DIRECTORS' REPORT Your Directors are glad to present the 32nd Annual Report of the company together with Audited Annual Accounts for the year ended 31st March, 2015. 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 2014-15 are carried forward, no dividend was declared on equity shares for the year ended 31.03.2015. OPERATIONS AND OVERALL PERFORMANCE Your Company has made Net loss of Rs.377.46 lacs from operations as against the net loss of Rs. 2482.47 lacs of the previous year. During the year, the sales turnover (net) was Rs.2915.07 lacs as against Rs.2788.92 lacs in the previous year. This is mainly due to decrease in sales realization of main product PTFE. During the year under report production of PTFE was 107 MT as against 184 MT in the previous year. During the year, 726.58 MT of CFM-22 was sold in the market against 555.17 MT in the previous year and balance quantity was used as feed stock to manufacture various products including Fluoro Specialty Chemicals and PTFE. Quality of all company's products continued to be well accepted by our customers. Company has achieved 88% capacity utilization was achieved as against 86% in the previous financial year. In spite of better physical performance, financial performance was badly affected due to the reasons mentioned above. THE RIGHT TO INFORMATION ACT, 2005 In consonance with the provisions of the Right to information Act, 2005, Company has appointed Appellate Authorities/ Public Information officers at all the units/ offices of the company to respond effectively to the request of the applicants under the acts in synchronization with the direction of Central Information Commission(CIC), for promotion of Institutional transparency with in the public authority through proactive and effective implementation of section 4 of the RTI Acts, 2005, the company has also appointed a transparency officer that company has created necessary mechanism to meet the objective to bring out transparency in the functioning of organization as envisaged by RTI Act. CORPORATE SOCIAL RESPONSIBILITY: Companies act provisions related to the CSR is not applicable to the Company for the financial year 2014-15. Recognizing the obligation to the society both in the areas of environment protection and social development, company has taken initiatives towards implementing welfare schemes for uplifting the quality of living of the community surrounding the area around the factory. Company is giving aid to schools by way of paying salaries to two Vidya Volunteers. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable. THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL Act, 2013 Company has not received any cases relating to the sexual harassment of women at work place. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES There was no contract or arrangements made with related parties as defined under Section 188 of the Companies Act, 2013 during the year under review. COMPANY'S POLICY RELATING TO APPOINTMENT AND PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES OF KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES. Company has complied all the provisions related to the constitution of Nomination and Remuneration Committee under section 178(1) of the Companies Act 2013 and complied the criteria for determining qualifications positive attributes and independence of appointment and remuneration of a Key Managerial Personnel and other employees as provided under Section 178(3) of the Companies Act, 2013. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW The Company had five Board meetings during the financial year under review. HEALTH AND ENVIRONMENT: The management has taken the great responsibilities for continuous monitoring and protecting the health and environment as per statutory compliance. The environment is maintained clean as per standard emissions norms and with respect to noise pollution norms prescribed by Central Pollution Control Board and under guidelines of Ministry of Environment and Forests, Govt. of India. The health record of employees working in production Division is maintained in the Health Register in Form 7. FIRE & SAFETY PERFORMANCE: The Company pays special attention to ensure safety of the factory and workers employed therein. The Company accords the same priority attention to safety aspects as it does to production and productivity, be it in a personal safety, process safety, environment safety or product stewardship and allocated adequate resources of men, machine, money, time and energy to maintain the standards thus performance during the year is very good. The Company continued to maintain good safety record without any major accident of fire. The financial year 2014-15 was a zero accident year. A Mock drill is a practice which trains an individual about the course of action to be taken in case of real emergency occurs. This is one of the most effective technique to train, aware & alert people in a process plant location. A surprise Mock drill was conducted at site to analyze the capacities of Plant, Equipment operating & employees skills towards Emergency preparedness & response. We are conducting Emergency Mock drill oftenly or once in a year in presence of external Authority i.e Director of Factories Telangana & higher management of HFL in compliance with ISO 2000 - 2001. BOARD OF DIRECTORS Smt. Anitha Rajendra,IAS was ceased as Nominee Director with effect from 09.09.2014. Sri. Sanjeeva Narayan was appointed as BIFR Special Director with effect from 04.02.2015. Three Directors viz. Shri. Suresh Kumar R, Nominee Director (HOCL), Dr. N J Gaikwad, HOCL Independent Director and Shri. Arun Agarwal, Nominee Director (GOVT) is due for retirement by rotation at the ensuing 32nd Annual General Meeting of the Company and eligible for re-appointment. IMPLMENTATION OF OFFCIAL LANGUAGE POLICY: During the year under report, your Company continued to Promote Hindi as Official Language in day to day working in line with the Government policies for its intensive and extensive efforts for progressive use of the official language. Official Language Implementation Cell of the Company continued to function effectively. ISO CERTIFICATION: Company's 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 Section 134(3)(m) of the Companies Act, 2013 read with the read with Rule 8(3) of the Companies (Accounts) Rules, 2014 Regarding Conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo are given at Annexure I, Form A to this Report. RESEARCH & DEVELOPMENT: The company is continuously conducting the research and development to deliver goods through innovative development; a. It is actively involved in collaborative program with IICT & Defense Research and Development Organisation (DRDO). b. Development of filled grades with modified PTFE are given at Annexure I, Form B to this Report. INDUSTRIAL RELATIONS Employee relations continued to be cordial throughout the year. Your Company has been implementing reservation policies of GOI for SCs/ STs/OBCs/Persons with disabilities. Representatives of SCs/ STs Categories are associated in Recruitment of Departmental Promotion Committees. A statement showing representation of employees belonging to Scheduled Castes/ Scheduled Tribes/ Backward classes /Minorities categories is appended as Annexure-II to this report. PARTICULARS OF EMPLOYEES: None of the employees of the company is drawing remuneration requiring disclosure pursuant to the provisions of the Companies (Particulars of Employees) Rules, 1975. VIGILANCE: 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 take care of Vigilance functions. Vigilance activities have mainly been directed to check the lacunae in the existing systems and procedures through periodic checks. The instructions of the Central Vigilance Commission received from time to time have been implemented to strengthen the vigilance machinery in the company. AUDITORS: The Statutory Audit of your Company was conducted by M/s.S Daga & Co Charted Accountants, who were appointed as Statutory Auditors for the Financial year 2014-15 by Comptroller and Auditor General of India (C &AG) as per Section 139(5) of the Companies Act, 2013, Auditors Report on the Accounts of the Company for the financial year ended 31st March, 2015 is at Annexure- III. The comments of the Comptroller and Auditor General of India u/s 143(6)(b) of the Companies Act, 2013 on the Accounts of the company for the year 2014-15 has been annexed to the Annual Report for the period 2014-15 and forms part of the Annual Report. LEGAL COMPLAINCE The Company has complied with all the legal provisions effectively. Although it has filed two petition to Company Law Board during the financial year 2011-12 regarding condolation of delay in filing of satisfaction of charge documents of Life Insurance Corporation of India, with the Registrar of Companies. INSURANCE: All properties and insurable interest of the company including building, plant and machinery and goods are adequately insured. As required under Public Liability Insurance Act, 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.INE 806J01013 and demat facilities with Central Depository Services (India) Limited, (CDSL) and with National Securities Depository Limited (NSDL) for the equity shares of the company. 84.48% of the Share Capital of the Company has been Dematerialize the shares, the Company has been Dematerialized as on 31st March, 2015- total accounts Dematerialized is 1783 involving 16557950 shares (which constitutes 84.48% of the share capital) . MANAGEMENT DISCUSSION AND ANALYSIS REPORT: In accordance with the Listing Agreement, the Management discussion and analysis report is annexed hereto in Annexure - IV and forms part of the Directors' Report. RISK MANAGEMENT In pursuance to comply with Clause 49(IV) (C) of the Listing Agreement and Clause 7.3 of the DPE Guidelines on Corporate Governance for CPSEs, The Risk Management process includes Risk Identification, Risk assessment, Risk evaluation, categorization, Risks 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. Investment is required to upgrade the technology of old plant to reduce the cost of production. PTFE Prices are continuously reducing. Increasing Raw Material cost. To mitigate the above risks your company has taken following action: > MPTFE Project; Company has developed superior grades of PTFE and started exporting the same. > Company is in the process of refurbishment of the existing plant with the help of Plan loan from GOI. This will increase the plant efficiency. > To reduce the dependency on PTFE Company is developing Fluro Speciality Chemicals. > Company is also exploring the possibility of increasing capability and backward integration. CORPORATE GOVERNANCE: The Company has complied with the various requirements of Corporate Governance. The details in this regard form part of this report in Annexure-V. SECRETARIAL AUDIT: Board has appointed M/s.Ahalada Rao.V Associates, Company Secretaries as a Secretarial Auditor of the company for the financial year 2014-15. The explanations /comments made by the Board relating to the qualifications, reservations or adverse remarks made by the Auditors in their report are furnished Annexure VI is attached to this report. There were no adverse comments, qualifications or reservations or adverse remarks in the Secretarial Audit Report. ANNUAL RETURN: The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 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 time to time are being complied with and implemented with the approval of the Board of Directors/ Competent Authority. TRAINING OF BOARD OF DIRECTORS: The company furnishes set of documents and booklets to the Directors on their joining the Board. This includes important data about the performance of the Company, Memorandum & Articles of Association, Corporate Governance guidelines, Delegation of powers, Product line brochures etc. A copy of the monograph on position, duties and liabilities of Directors is also circulated among the Directors. CODE OF CONDUCT: In line with the requirements of Clause 49 of Listing Agreement, the Board Members and Senior Management personnel have affirmed compliance with the code of conduct for the financial year ended 31st March, 2015. The Company has adopted "Code of Conduct and Ethics" for the Directors and Senior Executives of the Company. The object is to conduct the Company's business ethically and with responsibility, integrity, fairness, transparency and honesty. The code is available on Company's website www.hfl.co.in All directors and senior management personnel have complied compliance with the Code of Conduct and ethics as on 31st March, 2015. MISSION/ VISION: To position itself to be a niche player in the production of Fluorospeciality chemicals and advanced grades of PTFE by 2015. OBJECTIVES: 1. To increase the capacity utilization from 75% to 90% during the financial year 2014-15. 2. To Endeavour to convert entire quantity of TFE into various Fluoro Speciality Chemicals by 2015-16. 3. To develop advanced grades of PTFE. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES: The Company does not have any Subsidiary, Joint venture or Associate Company. DEPOSITS: The Company has neither accepted nor renewed any deposits during the year under review. SHARES: 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 the Board hereby submit its responsibility Statement:— (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the 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) The directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.- Not applicable to Private Limited Company. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. (f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. ACKNOWLEDGEMENTS I place on record my appreciation and gratitude to all the employees and others who had extended their support and co-operation during the year to achieve the targeted goals of the Company. In particular I am grateful to various officials of the Govt. especially from the Ministry of Chemicals & Fertilizers, Department of Chemicals & Petro Chemicals, The Finance Ministry, Ministry of Environment & Forestry, Government of India, Government of Telangana, Promoter Company i.e. HOCL and Board Members. I would like to convey my sincere appreciation to our valued customers, suppliers, Statutory Bodies, Investors, our bankers State Bank of Hyderabad, Statutory/Govt Auditors, etc for the continued support. In conclusion I am fully confident that with the continued support from all of you my urge to place your Company in the pedestal of success will not be unrealistic. We on our part would continue our efforts to take your Company into the future by meeting the challenges & grabbing the opportunities in our endeavor in the path towards turnaround. We look forward to your continued support in this ongoing process. In conclusion we are optimistic that the company would attain significant profits in the near future. For and on behalf of the Board of Directors By order of the Board of Directors of Hindustan Fluorocarbons Ltd., Sd/- (V.B.RAMACHANDRAN NAIR) CHAIRMAN PLACE: HYDERABAD DATE : 14.08.2015 |