Your Directors are glad to present the 34rd Annual Report of the company together withAudited Annual Accounts for the year ended 31st March 2017.
FINANCIAL RESULTS:[Section 134(3)(i)]
The financial performance of the Company for the year ended 31st March 2017 issummarized below:
| || ||(Rs. in lacs) |
|Particulars ||Financial Year 2016-17 ||Financial Year 2015-2016 |
|Revenue from operations ||3806.36 ||3963.29 |
|Sales Turnover(net) ||3383.51 ||3527.38 |
|Gross Profit / (Loss) for the year ||90.99 ||(629.38) |
|Less: Interest & Financing Charges ||325.95 ||345.36 |
|Cash Profit / (Loss) ||(234.96) ||(974.74) |
|Less: Depreciation ||152.25 ||136.57 |
|Profit / (Loss) for the year ||(387.21) ||(1111.31) |
|Add: Prior Period Adjustments ||101.34 ||0.08 |
|Net Profit (Loss) ||(488.55) ||(1111.39) |
RESERVES: [Section 134(3)(j)]:
Company has not transferred any amount to reserves due to the loss.
DIVIDEND: [Section 134(3)(k)]
In view of the accumulated losses at the end of the Financial Year 2016-17 are carriedforward no dividend was declared on equity shares for the year ended 31.03.2017.
OPERATIONS AND OVERALL PERFORMANCE.
Your Company has incurred a net loss of Rs.488.55 lacs from operations as against thenet loss of Rs. 1111.39 lacs of the previous year. During the year the sales turnover(net) was Rs.3383.51 lacs as against Rs. 3527.38 lacs in the previous year. CFM-22 salequantity was 1111 MT as against 1116 MT in the previous year and balance quantity was usedas feed stock to manufacture of PTFE. Quality of all companys products continued tobe well accepted by our customers. Company has achieved 95% capacity utilization asagainst 96% in the previous financial year.
STATUS OF STRATEGIC DISINVESTMENT:
NITI Aayog had recommended for the Strategic disinvestment of HFL which wascommunicated to us by our Administrative Ministry vide letter no.F.No.15015/12/2015-Org.Estt. Dated 03-Aug-2016. As part of this process Inter-MinisterialGroup (IMG) was formed for processing of strategic disinvestment of HFL which wascommunicated to us by our Administrative Ministry vide letter no.F.No.15015/12/2015-Ch.IIIdated 27-Jan-2017.
Subsequently DCPC had appointed M/s. SBI Caps as Transaction Advisor (TA) M/s.Crawford Bayley & Co. as Legal Advisors (LA) and Promoter Company HOCL has appointedM/s. GA Advisory as an Asset valuer.
The process of Strategic Disinvestment of HFL is initiated by Parent Company i.e.Hindustan Organic Chemicals Limited under the instructions guidance and supervision ofthe Department of Chemicals and Petro Chemicals.
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.
CORPORATE SOCIAL RESPONSIBILITY:
Though Companies act provisions related to the CSR is not applicable to the Company forthe financial year 2016-17 however recognizing the obligation to the society both in theareas of environment protection and social development company has taken initiativestowards implementing welfare schemes for uplifting the quality of living of the communitysurrounding the area around the factory. Company is sponsoring two Vidya Volunteers to thesurrounding areas.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 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.
THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL Act2013
Company has not received any cases relating to the sexual harassment of women at workplace.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
There was no contract or arrangements made with related parties as defined underSection 188 of the Companies Act 2013 during the year under review.
COMPANYS POLICY RELATING TO APPOINTMENT AND PAYMENT OF REMUNERATION AND DISCHARGEOF THEIR DUTIES OF KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES.
Company has complied all the provisions related to the constitution of Nomination andRemuneration 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.
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
The Company had six Board meetings during the financial year under review.
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.
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 is very good.The Company continued to maintain good safety record in the financial year 2016-17.
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 & employeesskills towards Emergency preparedness & response. We are conducting Emergency Mockdrill oftenly or once in a year in presence of external Authority i.e Director ofFactories Telangana & higher management of HFL in compliance with ISO 2000 2001.
BOARD OF DIRECTORS
Shri J N Suryawanshi was appointed as a HOCL Nominee Director of the Company witheffect from 03.09.2015 and ceased as a Nominee Director of the Company with effect from03.08.2016. Shri. Dinesh Kumar was appointed as GoI Nominee Director of the company witheffect from 24.06.2016 and ceased as a GoI Nominee Director of the Company w.e.f09.08.2017.
Ms.Pushpa Trivedi was appointed as HOCL Independent Director of the company with effectfrom 28.10.2016.
Shri. Rajkishore Das was appointed as Independent Director of the company with effectfrom 13.02.2017. Shri.Dharmendra Kumar Madan was appointed as GoI Nominee Director of thecompany with effect from 09.08.2017
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.
Companys quality management system is accredited as an ISO 9001:2008.
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.
RESEARCH & DEVELOPMENT:
The company is continuously conducting the research & development to deliver goodsthrough innovative development. a. Company has developed 7% carbon filled grade withmodified PTFE. Samples were sent to the party for evaluation. b. Development of modifiedPTFE emulsion grade in lab scale reactor. c. Development of pigmented PTFE for specialtyapplications are given at Annexure I Form B to this report.
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.
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.
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.
The Statutory Audit of your Company was conducted by K S Ramakrishna & Co ChartedAccountants who were appointed as Statutory Auditors for the Financial year 2016-17 byComptroller and Auditor General of India (C &AG) as per Section 139(5) of theCompanies Act 2013 Auditors Report on the Accounts of the Company for the financial yearended 31st March 2017 is at Annexure- III.
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 2016-17 has beenannexed to the Annual Report for the period 2016-17 and forms part of the Annual Report.
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 regardingcondolation 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.
TRADING AND DEMAT FACILITIES FOR SHARES:
The company shares are listed in Bombay Stock Exchange (BSE). Company got ISIN No.INE806J01013 and demat facilities with Central Depository Services (India) Limited (CDSL)and with National Securities Depository Limited (NSDL) for the equity shares of thecompany.
84.98%of the Share Capital of the Company has been Dematerialize the shares theCompany has been Dematerialized as on 31st March 2017- total accounts Dematerialized is1924 involving 16656150 shares (which constitutes 84.98%of the share capital) .
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.
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 Board.some of the risks and concerns which we are facing as follows:
- Energy intensive Technology and uneconomical plant size.
- Manpower cost is high.
- Refurbishment of old plant
- PTFE Prices are continuously reducing
To mitigate the above risks your company has taken following action:
Company has made continues efforts to reduce the energy consumption old energyintensive reciprocating compressors are being replaced by new efficient screw compressorsin refrigeration unit. Continues efforts are being made to implement various energyconservation schemes.
PTFE Margins are under pressure hence emphasis is given on development of variousgrades of PTFE where in margins are more than virgin PTFE.
The Company has complied with the various requirements of Corporate Governance. Thedetails in this regard form part of this report in Annexure- V.
Board has appointed M/s. Ahalada Rao.V & Associates Company Secretaries as aSecretarial Auditor of the company for the financial year 2016-17. The explanations/comments made by the Board relating to the qualifications reservations or adverseremarks made by the Auditors in their report are furnished Annexure VI is attached to thisreport. There were no adverse comments qualifications or reservations or adverse remarksin the Secretarial Audit Report.
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 VII and is attached to this Report.
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.
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.
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 March 2017.
The Company has adopted "Code of Conduct and Ethics" for the Directors andSenior Executives of the Company. The object is to conduct the Companys businessethically and with responsibility integrity fairness transparency and honesty. The codeis available on Companys website www.hfl.co.in. All directors and senior managementpersonnel have complied compliance with the Code of Conduct and ethics as on 31st March2017.
To position itself to be a niche player in the production of Fluorospeciality chemicalsand filled grades of PTFE.
1. To increase the capacity utilization from 96% to 100% during the financial year2017-18.
2. To Endeavour to convert entire quantity of TFE into various Fluoro SpecialtyChemicals by 2017-18.
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 review.
The Company has not bought back any of its securities during the year under review.
The Company has not issued any Sweat Equity Shares during the year under review.
No Bonus Shares were issued during the year under review.
The Company has not provided any Stock Option Scheme to the employees.
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 theannual accounts the applicable accounting standards had been followed along with properexplanation relating to material departures; (b) The directors had selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe company at the end of the financial year and of the profit and loss of the company forthat period; (c) The directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;(d) The directors had prepared the annual accounts on a going concern basis; and (e) Thedirectors in the case of a listed company had laid down internal financial controls tobe followed by the company and that such internal financial controls are adequate and wereoperating effectively.- Not applicable to Private Limited Company.
Internal financial control means the policies and procedures adopted by the Company forensuring the orderly and efficient conduct of its business including adherence toCompanys 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 had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
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 Hyderabad 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 thefuture by meeting the challenges & grabbing the opportunities in our endeavor in thepath towards turnaround. We look forward to your continued support in this ongoingprocess.
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 OfHindustan Fluorocarbons Ltd.
| ||Sd/- |
| ||(S B BHIDE) |
| ||Chairman |
|PLACE : Mumbai || |
|DATE : 14.08.2017 || |