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 probably
will 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 Investment in associates and joint ventures:
An associate is an entity over which the Company has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee but is not control or joint control over those
policies. A joint venture is a joint arrangement whereby
the parties that have joint control of the arrangement
have rights to the net assets of the joint arrangement.
Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent
of the parties sharing control. Investment in associate
and joint ventures are measured at cost. The investments
carried at cost are tested for impairment periodically in
accordance with Ind AS 36 - Impairment of Assets. The
carrying amount of the investment is tested for impairment
as a single asset by comparing its recoverable amount
with its carrying amount, any impairment loss recognised
reduces the carrying amount of the investment.
2.22 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.
2.23 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.
2.24 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.
2.25 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/GST/ENTRY TAX & Other Dues & Taxes
Total Gross Demand of ^ 10656.69 lakhs (Previous Year ^ 6722.96 lakhs) from various Revenue Authorities on account of GST/
VAT/CST/GST/Entry Tax/Other Taxes and the company has deposited under protest ^ 506.07 lakhs (Previous Year ^ 118.48 lakhs)
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 contentions are 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
Total Gross Demand of ^ 4597.59 lakhs (Previous Year ^ 4597.59 lakhs) from Central Excise Authorities regarding Excise Duty
against which the company has deposited under protest ^ 68.37 lakh (Previous Year ^ 68.37 lakhs) 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 contentions are 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 ^ 6299.41 lakh (Previous Year ^5792.89 lakh) against which
the company has deposited under protest ^ Nil (Previous Year ^ Nil) shown under Note No. 31 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
There are other demands with pending litigation totaling to ^ 83321.54 lakhs (Previous Year 86389.56 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 Directorate of Mines & Geology; Govt. of Jharkhand vide order dated
06.09.2024 for a period of 20 years w.e.f 01.04.2020 to 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. Forest clearance of balance forest land and subsequent amendment in Environmental Clearance over total lease
area have been granted by MoEF&CC,New Delhi for both Kendadih and Rakha Mining Leaeses. Also lease deed have been
executed till the extended period of 02.06.2043 and 28.08.2041 respectively.
b) Hindustan Copper Ltd (HCL) has appointed M/s South West Mining Limited (SWML) as the Mine Developer cum Operator (MDO)
for re-opening and expansion of Rakha Copper Mine, development of a new underground mine at Chapri and commissioning
of a new concentrator plant for a period of 20 years, extendable by another 10 years. The total capital expenditure (CAPEX)
for this project is estimated to be approximately INR 2,700 crore.
c) The Government of Rajasthan has extended the Chandmari Mining Lease (ML 09/91) up to 26.12.2042. The lease deed was
executed on 14.02.2023, subject to forest land diversion conditions which are being completed. The forest clearance co¬
terminus with the mining lease, i.e., up to 26.12.2042 is expected from the Govt. of Rajasthan.
Further, amalgamation of the Kolihan and Chandmari Mining Leases is under process with the Government of Rajasthan.
Upon approval, the mining plan and environmental clearance for the combined lease will be obtained, and the deed for the
combined lease will be executed”.
3. a) 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 plant 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 loss of ^ 244.80 lakh is appearing in books of accounts as on 31.03.2026 as a provision.
b) The Smelter, Refinery, Sulphuric Acid Plant and Nickel Plant at Moubhandar Plant, Indian Copper Complex (ICC) were
suspended since December 2019.The carrying value in the books of accounts as on 31.03.2026 after impairment & provisions
is ^ 711.12 lakhs .
c) Copper ore tailing (COT) beneficiation plant was set up with cost of ^15805.03 lakh at MCP unit for extraction of valuable
minerals and metals from copper ore tails with a capacity of 10000 tonnes per day (TPD) based on the sole technology
provider. The quality and quantity of products achieved at various stages in trail runs were not as per the parameters envisaged
in contract agreement. The contract had terminated with efflux of time. Since the party had failed to execute the project under
sole technology provider, total cumulative amount of ^14646.82 lakh (including current year provision of ^1868.88 lakh) has
been provided for impairment loss in compliance with the guidelines of IndAS-36, keeping salvage value of ^1158.21 lakh as
on 31.03.2026
The company has accounted for the stamp duty and registration charges amounting to Rs. 741.59 lakh 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 as impairment loss. During the FY 2021-22, the Company had further re-assessed the impairment of
the said plant excluding land, building, roads etc by an independent consultant and a further sum of ^ 5194.00 lakh had been
provided 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 IndAS-36 on “Impairment of Assets” as per notification under section 133 of the Companies
Act, 2013. Efforts are on to run the plant on revenue sharing basis
5. Trade and other payables and advaces are subject to confirmation / reconciliation and consequential adjustment, if any.
6. During the year, the Company has spent a sum of ^ 574.10 lakh on account of Corporate Social Responsibility (CSR) expenses
& a provision of ^ 386.53 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 : ^ 959.73 lakh.
b) Amount approved by the Board to be spent during the year : ^ 960.63 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 of any instances of frauds by the company or against the company 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”.
10. Sales for the period include FOB value of Export Sales: -
15. Defined Benefit Plans- General Description
A. Provident Fund
The Company's contribution to the Provident Fund are remitted to the three separate provident fund trusts established for this
purpose based on a fixed percentage of the eligible employee’s salary and charged to the Statement of Profit and Loss. Shortfall of
net income of trust below Government specified minimum rate of return, if any, and loss to the trust due to its investments turning
stressed are being made good by the Company. This includes the amount related to the contract employees who are part of the
trust.
B. Gratuity
Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount based on 15 days salary
(last drawn salary) for completed tenure of service subject to maximum of ^ 25 lakh at the time of separation from the Company.
C. Leave Encashment
The monetary compensation paid by an employer for unused paid leaves usually Earned Leave at the time of retirement subject
to the overall limit of 300 days.
D. Post-Retirement Medical Scheme (PRMS)
PRMS provides medical coverage to retired employees and their eligible dependent family members as per approved policy .
E. The summarised position of various Defined Benefit Plans recognized in the Statement of Profit & Loss, Balance Sheet and
Other Comprehensive Income are as under:
(figures given in unbold or italic font in the table as for previous year)
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.
G. The company has, during the quarter ended 31.12.2025 introduced a Post-Retirement Medical Scheme (PRMS) and has
made a one-time provision of ^9574.94 lakh on the basis of Actuarial Valuation of the scheme done by an Independent Actuary
as per the guidelines of Ind AS 19 issued by the Institute of Chartered Accountants of India. Being one time and infrequent in
occurrence, the same has been disclosed as exceptional item in the financial statement to ensure company’s true performance.
16. The Company as Lessee has taken certain vehicles on lease for a period of four years upto 31.12.2029, 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.
17. Physical verification of Semi-Finished and In-Process (WIP) and Finished Goods is conducted departmental^ in all the units at
reasonable intervals during the year by a duly approved committee. Also, physical stock verification of WIP and Finished Goods
is undertaken by a duly approved committee at the end of every financial year along with an independent agency once in a block
of three years.
The physical verification of Semi-Finished and In-Process (WIP) and Finished Goods has been conducted departmentally in all
the units (ICC, KCC, MCP, TCP & GCP) at the end of the current financial year duly approved internal committee and also had
conducted by independent agency during FY 2024-25 to cover a block of three years.
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.
Shortages/ (Excesses) identified on such physical verification have been duly adjusted in the books of accounts.
18. The physical verification of fixed assets which is required to be conducted regularly 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 MCP, ICC & GCP to cover block year FY 2025-26 to FY 2027-28
19. 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 25-26, 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 25-26, 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 2026, 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).
5. Financial Risk Management
Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s
primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its
financial performance.
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.
The company’s exposure to Commodity price from copper price fluctuation in international market does not arise as the
company hedges all its imports through Future contracts at LME.
b) Credit Risk
Credit risk refers to the risk of default on its obligation by the Debtors resulting in a financial loss. The company sells majority
of its products either against Advance from Customers or Letters of Credit. Accordingly, credit risk from Trade receivables has
not been cosidered as credit risk.
Credit risk exposure
An analysis of age of Trade receivables at each reporting date is summarized as follows:
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 ^ 158.48 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.
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.
Note :
1. The associate/joint venture has neither been liquidated nor sold during the year. Pursuant to Section 186(4) of the Companies Act,
2013, details of investment made and advance given to subsidiary & joint venture have been shown under Note No. 6 respectively.
However, no loan has been given to the subsidiary and joint venture during the year.
2. The Board of Directors in its meeting held on 07.10.2025 has approved amendment in the Joint Venture Cum Shareholders
Agreement dated 01.08.2019 executed among NALCO,HCL & MECL for altering the shareholding ratio of NALCO,HCL & MECL
from existing 40.30.30 to 60.35.05 respectively. However , clearance in respect of the above decisions are pending from Ministry
of Mines and Department of Investment & Public Asset Management (DIPAM).
26. 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.
With the above background valuation of the stock cannot be strictly in line with prescribed guidelines and accordingly 100%
provision against cost of the stock totalling Rs. 18331.80 lakh was made in the year FY 2019-20, which is still continuing.
27. Disputed Property Tax
The Company has been paying Property tax on the basis of self-assessment. The instant dispute is relating to assessment and
demand of property tax for various years from 1998-1999 to 2024-2025 with Municipal Council, Malanjkhand. These cases are sub
judice and are in different stages of adjudication before appropriate court of law including Civil Court, Baihar and in the Madhya
Pradesh High Court, Jabalpur. 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 amounting to Rs. 4.61 crores has been
charged to revenue. The additional amount of Rs.8.94 crore (net of provisions) demanded has been shown under contingent
liability.
28. Disputed Demand of Terminal Tax
The company is in dispute with Municipal Council, Malanjkhand (MCM) over amount of Terminal Tax payable by the company for
the period ranging from 2000-2012.
a. The company has deposited Rs. 5.13 crores against terminal tax for the period 2000-01 to 2005-06 which was disputed by the
MCM with their computation of Rs. 7.06 Crores. MCM raised a demand of Rs. 74.87 Crores on 18.01.2007 against Terminal Tax
for the period 2000-2006 with reference to Terminal Tax (Assessment & Collection) on the Goods Exported from Madhya Pradesh
Municipal Limit Rules, 1996. The demand consists of basic terminal tax of Rs. 7.06 crores and 10 times penalty of Rs. 67.81 crores
beside interest for wrong filing of return. The company’s appeal against the above demand of Rs. 74.87 crore was rejected by Civil
Court, Baihar for non-filing of any document evidencing the company’s petition. The company has filed revision petition against
the above order before the Additional District Judge Court, Baihar on 16.10.2025, which is due for hearing on 14.06.2026. The
company has made an interim deposit of Rs. 13.30 crores and has made provision against the same during the current year.
b. In another similar case, the Company has deposited ^ 11.88 crores against terminal Tax for the period 2006-07 to 2011-12 which
MCM has disputed and raised a demand of Rs. 188.68 Crores consisting of basic terminal tax of Rs. 17.18 crores on 16.10.2012
besides 10 times penalty & interest of Rs. 171.50 crores.
The company could not file any appeal against the above demand before the Baihar court since on its application for relief against
deposit of 100% of the demand before going for appeal the Hon'ble Supreme Court allowed 50% deposit against the demand to
be deposited within 04 weeks, if the company want to appeal the demand, which the company did not comply and the MCM has
filed a contempt for the same. The company has made an interim deposit of Rs. 2 crores and has made provision against the
same during the current year.In addition, Rs. 0.66 crore provision has been made against other small demands. Total demand as
on date of the balance sheet, net of deposits is Rs. 248.25 crore.
c. HCL has now filed an application against both the demands 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 disputed of
demand is Rs. 246.53 crore against which the Company has approached AMRCD on 07.05.2025 for Amicable Resolution. In a
meeting on 16.09.2025 held between HCL and MCM under AMRCD for CPSE disputes, Committee of Secretaries after detailed
deliberation noted that it is an old legacy issue which relates towards calculation of taxes based on different methodologies by HCL
and MCM. The Committee also noted that the agencies have also approached Hon'ble court to resolve the issue. The Committee
after detailed deliberation recommended interalia that Chairman and Managing Director (CMD), Hindustan Copper Limited
(HCL) along with representative of Secretary, Department of Legal Affairs should meet Commissioner, Urban Administration and
Development, Madhya Pradesh (MP) and representative from Municipality of Malanjkhand in Bhopal for in depth discussion to
resolve the issue amicably at the earliest.
d. The total amount of disputed demand of Rs. 238.50 crore (Net of provision) has accordingly been shown as contingent liability.
e. The company has provided a lumpsum amount Rs. 25.71 crore during the year consisting of Rs. 15.96 crore deposit made till date
besides an additional adhoc amount of Rs. 9.75 crore
29. 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 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.
Subsequently, on 13.11.2025, HCL had also filed a separate application under Section 36 of the Arbitration and Conciliation Act,
1996 before the Commercial Court, Jabalpur, seeking an unconditional stay on the Arbitral Award which has not yet been taken
up by the court and accordingly the company does not have a stay.
Further on 14.08.2025, M/s IVRCL Consortium filed Case No. EC-COM/478/2025 against HCL before the Commercial Division of
the Calcutta High Court for execution of the Arbitral Award dated 25.01.2025 and amended Award dated 04.03.2025 of Rs. 320
Crores (approx.) along with interest. On 31.10.2025, HCL filed an I.A. No. GA-COM/1/2025 under Section 47 of Civil Procedure
Code, 1908, seeking stay of the execution of the award.
The company is confident of winning the case and moreover there is already a liability provisioning Rs. 178.87 crore .With the
above background, the amount of Rs. ^141.53 crore (net of provisions) has been considered as contingent liability.
30. 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, Jharkhand. 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-194,
w.r.t. notice 883 & 884 raised a demand for water tariff till March 2026 for Rs. 246.216 crores on 09-04-2026.The demand raised
by the Water Resources Department (WRD), Government of Jharkhand, appears to be inflated and not supported by verifiable
consumption data. Without prejudice to its legal rights, HCL has taken proactive steps to address the matter. HCL has formally
requested WRD to allow reconciliation of the demand with reference to actual water consumption and has sought revision/
modification of the demand based on reconciled figures, along with waiver of penal components. The matter is currently sub
judice.
In parallel, HCL has initiated the process for entering into a prospective MoU with WRD (effective from 2023-24 onwards) to regulate
industrial and domestic water usage in line with prevailing WRD practices, without prejudice to ongoing legal proceedings. Online
applications for water surface allocation for Mosabani, Surda, and Moubhandar were submitted on 20.03.2026. Demand notes for
fee deposition are awaited from WRD as per applicable SOP. Further, water consumption data for the period from April 2005 to
October 2025, as sought by WRD, has been submitted by HCL vide letter HCL/ICC/WRD/2026/01 dated 23.03.2026. A committee
constituted by WRD is currently undertaking reconciliation of the data.The matter is being actively pursued at appropriate levels,
and based on ongoing constructive engagement, HCL expects a legally sustainable and mutually acceptable resolution in due
course.
The company has assessed the possible liability as on 31.03.2026 to be Rs. 47.14 crore and accordingly, the same has been
provided in the books of accounts. Since the Company's appeal on applicability of law is pending, the demand remains disputed
and accordingly has considered Rs 171.33 crore (net of provisions) as contingent liability.
31. The District Mining Officer (DMO), Jamshedpur, Govt. of Jharkhand raised a demand note W.r.t. clause 21 (5) of the MMDR act
1957 of Rs 929.40 crores on 24.10.2018 which was challenged by the Company before Revisional Authority, Ministry of Mines,
Government of India and was set aside on 05.08.2024. The DMO once again has raised the same demand vide notice dated
12.02.2026 against which HCL has preferred a revision application before the Revisional Authority, Ministry of Mines, Government
of India as per Rule 30 of the MMDR Act, 1957. The Revisional Authority vide order dated 20.02.2026 has granted a stay and
directed the State Government to refrain from any coercive measures against HCL.
Further, the MMDR Amendment Act, 2021 which came into force w.e.f. 28.03.2021 defines the expression “raising, transporting or
causing to raise or transport any mineral without any lawful authority” to mean raising, transporting or causing to raise or transport
any mineral by a person without prospecting license, mining lease or composite license. Since HCL has valid mining Lease in its
hand, it cannot be considered to be in default.
In addition, the company has obtained a legal opinion which concluded that since the possibility of any liability arising on this
account is remote, it need not be disclosed as a contingent liability in the company’s financial statements.
32. Pending notification of all the rules of the Labour Codes, within 31.03.2026, the company is yet to assess the total impact of the
same in its accounts and has provided approximately ^ 1.77 crore as on 31.03.2026, provisionally on adhoc basis . However, this
estimate is subject to interpretation of certain provisions. The company is in process of carrying out a detail assessment. However,
the company expects no major impact on account of implementation of the New Labour Codes.
33. The previous year’s figures have been regrouped / rearranged, wherever necessary.
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