2015-16 (5.37 mb)

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2 DIRECTORS' REPORT

15 MANAGEMENT DISCUSSION & ANALYSIS REPORT

16 C&AG'S COMMENTS

17 AUDITOR'S REPORT

22 BALANCE SHEET

23 PROFIT AND LOSS ACCOUNT

24 NOTES FORMING PART OF FINANCIAL STATEMENTS

42 CASH FLOW STATEMENT

43 CORPORATE GOVERNANCE REPORT

45 NOTICE

Board of Directors

Mr. Pushp Kumar Joshi

Mr. B. K. Namdeo

Mr. J. Ramaswamy

Manager & CEO

Mr. D. K. Saxena

Chief Finance Officer

Mr. Piyush Awasthi

Company Secretary

Ms. Heena Shah

Statutory Auditors

S. K. Jha & Associates

Chartered Accountants

Bankers

State Bank of India

Registered Office:

HPCL Biofuels LimitedNo. 271, Road No. 3E,Post Box No. 126,New Patliputra Colony,Patna – 800 013, Bihar.www.hpclbiofuels.co.inE-mail: [email protected]

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Generating green fuel for better tomorrow

7th Annual Report 2015-2016

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DIRECTORS’ REPORT

Dear Shareholders,

On behalf of the Board of Directors, it gives us immense pleasure to present the Seventh Annual Report and audited accountsfor the financial year ended 31st March, 2016.

PHYSICAL PERFORMANCE

Highlights of the physical performance of the plants during the year 2015-16 are given below:

Particulars UoM Sugauli Lauriya

No of days operated Days 88 97

Quantity of cane crushed Lac MT 2.07 2.72

Sugar manufactured MT 18,370 25,866

Sugar Recovery % 8.95 9.50

Ethanol manufactured KL 3,927 4,607

Power generated MWh 18,617 30,011

Power exported (net) MWh 9,681 18,084

FINANCIAL PERFORMANCE

Summary of financial performance is given as under:

For the year ended For the year ended31/03/2016 31/03/2015

(`) (`)

Income from Operations 160,66,84,500 187,41,94,796

Other Income 96,66,949 95,31,801

Total Income 161,63,51,449 188,38,26,597

Total Expenses 135,27,69,348 200,72,99,304

PBDIT 26,35,82,101 (12,35,72,707)

Less-Depreciation 27,97,51,882 28,38,79,282

Less-Interest 47,36,75,933 43,59,95,940

Profit / (Loss) before Prior Period Items and Tax (48,98,45,714) (84,34,47,929)

Prior Period Item 78,77,640 (2,38,046)

Profit / (Loss) for the year before Tax (49,77,23,354) (84,36,85,975)

Provision / (Reversal) for Taxes 0 0

Profit / (Loss) for the year after Tax carried forward to Balance Sheet (49,77,23,354) (84,36,85,975)

DIVIDENDS & RESERVES

Your company has commissioned it’s both the plants during season of financial year 2011-12 and is yet to achieve commercialviability, your Directors do not propose to declare any dividend for the financial year ended 31st March, 2016. The Board ofDirectors has not proposed to transfer any amount to reserves.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to provisions of section 134(3)(c) of the Companies Act, 2013, your Directors confirms that:

1. In the preparation of annual accounts, applicable accounting standards have been followed along with proper explanationsrelating to material departures;

2. The Company has selected such accounting Policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Company as on31st March, 2016 and of the Statement of Profit and Loss of the Company for the year ended on 31st March 2016.

3. The Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, for safeguarding the assets of the company and for preventing and detectingfraud and other irregularities.

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4. These Accounts have been prepared on a going concern basis.

5. The Company has laid down internal financial controls to be followed by the Company and that such internal financialcontrols are adequate and operating effectively.

6. The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and suchsystems were adequate and operating effectively.

PERFORMANCE MOU

Your Company has been signing a Memorandum of Understanding (MOU) with its holding company Hindustan PetroleumCorporation Limited (HPCL) as per target set under the guidance of task force assigned by the Ministry of MOP & NG.The performance of the Company for the year 2015-16 qualifies for ‘Good’ rating basis self-evaluation.

PLANT OPERATIONS

Immediately on completion of the crushing season of 2014-15, actions were taken to initiate the off season maintenance toensure its completion in all respects well ahead of the start of the next crushing season. As a part of the activities, the turbinesat both the mills were modified to take care of the steam requirements of the increased boiling house capacity. The job wasdone through Siemens Ltd., the OEM well within time so that the turbines were ready for the season 2015-16. Your mills startedcrushing on 2nd December 2015 in line with the neighboring mills.

• Sugar Plant

Lauriya achieved cane crushing of 27.22 lac quintals while Sugauli could crush only 20.76 lac quintals as Sugauli hadsuffered a set-back due to leak in the boiler tubes. Sugar recovery was better than last year where Lauriya achieved 9.50%and Sugauli ended with 8.95%. This was due to receipt of good quality cane, reduction of time gap between cutting andcrushing of cane and improved plant operations over the previous years. The total sugar production stood at 44,236 MT asagainst 46,211 MT of previous year.

• Ethanol Plant

Ethanol plants have performed quite well at their rated capacity but the total production was restricted due to inadequatesteam availability though there was molasses in stock from previous and current season. Production was 8534 kl against13117 kl of last year.

• Cogen Plant

Modifications made to the turbines had given some benefit during the season, despite the power generation was 48,628MWh against 54,042 MWh of previous year, due to leakage in boiler tubes at Sugauli for more than 13 days during theseason and frequent grid failure issues, at both the plants, Net power export was at 28,794 MWh against 31,185 MWh ofprevious year 2014-15.

CANE MANAGEMENT

Due to delayed payment of the previous two seasons, cane cultivation in the state had generally reduced. Nevertheless, thecane department of your company had put in their best effort to improve the quality of the cane cultivated and also reduce thetime taken in transporting the cane from the fields to the mills for crushing. Thus despite lesser cane availability, the recoveryachieved by the plants were much better than the previous seasons, and quite comparable to the neighboring mills of Bihar.

Your company had not only cleared all the cane dues up to the last season, i.e. 2014-15, but had also made timely paymentsto the cane growers for the current season 2015-16. This has sowed seeds of confidence in them, and as per the initial survey,the planting of cane in the cane command area is quite substantial and adequate cane would be available for the next season2016-17. Your company is also taking steps to get additional area allotted to them as command area so that the crushing seasoncould be extended by some more days.

MARKETING ACTIVITIES

• SUGAR

Your company sells sugar only through the online trading platform of NCDEX and it has been able to induct many tradersfrom the neighbouring states as well. The realization is quite well and there are no outstanding or bad debts. Due to thesuppressed market conditions, the average realisation during the year had been `25,535 per MT.

• ETHANOL

HPCL had placed orders for uplifting all the ethanol in stock as well to be produced in the year 2015-16. Your companyacknowledges with gratitude the help extended by HPCL by way of advance against the supplies. Supplies to HPCL depotsin the state of Bihar have substantially increased, which has resulted in lesser transportation cost and higher realization toyour company.

• POWER

Entire surplus power generated has been exported to the BSEB grid and their payments has largely been on time much tothe relief of your company.

BORROWINGS

The balance of term loan with SBI stood at `308.80 Cr as moratorium period still continued. The repayments start from thesecond quarter of the FY 2016-17. Your company had also availed the soft loan of `10.14 Cr under the GoI scheme for sugarmills where the interest burden is borne by GoI. The said loan is to be repaid by 30th September 2016. A further amount of


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`16.48 Cr was also availed under the scheme of GoB for sugar mills, where interest burden upto 10% is borne by GoB. Thisloan has a one-year moratorium and is then repayable in 20 equal quarterly instalments.

To ensure timely payments to the cane growers during the season 2015-16, your company had approached HPCL for a bridgeloan. After due consultations, an amount of ̀ 84 Cr was granted as bridge loan from HPCL which has been fully drawn and usedfor payment to the cane growers.

EROSION OF NET WORTHAs on 31st March 2015, i.e. the Balance Sheet date, the net worth of the company has been eroded beyond 50% of the peak networth. This is mostly due to the steep fall in the sugar prices coupled with teething problems of the initial years. The Companyhas reported the matter to the BIFR under section 23(1) of the SICA 1985 on 17th November, 2015 which was within the timestipulated from the date of AGM. The Company is also taking necessary steps to improve the net worth of the company andduly submission of Quarterly Progress Report consequent to Erosion of net-worth.

As on 31.03.2016 the net-worth was further eroded from ` 400 Cr to 450 Cr.

CREDIT RATINGYour company has been able to retain rating as ‘Fitch A (ind)’ for the year 2015-16 from M/s Fitch Ratings for the NationalLong-Term rating, reinforcing the faith of the rating agency in the inbuilt resilience of your company.

INSURANCEInsurance for Plant & Machinery has been obtained from Oriental Insurance Company for the period 20th January, 2016 to19th January 2017. With a good track record in safe operations and dialogue with the insurers, your company has been able toget a very competitive premium amounts without any reduction in the coverage.

RENEWABLE ENERGY BENEFITSYour company had got registered with the competent authority for issue of Renewable Energy Certificates (REC) in respect ofthe captive consumption of power generated by its Co-gen plant operating on Bagasse / Biomass. Renewable Energy Certificateshave been obtained by the company in accordance with the rules and they are being regularly sold through Power Exchange.The earnings from REC sale during the year was ` 83.92 Lacs and value of REC on hand as on 31st March, 2016 was` 2.80 Cr. CERC has since come out with stringent guidelines for purchase of REC by the power distributors which is likely toquicker sales of REC in the coming times.

RELATED PARTY TRANSACTIONSAll transactions entered with related parties for the year under review were on arm’s length basis and in the ordinary course ofbusiness. Same is disclosed in Form No. AOC-2 as per Annexure -2.

DIRECTORSDuring the year under review, the Board of Directors of the company comprised of Shri Pushp Kumar Joshi, Shri K V Rao (superannuated on 30th September, 2015) Shri J Ramaswamy (appointed as additional Director on 1st October, 2015) andShri B K Namdeo.

Shri Pushp Kumar Joshi continued as Chairman of the Company.

NUMBER OF BOARD MEETINGS HELD

The Board had met 5 times during the financial year 2015-16.

The intervals between any two meetings were well within the maximum period mentioned under Section 173 of the CompaniesAct, 2013.

MANAGERIAL REMUNERATION

Your Company being a Government Company, is exempted from the provisions of section 197 of the Companies Act, 2013vide Ministry of Corporate Affairs (MCA) notification dated 05.06.2015.

CORPORATE GOVERNANCE

Separate Report is attached.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICHHAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect thefinancial position of the Company.

STATUTORY AUDITORS

M/s. S K Jha & Associates, Chartered Accountants (Firm Registration No. 006189C), were appointed as Statutory Auditors byComptroller & Auditor General of India (C&AG) by their letter dated 9th July 2015 and shall retire at the conclusion of thisAnnual General Meeting.

As per provisions of the Companies Act, 2013, the Board of directors have advised C&AG to appoint Auditors of the Companyfor the financial year 2016-17 to hold office of the auditors from conclusion of this ensuing Annual General Meeting (AGM) tillthe conclusion of the next AGM.

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COST AUDITOR

M/s. R. Nanabhoy & Co have been appointed as cost auditors, in accordance with the guidelines issued in this regard. The coststatements for the year 2015-16 as stipulated under the cost audit rules have been prepared and submitted to the cost auditorsfor the purpose of audit. The cost audit report shall would be filed within the stipulated due date.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act, 2013, your company has appointed Mrs. Rupal Jhaveri, PracticingCompany Secretary. The report of the Secretarial Audit is annexed herewith as Annexure-3. There are no qualification oradverse remark made in the report except non-compliance on appointment of Independent Directors or woman Director asalready stated in para given below on independent Director and woman Director

INDEPENDENT DIRECTORS & WOMAN DIRECTOR

Under the Companies Act 2013, there is a requirement for appointment of Independent directors including a woman directoron the Board of the company. As the company is a Government Company and wholly owned subsidiary of HPCL, the issue wastaken up with them for appointment of Independent Directors including a woman director. HPCL have taken up with theGovernment of India for the appointments but as on date, these appointments have not been made. Due to this, the auditcommittee of the company could not have an Independent Director.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3) (a) of the Companies Act, 2013, an extract of the annual return in the prescribed format isappended as Annexure-4 to the Report.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. There is anappropriate mechanism which monitors and evaluates the efficacy and adequacy of internal control system in the Company, itscompliance with operating systems, accounting procedures and policies of the Company.

The internal controls are periodically tested through an Internal Audit done by an external agency. Based on the report ofinternal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls.

The Statutory Auditors has stated in his report as matter of emphasis regarding “effective internal control on stores receipts,issues and closing balances of stores inventory”, however, presently these controls are being implemented manually andmonitored regularly. It is proposed to integrate the Stores module of ERP with Finance module of the ERP to ensure effectiveinternal control over maintenance of electronic records for stores & spares inventory. Further efforts are on to have a single userrights for modifications and deletion of vouchers which shall vest with the appropriate authority to further tighten the controls.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THEGOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

There are no significant material orders passed by the regulator(s) or courts or tribunals which would impact the going concernstatus of the Company and its future operations.

RISK MANAGEMENT

The Company has proper mechanism of risk management to identify, quantify and manage all risk and opportunities that mayaffect the achievement of entity’s strategic, legal, operational and financial goals and then taking appropriate actions fordocumentations, mitigating controls and reporting mechanism of such risks.

MANAGEMENT DISCUSSION & ANALYSIS (MDA) REPORT

Separate report is attached.

CONTINGENT LIABILITY

There are no contingent liabilities other than mentioned in para 53 to the notes to the accounts.

COMMENTS ON THE QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE AUDITORS

There are no qualification, reservation or adverse remark made by the auditors in his report.

PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Your Company being a Government Company, is exempted from the provisions of section 134(3)(p) of the Companies Act,2013 vide Ministry of Corporate Affairs (MCA) notification dated 05.06.2015.

CORPORATE SOCIAL RESPONSIBILITY

As the company does not fall within the limits prescribed under section 135(1) of the Companies Act 2013, the requirementsrelating to Corporate Social Responsibility do not apply to the company.

NOMINATION AND REMUNERATION COMMITTEE

By virtue of having a paid up share capital of more than ̀ 500 Cr, your company has constituted a Nomination and Remunerationcommittee comprising of Shri P K Joshi, Shri B K Namdeo. Shri K V Rao (upto 30th September, 2015) and in his placeShri J Ramaswamy was appointed on 1st October, 2015 The directors of the company are nominated by the holding companywho do not receive any remuneration from HBL.


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PARTICULARS OF LOANS, INVESTMENTS & GUARANTEES BY THE COMPANY UNDER SECTION 186

Your company has not invested in any other person, firm or company and has not given guarantee or loan to any other person,firm or company.

DEPOSITS

During the year under review, your Company has not accepted any deposits under the provisions of Section 73 of the CompaniesAct, 2013, read with the Companies (Acceptance of Deposit) Rules, 2014 as amended.

SHARES

a. BUY BACK OF SECURITIES - The Company has not bought back any of its securities during the year under review.

b. SWEAT EQUITY - The Company has not issued any Sweat Equity Shares during the year under review.

c. BONUS SHARES - No Bonus Shares were issued during the year under review.

d. EMPLOYEES STOCK OPTION PLAN - The Company has not provided any Stock Option Scheme to the employees.

SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

Your company do not have any Subsidiaries, Joint Ventures or Associate companies.

VIGIL MECHANISM

As per the Directives of Ministry of Petroleum & Natural Gas (MOP & NG), the vigilance department of the promoter company i.e. HPCL hasbeen administering the vigilance function of the Company.

WHISTLE BLOWER POLICY

Your Company being subsidiary of HPCL, is covered under the HPCL’s Whistle Blower Policy and the same is displayed on thewebsite of the Company.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per requirement of the sexual harassment of woman at work place (prevention, prohibition & redressal) Act, 2013 (act) andrules made there under, the companies woman work force has been covered under the duly constituted internal complaintscommittees (ICC) of the holding company HPCL. However, there were no complaints received during the year under the act bythe company

SAFETY, HEALTH AND ENVIRONMENT

Your Company is focused on the Health, Safety and Environment management which is an integral part of all activities carriedout at both the Plants i.e. at Sugauli & at Lauriya. It is a proud moment to note that your Company had accident free operationsduring the period under review.

Your Company has acquired all environmental approval & permission for its operations.

Your company believes that employees are its biggest assets and hence it takes care to ensure the health & well being of allemployees.

PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNING/ OUTGO AS PER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS)RULES, 1988

In accordance with the requirements of the Companies Act, read with applicable Rules, statement showing the particulars withrespect to conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed hereto andforms part of this report marked as Annexure-1.

PARTICULARS OF EMPLOYEES

As regards the provisions of the Companies Act, 2013, read with applicable rules, none of the employees was in receipt ofremuneration exceeding the limits prescribed.

ACKNOWLEDGEMENTS

The Directors gratefully acknowledge the valuable guidance and support extended by HPCL, Dept. of Industries and Dept.Cane Government of Bihar, BSEB and BSPCB of Government of Bihar, MOE&F, GoI, Ministry of Food & Public Distribution,Government of India and other State Government Agencies.

Your Directors also wish to place on record their appreciation of the dedicated services of the employees of the Companyincluding those deputed by HPCL.

On behalf of the Board of Directors

Place: Mumbai P K JoshiDate: 2nd August, 2016 Chairman

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ANNEXURE-1

A. CONSERVATION OF ENERGY

(a) The Company is a green field project and is undertaking manufacturing of Sugar, Ethanol & Cogen Power fromcrushing of Sugar cane at Sugauli & Lauriya, in the State of Bihar.

(a) The year 2015-16 has been the fifth year of the operation of the plants which are in the phase of stabilization andhence measures for reduction of energy consumption would be studied, implemented and their impacts would assessedin the coming years.

B. TECHNOLOGY ABSORPTION

1. Specific areas in which R & D carried out by the company.

Your company is in constant dialogue with the Cane department of GoB as well as the agricultural university at Pusain various areas of cane development. In the years to come, as more specific program would be developed in

(a) Technology for improving cane yield per hectare and its recovery

(b) Intercropping options based on local needs

(c) Introduction of high yielding varieties of seeds for maximizing ethanol production

2. Future plan action.

Would embark on the scheme as the plants stabilize in commercial terms

3. Expenditure on R & D.

Nil (Previous year Nil)

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts in brief, made towards technology absorption, adaptation and innovation.

The following technologies have been used in the plants and the personnel are getting trained in operating and trouble-shooting the equipments along with the technology.

a) Cane Diffusion Technology

b) Producing Ethanol directly from Sugar Cane Juice

c) Molecular Sieve Technology

2. Benefits derived as a result of the above efforts.

Benefits will accrue in the coming years as the plants stabilize on commercial terms.

3. Information regarding Technology imported during the last 5 years.

(a) Details of technology imported and year of import.

Not Applicable

(b) Has technology been fully absorbed, and if not fully absorbed, areas where this has not taken place, reasons thereofand future plans of action.

Not Applicable

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to exports; initiatives taken to increase exports; developments of new export markets for products andservices; and export plans

-Nil-

(b) Total foreign exchange used and earned. (In ` ‘000s)

Total foreign exchange used

Consultancy services/others Nil

Total foreign exchange earnings Nil


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ANNEXURE-2

FORM NO. AOC - 2

(PURSUANT TO CLAUSE (h) OF SUB-SECTION (3) OF SECTION 134 OF THE ACT AND RULE 8(2) OF THE COMPANIES(ACCOUNTS) RULES, 2014.

Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section(1) of section 188 of the Companies Act, 2013 including certain arm’s length transaction under third proviso thereto.

1. Details of contracts or arrangements or transactions not at Arm’s length basis.

Sl. No. Particulars Details

a) Name (s) of the related party & nature of relationship Nil

b) Nature of contracts/arrangements/transaction Nil

c) Duration of the contracts/arrangements/transaction Nil

d) Salient terms of the contracts or arrangements or transaction including the value, if any Nil

e) Justification for entering into such contracts or arrangements or transactions’ Nil

f) Date of approval by the Board Nil

g) Amount paid as advances, if any Nil

h) Date on which the special resolution was passed in General meeting as requiredunder first proviso to section 188 Nil

2. Details of contracts or arrangements or transactions at Arm’s length basis.

Sl. No. Particulars Details

a) Name (s) of the related party & nature of relationship HPCL, Holding Company

b) Nature of contracts/arrangements/transaction Sale of Ethanol / Purchase of lubes & sulphur /Loans and advances / deputation of personnel

c) Duration of the contracts/arrangements/transaction April 2015 to March 2016

d) Salient terms of the contracts or arrangements or Sales of ethanol `246,093,100/-, Purchase oftransaction including the value, if any lubes / Sulphur `49 lakhs, Bridge Loan from

HPCL ` 84 Crs, Interest paid to HPCL on loan` 11,929,333/-, interest paid on advance forEthanol ` 26,476,548/-, Salary etc. of personneldeputed from HPCL `15,007,101/-

e) Date of approval by the Board -

f) Amount paid as advances, if any *

(* balance on advance availed during P/Y `111,289,092/-)

On behalf of the Board of Directors

Place: Mumbai P K JoshiDate: 2nd August, 2016 Chairman

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Form No. MR-3

SECRETARIAL AUDIT REPORTFOR THE FINANCIAL YEAR ENDED 31ST MARCH 2016

[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2016To,The Members,HPCL BIOFUELS LIMITEDI have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices byHPCL BIOFUELS LIMITED (hereinafter called the company).Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing my opinion thereon.Based on my verification of the HPCL BIOFUELS LIMITED books, papers, minute books, forms and returns filed and other records maintainedby the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct ofsecretarial audit, I hereby report that in my opinion, the company has, during the audit period covering the financial year ended on31st March, 2016 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes andcompliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:I have examined the books, papers, minute books, forms and returns filed and other records maintained by HPCL BIOFUELS LIMITED for thefinancial year ended on 31st March, 2016, according to the provisions of:(i) The Companies Act, 2013 (the Act) and the rules made thereunder.(ii) Foreign Exchange Management Act, 1999 (‘FEMA’) and the Rules and Regulations made thereunder to the extent of Foreign Direct

Investment, overseas Direct Investment and External Commercial Borrowings (Not Applicable);(iii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made there under (Not Applicable);(iv) The Depositories Act, 1996 and the Regulations and Bye- Laws framed there under (Not Applicable);(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 were not applicable

to the Company during the Audit Period as the Company is not a listed entity:-(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;(d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the

Companies Act and dealing with client;(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009;(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;(i) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015;

(vi) The Company has complied with The Bihar Sugarcane (Regulation of Supply and Purchase) Act 1981;(vii) Other laws to the extent applicable to the Company as per the representations made by the Company;I have also examined compliance with the applicable clauses of the following:(I) Secretarial Standards 1 and 2 issued by The Institute of Company Secretaries of India.(II) The Listing Agreement entered into by the Company with the Stock Exchanges; not applicable to the Company.During the period under review the Company has generally complied with the provisions of the Secretarial Standards issued by The Instituteof Company Secretaries of India.During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentionedabove subject to the following observations:Companies Act 20131. The Company is a Government Company, by virtue of being a wholly owned subsidiary of another government company. The directors

of the Company are therefore appointed in accordance with the directions/instructions issued by the Central Government. Thecompany has requested the Central Government to nominate individuals for the purpose of appointment as independent directors,including a woman director on the Board. We are informed that the company has not received any direction/instruction from theCentral Government till date, in this respect and in the circumstances, the company could not appoint any independent directors onits Board nor does the Board include a Woman director as required under the provisions of Section 149 of the Act.

I further report thatThe Board of Directors of the Company is constituted with Non-executive directors. The company has not appointed Independent directors,nor does the Board of directors include a woman director as required under the Act. The Company does not have any executive directors asthere is a Manager who is responsible for the executive functions. The changes in the composition of the Board of Directors that took placeduring the period under review were carried out in compliance with the provisions of the Act.Adequate notice is given to all directors to schedule the Board Meetings which was sent at least 7 days in advance except for Board meetings,which were held at a shorter notice to transact urgent business. The agenda and detailed notes on agenda were also sent before the meeting,and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningfulparticipation at the meeting.Majority decision is carried through while the dissenting members’ views, if any are captured and recorded as part of the minutes.I further report that there are adequate systems and processes in the company commensurate with the size and operations of the companyto monitor and ensure compliance with applicable laws, rules, regulations and guidelines.I further report that during the audit period in my opinion, there are no specific events/actions having a major bearing on the company’saffairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to above.

Rupal Dhiren JhaveriPlace: Mumbai FCS No: 5441Date: 25th July, 2016 Certificate of Practice No. 4225

ANNEXURE-3


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FORM NO. MGT-9

EXTRACT OF ANNUAL RETURN

As on financial year ended on 31.03.2016Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1)

of the Company (Management & Administration) Rules, 2014.

I. REGISTRATION & OTHER DETAILS

1. CIN U24290BR2009GOI014927

2. Registration Date 16th October, 2009

3. Name of the Company Hindustan Petroleum Corporation Limited17, J Tata Road, Churchgate, Mumbai - 400 020

4. Category/Sub-categoryof the Company

5. Address of the Registered 271, Road No 3Eoffice & contact details New Pataliputra Colony

Patna 800 013 Ph: 06122260069

6. Whether listed company NO

7. Name, Address & contact Not Applicabledetails of the Registrar &Transfer Agent, if any.

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

(All the business activities contributing 10 % or more of the total turnover of the company shall be stated)

Sr. Name and Description of main NIC Code of the % to total turnoverNo. products / services Product/service of the company

1. Sugar 15421 71.70

2. Ethanol 24116 13.01

3. Cogen Power 40108 9.50

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. Name and address CIN / GLN Holding / % of Shares ApplicableNo. of the Company Subsidiary / Held Section

Associate

1. Hindustan Petroleum L23201MH1952GOI008858 Holding 100%Corporation LimitedNo. 271, Road No. 3E,Post Box No. 126,New Patliputra Colony,Patna – 800 013, Bihar.

ANNEXURE-4

11

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

Category-wise Share Holding

Category of No. of Shares held at the beginning No. of Shares held at the end of % ChangeShareholders of the year [As on 31-March-2014] the year [As on 31-March-2015] during

the year

Demat Physical Total % of Demat Physical Total % ofTotal Total

Shares Shares

A. Promoters

1. Indian

a) Individual/ HUF

b) Central Govt

c) State Govt(s)

d) Bodies Corp. 205520000 205520000 100% 205520000 205520000 100% Nil

e) Banks / FI

f) Any other

Total shareholding of Promoter (A) 205520000 205520000 100% 205520000 205520000 100% Nil

B. Public Shareholding

1. Institutions

a) Mutual Funds

b) Banks / FI

c) Central Govt

d) State Govt(s)

e) Venture Capital Funds

f) Insurance Companies

g) FIIs

h) Foreign Venture Capital Funds

i) Others (specify)

Sub-total (B)(1):- Nil Nil Nil Nil Nil Nil Nil

2. Non-Institutions

a) Bodies Corp.

i) Indian

ii) Overseas

b) Individuals

i) Individual share holders holdingnominal share capital upto `1 lac

ii) Individual shareholders holdingnominal share capital in excessof Rs 1 lakh

c) Others (specify)

Non Resident Indians

Overseas Corporate Bodies

Foreign Nationals

Clearing Members

Trusts

Foreign Bodies - D R

Sub-total (B)(2):- Nil Nil Nil Nil Nil Nil Nil

Total Public Shareholding(B)=(B)(1)+ (B)(2) Nil Nil Nil Nil Nil Nil Nil

C. Shares held by Custodian forGDRs & ADRs Nil Nil Nil Nil Nil Nil Nil

Grand Total (A+B+C) 205520000 205520000 100% 205520000 205520000 100% Nil


12

B) Shareholding of Promoter

Sr. Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year % change inNo. shareholding

during the year

No. of % of total of Shares No. of % of total %of SharesShares Shares of Pledged / Shares Shares of Pledged /

the company encumbered the company encumberedto total shares to total shares

1. HPCL 205519990 — 205519990 —

2. S Bhosekar 1 — 1 —

3. P C Agarwal 1 — 1 —

4. K V Rao 1 — 1 —

5. P K Joshi 1 — 1 —

6. B K Namdeo 1 — 1 —

7. V N Nehete 1 — 1 —

8. G Mohan 1 — 1 —

9. V K Patel 1 — 1 —

10. M K Singh 1 — 1 —

11. Bhattacharjee S 1 — 1 —

C) Change in Promoters’ Shareholding (please specify, if there is no change)

Sr. Particulars Shareholding at the beginning Cumulative ShareholdingNo. of the year during the year

No. of shares % of total No. of shares % of totalshares of the company shares of the company

At the beginning of the year 205520000 100% 205520000 100%

Date wise Increase /Decrease in PromotersShareholding during theyear specifying the reasonsfor increase / decrease(e.g. allotment /transfer /bonus/ sweat equity etc.): Nil Nil Nil Nil

At the end of the year 205520000 100% 205520000 100%

D) Shareholding Pattern of top ten Shareholders(Other than Directors, Promoters and Holders of GDRs and ADRs):

Sr. For Each of the Shareholding at the beginning Cumulative ShareholdingNo. Top 10 Shareholders of the year during the year

No. of shares % of total No. of shares % of totalshares of shares of

the company the company

At the beginning of the year

Date wise Increase / Decrease inPromoters Shareholding duringthe year specifying the reasons Not Applicablefor increase/decrease (e.g.allotment/transfer/bonus/sweatequity etc):

At the end of the year

13

E) Shareholding of Directors and Key Managerial Personnel

Sr. Shareholding of each Directors and Shareholding at the beginning Cumulative ShareholdingNo. each Key Managerial Personnel of the year during the year

No. of shares % of total No. of shares % of totalshares of shares of

the company the company

At the beginning of the year 4 0.0001% 4 0.0001%

Date wise Increase/Decrease in Nil Nil Nil NilPromoters Shareholding duringthe year specifying the reasonsfor increase/decrease (e.g.allotment /transfer/bonus/sweat equity etc.):

At the end of the year 3 0.0001% 3 0.0001%

V) INDEBTEDNESS -Indebtedness of the Company including interest outstanding/accrued but not due for payment.

(` Cr)

Secured Loans Unsecured Deposits Totalexcluding deposits Loans Indebtedness

Indebtedness at the beginningof the financial year

i) Principal Amount 308.80 — — 308.80

ii) Interest due but not paid

iii) Interest accrued but not due 3.07 — — 3.07

Total (i+ii+iii) 311.87 — — 311.87

Change in Indebtedness duringthe financial year

* Addition 16.48 84 — 100.48

* Reduction (3.07) — — (3.07)

Net Change 13.41 84 — 97.41

Indebtedness at the end ofthe financial year

i) Principal Amount 325.28 84 — 409.28

ii) Interest due but not paid — — — —

iii) Interest accrued but not due 2.74 1.07 — 3.81

Total (i+ii+iii) 328.02 85.07 — 413.09

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNELA. Remuneration to Managing Director, Whole-time Directors and/or Manager

Sr. Particulars of Remuneration Name of MD/WTD/Manager Total AmountNo.

1. Gross salary — — — —

(a) Salary as per provisionscontained in section 17(1)of the Income-tax Act, 1961 — — — —

(b) Value of perquisites u/s17(2) Income-tax Act, 1961 — — — —

(c) Profits in lieu of salaryunder section 17(3)

Income- tax Act, 1961 — — — —

2. Stock Option — — — —

3. Sweat Equity — — — —

4. Commission

– as % of profit

– others, specify… — — — —

5. Others, please specify — — — —

Total (A) — — — —

Ceiling as per the Act — — — —


14

B. Remuneration to other directors

Sr. Particulars of Remuneration Name of Directors Total AmountNo.

1. Independent Directors — — — — —-

Fee for attending boardcommittee meetings — — — — —-

Commission — — — — —-

Others, please specify — — — — —-

Total (1) — — — — —-

2. Other Non-Executive Directors — — — — —-

Fee for attending boardcommittee meetings — — — — —-

Commission — — — — —-

Others, please specify — — — — —-

Total (2) — — — — —-

Total (B)=(1+2) — — — — —-

Total Managerial Remuneration — — — — —-

Overall Ceiling as per the Act — — — — —-

C. Remuneration to key managerial personnel other than MD/Manager/WTD

Sr. Particulars of Remuneration Key Managerial PersonnelNo.

CEO CFO CS Total

1. Gross salarya) Salary as per provisions

contained in section 17(1)of the Income-tax Act, 1961 37,95,355 33,56,374 18,06,962 89,58,691

b) Value of perquisites u/s17(2) Income-tax Act, 1961 4,34,228 8,90,472 1,44,731 14,69,431

c) Profits in lieu of salaryunder section 17(3)Income-tax Act, 1961

2. Stock Option — — — —3. Sweat Equity — — — —4. Commission

– as % of profit — — — —– others, specify — — — —

5. Others, specify (PF–Cocontribution, DCS exemption &Co Borne Tax) 4,13,642 5,42,913 3,48,853 13,05,408Total 46,43,225 47,89,759 23,00,546 1,17,33,530

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Brief Details of Authority Appeal made,Companies Act Description Penalty/ [RD/NCLT/ if any (give Details)

Punishment/ COURT]Compoundingfees imposed

A. COMPANY

Penalty — — — — —

Punishment — — — — —

Compounding — — — — —

B. DIRECTORS




C. OTHER OFFICERS IN DEFAULT




15

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Sugar Industry in India went through mixed fortunes during the year 2015-16. Struggling to keep hand and feet above theturbulent waters of low prices and high debt costs, the industry managed to remain afloat for the sugarcane crushing season2015-16.

Sugar prices touched an all-time low, the ex-mill prices plunging to ` 22 per kg in the state of Bihar. The mills were caughtbetween the compulsion to generate cash to pay the farmers and to be profitable to service the cost of bank borrowings.Crude prices continued to be low, pushing countries like Brazil to produce more sugar which kept the sugar prices suppressedin the international and consequently in the Indian market.

Monsoon during the off season of 2015-16 was less than average which had affected cane production. Due to delay inpayments during the previous season some farmers had drifted away from cane to other crops and this too added to thereduced production for crushing in 2015-16.

However, thanks to the timely announcement of interest free loans by the Union Government as well as the State Government,the mills could heave a sigh of relief and prepare themselves for a rewarding season ahead.

The Government brought another breather in the form of fixation of ethanol prices. Even before the financial year started, theprices were fixed slightly above the oil industry tender prices, taking the net realisation to mills close to ` 40 per liter. It hasgiven a new fillip to distillers to produce more ethanol to augment their revenue realisation while serving the cause of renewableenergy.

This year saw both the mills of your company improving in terms of plant performance and efficiency scaling higher on severalperformance parameters. But for the lower cane availability, the plant performance could have touched the design levels quiteconvincingly.

Despite the severe competitive and subdued market, your company had been able to sell sugar fairly well. The production of14-15 season and the balance stock of previous season were all fully sold out in spite of the suppressed market conditions.The sales quantity of 45,112 MT was almost 34% above the previous year is volume. The average realisation of ` 25,535 perMT was well comparable with most mills in the northern India.

Interstate supplies of Ethanol involve higher transportation and state levies by way of import / export fees, which reduce the netrealisation for the selling company. Therefore, your company had coordinated with the parent company, HPCL for evacuatingthe entire ethanol within the state of Bihar, for better realisation of revenue. The net realisation of ethanol per KL during the yearwas ` 42,497 as against `39,292 in the previous year.

Increase of cane cultivation and expansion of the cane command area is a critical requirement for the performance of anysugar mill. It ensures adequate supply of sugar cane for operating the mills at the design level for the full length of the crushingseason. Towards this, the Government of Bihar as well as your company had been working and all their efforts are showing upgood results by way of better yield, better variety and cleaner cane from the fields to the mills.

In the area of industrial relations your company has a healthy atmosphere and congenial work culture. People in all thefunctions have acquired a fair amount of expertise which has reflected in the performance for the year and it would help thecompany turnaround in the next few years. In the area of environmental conservation the company is doing whatever is thebest in the industry. Focused efforts are being put in to find ways to operate the cogen plants on bagasse / other biomass duringthe off season which would serve the cause of the state of Bihar as well as that of the company.

As the company is yet to post profit, the activities in the realm of CSR are yet to take off, though it does every possible thing tohelp the people of the vicinity in the remote districts of East and West Champaran of Bihar.

Current financial year 2016-17 has opened with a resurgence in the price of sugar which holds a fair promise to the sugarindustry. Coupled with a fair price to ethanol production, this is very encouraging to the mills which can look for a morerewarding years ahead.

The state of Bihar has taken a bold step to declare prohibition in the state from 1st April 2016. This means that the entiremolasses would go into production of ethanol instead of potable alcohol and hence the dynamics of ethanol supply wouldundergo some change in the state of Bihar. However, with assured supplies to HPCL, your company stands on a better footingon this subject.

Sugar industry is heavily influenced by monsoon, certain happenings in the rest of the world and the cyclical nature of theproduction-demand scenario. Your company is no exception to this phenomenon. Technical excellence, astute financialmanagement and a cohesive work culture are required to be above the turbulent times and to stride into the realms of profitabilityand sustainability.


16

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b)OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF HPCL BIOFUELS LIMITED FORTHE YEAR ENDED 31 MARCH 2016

The preparation of financial statements of HPCL Biofuels Limited for the year ended 31 March 2016 in accordance with the

financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the

company. The Statutory Auditors appointed by the Comptroller and Auditor General of India under Section 139(5) of the Act

are responsible for expressing opinion on the financial statements under section 143 of the Act based on independent audit in

accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by

them vide their revised Audit Report dated 27 May 2016.

I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 143(6)(a)

of the Act of the financial statements of HPCL Biofuels Limited for the year ended 31 March 2016. This supplementary audit

has been carried out independently without access to the working papers of the Statutory Auditors and is limited primarily to

inquiries of the Statutory Auditors and company personnel and a selective examination of some of the accounting records.

On the basis of my audit nothing significant has come to my knowledge which would give rise to any comment upon or

supplement to statutory auditors' report.

For and on the behalf of the

Comptroller and Auditor General of India

(Sushil Kumar Jaiswal)

Principal Director of Commercial Audit

& ex-officio Member, Audit Board, Ranchi

Place: Ranchi

Date: 01 July 2016

17

INDEPENDENT AUDITOR’S REPORT

To,

The Members ofHPCL Biofuels Limited

Report on the Financial Statements

We have audited the accompanying standalone financial statements of the HPCL Biofuels Limited, which comprise the BalanceSheet as at 31st March, 2016 and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information. Our earlier report dated 12th May, 2016 (issuedin supersession of our report dated 3rd May, 2016, which was withdrawn, primarily, to accommodate inclusion of report onsub-directions issued under section 143(5) of the Companies Act, 2013) on these financial statements stands withdrawn forinclusion of our report on Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct, 2013 in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting of theInstitute of Chartered Accountants of India and for withdrawing our comments on this matter as contained in earlier report.

Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“theAct”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financialposition, financial performance and cash flows of the Company in accordance with the accounting principles generally acceptedin India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent;and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuringthe accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statementsthat give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required tobe included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. ThoseStandards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considersinternal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion onwhether the Company has in place an adequate internal financial controls system over financial reporting and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalonefinancial statements give the information required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at31st March, 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

Your attention is hereby drawn to Note No.- 50 [relating to Provision for Gain/(Loss) on Inventory Variation] of the financialstatements. The reasons of such variations is stated to be errors in recording of manufacturing details in production records andthe same relates to the period relevant to season 2013-14. However, considering that the said variation has been disclosed asexceptional item in the statement of profit and loss, our opinion is not qualified in this matter.


18

Our test checks of the methods and procedures leading to valuations of consumption of stores and closing stock of stores haverevealed limitations of the electronic records maintained by the Company in this regard. Also, the Company has not identifiedslow-moving/non-moving/obsolete items in stock of stores. Considering these, a provision of ` 20,00,000/- has been createdby the Company to offset the possible impact [Note No. 50 of the Financial Statements]. Our opinion is not qualified inthis matter.

Your attention is also hereby drawn to Note No. 58 relating to non-appointment of independent/women director to the Boardof the Company as required by the Companies Act, 2013. These financial statements have, thus, been reviewed and approvedby the Audit Committee and the Board not constituted as per requirements of the Companies Act, 2013. Our opinion is notqualified in this matter.

Report on Other Legal and Regulatory Matters

As required by the Companies (Auditor’s Report) Order, 2016, issued by the Central Government of India in terms of section143 (11) of the Companies Act, 2013 and in terms of the information and explanations given to us and also on the basis of suchchecks as we considered appropriate, we enclose in Annexure-1 a statement on the matters specified in paragraphs 3 & 4 of thesaid order.

Our report on matters covered by directions and sub-directions issued by the Comptroller and Auditor General of India issuedunder section 143(5) of the Companies Act, 2013, to the extent applicable, is enclosed in Annexure-2.

As required by section 143(3)(i) of the Act, we enclosed in Annexure-3 our report on matters contained therein.

As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from ourexamination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with in this Report are in agreementwith the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified underSection 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) We have been informed by means of a certificate from the Company Secretary of the Company that none of the directorsis disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanationsgiven to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements –Refer Note 53 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any materialforeseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by theCompany.

For S K JHA & ASSOCIATESChartered Accountants

(CA. RATENDRA KUMAR)Partner

Place : Patna Membership Number- 075813Date : 27th May, 2016 Firm Registration Number- 006189C

19

ANNEXURE-1 TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF HPCL BIOFUELS LIMITED:Report on matters covered under Companies (Auditor’s Report) Order, 2016, as referred to under “Report on Other Legaland Regulatory Matters” paragraph of our report of even date on standalone financial statements of HPCL Biofuels Limitedfor the year ended on 31st March, 2016

(i) (a) The company has maintained proper records of fixed assets showing full particulars including quantitative detailsand situation of fixed assets.

(b) Physical verification of these fixed assets has been conducted during the year, the periodicity of which appearsreasonable. No material discrepancy was reportedly noticed on such physical verification.

(c) The title deeds of immovable properties are held in the name of the company.(ii) Physical verification of inventory has been conducted by the management during the year, the periodicity of which

appears reasonable. Material discrepancies have been noticed which have been provided for during the year awaitingproper authorization for its proper dealing in the books of account.

(iii) According to the information and explanation given to us, the company has not granted any loan, secured or unsecured,to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) The Company has not undertaken any transaction in respect of loans, investments, guarantees, and security whetherprovisions of section 185 and 186 of the Companies Act, 2013 are attracted.

(v) In our opinion and according to the information and explanations given to us, the company has not accepted any depositsfrom the public.

(vi) We have broadly reviewed the books of account relating to material, labour and other items of cost maintained by thecompany pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1)of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained.

(vii) (a) On the basis of our examination of the records and according to the information and explanations given to us, thecompany is generally regular in depositing undisputed statutory dues including provident fund, employees’ stateinsurance, income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any otherstatutory dues with appropriate authorities. There is no arrear of undisputed statutory dues as on the last day of thefinancial year which was outstanding for a period of more than 6 months from the date the same became payable.

(b) According to the information and explanations given to us, the following amounts have not been deposited onaccount of any dispute:Nature of Demand Amount involved Forum where dispute is pendingDisallowance of input tax credit 6,98,44,013/= Sales Tax Tribunal, Biharon capital goods for 2010-11Demand of Entry Tax for 2010-11 68,11,732/= Sales Tax Tribunal, Bihar

(viii) On the basis of our examination of the records and according to the information and explanations given to us, thecompany has not defaulted in repayment of loans or borrowing to a financial institution, bank, government or dues todebenture holders.

(ix) The Company has raised funds by way of term loans, which, on the basis of our examination of the records and accordingto the information and explanations given to us, were applied for the purposes for which those are raised.

(x) No fraud by the company or any fraud on the Company by its officers or employees during the year were either noticedduring our checking or were reported to us.

(xi) No managerial remuneration has either been paid or provided during the year.(xii) The requirements of reporting in respect of Nidhi Companies are not applicable to the Company.(xiii) On the basis of our examination of the records and according to the information and explanations given to us, all

transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicableand the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

(xiv) On the basis of our examination of the records and according to the information and explanations given to us, thecompany has not made any preferential allotment or private placement of shares or fully or partly convertible debenturesduring the year under review.

(xv) On the basis of our examination of the records and according to the information and explanations given to us, thecompany has entered into any non-cash transactions with directors or persons connected with him.

(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.





20

ANNEXURE-2 TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF HPCL BIOFUELS LIMITED:Report on matters covered by directions and sub-directions of C&AG, to the extent applicable, as referred to under “Reporton Other Legal and Regulatory Matters” paragraph of our report of even date on standalone financial statements of HPCLBiofuels Limited for the year ended on 31st March, 2016

DIRECTIONS U/S 143(5) OF THE COMPANIES ACT 2013

Sl.No. Directions Report

1 Whether the company has clear title / lease deeds for freehold Yes. We have further been informed that theand leasehold respectively? If not please state the area of documents are in the custody of the bank asfreehold and leasehold land for which title / lease deeds security for the Term / WC loan.are not available.

2 Whether there are any cases of waiver / write off of debts / Nilloans / interest etc; if yes, the reasons therefore and amountinvolved

3 Whether proper records are maintained for inventories lying Not Applicablewith third parties and assets received as gift / grant(s) from theGovt or other authorities

SUB DIRECTIONS U/S 143(5) OF THE COMPANIES ACT 2013.

Sl.No. Sub-Directions Report

1 Examine the percentage escalation in salary assumed by Percentage escalation in total monthly salary andmanagement for computation of actuarial liability against average salary, as compared to previous year, hasgratuity and other employee benefits and report whether the been mentioned in actuarial valuation report atsame was reasonable, and source data provided by the +4.44% and +7.44% respectively, which appearscompany to the Actuaries for actuarial valuation were correct, reasonable. Further, the source data provided bycomplete and valid. the company to the Actuaries for actuarial

valuation were found correct, complete and valid.




21

ANNEXURE-3 TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF HPCL BIOFUELS LIMITED:Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)We have audited the internal financial controls over financial reporting of HPCL Biofuels Limited (“the Company”) as of March 31, 2016 inconjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial ControlsThe Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control overfinancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilitiesinclude the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention anddetection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financialinformation, as required under the Companies Act, 2013.

Auditors’ ResponsibilityOur responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “GuidanceNote”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to theextent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all material respects.Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on theCompany’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial ReportingA company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detectionof unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial ReportingBecause of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or impropermanagement override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of anyevaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.

Qualified opinionAccording to the information and explanations given to us and based on our audit, the following material weaknesses have been identifiedas at March 31, 2016:a) The Company’s internal control system over maintenance of electronic records for inventory of stores with regard to their receipts, issue

for production, physical verification and reconciliation with financial books were not operating effectively which could potentiallyresult in material misstatements in the Company’s consumption and inventory account balances.

A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that thereis a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented ordetected on a timely basis.In our opinion, except for the effects/possible effects of the material weaknesses described above on the achievement of the objectives of thecontrol criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and suchinternal financial controls over financial reporting were operating effectively as of March 31, 2016, based on the internal control overfinancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit testsapplied in our audit of the March 31, 2016 standalone financial statements of the Company, and these material weaknesses do not affect ouropinion on the standalone financial statements of the Company.





22

Balance Sheet as at 31st March, 2016

PARTICULARS Note No. As at 31.03.2016 As at 31.03.2015

Amount (`) Amount (`)

I. EQUITY AND LIABILITIES

Shareholders’ Funds

(a) Share Capital 3 6,251,715,110 6,251,715,110

(b) Reserves & Surplus 4 (4,507,118,412) (4,009,395,058)

(c) Money Received against Share Warrants —

Share Application Money Pending Allotment

Non-Current Liabilities

(a) Long-Term Borrowings 5 3,944,000,000 3,088,018,946

(b) Deferred Tax Liabilities (Net) — —

(c) Other Long Term Liabilities 6 — —

(d) Long-Term Provisions 7 6,826,641 5,567,767

Current Liabilities

(a) Short-Term Borrowings 8 1,036,688,860 641,832,431

(b) Trade Payables 9 442,979,407 1,003,159,058

(c) Other Current Liabilities 10 942,663,064 993,052,967

(d) Short-Term Provisions 11 173,558 57,703

TOTAL 8,117,928,228 7,974,008,924

II ASSETS

Non-Current Assets

(a) Fixed Assets

(i) Tangible Assets 13 6,155,626,118 6,338,928,333

(ii) Intangible Assets 1,705,753 2,483,437

(iii) Capital Work-in-Progress 12 — —

(iv) Intangible Assets under Development — —

(v) Fixed Assets Held for Sale — —

(b) Non-Current Investments 14 — —

(c) Deferred Tax Assets (Net) — —

(d) Long-Term Loans & Advances 15 245,873,368 238,107,012

(e) Other Non-Current Assets 16 — —

Current Assets

(a) Current Investments 17 — —

(b) Inventories 18 1,399,349,682 1,134,806,882

(c) Trade Receivables 19 110,607,656 1,629,372

(d) Cash & Cash Equivalents 20 3,328,437 35,237,101

(e) Short-Term Loans & Advances 21 183,959,141 205,338,714

(f) Other Current Assets 22 17,478,073 17,478,073

TOTAL 8,117,928,228 7,974,008,924

The accompanying notes are Integral Part of the Financial Statements

As per our report of even date attached For and on behalf of the BoardFor S K Jha & AssociatesChartered Accountants

(C A Ratendra Kumar) (P. K. Joshi) ( J Ramaswamy) (B. K. Namdeo)Partner Chairman Director DirectorMembership No. 075813Firm’s ICAI Reg. No. 006189C

Place : Mumbai (Vinod Nehete) (R. Sankaran) (Heena Shah)Date : 03/05/2016 CEO & Manager Chief Finance Officer Company Secretary

23

Statement of Profit and Loss for the year ended 31st March, 2016

For the Year ended For the Year ended31.03.2016 31.03.2015

Amount (`) Amount (`)PARTICULARS Note No.IncomeI. Revenue from Operations (Gross) 23 1,682,404,419 1,977,506,090

Excise Duty (75,719,919) (103,311,294)Revenue from Operations (Net) 1,606,684,500 1,874,194,796

II. Other Income 24 9,666,949 9,531,801

Total Revenue (I+II) 1,616,351,449 1,883,726,597

ExpensesCost of Materials Consumed 25 1,262,787,668 1,492,959,782Consumption of Stores & Consumables 26,860,632 61,506,480Packing Expenses 19,009,362 20,929,849Excise Duty on Inventory Differential 33,282,190 (913,780)Power & Fuels 26 34,878,593 52,315,156Changes in Inventories of Finished Goods, WIP & Stock in Trade 27 (278,634,701) (9,539,006)Employee Benefits Expense 28 141,654,742 154,555,725Chemicals Consumed 24,068,746 31,133,115Finance Costs 29 473,675,933 435,995,940Depreciation & Amortization Expense 279,751,882 283,879,282Other Expenses 30 79,904,316 213,052,647

Total Expenses 2,097,239,363 2,735,875,190

Profit / (Loss) Before Exceptional & Extraordinary Items and Tax (480,887,914) (852,148,593)Exceptional Items

Prior Period Items 31 (7,877,640) (238,046)Provision for Gain/(Loss) on Inventory Variation 32 (8,957,800) 8,700,664

Profit / (Loss) Before Extraordinary Items & Tax (497,723,354) (843,685,975)Extraordinary Items — —

Profit / (–Loss) Before Tax (497,723,354) (843,685,975)Tax Expense(1) Current Tax Expense for Current Year — —(2) (Less): MAT Credit — —(3) Provision for Tax for Earlier year Written off/provided for — —(4) Deferred Tax — —(5) Current Tax Expenses Pertaining to Prior Years — —Net Current Tax — —

Profit / (Loss) from Continuing Operations (497,723,354) (843,685,975)

Discontinuing OperationsProfit / (Loss) from Discontinuing Operations (Before Tax) — —Total OperationsTax Expense on Discontinuing Operations — —Profit/(Loss) from Discontinuing Operations (After Tax) — —

Profit / (Loss) for the Year (497,723,354) (843,685,975)

Earnings Per Equity Share (of ` 10/- each) :-(1) Basic before extraordinary items (2.42) (4.11)(2) Diluted before extraordinary items (2.42) (4.11)(3) Basic after extraordinary items (2.42) (4.11)(4) Diluted after extraordinary items (2.42) (4.11)The accompanying notes are Integral Part of the Financial Statements





24

Notes Forming Part of the Financial Statements for the year 2015-16

1. CORPORATE INFORMATION

The Company has been formed as a wholly owned subsidiary of M/s Hindustan Petroleum Corporation Limited, a Public Sector undertaking,as a backward integration initiative. The Company had taken over two of the closed sugar mills of Bihar State Sugar Corporation atSugauli in East Champaran and Lauriya in West Champaran in the state of Bihar. The company is engaged in the business of manufacturingsugar and ethanol from crushing of sugarcane and generation of power from the bagasse generated in the process. Both the units of thecompany were commissioned during the financial year 2011-12.

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

A. Preparation of Financial Statements

The financial statements are prepared under historical cost convention and on accounting principles of going concern in accordancewith Generally Accepted Accounting Principles (GAAP), Accounting Standards referred to in the Companies (Accounts) Rule,2014 issued by the Central Government and the relevant provisions of the Companies Act, 2013. Presentation and Disclosure ofFinancial Statements is done in accordance with Revised Schedule III to the Companies Act 2013.All income and expenditurehaving material bearing are recognized on accrual basis, except where otherwise stated. Necessary estimates and assumption ofincome and expenditure are made during the reporting period and difference between the actual and the estimates are recognizedin the period in which the results materialize.

B. Fixed Assets

1. Land acquired on lease for 99 years or more is treated as freehold land. Land acquired for less than 99 years is treated as leasehold land.

2. Fixed Assets are carried at cost less accumulated depreciation.

C. Intangible Assets

1. Costs incurred on technical know-how/license fee relating to process designs/plants/facilities are capitalized as IntangibleAssets.

2. Cost of Software directly identified with hardware is capitalized along with the cost of hardware. Application software iscapitalized as Intangible Asset.

3. Intangible Assets are amortized on a straight line basis over the useful life of the parent asset.

D. Construction Period Expenses

Expenditure directly or indirectly related with the project, during construction period, start-up and commissioning of the projectare capitalized. Pre-operative expenses have been capitalized up to the date of commencement of commercial production asprovided in AS 10.

E. Depreciation

1. Depreciation on Fixed Assets is provided on the Straight Line method on the basis of useful life determined, in the manner andat the rates calculated based on the useful life recommended under Schedule II to the Companies Act, 2013 and is chargedpro rata on a daily basis on assets, from/up to and inclusive of the month of capitalization/sale, disposal or deletion during theyear. In case of restatement of carrying value of any asset due to any price adjustments warranted due to receipt of governmentgrants, the depreciation on revised unamortised depreciable amount is charged prospectively over the residual useful life ofthe asset. Residual value has been considered at 5%.

2. Premium on leasehold land is amortized over the period of lease. The lease rent is charged in the respective year.

3. Machinery Spares, which can be used only in connection with an item of fixed asset and the use of which is expected to beirregular, are depreciated over a period not exceeding the useful life of the principal item of fixed asset.

4. Intangible assets of the nature of software are being depreciated over the useful life of the related computer systems/servers.

F. Impairment of Assets

At each balance sheet date, an assessment is made of whether there is any indication of impairment. An impairment loss isrecognized whenever the carrying amount of assets of cash generating units (CGU) exceeds their recoverable amount.

G. Provisions, Contingent Liabilities and Contingent Assets

1. A provisions is recognized when there is a present obligation as a result of a past event and it is probable that an outflow ofresources will be required to settle the obligation in respect of which reliable estimate can be made.

2. No provision is recognized for:

• Any obligation that may arise from past events but the existence of which will be confirmed only by the occurrence ornon-occurrence of one or more uncertain future events not wholly within the control of the company.

• Any obligation that may arise from past events but is not probable that an outflow of resources embodying economicbenefits will be required to settle the obligation.

• Any obligation, the reliable estimate of which cannot be made.

25

Notes Forming Part of the Financial Statements for the year 2015-16 (Contd.)

However such obligations are recorded as contingent liabilities. These are assessed at regular intervals and only that part ofthe obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in theextremely rare circumstances where no reliable estimate can be made.

3. Contingent Assets are not recognized in the financial statements as this may result in the recognition of income that may neverbe realized.

H. Taxes on Income

1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

2. Deferred tax on account of timing difference between taxable and accounting income is provided by using tax rates and taxlaws enacted or substantively enacted as at the balance sheet date.

I. Employee Retirement Benefits

1. In respect of provident fund, the contribution for the period is recognized as expenses and charged to Profit & Loss Account.

2. Provision for Gratuity is made based on the actuarial valuation and the difference in the provision required at year end ischarged to the Profit & Loss Account. The provision is calculated using Projected Unit Credit Method which is also recommendedunder AS-15.

3. Provision for Leave Encashment is made based on the actuarial valuation and the difference in the provision required at yearend is charged to the Profit & Loss Account. The provision is calculated using Projected Unit Credit Method which is alsorecommended under AS-15.

J. Inventory Cost

1. Finished goods are valued at cost on FIFO basis or net realizable value whichever is lower. Cost includes Material Cost,Conversion cost and other cost incurred to bring the inventory to its present condition and location. Absolute Alcohol hasbeen considered as finished product as it meets all specs of ethanol.

2. Work In Progress is valued at lower of cost or estimated realizable value. Cost includes Material Cost & conversion cost asapplicable.

3. By products are valued at estimated realizable value.

4. Stock in trade is valued at cost on weighted average basis or net realizable value whichever is lower.

5. Stocks of stores are valued at cost on weighted average cost.

K. Revenue Recognition

1. Revenue from sales of sugar is recognized at the point when sale transaction is complete. The value of sales is taken at grossvalue including excise duty. Value relative to excise duty is also recorded separately for presentation in financial statements.Entry for sugar cess, if applicable, is done in the same manner as the excise duty.

2. Revenue from sales of power is recognized at the point when billing is done and is recorded at billing value.

3. Revenue from sales of ethanol is recognized at the time when the consignment is handed over to the transporter. The value ofsales is taken at gross value including excise duty and transportation. Value relative to excise duty is also recorded separatelyfor presentation in financial statements. Value relative to VAT / CST and import / export fees are recorded separately, but notgrossed up in sales.

L. Cash Flow Statement

The cash flow statement is prepared by indirect method set out in AS 3 on cash flow statements and presents the cash flows byoperating, investing & financing activities of the company. Cash & cash equivalent presented in the cash flow statement consist ofbalance in the Bank account and cash in hand.

M. Excise Duty

Liability for excise duty in respect of goods produced by the company is accounted upon clearance and provision is made forexcisable manufactured goods lying in stock as on the balance sheet date.

N. Deferred Tax Assets / Deferred Tax Liabilities

Deferred Tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.Deferred Tax is recognised at the Balance Sheet date, subject to the considerations of prudence, on timing differences, being thedifference between taxable income and accounting income that originate in one period and are capable of reversal in one or moresubsequent periods. Unabsorbed depreciation and carry forward of losses during the year which can be set off against futuretaxable income are also considered as timing differences and result in deferred tax assets, subject to consideration of prudence.Deferred Tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will beavailable against which such Deferred Tax assets can be realised. However, deferred tax assets originating due to unabsorbeddepreciation or carry forward of losses under tax laws are recognized only to the extent that there is virtual certainty supported byconvincing evidence that sufficient future taxable income will be available for their realization.


26

(Amount in `)

As At As At31st March, 2016 31st March, 2015

NOTE 3SHARE CAPITAL

A. Authorised:

25,00,00,000 Equity Shares of `10 each 2,500,000,000 2,500,000,00045,00,00,000 Preference Shares of ` 10 Each 4,500,000,000 4,500,000,000

Total 7,000,000,000 7,000,000,000

B. Issued, Subscribed, Called up & Fully Paid:

20,55,20,000 Equity Shares of `10 eachFully Paid up (100% Held by HPCL) 2,055,200,000 2,055,200,000

TOTAL 2,055,200,000 2,055,200,000

41,96,51,511 nos 5 % Non Cumulative 14 year redeemablePreference Shares @ `10/- each (100 % held by HPCL) 4,196,515,110 4,196,515,110

TOTAL 4,196,515,110 4,196,515,110

TOTAL 6,251,715,110 6,251,715,110

C. Par Value per Share

i) Equity share `10 `10

ii) Preference Share `10 `10

D. Reconciliation of outstanding number of shares

a) Equity Shares

Opening Balance 2,055,200,000 2,055,200,000

Add: Issued during the year — —

Less: Buy back during the year — —

Closing Balance 2,055,200,000 2,055,200,000

b) Preference Shares

Opening Balance 4,196,515,110 4,196,515,110

Add: Issued during the year — —

Less: Buy back during the year — —

Closing Balance 4,196,515,110 4,196,515,110

E. Rights, preferences and restrictions attaching to each class of shares

All equity shares are allotted to the holding company “Hindustan PetroleumCorporation Ltd” except 6 equity shares which were allotted to 6 nomineesof the holding company.

All preference shares are allotted to the holding company “HindustanPetroleum Corporation Ltd”. They carry preference dividence of 5%, arenon cumulative and are redeemable at the end of 20 years from issue, i.e.in March 2034

F. Shares held by Holding Company - Hindustan Petroleum Corporation Ltd

Equity Shares 2,055,200,000 2,055,200,000

Preference Shares 4,196,515,110 4,196,515,110

G. Share holding pattern

Hindustan Petroleum Corporation Ltd

Equity Shares 100% 100%

Preference Shares 100% 100%

H. Shares Reserved Nil Nil

I. Details of shares, which in the last 5 years, were issued for other thancash consideration Nil Nil

issued as bonus shares Nil Nil

bought back Nil Nil

J. Terms of any securities convertible into equity/preference shares issued Nil Nil

K. calls unpaid Nil Nil

L. Forfeited shares (amount originally paid-up) Nil Nil


27


As at 31.03.2016 As at 31.03.2015


NOTE 4RESERVES & SURPLUS

Capital Reserve — —

Capital Redemption Reserve — —

Share Premium Account — —

Debenture Redemption Reserve — —

Revaluation Reserve — —

General Reserve — —

TOTAL — —

Capital Grant — —

Surplus / (Deficit) in Statement of Profit and Loss

Opening Balance (4,009,395,058) (3,165,709,083)

Add: Profit / (Loss) for the Year (497,723,354) (843,685,975)

Profit Appropriated to General Reserve — —

Profit Appropriated to Debenture Redemption Reserve — —

Profit Appropriated to Proposed Dividend — —

Profit Appropriated to Tax on Distributed Profits — —

Closing Balance (4,507,118,412) (4,009,395,058)Other Reserve — —

TOTAL (4,507,118,412) (4,009,395,058)

NOTE 5LONG-TERM BORROWINGS

Secured Loans (Against Hypothecation of Fixed & Current Assets)

Bank Term Loan (Repayable in 48 Structured Quarterly InstalmentsStarting from Q2 of 2016-17)(Rate of Interest @ Base Rate + 1.70% Fixed Spread) 3,088,000,000 3,088,018,946

Less: 3 Installments totalling ` 11.58 Cr. due in FY 2016-17 (115,800,000) —

GOB Soft Loan (Repayable in 20 equal Quarterly Instalmentsstarting from Q1 of 2016-17)(Rate of Interest @ Base Rate + 2.70% Fixed Spread) 164,800,000 —

Less: 4 Installments totalling ` 3.30 Cr. due in FY 2016-17 (33,000,000) —

TOTAL A 3,104,000,000 3,088,018,946

Un-Secured Loans

Short Term Loans from Banks (Repayable in Foreign Currency) — —

Clean Loans from Banks — —

Inter Company Deposits — —

Commercial Paper — —

Loans & Advances from Related Parties (Bridge loan fromHPCL repayable in 10 quarterly installments starting from June 2017) 840,000,000 —

TOTAL (A+B) 3,944,000,000 3,088,018,946


28


As at 31.03.2016 As at 31.03.2015

Amount (`) Amount (`)NOTE 6OTHER LONG TERM LIABILITIES

Other Deposits — —

Accrued Charges/Credits — —

Other Liabilities — —

TOTAL — —

NOTE 7LONG TERM PROVISIONS

Provision for Gratuity 5,462,473 4,169,083

Provision for Leave Encashment 1,364,168 1,398,684

TOTAL 6,826,641 5,567,767

NOTE 8SHORT TERM BORROWINGS

Secured Loans

Cash Credit (Hypothecation of Debtors & Inventory) 1,036,688,860 641,832,431(Rate of Interest @ Base Rate + 1.25% Fixed Spread)

Overdrafts from Banks (Secured by Hypothecation of Stock-in-Trade) — —

TOTAL A 1,036,688,860 641,832,431

Un-Secured Loans

Short Term Loans from Banks (Repayable in Foreign Currency) — —

Clean Loans from Banks — —

Inter Company Deposits — —

Commercial Paper — —

Loans & Advances from Related Parties — —

TOTAL B — —

TOTAL (A+B) 1,036,688,860 641,832,431

NOTE 9TRADE PAYABLES

(i) Total Outstanding dues of Micro, Small & Medium Enterprises — —

(ii) Total outstanding dues of creditors other than above Creditors

Operating Expenses Payable to HPCL 77,425,459 63,733,877

Accrued Expense - Payable 46,873,439 113,651,572

Advance Received From Farmers for Cane seeds — —

Payable to Cane Growers 242,918,355 708,445,989

Retention from Vendors 19,798,025 14,240,274

Payable to Trade Vendors 55,964,129 103,087,346

TOTAL 442,979,407 1,003,159,058

29


As at 31.03.2016 As at 31.03.2015


NOTE 10OTHER CURRENT LIABILITIES

WCT Payable 73,172 307,526

TDS Payable 2,047,616 1,306,907

Sales Tax Payable 2,343,616 —

Excise Payable 82,160,927 44,208,243

Payable to Contractor/Vendor (Capital Assets) 406,429,044 418,485,506

Security Deposit from Contractors 8,699,633 14,396,343

Road Map Scheme - Lauriya 12,032 12,032

Farmer Loan 37,105 85,924

Accrued Liability-EPCC Vendor 127,890,934 135,459,089

Payable to Zone Development Council 2,448,586 2,308,031

PF Contribution Employee 1,048,229 917,875

Unclaimed Cheque 1,601,215 1,107,071

Interest Accrued but not due 38,069,475 30,685,602

Current Maturities of Long Term Debt

– Bank Term Loan (3 Installments totalling ` 11.58 Cr.due in FY 2016-17), (P.Y- Nil) 115,800,000 —

– GoB Soft Loan (4 Installments totalling ` 3.30 Cr.due in FY 2016-17), (P.Y- Nil) 33,000,000 —

Inter Office Balance — —

Payable To Employee 9,028,894 7,943,696

Payable To Govt (Others) 3,112 —

Misc Other Current Liablities 117,067 164,294

Advance From Customers 111,852,407 335,664,828

TOTAL 942,663,064 993,052,967

NOTE 11SHORT-TERM PROVISIONS

Provision for Other Employee Benefits 173,558 57,703

Provision for Tax (Net) — —

Provision For Dividend — —

TOTAL 173,558 57,703


30


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31


As at 31.03.2016 As at 31.03.2015

Amount (`) Amount (`)NOTE 14NON-CURRENT INVESTMENTSTrade Investments

Quoted

Investment in Equity — —

Investments in Joint Venture — —

Un - Quoted


Investments in Subsidiary — —


Investment in Preference Shares — —


Total Trade Investments - A — —

Other Investments

Quoted


Investment in Government or Trust Securities — —

Un - Quoted

Investment in Government or Trust Securities — —

Investment in Debentures or Bonds — —

Investment in Other non - Current Investments — —

Total Other Investments - B — —

Total Non - Current Investments (A+B) — —

NOTE 15LONG-TERM LOANS & ADVANCES

Secured, Considered Good

Advances Recoverable in cash or in kind or for value to be received — —

Interest Accrued thereon — —

Capital Advances 40,011,247 39,044,391

Unsecured

Unsecured, Considered Good

Capital Advances — —

Advances Recoverable in Cash or in kind or for Value to be Received (BSEB) — 11,346,923

Balances with Excise, Customs, Port Trust etc. 204,902,621 186,918,198

Other Deposits 959,500 797,500

Prepaid Expenses — —

Amounts Recoverable under Subsidy Schemes — —

Share Application Money Pending Allotment — —

Advance Towards Equity — —

Loan given to Subsidiaries & JVs — —

Other Accounts Receivable — —

Less : Provision for Doubtful Receivables — —

TOTAL A 245,873,368 238,107,012

Unsecured, Considered Doubtful:

Accounts Receivable & Deposits — —

Less : Provision for Doubtful Receivables — —

TOTAL B — —

TOTAL (A+B) 245,873,368 238,107,012


32


As at 31.03.2016 As at 31.03.2015

Amount (`) Amount (`)NOTE 16OTHER NON-CURRENT ASSETS

— —

— —

NOTE 17CURRENT INVESTMENTS

Non - Trade Investments (Quoted) — —

TOTAL — —

NOTE 18INVENTORIES

A. Inventories as per books(Inventory Taken, Valued & Certified by the Management)

Raw Materials (Including in Transit - Raw Materials) — —Finished Products 1,321,534,613 1,017,347,275Bio-Compost 4,191,247 3,500,000Stock-in-Trade 41,724 11,313Work in Progress 50,690,276 76,964,571Packages 2,543,227 5,714,375Process Materials & Lubes 8,589,907 5,995,064Stores & Spares 21,664,851 26,222,647

TOTAL (A) 1,409,255,845 1,135,755,245

B. Provision for Gain/(Loss) on Inventory VariationFinished Products (7,917,204) (948,363)Work in Progress 11,041 —Stores & Spares (2,000,000) —

TOTAL (B) (9,906,163) (948,363)

C. Net InventoriesRaw Materials (Including in Transit - Raw Materials) — —Finished Products 1,313,617,409 1,016,398,912Bio-Compost 4,191,247 3,500,000Stock-in-Trade 41,724 11,313Work in Progress 50,701,317 76,964,571Packages 2,543,227 5,714,375Process Materials & Lubes 8,589,907 5,995,064Stores & Spares 19,664,851 26,222,647

TOTAL (A+B) 1,399,349,682 1,134,806,882

NOTE 19TRADE RECEIVABLES OVER SIX MONTHS (from the due date):

Secured Considered Good — —Un - Secured Considered Good — —Considered Doubtful — —Less: Provision for Doubtful Debts — —

TOTAL (A) — —

OthersSecured Considered Good — —Un - Secured Considered Good 110,607,656 1,629,372Considered Doubtful — —Less: Provision for Doubtful Debts — —

TOTAL (B) 110,607,656 1,629,372

TOTAL (A+B) 110,607,656 1,629,372

NOTE 20

33


As at 31.03.2016 As at 31.03.2015

Amount (`) Amount (`)CASH AND CASH EQUIVALENTS

i. Cash & Cash Equivalents

Cash on Hand 2,231 2,231

Cheques Awaiting Deposit — —

Balances With Scheduled Banks:

– On Current Accounts 3,326,206 35,234,870

– On Non-operative Current Accounts — —

ii. Other Bank Balances

With Scheduled Banks:

– On Fixed Deposit Accounts — —

– On Fixed Deposit Accounts (more than 12 months) — —

Earmarked for Unclaimed Dividend — —

TOTAL 3,328,437 35,237,101

NOTE 21SHORT-TERM LOANS & ADVANCESSecured, Considered Good

Advances recoverable in cash or in kind or for value to be received — —

Interest Accrued thereon — —

Unsecured

Considered Good

Capital Advances — —

Advances recoverable in cash or in kind or for value to be received — —

Balances with Excise, Customs, Port Trust etc. 76,887,059 107,733,198

Prepaid Expenses 6,309,066 5,527,957

Amounts Recoverable under Subsidy Schemes 93,519,526 79,236,254

Share Application Money Pending Allotment — —

Loans to Related Party — —

Employee Advance 434,042 326,090

Vendor Advance 3,354,169 9,041,254

LD Recoverable — —

Receivable from Farmer for Cane Seed 999,338 1,018,020

Other Accounts Receivable 2,872,000 2,872,000

Provision for Doubtful Receivables (416,059) (416,059)

Other Advances — —

TOTAL A 183,959,141 205,338,714

Unsecured, Considered Doubtful

Accounts Receivable & Deposits — —

Provision for Doubtful Receivables — —

TOTAL B — —

TOTAL (A+B) 183,959,141 205,338,714

NOTE 22OTHER CURRENT ASSETS

Interest Accrued on Bank Deposits/Investments — —

Rent Receivable — —

LD Recoverable — —

Other Recoverable 6,131,150 6,131,150

Instalment of BSEB Advance Receivable 11,346,923 11,346,923

TOTAL 17,478,073 17,478,073

NOTE 23


34


As at 31.03.2016 As at 31.03.2015

Amount (`) Amount (`)REVENUE FROM OPERATIONS

Gross Sales

Sale of Products 1,593,259,185 1,883,985,719

Sale of Services — —

Other Operating Income 89,145,234 93,075,663

Excise Duty (75,719,919) (103,311,294)

Recovery under Subsidy Schemes — 444,708

TOTAL 1,606,684,500 1,874,194,796

NOTE 24OTHER INCOME

Other Operating Revenue

Rent Recoveries 2,666,461 3,149,368

Interest on Working Capital Loan — —

Net Recovery from IPA — —

Miscellaneous Income 6,996,896 6,370,849

TOTAL A 9,663,357 9,520,217

Other Income

Interest On Deposits — —

Interest On Staff Loans — —

Interest On Customers’ Accounts — —

Interest (Gross) Long Term Investments — —

Interest (Gross) Current Investments — —

Interest (Gross) On Others 3,592 11,584

TOTAL B 3,592 11,584

TOTAL (A+B) 9,666,949 9,531,801

NOTE 25COST OF MATERIALS CONSUMED

Cane Purchase 1,224,267,127 1,463,156,024

Cane Transportation 26,518,344 17,253,384

ZDC Commission 2,450,346 2,893,941

Cane-Other Procurement cost 9,551,851 9,656,433

TOTAL 1,262,787,668 1,492,959,782

NOTE 26POWER & FUELS

Baggasse Cost ,Fuels & Handling 5,360,790 16,750,587

Rice Husk & Firewood 16,075,368 —

Power Import 13,442,435 35,564,569

Other Raw Material/Components — —

TOTAL 34,878,593 52,315,156

NOTE 27

35


As at 31.03.2016 As at 31.03.2015

Amount (`) Amount (`)CHANGES IN INVENTORIES OF FINISHED GOODSWORK-IN-PROGRESS & STOCK IN TRADEInventories at the end of the period (as per books)

Work in Progress 50,690,276 76,964,571

Finished Products 1,321,534,613 1,017,347,275

Bio Compost 4,191,247 3,500,000

Stock-In-Trade 41,724 11,313

TOTAL A 1,376,457,860 1,097,823,159

Inventories at the begining of the period

Work in Progress 76,964,571 139,315,125

Finished Products 1,017,347,275 944,368,880

Bio Compost 3,500,000 4,550,000

Stock-In-Trade 11,313 50,148

TOTAL B 1,097,823,159 1,088,284,153

Total (B-A) (278,634,701) (9,539,006)

NOTE 28EMPLOYEE BENEFITS EXPENSE

Salaries, Wages, Bonus, etc. 105,207,988 115,043,629

Employees Allowances & Other Benefits 26,835,488 29,457,347

Employees Recruitment & Training 712,998 38,818

Contribution to Provident Fund 7,023,539 7,356,985

Pension, Gratuity etc. 1,874,729 2,303,896

Employee Welfare Expenses — 355,050

TOTAL 141,654,742 154,555,725

NOTE 29FINANCE COSTS

(a) Interest Expense 473,675,933 435,995,940

(b) Other Borrowing Costs — —

(c) Applicable Net Gain/Loss onForeign Currency Transactions & Translation — —

TOTAL 473,675,933 435,995,940

NOTE 30OTHER EXPENSES

Ethanol Transportation 4,663,287 79,060,960

Repairs & Maintenance – Buildings 2,238,102 2,316,455

– Plant & Machinery 16,572,674 26,692,726

– Other Assets 1,184,052 5,637,988

Insurance 6,291,129 5,965,276

Rates & Taxes 775,504 500,848

Rent 524,400 524,420

Travelling & Conveyance 7,028,891 9,250,473

Contract Labour 4,124,181 12,725,582

Printing & Stationery 630,251 669,672


36


As at 31.03.2016 As at 31.03.2015


Electricity & Water 316,924 277,856

Advisor Fees — —

Cane Development Expense 1,127,543 1,180,054

Discount on Cogen 212,878 1,161,226

Other Supplies 13,770 436,507

Telephone & Fax 580,554 498,341

Postage & Telegram 183,240 220,298

Provision for Doubtful Debts(After Adjusting Provision no Longer Required) — 416,059

Other Manufacturing Expenses 3,270,012 7,672,598

Additional Depreciation (as per note no. 55) — 1,161,428

Security Charges 10,485,302 12,388,097

Bagasse Transportation & Handling — —

Advertisement & Publicity 89,914 135,537

Sundry Expenses & Charges (Not otherwise classified) 15,538,161 18,755,517

Consultancy & Technical Services 3,876,116 25,208,423

Auditor Expenses

– Statutory Audit Fees 150,000 120,000

– Other Services — —

– Other Expenses 27,431 76,306

Exchange Rate Variation (Net) — —

TOTAL 79,904,316 213,052,647

NOTE 31PRIOR PERIOD INCOME/(EXPENSES)

Freight Outward (7,877,640) (238,046)

TOTAL (7,877,640) (238,046)

NOTE 32PROVISION FOR GAIN/(LOSS)ON INVENTORY VARIATION (Refer Note no. 50)

Reversal of Last Year Provision on Inventory Variation — 9,649,027

Provision for Gain/(Loss) Current Year (8,957,800) (948,363)

TOTAL (8,957,800) 8,700,664

33 (a) Disclosures for a manufacturing company

Particulars 2015-16 2014-15

Provision for Provision forBook Stock Gain/(Loss) Net Inventory Book Stock Gain/(Loss) Net Inventory

Work In Progress ` ` ` ` ` `

Stock in Process — — — — — —

Sugar in Process — — — — — —

Rectified Spirit — — — 1,417,045 — 1,417,045

Molasses 50,690,275 11,041 50,701,316 75,547,525 — 75,547,525

Syrup — — — — — —

Total 50,690,275 11,041 50,701,316 76,964,570 — 76,964,570

(b) Raw Material

Raw Material Consumption Consumption(2015-16) (2014-15)

Particulars Quantity MT Amount ` Quantity MT Amount `

Purchase of Cane 479,877 1,224,267,127 588,619 1,463,156,024

Other costs incidental to cane purchase 38,520,541 29,803,758

Total 479,877 1,262,787,668 588,619 1,492,959,782

37

(c) Manufactured Goods

Particulars Opening Stock Production Sales Provision for Gain/(Loss) Closing Stock

Qty Amount ` Qty Qty Gross Turn Net Turn Qty Amount ` Qty Amount `over ` over `

Finished Goods

Sugar (MT)* 35,125 924,594,470 44,236 45,112 1,202,204,364 1,151,934,416 (230.00) (7,917,934.00) 33,903 1,139,816,091(22,769) (740,669,255) (46,211) (33,740) (976,907,460) (944,135,409) (37.40) (948,363) (35,125) (924,594,473)

Ethanol (KL) 2,200 91,804,439 8,534 4,920 234,537,391 209,087,420 0.03 730.00 5,814 173,801,317(5,273) (203,699,625) (13,117) (16,190) (706,673,423) (636,134,180) — — (2,200) (91,804,439)

Power (KWH) — — 48,628 28,794 152,609,260 152,609,260 — — — —— — (54,042) (31,185) (197,091,638) (197,091,638) — — — —

Note: Figures in brackets represent previous year figures.Note: Figures in brackets represent previous year figures except in column of “Provision for Gain/(loss) where loss of current year also isshown within brackets.*The sugar production figure includes 102.5 MT produced by reprocessing 153.40 MT of old stock. Closing stock of sugar has, therefore,been adjusted down for the same by 153.4 MT.

34. Deferred Tax Liability for the year ended March 31, 2016Sl.

No. Timing differences Amount (Rs) DTA @ 30.90% DTL @ 30.90%1 Differences in book & tax depreciation

WDV as per books of accounts as at March 31,2016 6,157,331,871Less : WDV as per Income Tax Act as at March 31,2016 3,114,166,717Difference (3,043,165,154) 940,338,033(If WDV as per IT is more than the WDV as per books thenDTA is created, otherwise DTL)

2 Expenditures covered by section 43 B which are outstanding as on31 March and not paid on or before the due date of filing of returnEmployer’s contribution to PF, superannuation fund, annuity fundor other fund for the welfare of the employeesLeave Encashment —Gratuity —BonusDebtorsRent equalisation reserveCENVATCustoms Duty

3 Losses available for set off 5,508,243,830 1,702,047,343Total as on March 31,2016 1,702,047,343 940,338,033Net Deferred tax asset as on March 31,2016 761,709,311 —Net Deferred tax asset as on March 31 of the previous year 983,169,005 —Amount to be debited / credited to statement of profit and loss — —

35. Segment ReportingCompany deals in the manufacturing and sales of Sugar, Ethanol and generation of Power. Business segment has been taken as PrimarySegment as three products are subject to different risks and rewards. There is no geographical segment as both the units operate in samelocation and business environment.

SI. No. Particulars Year Ended Year EndedMarch 31, 2016 March 31, 2015

1 Segment Revenue ` `a) Sugar 1,642,504,571 1,572,402,724b) Ethanol 216,332,937 645,821,521c) Co-Gen 548,959,714 578,264,080d) Unallocated 12,030,502 13,575,887Total 2,419,827,723 2,810,064,213Less: Inter Segment 803,476,274 926,337,616Net Segment Revenue 1,616,351,449 1,883,726,597

2 Segment Resultsa) Sugar (1,315,439) (361,175,269)b) Ethanol 8,107,273 74,192,892c) Co-Gen 302,883 (41,689,631)d) Unallocated (343,211) (43,027,606)Total 6,751,506 (371,699,614)Less: Interest 473,675,933 435,995,940Less: Other Unallocable Exp. 30,798,927 35,990,421Total Profit Before Tax (497,723,354) (843,685,975)



38


SI. No. Particulars Year Ended Year EndedMarch 31, 2016 March 31, 2015

3 Segment Assetsa) Sugar 3,841,140,489 3,770,113,509b) Ethanol 1,269,798,739 1,272,600,769c) Co-Gen 1,985,696,669 1,906,237,539d) Unallocated 1,066,255,571 1,008,675,727Total 8,162,891,468 7,957,627,543

4 Segment Liabilitya) Sugar 1,763,790,582 1,034,288,955b) Ethanol 387,049,800 633,764,851c) Co-Gen 103,100,935 119,905,094d) Unallocated 4,164,353,454 3,927,348,591Total 6,418,294,770 5,715,307,491

5 Capital Employed [Segment Assets-Segment Liability] 1,744,596,698 2,242,320,0526 Capital Expenditure incl. Change in CWIP

a) Sugar — —b) Ethanol — —c) Co-Gen — —d) Unallocated — —Total — —

7 Depreciationa) Sugar 113,148,212 114,425,526b) Ethanol 50,609,917 44,280,948c) Co-Gen 106,672,710 92,061,436d) Unallocated 9,321,042 33,111,372Total 279,751,882 283,879,282

8 Non Cash Expenditure Other Than Depreciation Nil Nil

Other Disclosures:2. Segments have been identified in line with the Accounting Standard - 17 “Segment Reporting” taking into account the organisation

structure as well as differing risks and returns.3. The Segment revenue, results, assets and liabilities include respective amounts identifiable to each of the segment and amounts allocated

on reasonable basis.4. The segment performance has been worked out after attributing the realisable value of inter segment transfer of material.5. Segment assets and liabilities represents assets and liabilities in respective segment. Assets and liabilities that cannot be allocated to

segment on reasonable basis have been disclosed as unallocable.6. Previous year figures have been regrouped/reclassified wherever necessary.

36. Lease Hold LandLeasehold Land is being amortized over a period of 60 years on SLM. Amortization value corresponding to pre-capitalization period hasbeen capitalized. ` 15,044,688/- being amortization for the year 2015-16 (` 15,044,688/- for 2014-15) is being charged to Statementof Profit & Loss. The details of leasehold land (location wise) is as follows-

Unit wise Leasehold Land Lauriya Unit Sugauli Unit TotalFarm Area (Acres) 138.79 199.45 338.24Plant Area (Acres) 56.65 89.92 146.57Total Leasehold Land (Acres) 195.44 289.37 484.81Total Lease Premium (`) 450,000,000 500,000,000 950,000,000Acquisition Cost (`) (Net of Scrap Sale) 408,443,952 494,237,312 902,681,264

37. Plant Capacity

Sl. No. Plant Name Capacity (Sugauli) Capacity (Lauirya)

1 Sugar Plant 3500 TCD 3500 TCD2 Ethanol Plant 60 KLPD 60 KLPD3 Co-gen Plant 20MW 20MW

38. Excise Claim with GOBClaim has been lodged with Government of Bihar for Reimbursement of excise duty on sugar sales. Considering the significant uncertaintyover its realization, it would be accounted on receipt of the amount from GoB.

39. Consumption of Raw MaterialsConsumption of bagasse generated from production is valued at ‘nil’ rate.

40. SLDCSLDC charges or charges towards State Load Despatch Centre have been mentioned in the PPA with BSEB but SLDC in Bihar is yet to beestablished. Hence there has been no demand for SLDC charges and no provision has been made in this regard.

41. Cane Development ExpenditureCane development expenditure is net of sale of seeds and fertilizers to the farmers of cane command area and own farm production ofSugauli&Lauriya Unit.

39

Notes Forming Part of the Financial Statements for the year 2015-16 (Contd.)42. Renewable Energy Certificates

RECs earned for the captive consumption of power generated from renewable sources are not valued as stock on hand on the BalanceSheet dates, since the cost of obtaining them is very negligible and their realization is not certain. The income from the sale of RECs isaccounted as revenue in the year of sales. The RECs on hand on 31st March 2016 was 18,666 units (PY 13,738 units) and their value atthe floor price of `1,500/- stood at `27,999,000/- (PY ` 20,607,000 /-).

43. Micro, Small & Medium CreditorsThe company has no sundry creditors falling under the Micro, Small &Medium Enterprises Development Act 2006.

44. Accounting of Cane SubsidyConsidering the difficult financial condition of the sugar mills, state governments are continuing the subsidy in the current year and arelikely to extend similar support in the future years too. Hence the subsidy for has been shown as ‘Other Operating Income’ under thehead Revenue from Operations.

45. CENVAT / Input Tax Credit:The CENVAT credit available for set-off against liability for excise duty has been shown separately from provisions made for excise dutyagainst inventory and have not been netted off against each other. The unadjusted CENVAT / ITC credit is shown under the head ShortTerm Loans and Advances to the extent of expected clearance in the next 12 months and the balance is shown under the head Long TermLoans and Advances. Provision for excise duty on closing stock is shown under the head Other Current Liability.CENVAT credit utilized during the year on sale of ethanol and sugar is ` 57,072,977/- (` 97,668,684/- in 2014-15) and Input Tax creditutilized on sale of ethanol is Nil (` 14,974,859/- in 2014-15).

46. Secured LoanAs announced by Government of India, a soft loan of ` 101,400,000/- was availed through SBI with interest subvention to the extent of10%. The amount is repayable at 12 months, i.e. September, 2016.Soft loan from announced by Government of Bihar to the extent of ` 164,800,000/- was also availed through SBI with interest subventionto the extent of 10%. The loan carries a moratorium of one year and then repayable in five annual instalments.Term loan of `3,088,000,000/- is from State Bank of India who have granted a two year moratorium on repayment and a further 12 yearrepayment period. The loan is repayable in 48 structured instalments starting from end of Q2 of FY 2016-17 carrying interest @ base rate+ 1.70% fixed spread. The Balance of Term loan as on 31.03.2016 was ` 3,088,000,000/- (as on 31.03.2015, ` 3,088,018,946/-)The term loan as well as the soft loans under GOI and GOB schemes are secured by equitable mortgage of Land, Building & FixedAssets.Working capital loan is from State Bank of India with interest @ base rate + 1.25% fixed spread, where the limit was increased from` 700,000,000/- to ` 1,000,000,000 during the year. The working capital loan is secured by hypothecation of Stocks & Debtors of thecompany. The Working Capital Loan balance as on 31.03.2016 was ` 93,78,72,469/- (` 641,832,431/- as on 31.03.2015)

47. Unsecured loanDuring the year, an unsecured bridge loan of ` 84 Cr has been obtained from the holding company to meet the requirements of paymentto cane growers and other working capital requirements. The loan carries interest at the average cost of capital of the holding companyand is repayable in 10 quarterly instalments starting from 30th June 2017.

48. Provision for Gratuity & Leave EncashmentProvision for gratuity of `5,600,691/- (PY- `4,190,171/-) has been made towards Retirement benefits for employees during the yearbased on Actuarial Valuation as of 31.3.2016. Provision for Leave Encashment of ` 1,399,508/- (PY – ` 1,435,299) has been made basedon Actuarial Valuation as of 31.03.2016.

49. Provision for Income TaxAs company has incurred losses during the current financial year, no provision for income tax has been made.

50. Provision for inventory variationA reversal of net provision of ` 8,700,664 relating to differences observed in physical verification of inventory during financial year2013-14 was made during the previous year. During this year, the company has conducted regular monthly inventory verification. As aresult, inventory variation to the extent of ` (69,57,800) has been observed which has been provided for on 31st March 2016. It wasfound that these errors have cropped up due to mistake in recording of manufacturing details in production records and the same relatesto the period relevant to season 2013-14. The said variation shall be dealt with properly after obtaining appropriate approvals.Another provision of ` 20,00,000/- (Pr. Year Nil) has been created this year to offset the diminution in value of stock of slow-moving/non-moving stores.

51. Penalty Recovered& Kept as Retention Money.An amount of `151,416,403/-was recovered through encashment of Bank Guarantees from one of the EPCC contractors. Out of this` 119,700,000/- istowards penalty for shortfall in performance and ` 31,716,403/- is towards additional retention against defectivesupplies. The contractor had invoked the Arbitration Clause and the Arbitrator has since been appointed. Hence this amount has beenaccounted as retention money in ‘Payable to Contractor / Vendor (Capital Assets)’ in Other Current Liabilities (Note no 10). WhileArbitration proceedings were in progress the party wanted an out court settlement. After series of discussions, there had been a mutualagreement on the issues and the amounts, which have been laid before the Arbitrator. Depending on the award being passed in thematter, necessary actions would be taken.

52. Liquidated Damages.Liquidated Damages recovered from some vendors have not been taken to income, pending approval of the Board in the matter.

53. Remaining Contracts/Contingent Liabilities & Management Remuneration etc.

Sl. Description 2015-16 2014-15No. Amount (`) Amount (`)

A. Estimated amount of contracts remaining to be executed on capital accountnot provided for. 3,717,232 7,77,75,396

B. Claims against the company not acknowledged as debts

Wrong disallowance of Input Tax Credit claimed on capital goods for 2010-11.Appeal lying before Sales Tax Tribunal, Bihar 69,844,013/- 69,844,013/-

Erroneous demand for 2010-11 of Entry Tax based on proportional amounts, ignoringthe actual tax paid 6,811,732/- 6,811,732/-


40


C. Other Contingent Liabilities

Corporate Guarantee given to the State Bank of India for Agriculture financingarrangement with farmers 20,000,000 20,000,000

ISGEC Heavy Engineeringltd claims against the three EPCC contracts which is beingreferred to arbitration as per the provisions of the contract 542,761,531 —

D. Managerial Remuneration

Salary & Allowances

(Chief Executive Officer on deputation from HPCL. The amount represents remunerationfrom HPCL and debited to the company. The salary includes salary, companycontribution to PF, LFA, Bonus, medical, gratuity & leave encashment ) 40,43,225 40,28,495

E. Expenditure in Foreign Currency Nil Nil

F. Earning in Foreign Currency Nil Nil

G. C I F Value of imports during the year Nil Nil

54. Related parties

Nature of relationship Name of related parties

Promoters Hindustan Petroleum Corporation Ltd

Key Management personnel ShriVinodNehete (CEO)

Relative of key Management personnel Nil

55. Details of transaction between the company and related party (HPCL)

Nature of transaction 2015-16 2014-15(Amount in `) (Amount in `)

Advance Taken against supplies of Ethanol — 746,500,000

Balance advance as on 31.03.2015 111,289,092 335,654,966

Interest Paid during the year to HPCL on Ethanol Advance 26,476,548 26,007,418

Sale of Ethanol to HPCL 246,093,100 740,188,160

Purchase of Lubes from HPCL 3,096,765 1,895,823

Purchase of Sulphur from HPCL 1,803,235 4,149,241

Other Expenditure incurred by HPCL on behalf of HBL — 941,564

Bridge Loan Taken from HPCL 840,000,000 —

Interest paid to HPCL on Bridge Loan 11,929,333 —

Manpower cost of employees on deputation and establishment expenses including Service Tax 15,007,101 14,889,469

56. Payments to auditors

Expenses incurred towards statutory auditor’s remuneration during the year as under:

2015-16 2014-15

As Auditors – Statutory audit ` 1,50,000/- ` 120,000/-

(a) For Taxation matters — —

(b) For Company law matters — —

(c) For management services — —

(d) For other services — —

(e) For expenses ` 27,431/- ` 76,306/-

57. Power Report

Description 2015-16 2014-15

Quantity in KWH Amount ` Quantity in KWH Amount `

Generation 48,628,000 257,728,400 54,062,000 281,663,020

Export 28,794,200 152,609,260 31,184,638 162,471,963

Captive Consumption 22,379,459 118,561,518 22,867,472 119,139,528

Import 2,545,670 13,442,434 6,062,523 31,585,745

Energy Loss 0 56 9,924 51,702

Total Consumption 22,379,459 118,561,518 28,929,995 150,725,274

i. Power export and import figures are as per joint meter reading with Bihar State Electricity Board as provided in Power PurchaseAgreement.

ii. Generation, consumption and captive consumption figures are as per company meter

iii. The figure stated as energy loss is a derived figure.

41





58. Independent DirectorsIn terms of the provisions of the Companies Act, 2013 the number of Independent Directors in the Board is required to be two (includinga woman director) but at present there are no independent directors on the Board. The Company has approached the administrativeministry for appointment of requisite number of Directors for compliance of the provisions of the Companies Act, 2013 and the same isawaited. Pending such appointment, the financial results have been reviewed and recommended to the Board by the Audit Committeeconsisting of no Independent Director.

59. Statement of change in EquitySection 2(40) of the Companies Act 2013 states that Financial Statement in relation to a company, includes inter alia, a statement ofchanges in equity, if applicable. There had been no increase or decrease in the equity or preference share capital of the company duringthe year and all other information required by Schedule III of the Companies Act 2013 has been disclosed in note 3 relating to the ShareCapital. As the format for the statement of change in equity has not yet been prescribed by the Act, the same has not been prepared butall the relevant information is covered by the disclosure in the note 3 as abovementioned.

60. Foreign Exchange Information

Sl. Particulars 2015-16 2014-15No.

a Value of imports calculated on CIF basis by the company during the financialyear in respect of

I. Raw Materials Nil Nil

II. Components and Spare Parts Nil Nil

III. Capital Good Nil Nil

b Expenditure in foreign currency during the financial year on account of royalty,know how, professional and consultation fees, interest, and other matters

c Total value of all imported raw materials, spare parts and components consumed during the financial year and the total value of indigenous raw materials, spare parts andcomponents similarly consumed and the percentage of each to the total consumption

Raw Materials

Imported in % Nil Nil

Imported in Value Nil Nil

Indigenous in % 100% 100%

Indigenous in Value 1262787668 1492959782

Spare Parts and components

Imported in % Nil Nil

Imported in Value Nil Nil

Indigenous in % 100% 100%

Indigenous in Value 37503824 61506480

d The amount remitted during the year in foreign currencies on account of dividendswith a specific mention of the total number of non-resident shareholders, the totalnumber of shares held by them on which the dividends were due and the year towhich the dividends related

e Earnings in foreign exchange classified under the following heads, namely

Export of goods calculated on FOB basis Nil Nil

Royalty, know how, professional and consultation fees Nil Nil

Interest and dividend Nil Nil

Other income indicating the nature thereof Nil Nil

61. Previous year figuresPrevious year figures have been rearranged / regrouped where ever necessary. Figures have been rounded off to nearest rupee.

62. Presentation of Negative AmountsUnless otherwise stated or the context requires it to be interpreted otherwise, figures in bracket in the financial statements representnegative amounts.


42

Cash Flow Statement for the Year Ended 31st March, 2016

Sl. PARTICULARS For the Year ended For the Year ended

No. 31st March, 2016 31st March, 2015


(A) CASH FLOW FROM OPERATING ACTIVITIES

1 NET PROFIT/(LOSS) BEFORE TAX AND EXTRAORDINARY ITEMS (497,723,354) (843,685,975)

(i) Depreciation 279,751,882 283,879,282

(ii) Provision for Deferred Tax Liability — —

(iii) Tax Payment of last year during Current Year — —

(iv) Interest Income — —

2 OPERATING PROFIT/(LOSS) BEFORE WORKING CAPITAL CHANGES (217,971,472) (559,806,693)

(a) Working Capital Changes —

(i) Decrease in Current Assets (Except Cash & Cash Equivalents) 21,379,573 —

(ii) Increase in Current Liabilities 394,972,284 445,543,445

(iii) Decrease in Current Liabilities (610,569,554) (523,810,119)

(iv) Increase in Current Assets (Except Cash & Cash Equivalents) (373,521,084) 35,744,584

(b) Changes in Long Term Provisions

Provision for Gratuity & Leave Encashment 1,258,874 2,305,482

3 CASH GENERATED FROM OPERATIONS BEFORE TAX (784,451,379) (600,023,301)

(i) Income Tax Paid — —

(ii) Tax Refund Received — —

4 CASH FLOW BEFORE EXTRAORDINARY ITEMS (784,451,379) (600,023,301)

Less: Extraordinary Items - Cane Subsidy from GOB — —

5 MISC EXPENDITURE (LAST YEAR P&L BALANCE) — —

NET CASH OUTFLOW FROM OPERATING ACTIVITIES AFTER TAX &EXTRAORDINARY ITEMS (784,451,379) (600,023,301)

(B) CASH FLOW FROM INVESTING ACTIVITIES

(i) Interest Received —

(ii) Purchase of Fixed Assets & Investments (95,671,983) 45,174,219

(iii) Capital Work in Progress - Project Management Expenses — 42,691,747

(iv) Inventory from Trial Production — —

NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES (95,671,983) 87,865,966

(C) CASH FLOW FROM FINANCING ACTIVITIES

(i) Proceeds from Issue of Shares —

(ii) Loan Taken 848,214,698 461,015,339

(iii) Advance against Equity pending Allotment — —

NET CASH INFLOW FROM FINACING ACTIVITIES 848,214,698 461,015,339

(D) NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS (A+B+C) (31,908,664) (51,141,996)

(E) Add: Cash & Cash Equivalent as at Beginning of the Year 35,237,101 86,379,097

(F) Cash & Cash Equivalent as at End of the Year 3,328,437 35,237,101




43

CORPORATE GOVERNANCE REPORTCorporate Governance is creation and enhancing long-term sustainable value for the stakeholders through ethically driven business process

At HPCL Biofuels Limited(HBL), it is imperative that Company affairs are managed in a fair and transparent manner. We, at HBL, ensures thatwe evolve and follow the Corporate Governance guidelines and best practices in line with our parent Company HPCL.

SHAREHOLDING

HPCL Biofuels Limited is wholly owned subsidiary company of Hindustan Petroleum Corporation Limited.

BOARD OF DIRECTORS

The Board of Directors (‘the Board’) is at the core of our Corporate Governance practice and oversees how the Management serves andprotects the long-term interests of all our stakeholders. We believe that an active and well-informed Board is necessary to ensure the higheststandards of Corporate Governance.

INFORMATION TO BOARD

The major decisions related to the operations of the Company, its business plans, financial affairs and results, indebtness issues, legal andCorporate Governance issues, growth strategies, restructuring plans, senior appointments etc. are placed before the Board and Board isauthorized to approve them, take decision in this regard.

COMPOSITION OF BOARD OF DIRECTORS

The Board of HPCL Biofuels Limited is presently consisting of three Directors as under:

1. Mr. Pushp Kumar Joshi- Chairman

2. Mr. B K Namdeo – Director

3. Mr. J Ramaswamy – Additional Director effective 01.10.2015

4. Mr. K V Rao – Director till 30.09.2015

All Directors are Non-executive Directors and are nominee of the holding Company HPCL.

Brief resumes of all Directors are furnished hereunder:

MR. P K JOSHI - CHAIRMAN

Mr. Pushp Kumar Joshi is a Bachelor of Law and an alumnus of XLRI, Jamshedpur. He joined HPCL in 1986 and since then he has held variouskey positions in Human Resources and Industrial Relations functions at HQO, Marketing and Refineries Divisions of HPCL. He has beenresponsible for the design and deployment of key HR policies and practices that are employee oriented and aim at building high performanceculture. He is currently Director Human Resources of HPCL since August, 2012 and he took charge as Director of the company effective 1stJuly, 2013. He was appointed as Chairman effective 14.11.2014.

MR. B K NAMDEO - DIRECTOR

Mr. B. K Namdeo is Director Refineries of HPCL. A Mechanical Engineer and a Master of Technology from IIT Bombay, he has over 32 yearsof experience in various refinery functions and has held key positions in Central Engineering (Refinery Projects), Operations, Projects andMaintenance of the Refineries. He joined the Board as Director effective 24.02.2014.

MR. J RAMASWAMY - ADDITIONAL DIRECTOR

Mr. J Ramaswamy is aDirector Finance of HPCL. He is a member of the Institute of Chartered Accountants of India (ICAI), he brings with himrich experience of over three decades in handling various challenging assignments in HPCL in the field of Corporate Finance, MarketingFinance, SBU Commercial, C&MD’s Office, Internal Audit, Vigilance, System & Procedures, and Refinery Finance.

Mr. J Ramaswamy has expertise in Financial Management, and is known for strengthening financial discipline, cost consciousness andcommercial acumen in the Corporation, which is of immense benefit to the organization. He is also credited with effective treasury managementin raising External Commercial Borrowing, Debentures and various other types of financial instruments at a very competitive interest rate ascompared with the Industry.

He has various academic distinctions to his credit, and is a key technical speaker in in-house capability building seminars and workshops. Hetook charge as Additional Director in HPCL Biofuels Ltd. effective 1st October 2015.

MR. K V RAO – DIRECTOR (TILL 30TH SEPTEMBER, 2015)

Mr. K V Rao is a member of the Institute of Chartered Accountants of India (ICAI), he took charge effective June, 2013 and continue asDirector till 30

th September, 2015. He was Director Finance of HPCL during his tenure as Director.

REMUNERATION TO DIRECTORS

Directors are part-time Directors and hence no remuneration or sitting fees is paid to any Directors for attending the Board meetings.

INDEPENDENT DIRECTORS & WOMEN DIRECTOR

Under the Companies Act 2013, there is a requirement for Independent Directors including a Women Director on the Board of the company.As the company is a wholly owned subsidiary of HPCL, the issue was taken up with HPCL for appointment of Independent Directors. Theyhave taken up with the Government of India for the appointments but as on date, these appointments have not been made.

CHIEF EXECUTIVE OFFICER

Day-to-day affairs of the Company are managed by Manager as per section 2(53) of the Companies Act, 2013 designated as Chief ExecutiveOfficer (CEO). Mr. Vinod Nehete is CEO of the Company till 3rd May, 2016. Mr. D K Saxena took charge as CEO & Manager effective 3rd May,2016.

DETAILS OF BOARD MEETINGS

During the financial year 2015-2016, Five (05) meetings of the Board of Directors took place, the time gap between two board meetings didnot exceed 120 days as prescribed under the Companies Act. The details of the Board Meetings as follows:


44

Meeting Date of Meeting Total Strength Directors Duration between thisNo. of the Board Present and next meeting (days)

47 07-05-2015 3 3 41

48 14-08-2015 3 2 98

49 26-09-2015 3 2 42

50 25-01-2016 3 3 120

51 08-02-2016 3 3 13

The overall attendance of Directors at the board meetings was 86%.

CONDUCT OF BOARD PROCEEDINGS

The day-to-day business is conducted by the CEO of the Company under the direction and the supervision of the Board. The Board holdsperiodic meetings to discuss the performance of the Company, provide directives, review the operations and other issues relating to theCompany.

BOARD COMMITTEES

The Board of the Company has the following Committees:

a) Audit Committee

b) Nomination & Remuneration Committee

a) Audit Committee Composition & Meetings

Audit Committee consists of three members, namely;

Mr. Pushp Kumar Joshi - Chairman

Mr. K V Rao – Member till 30.09.2015 and thereafter Mr. J Ramaswamy

and

Mr. B K Namdeo – Member

There were four audit committee meetings were held during the financial year as under;

Meeting No. Date of Audit Committee Total Strength Members Present

19 7th May, 2015 3 3

20 14th August, 2015 3 2

21 26th September, 2015 3 2

22 8th February, 2016 3 3

b) Nomination & Remuneration Committee (NRC)

NRC consists of three members, namely;

Mr. Pushp Kumar Joshi;

Mr. K V Rao till 30.09.2015 and thereafter Mr. J Ramaswamy

and

Mr. B K Namdeo

There was no meeting of NRC during the financial year 2015-16.

COMPLIANCE

The Company monitors the compliance of applicable laws, regulations and rules including the Companies Act and all applicable corporatelaws and places confirmation of such compliance before the Board at regular interval.

DETAILS OF ANNUAL GENERAL MEETINGS

Meeting No. Meeting Date Location

1 10th December, 2010 Patna

2 16th September, 2011 Patna

3 15th December, 2012 Patna

4 3rd December, 2013 Patna

5 19th August, 2014 Patna

6 21st September, 2015 Patna

For and on behalf of Board of Directors

Place: Mumbai P K JoshiDate : 02.08.2016 Chairman

HPCL BIOFUELS LIMITED(CIN: U24290BR2009GOI014927)

Registered Office: No. 271, Road No. 3E, Post Box No. 126 (Patna GPO),New Patliputra Colony, Patna - 800 013, Bihar. Email:[email protected]

Website – www.hpclbiofuels.co.in, phone – 0612-2260185

NOTICE

Notice is hereby given that the SEVENTH ANNUAL GENERAL MEETING OF HPCL BIOFUELS LIMITED will be held at its registeredoffice No. 271, Road No. 3E, Post Box No. 126 (Patna GPO), New Patliputra Colony, Patna - 800 013, Bihar on Monday,8th August, 2016 at 3.00 p.m. to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Financial Statements of the Company for the year ended 31st March, 2016, the Statement ofProfit and Loss and Cash Flow Statement for the year ended on that date and the Report of the Board of Directors and Auditorsthereon.

2. To appoint a Director in place of Mr. B K Namdeo (DIN: 06620620), who retires by rotation and being eligible offers himself forre-appointment.

SPECIAL BUSINESS:

3. To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148 and other applicable provisions, if any, of the Companies Act, 2013and the Rules made thereunder, the remuneration payable to M/s. R Nanabhoy & Co, Cost Accountants (Firm RegistrationNo. 7464), who was appointed by the Board of Directors of your Company as Cost Auditors to conduct the audit of the costrecords of the Company for the financial year ending on 31st March, 2017, amounting to ` 62,000 (Rupees Sixty-Two Thousandonly) as also the payment of service tax as applicable and re-imbursement of out of pocket expenses incurred in connection withthe aforesaid audit, be and is hereby approved.”

4. To consider and, if thought fit, to pass, the following resolution as an Ordinary Resolution:

“RESOLVED THAT Mr. J Ramaswamy (DIN: 00627920), who was appointed as an Additional Director with effect from1st October, 2015 in terms of Section 161 of the Companies Act, 2013 and who holds office up to the date of this Annual GeneralMeeting, and in respect of whom a notice has been received from a member in writing, under Section 160 of the CompaniesAct, 2013 along with requisite deposit, proposing his candidature for the office of a Director, be and is hereby appointed as adirector of the company liable to retire by rotation.

RESOLVED FURTHER THAT Company Secretary be and is hereby authorized to do all the acts, deeds and things which arenecessary to give effect to the above said resolution.”

By Order of the BoardFor HPCL Biofuels Ltd.

Heena ShahDated: 02.08.2016 Company Secretary

Registered Office:No. 271, Road No. 3EPost Box No. 126 (Patna GPO)New Patliputra ColonyPatna - 800 013, Bihar.

Notes:

1. (a) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING (“AGM”) IS ENTITLED TO APPOINTA PROXY OR PROXIES TO ATTEND AND, ON A POLL, TO VOTE ON HIS/HER BEHALF AND A PROXY NEED NOT BE AMEMBER. The instrument appointing the proxy, in order to be effective, must be deposited at the Company’s Registered Office,duly completed and signed, not less than 48 (Forty Eight) hours before the AGM. Proxies submitted on behalf of limited companies,etc. must be supported by appropriate resolutions or authority, as applicable. A person can act as a proxy on behalf of Membersnot exceeding 50 and holding in the aggregate not more than 10% of the total share capital of the Company carrying votingrights. In case a proxy is proposed to be appointed by a member holding more than 10% of the total share capital of the Companycarrying voting rights, then such proxy shall not act as a proxy for any other Member.

2. Corporate member intending to send their authorized representative to attend and vote on their behalf at the Meeting arerequested to send letter of authorization.

3. To support the Green Initiative, the Notice of the AGM along with the Annual Report for FY 2015-16 is being sent by electronicmode to all the Members, whose e-mail addresses are registered with us. The Notice of the AGM is also posted on the website ofthe Company www.hpclbiofuelslimited.co.in.

4. All documents referred to in the Notice are open for inspection at the Registered Office of the Company on all working daysduring business hours up to the date of meeting for inspection.

45

5. The Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013, which sets out details relating to SpecialBusiness at the meeting, is annexed hereto forms part of the Notice.

6. Route Map showing directions to reach to the Venue of AGM is attached.

7. At the ensuing AGM Mr. B K Namdeo, retire by rotation and being eligible, offer himself for appointment.

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013

Item No. 3

The Board, on the recommendation of the Audit Committee, has approved the appointment and remuneration of the Cost Auditors toconduct the audit of the cost records of the company for the financial year ending March 31, 2017 for a remuneration of ` 62,000/-(Rupees Sixty Two Thousand only).

In accordance with provisions of section 148 of the Companies Act, read with the Companies (Audit and Auditors) Rules, 2014, theremuneration payable to Cost Auditors has to be approved by the shareholders of the company.

Relevant documents in respect of the said item are open for inspection at the Registered Office of the Company on all working daysduring 2.30 p.m. to 4.00 p.m. up to the date of meeting.

Accordingly, the consent of the members is sought for passing the ordinary resolution as set out at item no. 3 of the notice for approvalof the remuneration payable to cost auditors for the financial year ending on March 31, 2017.

None of the Directors/KMP of the Company/ their relatives are, in any way, concerned or interested, financially or otherwise, in theresolution set out at item no.3 of the Notice.

The Board commends the ordinary resolution set out at in item no.3 of the notice for approval of shareholders.

Item No.4

Mr. J Ramaswamy was appointed as an Additional Director w.e.f. 1st October, 2015 in accordance with the provisions of Section 161of the Companies Act, 2013.

Pursuant to Section 161 of the Companies Act, 2013 the above director holds office up to the date of the ensuing Annual GeneralMeeting. In this regard the Company has received request in writing from a member of the company proposing Mr. J Ramaswamy'scandidature for appointment as Director of the Company in accordance with the provisions of Section 160 and all other applicableprovisions of the Companies Act, 2013. The Board feels that presence of Mr. J Ramaswamy on the Board is desirable and would bebeneficial to the company and hence recommend resolution No. 4 for adoption.

Relevant documents in respect of the said item are open for inspection at the Registered Office of the Company on all working daysduring 2.30 p.m. to 4.00 p.m. up to the date of meeting.

Mr. J Ramaswamy (aged 57 years) is a Director Finance of HPCL. He is a member of the Institute of Chartered Accountants of India(ICAI), he brings with him rich experience of over three decades in handling various challenging assignments in HPCL in the field ofCorporate Finance, Marketing Finance, SBU Commercial, C&MD’s Office, Internal Audit, Vigilance, System & Procedures, and RefineryFinance.

Mr. J Ramaswamy has expertise in Financial Management, and is known for strengthening financial discipline, cost consciousness andcommercial acumen in the Corporation, which is of immense benefit to the organization. He is also credited with effective treasurymanagement in raising External Commercial Borrowing, Debentures and various other types of financial instruments at a very competitiveinterest rate as compared with the Industry.

Mr. J Ramaswamy took charge as Additional Director in HPCL Biofuels Ltd. effective 1st October, 2015 and is nominee of HPCL tobe appointed as non-executive Director on the Board and do not draw any remuneration. Mr. J Ramaswamy, prior to his appointmentas Director, was not holding any shares in the Company. His tenure on the board will be as per further directives from holdingcompany HPCL.

None of the Directors, except Mr. J Ramaswamy and Key Managerial Personnel of the Company or their relatives are in any wayconcerned or interested, financially or otherwise, in the said resolution.

The Board recommends resolutions under Item No. 4 of the Notice to be passed as an ordinary resolution as set out in item No. 4 of thenotice for approval by members.

The Directors, therefore, recommend the Ordinary Resolution.By Order of the Board

For HPCL Biofuels Ltd.

Heena ShahDated: 02.08.2016 Company Secretary

Registered Office:No. 271, Road No. 3EPost Box No. 126(Patna GPO)New Patliputra ColonyPatna - 800 013, Bihar.

46


Registered Office: No. 271, Road No. 3E, Post Box No. 126 (Patna GPO),New Patliputra Colony, Patna - 800 013, Bihar. Email: infohpclbiofuels.co.in


FORM NO. MGT – 11

PROXY FORM

[Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies(Management and Administration) Rules, 2014]

7th ANNUAL GENERAL MEETING - Monday, 8th August, 2016 at 3.00 p.m.

Name of the Member(s) :

Registered Address :

E-mail ID :

Folio No. :

I/We, being the member(s) of shares of the above named Company, hereby appoint:

1. Name:

of E-mail ID

Address:

Signature: , or failing him / her

2. Name:

of E-mail ID

Address:


3. Name:

of E-mail ID

Address:


as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 7th Annual GeneralMeeting of the Company, to be held on Monday, the 8th August, 2016 at 03.00 p.m. at Registered Office No. 271, Road No. 3E,Post Box No. 126 (Patna GPO), New Patliputra Colony, Patna - 800 013, Bihar.

ResolutionResolutions

Optional*No. For Against1. Adoption of the Audited Financial Statements and Audited Consolidated Financial

Statements for the Financial Year ended March 31, 2016 together with the Reports ofthe Board of Directors’ and Auditors’ thereon

2. To re-appoint Mr. B. K. Namdeo (DIN: 06620620) as Director, who retires by rotationand being eligible offers himself for re-appointment.

3. Approval for payment of remuneration to Cost Auditors M/s. R Nanabhoy & Co. forthe year 2016-17

4. Appointment of Mr. J. Ramaswamy as Director of the Company.

Signed this day of August, 2016.

Signature of the Shareholder

Signature of Proxy holder(s)

Note: This form of Proxy in order to be effective, should be duly completed and deposited at the Registered Office of theCompany, not less than 48 hours before the commencement of the meeting.

AffixRevenueStampRe 1/-


Registered Office: No. 271, Road No. 3E, Post Box No. 126 (Patna GPO),New Patliputra Colony, Patna - 800 013, Bihar. Email: infohpclbiofuels.co.in


Attendance Slip for the 7th Annual General Meeting(to be handed over at the registration counter)

Folio No. :

Name :

Address :

No. of Shares :

I / We hereby record my / our presence at the 7th Annual General Meeting of the Company on Monday, the 8th August, 2016at 03.00 p.m. at Registered Office No. 271, Road No. 3E, Post Box No. 126 (Patna GPO), New Patliputra Colony,Patna - 800 013, Bihar.

First / Sole holder / Proxy Second / Sole holder / Proxy Third / Sole holder / Proxy

NOTE:Shareholders / Proxy holders are requested to bring the Attendance Slip with them when they come to the Meeting andhand it over at the gate after affixing their signature on it.

Route map to the venue of the Annual General Meeting on Monday, 8th August, 2016 at 3.00 p.m.

HPCL BIOFUELS LIMITEDRegistered Office: No. 271, Road No. 3E, Post Box No. 126 (Patna GPO),

New Patliputra Colony, Patna - 800 013, Bihar.

2015-16 (5.37 mb)

Documents