Your Board of Directors takes pleasure in presenting their 37th AnnualReport on the performance of the Company together with the Audited Annual Accounts forthe year ended 31st March 2020 and reports of the Statutory Auditors and theComptroller and Auditor General of India thereon.
1. FINANCIAL RESULTS
The financial performance of the Company for the year ended 31st March 2020is summarized below:
(Rs. in lacs)
|Particulars ||2019-20 ||2018-19 |
|Revenue from operations ||3695.77 ||4585.51 |
|Other Income ||4.31 ||240.79 |
|Less: GST ||(563.31) ||(699.48) |
|Total Revenue ||3136.77 ||4126.82 |
|Total Expenditure ||3500.01 ||3956.62 |
|Profit/ (Loss) Before Tax ||(363.24) ||170.20 |
|Other comprehensive income/(Loss) ||(48.76) ||(648.27) |
|Total comprehensive income/(Loss) ||(412.00) ||(478.07) |
2. RESERVES [Section 134(3)(i)]
Company has not transferred any amount to reserves due to continuous losses.
3. DIVIDEND [Section 134(3)(k)]
In view of the losses at the end of the Financial Year 2019-20 the Board of Directorsdid not recommend any dividend on the equity shares for the year ended 31stMarch 2020.
4. OPERATIONS AND OVERALL PERFORMANCE
During the year under review your company has incurred a net loss of Rs. 412 lacs asagainst Rs. 478.07 lacs of the previous year. During the year the sales turnover (net)was Rs. 3886.03 lacs as against Rs. 3685.36 lacs in the previous year.
CFM-22 sale quantity was 961 MT as against 1056 MT in the previous year and balancequantity was used as feed stock to manufacture of PTFE. Quality of all companysproducts continued to be well accepted by our customers. Company has achieved 74% capacityutilization as against 94% in the previous financial year.
5. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY:i. DECISION FOR CLOSURE OF HFL
HFL Board at its meeting held on 30.07.2019 after considering all options concludedthat sustainable operations of HFL is not feasible and recommended for closure of the unitsubject to approval of the administrative Ministry. The Board of HOCL parent company ofHFL at its meeting on 09.08.2019 has also given in principle' approval for closureof HFL subject to approval of Administrative Ministry.
ii. CCEA APPROVAL
The company had received letter from Ministry of Chemicals And Fertilizers Departmentof Chemicals and Petro chemicals vide File. No. 9-5101506/2019-Ch.III dated 29.01.2020informing the decision of Cabinet Committee on Economic Affairs (CCEA) for closure andshutting of operations of HFL.
iii. SALE/DISPOSAL OF HFL FREEHOLD
As per DPE guidelines for time bound closure of sick/loss making CPSE and disposal ofmovable and immovable assets DPE/5(1)/ 2014-Fin.(Part-1) dated 14.06.2018 guideline 4.2states that the CPSE shall carry out the processes of disposal of movable assetsincluding plant & machinery in a transparent manner under the supervision ofAdministrative Ministry's Guideline 4.3.2 on Disposal of Freehold land states that thecompany has to appoint Land Management Agencies (LMA) for disposal of land as per theguidelines of Ministry of Housing and Urban Affairs (MoH&UA).The sale of land issubject to receipt of NOC from TSICC/TS Govt.
iv. PLANT AND MACHINERY AND OTHER MOVABLE ASSETS
Sale of Plant & Machinery and other movable assets would be done through MSTC asper decision taken by CCEA on 22-Jan-2020 and will be executed as per DPE guidelines. HFLhas only one plant/unit located at Rudraram District Sangareddy in Telangana.
v. RECEIPT OF GOI INTEREST FREE LOAN
HFL had received for interest free loan of Rs.73.70 crore from GoI vide LetterNo.P.51015/06/2019-Ch. III (Vol.II) dated 19.05.2020 and received funds on 26.05.2020. Asper GoI order HFL to utilize funds for payment of liabilities viz. VRS/VSS to existingemployees Clearing liabilities of Ex-employees Statutory dues and secured / unsecuredcreditors etc. related to shutting down of plant / unit of HFL as per CCEA decision dated22.01.2020.
The VRS sums paid to employees' towards VRS/VSS and arrears to retired employees etc.after the same are audited by One Independent auditor Internal Auditor and StatutoryAuditors. Further as directed checking of VRS payments as per DPE guidelines have alsobeen verified by DCPC MoC&F.
vi. PROCESS OF OBTAINING MLF FUNDING FROM MOEFCC FOR THE PLANT CLOSURE
In case of closure of HCFC-22 plant Multilateral Fund (MLF) is providing the financialassistance for this process through World Bank. Administrative Ministry will write toMoEFCC and in turn they will write to World Bank which is the Implementing Agency forIndia. The basis for MLF funding is around 1 to 1.50 US Dollar per Kg on the productioncapacity of the plant.
6. IMPACT OF COVID-19
The pandemic Covid-19 has significantly and adversely affected the business sentimentsand economy in general. Company has evaluated the impact of COVID - 19 on the functioningof the company till the year end which is insignificant considering the overall operationsof the company for the year and the decision of the Government to close the company.
7. POSTAL BALLOT
HFL has conducted two postal ballot process during the year 2019-20. Pursuant toSection 110 and other applicable provisions of the Companies Act 2013 read together withthe Companies (Management and Administration) Rules 2014 Hindustan Fluorocarbons Limited(The Company) had sought the approval of the members through postal ballot (which includedelectronic voting) for the Special Resolution under Section 180(1)(c) and 180(1) (a) ofthe Companies Act 2013 seeking approval of shareholders for the following resolutions: (i)increase the borrowing powers of the company and creation of charge / providing ofsecurity and (ii) to approve the shutting down of the plant/unit and closure of thecompany(iii) to sell or otherwise dispose of the whole or substantially the whole of theundertaking of the company as contained in the postal ballot notice dated November 082019 and February 10 2020.
Based on the scrutinizer Report dated 31st December 2019 and 28thJuly 2020 submitted by Mr. Raghavendar Rao Depuru M/s. Ahalada Rao.V & Associatesthe Special Resolutions in relation to the aforesaid matter has therefore been approvedby the Shareholders with the requisite majority. The results of the postal ballot andscrutinizer report are available at the website of the Company i.e. www.hfl.co.in.
The Authorized Share Capital of the company is Rs. 210000000 and the paid up capitalof the company is Rs.195991000. The company's shares are listed in BSE (Scrip id:524013). During the period under review the company has not: (i) bought back any of itssecurities (ii) issued any sweat equity shares (iii) issued any Bonus shares (iv) providedany stock option scheme to employees.
9. THE RIGHT TO INFORMATION ACT 2005.
In consonance with the provisions of the Right to information Act 2005 Company hasappointed Appellate Authorities/ Public Information officers at all the units/ offices ofthe company to respond effectively to the request of the applicants under the acts insynchronization with the direction of Central Information Commission(CIC) for promotionof Institutional transparency within the public authority through proactive and effectiveimplementation of section 4 of the RTI Acts 2005 the company has also appointed atransparency officer that company has created necessary mechanism to meet the objective tobring out transparency in the functioning of organization as envisaged by RTI Act.
10. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
The company was not required to transfer any amount towards IEPF
11. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
The Board of Directors met 4 times during the financial year on:25 24th May2019 30thJuly 2019 08th November 2019 10th February 2020. Fordetails of meetings of the Board refer to Corporate Governance Report which is a part ofthis report.
12. BOARD OF DIRECTORS
Board of Directors of the company was constituted. Changes during the year are:
1. Shri. Chander Prakash BhatiaHOCL Nominee Director was appointed as ManagingDirector (Additional Charge) of the Company w.e.f 01.06.2020.
2. Shri. T S Gaikwad Managing Director of the company superannuated on 31.05.2020
3. Shri. Mukesh Pareek HOCL Nominee Independent Director tenure ended on 20.02.2020(w.e.f.13.2.2019 up to 20.02.2020)
4. Ms. Lata Alker HOCL Nominee Independent Women Director tenure ended on 20.02.2020(w.e.f 09.08.2019 up to 20.02.2020) Pursuant to the provisions of Section 149 of theCompanies Act 2013 the independent directors have submitted declarations that each ofthem meet the criteria of independence as provided in Section 149(6) of the Act along withRules framed there under and Regulation 16(1)(b) of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBIListing Regulations"). There has been no change in the circumstances affecting theirstatus as independent directors of the Company.
Due to the end of term of Independent Directors on 20.02.2020 HFL has requested to GoIand HOCL (Parent company) for appointment of Independent Directors on the Board of HFL.
Pursuant to the provisions of Section 203 of the Companies Act 2013 the Key ManagerialPersonnel of the Company as on March 31 2020 are: 1. Shri. Srinivas Raju DalapathiraoChief Financial Officer; 2. Ms. S Krithika Company Secretary.
13. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company being a CPSE appointment of all the Directors on the Board of the Companyare made by the Govt. of India/President of India and under the supervision control anddirectors of the DC&PC; by parent company (HOCL) and the prescribed DPE Guidelines arebeing followed.
14. COMPANY'S POLICY RELATING TO APPOINTMENT AND PAYMENT OF REMUNERATION AND DISCHARGEOF THEIR DUTIES OF KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
Company has complied with all the provisions related to the constitution of Nominationand Remuneration Committee under section 178(1) of the Companies Act 2013 and complied thecriteria for determining qualifications positive attributes and independence ofappointment and remuneration of a Key Managerial Personnel and other employees as providedunder Section 178(3) of the Companies Act 2013.
15. FORMAL ANNUAL EVALUATION OF PERFORMANCE OF BOARD ITS COMMITTEES AND INDIVIDUALDIRECTORS
The Company being a CPSU is governed by the DPE Guidelines and the Annual Evaluationof Performance of Board its committees and of individual Directors are carried out by theAdministrative Ministry.
16. RATIO OF DIRECTORS REMUNERATION
TO MEDIAN EMPLOYEES REMUNERATION AND OTHER PRESCRIBED ELABORATE DISCLOSURES AND DETAILS
The Company being a CPSE which is under the supervision control and direction of theAdministrative Ministry the prescribed DPE Guidelines are being followed in respect ofemployee's remunerations and DPE Guidelines are being followed as regards otherprescribed Perquisites
17. TRAINING OF BOARD OF DIRECTORS:
The company furnishes set of documents and booklets to the Directors on their joiningthe Board. This includes important data about the performance of the Company Memorandum& Articles of Association Corporate Governance guidelines Delegation of powersProduct line brochures etc. A copy of the monograph on position duties and liabilities ofDirectors is also circulated among the Directors.
18. COMMITTEES OF THE BOARD
The Committees of the Board includes Audit Committee Nomination and RemunerationCommittee Corporate Social Responsibility and Sustainability Development Committee(CSR&SD) Share Transfer Committee and Stakeholders Relationship Committee. For detailsof Composition and meeting of Committee refer to Corporate Governance Report which is apart of this report.
19. INDEPENDENT DIRECTORS DECLARATION
The Company has received Declarations of Independence as stipulated under Section149(7) of the Companies Act 2013 from Independent Directors confirming that he/she is notdisqualified from appointing/continuing as Independent Director.
disclosure on re-appointment of independent directors: not applicable
20. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information in accordance with the provisions required to be disclosed under Section134(3)(m) of the Companies Act 2013 read with the Rule 8(3) of the Companies (Accounts)Rules 2014 Regarding Conservation of energy Technology Absorption and Foreign ExchangeEarning and outgo are given at Annexure II Form A and B to this Report.
21. RESEARCH & DEVELOPMENT:
As the company is in the process of closure of operations R&D operations were notcarried out during the period.
22. INDUSTRIAL RELATIONS
Employee relations continued to be cordial throughout the year. Your Company has beenimplementing reservation policies of GOI for SCs/STs/OBCs/Persons with disabilities.Representatives of SCs/ STs Categories are associated in Recruitment of DepartmentalPromotion Committees. A statement showing representation of employees belonging toScheduled Castes/ Scheduled Tribes/ Backward classes /Minorities categories is appended asAnnexure-III to this report.
23. ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and administration) Rules 2014 is furnished in Annexure-Iand is attached to this Report.
24. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Management discussion and analysis report is annexed hereto in Annexure IV and forms part of the Directors' Report.
25. CORPORATE GOVERNANCE
The Company has complied with the requirements of Corporate Governance Code. Report onthe Compliance with Corporate Governance Code is attached as Annexure-V Thecertificate obtained from Practicing Company Secretary regarding compliance of theconditions of corporate governance are attached in Annexure VI.
26. DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard hereby submit its responsibility Statement:
a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
c) The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) The directors have prepared the annual accounts on a going concern basis; and
e) The directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
Internal financial control means the policies and procedures adopted by the Company forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
f) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively
27. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company do not have any Subsidiary Joint venture or Associate Company.
The Company has neither accepted nor renewed any deposits during the year under reviewand the company has not accepted any deposits during the previous years
29. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013
There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the said provision is notapplicable.
30. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
There were no contract or arrangements made with related parties as defined underSection 188 of the Companies Act 2013 during the year under review.
31. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS U/S 143 OTHER THAN THOSEREPORTABLE TO CENTRAL GOVERNEMENT:
During the year no frauds were reported by the auditors and the same is not applicableto the company.
32. CORPORATE SOCIAL RESPONSIBILITY:
As the Company is making Continuous losses the provision of Section 135 of theCompanies act related to the CSR is not applicable to the Company for the financial year2019-20 but as a social obligation Company has spent an amount of Rs.42000/ - towardstwo teachers to provide their services in schools near to our factory.
33. RISK MANAGEMENT
The company has put in place Risk Management process which includes riskidentification risk assessment risk evaluation categorizationand risk treatment planfor mitigation of risks and escalation / reporting of risks to Board.
With the approval of the Ministry an Officer of the company has been nominated as"Vigilance Officer" (Part time) from amongst the Officers of the Company to takecare of Vigilance functions. Vigilance activities have mainly been directed to check theimprovements in the existing systems and procedures through periodic checks. and toencourage preventive vigilance. The instructions of the Central Vigilance Commissionreceived from time to time have been implemented to strengthen the vigilance machinery inthe company.
35. MATERIAL ORDERS OF JUDICIAL BODIES / REGULATORS
During the year under review Hon'ble High Court vide interim order dated 03.12.2019directed HFL to deposit 50% of award in a court case against the company. which comes toaround Rs.6.5 Crores. HFL has contesting the same with appropriate judicial proceedings.
The Statutory Audit of your Company was conducted by M/s. Sarath & AssociatesChartered Accountants who were appointed as Statutory Auditors for the Financial year2019-20 by Comptroller and Auditor General of India (C &AG) as per Section 139(5) ofthe Companies Act 2013 Auditors Report on the Accounts of the Company for the financialyear ended 31st March 2020 is at Annexure VIII
37. EXPLANATIONS IN RESPONSE TO AUDITORS' QUALIFICATIONS
The comments of the Comptroller and Auditor General of India u/s 143(6)(b) ofthe Companies Act 2013 on the Accounts of the company for the year 2019-20 has beenannexed to the Annual Report for the period 2019-20 and forms part of the Annual Report.
38. SECRETARIAL AUDIT
Board has appointed M/s. Ahalada Rao.V &Associates Company Secretaries as aSecretarial Auditor of the company for the financial year 2019-20.The explanations /comments made by the Board relating to the qualifications reservations or adverse remarksmade by the Auditors in their report are furnished in Annexure VII is attached tothis report. There were no adverse comments qualifications or reservations or adverseremarks in the Secretarial Audit Report.
39. COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has generally complied with the Secretarial Standards issued by theInstitute of Company Secretaries of India.
40. THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSALAct 2013
The company has complied with the provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013. Company has not received any cases relating to thesexual harassment of women at work place.
41. HEALTH AND ENVIRONMENT
The management has taken the great responsibilities for continuous monitoring andprotecting the health and environment as per statutory compliance. Company is followingall pollution norms.
The health record of employees working in production Division is maintained in theHealth Register in Form 7.
42. FIRE & SAFETY PERFORMANCE
The Company pays special attention to ensure safety of the factory and workers employedtherein. The Company accords the same attention to safety aspects as it does to productionand productivity be it in a personal safety process safety environment safety orproduct stewardship and allocated adequate resources of men machine money time andenergy to maintain the standards thus performance during the year was very good.
The Company continued to maintain good safety record in the financial year 2019-20.
A Mock Drill is a practice which trains an individual about the course of action to betaken in case of real emergency occurs. This is one of the most effective technique totrain aware & alert people in a process plant location. A surprise Mock Drill wasconducted at site to analyze the capacities of Plant Equipment operating & employees'skills towards Emergency Preparedness & Response. We have conducted Emergency Mockdrill in the year 2019-20 in presence of External Authority i.e. Director of FactoriesTelangana & higher management of HFL in compliance with ISO 9001:2015.
43. IMPLMENTATION OF OFFCIAL LANGUAGE POLICY
During the year under report your Company continued to Promote Hindi as OfficialLanguage in day to day working in line with the Government policies for its intensive andextensive efforts for progressive use of the official language. Official LanguageImplementation Cell of the Company continued to function effectively.
44. ISO CERTIFICATION
Company's quality management system is accredited as an ISO 9001:2015.
45. PARTICULARS OF EMPLOYEES:
None of the employees of the company is drawing remuneration requiring disclosurePursuant to the provisions of the Companies (Particulars of employees) Rules 1975.
46. LEGAL COMPLIANCE
The Company has complied with all the legal provisions effectively. Although it hasfiled two petition to Company Law Board during the financial year 2011-12 regardingcondonation of delay in filing of satisfaction of charge documents of Life InsuranceCorporation of India with the Registrar of Companies.
All properties and insurable interest of the company including building plant andmachinery and goods are adequately insured. As required under Public Liability InsuranceAct 1991 the company has taken necessary insurance cover.
48. TRADING AND DEMAT FACILITIES FOR SHARES
The shares of the Company are compulsorily traded in Dematerialized mode. To facilitatethe shareholders to dematerialize the shares the Company has signed the agreement withboth i.e. National Securities depositories Limited (NSDL and Central Depositories Services(India) Ltd. (CDSL) under ISIN No. INE806J01013.
86.64% of the Share Capital of the Company has been dematerialized as on 31st March2020.
49. COMPLIANCE OF DPE GUIDELINES & POLICIES
The Guidelines & policies issued by the Department of Public Enterprises from timeto time are being complied with and implemented with the approval of the Board ofDirectors/ Competent Authority.
50. CODE OF CONDUCT
The Company has adopted "Code of Conduct and Ethics" for the Directors andSenior Executives of the Company as per DPE guidelines and as per HOCL (Parent Company).The object is to conduct the Company's business ethically and with responsibilityintegrity fairness transparency and honesty.
51. VRS-2020 SCHEME
The VRS-2020 scheme is implemented in the company vide Part-I Order No.01/2020 Dated:19.02.2020 accordingly the employees were relieved on 30-May-2020 (30) 30-Jun- 2020 (25)and 20Jul-2020 (9) totaling to 64 employees were relieved on VRS-2020 scheme and two (2)of the employees got superannuated on 31.7.2020 and 31.8.2020 respectively totaling to 66.Total amount of Rs. 43.11 Crores was spent towards VRS/ VSS. Amounts are paid toemployees' towards VRS/VSS and arrears to retired employees etc. after the same areaudited by One Independent auditor Internal Auditor and Statutory Auditors. Further asdirected checking of VRS payments as per DPE guidelines have also been verified by DCPCMoC&F on random basis
I place on record my appreciation and gratitude to all the employees and others who hadextended their support and co-operation during the year to achieve the targeted goals ofthe Company. In particular I am grateful to various officials of the Govt of Indiaespecially from the Ministry of Chemicals & Fertilizers Department of Chemicals andPetrochemicals the Finance Ministry Ministry of Environment Forest and Climate ChangeGovt. of India Govt of Telangana Promoter Company i.e. HOCL and Board Members. I wouldlike to convey my sincere appreciation to our valued customers suppliers StatutoryBodies Investors our bakers State Bank of India Statutory/Govt Auditors etc. for thecontinued support.
For and on behalf of the Board of Directors of
Hindustan Fluorocarbons Limited
SDI- (S B BHIDE) Chairman