Your Board of Directors takes pleasure in presenting their 36th AnnualReport on the performance of the Company together with the Audited Annual Accounts forthe year ended 31st March 2019 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 2019is summarized below:
(Rs. in lacs)
| ||Ind AS ||I -GAAP |
|Particulars ||Financial Year ||Financial Year |
| ||2018-19 ||2017-18 |
|Revenue from operations ||4585.51 ||4308.31 |
|Other Income ||240.79 ||36.11 |
|Total Revenue ||4826.30 ||4344.42 |
|Total Expenditure ||4656.10 ||4421.81 |
|Profit/ (Loss) Before Tax ||170.20 ||(77.39) |
|Other comprehensive income/(Loss) ||(648.27) ||(405.26) |
|Total comprehensive income/(Loss) ||(478.07) ||(482.65) |
Company has not transferred any amount to reserves due to the loss.
In view of the losses at the end of the Financial Year 2018-19 the Board of Directorsdid not recommend any dividend on the equity shares for the year ended 31stMarch 2019.
4. OPERATIONS AND OVERALL PERFORMANCE.
During the year under review your company has incurred a net loss of 478.07 lakhs asagainst 482.65 lakhs of the previous year. During the year the sales turnover (net) was3886.03 lakhs as against 3685.36 lakhs in the previous year.
CFM-22 sale quantity was 1056MT as against 1165 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 94% capacityutilization as against 100% in the previous financial year.
5. STATUS OF STRATEGIC DISINVESTMENT:
Govt. of India on 27.10.2016 has given in principle' approval for strategicdisinvestment of HFL with the parent Company (HOCL) to exit the Company completely.Disinvestment process was initiated by Administrative Ministry as per the Department ofInvestment Public Asset Management (DIPAM) guidelines by appointing Inter-MinisterialGroup (IMG). IMG had recommended for cancellation of disinvestment process in the meetingheld on 17-Jul-2018 as the company received single bid.
Subsequently various road map options were studied to ensure sustainable operationswere considered and concluded that viable options are not available in consultations withAdministrative Ministry.
Company is depending on CFM-22 since PTFE is not viable. However there is a restrictionunder the Montreal Protocol (1992) CFM-22 falls under Ozone Depleting Substances (ODS)category.
In view of this our Administrative Ministry directed to organize sale of the 66 acres13 Gunthas vacant surplus land through MSTC E-Auction and utilize the sale proceeds forgiving VRS/VSS to employees of the HFL as per law and laid down rules/procedures.
6. SALE OF IMMOVABLE PROPERTY:
With reference to the approvals received from the Government HOCL TSIIC The Board ofDirectors of the company have initiated the process for the sale of 66 Acres 13 Gunthas ofland to clear the employee dues and for providing VRS/VSS to the employees. As part ofthis process Board requires the approval of the Shareholders for the sale of 66 Acres 13Gunthas of land of the Company as per Section 180(1)(a) of the companies act 2013 by wayof passing a Special Resolution.
Pursuant to Section 110 and other applicable provisions of the Companies Act 2013 readtogether with the Companies (Management and Administration) Rules 2014 HindustanFluorocarbons Limited (The Company) had sought the approval of the members through postalballot ( which included electronic voting) for the Special Resolution under Section180(1)(a) of the Companies Act 2013 to consider and to approve the proposal for sale of 66acres 13 Gunthas of land of the company contained in the postal ballot notice dated March11 2019.
Based on the scrutinizer Report dated 23rd May 2019 submitted by Mr. Raghavendar RaoDepuru M/s. Ahalada Rao.V & Associates The Special Resolution in relation to theaforesaid matter has therefore been approved by the Shareholders with the requisitemajority.
The results of the postal ballot and scrutinizer report are available at the website ofthe Company i.e www.hfl.co.in.
Currently the Company is in process of selling the surplus land through MSTC E-Biddingprocess.
The Authorized Share Capital of the company is 210000000 and the paid up capital ofthe company is 195991000. The company's shares are listed in BSE (Scrip id: HINFLUR).During the period under review the company has not: (i) bought back any of its securities(ii) issued any sweat equity shares (iii) issued any Bonus shares (iv) provided any stockoption scheme to employees.
8. CREDIT RATING
The company was issued credit rating of ACUITE C for long term instruments and ACUITEA4 for short term instruments by ACUITE Ratings and Research.
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 Seven times during the financial year on:18thApril 2018 15th May 2018 23rd May 2018 10th August2018 12th November 2018 08th February 2019 11thMarch 2019.
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 duly constituted. During the year
1. Shri. Mukesh Pareek was appointed as HOCL Nominee Independent Director of theCompany w.e.f.13.2.2019;
2. Ms. Lata Alker was appointed as HOCL Nominee Independent Women Director of thecompany w.e.f 09.08.2019
3. Shri. Chander Prakash Bhatia was appointed HOCL Nominee Director of the Companyw.e.f 09.08.2019
Pursuant to the provisions of Section 149 of the Companies Act 2013 the independentdirectors have submitted declarations that each of them meet the criteria of independenceas provided in Section 149(6) of the Act along with Rules framed there under andRegulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations"). Therehas been no change in the circumstances affecting their status as independent directors ofthe Company Pursuant to the provisions of Section 203 of the Companies Act 2013 the KeyManagerial Personnel of the Company as on March 31 2019 are: Shri.Srinivas RajuDalapathirao Chief Financial Officer and Ms. K Rajini Company Secretary (from 19.05.2011up to 26.06.2019). During the year Ms. S Krithika was appointed as Company Secretaryw.e.f 12.08.2019.
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; the prescribed DPE Guidelines are being 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 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 Corporate Social Responsibility and Sustainbility Development Committee (CSR& SD) Share Transfer Committee. For details of Composition and meeting of Committeerefer to Corporate Governance Report which is a part of this report.
19. 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
20. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does 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
22. 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.
23. 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.
24. 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 year2018-19 however recognizing the obligation to the society both in the areas ofenvironment protection and social development company has taken initiatives towardsimplementing welfare schemes for uplifting the quality of living of the communitysurrounding the area around the factory. Company is sponsoring two teachers in theneighboring area and has constructed two public toilets in the surrounding areas.
25. 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 to this Report.
26. RESEARCH & DEVELOPMENT:
The company is continuously conducting the research &development to deliver goodsthrough innovative development a. Development of Glass filled and Glass+MoS2 filled withModified PTFE. b. Development of micro fine PTFE powder for lubrication application withsuspension grade PTFE. c. Development of blends of non- ODS gases by importing.
27. RISK MANAGEMENT
Clause 7.3 of the DPE Guidelines on Corporate Governance for CPSEs The Risk Managementprocess includes Risk Identification Risk assessment Risk evaluation categorizationRisks treatment plan for mitigation of risks and escalation/ reporting of risks to Boardsome of the risks and concerns which we are facing as follows:
- Energy intensive Technology and uneconomical plant size.
- Manpower cost is high.
To mitigate the above risks your company has taken following action:
Company has made continues efforts to reduce the energy consumption the company isalso planning for VRS Scheme to the employees to mitigate manpower cost.
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 thelacunae in the existing systems and procedures through periodic checks. The instructionsof the Central Vigilance Commission received from time to time have been implemented tostrengthen the vigilance machinery in the company.
29. MATERIAL ORDERS OF JUDICIAL BODIES/REGULATORS
The company has not received any material order from the Judicial Bodies or regulators.
The Statutory Audit of your Company was conducted by Sarath & Associates ChartedAccountants who were appointed as Statutory Auditors for the Financial year 2018-19 byComptroller and Auditor General of India (C&AG) as per Section 139(5) of the CompaniesAct 2013 Auditors Report on the Accounts of the Company for the financial year ended 31stMarch 2019 is at Annexure- III.
31. 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 2018-19 has beenannexed to the Annual Report for the period 2018-19 and forms part of the Annual Report
32. SECRETARIAL AUDIT:
Board has appointed M/s. Ahalada Rao.V &Associates Company Secretaries as aSecretarial Auditor of the company for the financial year 2018-19.
The explanations /comments made by the Board relating to the qualificationsreservations or adverse remarks made by the Auditors in their report are furnished inAnnexure VI is attached to this report. There were no adverse comments qualifications orreservations or adverse remarks in the Secretarial Audit Report.
33. COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has generally complied with the Secretarial Standards issued by theInstitute of Company Secretaries of India.
34. 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 AnnexureVII and is attached to this Report.
35. THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (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 Workplace (PreventionProhibition and Redressal) Act 2013. Company has not received any cases relating to thesexual harassment of women at work place.
36. 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 inAnnexure IV and forms part of the Directors' Report.
37. 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 certificate obtained from Practicing Company Secretary regarding compliance of theconditions of corporate governance is attached in Annexure V.
38. 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.
39. FIRE & SAFETY PERFORMANCE:
The Company pays special attention to ensure safety of the factory and workers employedtherein.
The Company accords the same priority attention to safety aspects as it does toproduction and productivity be it in a personal safety process safety environmentsafety or product stewardship and allocated adequate resources of men machine moneytime and energy to maintain the standards thus performance during the year was very good.The Company continued to maintain good safety record in the financial year 2018-19.
A Mock drill is a practice which trains an individual about the course of action to betaken in case if 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. We are conducting Emergency Mockdrill often or once in a year in presence of External Authority i.e Director of FactoriesTelangana & higher management of HFL in compliance with ISO 2000 2001.
40. 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.
41. ISO CERTIFICATION:
Company's quality management system is accredited as an ISO 9001:2015.
42. 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.
43. 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.
44. LEGAL COMPLAINCE
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.
46. 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.
86.26% of the Share Capital of the Company has been dematerialized as on 31stMarch 2019 the company has Dematerialized total accounts of 2698 involving 16906175shares (which constitutes 86.26%of the share capital).
47. 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.
48. CODE OF CONDUCT:
In line with the requirements of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board Members and Senior Management personnel have affirmedcompliance with the code of conduct for the financial year ended 31st March2019. The Company has adopted "Code of Conduct and Ethics" for the Directors andSenior Executives of the Company. The object is to conduct the Company's businessethically and with responsibility integrity fairness transparency and honesty. The codeis available on Company's website. All directors and senior management personnel havecomplied compliance with the Code of Conduct and ethics as on 31st March 2019.
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 India.especially 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. In conclusion I am fully confident that with the continued support fromall of you my urge to place your Company in the pedestal of success will not beunrealistic.
We on our part would continue our efforts to take your Company into the future bymeeting the challenges & grabbing the opportunities in our endeavor in the pathtowards turnaround. We look forward to your continued support in this ongoing process.
In conclusion we are optimistic that the company would attain significant profits inthe near future.
For and on behalf of the Board of Directors
By order of the Board of Directors
Of Hindustan Fluorocarbons Ltd.
(S B BHIDE)