Hindustan Copper Limited

“Tamra Bhawan”, 1 Ashutosh Chowdhury Avenue

Kolkata – 700 019

Chairman’s speech at the 38th Annual General Meeting

Dear Shareholders,

It gives me great pleasure to welcome all of you to the 39th Annual General Meeting of your Company, Hindustan Copper Limited.

The Annual Report for the year ended 31st March, 2006 along with the Directors’ Report and Audited Annual Accounts of the Company have been provided to you, and I request your kind permission to take them as read.

Now I would like to present briefly the salient features of the Company’s performance during 2005-06.

Production Performance

During 2005-06, the Company produced 22,984 tonnes of metal-in-concentrates, 36,087 tonnes of cathode and 34,749 tonnes of wirerod. While production of cathode and wirerod improved appreciably during the year and was higher by 49% and 27% respectively over the previous year, performance in the mining segment (i.e. ore and metal-in-concentrates) was adversely affected because we carry a heavy burden of many years’ backlog in mine development work. We are, therefore, channelising funds into mine development work on a priority basis.

Sales Performance

During the year, the Company sold 38,631 tonnes of refined copper as against 26,043 tonnes in 2004-05 achieving sales growth of 48%. In financial terms, the sales turnover during the year was Rs. 1053.76 crore which is 88% higher than the previous year.

HCL exported 1,402 tonnes of wirerod for the first time in 2005-06.

Financial Performance

Financial performance during the year has shown significant improvement registering a net profit of Rs.100.22 crore as against Rs.52.06 crore in the previous year. This rise in bottomline was achieved through improved production process, reduction in interest costs, savings in manufacturing overheads and other cost cutting measures. Besides, the surge in LME price of copper helped in improved sales realisation and better working results. Cash profit during 2005-06 was Rs. 123.33 crore as compared to Rs. 84.80 crore in 2004-05. Net worth of the Company as on 31st March, 2006 was Rs. 225.61 crore. I am glad to inform that HCL has been able to maintain the upward trend in profitability during the current financial year too registering cumulative net profit of Rs. 83.78 crore upto the month of August, 2006.

Reference to BRPSE

Owing to losses incurred in the past and erosion of net worth in excess of 50%, the Company comes under the purview of the Board for Reconstruction of Public Sector Enterprises (BRPSE). A restructuring package has been prepared and submitted to the Ministry of Mines for presentation before BRPSE. In this package we seek reliefs and concessions from the Government to help us strengthen the Company.

Long-term Improvement Programme

With increasing competition, our task is rendered more daunting. Business operations have to match international standards if we are to sustain the upward trend of performance.

Several strategic issues concerning operations, finances, systems and processes, human resources, sales and marketing which need close attention and improvement have been identified. These are being addressed under a programme code named ‘Operation Manthan’. We are fully confident that this programme will transform HCL into a vibrant and self-sustaining enterprise.

Mining has been identified as our competitive edge. So maximum thrust has been given to mine development and long term planning. This includes feasibility studies for transition of open cast mine to underground mine at Malanjkhand, mining of Banwas deposit at Khetri, and reopening of closed mines at Ghatsila.

Steps have been taken for preparation of information technology (IT) roadmap, energy conservation, hedging and diversification into value-added niche products.

Future Outlook

GDP growth in India during 2005-06 has been over 7% and is likely to touch double digit figures in the near future. Govt. of India’s increasing thrust on infrastructure development has pushed up the demand for commodities in general and copper in particular. Areas of growth are power generation and transmission, consumer electronics, and industrial machinery and equipment. This offers excellent opportunities for growth. The future outlook for HCL is, therefore, definitely promising.

Having achieved net profits in the last two consecutive years, HCL is now aiming to emerge as a self-sustaining and profit making organisation.

HCL’s thrust for the year 2006-07 would be

» To increase mining output through extensive mine planning and infrastructure development

» To increase operational efficiency of process plants through technology upgradation

» To improve capacity utilisation and reliability of plants and equipment

» To take steps for global recognition of product quality through LME registration

» To reduce interest costs through repayment and restructuring of loans and reduction in interest rates

» To dispose off non-performing assets and scrap to generate additional revenue

» To introduce a Company policy on Energy to institutionalize energy saving measures

» To rationalize manpower, bring about change in work culture and mobilize external resources for achieving   optimum results.  

Shareholders / Investors’ Grievance Committee 

As per corporate governance requirement, a Shareholders / Investors’ Grievance Committee has been constituted by the Board to look into the redressal of complaints, if any, pertaining to transfer of shares, non-receipt of Balance Sheet and issue of duplicate shares etc. received from investors.

Acknowledgements

On behalf of the Board, I would like to thank you, our esteemed shareholders, for your continuing confidence and support. I take this opportunity to thank the Ministry of Mines for their unstinted support to the Company. I also acknowledge the support extended by the State Governments and all other authorities and agencies. I thank all the employees of HCL for their commitment and devotion. I thank the trade unions for their constructive cooperation to the management that has helped us to maintain cordial industrial relations.

As the Statutory Auditors’ Report has already been circulated to all the shareholders, I request that the same may be taken as read. Additionally, I am glad to inform you that the CAG after having reviewed the Company’s accounts for the year ending 31st March, 2006 have given a ‘Nil’ report.

Now I request the Company Secretary to take up the resolutions as listed in the notice. One of the members present may please propose the resolution and another member second it.

I thank all of you once again and offer my best wishes to you for the ensuing festival season. 

Chairman-cum-Managing Director
Hindustan Copper Limited