Hutti Gold Mines Company Limited Shares

Financial Report Summary

THE HUTTI GOLD MINES COMPANY LIMITED, a Government of Karnataka undertaking, presents its 78th Annual Report for the financial year 2023-24. The registered office is located in Bangalore, and the mines are in Hutti, Raichur District. The Annual General Meeting (AGM) is scheduled for December 27, 2024, and will be conducted through video conferencing or other audio-visual means.

Notice of Annual General Meeting:

The primary business of the AGM includes receiving, considering, and adopting the financial statements as of March 31, 2024, encompassing the Audited Balance Sheet, Statement of Profit & Loss, and Cash Flow statement. This will also include the reports from the Board of Directors and Statutory Auditors, and comments from the Comptroller and Auditor General of India. Shareholders will vote on resolutions to declare both regular and special dividends. The board has recommended a dividend of Rs.2425.24 per Equity Share of Rs.100/- and a special dividend of Rs. 1646.84/- per Equity Share of Rs.100/-. The record date for determining eligibility for dividends is December 20, 2024.

General Information for Members:

A member entitled to attend and vote can appoint a proxy who need not be a member. A person can act as a proxy for up to 50 members, holding no more than 10% of the total share capital with voting rights. The proxy instrument must be deposited at the Registered Office 48 hours before the meeting. Members attending the AGM via video conferencing will be counted for quorum. Members are requested to provide their email address to receive the meeting link by December 24, 2024. The register of members will be closed from December 20, 2024 to December 27, 2024. Dividend payments will be made within 30 days of the AGM, before January 26, 2025, to members on the register as of the record date. Unclaimed dividends from past years are uploaded on the company website and members are encouraged to view the list and lodge their claims. The company's website is https://huttigold.karnataka.gov.in/.

Additional Information for Members:

Voting rights are proportional to shareholding. Members should bring a copy of the Annual Report and Attendance Slip. Written queries on the report should be sent by December 20, 2024. The company’s email for grievances is rohgml@gmail.com. Members should register their email address with the company. No gifts or coupons will be distributed at the meeting. The Register of Directors and Key Management Personnel will be available for inspection at the AGM.

Report of the Board of Directors:

The Directors report on the company's Corporate Vision, which is to become one of the most vibrant and self-reliant mining giants. The report highlights operational and financial performance.

Operational & Financial Highlights for FY 2023-24 (vs. FY 2022-23):

• Production: Ore Treated increased by 112,305 MT (18.53%) to 718,281 MT. Gold Production increased by 141.63 Kg (10.03%) to 1,553.05 Kgs. Net recovery grade decreased from 2.33 to 2.16 Gms/MT due to encountering a lean zone. Sand extraction decreased to 417,389 MT. Wind Power generated increased by 14.14 Lakh KWH to 232.48 Lakh KWH.
• Sales: Sale of gold increased by 115.71 Kgs to 1528 Kgs due to increase in gold production. Sand sales increased to 243,938 MT. Wind Power sale increased to 232.48 Lakh KWH, all exported to BESCOM.
• Income: Sale of gold increased to Rs. 93,333.84 lakhs. Sand sales increased to Rs. 1707.57 lakhs (rate fixed by Govt. of Karnataka). Wind Power sales increased to Rs. 790.44 lakhs (rate of Rs.3.40/KWH). Income from investments increased to Rs. 7417.24 lakhs due to higher average investment and interest rates.
• Expenditure: Materials consumed increased to Rs. 6727.88 lakhs. Employee benefit expenses increased to Rs. 45,288.44 lakhs due to wage revisions and increased gratuity provisions. Power & Fuel increased to Rs. 7368.40 lakhs. Royalty, DMF & NMET increased to Rs. 5284.61 lakhs.
• Profitability: Profit Before Tax was Rs. 31,477.80 lakhs, and Profit After Tax was Rs. 23,945.47 lakhs. Earnings per share were Rs. 8084.12, and Book value per share was Rs. 66,265.96.
• Segment-wise Profitability: Gold division profit was Rs. 23459.69 lakhs, and wind mill division profit was Rs. 215.53 lakhs.
• Dividend: Board recommends dividend payment of Rs.7183.65 lakhs, subject to shareholder approval, with Rs. 31.50 Crores transferred to the General Reserve. There is unclaimed dividend amount for past years on Rs.43.31 Lakhs which will be remitted to the Central Government. The board has reviewed the status of the equity shares of the company which are not listed on any stock exchanges and carefully considered the option of buyback of equity shares.

Changes in Directors and Key Managerial Personnel: A number of changes in Directors and Key Managerial Personnel during the year, which are listed in the report with dates of appointment and cessation.

Directors' Responsibility Statement: Directors confirm that the annual accounts have been prepared according to applicable accounting standards and give a true and fair view of the company's financial position.

Auditors: The Statutory Auditors (Messrs P.K.Rungta & Co.), Supplementary Auditors (Accountant General of Karnataka), and Secretarial Auditors (CS Vishwanathan) have been appointed.

Other Policies and Disclosures:

• Risk Management Policy, Environmental Management Policy, Corporate Social Responsibility, Vigil Mechanism in force, Annual Return, adequate internal financial controls operating effectively, no separate policy on Directors’ remuneration, Corporate Governance standards are not applicable as company is unlisted
• Particulars of loans given, investments made, guarantees given and securities provided: Nil. There are 67 applications for exploration and mining of gold. Three mining applications with 685.81 Ha of land which are at final stages of approval at Government level.

The report notes the manpower strength as 3704 employees. The company received 177 applications under the Right to Information Act (RTI) during the year. Several projects under implementation are also listed along with their cost estimates.

The report concludes with acknowledgements to the Government of India, Government of Karnataka, and various stakeholders for their support.

Revised Independent Auditor's Report (P.K. Rungta & Co.):

The auditor expresses a qualified opinion on the IND AS financial statements of THE HUTTI GOLD MINES COMPANY LIMITED. The audit report supersedes the independent Auditor's Report dated 10.09.2024, which has been revised in the light of observations arising from the audit by Comptroller & Auditor General of India.

Basis for Qualified Opinion:

1. The Company has not obtained balance confirmation from Trade payables Rs. 1438.59 Lakhs, Capital creditors Rs. 4319.72 lakhs, Trade/security deposits Rs. 3768.73 Lakhs and Creditors for expenses Rs. 5704.08 Lakhs as on 31.03.2024.
2. Company has spent Rs. 65.49 lakhs towards installation of captive Gold Refinery plant. The plant could not be commissioned due to technical problems.
3. The Company has not obtained any written confirmation regarding receivable of Rs. 100 Lakhs from Suvarna Arogya Suraksha Trust (SAST) and the same is outstanding since November 2021.
4. The approval date of the financial statements and Authority approving the same have not been disclosed in the Notes as per IND AS 10.
5. The Company has not prepared the Aging Schedule and completion overdue for Intangible Assets under Development has not been disclosed as per Schedule III of the Companies Act 2013.
6. The aging schedule for Trade payable Note No.35 (22) does not match the face of the Balance sheet and Note No.20-Trade Payables in Notes to the accounts.
7. Intangible Assets Under Development (Note No.5) has been included in the aging schedule. The Auditor draws attention to Note. 35(2) (b1 to be) to the IND AS financial statements, which discloses the contingent liability of prior year demands of Rs. 4766.28 lakhs with respect to income tax.

Secretarial Audit Report (Swayambhu Viswanathan):

During the period under review, the Company has complied with the provisions of the applicable Acts, Rules, Regulations, Guidelines, Standards, etc. subject to certain observations/qualification/matters for emphasis, primarily related to Board composition and regulatory filings. The audit covers applicable statutory provisions and adherence to good corporate practices under the Companies Act, 2013 and other related laws. The report emphasizes the company's responsibility to comply with the Companies Act and Secretarial Standards for Board meetings and general meetings. It also covers other laws that are applicable.

Qualifications Noted:

1. The Board of Directors did not have the required number of Independent Directors as per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules 2014.
2. The Audit Committee did not consist of two (2) Independent Directors.
3. The Board held only two Board Meetings, below the statutory minimum.
4. The Company has not constituted a Nomination and Remuneration Committee as required under Section 178 of the Companies Act, 2013.
5. The CSR Committee constituted by the Board does not include an Independent Director.
6. Form DIR-12 for appointment or Cessation of Directors is required to be filed. There has been default or delay in filing form DIR-12 in several cases:
7. The vacancy of Women Director was filled more than six months after the vacation.

The company also needs to comply with the orders of NCLT and update statutory registers. The report acknowledges the Company's engagement of a retired District Judge to oversee compliance. The Board of Directors has implemented and maintained an internal control system.