2.19 Provisions, Contingent Liabilities & Contingent
Assets
Provisions are recognized when the company has a
present obligation (legal or constructive) as a result of
a past event and it is probable that the company will be
required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation.
Wherever no reliable estimate could be made, a
disclosure is made as contingent liability. A disclosure
for a contingent liability is also made when there is a
possible obligation or a present obligation that may but
probablywill not require an outflow of resources.
When there is a possible obligation or a present
obligation in respect of which likelihood of outflow of
resources is remote, no provision or disclosure is made.
Contingent Liabilities are disclosed in the General
Notes forming part of the accounts.
Contingent Assets are not recognised in the financial
statements but are disclosed in Notes to the Accounts.
Such assets occur when the inflow of economic
benefits is probable. Such contingent assets are
assessed continuously, if it’s virtually certain that inflow
of economic benefits will arise then such assets and
the relative income will be recognised in the financial
statements.
2.20 Financial Instruments
Non-Derivative Financial Instruments
(i) Initial Recognition
Financial assets and financial liabilities are recognized
when the company becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the
fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss
are recognized immediately in profit or loss.
(ii) Subsequent Recognition
a. Financial assets
Financial assets are subsequently measured
at amortised cost, fair value through other
comprehensive income or fair value through profit
or loss.
b. Financial Liabilities
Financial liabilities are subsequently measured at
amortized cost using Effective Interest Rate (EIR)
method except for derivatives, which are measured
at fair value.
Derivative Financial Instruments
All derivatives are recognized and measured at fair
value with changes in fair value being recognized in
profit or loss for the period.
Impairment of financial assets
At each reporting date, assessment is made whether
the credit risk on a financial instrument has increased
materially or not since initial recognition.
If the credit risk on a financial instrument has not
increased materially since initial recognition, the loss
allowance is measured for that financial instrument at
an amount equal to 12 month expected credit losses. If
the credit risk on that financial instrument has increased
materially since initial recognition, the loss allowance is
measured for a financial instrument at an amount equal
to the lifetime expected credit losses.
The amount of expected credit losses (or reversal) that
is required to adjust the loss allowance at the reporting
date is recognised as an impairment gain or loss in the
statement of profit and loss.
2.21 Events Occurring after the Reporting Period
The company adjusts the amount recognized in its
financial statements to reflect adjusting material
events after the reporting period and does not adjust
the amount to reflect non-adjusting events after
the reporting period. However where retrospective
restatement is not practicable for a particular prior
period then the circumstances that lead to the existence
of that condition and the description of how and from
where the error is corrected are disclosed in Notes on
Accounts.
2.22 Dividends
Final dividend on shares are recorded as a liability on
the date of approval by the shareholders in general
meeting and interim dividends are recorded as a
liability on the date of declaration by the directors in the
meeting of the Board of Directors.
2.23 Cash and Cash Equivalents
Cash and cash equivalent in the Balance Sheet
comprise cash at bank and on hand and short-term
deposit with an original maturity of three months or
less which are subject to insignificant risk of changes
in value.
2.24 Rounding of amounts
Amounts in these financial statements have, unless
otherwise indicated, have been rounded off to 'Rupees
in lakh' upto two decimal points.
Details of Claims against the Company not acknowledged as debt (of 1(A)(a) above)
VAT/CST/ENTRY TAX & Other Taxes
There are demand notices totaling to Gross Demand of ^ 10123.92 lakh (Previous Year ^ 9312.22 lakh) from various Revenue
Authorities regarding VAT/CST/Entry Tax/Other Taxes and the company has deposited under protest ^ 78.55 lakh (Previous Year
^ 78.55 lakh) shown under Note No. 16-Other Current Assets. The company is contesting the demands and the management
as well as the legal advisors/consultants are of the opinion that its contention will likely to be upheld by the Appellate Authorities.
The company also believes that ultimate outcome of these proceedings will not have a material adverse impact on the financial
position of the company.
EXCISE DUTY
There are demand notices totaling to Gross Demand of ^ 1196.63 lakh (Previous Year ^ 4607.05 lakh) from Central Excise
Authorities regarding Excise Duty against which the company has deposited under protest ^ 108.30 lakh (Previous Year ^
117.87 lakh) shown under Note No. 16 Other Current Assets. The company is contesting the demands and the management as
well as the legal advisors/consultants are of the opinion that its contention will likely to be upheld by the Appellate Authorities.
The company also believes that ultimate outcome of these proceedings will not have a material adverse impact on the financial
position of the company.
INCOME TAX
There are Income Tax demand notices totaling to Gross Demand of ^ 5792.89 lakh (Previous Year ^13131.12 lakh) against
which the company has deposited under protest ^ Nil (Previous Year ^ Nil) shown under Note No. 29-Current Tax Liabilities (Net
of Current Tax Assets). The management as well as the income tax consultant are of the opinion that its contention will likely to
be upheld by the Appellate Authorities/High Court. The company also believes that ultimate outcome of these proceedings will
not have a material adverse impact on the financial position of the company.
OTHER DEMAND
The pending litigation cases totaling to ^ 86389.56 lakh (Previous Year ^103010.93 lakh) 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. a) Surda Mining Lease period has been extended by Govt, of Jharkhand for a period of 20 years till 31.03.2040 & also lease
deed has been executed till 31.03.2040. Validity of Kendadih Mining Lease period has been extended till 02.06.2043 and
Rakha Mining Lease has been extended till 28.08.2041. However, execution of both the leases are pending for balance
forest area clearance (FC) & subsequent amendment in existing environmental clearance (EC). Both FC & EC proposal are
under process at MoEF & CC, New Delhi.
b) The production of Kolihan mines was stopped conscequent to / accident on 14 May 2024 for compliance of the statutory
violation. The mine production has started from decline from 10.04.2025. Further a small winder is under installation for
transportation of men through shaft & is planned to be installed by second quarter of FY 2025-26.
c) Chandmari Mining Lease(ML 09/91) lease period has been extended till 26.12.2042. A Lease deed has been executed
on 14.02.2023 with forest land diversion conditions. The FC co-terminus issue is pending. The matter is being processed
with the Forest Department, Govt. of Rajasthan, with ongoing activities to comply with forest authority requirements,
including awarding resource mobilization and technical consultancy contracts for reclaiming the stony waste dump near the
Chandmari mine lease area.Pending Forest Clearance, other statutory clearances and other activities will be completed,
including lease amalgamation, combined lease mining plan approval, environment clearance, and lease deed execution.
3. The commercial operation of Smelter, Refinery and Sulphuric Acid Plant at Khetri Copper Complex (KCC) were suspended
since December 2008. The Company suffered loss on account of impairment of the said plants valued by an independent
consultant in earlier years and consequently a total sum of ^ 464.01 lakh was provided in the accounts for impairment loss in
compliance with the guidelines of IND AS 36 on “Impairment of Assets”, out of which some impaired assets has been sold/
written off and net impairment of ^ 252.23 lakh is appearing in books of accounts as on 31.03.2025.
The company has carried out valuation work of Moubhandar Plant, Sulphuric Acid Plant & Nickel Plant at Indian Copper
Complex (ICC) by an external Agency and as per valuation report, a provision for impairment loss of ^ 1034.03 lakh has been
made during current year & cumulative impairment loss of ^ 2543.47 for carrying value of assets is appearing in books of
accounts as on 31.03.2025.
The company has accounted for the stamp duty and registration charges applicable on the date of transfer as per its accounting
policy though actual registration is yet to be executed.
The commercial operation of Gujarat Copper Project was suspended since August 2019 due to non-availability of feed material
at economical price. Accordingly, the company had assessed the loss on account of impairment of the said plant excluding land,
building, roads etc. valued by an Independent consultant & consequently a sum of ^ 9708.21 lakh had been provided in the
accounts of FY 2020-21. During the FY 2021-22, the Company had further re-assessed the impairment study of the said plant
excluding land, building, roads etc by an independent consultant and a sum of ^ 5194.00 lakh had been booked as impairment
loss. Total cumulative amount of ^ 14902.21 lakh had been provided in the accounts for impairment loss in compliance with the
guidelines of lndAS-36 on “Impairment of Assets” as per notification under section 133 of the Companies Act, 2013. The Asset
Monetization plan (Sale) has been sent to Ministry of Mines who in turn has recommended the proposal to DIPAM for approval
5. Confirmation letters of majority of balances under the heads Trade Payables, Claims Recoverable, Loans & Advances, Trade
Receivables and Deposits from and with various parties/ Government Departments have been sent. In number of cases such
confirmation letters from the parties are yet to be received.
6. During the year, the Company has spent a sum of ^ 621.77 lakh on account of Corporate Social Responsibility (CSR) expenses
& a provision of ^ 170.10 lakh has been made towards Unspent CSR Liability.
Disclosure Relating to Corporate Social Responsibility (CSR) expenditure
a) Gross amount required to be spent by the company during the year - ^ 791.87 lakh.
b) Amount approved by the Board to be spent during the year -^ 791.87 lakh
c) Amount spent during the year on:
i) 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. The calculated interest on delayed payment is on account of the MSME's
non-performance as per contract.
ii) In the TReDs portal, the company has after the delivery of goods and rendering of services, the decision on acceptance/
rejection of the goods and the respective bills/invoices has been taken within 15 days of the delivery of the goods/rendering
of services. The Company has also accepted and paid all invoices of Goods & services raised on HCL through TReDs
portal.
8. Management has not become aware any instances of frauds by the company or any fraud on the company by its officers and
employees which are material in nature that may have affected the Company operations during the current financial year.
9. 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 IND AS 108 “Operating
Segments”
15. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS IN TERMS OF Ind AS 19 :
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 Co. Ltd, India First Life Insurance, Kotak Mahindra Life Insurance,
ICICI Prudential Life Insurance, Aditya Birla Life Insurance, and managed by a separate trust. 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 Other Comprehensive Income amounting to ^ 1267.43 lakh in respect of Gratuity, Leave
Encashment which have been provided for as stated below.
The following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss, Other
Comprehensive Income and Mine Development Expenditure and the funded status and amounts recognized in the balance
sheet for the respective plans.
Return on Plan Assets during the year (Provisional) : ^ 1147.72 lakh.
The estimates of future salary increases were considered in actuarial valuation after considering 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.
16. Provident Fund: The Provident Fund of the company is managed by an exempted trust u/s 17 of Employees Provident Funds &
Miscellaneous Provisions Act 1952.The company has an obligation to pay minimum rate of return to the members as specified
by Govt, of India. As per the condition of exemption, the company shall make good for any deficiency, if any, including between
the return from the Investments of the Trust & the notified interest rate by the Govt, of India. Accordingly, the company has
obtained Actuarial Valuation in accordance with Ind AS 19 & there is no short fall amount to be charged to statement of profit /
loss as per Actuarial Valuation Report.
The fair value of the plan assets as on 31.03.2025 is ^ 61890.82 lakh. The present value of defined benefit obligations is
^ 61339.78 lakh. The key assumptions for actuarial valuation is Discount rate 8.25%, Guaranteed rate of return 8.25% and
Interest Rate declared by Trust is 8.25%.
17. The Company as Lessee has taken certain vehicles on lease for a period of four years upto 31.03.2025, which can be further
extended at mutually agreed terms. There are no escalations in the lease rentals as per terms of the agreement. However, the
Company has purchase option for such vehicles at the end of the lease term. Accordingly, the Company has adopted Ind AS
116 during the current financial year & accounted for the leasing entries as per IND AS 116.
The following are the carrying amounts of lease liabilities recognised and the movements during the year
The physical verification of Semi-Finished and In-Process (WIP) and Finished Goods has been conducted departmental^ in all
the units (ICC, KCC, MCP, TCP & GCP) at the end of the current year by a duly approved internal committee.
In respect of Stores and Spares, physical verification is carried out by external agencies once in every year covering all the
units. Shortage/(Excesses), if any, identified on such physical verification is duly adjusted in the books of accounts in the year
of identification. Accordingly, physical verification has been conducted by the external agencies in all the units during the year.
20. Financial Instrument
1. Derivatives not designated as hedging instruments
The Company uses Commodity Futures Contracts to manage its commodity price risk . The Commodity Futures Contracts
are not designated as hedging instrumnets and are entered into for periods consistent with commodity price risk exposure
of the underlying transactions, generally from one to four months. However in the year FY 24-25, the Company has not
entered into any Commodity Futures Contract.
The Company uses foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange
forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency
exposure of the underlying transactions, generally from one to four months.
Commodity price risk
In the year FY 24-25, the Company has not purchased any such copper blister/ anode .
Hedging the price volatility of copper purchases is in accordance with the Risk Management Policy approved by the Board
of Directors. The hedging relationships are for a period between 1 and 4 months based on existing purchase agreements.
The Company designated only the spot-to-spot movement of the entire commodity purchase price as the hedged risk. It has
been decided by the company not to follow the hedge accounting for these instruments.
As at 31 March 2025, the fair value of the open position of commodity future contracts is nil.
2 . Financial Instruments by Categories
The carrying value and fair value of financial instruments by categories were as follows:
Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments, other
than those with carrying amounts that are reasonable approximations of fair values:
3. The Management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other
current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and
assumptions were used to estimate the fair values:
The Company enters into derivative financial instruments with various counterparties, principally with financial institutions
having Investment grade credit ratings. Foreign exchange forward contracts and commodity futures contracts are valued
using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation
techniques include forward pricing .
4. Fair Value Hierarchy
Level 1 - Level 1 hierarchy includes financial instruments measured using quoted prices (unadjusted) in active markets.
Level 2 - Level 2 hierarchy includes financial instruments measured using inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Level 3 hierarchy includes financial instruments measured using inputs that are not based on observable market
data (unobservable inputs).
a) Market Risk
i) Foreign Currency Risk
The Company operates at international level which exposes the company to foreign currency risk arising
from foriegn currency transaction primarily from Imports,exports and foreign currency borrowing. Foreign
currency risk arises from future commercial transactions and recognised assets and liabilities denominated
in a currency other than INR as on reporting date.”
Customer credit risk is managed by each business unit subject to the Company's established Marketing policy, procedures
and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and any
shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
The maximum exposure to credit risk at the reporting date is Rs 987.13 lakh for which full provision has been made in the
accounts as disclosed in Note No 12.
Other financial assets
Credit risk relating to cash and cash equivalents is considered negligible because our counterparties are scheduled banks. We
consider the credit quality of Term deposits with such banks as good as these banks are under the regulartory framework of
Reserve Bank of India. We review these banking relationships on an ongoing basis.
c) Liquidity Risk
Our liquidity needs are monitored on the basis of monthly and yearly projections. The company's principal sources of liquidity
are cash and cash equivalents and cash generated from operations.
We manage our liquidity needs by continuously monitoring cash inflows and by striving to maintain adequate cash and cash
equivalents. Net cash requirements are compared to available cash in order to determine any shortfall.
Short term liquidity requirements consists mainly of Loans, Sundry creditors, Expense payable, Employee dues arising during
the normal course of business as of each reporting date. We strive to maintain a sufficient balance in cash and cash equivalents
to meet our short term liquidity requirements.
The table below provides details regarding the contractual maturities of financial liabilities. The table has been drawn up based
on the undisclosed cash flows of financial liabilities based on the earliest date on which the company can be required to pay.
6. Capital Management
For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves
attributable to the Company. The primary objective of the Company's capital management is to maximise the shareholder
value.
Shortages/ (Excesses) identified on such physical verification have been duly adjusted in the books of accounts.
19. The physical verification of fixed assets which is required to be conducted every year so that all the units/offices are covered
once in a block of three years interval. During the year, physical verification of fixed assets has been conducted by external
agencies for HO & RSON.
27. Provision against Inventory
Inventory of semi-finished and in process stock includes Mill scat and Lean Ore amounting to Rs. 18331.80 lakhs valued at
cost and market value whichever is lower. However, in absence of non-availability of existing matching concentrator plant to
process and treat Mill Scat metal and that the entire quantity of lean ore cannot be processed for production of concentrate
independently without mixing with crusher ore having high grade in order to achieve the average cut of grade, the market value
remains unascertainable and accordingly 100% provision against both the stocks totalling of Rs. 18331.80 lakh was made in
the year FY 2019-20, against cost of the stock which is still continuing.
28. Disputed Property Tax
The Company has been paying Property tax on self-assessment basis. As on date, HCL/MCP is in dispute with Municipal
Council, Malanjkhand relating to assessment and demand of property tax for various years from 1998-1999 to 2024-2025.
These cases are at various stages of adjudication including writ petitions in the Madhya Pradesh High Court and appeals in
the Civil Court, Baihar. HCL/MCP has been depositing a fixed amount since 2013-14 onwards without any demand from the
Municipal Council, Malanjkhand. The tax amount deposited in the relevant years has been charged to revenue. The additional
amount of Rs.1100.99 lakhs demanded has been shown under contingent liability.
29. Disputed Demand of Terminal Tax
The Company is in dispute with the Municipal Council, Malanjkhand (MCM) over amount of Terminal tax payable by the
Company for periods ranging from 2000-2012.
The Company has deposited Rs. 17.01 crores towards Terminal Tax on self-assessment for the above period, against which
MCM has raised a demand of Rs. 24.24 crore. Besides, MCM has imposed penalty and interest of Rs. 239.30 crore for wrong
deposit of tax. Total demand as on date of the balance sheet, net of self-assessment tax deposited is Rs. 246.53 crore.
Company's appeal against demand of Rs. 74.87 crore for the period 2000-2006 is pending with hon'ble Civil court Baihar on
interim deposit of Rs.13.50 crore as per the order of the court. The hearing is due on 14.06.2025. Company could not file an
appeal against demand of Rs. 188.67 crore for the period 2006-2012 since its petition for waiver of hundred percent deposit of
the demand before appeal was rejected by both Hon'ble High court and Hon'ble Supreme court. The matter has not been heard
on merits as yet.
HCL has now filed an application on 07.05.2025 before the Additional Secretary (FA), Ministry of Mines for Amicable resolution
of the ongoing Terminal Tax disputes with the Municipal Council, Malanjkhand under Administrative Mechanism for Resolution
of CPSE's Disputes (AMRCD) scheme of the Government of India. As on date, the total dispute of demand is Rs. 246.53 crore
against which the Company has approached AMRCD on 07.05.2025 for Amicable Resolution. The total amount of disputed
demand of Rs. 246.53 Crores has been shown as contingent liability.
30. Arbitration Award of IVRCL
In 2011, the Company awarded a contract to a bidder consortium, i.e., IVRCL-MCCDL-TCL-DM, for development of an
Underground Mine for 5 Mtpa capacity at its Malanjkhand Copper Project (MCP). M/s IVRCL was the lead member of the
Consortium. The Company rejected request of IVRCL for extension of time which expired by efflux of time on 28.12.2021.
Since all the meetings of amicable resolution failed, M/s IVRCL invoked arbitration clause. Further the Company also raised
issues of non-performance by IVRCL, loss incurred by the Company due to non-performance and lack of ground for further
time extension asked by IVRCL before the arbitration tribunal. The claim of IVRCL was of Rs. 4,65,18,41,757 and the counter
claim of the Company was of Rs. 6,14,46,12,622.
The Arbitral Tribunal passed Award dated 25.01.2025 and amended Award dated 04.03.2025 for Rs. 320 Crores (approx.)
along with interest against the Company. On 16.05.2025, the Company has filed application bearing no. MJC AV/6465/2025
(CNR No. MP20010217712025) under Section 34 of the Arbitration and Conciliation
Act, 1996 challenging the Award dated 25.01.2025 and amended Award dated 04.03.2025 before the Commercial Court,
Jabalpur.
The Company in its books has a continuing provision of Rs. 17887.58 Lakhs on account of security deposit, retention money,
damage etc. and the balance amount of Rs. 14153.30 lakhs against the award of Rs. 32040.88 Lakhs has been considered as
contingent liability.
31. Disputed Demand of Water Cess:
The Company has received demand notes for payment towards Water Cess from the Water Resources Department (WRD),
Govt, of Jharkhand for water drawn from the Subarnarekha River since 1990-91. Being aggrieved with the demand, the
Company has filed a Writ petition no. AP(C)1581/2010 before Honourable High Court, Ranchi.
The learned Single Judge Bench of Jharkhand High Court vide Order dated 28.06.2024, upheld the applicability of the law
to the Company but has given quantum relief to HCL and directed the respondent authority to quantify the differential rate
for water cess as per purpose for which the water is being supplied. The Company has, thereafter filed an appeal before the
Divisional Bench of Hon'ble High Court against the order of the Single Bench on upholding the applicability of the law to the
Company.
WRD after several revisions vide its letter ref no-607, w.r.t. notice 883 & 884 raised a demand for water tariff till November 2024
for Rs. 166.57 crores on 03-12-2024, against which the Company has not yet filed any appeal.
However, since the Company's appeal on applicability of law is pending, the demand remains disputed and accordingly has
considered Rs 166.57 crores as contingent liability after netting off Rs. 29.08 crores already provided for on self-assessment
but not deposited.
32. Jharkhand Govt, has notified Jharkhand Mineral Bearing Land Cess Act,2024 on 07.10.2024 which provides for imposition of
cess equivalent to 50% of the applicable royalty on mineral bearing and belonging to the Jharkhand State. The company is duly
complying the same.
33. The previous year’s figures have been regrouped / rearranged, wherever necessary.
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