Your Board of Directors takes pleasure in presenting their 39th AnnualReport on the performance of the Company together with the Audited Annual Accounts forthe year ended 31st March 2022 and reports of the Statutory Auditors and the Comptrollerand Auditor General of India thereon.
1. FINANCIAL RESULTS
The financial performance of the Company for the year ended 31st March 2022is summarized below:
(Rs. in lacs)
|Particulars ||2021-22 ||2020-21 |
|Revenue from Sales ||0.33 ||366.91 |
|Other Income ||281.43 ||249.90 |
|Total Income ||281.76 ||616.81 |
|Total expenditure ||894.63 ||3099.90 |
|Profit/(Loss) before tax ||(612.87) ||(2483.09) |
|Other Comprehensive income/(Loss) ||(4.19) ||(48.98) |
|Total Comprehensive income/(Loss) ||(617.06) ||(2532.07) |
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 2021-22 the Board of Directorsdid not recommend any dividend on the equity shares for the year ended 31st March 2022.
4. OPERATIONS AND OVERALL PERFORMANCE
During the year under review pursuant to CCEA order for closure and shutting ofoperations HFL had stopped its operations. During the year the sales turnover (net) wasRs.0.33 lakhs as against Rs. 366.91 lakhs in the previous 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
HFL had received letter from Ministry of Chemicals and Fertilizers Department ofChemicals 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.
HFL has received approval of shareholders for the shutting down of the plant/unit andclosure of the company and to sell or otherwise dispose of the whole or substantially thewhole of the undertaking of the company through postal ballot notice dated February 102020.
iii. SALE / DISPOSAL OF HFL FREEHOLD LAND
HFL is in the process of sale of land and the subject to receipt of NOC from TSIDC/TSGovt.
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 29.01.2020 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 interest free loan of Rs.73.70 crore from GoI on 26.05.2020. On15.03.2022 HFL received an additional amount of Rs.2.17 crore from GoI. As per GoI orderHFL to utilize funds for payment of liabilities viz. VRS/VSS to existing employeesClearing liabilities of Ex- employees Statutory dues and secured / unsecured creditorsetc. related to shutting down of plant / unit of HFL as per CCEA decision dated22.01.2020.
vi. OBTAINING MLF FUNDING FROM MOEFCC FOR THE PLANT CLOSURE In case of closure ofHCFC-22 plant Multilateral Fund (MLF) is providing the financial assistance for thisprocess through World Bank. HFL is in touch with DCPC and MoEFCC on MLF funding.
A DO letter No.42/31/2017-PMU-OC dated 28- Sep-2021 addressed to Director (C&PC)from Hon'ble Additional Director (Ozone Cell) MoEFCC and intimated that an email wasreceived from World bank and informed that MLF funding will not provided to HFL sinceclosure decision was taken by GoI and HFL would be closed by December 2021 no furtherintervention from MoEFCC is admissible as per the rules and procedures of Ex-Com of theMLF.
vii. 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 20-Jul-2020 (9) 31- Jul-2021 (1) totalling to 65 employees were relieved on VRS-2020scheme and 13 of the employees got superannuated totalling to 78 as on date.
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 not conducted any postal ballot process during the year 2021-22.
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 officer at the office of the companyto respond effectively to the request of the applicants under the acts in synchronizationwith the direction of Central Information Commission (CIC) for promotion of Institutionaltransparency within the public authority through proactive and effective implementation ofsection 4 of the RTI Acts 2005. During the year company has received 10 applications andthe same were resolved.
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
In view of the COVID-19 pandemic and restrictions on the movements apart from socialdistancing the MCA vide circular dated 19th March 2020 and subsequentexemptions thereto to Section 173 (2) and Rule 4(2) of Companies (Meeting of Board ofDirectors and its Powers) Amendment Rules 2020 HFL has conducted all its Board Meetingthrough VC. The Board of Directors met 5 times during the financial year 2021-22 on: 24thMay 2021 27th July 2021 27th October 2021 and 24th January2022 and 25th March 2022.
For details of meetings of the Board refer to Corporate Governance Report which is apart of this report.
12. BOARD OF DIRECTORS
Board of Directors of the company was constituted. During the year the followingadditions / deletions were made:
1. Shri Sajeev B was appointed as Chairman & managing Director (Additional charge)w.e.f 22.09.2021.
2. Smt. Archana K was appointed as Independent Director on the of Board of HFL w.e.f24.12.2021.
3. Shri. Bharat J Kanabar was appointed as HOCL Nominee Independent Director on the ofBoard of HFL w.e.f 28.01.2022.
4. Smt. Susheela S Kulkarni CGM & Company Secretary of HOCL was ceased as HOCLNominee Director w.e.f. 28.02.2022
5. Shri. P O Luise was appointed as HOCL Nominee Director w.e.f. 01.03.2022.
6. Shri Sanjay Krishna Navhale was appointed as Government Nominee Director in place ofShri Dharmendra Kumar Madan w.e.f 31.03.2022
Pursuant to the provisions of Section 203 of the Companies Act 2013 the Key ManagerialPersonnel of the Company as on March 31 2022 are: 1. Shri. Srinivasa Raju DalapathiraoChief Financial Officer; 2. Mr Subramonian H 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 Government of India/ President of India and under the supervision controland directions of the DCPC and by parent company (HOCL) and the prescribed DPE Guidelinesare also 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 constitutedNomination and Remuneration Committee under section 178(1) of the Companies Act 2013 andcomplied the criteria for determining qualifications positive attributes and independenceof appointment and remuneration of a Key Managerial Personnel and other employees asprovided under 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 OTHERPRESCRIBED 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 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
Company has obtained necessary declarations from the Independent Directors asstipulated under Section 149(7) of the Companies Act 2013.
20. 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 hfl.co.in.
21. 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 I Form A and B to this Report.
22. RESEARCH & DEVELOPMENT
As the company is in the process of closure of operations R&D operations were notcarried out during the period.
23. 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-II 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 are annexed hereto inAnnexure - III 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 The certificatesobtained from Practicing Company Secretary regarding compliance of the conditions ofcorporate governance are attached in Annexure - IV.
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 for the year ended 31st March 2022 theapplicable accounting standards had been followed along with proper explanation relatingto 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) Cabinet Committee on Economic Affairs [CCEA] Government of India has approved theclosure and shut down of operations of the Company. Accordingly company is no longer aGoing Concern Entity 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 theCompany for ensuring the orderly and efficient conduct of its business including adherenceto Company's policies the safeguarding of its assets the prevention and detection offrauds and 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 GOVERNMENT:
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 year2021-22.
33. RISK MANAGEMENT
The company has put in place Risk Management process which includes riskidentification risk assessment risk evaluation categorization and 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
In the case of Rockwell Industries Limited vs. HFL the High Court vide Order Dated:04.11.2020 (Case No. COM.C.A. 16/2020) has directed HFL (Appellant) not to dispose ortransfer or to create a third party right with regard to its assets. HFL is in the processof vacating the stay on disposal of assets.
36. SECRETARIAL AUDIT
Board has appointed M/s. ARS & Associates Company Secretaries LLP (LLPIN: AAG-3878) as a Secretarial Auditor of the company for the financial year 2021-22. Theexplanations / comments made by the Board relating to the qualifications reservations oradverse remarks made by the Auditors in their report are furnished in Annexure VII isattached to this report. There were no adverse comments qualifications or reservations oradverse remarks in the Secretarial Audit Report.
The Statutory Audit of your Company was conducted by M/s. Sarath & AssociatesChartered Accountants who were appointed as Statutory Auditors for the Financial year2021-22 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 2022 is at Annexure- VIII
38. EXPLANATIONS IN RESPONSE TO AUDITORS' QUALIFICATIONS
The comments of the Comptroller and Auditor General of India u/s 143(6)(b) of theCompanies Act 2013 on the accounts of the company for the year 2021-22 is annexed to theAnnual Report for the period 2021- 22.C & AG have decided not to conduct thesupplementary audit of the financial statements of the Company..
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 WORK PLACE (PREVENTION PROHIBITION AND REDRESSALACT 2013
The company has complied with the provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at the Work place (PreventionProhibition and Redressal) Act 2013. Company has not received any case 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 ismaintained in the Health 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 2021-22.
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 techniques 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.
43. IMPLEMENTATION OF OFFICIAL 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 DepositoriesServices (India) Ltd. (CDSL) under ISIN No. INE806J01013. 86.89% of the Share Capital ofthe Company has been dematerialized as on 31st March 2022.
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.
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 bankers State Bank of India Statutory/Govt Auditors etc. for thecontinued support.
|For and on behalf of the Board of Directors |
|(SAJEEV B) |
|Chairman and Managing Director |
|Place: Mumbai |
|Date: 24-05-2022 |