16 of the Act, along with amount of payment made beyond the appointed date during the year - Rs. NIL

The information has been given of such vendors to the extent they could be identified as "Micro and Small" enterprises on the basis of information available to the Company.

16. Special audit was conducted during the current year in respect of financial irregularities in debtors and sales ledger committed in earlier years regarding extending financial benefits to some customers which included allowing delivery of materials without receipt of payment for the same. Appropriate provision have been made in the accounts for uncovered portion of interest and penal interest on interest amounting to Rs.50.59 lac. As the Company has already recovered the principal amount and some portion of the interest, the management therefore has decided not to categorize the said occurrence as fraud. Therefore no fraud was committed in the preceding year.

As regard the current year 2013-14, there have been financial irregularities committed regarding fraudulent encashment of cheques at ICC to the tune of Rs.19.87 lac at SBI, Ghatsila. Considering the said fraudulent encashment of cheque allowed by SBI Ghatsila as a lapse on their part, they refunded Rs.9.46 lac and balance amount is also receivable by the company subject to completion of in Bank Reconciliation Statement and will be accounted for on actual receipt. Thus the above financial irregularities were committed against the company by outside agency and were beyond the control of the company. This occurrence was not due to any failure of internal control mechanism of the company. Accordingly, the company has not declared such fraudulent encashment of cheques as fraud.

17. In ICC unit, a sum of Rs.150.53 lac has been shown as advance with the suppliers though materials were received before the end of the year. Reconciliation is in progress and on being reconciled, the same will be transferred to the natural head of accounts.

18. The Company has closed / suspended many of its mining operations located at various places, Fertilizer Plant at Khetri in different years due to their uneconomic operations. As per requirement of AS-24 on "Discontinuing Operations" the following information for the year are furnished:

19. Since the company is primarily engaged in the business of manufacture and sale of copper products, the same is considered to be the only primary reportable business segment and accordingly reported. As the Company operates predominantly within the geographical limits of India no secondary segment reporting has been considered as per Accounting Standard "Segment Reporting (AS-17)".

20. Sales for the period include FOB value of Export Sale:-

21. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS IN TERMS OF AS-15 (REVISED) :

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded through Life Insurance Corporation of India, SBI Life Insurance Ltd and Birla Sun Life Asset Management Co.Ltd. and are managed by separate trust. During the year, the Company has also funded through Life Insurance Corporation of India and SBI Life Insurance towards leave encashment. Expenses recognized in Profit & Loss Account and Mine Development Expenditure amounts to Rs.9062.35 lac in respect of Gratuity, Leave Encashment and Leave Travel Concession has been made as stated below.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans.

The estimates of future salary increases considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors. Further, the expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of asset management and historical returns from plan assets.

22. The physical verification of stores and spares has been carried out during the year under review. Shortage/ (Excess) identified on physical verification have been duly adjusted in the books of accounts.

23. As per Accounting Policy (Note No. 2.c.5), the physical verification of fixed assets has been carried out during the year under review. Shortage/(Excess) identified on physical verification have been duly adjusted in the books of accounts.

24. Work in process includes stock worth Rs.3460.06 lac lying with third party.

25. The Accounts have been prepared as per Revised Schedule VI of the Companies Act, 1956 and the previous year''s figures have been regrouped / rearranged / restated accordingly.


Mar 31, 2013

1. CORPORATE INFORMATION

Hindustan Copper Limited is a public limited company domiciled in India and incorporated under the provisions of Companies Act, 1956. Its Shares are listed and traded on Stock Exchanges in India. The Company is engaged in exploration, exploitation, mining of copper and copper ore including beneficiation of minerals, smelting, refining of copper.

(Rs. in lac) Year Year 2012-13 2011-12

2. Contingent Liabilities not provided for in respect of :-

(a) Estimated amount of commitments

i. Capital 1168.82 29649.07

(b) Other money for which the company is contingently liable

i. Value Added Tax / Central Sales Tax/ Entry Tax 511.11 477.01

ii. Excise Duty / Income Tax 5069.97 3457.29

iii. Others 21756.94 19639.23

TOTAL 28506.94 53222.60

3. The Municipal Council, Malanjkhand, raised a demand on MCP/HCL amounting to Rs.7046.64 lac on account of penalty on Terminal Tax for the period 2000-01 to 2005-06 on the ground of short payment of Terminal Tax by adopting higher assessable value as well as higher of Metal in Ore (MIO) produced and Metal in Concentrate (MIC) despatched. The matter was contested by the company before the Hon''ble High Court, Jabalpur,M.P. and the company paid Rs.352.33 lac towards penalty Terminal Tax as per the order of Hon''ble High Court, Jabalpur,M.P. Subsequently the matter was turned down by the Hon''ble High Court, Jabalpur,M.P. The Company filed writ petition with Hon''ble Supreme Court of India. The Hon''ble Supreme Court vide its order dated 29.07.2011 directed the Company to deposit an ad-hoc amount of Rs.1000.00 lac to Municipal Council, Malanjkhand which has since been deposited by the company and also ordered that the matter may be heard on the ground of merit by the Civil Court, Baihar. Pending final decision, the said amount has been disclosed under ''Contingent Liability''.

4. During the year, the company has made a provision amounting to Rs.600.00 lac towards Performance Related Pay payable to the executives for F.Y. 2012-13 which is shown under '' Employees'' Benefit Expenses''.

5. There was a dispute with Madhya Pradesh State Electricity Board regarding interest on electricity tariff amounting to Rs.7008.00 lac payable by MCP/HCL which is pending for long time. Jabalpur High Court vide its order dated 01.12.2011 dismissed the writ petition filed by the company. Thereafter, the company preferred SLP before the Hon''ble Supreme Court praying for stay and the Hon''ble Supreme Court vide its judgement dated 13.04.2012 has granted ad-interim stay of the judgement / order dated 01.12.2011 of the Hon''ble High Court of Madhya Pradesh at Jabalpur. Pending final decision, the said amount has been disclosed as a ''Contingent Liability''.

6. The Municipal Council, Malanjkhand, Madhya Pradesh issued demands on MCP/HCL for Rs.1253.32 lac on account of Property Tax for several years against which the company filed writ petitions with the Madhya Pradesh High Court, Jabalpur challenging the demand notice. Out of the above, an amount of Rs.220.85 lac has been paid by the Company based on self assessment from time to time and also as per interim measure as directed by The Madhya Pradesh High Court, Jabalpur. The net amount of Rs.1032.47 lac has been included under ''Contingent Liability''.

7. In absence of lease agreement with the State Government in respect of certain leasehold lands, the amortization has been done against the adhoc payment made so far. In case of certain freehold lands acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act, 1972, title deeds, conveyance deed etc. are not under the possession of the company.

8. In accordance with the guidelines of AS-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India, the Company assessed the recoverable value of its Cash Generating Units during preceding F.Y. 2011-12. Due to economic consideration, the Company had suspended KCC Smelter, Refinery and Sulphuric Acid Plant from December 2008. During the preceding financial year the Company had ascertained the recoverable value of the fixed assets of all the units including Smelter, Refinery and Sulphuric Acid Plant at KCC. The written down value of such plants were lower than the recoverable value. In the opinion of the management, there is no impairment of assets requiring provision to be made in the accounts during the year under review.

9. The title deeds are yet to be executed in respect of office flat at SCOPE Complex, Delhi and Jaipur office having book value of Rs.85.58 lac (Previous year Rs.87.31 lac).

10. The Company entered into derivative contract in the nature of forward contract for sale with an intention to hedge sale of copper in the Commodity Exchange Market to minimize LME price fluctuation. The company has made a net gain of Rs.5.62 lac during the year under review which is shown under ''Other Income'' (Previous Year - a net gain of Rs.49.34 lac).

11. At ICC, Pollution Control Plant under Package I & III amounting to Rs.2100.50 lac have not been capitalized for want of completion of trial / guarantee run as per terms of contract. As a matter of prudence, adequate provision for the same has been made in the accounts to take care of efflux of time over the years.

12. Majority of balances under the heads Sundry Creditors, Claims Recoverable, Loans, Advances, Sundry Debtors and bank balances are confirmed and wherever necessary, reconciliation process is in progress.

13. In terms of Accounting Policy (Note No. 2.h.2) a sum of Rs. 1868.82 lac incurred in respect of working mines in Khetri Copper Complex have been apportioned and debited to Capital Expenditure in the year under the head "Mine Development Expenditure" on the basis of in-house technical estimates.

14. Irregularities committed in debtors and sales ledger since earlier years with an intention to extend financial benefits to some handful customers have been detected during the current year and all possible steps have been taken to stop the recurrence of the same during the current financial year itself. Financial benefits to some customers includes allowing delivery of materials without receipt of payments for the same. Total financial implications for such benefits have been tentatively determined from the available records. The determined amount includes total cost of materials and interest thereon from the date of delivery of materials. In the detected cases the cost of materials have been recovered till the finalization of accounts for the year ended 31.03.2013 and interest amounting to Rs. 81.38 lac are yet to be recovered. Necessary legal action will be initiated on the basis of legal advice on non-payment of interest.

15. The Company has closed / suspended many of its mining operations located at various places, Fertilizer Plant at Khetri in different years due to their uneconomic operations. As per requirement of AS-24 on "Discontinuing Operations" the following information for the year are furnished:

16. Since the company is primarily engaged in the business of manufacture and sale of copper products, the same is considered to be the only primary reportable business segment and accordingly reported. As the Company operates predominantly within the geographical limits of India no secondary segment reporting have been considered as per Accounting Standard "Segment Reporting (AS-17)".

17. The Company has accounted for Deferred Tax in accordance with the guidelines of AS-22 on "Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India. The Deferred tax balances are set out below:-

18. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS IN TERMS OF AS-15 (REVISED

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded through Life Insurance Corporation of India, SBI Life Insurance Ltd and Birla Sun Life Asset Management Co.Ltd. and are managed by separate trust. During the year, the Company has for the first time funded through Life Insurance Corporation of India and SBI Life Insurance towards leave encashment. Expenses recognized in Profit & Loss Account and Mine Development Expenditure amounts to Rs. 9359.51 lac in respect of Gratuity, Leave Encashment and Leave Travel Concession has been made as stated below.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans.

19. The physical verification of stores and spares has been carried out during the year under review. Discrepancies identified on physical verification have been duly adjusted in the books of account.

20. Excise duty deducted from Gross Sales is the excise duty on Gross Turnover for the year under review. However, the excise duty related to the difference between the closing stock and opening stock is recognized separately in the statement of Profit & Loss Account as follows:

21. As per Accounting Policy (Note No. 2.c.5) the physical verification of fixed assets has not been carried out during the financial year 2012-13.

22. The Accounts have been prepared as per Revised Schedule VI of the Companies Act, 1956 and the previous year''s figures have been regrouped / rearranged / restated accordingly.


Mar 31, 2012

(Rs. in lac)

Year Year 2011-12 2010-11

1. Contingent Liabilities not provided for in respect of :-

a. Estimated amount of commitments

i. Capital 29649.07 1147.16

ii. Others 27964.85 15617.00

b. Other money for which the company is contingently liable

i. Sales Tax 477.01 575.39

ii. Excise Duty 3457.29 3307.41

iii. Others 19639.23 20033.85

TOTAL 81187.45 40680.81

2. There was a trade dispute with M/s Bhagawati Gases Ltd (BGL) in connection with an agreement to supply of gaseous oxygen at Khetri Copper Complex. The dispute was referred to arbitration. The claim of M/s BGL is for an amount of Rs 1079.80 lac including interest with a corresponding counter claim of Rs 534.62 lac on the part of the company. The arbitral award has gone against the company. The company has filed an appeal before the Jhun-Jhunu Court, Rajasthan. and the same was admitted for hearing. There was no further development during the year under review. Out of the total claim of Rs 1079.80 lac of M/s BGL, the principal amount for Rs 688.20 lac has been duly provided in the books of accounts for the year under review. The balance amount of Rs 391.60 lac has been disclosed under 'Contingent Liabilities'.

3. The Municipal Council, Malanjkhand, has raised a demand on MCP/HCL amounting to Rs 7046.64 lac on account of penalty on Terminal Tax for the period 2000-01 to 2005-06 on the ground of short payment of Terminal Tax by adopting higher assessable value as well as higher of Metal in Ore (MIO) produced and Metal in Concentrate (MIC) despatched. The matter has been contested by the company before the Hon'ble High Court, Jabalpur,M.P. and the company paid Rs 352.33 lac towards penalty Terminal Tax as per the order of Hon'ble High Court, Jabalpur,M.P. Subsequently the matter has been turned down by the Hon'ble High Court, Jabalpur,M.P. The Company has filed writ petition with Hon'ble Supreme Court of India. The Hon'ble Supreme Court vide its order dated 29.07.2011 directed to deposit an ad-hoc amount of Rs 1000.00 lac to Municipal Council, Malanjkhand which has since been deposited by the company and also ordered that the matter may be heard on the ground of merit by the Civil Court, Baihar. Pending final decision, the said amount has been disclosed under 'Contingent Liability'.

4. During the year, the company has made a provision amounting to Rs 800.00 lac towards Performance Related Pay payable to the executives for F.Y. 2011-12 which is shown under 'Employees' Benefit Expenses'.

5. There is a dispute with Madhya Pradesh State Electricity Board regarding interest on electricity tariff amounting to Rs 7008.00 lac payable at MCP which is pending for long time. Jabalpur High Court vide its order dated 01.12.2011 have dismissed the writ petition filed by the company. Thereafter, the company has preferred SLP before the Hon'ble Supreme Court praying for stay and the Hon'ble Supreme Court vide its judgement dated 13.04.2012 has granted ad-interim stay of the judgement / order dated 01.12.2011 of the Hon'ble High Court of Madhya Pradesh at Jabalpur. Pending final decision, the said amount has been disclosed as a 'Contingent Liability'.

6. The Municipal Council, Malanjkhand, Madhya Pradesh issued demands on HCL/MCP for Rs 1253.32 lac on account of Property Tax for several years against which the company filed writ petitions with the Madhya Pradesh High Court, Jabalpur challenging the demand notice. Out of the above, an amount of Rs 220.85 lac has been paid by the Company based on self assessment from time to time and also as per interim measure as directed by The Madhya Pradesh High Court, Jabalpur. The net amount of Rs 1032.47 lac has been included under 'Contingent Liability'.

7. In absence of lease agreement with the State Government in respect of certain leasehold lands, the amortization has been done for the adhoc payment made so far. In case of certain freehold lands acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act, 1972, title deeds, conveyance deed etc. are not under possession of the company.

8. In accordance with the guidelines of AS-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India, the Company has assessed the recoverable value of its Cash Generating Units during F.Y. 2011-12. Due to economic consideration, the Company suspended KCC Smelter, Refinery and Sulphuric Acid Plant from December 2008. During the year the Company has ascertained the recoverable value of the fixed assets of all the units including Smelter, Refinery and Sulphuric Acid Plant at KCC. The written down value of such plants are lower than the recoverable value. Hence, in the opinion of the management, there is no impairment of assets that require provision to be made in the accounts for the year under review.

9. The title deeds are yet to be executed in respect of office flat at SCOPE Complex, Delhi and Jaipur office having book value of Rs 87.31 lac (Previous year Rs 89.05 lac).

10. The Company entered into derivative contract in the nature of forward contract for sale with an intention to hedge sale of copper in the Commodity Exchange Market to minimize LME price fluctuation. The company has made a net gain of Rs 49.34 lac during the year under review which is shown under 'Other Income' (Previous Year - a net loss of Rs 164.65 lac which is shown under 'General, Administration and Other Expenses').

11. At ICC, Pollution Control Plant under Package I & III amounting to Rs 2100.50 lac have not been capitalized for want of completion of trial / guarantee run as per terms of contract. As a matter of prudence, a provision for the same has been made in the accounts to take care of efflux of time during previous periods/years.

12. The balances under the heads Sundry Creditors, Claims Recoverable, Loans, Advances and Sundry Debtors are confirmed and reconciled as per book balance.

13.Since the company is primarily engaged in the business of manufacture and sale of copper products, the same is considered to be the only primary reportable business segment and accordingly reported. As the Company operates predominantly within the geographical limits of India no secondary segment reporting have been considered as per Accounting Standard "Segment Reporting (AS-17)".

14. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded through Life Insurance Corporation of India, SBI Life Insurance Ltd and Birla Sun Life Asset Management Co.Ltd. and are managed by separate trust. A provision of Rs 7410.46 thousand in respect of Gratuity Leave Encashment and Leave Travel Concession has been made as stated below.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans.

15. The physical verification of stores and spares has been carried out during the year under review. Discrepancies identified on physical verification have been duly adjusted in the books of accounts.

16. Excise duty deducted from Gross Sales is the excise duty on Gross Turnover for the year under review. However, the excise duty related to the difference between the closing stock and opening stock is recognized separately in the statement of Profit & Loss Account as follows :

17. As per Accounting Policy No. 3.5, the physical verification of fixed assets is carried out. Discrepancies identified on physical verification, if any, are duly adjusted in the accounts.

18. The Accounts have been prepared as per Revised Schedule VI of the Companies Act, 1956 and the previous year's figures have been regrouped / rearranged / restated accordingly.


Mar 31, 2010

(Rs. in crore)

2009-10 2008-09

1. Contingent liabilities not provided for in respect of :-

a. Estimated amount of capital commitments 10.48 32.40

b. Other money for which the company - - is contingently liable

i. Arrear Salary & Allowances 6.04 113.26

ii. Sales Tax 5.81 5.41

iii. Excise Duty 78.49 76.41

iv. Others 256.95 273.05

2. There was a trade dispute with M/s Bhagawati Gases Ltd (BGL) in connection with an agreement to supply of gaseous oxygen at Khetri Copper Complex. The dispute was referred to arbitration. The claim of M/s BGL is for an amount of Rs 10.80 crore including interest with a corresponding counter claim of Rs 5.34 crore on the part of the company. The arbitral award has gone against the company. The company has filed an appeal before the Jhun-Jhunu Court and the same was admitted for hearing. There was no further development during the period under review. Based upon legal opinion obtained from a senior Supreme Court advocate and the Additional Solicitor General of West Bengal, the management considers the arbitral award is not binding on the company. Hence, in accordance with AS 29 on "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, M/s BGLs claim has been disclosed under Contingent liabilities.

3. Pursuant to letter no. 10/4/2009-Met.III dated 22nd October 2009 regarding revision of pay scales for Executives of Board level and below Board level with effect from 1st January 2007 and a MOU signed between Management and Recognized Unions on 6th January 2010 regarding Revision of Pay with effect from 1st November 2007, the Company paid the dues to the employees during the year under Salary, Wages & Allowance which includes an arrear payment for Rs 46.11 crore and Rs 5.80 crore for Contribution towards Provident Fund & Other funds.

4. There is a dispute with MP State Electricity Board regarding interest on electricity tariff amounting to Rs.121.87 crore payable at MCP which is pending for long time and the matter is presently referred back to Honorable High Court, Jabbalpur by Honorable Supreme Court of India for reconsideration. The said amount has not been provided as liability in the accounts but disclosed as a contingent liability.

5. In absence of lease agreement with the State Government in respect of certain leasehold lands, the amortization has been done for the adhoc payment made so far. In case of certain freehold lands acquired through nationalization in accordance with Indian Copper Corporation (Acquisition of Undertaking) Act, 1972, title deeds, conveyance deed etc. are not under possession of the company.

6. In accordance with the guidelines of AS-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India, the Company has assessed the recoverable value of its Cash Generating Units. Due to economic consideration, the Company suspended KCC Smelter, Refinery and Sulphuric Acid Plant from December 2008 and during the year the revaluation of Smelter, Refinery and Sulphuric Acid Plant has been conducted on recoverable value basis as on 31.03.2010 by a Registered valuer. The written down value of such plants are lower than the recoverable value assessed by the said valuer. In the opinion of the management, there is no impairment of assets that require a provision to be made in the accounts for the year under review.

7. The title deeds are yet to be executed in respect of office flat at SCOPE Complex, Delhi and Jaipur office having book value of Rs 0.91 crore. (Previous year Rs. 0.92 crore).

8. Government of India sanctioned Grant-in-aids from time to time for reimbursement to Council of Scientific & Industrial Research, Bhubaneswar, out of which Rs 1.77 crore remains unadjusted since 1994. In absence of specific claim, the same has been credited to Miscellaneous Income under Prior Period Account. However, future claim, if any, arising out of such will be paid by the company.

9. The Company entered into derivative contract in the nature of forward contract for sale with an intention to hedge sale of copper in the Commodity Exchange Market to minimize LME price fluctuation. The company incurs a net loss of Rs 2.34 crore during the year without having any open contract at the end of the year which is shown under Miscellaneous Expenses.

10. At ICC, Pollution Control Plant under Package I & III amounting to Rs 21.00 crore have not been capitalized for want of completion of trial / guarantee run as per terms of the contract. As a matter of prudence, a provision amounting to Rs 18.27 crore upto 2008-09 has been made in the accounts to take care of efflux of time. Since the Plant has not been capitalized till now, a further provision against Capital WIP of Rs.2.10 crore has been made in 2009-10.

11. The balances under the heads Sundry Creditors, Claims Recoverable, Loans, Advances and some of the Sundry Debtors are subject to confirmations.

12. None of the creditors has been reported as registered under Micro, Small and Medium Enterprise Development Act 2006.

13. Since the company is primarily engaged in the business of manufacture and sale of copper products, the same is considered to be the only primary reportable business segment and accordingly reported. As the Company operates predominantly within the geographical limits of India no secondary segment report- ing have been considered as per Accounting Standard "Segment Reporting (AS-17)".

14. Sales for the year include Export Sale of Rs.36.10 crore.

15. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded through Life Insurance Corporation of India, SBI Life Insurance Ltd and Birla Sun Life Asset Management Co.Ltd. A provision of Rs.40.10 crores in respect of Gratuity, Leave Encashment and Leave Travel Concession has been made as stated below.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans.

16. The physical verification of stores and spares have been carried out during the year as a perpetual process. Discrepancies identified on physical verification are duly adjusted in the books of accounts.

17. Previous years figures have been regrouped / rearranged wherever considered necessary.

 
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