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Hindustan Organic Chemicals Ltd.

BSE: 500449 Sector: Industrials
NSE: HOCL ISIN Code: INE048A01011
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VOLUME 44928
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OPEN 37.60
CLOSE 37.75
VOLUME 44928
52-Week high 47.90
52-Week low 13.50
P/E
Mkt Cap.(Rs cr) 255
Buy Price 37.85
Buy Qty 933.00
Sell Price 37.95
Sell Qty 112.00

Hindustan Organic Chemicals Ltd. (HOCL) - Director Report

Company director report

The Board of Directors presents herewith the 60th Annual Report of yourCompany along with the Audited Statement of Accounts for the financial year 2020-21.

1. FINANCIAL RESULTS

The financial results for the year ended 31.03.2021 with thecomparative figures of company's operations for the previous year is as under:

(Rs. in Lakhs)

Particulars 2020-21 2019-20
Revenue from operations 41157.80 30001.23
Other Income 1927.64 2203.36
Total 43085.44 32204.59
Expenditure 41418.07 41550.87
Profit before Depreciation & Tax 1667.37 (9346.28)
Less Depreciation 120.61 128.76
Profit /(Loss) before Exceptional Items and Tax 1546.76 (9475.04)
Less : Exceptional Items
Less : (1) Current Tax - -
(2) Deferred Tax - -
Profit/(Loss) for the Period after Tax 1546.76 (9475.04)
Other Comprehensive Income for the year Net of Tax 1543.06 (244.05)
Total Comprehensive Income for the year 3089.82 (9719.09)

2. MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA

Company has been entering into a Memorandum of Understanding (MOU) withthe Ministry of Chemicals & Fertilizers Government of India setting the performanceparameters and targets every year. Company secured "very good" rating for theyear 2018-19. The performance rating for 2019-20 MoU is yet to be finalised by theGovernment.

3. COVID-19 IMPACT ANALYSIS

During the financial year 2020-21 operation of the Company was scaleddown for three weeks during the month of April 2020. The Company was in lock down for 24days and thereby resulting in a decrease in production of Phenol Acetone HydrogenPeroxide H.E. of Cumene and Cumox Oil.

There was a reduction in turnover for an amount of Rs.44.58 crore andrevenue loss for an amount of Rs.14.72 crore due to the production loss in April/May 2020and price reduction of Phenol and by-products.

a. The Company was quick in restoring the operations by ensuringhealth safety and wellbeing of its employees after obtaining all necessary permissions.

b. COVID-19 has affected all the sectors of industry and commercesectors that has much affected including logistics auto drugs pharmaceuticals andelectronic goods where our products are used. COVID-19 had indirectly affected HOCL it'seffect on other industries and restriction in logistics resulted in non-availability andincreased cost of spares and services which in turn had small impact on HOCL. The impactof COVID-19 for the financial year 2020-21 may lead to decline in demand or pricessuspend or significantly reduce operations of factory and affect movement of interstatetransportation of goods etc.

As per our current assessment no significant impact on tangibleassets intangible assets trade receivables investments and other financial assets isexpected and we continue to monitor the changes in future economic conditions. TheManagement does not see any risk in the ability to continue as a going concern and meetingits liabilities as and when they fall due. However the actual impact of Covid-19 on theCompany's financial statements may differ from what is estimated.

4. CONSOLIDATED FINANCIAL STATEMENT

In accordance with the provisions of the Companies Act 2013 ("theAct") and Ind AS 110 - Consolidated Financial Statement the audited consolidatedfinancial statement for the period ending 31.03.2021 is provided in the Annual Report.

5. DIVIDEND

In view of the accumulated losses carried forward by the Company duringthe current year the Board of Directors do not recommend any Dividend for the year underreview.

6. CHANGE IN NATURE OF BUSINESS IF ANY

As per the approved restructuring plan during the year previous yearsale of 85.27 acre of land out of 242-acre sale of land at township at Rasayani has beenregistered and an amount of Rs.67.82 crore was received after deduction of TDC and dues toBPCL amounting to Rs.69.36 crore on 08.05.2019.During the year 2020-21 0.386 acre landwas sold to IOCL (Petrol Pump area) for an amount of Rs.75 lakhs.

Consequent to the decision of the Govt. of India for closure ofSubsidiary Company Hindustan Fluorocarbons Ltd. an amount of Rs.73.70 crore has beenreleased to the Subsidiary company as loan from Govt. of India to meet the expensesrelated to VRS/VSS to employees and settling dues to Bank and other liabilities.

7. FINANCIAL HIGHLIGHTS

During the year 2020-21 the company has achieved a Gross Income ofRs.430.85 crore registering an increase of 33.78 % as against the Previous Year GrossIncome of Rs.322.05 Crore. The Company has earned a Net Profit before Tax of Rs.15.47Crore during the year as against Net loss of Rs.94.75 crore incurred during the previousyear.

8. NUMBER OF MEETINGS OF BOARD (including the dates of Board andcommittee meetings indicating the number of meetings attended by each director in everyfinancial year)

During the year the Board Meetings were held on the following dates:

26th June 2020 13th August 2020 29thOctober 2020 27th January 2021 6th March 2021.

Other details are furnished in the Corporate Governance Report inAnnexure IV to this Report.

9. CORPORATE GOVERNANCE

There has not been any appointment of Independent Directors on theCompany's Board with effect from 21.02.2020 and there has been non -compliance to thatextent with the various requirement of Corporate Governance under provisions of CompaniesAct 2013 under SEBI LODRRs and various Rules / Regulations made there under. The detailsin this regard forms part of Corporate Governance Report as Annexure IV to the AnnualReport. The requisite certificate from the Auditors of the Company confirming compliancewith the conditions of Corporate Governance is attached to the report on CorporateGovernance.

10. COMPLIANCE OF CORPORATE GOVERNANCE GUIDELINES ISSUED BY DEPARTMENTOF PUBLIC ENTERPRISES

DPE Government of India has laid down certain parameters for thepurpose of grading the CPSEs on the basis of their compliance with guidelines on CorporateGovernance and this report needs to be submitted to the Government on quarterly/annualbasis. Company has been complying with the Guidelines on Corporate Governance for CPSEslaid down by DPE and regularly submits reports to the Government. DPE issued 'Very Good'Rating' to your Company for the year 2020-21.

11. MANAGEMENT DISCUSSION & ANALYSIS REPORT

The details in this regard forms part of Corporate Governance Report asAnnexure III to the Annual Report.

12. MANNER IN WHICH FORMAL ANNUAL EVALUATION OF PERFORMANCE OF BOARDITS COMMITTEES AND INDIVIDUAL DIRECTORS HAS BEEN CARRIED OUT :

The provisions of Section 134 (3)(p) of the Act shall not apply to aGovernment Company in case the Directors are evaluated by the Ministry which isadministratively in charge of the Company as per its own evaluation methodology. HOCLbeing a Government Company the performance evaluation of the Directors is carried out bythe Administrative Ministry (MoC&F) Government of India as per applicable Governmentguidelines.

13. KEY MANAGERIAL PERSONNEL:

The following are Key Managerial Personnel of the Company:

a) Shri Subodh B. Bhide [DIN: 05323535] Chairman & ManagingDirector

b) Smt Susheela S. Kulkarni [FCS: 5145] Company Secretary &Compliance Officer

c) Shri P.O Luise GM (Finance) & CFO w.e.f. 6-11-2020

d) Shri Chander P. Bhatia [DIN:08554234] Director (Finance) & CFOup to 5-11-2020

14. DETAILS OF DIRECTORS AND/OR KMP'SWHO HAVE BEEN APPOINTED ORRESIGNED DURING THE YEAR:

i. GOI has assigned additional charge of the post of Managing DirectorHindustan Fluorocarbons Limited (HFL) to Shri Chander Prakash Bhatia Director (Finance)HOCL vide File No. 51011/1/2019-CHEM.III-CPC dated 28th May 2020 w.e.f.01.06.2020 and till closure activities of HFL are completed or till the date of hissuperannuation or till further orders whichever is earliest. AccordinglyShriChanderPrakash Bhatia assumed the charge of Managing Director Hindustan FluorocarbonsLimited (HFL) on 1st June 2020. Further with reference to this Department'sorder No. P-51011/1/2018- CHEM.III- CPC dated 02.11.2020 approval of the President wasconveyed for premature termination of the tenure of ShriChanderPrakash Bhatia Director(Finance) HOCL on his personal request with effect from the date of completion of thethree months' notice period (i.e. 05.11.2020 A/N)

Consequent to the premature termination (on his personal request) witheffect from 05.11.2020 (A/N) of the tenure of Shri C P Bhatia Director (Finance) HOCLwho is also holding the additional charge of Managing Director HFL the President ispleased to assign additional charge of the post of Managing Director HFL to Shri S BBhide Chairman & Managing Director HOCL w.e.f. 06.11.2020 till completion ofclosure of HFL or his superannuation or till further orders whichever is the earliest.

Further Approval of the Competent Authority is hereby conveyed forentrustment of the additional charge of the post of Director (Finance) Hindustan OrganicChemicals Limited (HOCL) to Shri S.B. Bhide Chairman & Managing Director (CMD) HOCLw.e.f. the date of his assumption of additional charge of the post and up to 31.07.2021(date of his superannuation) or till the regular appointment to the post or until furtherorders whichever is the earliest.

ii. Mr.C.P.Bhatia was holding the position of CFO of the Company.However as Director (Finance) Mr. C.P. Bhatia (also CFO HOCL) had submitted hisapplication for repatriation back on lien to his earlier organization viz. REC Ltd. videhis letter dated 06-08-2020 by giving 3 months' notice therefore on 5-11-2020Mr.C.P.Bhatia was relieved from the Post of Director (Finance) of HOCL as per Govt. Orderin this regard. Therefore the position of CFO of the Company was statutorily required tobe filled up to be effective from 6-112020. Further Mr.P.O.Luise GM(Fin.) HOCL wasappointed as CFO of the Company w.e.f. 6th November 2020 and till further orders.

iii. Mr. S. B. Bhide CMD HOCL also holds the Additional charge ofDirector Finance HOCL from 18-02-2018 upto 06-08-2019. Further with reference to thisDepartment's Order No.P-51011/1/2018- CHEM.III-CPC dated 02.11.2020 regarding prematuretermination (on his personal request) with effect from 05.11.2020 (A/N) of the tenure ofShri C P Bhatia Director (Finance) HOCL who is also holding the additional charge ofManaging Director HFL the President is pleased to assign additional charge of the postof Managing Director HFL to Shri S B Bhide Chairman & Managing Director HOCLw.e.f. 06.11.2020 till completion of closure of HFL or his superannuation or till furtherorders whichever is the earliest.

15. COMPOSITION OF AUDIT COMMITTEE (AC) AND NON ACCEPTANCE OF ANYRECOMMENDATIONS OF AC (only for public and listed companies).

The Audit Committee was not in place for the year 2020-21 in compliancewith the Companies Act 2013 and LODRRs as it does not have any Independent Directors.Thereafter in the absence of Independent Directors in the Board Meeting held on13.08.2020 the name of the Audit Committee has been changed to Sub-Committee of theBoard.

Details of Composition meetings of Audit Committee/Sub-Committee areprovided in Corporate Governance Report in Annexure IV to this Report.

16. COMMITTEES OF THE BOARD

Consequent to the completion of tenure of Mr. Mukesh Pareek and Ms.Lata Alker (Independent Directors) on 20-02-2020 there are no Independent Directors onthe Board of the Company as on 31-03-2021. Therefore the following Committees (were inexistence up to 5-11-2020) were cease to exist with effect from 6-11-2020 and as on31-03-2021.

i. Stakeholders Relationship Committee.

ii. Nomination and Remuneration Committee

iii. Committee on Corporate Social Responsibility (CSR)

The Company's Board has the following Committees:

i. Audit Committee though existing but as it does not have anyIndependent Directors therefore w.e.f. 13-08-2020 Board Meeting the name has been changedto Sub-Committee of the Board.

ii. The Share Transfer committee (constituted under Regulation 40 ofthe LODRRs)

The details of the committees along with their composition number ofmeetings held and attendance of each director at the meetings are provided in theCorporate Governance Report.

17. SECRETARIAL STANDARDS

Applicable Secretarial Standards i.e. SS-1 and SS-2 relating to'Meetings of the Board of Directors' and 'General Meetings' respectively have been dulycomplied by the Company.

18. DIRECTOR'S RESPONSIBILITY STATEMENT

Your Directors make the following statement in terms of Section 134(5)of the Companies Act 2013 -

i. That in the preparation of the annual accounts for the year ended31st March 2021; the applicable accounting standards had been followed along with properexplanation relating to material departures.

ii. That such accounting policies as mentioned in the Notes on Accountshad been applied consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as atthe financial year ended 31st March 2021 and the profit or loss of the Company for thatperiod.

iii. That proper and sufficient care had been taken for the maintenanceof adequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

iv. That the annual accounts for the year ended 31st March 2021 hadbeen prepared on a going concern basis.

v. That the Directors had devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.

19. INDEPENDENT DIRECTORS DECLARATION -

As there are no Independent Directors on the Board of the Companyw.e.f. 20-02-2020 the requirement of 'Independent Directors Declaration' is not applicableduring the year under review (FY 2020-21).

20. DISCLOSURE ON REAPPOINTMENT OF INDEPENDENT DIRECTORS

Not applicable.

21. COMPANY'S POLICY ON DIRECTOR'S APPOINTMENT ANDREMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTESINDEPENDENCE OF DIRECTORS ETC.

As per notification dated 5th June 2015 issued by Ministry ofCorporate Affairs provision of section 134(3) (e) of the Companies Act 2013 regardingdisclosure of its policy on Director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatter provided under sub- section (3) of section 178 of the Companies Act 2013 are notapplicable to a Government company. Company being a CPSE and appointments of all theDirectors on the Board of the Company are made by the Govt. of India/President of Indiaand under the supervision control and directions of the Department of Chemicals &Petrochemicals and the prescribed DPE Guidelines are being followed. The Terms andConditions of appointment of Independent Directors and other directors are as per theGovernment Orders are disclosed on the Company's website.

22. RATIO OF DIRECTORS REMUNERATION TO MEDIAN EMPLOYEES REMUNERATIONAND OTHER PRESCRIBED ELABORATE DISCLOSURES AND DETAILS :

The provisions of Section 134 (3)(e) of the Act are not applicable to aGovernment Company. Consequently details on Company's policy on Directors' appointmentand other matters are not provided under Section 178 (3) of the Act. Similarly Section197 of the Act shall not apply to a Government Company. Consequently disclosure of theratio of the remuneration of each Director to the median employee's remuneration and othersuch details including the statement showing the names and other particulars of everyemployee of the Company who if employed throughout / part of the financial year was inreceipt of remuneration in excess of the limits set out in the Rules are not provided interms of Section 197 (12) of the Act read with Rule 5 (1) / (2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014. The Chairman &Managing Director and the Whole-time Directors of the Company did not receive anyremuneration or commission from any of its Subsidiaries. HOCL being a Government Companyits Directors are appointed / nominated by the Government of India as per the Government /DPE Guidelines which also include fixation of pay criteria for determining qualificationsand other matters.

23. AUDITORS

a) M/s. BSJ & Associates Chartered Accountants were appointed asStatutory Auditors of your Company for Corporate Office and Kochi Unit for FY 2020-2021 byC&AG.

The auditors have furnished a declaration confirming their independenceas well as their arm's length relationship with the Company as well as declaring that theyhave not taken up any prohibited non-audit assignments for the Company. The AuditCommittee reviews the independence and objectivity of the Auditors and the effectivenessof the audit process. The auditors attend the Annual General Meeting of the Company

b) The Board of Directors have appointed M/s. C.Y. Associates CostAccountants as Cost Auditors of your Company for FY 2020-2021.

c) M/s. N. C. Mittal & Co. Chartered Accountants were appointed asInternal Auditor of your Company for Corporate office and Kochi unit for FY 2020-2021.

d) Supplementary Audit is conducted by Director General of CommercialAudit and ex-Officio Member Audit Board-I Mumbai.

e) The Board had appointed D. S. Momaya & Co. Practising CompanySecretaries to conduct Secretarial Audit for the FY 2020-2021. The Secretarial AuditReport for the Financial Year ended March 31 2021 is annexed to this Report as Annexureand complied with Section 204 of Companies Act and Regulation 24A of SEBI LODRRs. TheCompany has also obtained Annual Secretarial Compliance Report form the PCS D. S. Momaya& Co. for the year 2020-21 under Regulation 24A of LODRRs.

24. SAFETY HEALTH AND ENVIRONMENT

In the areas of Health Hygiene and Environment the company hasundertaken periodic medical examination as well as statutory requirements of fitnesscheck-up under form No. 23 for its employees. Audiometry tests were carried out for thosewho are exposed with Noise and Autotoxicity tests were carried out for the Benzenehandlers apart from other statutory regular check-ups.

Periodic awareness session on Hygiene Covid precautions and guidelineswere imparted. In order to control the spread Fumigation and disinfection were done onregular basis. Additional dining /rest rooms were provided for contract workers andwaiting Shed were provided for tanker drivers to ensure social distancing. All the tankerswere disinfected before entering.

As part of the safety improvements many positive measures have beenundertaken by the organisation. IMS (Integrated Management System) was implementedintegrating Quality Management System (ISO-9001) Environment Management System(ISO-14001) and Occupational Health and Safety Management System (ISO 45001). This givesmore importance to the safety and health aspects. The objectives of each department hasbeen set in line with the same including Near Miss accident reporting Hazardidentification Risk Assessment identification of each activity Tool Box Talks prior tocommencement of work inside the plant so as to make the employee more aware of the hazardinvolved in the work. During the covid situation online training were organised. Bycomplying with Covid Protocols "First aid training" was imparted being astatutory requirement thereby meeting the availability of required certified first aidersin the organisation. Live practical sessions on safety were conducted for the employees.

During 2020-21 an "Offsite Emergency Drill" was organised inassociation with District Administration NDRF Statutory Authorities nearby PSUs andLocal bodies apart from our regular on-site mock drill. "Lock out Tag Out"system was implemented for Electrical isolations for safe electrical permits across theplant.

HOC Kochi unit received safety awards from Department of Factories& Boilers Govt. of Kerala for outstanding performance in industrial safety for theyear 2020. HOCL Kochi unit also received Suraksha Puraskar from M/s. National SafetyCouncil Kochi Chapter among the large chemical Industries category for the year 2020.

In our commitment to Environment we have ensured that the level ofpollutants from the Factory and nearby surroundings was much below the permissible levels.

Continuing the use of RLNG (Regasified Liquefied Natural Gas) hasresulted in tremendous reduction in air pollution.

As part of protecting the environment awareness sessionscompetitions swachh Bharat activities promoting employees for vegetable cultivationunder a "Green Mission" Beautification of the plant premises involving theentire employees of the organisation were carried out. E-Calendar and E-Diaries wereintroduced and widely circulated as per Government Directives to reduce paper consumptionand thereby conserving natural resources.

On-line Effluent Monitoring and stack monitoring system is implementedto comply with Central Pollution Control Board regulations.

HOCL is in the process of implementing ISO 50001. All the products ofHOCL are certified by BIS.

During 2020-21 HOCL received Commendation certificate for the bestpractices in Energy Conservation activities in the organisation from M/s. Kerala EnergyManagement Centre.

The Company has implemented several measures to prevent the spread ofCOVID-19 pandemic during the year like suspension of Bio-metric punching temporarybanning of visitors' entry work from home for some of the non-essential staff andencouraging the use of protective measures like use of Mask hand hygiene safe distancedisinfection of all trucks and tankers coming inside etc. Posters have been displayed atvarious locations to educate the employees in this regard. In addition Contributions weremade by employees to PM Care Fund and CMDRF. Homeo preventive medicines were supplied tothe employees of all categories.

Hot Water dispenser provided at various locations for employees.Partitions done at Dining Table and Wash Area of Canteen to ensure physical distancing.Awareness session on Covid-19 conducted for Housekeeping staffs and other contract workersat HOC Township. The classes were held at our Township by complying with all Covid-19protocols by our Medical Officer. Covid-19 Awareness session conducted for Security Staffsat our Training Centre. The Session was handled by our Medical Officer. Separate HomeQuarantine facility provided at Township for employees and their family. Also Separateisolation centre was arranged for those who have tested positive. Fumigation done atTownship and work place when positive cases reported.

Hydrogen Peroxide (H202) one of our products iswidely used as a disinfectant. Company has distributed it some of the Institutions/ LocalBodies free of cost. In order to promote Hydrogen Peroxide 5% concentrated H2O2 (5Litre) is also provided to employees. Face Shields were provided to all employees Localauthorities Health Workers Police Dept. and Municipality. Webinar on "Ignorancespreads faster than Covid-19" was conducted by M/s. National Safety Council KeralaChapter for Covid-19 Advisory Committee members and Chief Executives of the Organization.Webinar on "Sustainability and Energy Conservation ideas in a pandemicsituation" conducted for the Executives of the Organization. Covid-19 -SocialBehaviour Norms Pledge was administered to all employees.

Hand washing facility for tanker lorry drivers and cleaners inside theplant area were provided adjacent to the finished product filling area. Hot Waterdispenser provided to various locations. "Break the chain" Diary (500 Nos.)given to Health Dept for distributing to Auto Drivers/ Shopkeepers.

As a part of preventive measures the selection process for engagingapprentices under Apprentices Act were conducted through online mode. The selectedcandidates were allowed to join after certified for a negative RTPCR Test. Posters onCovid-19 displayed at various locations to create awareness.

25. RESERVATION AND OTHER WELFARE MEASURES FOR SCHEDULED CASTES/SCHEDULED TRIBES/ OTHER BACKWARD CLASSES AND PERSONS WITH DISABILITIES.

All guidelines laid down in respect of Reservation and other welfaremeasures for Scheduled castes/Scheduled Tribes/Other Backward Classes are complied with.The provisions for special arrangement for Persons with Disabilities at work place havebeen complied with.

26. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

During the year under report the company continued its efforts topromote Hindi as Official Language in its day today official activities. 10 Hindiworkshops were conducted during the years including special programme on Annual Programme2020-21 issued by the dept of OL. Hindi week and Hindi Fortnight were organized atcorporate office and Kochi units on 1421 September and 07th -21st Septemberrespectively. During this period various competitions were also organized and large numberof employees participated. HOCL Kochi Unit bagged Third prize for the best implementationof OL policy by Town official language Implementation Committee (TOLIC). Our Corporate andKochi Unit were actively participated in various programmes conducted by TOLIC (PSU)Kochi and TOLIC Navi Mumbai. Official Language Seminar was conducted online mode at Kochiin association with TOLIC Kochi on 17 &18 February 2021 on the subjects"Emerging Dimensions of OL "and "IT Tools in Hindi". OL orientationprogramme was conducted exclusively for senior officers of Corporate and Kochi Office. Alldocuments under section 3(3) of OL Act 1963 were issued both in Hindi and English. TheWebsite of the company is available both in Hindi and English. Competitions in Hindi wereorganized in connection different day celebrations including Constitution Day Worldenvironment Day Vigilance Awareness Week. Various promotional scheme including incentivesfor better implementation of Official Language has been adopted by our organization.

27. CITIZEN'S CHARTER PUBLIC GRIEVANCE REDRESSAL (PG) CUSTOMERCARE SYSTEM (CCS) & RIGHT TO INFORMATION (RTI)

In line with the provisions of RTI Act 2005 to promote transparency andaccountability our organisation has taken efforts to handle the Right to Informationsought for. Company has laid down procedure to provide information through PublicInformation Officer/CPO and Appellate Authority.

28. MICRO & SMALL ENTERPRISES

All efforts have been taken to comply with the Government Directive toprocure items specified for procurement from MSMEs. Necessary procedures has been made inall tenders stating the eligibility of MSMEs to participate in tenders. We have removedthe restricted clauses in the tender conditions and modified the same which will help ingreater participation of MSMEs and especially SC/ST MSMEs in the procurement processes.Company has modified the purchase policy also to comply with the directions.

HOCL always takes efforts to fulfill the requirements. Our 95% of thepurchases by value are petroleum products (LPG Benzene LNG and Hydrogen - which are ourraw materials.) supplied by M/S. BPCL through pipeline transfer. These items are notmanufactured by MSME's and not available in GeM portal. Out of the balance 5% procurementHOCL 's target is to procure minimum 25% from MSME includes 4% from MSEs owned by SC/STand 3% from women owned MSEs. Special efforts have been made to ensure participation ofSC/ST representative women representatives.

29. SOCIAL ENVIRONMENTAL AND ECONOMIC RESPONSIBILITIES AND BUSINESSRESPONSIBILITY REPORT

Hindustan Organic Chemicals Limited has adopted and realizes thebenefits of Management Principles into daily activities to achieve the goals of theorganization. These Management Principles will provide a foundation to continually improveupon the Organization's performance. The organization believes the following principles toalign with the business processes.

1. Customer focus

2. Leadership

3. Utilization of resources with improved information flow within theorganisation

4. Process approach; & its Continual improvement

5. Risk & opportunity and real time decisions

6. Developing internal resources & maintaining better humanrelations at work.

We have adopted the "Process Approach" into daily operationsincluding the PDCA Cycle. We have considered the utilization of Risk-Based Thinking whendeveloping implementing and improving the effectiveness in most of our ManagementSystem. This approach enables Hindustan Organic Chemicals Limited to enhance the overallperformance of the Organization by effectively controlling the interrelationships and theinterdependencies among the processes. The understanding and consistency with achievingcustomer specific requirements;

• The consideration of our processes in terms of added value;

• The achievement of effective process performance;

• Improvement of our processes based on real time data andinformation.

We also effectively plan and implement various actions to address risksand opportunities to maximize the outcomes including but not limited to achievingimproved results and preventing negative effects of our products Operations services.

Our businesses provide goods and services that are safe and contributeto sustainability throughout their life cycle and to promote the wellbeing of allemployees respect the interests of the stake holders responsive towards all stakeholders especially those who are disadvantaged vulnerable and marginalized. Ourbusinesses respect protect and make efforts to restore the environment in a safe andbetter manner by complying with the relevant Statutory regulations. Our businesses alsosupport and provide value to their customers and consumers in a responsible manner.

30. DETAILS OF CSR POLICY AND ITS IMPLEMENTATION DURING THE YEAR

Company since its inception is very much aware about its socialresponsibility. For over five decades as a socially responsible and sensitive corporateyour Company continues to remain committed to social thought and action to serve societythrough providing basic civic amenities to the neighbouring villages rendering assistancein different forms.

Your Company is not required to carry out any CSR activities on accountof losses incurred during the previous years and also in the current year. HoweverCompany has recognized its social obligations and extended the following during the yearunder review.

In order to help fighting the COVID-19 pandemic Company extended thefollowing during the year.

• One day salary each of all employees contributed to the PM CaresFund (Rs.6.19 Lakhs) and Kerala Chief Minister's Distress Fund (Rs.6.02 Lakhs).

• Medicine kit donated to local Police station for distributing tothe needy suffering people (Rs.25000/).

• Donated H2O2 to local bodies for sanitisation purpose(Rs.40500/-).

• Face shields distributed to local police and GovernmentHospitals 9Rs.12150/-).

• As a part of social obligation the company is extendingneed-based assistance to deserving students along with SC/ST students for their School /Graduate education.

• As part of social obligation face masks face shield medicalkit hydrogen peroxide for disinfection supply of lunch to the health workers of medicalcamp etc were supplied to Health and Police Authorities and nearby villages.

• Vocational training facilities to the wards of employees of thecompany in the nearby Engineering / Management colleges for enhancing skill / knowledge.

• Engaging professional students of ICAI/ICSI who have completedintermediate level as trainees for imparting practical knowledge of company working bypaying stipend.

Other activities.

SWACHH BHARAT ABHIYAN

Swachh Bharat Abhiyan is given utmost importance by the Company andvarious activities were conducted during the year.

Inaugural Function was organised with Executive Director administeringPledge on Swachhta Mission in front of the Administrative Building where all employeesgathered and the relevance of Swachhta Mission and Action Plan of Swachhta 2020 wereexplained to the gathering.

A team of 16 volunteers from different departments were selected andsuggestions were sought from them how to proceed the activities in their departments apartfrom the common activity. Accordingly each team planned their activity chart of theprogramme.

Banners with logo on "Swachhta Pakhwada" were displayed inthe main gate of the factory and Township to give wide publicity. All the activitiesconducted in our Unit were published through social media along with photographs on dailybasis.

Awareness session on Covid 19 given to Housekeeping staff security andTownship staff. Vegetable gardening was promoted and employees were volunteered under aGreen Mission and vegetables cultivated at our premises. Swachhta activity was done atvegetable garden. Employees were promoted to beautifying the company premises and theywere formed into groups and competitions were organised and the best departments wereawarded for the best beautification

Essay and cartoon competitions conducted

As part of the promotional activities face mask sanitizer pen etc wereprovided to the employees

Distributed plantable pen with seeds to promote elimination of plasticusage.

Senior executives attended swachhta seminar.

Swachhta activities carried out at Township

The Factory area is cleaned by the employees/trainees/apprentices andcontract workers including the work places office building approach roads. Removing ofold files and segregation of items in stores connected with each department were carriedout.

Awareness session on Covid -19 given to Housekeeping staff securityand Township staff. Vegetable gardening was promoted and employees were volunteered undera Green Mission and vegetables cultivated at our premises. Swachhta activity was done atvegetable garden. Employees were encouraged to beautify the company premises. They wereformed into groups and competitions were organised and the best departments were awardedfor the best beautification. Essay and cartoon competitions were also conducted.

As part of the promotional activities face mask sanitizer pen etc wereprovided to the employees. Distributed plant-able pen with seeds to promote elimination ofplastic usage. Senior executives attended Swachhta seminar organised Swachhta activitiescarried out at Township.

INTERNATIONAL YOGA DAY

As part of Yoga Day on 21st June 2020 Common Yoga protocols e-bookwere widely circulated for the information of all employees through our portal and socialmedia.

31. INDUSTRIAL RELATIONS:

The overall Industrial Relation situation continues to be peaceful andcordial during the year. There was no strike or lockout during the year.

32. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION186 OF THE COMPANIES ACT 2013

There are no loans guarantees or investments made by the companyunder Section 186 of the Companies Act 2013 during the year under review and hence saidprovisions are not applicable.

However the cumulative investment on the subsidiary company HindustanFluorocarbons Ltd. as on 31.3.2021 stood at Rs.11.06 Crore. In addition the company hasgiven secured loan of Rs.31.97 Crore to HFL [on the security of HFL Land] and Company hasalso extended Corporate Guarantee to the working capital loan to the subsidiary companyHFL. The investments made in HFL during earlier years under section 186 of the CompaniesAct 2013 were shown in the financial statements.

Consequent to the decision of the Govt. of India for closure ofSubsidiary Company Hindustan Fluorocarbons Ltd. an amount of Rs.73.70 crore has beenreleased to the Subsidiary company as loan from Govt. of India to meet the expensesrelated to VRS/VSS to employees and settling dues to Bank and other liabilities.

33. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES- None.

1. Details of Contracts or arrangement or transactions not at arm'slength basis:- None

a) Name(s) of related party and nature of relationship - NA

b) Nature of Contracts/arrangements/transactions - NA-

c) Duration of contracts/arrangements/transactions - NA

d) Salient terms of the contracts or arrangements or transactionsincluding the value if any - NA-

e) Justification for entering into such contracts or arrangements ortransactions date (s) of approval by the Board - NA-

f) Amount paid as advances if any Nil

g) Date on which a special resolution was passed in general meeting asrequired under first proviso to section 188 - NA-

2. Details of material contracts or arrangements or transactions atarm's length basis:- None.

a) Name(s) of related party and nature of relationship -NA

b) Nature of contracts/arrangements/transactions -NA-

c) Duration of contracts/arrangements/transactions -NA

d) Salient terms of the contracts or arrangements or transactionsincluding the value if any: -NA-

e) Date(s) of approval by the Board if any: -NA-

f) Amount paid as advance if any: Nil

34. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSEREMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND PRACTISING COMPANY SECRETARY IN THEIRREPORTS

There are no qualifications reservations or adverse remarks made bythe Statutory Auditors in their audit report for the Financial Year 2020-21.

The Secretarial Auditors of the company have submitted theirSecretarial Audit Report for the year 2020-21 without any qualification reservationsadverse remark or disclaimer.

35. AMOUNTS IF ANY WHICH IT PROPOSES TO CARRY TO RESERVES.

The Company has earned a Net Profit before Tax of Rs.15.47 Crore duringthe year as against Net loss of Rs.94.75 crore incurred during the previous year. TheRetained earnings (including Other Comprehensive Income) transferred to Balance Sheetduring the year is Rs.30.89 crore.

36. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIALPOSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THISFINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

Nil

37. THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLSWITH REFERENCE TO THE FINANCIAL STATEMENTS:

Company ensures existence of adequate internal controls throughdocumented policy and procedures laid down in the manuals to be followed by the executivesat various levels. Internal controls are supported by periodical internal audits andmanagement reviews. The management is keen on these issues and initiated various measuressuch as upgrading the IT infrastructure evaluating and implementing ERP softwareweb-based application and establishing connectivity amongst manufacturing units Corporateoffice and branch offices for effective and proactive services and businesses.

Board periodically reviews the internal controls audit programmefinancial results and recommendations the replies of the management to Government Auditand internal audit etc. The Company has maintained adequate financial control systemcommensurate with the size scale and complexity of its operations and ensures compliancewith various policies practices and statutes in keeping with the organization's pace ofgrowth and increasing complexity of operations.

38. CONSERVATION ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO

A. The steps taken and impact on conservation of energy:

Major Energy Conservation Activities / Projects Implemented in 2020-21

• Boiler oxygen trimming. In order to reduce the dry flue gas lossin Boiler oxygen content in flue gas is optimized by reducing combustion air their byreducing oxygen in flue gas from 7.85% to 3.04%.

• C3-C4 Overhead condenser tube replacement and channel headmodification thereby saving Electrical energy saving of Rs.15.94 Lakhs

• Drift eliminator replacement in cooling tower with new designDrift eliminator thereby saving Rs.6.56 Lakhs on water cost.

• Damaged insulation replaced on pipe lines and steam trapreplacement thereby attaining considerable saving.

• Usage of Water as sealant instead of Mercury in ETP therebyeliminating the spillage of Mercury and achieving a saving of Rs 5 Lakhs per year.

• Maximum contract demand with KSEB reduced from 9000KVA to8000KVA resulting in a saving of Rs.20/- Lakhs a year.

• Revamping of UPS - Considering present load company has placedorder to replace the existing UPS which is obsolete.

• Up gradation of DCS at Boiler house and Revamping at H2O2 Plant.

i. The steps taken by the company for utilizing alternate sources ofenergy - Company is using LNG as fuel in place of Furnace oil resulting in saving of fuelcost during 2020-21.

ii. Company is availing open access power trading resulting in a savingof Rs.2.6 Crores on power cost for the year 2020-21.

B. Technology Absorption: Nil

i. The efforts made towards technology absorption: Nil

ii. The beneffts derived like product improvement cost reductionproduct development or import substitution: Nil

iii. In case of imported technology (imported during the last threeyears reckoned from the beginning of the financial year): Nil

a) the details of technology imported;

b) the year of import;

c) whether the technology been fully absorbed;

d) if not fully absorbed areas where absorption has not taken placeand the reasons thereof; and

iv. The expenditure incurred on Research and Development: Nil

39. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISKMANAGEMENT POLICY OF THE COMPANY

Key Threats include:

• Competition from domestic / imports and fluctuation in the inputprices

• High input costs

• High utility costs

• High overheads

• Continued availability of anti-dumping support for the mainproducts Phenol and Acetone.

• Working Capital availability for continuous operations

• High interest cost and employee remuneration.

Some risks and concerns:

• High manpower cost per ton of finished product.

• Depreciated plants requiring high maintenance cost.

• Dumping in main products Phenol / Acetone.

• Volatility in main input Benzene.

• COVID-19 impact on downstream industries.

• Drastic reduction in skilled and experienced manpower.

• Quality/availability of main raw materials like LPG. Benzene andHydrogen.

40. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES WHICH HAVEBECOME OR CEASED TO BE.

Ministry of Chemicals and Fertilizers Department of Chemicals &Petrochemicals vide No. P. 51015/06/2019-Ch. III dated 29-01-2020 informed the decision ofCabinet Committee on Economic Affairs directing closure of Hindustan FluorocarbonsLimited Subsidiary of HOCL which was approved by the shareholders on 30-03-2020.

Consequent to the decision of the Govt. of India for closure ofSubsidiary Company Hindustan Fluorocarbons Ltd. an amount of Rs.73.70 crore has beenreleased to the Subsidiary company as loan from Govt. of India to meet the expensesrelated to VRS/VSS to employees and settling dues to Bank and other liabilities.

41. DEPOSITS: NIL

During the period under review the Company has not invited or acceptedany deposits either from the directors or from shareholders of the Company.

42. THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THEREGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'SOPERATIONS IN FUTURE: Nil

43. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

As per the requirement of The Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 ('Act') and rules made there underyour Company has adopted a Sexual Harassment Policy for women to ensure healthy workingenvironment without fear of prejudice gender bias and sexual harassment. The policy hasbeen widely disseminated. A Complaint Committee is in existence as per the Act.

The Board states that there were no cases or complaints filed pursuantto the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Annual Report for the year 2020 The Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013-:

No. of complaints received: Nil

No. of complaints disposed of: Nil

No. of cases pending for more than 90 days: Nil

No. of Workshop/Awareness programmes carried out: One day Workshop wasattended by our Committee Member. Awareness training given to the newly joined Trainees.

Nature of action taken by the Employer: N.A.

44. VIGILANCE MECHANISM: (Under Sec.177(9) of Companies Act2013)

Hindustan Organic Chemicals Limited being a Government Company aVigilance Department is already existing in pursuance of CVC Guidelines. ThereforeVigilance Mechanism is being handled by the Vigilance Department and the Company hasalready adopted a Vigilance Manual in pursuance of CVC Guidelines. Vigilance Manual isavailable on Company's Website.

45. GENERAL

No disclosure or reporting is required in respect of the followingmatters as there were no transactions on these items during the year under review:

• Issue of equity shares with differential rights as to dividendvoting or otherwise.

• Issue of shares (including sweat equity shares) to employees ofthe Company under any scheme.

• The Company does not have any scheme of provision of money forthe purchase of its own shares by employees or by trustees for the benefit of employees.

• Neither the Managing Director nor the Whole-time Directors ofthe Company receive any remuneration or commission from any of its subsidiaries.

• No significant or material orders were passed by the Regulatorsor Courts or Tribunals which impact the going concern status and Company's operations infuture save and except mentioned above during previous year.

• No fraud has been reported by the Auditors to the AuditCommittee or the Board.

• There is no Corporate Insolvency Resolution Process initiatedunder the Insolvency and Bankruptcy Code 2016.

.