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HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013

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30th

ANNUAL REPORT2012 - 2013

HINDUSTAN FLUOROCARBONS LIMITED

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WORKS

Rudraram P O, Sangareddy Tq.Medak Dist – 502 329

Andhra Pradesh

REGISTERED OFFICE

303, Babukhan Estate,Basheerbagh,

Hyderabad – 500 001

AUDITORS

M/s S Daga & CoChartered Accountants,

403, Paigah PlazaBasheerbagh

Hyderabad - 500 063.

BANKERS

State Bank of Hyderabad,Gunfoundry, Hyderabad.

REGISTRARS & SHARE TRANSFER AGENTS

Share pro services (India) Pvt.Ltd.,13AB,Samhita Warehousing Complex,Second Floor, Sakinaka

Telephone Exchange Lane,Off Andheri Kurla Road, Sakinaka, Andheri(East), MUMBAI – 400 072.

CONTENTS

Notice 1

Chairman’s Speech 3

Directors’ Report 5

Auditors’ Report 12

C&AG Comments 34

Balance Sheet 35

Profit and Loss Account 36

Cash Flow Statement 37

Notes 38

BOARD OF DIRECTORSShri R N Madangeri HOCL NomineeChairman / Director (From 01.02.2008

Up to 30.04.2013)Shri J N Suryawanshi HOCL NomineeDirector (From 04.11.2011)Chairman (From 01.05.2013

Up to 12.08.2013)Shri V B Ramachandran Nair HOCL NomineeChairman (From 12.08.2013)Shri T S Gaikwad From 01.01.2008Managing DirectorDr.B.D.Kulkarni HOCL NomineeDirector From 30.01.2009Shri Arun Agarwal Govt. of India NomineeDirector (From 13.03.2012)Shri S V Kanaka Seshu APIDC NomineeDirector (From 18.10.2010)Shri. Suresh Kumar R HOCL NomineeDirector (From13.07.2012)

Shri S B Bhide HOCL NomineeDirector (07.09.2012)

Mrs. Rajani. K Company Secretary (From 19.05.2011)


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AUDIT COMMITTEE (A.C) OF THE BOARDDr. B. D. KULKARNI Director, ChairmanShri S. V. KANAKA SESHU Director, MemberShri ARUN AGARWAL Director, Member (From 13.04.2012)Shri J N SURYAWANSHI Director, Member (From 14.11.2011)Shri SURESH KUMAR R Director, Member (From 13.07.2012)Mrs. RAJANI. K, CS Secretary to the Committee (From 20.06.2011)

SHARE TRANSFER COMMITTEEShri R.N. MADANGERI Chairman, Chairman (Up to 30.04.2013)Shri J.N. SURYAWANSHI Director, Member (From 14.11.2011)

Chairman (From 23.05.2013)Shri V.B. RAMACHANDRAN NAIR Chairman, Chairman (From 12.08.2013)Shri T S GAIKWAD MD, Member (From 12.08.2011)Dr. B D KULKARNI Director, Member (From 12.08.2011)Shri S V KANAKA SESHU Director, Chairman (From 12.08.2011)Shri SURESH KUMAR R Director, Member (From 13.07.2012)Shri S B BHIDE Director, Member (From 07.09.2012)Mrs. RAJANI. K, CS Secretary to the Committee (From 20.06.2011)

MANAGEMENT COMMITTEEShri R. N. MADANGERI Chairman, Member (Up to 30.04.2013)Shri V.B. RAMACHANDRAN NAIR Chairman, Member (From 12.08.2013)Shri J N SURYAWANSHI Director, Member (From 23.05.2013)Shri ARUN AGARWAL Director, Member (From 13.04.2012)Shri T. S. GAIKWAD MD, Member (From 13.04.2012)Dr. B D KULKARNI Director, MemberMrs. RAJANI. K, CS Secretary to the Committee (From 20.06.2011)

REMUNERATION COMMITTEEDissolved in 158th Board Meeting vide item No.158/28 held on 13.07.2012.

RECEIVABLE COMMITTEEShri R. N. MADANGERI Chairman, Member (Up to 30.04.2013)Shri V.B. RAMACHANDRAN NAIR Chairman, Member (From 12.08.2013)Shri T. S. GAIKWAD MD, MemberShri J N SURYAWANSHI Director, Member (From 13.04.2012)Shri S V KANAKASESHU Director, Member (From 13.04.2012)Mrs. RAJANI. K, CS Secretary to the Committee (From 20.06.2011)

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENTCOMMITTEE (CSR @SD):Dr. B D KULKARNI Director, ChairmanShri J N SURYAWANSHI Director, MemberShri T S GAIKWAD Director, MemberShri SURESH KUMAR R Director, Member

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1


NOTICE

Notice is hereby given that the 30th Annual GeneralMeeting of the Members of HindustanFluorocarbons Limited will be held on Saturday,the 7th September, 2013 at 3.00 P.M. at Press Club,Deshodharaka Bhavan, Bashirbagh, Hyderabad- 500 001 to transact the following business .

ORDINARY BUSINESS:

1. To receive, consider and adopt the AuditedProfit and Loss Account for the year ended31st March, 2013 and Balance Sheet as onthat date together with reports of theDirectors’ and the Auditors’ thereon.

2. To appoint a Director in place of Shri. S VKanaka Seshu, who retires at this AnnualGeneral Meeting of the Company and eligiblefor re-appointment.

3. To appoint a Director in place of Shri. S BBhide, who retires at this Annual GeneralMeeting of the Company and eligible for re-appointment.

4. To appoint a Director in place of Shri. SureshKumar R, who retires at this Annual GeneralMeeting of the Company and eligible for re-appointment.

5. To appoint a Director in place of Shri. Arunagarwal, who retires at this Annual GeneralMeeting of the Company and eligible for re-appointment.

6. To appoint a Director in place of Dr. B DKulkarni, who retires at this Annual GeneralMeeting of the Company and eligible for re-appointment.

7. To appoint a Director in place of Shri.J NSuryawanshi, who retires at this AnnualGeneral Meeting of the Company and eligiblefor re-appointment.

8. To approve the remuneration of the StatutoryAuditors of the Company, appointed by theComptroller and Auditor General of India.

By order of the Board of DirectorsOf Hindustan Fluorocarbons Ltd.,

Sd/-(RAJANI.K)

COMPANY SECRETARY

PLACE: HYDERABADDATE : 12.08.2013

Regd.Office303, Babukhan Estate,Basheerbagh, Hyderabad – 500 001.


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NOTES:

1. A MEMBER ENTITLED TO ATTEND AND

VOTE AT THE MEETING IS ENTITLED TO

APPOINT A PROXY OR PROXIES TO

ATTEND AND VOTE INSTEAD OF

HIMSELF ON A POLL AND THAT A PROXY

NEED NOT BE A MEMBER OF THE

COMPANY. PROXIES, IN ORDER TO BE

EFFECTIVE MUST BE LODGED AT THE

REGISTERED OFFICE OF THE COMPANY

NOT LESS THAN 48 HRS. BEFORE THE

MEETING.

2. Members/Proxies should bring their

attendance slip duly filled in at the

meeting.

3. The Register of Members and Shares

Transfer Books of the company will

remain closed from Friday the 30th

August, 2013 to Saturday the 7th

September, 2013 (both days inclusive).

4. Members are requested to intimate

immediately any change in their

addresses registered with the company

to the R&T Agents at their office address.

5. Members, who hold shares in the

dematerialized form, are requested to

bring their depository account number for

identification.

6. Members are requested to bring their

copy of Annual Report at the meeting, as

the same will not be distributed again as

a measure of economy.

7. The Ministry of Corporate Affairs has

taken a “Green Initiative in Corporate

Governance” by allowing paperless

compliances by the Companies and

issued a circular on 21st April, 2011.

Section 53 of the Companies Act, 1956

provides service of documents under

“Certificate of Posting” as one of the

accepted mode of service where as the

Department of Posts has recently

discontinued the postal facility under

“Certificate of Posting” vide Letter Dated

23.02.2011, the Information Technology

Act, 2000 also permits service of

documents etc., in electronic mode.

Hence, the service of documents of a

company can be made through Electronic

mode. So, we request all the members to

register their email id’s by sending email

along with names, DP id’s & Folio Number

to the following Mail ID:

[email protected]

By order of the Board of Directorsof Hindustan Fluorocarbons Ltd.,

Sd/-(RAJANI.K)

COMPANY SECRETARY


Regd.Office303, Babukhan Estate,Basheerbagh, Hyderabad – 500 001.

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CHAIRMAN’S SPEECH

Dear Shareholders,

I extend my hearty welcome to you to this30th Annual General Meeting of your Company. Iam sure, you must have received The Directors’Report and Audited Annual Accounts of theCompany for the year ended 31st March, 2013 andwith your permission I take them as read.

I now proceed to share with you briefly theperformance of the company and our activities.

1. OPERATIONS AND OVERALLPERFORMANCE

Your Company has made Net Profit of Rs.94.88 lacs from operations as against thenet profit of Rs.252.24 lacs of the previousyear. During the year, the sales turnover (net)was Rs.4080.31 lacs as against Rs.6282.93lacs in the previous year. During the yearunder report production of PTFE was 154.78Metric Tones as against 143.83 Metric

Tones in the previous year. During the year,244.73 Metric Tones of CFM-22 was sold inthe market against 291.77 Metric Tones inthe previous year and balance quantity wasused as feed stock to manufacture variousproducts including Fluoro SpecialtyChemicals. Accordingly, during the year156.14 Metric Tones of Tetra Fluoro Etylene(TFE) was used to manufacture TFE-ETHER. Quality of all company‘s productscontinued to be well accepted by ourcustomers. Company has achieved 82%capacity utilization for CFM-22 for this year.

CLEAN DEVELOPMENT MECHANISM(CDM) PROJECT:

Company has received payment of secondand Third issuance during the financial year.Main customer for CERs was EuropeanUnion, but due to various reasons they havebanned the trading of CERs generated from


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R-23 Project due to this ban CERs priceshave come down drastically, hence it is noteconomically viable to generate CERs fromR-23 Project.

2. FUTURE OUTLOOK.DIVERSIFICATION:

In accordance with long term strategy ofdiversifying into Fluoro speciality chemicals.the company has successfully commer-cialized TFE-ETHER. Commercialization ofnew product is in process.

3. SAFETY, ENVIRONMENT & ISOCERTIFICATION

The company continued to lay emphasis onthe consciousness about safety among theemployees and periodic reviews of safetymeasures have enabled the company onceagain to maintain safe operations during theyear.

Management is maintaining strictly all therequired environmental norms and qualitysystems as per ISO 9001:2008

4 INDUSTRIAL RELATIONS

Employee relations continued to be cordialthrough out the year. Company continuedto follow Govt. policy of reservation inrecruitment of SC/ST/OBC. During the yearthere were no strikes or lock outs affectingthe production/profitability.

5. CORPORATE GOVERNANCE

Your Company lays emphasis in conductingits affairs within the frame work of policies

and guidelines set by the Government in atransparent manner. It is the endeavour ofthe Company to build trust between shareholders, Employees and Customers basedon the basic principles of CorporateGovernance. The detailed Report on theCorporate Governance as well asManagement Discussion Analysis Report isenclosed as a part of the Directors’ Report.This Report analyses in brief the potentialitiesof the Company as well as the focus of theCompany’s business

6. ACKNOWLEDGEMENTS :

I place on record my appreciation andgratitude to all the employees and others whohad extended their support and co-operationduring the year to achieve the targeted goalsof the Company. In particular I am gratefulto various officials of the Govt. especiallyfrom the Govt. of India, the Ministry ofChemicals & Fertilizers, Finance Ministry,Ministry of Environment & Forestry, PromoterCompany i.e. HOCL and Board Members. Iwould like to convey my sincere appreciationto our valued customers, suppliers, StatutoryBodies, Investors, Banks & FIs etc for thecontinued support. In conclusion I am fullyconfident that with the continued supportfrom all of you my urge to place yourCompany in the pedestal of success will notbe unrealistic.

Thank you all once again.

Sd/-(V B RAMACHANDRAN NAIR)

Chairman

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DIRECTORS’ REPORT

Your Directors are glad to present the 30th Annual Report of the company together with Audited AnnualAccounts for the year ended 31st March, 2013.

FINANCIAL RESULTS:[Section 217(1)(a)]The financial performance of the Company for the year ended 31st March, 2013 is summarized below:

(Rs. in lacs)Particulars Financial Year Financial Year

2012-13 2011-2012Revenue from operations (including net sales) 4447.51 6758.16Sales Turnover(Net) 4080.31 6282.93Gross Profit / (Loss) for the year 369.89 497.55Less: Interest & Financing Charges 105.81 128.69Cash Profit / (Loss) 264.08 368.86Less: Depreciation 167.88 155.19Profit / (Loss) for the year 96.20 213.67Add: Prior Period Adjustments 1.32 (38.58)Net Profit (Loss) 94.88 252.25

RESERVES: [Section 217(1)(b)]: Nil

DIVIDEND: [Section 217(1)(c)]

In view of the accumulated losses at the end ofthe Financial Year 2012-13 are carried forward,your Directors do not recommend any dividendon equity shares for the year ended 31.03.2013.

OPERATION AND OVERALL PRODUCTIONAND MARKETING PERFORMANCE:

During the year, the sales turnover (net) wasRs.4080.31 lacs as against Rs.6282.93 lacs inthe previous year. During the year under reportproduction of PTFE was 154.78 Metric Tones asagainst 143.83 Metric Tones in the previous year.During the year, 244.73 Metric Tones of CFM-22was sold in the market against 291.77 MetricTones in the previous year and balance quantitywas used as feed stock to manufacture variousproducts including Fluoro Specialty Chemicals.Accordingly, during the year 156.14 Metric Tonesof Tetra Fluoro Etylene (TFE) was used tomanufacture TFE-ETHER. Quality of allcompany‘s products continued to be wellaccepted by our customers. Company hasachieved 82% capacity utilization for CFM-22for this year.

CLEAN DEVELOPMENT MECHANISM (CDM):

Company has received payment of second andThird issuance during the financial year. Maincustomer for CERs was European Union, but dueto various reasons they have banned the tradingof CERs generated from R-23 Project due to thisban CERs prices has come down drastically,hence it is not economically viable to generateCER from R-23 Project.

THE RIGHT TO INFORMATION ACT, 2005

In consonance with the provisions of the Right toinformation Act, 2005, Company has appointedAppellate Authorities/ Public Information officersat all the units/ offices of the company to respondeffectively to the request of the applicants underthe acts in synchronization with the direction ofCentral Information Commission(CIC), forpromotion of Institutional transparency with in thepublic authority through proactive and effectiveimplementation of section 4 of the RTI Acts, 2005,the company has also appointed a transparencyofficer that company has created necessarymechanism to meet the objective to bring outtransparency in the functioning of organization asenvisaged by RTI Act.


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productivity, be it in a personal safety, processsafety, environment safety or product stewardshipand allocated adequate resources of men, machine,money, time and energy to maintain the standardsthus performance during the year is very good.

The Company continued to maintain good safetyrecord without any major accident of fire. Thefinancial year 2012-13 was a zero accident year.

A Mock drill is a practice which trains an individualabout the course of action to be taken in case ofreal emergency occurs. This is one of the mosteffective technique to train, aware & alert peoplein a process plant location.

A surprise Mock drill was conducted at site toanalyze the capacities of Plant, Equipmentoperating & employees skills towards Emergencypreparedness & response.

We are conducting Emergency Mock drill oftenlyor once in a year in presence of external Authorityi.e. Director of Factories AP & higher managementof HFL in compliance with ISO 2000-2001.

BOARD OF DIRECTORS

Shri J N Suryawanshi, Nominee Director (HOCL)was appointed as Nominee Director with effectfrom 04.11.2011.

Shri Sanjay Bansal, Nominee Director (Govt)ceased to be Director of the Company with effectfrom 13.03.2012.and in his place Shri ArunAgarwal, appointed as Nominee Director witheffect from 13.03.2012.

Shri. Suresh Kumar R, Nominee Director (HOCL)was appointed as Nominee Director with effectfrom 13.07.2012.

Shri. S B Bhide, Nominee Director (HOCL) wasappointed as Nominee Director with effect from07.09.2012.

Shri. V B Ramachandran Nair, Chairman andManaging Director was appointed as Chairmanwith effect from 12.08.2013.

Six Directors viz. Shri. S V Kanaka SeshuNominee Director (APIDC), Dr.B D Kulkarni,

CORPORATE SOCIAL RESPONSIBILITY:

Recognizing the obligation to the society both inthe areas of environment protection and socialdevelopment, company has taken initiativestowards implementing welfare schemes foruplifting the quality of living of the communitysurrounding the area around the factory. Companyis providing water and first aid facilities in nearbyvillages and also giving aid to schools by way ofpaying salaries to two Vidya Volunteers, providingamenities such as tables, chairs, toilets, Drinkingwater, by making approach roads to the school etc.,

Medical camps were conducted in peripheralareas near to Rudram and its surrounding villages.

DIVERSIFICATION INTO FLUORO SPECIALITYCHEMICALS:

In accordance with long term strategy of diversify-ing into Fluoro speciality chemicals. the companyhas successfully commercialized TFE-ETHER.Commercialization of new product is in process.

HEALTH AND ENVIRONMENT:

The management has taken the greatresponsibilities for continuous monitoring andprotecting the health and environment as perstatutory compliance. The environment ismaintained clean as per standard emissionsnorms and with respect to noise pollution normsprescribed by Central Pollution Control Board andunder guidelines of Ministry of Environment andForests, Govt. of India.

The health record of employees working in produc-tion Division is maintained in the Health Registerin Form 7 and these employees are certified forthe fitness to work in hazardous process by thecertifying Surgeon for the year 2013 as perstatutory requirement of Director of IndustriesHealth and Safety, Govt. of Andhra Pradesh.

FIRE & SAFETY PERFORMANCE:The Company pays special attention to ensuresafety of the factory and workers employed therein.

The Company accords the same priority attentionto safety aspects as it does to production and

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HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013implementing reservation policies of GOI for SCs/STs/OBCs/Persons with disabilities. Representa-tives of SCs/ STs Categories are associated inRecruitment of Departmental PromotionCommittees. A statement showing representationof employees belonging to Scheduled Castes/Scheduled Tribes/ Backward classes /Minoritiescategories is appended as Annexure-II to thisreport.

PARTICULARS OF EMPLOYEES:

None of the employees of the company is drawingremuneration requiring disclosure pursuant toSection 217(2A) of Companies Act, 1956 read withCompanies (Particulars of Employees) Rules,1975.

VIGILANCE

With the approval of the Ministry, an Officer of thecompany has been nominated as “VigilanceOfficer” (Part time) from amongst the Officers ofthe Company to take care of Vigilance functions.Vigilance activities have mainly been directed tocheck the lacunae in the existing systems andprocedures through periodic checks. Theinstructions of the Central Vigilance Commissionreceived from time to time have been implementedto strengthen the vigilance machinery in thecompany.

AUDITORS:The Statutory Audit of your Company was conduc-ted by M/s.S Daga & Co Chartered Accountants,who were appointed as Statutory Auditors for theFinancial year 2012-13 by Comptroller and AuditorGeneral of India (C &AG) as per Section 619(2)of the Companies Act, 1956, Auditors’ Report onthe Accounts of the Company for the financial yearended 31st March, 2013 is at Annexure- III.

The Replies of the Management /Board ofDirectors on the Auditors Qualifications in theirReport are furnished in Annexure – IV.

The comments of the Comptroller and AuditorGeneral of India u/s 619(4) of the Companies Act,1956 on the Accounts of the company for the year2012-13 has been annexed to the Annual Report

Nominee Director (HOCL), Shri. S B Bhide,Nominee Director (HOCL), Shri. Suresh KumarR, Nominee Director (HOCL) Shri. J NSurawanshi, HOCL Nominee Director and Shri.Arun Agarwal, Nominee Director (GOVT) is duefor retirement by rotation at the ensuing 30h AnnualGeneral Meeting of the Company and eligible forre-appointment.

IMPLMENTATION OF OFFCIAL LANGUAGEPOLICY:

During the year under report, your Companycontinued to Promote Hindi as Official Languagein day to day working in line with the Governmentpolicies for its intensive and extensive efforts forprogressive use of the official language. OfficialLanguage Implementation Cell of the Companycontinued to function effectively.

ISO CERTIFICATION:

Company’s quality management system isaccredited has an ISO 9001:2008.

CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION, FOREIGN EXCHANGEEARNINGS AND OUTGO:Information in accordance with the provisionsrequired to be disclosed under Section 217(1)(e)of the Companies Act, 1956 read with theCompanies (Disclosures of Particulars in theReport of Board of Directors) Rules, 1988Regarding Conservation of energy, TechnologyAbsorption and Foreign Exchange Earnings andoutgo are given at Annexure I, Form A to thisReport.

RESERCH & DEVELOPMENT:

The Company is continuously conducting theResearch and Development to deliver goodsthrough innovative development; it is activelyinvolved in collaborative Research Program withVikram Sarabhai Space Centre (VSSC) & DefenseResearch and Development Organization (DRDO)are given at Annexure I, Form B to this Report.

INDUSTRIAL RELATIONSEmployee relations continued to be cordialthroughout the year. Your Company has been


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MANAGEMENT DISCUSSION AND ANALYSISREPORT:

In accordance with the Listing Agreement, theManagement discussion and analysis report isannexed hereto in Annexure – V and forms partof the Directors’ Report.

RISK MANAGEMENTIn pursuance to comply with Clause 49(IV) (C) ofthe Listing Agreement and Clause 7.3 of the DPEGuidelines on Corporate Governance for CPSEs,The Risk Management process includes RiskIdentification, Risk assessment, Risk evaluation,categorization, Risks treatment plan for mitigationof risks and escalation/ reporting of risks to Board.Some of the risks and concerns, are as follows:

- Obsolete Technology and uneconomicalplant size.

- Manpower cost is high.

- Investment is required to upgrade thetechnology of old plant to reduce the cost ofproduction so as to remain competitive.

- PTFE Prices are continuously reducing.

CORPORATE GOVERNANCE

The Company has complied with the variousrequirements of Corporate Governance. Thedetails in this regard form part of this report inAnnexure – VI.

COMPLIANCE OF DPE GUIDELINES &POLICIES:The Guidelines & policies issued by theDepartment of Public Enterprises from time to timeare being complied with and implemented with theapproval of the Board of Directors/ CompetentAuthority.

TRAINING OF BOARD OF DIRECTORS:

The company furnishes set of documents andbooklets to the Directors on their joining the Board.This includes important data about theperformance of the Company, Memorandum &Articles of Association, Corporate Governanceguidelines, Delegation of powers, Product linebrochures etc. A copy of the monograph on

for the period 2012-13 and forms part of the AnnualReport.

Pursuant to the directions of Central Governmentfor audit of Cost Accounts, your company hasappointed M/s. DZR & Co as cost auditors for theyear ended 31st March, 2013 as prescribed underthe Cost Accounting Records (Reports) Rules,2011, the cost accounting records are beingmaintained by all the units of the company. TheCost Auditor Reports for the year financial year2011-12 were filed on 18/01/2013.

LEGAL COMPLAINCE

The Company has complied with all the legalprovisions effectively. Although it has filed twopetition to Company Law Board during the financialyear 2011-12 regarding condolation of delay infiling of satisfaction of charge documents ofIndustrial Finance Corporation of India and of LifeInsurance Corporation of India, with the Registrarof Companies.

INSURANCE:

All properties and insurable interest of thecompany including building, plant and machineryand goods are adequately insured. As requiredunder Public Liability Insurance Act, 1991, thecompany has taken necessary insurance cover.

TRADING AND DEMAT FACILITIES FORSHARES:

The company shares are listed in Bombay StockExchange (BSE). Company got ISIN No.INE806J01013 and demat facilities with CentralDepository Services (India) Limited, (CDSL) andwith National Securities Depository Limited(NSDL) for the equity shares of the company.

83.71% of the Share Capital of the Company hasbeen Dematerialized the shares, the Companyhas been Dematerialized as on 31st March, 2013-total accounts Dematerialized is 1578 involving16407250 shares (which constitutes 83.71% ofthe share capital) .

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HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013b. That they have selected such accounting

policies and applied them consistently andmade judgments and estimates that arereasonable and prudent so as to give a trueand fair view of the state of affairs of thecompany for the period.

c. That they have taken proper and sufficientcare of the maintenance of adequateaccounting records in accordance with theprovisions of the companies Act, 1956 forsafe guarding the assets of the company andfor preventing and detecting fraud and otherirregularities.

d. That they have prepared the annual accountson a going concern basis.

ACKNOWLEDGEMENTS

I place on record my appreciation and gratitude toall the employees and others who had extendedtheir support and co-operation during the year toachieve the targeted goals of the Company. Inparticular I am grateful to various officials of theGovt. especially from the Govt. of India, theMinistry of Chemicals & Fertilizers, FinanceMinistry, Ministry of Environment & Forestry,Promoter Company i.e. HOCL and BoardMembers. I would like to convey my sincereappreciation to our valued customers, suppliers,Statutory Bodies, Investors, Banks & FIs etc forthe continued support. In conclusion I am fullyconfident that with the continued support from allof you my urge to place your Company in thepedestal of success will not be unrealistic.

For and on behalf of the Board of Directors

By order of the Board of Directorsof Hindustan Fluorocarbons Ltd.,

Sd/-(V.B.RAMACHANDRAN NAIR)

CHAIRMAN


position, duties and liabilities of Directors is alsocirculated among the Directors.

WHISTLE BLOWER POLICY:

Your company released in transparency onpropriety in its business dealings. To take thisobjective further, company has put in place aWhistle Blower Policy providing for the mechanismto the employees and other stakeholders to reporttransparency in the above unethical behaviour,actual or suspected fraud or violation of Code ofConduct or Ethics Policy. The disclosures underthe Policy are to be made to Ethics CommitteeChaired by Chief Financial Officer (CFO). In caseof conflict of interest, the whistle blower can directlyapproach the Chairman of the Audit Committee.The policy provides for adequate safeguardsagainst victimization of employees who avail of themechanism. During the year, no disclosures havebeen received under the whistle blower mechanism.

CODE OF CONDUCT:In line with the requirements of Clause 49 of ListingAgreement, the Board Members and SeniorManagement personnel have affirmed compliancewith the code of conduct for the financial yearended 31st March, 2013.

The Company has adopted “Code of Conduct andEthics” for the Directors and Senior Executives ofthe Company. The object is to conduct theCompany’s business ethically and withresponsibility, integrity, fairness, transparency andhonesty. The code is available on Company’swebsite www.hfl.co.in. All directors and seniormanagement personnel have compliedcompliance with the Code of Conduct and ethicsas on 31st March, 2013.

RESPONSIBILITY STATEMENT:The Directors confirm:a. That in the preparation of the annual

accounts, the applicable accountingstandards have been followed and that nomaterial departures have been made fromthe same.


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Annexure-I to Directors’ Report

ENERGY CONSERVATION MEASURES TAKEN:The following Energy conservation measures were taken in the financial year 2012-13:

SI.No. PARTICULARS Investment Savings Per Annum

1 Improvement in power factor Nil Rs.8.0 lakhsfrom 0.98 to 0.998

2. Replacement of 20 numbers of Rs. 0.12 lakhs Rs. 0.66 lakhs100W GLS lamps with 20W CFL lampsand Installation of 2X28 W T5 seriestube light fittings

3 Switching of one transformer Nil 1.1 lakhs

4. By DCS systems taken in CFM and 10.0 lakhs 18.0 lakhsTFE plants new air compressor300CFMcapacity in place of525CFM capacity

FUTURE PLANS:Future plans for energy conservation for the financial year 2013-14 is as follows:SI No PARTICULARS Expected Expected Savings

Investment Per Annum1 Replacement of 2X28 W T5 series Rs.1 lakhs Rs.0.5 lakhs per anum

tube light fittings in place of 2X40Wtube light fittings

2 New 2.0T capacity Briquittee/coal Rs. 40.0 lakhs Rs.140 lakhsfired boiler

3 Modifications in cooling water distribution. Rs. 2 lakhs Rs.4 lakhs4 Condensate recovery Rs. 4 Lakhs Rs.6 lakhs

FORM A

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGYTECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNIGS AND OUTGO:A. POWER AND FUEL CONSUMPTION CURRENT YEAR PREVIOUS YEAR1. Electricitya) Purchased units 8309655 kwh 8216040 KWH

TOTAL AMOUNT Rs. 45401239.49 Rs.33112605.54Rate/Unit Rs. 5.46 Rs.4.03

b) Own Generation

i) Through Diesel Generator 59790 KWH 28270 KWHUnits per Liter of Diesel Oil 2.43 KWH 2.13 KWHCost per unit Rs.17.91 Rs.18.58

ii) Through Steam Turbine - -Generator Units - -

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2. FURNACE OILQuantity 565.75 MT 564.08 MTTotal Amount Rs.29413947.88 Rs. 26337768.64Average rate per KL Rs. 51991.07 Rs.46691.54

B. CONSUMPTION PER UNIT OF PRODUCTIONPRODUCT: PTFE (MT) 154.681 139.196Electricity per MT of PTFE Rs. 16283.80 Rs.13098

Furnace oil per MT of PTFE 3.657 KL 4.05 KLHSD rate per KL Rs. 43535.45 Rs.39503.00

Technology Absorption Nil Nil

Foreign Exchange earnings and outgo Rs.573.40 lacs Rs.1746.76 lacs

FORM B

1. SPECIFIC AREAS IN WHICH R&D WORK CARRIED OUT BY THE COMPANY

i. Bench size auto clave procured. Experiments completed and established the process parametersfor FEP emulsion grade on bench size reactor.

ii. Literature survey for development of suspension grade FEP resin and R&D experiments are inprogress.

2. BENIFIT DERIVED AS A RESULT OF THE ABOVE R&D

Company is in process of commercializing the product FEP.

3. FUTURE PLANSa. Development of Fluoro elastomer for TBRL, Chandigarhb. Modification study to be conducted to reduce the specific consumptionc. Separation of HFP from vent gasd. Recovery of PFOA from waste process water.e. Trials for development of fluoro specialty chemicals.

Annexure-II to Directors’ Report

Consolidated report as on 31-03-2013 (SC/ST/OBC/WOMEN/Minority)

Group Total Strength SC ST OBC Minority WOMEN

A 82 07 01 16 02 02

B - - - - - -

C 49 08 05 15 01 01

D 26 06 13 07 - -

TOTAL 157 21 19 38 03 03


12

ANNEXURE-III TO THE DIRECTORS’ REPORTINDEPENDENT AUDITORS’ REPORT

ToThe Members,Hindustan Fluorocarbons Limited.

Report on the Financial StatementsWe have audited the accompanying financialstatements of HINDUSTAN FLUOROCARBONSLIMITED (“the Company”), which comprise theBalance Sheet as at March 31, 2013, and theStatement of Profit and Loss and Cash FlowStatement for the year then ended, and a summaryof significant accounting policies and otherexplanatory information.

Management’s Responsibility for the FinancialStatementsManagement is responsible for the preparation ofthese financial statements that give a true and fairview of the financial position, financialperformance and cash flows of the Company inaccordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 ofthe Companies Act, 1956 (“the Act”). Thisresponsibility includes the design, implementationand maintenance of internal control relevant to thepreparation and presentation of thefinancial statements that give a true and fair viewand are free from material misstatement, whetherdue to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on thesefinancial statements based on our audit. Weconducted our audit in accordance with theStandards on Auditing issued by the Institute ofChartered Accountants of India. Those Standardsrequire that we comply with ethical requirementsand plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free from material misstatement.An audit involves performing procedures to obtainaudit evidence about the amounts and disclosuresin the financial statements. The proceduresselected depend on the auditor’s judgement,including the assessment of the risks of materialmisstatement of the financial statements, whetherdue to fraud or error. In making those risk

assessments, the auditor considers internalcontrol relevant to the Company’s preparation andfair presentation of the financial statements inorder to design audit procedures that areappropriate in the circumstances. An audit alsoincludes evaluating the appropriateness ofaccounting policies used and the reasonablenessof the accounting estimates made bymanagement, as well as evaluating the overallpresentation of the financial statements.

We believe that, the audit evidence we haveobtained is sufficient and appropriate to provide abasis for our audit opinion.

Basis for Qualified Opinion(I) The Company had incurred Rs.284.14 lakhs

and Rs. 17.83 lakhs as refurbishmentexpenditure on Plant & Machinery during theFinancial Year 2008-09 & 2009-10respectively. As per the guidelines laid downin scheme of BIFR, Modified DraftRehabilitation Scheme (MDRS), it has beenstipulated that this sum shall be written off in5 equal annual installments. Accordingly,during the current financial year, a sum of theRs.61.49 lakhs has been written off on pro-rata basis. This accounting treatment is adeviation from Accounting Standard (AS- 6)notified as a mandatory accounting standardin Section 211(3C) of the Companies Act 1956;

(II) The arrears payable on account of pay fixationin the revised scale with effect from January2007 vide wage revision settlement as perDPE guidelines, had not been provided for inthe books of the company. The arrearspayable at the close of the year wasRs.1070.34 lakhs (Pr. year Rs.1160 Lakhs).The company has implemented the wagerevision for officers and non officers’ with effectfrom January 2007 as per BIFR- MDRS, buthas not been provided/charged to statementof profit and loss on account of categoricallystipulation made under the scheme, thatarrears are to be released subject toavailability of funds. This liability has beendisclosed under contingent liability in thefinancial statements and not provided for;

13

HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013(III) “Creditors for capital advance of SRF Limited

has been written back in books amounting toRs.342.35 lakhs which in the opinion ofmanagement had ceased to be a liability interms of agreement at the close of year. Thissum of Rs.342.35 lakhs has been shown in‘Other non-operating income’ instead ofreducing the amount from the value of theconcerned asset as on 31.03.2013, asrequired under Accounting Standard 10referred to in Section 211(3C) of theCompanies Act 1956. The Company’s recordsindicate that, had the management reducedthe amount written back from the value ofconcerned asset, the profit would havereduced to losses for the year at Rs.247.47lakhs. Accordingly, fixed assets written downvalue would have reduced by 342.35 lakhs andshareholders fund would have reduced byRs.342.35 lakhs;”

(IV)Trade Receivables, Trade payables, sundrybalances of debit and credit of parties aresubject to confirmation and review by themanagement,

Qualified OpinionIn our opinion and to the best of our informationand according to the explanations given to us,except for the effects of the matter described inthe Basis for Qualified Opinion paragraph, thefinancial statement give the information requiredby the Act in the manner so required and give atrue and fair view in conformity with the accountingprinciples generally accepted in India;(a) in the case of the Balance Sheet, of the state

of affairs of the Company as at March 31, 2013;(b) in the case of the Statement of Profit and Loss,

of the profit for the year ended on that date;and

(c) in the case of the Cash Flow Statement, ofthe cash flows for the year ended on that date.

Report on Other Legal and RegulatoryRequirements1. As required by the Companies (Auditor’s

Report) Order, 2003 (“the Order”) issued bythe Central Government of India in terms ofsub-section (4A) of section 227 of the Act, we

give in the Annexure a statement on thematters specified in paragraphs 4 and 5 ofthe Order.

2. As required by section 227(3) of the Act, wereport that:a. we have obtained all the information and

explanations which to the best of ourknowledge and belief were necessary forthe purpose of our audit;

b. in our opinion proper books of accountsas required by law have been kept by thecompany so far as appears from ourexamination of those books and properreturns adequate for the purposes of ouraudit have been received from branchesnot visited by us;

c. the Balance Sheet, Statement of Profitand Loss, and Cash Flow Statement dealtwith by this Report are in agreement withthe books of accounts and with thereturns received from branches notvisited by us;

d. in our opinion, the Balance Sheet,Statement of Profit and Loss, and CashFlow Statement comply with theAccounting Standards referred to insubsection (3C) of section 211 of theCompanies Act, 1956 except AS – 6 , AS– 15 & AS - 10;

e. on the basis of written representationsreceived from the directors as on March31, 2013, and taken on record by theBoard of Directors, none of the directorsis disqualified as on March 31, 2013, frombeing appointed as a director in terms ofclause (g) of sub-section (1) of section274 of the Companies Act, 1956.

For S.DAGA & CO.,Chartered Accountants,

(F.No.000669S)Sd/-

(Pavan Kumar Bihani )Place: Hyderabad M.No. 225603Date: 27.05.2013 Partner


14

ANNEXURE TO AUDITORS REPORT:

(Annexure referred to in Point 1 of other Legaland Regulatory Requirements of the Report ofthe Auditors)

1a) The Company has maintained proper recordsshowing full particulars, including quantitativedetails and situation of fixed assets.

1b) All the fixed assets have been physicallyverified by the management during the yearand there is regular program of verificationwhich, in our opinion, is reasonable havingregard to the size of the Company and thenature of its assets. As informed no majormaterial discrepancies were noticed on suchverification.

1c) During the year, the Company has notdisposed off substantial part of its fixedassets.

2a) As explained to us, the stocks of finishedproducts, stock-in-process and raw materialshave been physically verified by themanagement during the year. Stock of storesand spare parts are reported to be physicallyverified in accordance with the procedurefollowed by the management. In our opinion,the frequency of such physical verification ofstocks is reasonable.

2b) In our opinion, the procedure of physicalverification of stocks followed by themanagement is reasonable and adequate inrelation to the size of the Company and thenature of its business.

2c) The Company is maintaining proper recordsof inventory and no material discrepancieshave been noticed on physical verification ofstocks compared to the books/records.

3a) The company has not granted any loanssecured or unsecured to Companies, Firmsor other parties covered in the registersmaintained under section 301 of theCompanies Act, 1956.

3b) The company has taken secured loan fromits holding company, Hindustan OrganicsCompany Limited, covered in the registermaintained under section 301 of theCompanies Act 1956 and the maximumamount involved during the year was Rs.3956.23 lakhs (Pr. Year Rs.4021.06 lakhs )and the year - end balance is Rs. 3701.43lakhs (Pr. Year Rs. 3929.33 lakhs)

3c) In our opinion, the rate of interest and otherterms and conditions on which loans havebeen taken on the holding company, are notprima facie prejudicial to the interest of thecompany.

3d) The Company is irregular in repaying theprincipal amount as stipulated and alsoirregular in payment of interest. The overdueof principal and interest at the close of theyear is Rs.1830.83 lakhs (Pr.Year Rs.1514.62lakhs)

4. In our opinion and according to the informationand explanations given to us, there areadequate internal control procedures,commensurate with the size of the Companyand the nature of its business with regard tothe purchase of inventory, fixed assets andwith regard to the sale of goods. Further, onthe basis of our examination of the books andrecords of the company and according to theinformation and explanations given to us, wehave neither come across nor have beeninformed of any continuing failure to correct

15


major weaknesses in the aforesaid internalcontrol procedures.

5a) According to the information and explanationsgiven to us, we are of the opinion that thetransactions that need to be entered in theregister maintained u/s 301 of the CompaniesAct, 1956 have been so entered.

5b) In our opinion and according to the informationand explanations given to us, the transactionsmade in pursuance of contracts andarrangements entered in the registermaintained under section 301 of theCompanies Act 1956 in respect oftransactions during the year, have been madeat prices which are reasonable having regardto the prevailing market price at the relevanttime.

6. The Company has not accepted any depositsfrom the public within the meaning of section58A, 58AA of the Companies Act 1956 or anyother relevant provisions of the act and therules made there under.

7. The internal audit of the company has beenentrusted to an independent firm of CharteredAccountants to carry out the functions asInternal Auditors. In our opinion the companyhas internal audit system commensurate withthe size and nature of business.

8. We have broadly reviewed the books ofaccounts maintained by the Companypursuant to the rules made by the CentralGovernment for the maintenance of costrecords u/s 209 (1) (d) of the Companies Act,1956 and we are of the opinion that primafacie the prescribed accounts and recordshave been made and maintained. We havenot however made a detailed examination of

the records with a view to determine whetherthey are accurate or complete.

9a) The company is generally regular indepositing with appropriate authoritiesundisputed statutory dues including Providentfund, Employee’s State Insurance, Income-tax, CST/VAT, Wealth- tax, Service- tax,Customs duty, Excise duty, Cess and othermaterial statutory dues applicable to it. Thearrears of CST/VAT, Provident fund etc.outstanding at the close of previous year havebeen deposited during the year.

9b) According to the information and explanationsgiven to us, no undisputed amounts payablein respect of Income-Tax, Wealth Tax, ServiceTax, Sales Tax, Customs Duty, Excise Dutyand Cess were in arrears, as at 31st March2013 for a period of more than six monthsfrom the date they became payable;

10. The accumulated losses of the company asat the end of the year are more than fiftypercent of its net worth. Further, the companyhas neither incurred cash losses during thefinancial year covered by our audit nor in theimmediately preceeding financial year. Thecompany is under the Scheme of BIFR andhence considered as a Sick Company as perSick Industries Companies (SpecialProvisions) Act 1985.

11. The Company has not defaulted in repaymentof dues to financial institutions during thecurrent financial year. There are no over duesas on 31st March, 2013.

12. The Company has not granted any loans andadvances on the basis of shares, debenturesand other securities of a similar nature andhence maintenance of documents and


16

records relating to such items are notapplicable.

13. In our opinion the company is not a chit fundor a nidhi/mutual benefit fund/society.Therefore, clause-4 (iii) of the Companies(Auditor ’s Report) Order, 2003, is notapplicable to the Company.

14. The Company has not dealt in or traded inshares, securities, debentures and otherinvestments.

15. The Company has not given any guaranteefor loans taken by others from banks andfinancial institutions.

16. In our opinion, the term loans have beenapplied for the purpose of which they wereraised.

17. In our opinion and as per the explanationsgiven to us, no funds raised on short termbasis have not been used for long termpurposes and vice-versa.

18. The Company has not made any preferentialallotment of the shares during the year.

19. The Company has not issued any debenturesduring the year.

20. The Company has not raised any money bypublic issues during the year.

21. Based upon the audit procedures performedand explanations given by the management,we report that no fraud on or by the Companyhas been noticed or reported during thecourse of our audit.

For S Daga & Co.,Chartered Accountants

(FRN 000669S)

Sd/-Place: Hyderabad (Pavan Kumar Bihani)Date: 27.05.2013 M.No. 225603

17


Annexure-IV to Directors’ ReportAuditors’ reply of the Management on the Auditors’ Report to the Members for the Financial Year 2012-13:

Audit Observation Management Reply

Regarding Refurbishment Expenditure:

(I) The Company had incurred Rs.284.14 lakhs andRs.17.83 lakhs as refurbishment expenditure on Plant &Machinery during the Financial Year 2008-09 & 2009-10respectively. As per the guidelines laid down in scheme ofBIFR, Modified Draft Rehabilitation Scheme (MDRS), it hasbeen stipulated that this sum shall be written off in 5 equalannual installments.

Accordingly, during the current financial year, a sum of theRs.61.49 lakhs has been written off on pro –rata basis.This accounting treatment is a deviation from AccountingStandard (AS- 6) notified as a mandatory accountingstandard in Section 211(3C) of the Companies Act 1956;

As per BIFR’s MDRS the company isfollowing the accounting treatment ofrefurbishment expenditure deviatingfrom AS-6 issued by ICAI.

(II) Regarding 2007 wage revision arrears:

The arrears payable on account of pay fixation in therevised scale with effect from January 2007 vide wagerevision settlement as per DPE guidelines, have had notbeen provided for in the books of the company. The arrearspayable at the close of the year was Rs.1070.34 lakhs (Pr.year Rs.1160 Lakhs). The company has implemented thewage revision for officers and non officers’ with effect fromJanuary 2007 as per BIFR- MDRS, but has not beenprovided/charged to statement of profit and loss on accountof categorically stipulation made under the scheme, thatarrears are to be released subject to availability of funds.This liability has been disclosed under contingent liabilityin the financial statements and not provided for;

As per BIFR-MDRS the company hasimplemented the wage revision forofficers and non officers w.e.f. October2012 and arrears to this effect couldnot be charged to profit and lossaccount since BIFR categoricallymentioned that arrears should bereleased subject to availability offunds. Accordingly, the liability wasshown under contingent liability.

(III) “Creditors for capital advance of SRF Limited has beenwrittenback in books amounting to Rs.342.35 lakhs whichin the opinion of management had ceased to be a liabilityin terms of agreement at the close of year. This sum ofRs.342.35 lakhs has been shown in ‘Other non operatingincome’ instead of reducing the amount from the value ofthe concerned asset as on 31.03.2013, as required underAccounting Standard 10 referred to in Section 211(3C) ofthe Companies Act 1956. The Company’s records indicatethat had the management reduced the amount written back

The Board has discussed at length onthis issue and Management of HFLneeds to pay as per contract. The totalCERs are 659500 out of which478878 CERs are already paid andthe contract is valid up to 31.12.2012.In the meanwhile, UNFCCC has notrenewed this type of CERs for the gas.Hence, this contact is not valid beyond31.12.2012. Hence, the issue of CERs


18

Audit Observation Management Reply

from the value of concerned asset, the profit would havereduced to losses for the year at Rs.247.47 lakhs.Accordingly, fixed assets written down value would havereduced by 342.35 lakhs and shareholders fund would havereduced by Rs.342.35 lakhs;”

to M/SRF as per the contact by theUNFCCC as a proponent partnerdoes not arise. Hence, the contractat present is NULL and VIOD. Hence,the liability is reversed.

(IV)Trade Receivables, Trade payables, sundry balancesof debit and credit of parties are subject to confirmationand review by the management,

We had sent letters for seekingconfirmation of balances to tradepayables and receivables on halfyearly basis that is October and April.

Annexure-V to Directors’ Report

MANAGEMENT DISCUSSION AND ANALYSIS REPORTThe Financial year of the company consists of 12 months ended as on 31st March, 2013.

INDUSTRY STRUCTURE & FUTURE OUTLOOK: Company is continuously focusing on Developmentof Fluoro Speciality Chemicals. As a part of development, one product was well accepted in market.Company is in process to commercialize one more product.

Simultaneously efforts are also being taken to reduce specific consumption of the raw materials andnecessary modification is being carried out in the plant. Plant capacity is very small as compared tothe competitors, hence company is continuously focusing niche area of Fluoro Speciality Chemicals.Company is also discussing for development of other product for Defense Research and DevelopmentOrganization (DRDO).

KEY OPPORTUNITIES:Development of Fluoro Speciality Chemicals.

KEY THREATS INCLUDE:

1. Increase input prices i.e., FC-26 Acid, Furnace Oil and Electricity

2. PTFE Prices continuously decreasing from last two years.

SEGMENT WISE PERFORMANCE:The company is primarily having one segment i.e., PTFE

Production (MT) Year ended 31/03/2013 Year ended 31/03/2012

PTFE 154.78 143.83

OUTLOOK & INITIATIVE FOR CURRENT YEAR

Company is continuously making efforts to increase the market share of the Fluoro Speciality Chemicalsas this product contributes more than PTFE.

Company is planning to separate valuable Fluoro specialty chemicals from vent as it will be marketablein the Market and it adds some margins to the company.

19


INTERNAL CONTROL SYSTEM AND ADEQUANCY

Internal controls are supported by Internal Audit and Management reviews. Company ensures existenceof adequate internal control through documented policy and procedures to be followed by the executivesat various levels.

As part of good Corporate Governance the Audit Committee constituted by the Board periodicallyreviews the internal controls, Audit programmes, Financial Results, Recommendations of the Auditorsand Management replies to the Auditors qualifications, etc

REVIEW OF FINANCIAL PERFORMANCE

The financial statements have been prepared in accordance with the requirements of the CompaniesAct, 1956 and generally accepted accounting principles.

The financial performance highlights are as follows:

The sales turnover was Rs.4080.31 lacs against Rs.6282.93 lacs for the previous year and operatingprofit for the year Rs.94.88 lacs as against 252.25 lacs for the previous year.

CAUTIONARY STATEMENT:Statement in this Management Discussion Analysis describing the Company’s objectives, Projections,estimates and expectations may be forward looking statements within the meaning of applicable lawsand regulations.

(Annexure VI to Director’s report)

CORPORATE GOVERNANCE REPORT AS ON 31.03.20131. The Directors present the Company’s Report on Corporate Governance:

As per the Code of Governance propounded by the Government, Corporate Governance involvesa set of relationships between a Company’s management, its Board, its shareholders and otherstakeholders. Corporate Governance provides a principled process and structure through whichthe objectives of the Company, the means of attaining the objectives and systems of monitoringperformance are also set. The Management believes that strong and sound corporate governanceis an important instrument of protection of stake holders, through transparency, professionalism,accountability and adequate disclosures. The company continuously endeavors to improve onthese aspects on an ongoing basis.The key to good Corporate Governance is well functioning Board of Directors. Board is responsibleto shareholders for performance of the Company. Company cannot prosper without the trustand support of its shareholders.Given below is the Report of Directors on Corporate Governance in accordance with the provisionsof Listing Agreement.

2. BOARD OF DIRECTORS:The Board of Directors overseas all major actions proposed to be taken by the Company. TheBoard also reviews and approves the strategic and business plans including monitoring corporateperformance.

a) Composition of the Board:In accordance with the provisions of the Articles of Association of the Company (as amendedfrom time to time) the number of Directors of the Company shall neither be less than three normore than twelve. The Directors shall not require to hold any qualification shares.


20

As on 31st March, 2013, that Board of Directors must be an optimum combination of executiveand non-executive directors representing the different fields. The strength of Board of Directorsas on 31.03.2013 is Eight. The Board comprises of one Executive Director, Five Non Executivedirectors nominated by HOCL of which one Director is Chairman of the Board, One Non-ExecutiveDirector Nominated by APIDC, and One Non-Executive Director Nominated by Govt of IndiaDepartment of Chemicals & Petrochemicals, Ministry of Chemicals & Fertilizers.

SlNo Directors/Shri Category of Date of Date of No.of Member- ChairmanDirector appointment Ceasure Other Ship in Ship in(ED,NED, Director- other Board and

NEID) ships Board Other BoardCommittees Committees

1. R N Madangeri Chairman, 01.02.2008 30.04.2013 2 3 5HOCL 01.09.2010

Nominee,NED

2. T S Gaikwad MD, 01.01.2008 - - 4 -ED

3. Dr. B D Kulkarni HOCL 31.01.2009 - - 2 1Nominee,

NEID4. S V Kanaka Seshu APIDC 18.10.2010 - 7 3 -

Nominee,NED

5 J N Suryawanshi HOCL 04-11-2011 - 2 4 -Nominee,

NEDChairman 01.05.2013

6 Arun Agarwal Govt 13.03.2012 - 1 3 -Nominee,

NED7 Suresh Kumar R HOCL 13.07.2012 - 2 3 -

Nominee,NED

8 S B Bhide HOCL 07.09.2012 - 2 2 -Nominee,

NEDED: Executive Director, NED: Non-Executive Director, NEID: Non-Executive Independent Director

The non-executive independent Directors are independent of management and free from any businessor other relationship that could materially influence their judgment. All the independent directors satisfythe criteria of independence as defined under listing agreement with Indian Stock Exchanges’ CorporateGovernance standards.

21

HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013CHANGES IN THE BOARD OF DIRECTORS:

1. Shri J N Suryawanshi, Nominee Director (HOCL) was appointed as Nominee Director with effectfrom 04.11.2011.

2. Shri Sanjay Bansal, Nominee Director (Govt) ceased to be Director of the Company with effectfrom 13.03.2012.and in his place Shri Arun Agarwal, appointed as Nominee Director with effectfrom 13.03.2012.

3. Shri. Suresh Kumar R, Nominee Director (HOCL) was appointed as Nominee Director witheffect from 13.07.2012.

4. Shri. S B Bhide, Nominee Director (HOCL) was appointed as Nominee Director with effect from07.09.2012.

5. Shri. V B Ramachandran Nair, Chairman and Managing Director was appointed as Chairmanwith effect from 12.08.2013.

Six Directors viz. Shri. S V Kanaka Seshu Nominee Director (APIDC), Dr.B D Kulkarni, NomineeDirector (HOCL), Shri. S B Bhide, Nominee Director (HOCL), Shri. Suresh Kumar R, Nominee Director(HOCL), Shri. J N Suryawabshi, HOCL Nominee Director and Shri. Arun Agarwal, Nominee Director(GOVT) are due for retirement by rotation at the ensuing 30h Annual General Meeting of the Companyand eligible for re-appointment.

a) PROFILE OF DIRECTOR

Shri. J N Suryawanshi: (From 04.11.2011)

Qualification: B.S.C, Master in Management Studies (MMS)

Business/Occupation: Director (Mktg) of HOCL

Experience: He underwent two months business Management Course organised by JICA, JapanGovernment, TOKYO under colombo Plan in Oct - November, 1989 and he carries with him richexperience of over 30 years in Marketing

Shri. Arun Agarwal: (From 13.03.2012)

Official Govt. Nominee Director

Qualification: B.E. (Electronics and Communications), MBA

Business/Occupation:Director to the Govt .of India, Ministry of Chemicals & Fertilizers, Dept ofChemicals & Petrochemicals.

Experience: An officer of the Indian Engineering Service (Telecom) of 1991 batch, & joined theDepartment of Telecom in 1992 as ‘Assistant Divisional Engineer “. Working in the Selection Gradeof JAG from 1-1- 2004 as Director, and having about 20 years of experience of telecom. Presentlyworking as a Director in the Dept. of Chemical & Petrochemicals on deputation.

Shri. Suresh Kumar R: (From 13.07.2012)

Qualification: B.Com, FCA, DISA (ICA), CISA

Business/Occupation: Director (Finance) of HOCL

Experience: May, 2009 to May,2012 – GM(Finance), HOCL, Ambalamugal.April, 2006 to May, 2009 – GM (Finance), Cochin International Airport Ltd.February 2003 to April, 2006 – Roads & Bridges Development Corporation Financial Controller ofKerala Ltd, Kochi


22

November, 1999 to October, 2002 – Finance Manager – Kerala Shipping & Inland NavigationCorporation Ltd, Kochi.

Shri. S B Bhide: (From 07.09.2012)

Qualification: B.E (Mechanical)

Business/Occupation: Director (Technical) of HOCL

Experience:1. Operation and maintenance of utilities.2. Operation and maintenance of continuous process plant.3. Execution of project Formaldehyde, JNPT Tank terminal, revamping and restart up of caustic

soda.4. Head of Mechanical Department for 10 years. Head of production and engineering division.5. Acted as Factory Manager for HOCL’s Rasayani Unit.6. Undergone process training for four weeks at Sweden.7. Member of the Board of Examiners for Maharashtra State boiler proficiency and competency.

Overall 30 years of experience in HOCL Manufacturing of Organic Chemical and Intermediates.

Shri. V B Ramachandran Nair: (From 12.08.2013)

Qualification: BSC(Engg.); MBA; PGDPM

Business/Occupation: Govt Service – CMD of HOCL (CPSE)

Experience:4 years with Kerala Minerals and Metals Ltd, Kollarn; Kerala as Executive Trainee and as Asst ProjectEngineer (Dec 1981 – Dec 1985)Dec 1985 joined HOCL as Senior Mechanical Engineer1988-1992: Worked as Asst.Manager (Mechanical)1992-1996: Worked as Dy.Manager(Mechanical)1996-2001: Worked as Manager (Mechanical)July 2001-June 2006: Worked as Chief Engineer Mechanical)July 2006- June 2010: Worked as DGM (Mechanical)/GM (Mechanical)June 2010-16/6/2013: Worked as CGM (P&E)17/6/2013 Onwards: CMD of HOCL

b) RESPONSIBILITIES:

The Board has a formal schedule of matters reserved for its consideration and decision whichincludes review of corporate performance, financial resources, strategy formulation, policy andcontrol, organizational structure and reporting to shareholders. The combined wisdom andexperience of the Board has brought a wide range of skills and professionalism to the functioningof the organization.

c) ROLE OF INDEPENDENT DIRECTORS:

The independent directors including the nominee directors play an important role in thedeliberations at the Board Meetings and bring to the Company their wide-ranging experience in

23


SlNo Directors Board Board AttendanceMeetings Meetings at the

Held Attended Last AGM1 Shri R N Madangeri, Chairman 06 06 YES2 Dr. B D Kulkarni, 06 06 NO

Independent Director3 Shri T S Gaikwad, Managing Director 06 06 YES4 Shri Arun Agarwal, Govt Nominee Director 06 03 NO

(Up to 13.03.2012)5 Shri S V Kanaka Seshu, 06 02 NO

APIDC Nominee Director6 Shri J N Suryawanshi, 06 06 YES

HOCL Nominee Director (04.11.2011)7 Shri Suresh Kumar R, 06 04 YES

HOCL Nominee Director (13.07.2012)8 Shri S B Bhide, 06 03 YES

HOCL Nominee Director (07.09.2012)NOTES:1. Shri. J N Surawanshi appointed as a HOCL Nominee Director w.e.f 04.11.2012.2. Shri. Arun Agarwal appointed as Govt Nominee Director w.e.f 13.03.2012.3. Shri. Suresh Kumar R appointed as a HOCL Nominee Director w.e.f.13.07.20124. Shri. S B Bhide appointed as a HOCL Nominee Director w.e.f.07.09.2012.5. Shri. R N Madangeri retired as a Chairman w.e.f.30.04.2013

the fields of finance, audit, marketing, technical, engineering and public policy. All independentdirectors were members of the Audit Committee.

d) BOARD MEETINGS:

The meetings of the Board of Directors are generally scheduled well in advance and are generallyheld either at Hyderabad where Regd. Office of the company is located or at Holding Company,HOCL Corporate Office at Mumbai. The members of the Board have access to all information ofthe company and are free to recommend inclusion of any matter in the agenda for discussion.Senior management personnel are invited to attend the board meeting for clarifications as andwhen required.

During the year under review, Board Meetings were held on 13.04.2012, 25.05.2012, 13.07.2012,07.09.2012, 12.11.2012, 04.02.2013.

The attendance of the Directors at Board Meeting is as follows:


24

3. COMMITTEES OF THE BOARD

To enable better and more focused attention on the efforts of the company, the Board delegatesparticular matters to the Committees of the Board set up for the purpose with adequate delegations ofpowers and to discharge urgent business of the company. These Committees are (a) Audit Committee(b) Share Transfer and Shareholders/Investors’ Grievance Committee (c) Management Committee(d) Receivable Committee.

The details of the Audit Committee, Share Transfer/Shareholder’s /Investor’s Grievance Committee,Management Committee, and Receivable Committee:

a. AUDIT COMMITTEE OF THE DIRECTORS:

(i) Terms of Reference:

Apart from all the matters provided in Clause 49 of the Listing Agreement and Section 292(A) of theCompanies (Amendment) Act, 2002, the Committee reviews reports of the Internal Auditors, meetsinternal Auditors periodically and discusses their findings, suggestions, internal control systems,compliance with the accounting standard, scope of audit, observations of the Auditors and other relatedmatters. The committee also reviews the major accounting policies followed by the company. The committeeinvites senior executives as it considers appropriate at its meetings. MD and Chairman of HFL Boardand Head of Internal Audit (on invitation) attend the meetings of Audit Committee as special invitees.

The representatives of the Statutory Auditors are also invited to attend the meetings.

(ii) Composition:The Committee as on 31st March, 2013 comprised of three non Executive Directors. The Committeemet five times during the year 2012-13 i.e., 13.04.2012, 25.05.2012, 13.07.2012, 12.11.2012 and 04.02.2013.

Further, in compliance of Clause 49(II) of the Listing Agreement with Stock Exchange, the AuditCommittee was reconstituted at the Board Meeting held on 13.07.2012 comprising of Shri.S.V.KanakaSeshu, Nominee Director as Chairman of the Committee up to 12.07.2012 and Member of theCommittee from 13.07.2012, Dr.B.D.Kulkarni, Independent Director as Member up to 12.07.2012 andChairman of the Committee from 13.07.2012, Shri. Arun Agarwal, Nominee Director as Member, Shri.JN Suryawanshi, Nominee Director as member of the Committee and Shri. Suresh Kumar R, NomineeDirector as member of the Committee.

(iii) The attendance of the members at the meetings was as follows:

Name of the Member Status No. of Meetings attended

1. Shri S V Kanaka Seshu Chairman 01(up to 12.07.2012)

Member 01(From 13.07.2012)

2. Shri Arun Agarwal Member 03

3. Shri J N Suryawanshi Member 05

4. Shri Suresh Kumar R Member 03

5. Dr. B D Kulkarni Member 02(up to 12.07.2012)

Chairman 03(From 13.07.2012)

25

HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013b. SHARE TRANSFER AND SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE:As required under the Companies Act, 1956, the company already has a Share Transfer and ShareHolders/Investor’s Grievance Committee was reconstituted at the Board Meeting held on 23.05.2013comprising of Shri.J.N Suryawanshi, Chairman, Shri.T S Gaikwad, Managing Director as Member,Shri S V Kanaka Seshu, Nominee Director as Member, Shri B D Kulkarni, Independent Director asMember and Shri. Suresh Kumar R, Nominee Director as member. The quorum of the Committee is two.

SHARE TRANSFER SYSTEM:

The company has a Share Transfer Committee which is authorized to transfer securities as and whenthey are received both under physical and electronic mode. Further for dematersisation of sharesCompany shares can be dematerialized with CDSL and NSDL under ISIN No.INE 806J01013.

The share transfer committee meets regularly and approves all matters related to shares vis-à-vistransfers, deletions, transmissions, dematerialization and re-materialization of shares. There were nopending complaints and requests for demat. This committee is vested with requisite powers andauthorities to specifically look into the redressal of grievances of shareholders and investors.

The letters received from the investors were attended/resolved to the satisfaction of investors. Thetransfers of shares were affected within the stipulated time.

The Committee met 26 times and the details are as under: 04.04.2012, 21.04.2012, 15.05.2012,21.05.2012, 05.06.2012, 21.06.2012, 07.07.2012, 23.07.2012, 22.08.2012, 07.09.2012, 15.09.2012,21.09.2012, 19.10.2012, 05.11.2012, 19.11.2012, 03.12.2012, 10.12.2012, 18.12.2012, 26.12.2012,10.01.2013, 29.01.2013, 12.02.2013, 26.02.2013, 07.03.2013, 20.03.2013, 25.03.2013.

Summarized information on complaints received and resolved during 1st April, 2012 to 31st

March, 2013:

Sl. No. Nature of Complaint Received Redressed Pendingas on 31.03.2013

1. Non-receipt of Dividend NIL NIL NIL

2. Non-receipt of shares lodged for transfer NIL NIL NIL

3. Others (N/R of Annual Report, etc). NIL NIL NIL

Please note that the grievances, if any, have been redressed within 30 days of the receipt thereof.

c. MANAGEMENT COMMITTEE:

Terms of Reference:

The Management Committee formed to review the operations of the Company and to monitor theimplementation of the Modified Draft Rehabilitation Scheme (MDRS) sanctioned by BIFR/AAIFR, forimplementation in the Company.

Composition:

The Committee as on 31st March, 2013 comprised of Four Directors, the committee was re-constitutedat the Board Meeting held on 23rd May, 2013 comprising of Shri J N Suryawanshi, Chairman,Shri.T.S.Gaikwad, Managing Director Shri Arun Agarwal, Govt Nominee Director and Dr. B D Kulkarni,Independent Director as Members.


26

d. RECEIVABLE COMMITTEE:Terms of Reference:The terms of reference of the Board Committee on Corporate Social Responsibility and SustainabilityDevelopment to recommended the CSR & SD expenditure, CSR &SD Activities and their plans andMonitoring system to the Board for approval.

Composition:The Committee as on 31st March, 2013 comprised of three Directors. The Committee met one timeduring the year 2012-13 i.e., 12.11.2012.

The Committee as on 31st March, 2013 comprised of three Directors, the committee was re-constitutedat the Board Meeting held on 23rd May, 2013 comprising of Shri J N Suryawanshi, ChairmanShri.T.S.Gaikwad, Managing Director and Shri S V Kanaka Seshu, Nominee Director as Members.

e. CSR & SD COMMITTEE:Terms of Reference:The terms of reference of the Board Committee on Corporate Social Responsibility and SustainabilityDevelopment for recommending the CSR & SD expenditure, CSR &SD Activities and their plans andMonitoring system.

Composition:The Committee was constituted at the Board Meeting held on 23rd May, 2013 comprising of Dr. B DKulkarni, Independent Director as a Chairman, Shri J N Suryawanshi, Chairman as a Member,Shri.T.S.Gaikwad, Managing Director as a Member and Shri Suresh Kumar R, Nominee Director as aMember.

1. DETAILS OF REMUNERATION PAID TO THE DIRECTORS FOR THE YEAR 2012-2013: Amount (Rs.lacs)

Name Salary including perks Arrears Retirement benefits Total

1. T S Gaikwad 14.68 0 0 14.68

The Executive Directors have been appointed by the President of India for a period of 5 years or tillattaining the age of superannuation, whichever is earlier. The appointment may be terminated evenduring this period either side on three months notice or on payment of three months salary in lieu thereof.

The company has not given any stock options.

i. Non-executive Directors: The Company does not pay any remuneration to non-executiveDirectors for attending the meetings of the Board of Directors thereof. The company pays SittingFees and out of pocket expenses at the rate of Rs.1000/- per meeting per Non Executive Directorfor attending each meeting of the Board of Directors and also Rs.1000/- for attending each meetingof Committee of the Directors. The details of sitting fees paid during the year 2012-13 are asfollows:

Sl No. Name of the Director Sitting fees (including out of pocket expenses)

Amount(Rs.)

1 Dr B.D.Kulkarni Rs.35000.00

2 Shri. S.V.Kanaka Shesu(APIDC) Rs.4000.00

Non Executive Directors does not hold any shares in the Company.

27

HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-20134. ANNUAL GENERAL MEETINGS

The last three Annual General Meetings of the company were held as under:

Particulars FY-2009-2010 FY-2010-2011 FY-2011-2012

Date 12.08.2010 12.08.2011 21.09.2012

Time 3.00 P.M 3.00 P.M. 3.00 P.M.

Venue Press Club Press Club Press ClubDeshodharaka Bhavan Deshodharaka Bhavan Deshodharaka BhavanBasherbagh, Basherbagh, Basherbagh,Hyderabad-500 001 Hyderabad-500 001 Hyderabad-500 001

No special resolutions were passed in previous three General Meetings.

No special resolutions were passed through postal ballot at the last Annual General Meeting (AGM).

No special resolutions are proposed through postal ballot at the forthcoming Annual General Meeting.

5. DISCLOSURES:

i. There was no materially significant related party transaction with its Directors/or the managementof Subsidiary or relatives that may have potential conflict with the interests of Company of large.

ii. There was no case of Non-compliance by the Company of Statutory Provisions of the CompaniesAct, 1956 or SEBI regulation or provisions of listing Agreement or any other Statutory Authority.Further, these authorities have never passed any structure of imposed any penalties on theCompany on any matter related to capital markets, during the last three years.

iii. Whistle Blower policy: Your company has instituted procedures for the receipt, retentions anddealing with complaints. Nonetheless no personnel have been denied access to the AuditCommittee.

iv. Details of compliance with mandatory requirements and adoption of the non mandatoryrequirements of this clause are provided in this report.

6. MEANS OF COMMUNICATION:

The Board Meeting Notices before 7 days and General Meeting Notices before 21 clear daysfrom the date of meeting held are published in the financial express (English) and Andhra Prabha(Telugu) Daily News Papers.

As required under Clause 41, Company issues a notice of at least 7 days in advance to the StockExchange of the Board Meetings in which the unaudited/ audited Financial Results are due forconsideration. Further the said results are intimated immediately after they are taken on record/approved to the Stock Exchange. These Financial results are normally published in the FinancialExpress (English) and Andhra Prabha (Telugu) within 48 hours of the conclusion of the saidmeeting.

Management Discussion and Analysis report forms part of this Annual report

When ever a Director is appointed or reappointed Stock Exchanges are intimated through Fax/Speed Post/Courier Service.


28

6. GENERAL SHAREHOLDER INFORMATION:

Compliance Officer:

Mrs.Rajani.K, Company Secretary of the Company is the Compliance Officer of the Company underClause 47 of the Listing Agreement.

Registered Office 303, Babukhan Estate,Basheerbagh, Hyderabad – 500 001.

Annual General Meeting Date & Time : 7th September, 2013 at 3.00 p.m

Venue : at Press Club, Deshodharaka Bhavan, Bashirbagh, Hyderabad-500 001

Tentative Financial Calendar 1st unaudited Quarter Results on or before14th August of the year.

2nd unaudited Quarter Results on or before15th November of the year.

3rd unaudited Quarter Results on or before15th February of the following year.

4th unaudited Quarter Results on or before15th May of the following year/orAnnual Audited Results on or before30th May of the following year.

Date of book closure (For the purpose of Annual General Meeting)30.08.2013 to 07.09.2013 (both days inclusive)

Dividend payment date (tentative) N.A

Listing on Stock Exchanges The shares of the Company are listed on-The Stock Exchange, MumbaiStock Code at BSE: 524013

Registrar & Transfer Agents M/s Sharepro Services (India) Pvt.Ltd.,13AB, Samhita Warehousing Complex,2nd Floor, Sakinaka Telephone Exchange Lane,Off. Andheri-Kurla Road,Sakinaka, Mumbai – 400 072.Tel:67720300/351/352, 67720400/211872,Fax: 28591568e-mail: [email protected].

29


MARKET PRICE DATA

Scrip Code: 524013 Scrip Id: HINFLUR

The high/low prices of Equity shares traded month wise as available at BSE site are stated hereunder.(All Rupees)

Month Open Price High Price Low Price Close Price

Apr-12 12.79 14.00 12.79 13.31

May-12 12.65 12.65 9.61 10.99

Jun-12 10.45 10.79 8.56 9.97

Jul-12 10.45 11.18 9.41 10.53

Aug-12 10.05 11.78 9.56 10.40

Sep-12 10.92 12.10 9.36 11.12

Oct-12 10.60 11.51 8.17 9.15

Nov-12 9.00 10.97 8.27 9.07

Dec-12 8.62 9.62 8.19 8.97

Jan-13 9.25 9.66 6.68 6.90

Feb-13 6.60 7.25 5.90 6.19

Mar-13 6.49 7.10 6.00 6.29

DISTRIBUTION OF SHAREHOLDING

The Distribution of holdings as on 31st March, 2013 was as follows:

Description Holders(s) Holdings(s)Folios % Shares %

Less than 500 14258 92.26 2457699 12.54

501-1000 744 4.81 629823 3.21

1001-2000 231 1.50 356589 1.82

2001-3000 73 0.47 185349 0.94

3001-4000 29 0.19 103432 0.53

4001-5000 37 0.24 175691 0.90

5001-10000 38 0.25 272003 1.39

Above 10000 44 0.28 15418514 78.67

Total 15454 100 19599100 100


30

Share Holding Pattern as on 31st March, 2013 was as under:

Category No. of shares Percentage of

held Shareholding

I. CONTROLLING/STRATEGIC HOLDINGS:

1. Hindustan Organic Chemicals Limited 11060000 56.43

2. A.P.Industrial Development Corpn.Ltd. 870000 4.44

SUB TOTAL 11930000 60.87

II. FREE FLOAT:

A. BASED IN INDIA

1. Indian Individuals/HUFs 5532119 27.72

2. Indian Corp.Bodies/Trustees/Partnership 872348 4.45

3. Independent Directors & Relatives 0.00 0.00

4. Present employees 60900 0.31

5. Banks/Financial Institutions 6606100 3.37

6. Insurance companies 296417 1.51

7. Mutual funds 0.00 0.00

SUB-TOTAL 7322384 37.36

B BASED OVERSEAS:

1. Non-resident Indians 346716 1.77

GRAND TOTAL 19599100 100.00

DEMATERIALISATION OF SHARES & LIQUIDITY:

The shares of the Company are compulsorily traded in Dematerialized mode. To facilitate theshareholders to dematerialize the shares, the Company has signed the agreement with both i.e NationalSecurities depositories Limited (NSDL) and Central Depositories Services (India) Ltd., (CDSL) underISIN No. INE806J01013.

83.71% of the Share Capital of the Company has been Dematerialize the shares, the Company hasbeen Dematerialized as on 31st March, 2013- total accounts Dematerialized is 1578 involving 16407250shares (which constitutes 83.71% of the share capital).

31


CFO CERTIFICATION

To,The Board of directorsHindustan fluorocarbons limitedHyderabad.

a) We have reviewed financial statements and the cash flow statement of Hindustan fluorocarbons

limited for the year ended 31st March, 2013 and that to the best of our knowledge and belief:

i) These statements do not contain any materially untrue statement or omit any material fact

or contain statements that might be misleading.

ii) These statements together present a true and fair view of the company’s affairs and are in

compliance with existing accounting standards, applicable laws and regulations.

b) There are, to the best of our knowledge and belief, no transactions entered into by the company

during the year 2012-13 which are fraudulent, illegal or in violation of the company’s code of

conduct.

c) We accept responsibility for establishing and maintaining internal controls for financial reporting

and that we have evaluated the effectiveness of the internal control systems of the company and

we have disclosed to the auditors and the Audit Committee, deficiencies in the design of operation

of such internal controls, if any, of which they are aware and the steps we have taken or propose

to take to rectify these deficiencies.

d) We have indicated to the auditors and the Audit Committee :

i) significant changes in internal control over financial reporting during the year 2012-13;

ii) significant changes in accounting policies during the year 2012-13 and that the same have

been disclosed in the notes to the financial statements; and

iii) Instances of significant fraud of which we have become aware and the involvement therein,

if any, of the management or an employee having a significant role in the company’s internal

control system over financial reporting.

Sd/- Sd/-(T S GAIKWAD) (E SURYA RAO)

(MANAGING DIRECTOR) DY.GENERAL MANAGER (FIN.)

Place: HyderabadDate: 12.08.2013


32

COMPLIANCE OFFICER’S RESPONSIBILITY STATEMENT:

The Compliance Officer (Mrs. Rajani K,) confirms as on 31STMarch, 2013, that the Company has:

- Maintained all the Statutory Registers required to be maintained under the Companies Act, 1956(“the Act”) and rules made hereunder.

- Filed all forms and returns and furnished necessary particulars in time to Registrar of Companies(ROC) and/or Authorities as required under the Act.

- Issued all notices as required to be given for convening the meeting of the Board of Directors andGeneral Meetings of the shareholders within the time limits prescribed by the law.

- Conducted the meetings of the Board of Directors and Annual General Meeting as per theprovisions of the Act.

- Complied with all the requirements relating to the minutes of the proceedings of the meeting ofthe Directors and the shareholders.

- Made due disclosures under the requirements of the Act including the requirements in pursuanceto the disclosures made by the directors.

- Obtained necessary approvals of the directors, shareholders, Central Government and otherauthorities as per the statutory requirements.

- Given loans and made investments in accordance with the requirements of the Act.

- Not exceeded the borrowing powers of the company.

- Registered all the particulars relating to the creation, modification and satisfaction of the chargeswith the ROC.

- Effected share transfers and dispatched the certificates within the time limit prescribed under theAct and rules made there under.

- Complied with all the requirements of the Listing Agreement entered into with the Stock Exchanges.

The company has also complied with the requirements prescribed by Securities and Exchange Boardof India (SEBI) and other statutory authorities and also the requirements under the Act and relatedstatutes in force.

NON-MANDATORY REQUIREMENTS

RE-APPOINTMENT OF DIRECTORS:

Six Directors viz. Shri. S V Kanaka Seshu, APIDC Nominee Director, Shri. Arun Agarwal, Govt NomineeDirector, Shri. J N Suryawanshi, HOCL Nominee Director, Shri. Suresh Kumar R, HOCL, NomineeDirector, Shri S B Bhide, HOCL Nominee Director and Dr. B D Kulkarni, HOCL Nominee Director aredue for retirement by rotation at the ensuing 30th Annual General Meeting of the Company.

Sd/-(RAJANI.K)

COMPANY SECRETARY &COMPLIANCE OFFICER


33


CERTIFICATE ON CORPORATE GOVERNANCE

To,The MembersHindustan Fluorocarbons LimitedHyderabad

We have examined the compliance of conditions of Corporate Governance by Hindustan Fluorocarbons

Limited, Hyderabad, for the year ended 31st March, 2013, as stipulated in Clause 49 of the Listing

Agreement of the said Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our

examination was limited to procedures and implementation thereof, adopted by the Company, for

ensuring the compliance of conditions of Corporate Governance. It is neither an audit nor an expression

of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the

representations made by the Directors and the Management, we certify that the Company has complied

the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company

nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For Ahalada Rao.V & Associates

Company Secretaries

Place: Hyderabad

Date: 14.07.2013

Sd/-

SUJANA NANDULA

Company Secretary in Practice

CP No. 11497


34

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDERSECTION 619(4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF HINDUSTANFLUOROCARBONS LIMITED, HYDERABAD FOR THE YEAR ENDED 31 MARCH 2013

The preparation of financial statements of Hindustan Fluorocarbons Limited, Hyderabad forthe Year ended on 31st March 2013 in accordance with the financial reporting frameworkprescribed under the Companies Act, 1956 is the responsibility of the management of thecompany. The Statutory Auditor appointed by the Comptroller and Auditor General of Indiaunder Section 619(2) of the Companies Act, 1956 is responsible for expressing opinion onthese financial statements under Section 227 of the Companies Act, 1956 based on theindependent audit in accordance with the auditing and assurance standards prescribed bytheir professional body, the Institute of Chartered Accountants of India. This is stated tohave been done by them vide their Audit Report dated 27 May 2013.

I, on the behalf of the Comptroller and Auditor General of India, have conducted asupplementary audit under Section 619(3) (b) of the Companies Act, 1956 of the financialstatements of Hindustan Fluorocarbons Limited, Hyderabad for the year ended on 31 March2013. This supplementary audit has been carried out independently without access to theworking papers of the Statutory Auditors and is limited primarily to inquiries of the StatutoryAuditor and company personnel and a selective examination of some of the accountingrecords. On the basis of my audit, nothing significant has come to my knowledge, whichwould give rise to any comment upon or supplement to Statutory Auditor’s report underSection 619(4) of the Companies Act, 1956.

For and on the behalf of the Comptroller and Auditor General of India

Sd/-(N Karunakaran)

Principal Director of Commercial Audit &Ex-Officio Member, Audit Board,

Hyderabad

Place: Hyderabad

Date: 09 July 2013

35


Balance Sheet as at 31st March 2013(Rs. in lacs)

Notes As at As at31 March 2013 31 March 2012

EQUITY AND LIABILITIESSHAREHOLDERS’ FUND

Share capital 2 1961.46 1,961.46Reserves and surplus 3 (4329.68) (4,424.56)

NON - CURRENT LIABILITIESLong-term borrowings 4 1327.31 1870.61Other Long term liabilities 5 0.00 451.47Long-term provisions 6 199.58 245.45

CURRENT LIABILITIESShort-term borrowings 7 297.20 28.26Trade payables 8 417.93 380.58Other current liabilities 9 3502.45 2693.75Short-term provisions 10 214.41 113.64

TOTAL 3590.66 3320.66ASSETSNON-CURRENT ASSETS

Fixed AssetsTangible assets 11A 1888.08 1643.34Intangible assets 11B 5.61 61.49Capital work-in-progress 0.00 119.87Long term loans and advances 12 98.95 68.79

CURRENT ASSETSInventories 13 1057.87 614.76Trade receivables 14 382.55 628.46Cash and bank balances 15 1.47 34.78Short-term loans and advances 16 156.13 149.16

TOTAL 3590.66 3320.66Significant accounting policies and noteson Financial Statements 1As per our report of even date For and on behalf of the Board of Director of HFC Ltd.,

For S. Daga & Co.,Chartered Accountants(FRN 000669S)

Sd/- Sd/- Sd/-(PAVAN KUMAR BIHANI) (J N SURYAWANSHI) (T S. GAIKWAD)

PARTNER CHAIRMAN MANAGING DIRECTORM No. 225603

Sd/- Sd/-Place: Mumbai (E. SURYA RAO) (RAJANI .K)Date: 23.05.2013 Dy. GENERAL MANAGER(FINANCE) COMPANY SECRETARY


36

Statement of Profit and loss for the year ended 31.03.2013(Rs. in lacs)

Notes 2012-2013 2011-2012

Revenue from operations 17 4447.51 6758.16Less: Excise Duty 367.20 475.23Net Sales 4080.31 6282.93Other income 18 375.74 133.16Total Revenue 4456.05 6416.09

Expenditure:Cost of raw materials consumed 19 1383.87 1947.35Changes in inventories of finished goodsWork-in-progress and Stock-in-Trade 20 (428.24) 1520.19Employee benefits expense 21 1748.86 1191.61Finance costs 22 105.81 128.69Depreciation and amortization expense 11E 167.88 155.19Other expenses 23 1381.67 1259.39Total expenses 4359.85 6202.42Deduct Prior period items (net) 1.32 (38.58)Profit before exceptional items and tax 94.88 252.25Tax Expense 0.00 0.00Profit/(Loss) for the year from continuingoperations 94.88 252.25

Earnings per equity share:Basic 24 0.48 1.29Diluted 0.48 1.29

Significant accounting policies and noteson Financial Statements 1

As per our report of even date For and on behalf of the Board of Director of HFC Ltd.,





37


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2013 (Rupees in lacs) 2012-13 2011 - 12

CASH FLOW FROM OPERATING ACTIVITIES:Net Profit before taxation and Extraordinary items 94.88 252.25

Adjustments for :Depreciation 106.39 93.71VRS Payment written off during the year 0.00 37.26

Refurbishment expenditure written off 61.49 61.49262.76 444.70

Operating Profit before working capital changesAdjustments for(Increase)/Decrease in Inventories (443.10) 1466.30(Increase)/Decrease in Trade receivables 245.92 (344.29)

(Increase)/Decrease in Loans & Advances (37.15) 53.16Increase/(Decrease) in working capital borrowings 268.94 (378.25)Increase/(Decrease) in Current Liabilites & Provisions 134.08 (397.00)

Cash generated from operations 168.69 399.91Net Cash flow from Operating activities 431.45 844.61CASH FLOW FROM INVESTING ACTIVITIES :Purchase of fixed assets (236.86) (246.77)VRS & Refurbishment Expenditure 0.00 0.00

(236.86) (246.77)

CASH FLOW FROM FINANCING ACTIVITIES:Increase in Secured Loans (227.90) (424.18)Increase in Unsecured Loans 0.00 (144.93)

Net cash used in financing activities (227.99) (569.11)Net increase in cash and cash equivalents (33.31) 28.73

Cash and cash equivalents at the beginning of period 34.78 6.04Cash and cash equivalents at the ending of period 1.47 34.78

Previous year figures have been regrouped / reclassified wherever necessary to confirm to current year’sclassification.As per our report of even date for and on behalf of the Board of Directors of HFC Ltd.,






38

Notes to financial statements for the yearended 31st March 2013

NOTE No.1BASIS OF PREPARATION OF FINANCIALSTATEMENTS:The financial statement have been prepared underthe historical cost convention on accrual basis tocomply in all material aspects and in accordancewith generally accepted accounting principles inIndia and the relevant provisions of the CompaniesAct,1956. The accounting policies have beenconsistently applied by the company unlessotherwise stated.

Significant Accounting policies

1(A) USE OF ESTIMATES:The preparation of financial statements requiresestimates and assumptions to be made that affectthe reporting amount of assets and liabilities onthe date of the financial statements and thereported amount of revenues and expenses duringthe reporting period. Difference between actualresults and estimates are recognized in the periodin which the results are known/ materialized.

1(B) RECOGNITION OF REVENUE ANDEXPENDITURE :

(i) Revenues/Incomes and Costs/Expendituresare generally accounted on accrual, as theyare earned or incurred.

(ii) Sales are recognized when significant risksand rewards of ownership have beentransferred to the buyer. In case ofdevelopment projects / Research income isrecognized on achieving the set milestonesor targets.

(iii) Carbon credit revenue is recognized onachieving the set milestones or targets asprescribed by an agency and wherereasonable assessment of certainty of futureeconomic benefits.

(iv) Export incentives under various schemes arerecognized as Income on certainty ofrealization.

(v) Sale of realizable scrap is accounted onreceipt basis.

(vi) Insurance claims are accounted on accrualbasis on admission of claims.

(vii) Interest income is recognized on a timeproportion basis taking into account theamount outstanding and the applicable rateof interest.

1(C) FIXED ASSETS:(i) Fixed Assets (including capital work-in-

progress) are accounted at cost lessaccumulated depreciation net of modvatcredit.

(ii) Constructed and fabricated capital assets arecapitalised as and when the plant is put intocommercial production.

(iii) Expenditure during construction periodincluding interest on loans borrowed isincluded in the Capital cost.

(iv) Significant items of separate identity capableof enhancing life and capacity of themachinery are capitalised at cost inclusiveof installation cost.

1(D) DEPRECIATION(i) Depreciation is provided on Straight-Line

Method in accordance with Schedule XIV ofthe Companies Act, 1956, as amendedtreating plant and machinery as continuousprocess plant.

(ii) Depreciation on assets costing less thanRs.5000/- is provided at 100%.

1(E) VOLUNTARY RETIREMENT SCHEME (VRS)(i) The Company has introduced Voluntary

Retirement Scheme in accordance with BIFRModified Draft Rehabilitation Scheme. TheCompany followed the policy guidelinesissued by BIFR by amortizing the VRSpayment over a period of 3 years.

1(F) REFURBISHMENT EXPENDITUREThe company has followed the policy ofamortizing refurbishment expenditure met on

39

HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013Plant and Machinery over a period of fiveyears from the year of expenditure inaccordance with the BIFR Modified DraftRehabilitation Scheme.

1(G) INVENTORIES:(i) The closing stock of raw materials, packing

material stores and spares are valued at costby adopting weighted average method or netrealizable value whichever is less. Stock-inprocess (intermediate products) and finishedgoods including CERs are valued at cost ornet realizable value whichever is lower.

Cost of Stock-in-process includes costs ofconversion and other costs incurred inbringing the inventories to their presentlocation and condition.

(ii) Excise duty payable on finished goodsmanufactured but not removed is includedin the Valuation of such stocks.

(iii) By-products are valued at NIL value.

1(H) EMPLOYEE BENEFITS:a. Short term employee benefits:

Undiscounted value of short term employeebenefits such as salaries, wages, short termcompensated absences, bonus, ex-gratiaand performance incentives are recognizedas expense in the period in which theemployees render the related service

b. Post Employment BenefitsDefined Contribution plans: Contributionto defined contribution plans being EmployeeProvident Fund, Employee State Insurance,Employee Insurance Scheme etc. arerecognized in the Statement of profit and lossduring the period in which the employeesrender the related services.

Defined Benefit Plans: Liabilities in respectof defined benefit plans being Gratuity andLeave encashment are determined based onan actuarial valuation using the projected unitcredit method. Actuarial gains or losses are

recognized immediately in the Statement ofProfit and Loss account.

1(I) PROVISION FOR DOUBTFUL DEBTS:Provision for doubtful debts/loans/advances:

Provision for the doubtful debts is made inthe books in respect of debtors outstandingfor more than 3 years except Govt. Debts.In respect of cases under Civil suits/tribunalsfor recovery of dues which are yet to bedecided, provisions are made to the extentconsidered necessary by the Management.

1(J) FOREIGN CURRENCY TRANSACTIONS:(i) Foreign currency transactions are accounted

for at the exchange rates prevailing on thedate of transaction.

(ii) Fixed assets are translated at the exchangerates on the date of transaction. Theexchange difference in each financial year,up to the period of settlement is taken toStatement of profit and loss.

(iii) The monetary items in foreign currencies aretranslated at the closing exchange rate onthe date of balance sheet and difference intranslation and realized gains/losses thereonadjusted in the Statement of profit and loss.

1(K) BORROWING COST:Borrowing costs relating to acquisition offixed assets which takes substantial periodof the time to get ready for its intended useare included to the extent they relate to theperiod till such assets are ready to be put touse, All other borrowing costs are chargedto revenue. Borrowing costs consists ofinterest and other costs that the companyincurs in connection with borrowing of fundson acquisition of fixed assets are capitalisedas part of the cost of asset.

1(L) TAXES ON INCOME:(i) The Current charge for income taxes is

calculated in accordance with the relevanttax regulations applicable to the company onthe estimated total income for the year.


40

(ii) Deferred tax assets and liabilities arerecognized on timing differences betweentaxable income and accounting income,originating in one period and expected toreverse in subsequent periods. Deferred taxasset is recognized and carried forward onlyto the extent that there is a virtual certaintythat the asset will be realized in future.

(iii) Deferred tax assets and liabilities aremeasured using the tax rates and tax lawsthat have been enacted or substantivelyenacted as on the Balance Sheet date.

1(M) SEGMENT REPORTING:The company’s operation mainly comprisesmanufacturing of PTFE (Suspension &Emulsion). These activities constitutes theprimary segment i.e. manufacturing inchemicals.

1(N)EARNING PER SHARE:Basic Earnings Per Share is calculated bydividing the net profit or loss for the periodattributable to equity share holders by theweighted average number of equity sharesoutstanding during the period. For thepurpose of calculating the diluted earningsper share, the net profit or loss for the period

attributable to equity share holders and theweighted average number of sharesoutstanding during the period are adjustedfor the effects of all dilutive potential equityshares.

1(O) IMPAIRMENT OF ASSETS:The carrying amounts of assets are reviewedat each balance sheet date to determinewhether there is any indication of impairment.If any such an indication exists, then thecarrying value is reduced to the higher of thenet selling price or the value in use. The valuein use is the present value of estimated futurenet income expected from use of the asset.

1(P) PROVISIONS / CONTINGENT LIABILITIES:Provisions are recognized, when thecompany has a present legal or constructiveobligation, as a result of past events, forwhich it is probable that an out flow ofeconomic benefits will be required to settlethe obligation and a reliable estimate can bemade for the amount of the obligation. Thedisclosure is made for all present or possibleobligations that may but probably will notrequire outflow as contingent liability in thefinancial statements.

NOTE 2 : SHARE CAPITAL(Rs. In lacs)

As at As at31-03-2013 31-03-2012

Authorised21000000 (Pr. Year 21000000) Equity Shares of Rs.10 /- each 2,100.00 2,100.00Issued19630000 (Pr. Year 19630000) Equity Shares of Rs.10/- each 1,963.00 1,963.00Subscribed & Paid up19599100 (Pr. Year 19599100) Equity Shares of Rs.10/- each fully paid 1,959.91 1,959.9130900 (Pr. Year 30900) Equity Shares forfeited (amount originally paid) 1.55 1.55Total 1,961.46 1,961.46

41


NOTE 2 (A)Reconciliation of number of shares outstanding at the begining and at the end of the reporting period

Equity Shares 31-03-2013 Equity Shares 31-03-2012Number Amount Number Amount

Shares outstanding at the beginning of the year 19599100 1959.91 19599100 1959.91Shares Issued during the year 0 0 0 0Shares bought back during the year 0 0 0 0Shares outstanding at the end of the year 19599100 1959.91 19599100 1959.91NOTE 2 (B)Disclosure of shares held by its holding company11060000 (Pr.Year 11060000) Equity Shares fully paid up of Rs.1106 lakhs (Pr.Year Rs.1106 lakhs)are held by M/s Hindustan Organics Chemicals Limited, the holding company.NOTE 2 (C)Details of equity shareholders holding more than 5% of equity shares along with No. of equityshares held at the beginning and at the end of the reporting period as given belowSl.No. Name of Shareholder As at 31 March 2013 As at 31 March 2012

No. of % of No. of % ofShares held Holding Shares held Holding

1 M/s Hindustan Organics Chemicals Ltd 11060000 56.43% 11060000 56.43%

NOTE 2 (D)

The company has only one class of shares referred to as equity shares having a par value of Rs.10.each holder of the equity share, as reflected in the records of the company as of the date of theshareholders meeting, is entitled to one vote in respect of each share held for all matters submitted tovote in the shareholders meeting.

The company declares and pays dividends in Indian rupees. The dividend proposed by the Board ofDirectors is subject to the approval of the shareholders in the Annual General Meeting.

NOTE 3 : RESERVES AND SURPLUS (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

Surplus/(Deficit) in the statement of profit and loss

Opening balance (4,424.56) (4,676.81)

Add: Profit transferred from Statement of Profit and Loss 94.88 252.25

Net Deficit in the Statement of Profit & Loss (4,329.68) (4,424.56)

Total (4,329.68) (4,424.56)

NOTE 4 : LONG TERM BORROWINGS (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

SecuredTerm loansfrom Hindustan Organics Chemicals Ltd 1,327.31 1,870.61

Total 1,327.31 1,870.61

Rupees in lacs.


42

4(A). The Term loan is secured by part of the land to the extent 82.13 acres of the factory at Rudraram Village

4(B). The Term loan of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR agreement andis repayable in seven equal instalments as per the loan agreement commencing from F Y 2010-11.The instalment due for F Y 2010-11, 2011-12 & 2012-13 amounting to Rs. 1176.03 lakhs is not paid bythe company and same is shown in Note - 9 under the head ‘Other Current liabilities’ being currentmaturities of long term debt.

4(C). The Term loan of Rs.756.42 lakhs is Interest bearing @ 10.25% to 14.50% repayable in 5 annualinstalments commencing from F Y 2010-11 as per the loan agreement. The company is continuingdefault in payment of instalment due and interest during the F Y 2010-11, 2011-12 & 2012-13. Of theinstalments due of Rs.605.14 lakhs, an amount of Rs.300 lakhs paid during the year and balance isshown in Note -9 of the financial statements under the head ‘Other Current liabilities’ being currentmaturities of long term debt and interest due amounting to Rs.500.94 lakhs under Interest accrued anddue.

NOTE 5 : OTHER LONG TERM LIABILITES (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

Creditors for Capital Goods 0.00 451.47

Total 0.00 451.47

5(A). Creditors for capital goods includes an amount of Rs.Nil payable to M/S SRF Ltd towards supplyand erection of Plant and Machinery relating to CDM Project. The total outstanding amount as percontract for plant and machinery supply and mechanical completion is Rs.1250.00 lacs. As per theterms of BOT contract dated 14-8-2007, the payment is to be made in the form of CERs. The contractequated Rs.1250.00 lacs to 6,59,500 CERs in 5 instalments of 131900 each. However, the totalinstalments of CERs are reduced to 4.13 instalments and the company has so far transferred 478878CERs and balance of 1.32 instalment for a value of Rs.342.35 lacs is due. CDM Borad has stopped thistype of CERs Trading. Hence M/s SRF contract deemed to have been completed and the due date was31.12.2012. Hence there is remission of liability and accordingly the same has been shown under‘Other non operating Income’.

NOTE 6: LONG TERM PROVISIONS (Rs. In lakhs)

As at As at31 March 2013 31 March 2012

(a) Provision for employee benefits (Refer Note 21)Gratuity 172.58 203.49Leave Encashment 27.01 41.97Total 199.58 245.45

NOTE 7: SHORT TERM BORROWINGS (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

SecuredFrom bank STATE BANK OF HYDERABADCASH CREDIT 297.20 28.26Total 297.20 28.26

43

HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-20137(A).Secured by hypothecation of the company’s entire stock of raw materials, finished goods, stockin process, consumables, stores & spares and book debts, plant and machinery and part of the landto the extent of Ac 64 out of the total land of Ac 146.13 cents at Rudraram Village and guaranteed bythe holding company, viz. Hindustan Organic Chemicals Ltd. The cash credit is repayable on demandand carries interest @15.5% p.a.

NOTE 8: TRADE PAYBLES (Rs. In lakhs)As at As at

31 March 2013 31 March 2012Dues to Micro and SSI units 3.62 2.64

Others 414.31 377.93Total 417.93 380.58

8(A). Disclosure in accordance with Section 22 of Micro, Small and Medium Enterprises DevelopmentAct, 2006.

As at As atParticulars 31 March 2013 31 March 2012

Principal amount remaining unpaid and interest due thereon Nil Nil

Interest paid in terms of Section 16 Nil Nil

Interest due and payable for the period of delay in payment Nil Nil

Interest accrued and remaining unpaid Nil Nil

Interest due and payable even in suceeding years Nil Nil

8(B). The information as required to be disclosed under the Micro, Small and Medium EnterprisesDevelopment Act, 2006 has been determined to the extent such parties have been identified on thebasis of information available with the company.

NOTE 9: OTHER CURRENT LIABILITIES (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

Current maturities of long-term debt (Refer Note 4) 1,873.18 1,629.88Interest Accrued and Due (Refer Note 4) 500.94 428.84Creditors for capital goods 0.00 399.26Others Payables 1,128.33 235.76

Total 3,502.45 2,693.75

NOTE 10: SHORT TERM PROVISIONS (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

(a) Provision for employee benefits (Refer Note 21)

P F company contribution 1.30 0.00Gratuity 30.63 9.28LTA & Other Provistions 2.52 2.23Leave Encashment 179.96 102.14

Total 214.41 113.64


44

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45

HINDUSTAN FLUOROCARBONS LIMITED 30th Annual Report 2012-2013NOTE 12 LONG TERM LOANS AND ADVANCES (Rs. In lakhs)


Security DepositsSecured, Considered good 0.00 0.00Unsecured, considered good 98.95 68.79Doubtful 0.00 0.00

Total 98.95 68.79

NOTE 13 : INVENTORIES (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

Raw Materials and components {includes in transit of Rs.395734/- 54.11 89.42

(Pr. Year Rs.4559302)}

Stock-in-procress* 301.78 130.78

Finished goods 473.08 180.67

Stores and spares 228.90 213.89

Grand Total 1057.87 614.76

13(A)* The closing stock-in-process includes the following products: (Rs. in lakhs)As at As at

31 March 2013 31 March 2012CFM – 22 Product 64.75 85.44TFE 25.10 3.50POLY-SUSPENSION 165.13 19.69POLY-EMULSION 46.80 22.15Total 301.78 130.78

13(B). Excise duty on closing finished goods in respect of goods manufactured by the companyamounting to Rs.52.04 lacs (previous year 16.87 lacs) is included in the valuation of such stocks.

13(C). Finished goods, which have not moved for more than 3 years are valued at Rs.1.00/kg and theconsequential difference in value of Rs.2.24 lacs (Previous year Rs.2.24 lacs) and there is nodifference to change off during the year.

NOTE 14: TRADE RECEIVABLES (Rs. in lakhs)As at As at

31 March 2013 31 March 2012

Unsecured,considered good

Debts overdue for a period exceeding six months 8.90 190.81

Other debts 373.64 437.65

Total 382.55 628.46

14(A). Balance standing to the debit/credit of parties is subject to confirmation by them and reviews bythe Company.


46

NOTE 15 : CASH AND BANK BALANCES: (Rs. In lakhs)As at As at

31 March 2013 31 March 2012Balances with Banks 0.32 30.36Margin money Deposit (maturity less than 3 months) 1.00 4.40Cash on hand 0.15 0.02

Total 1.47 34.78

15(A). Margin money deposits are subject to first charge to secure the company’s cash credit loan.

NOTE 16: SHORT TERM LOANS AND ADVANCES (Rs. In lakhs)As at As at

31 March 2013 31 March 2012

Balances with central excise 16.89 45.66

Others 116.36 66.33- Advance to SuppliersConsidered good 22.88 37.18Considered doubtful 0.91 0.91Less:Provision for Considered doubtful advance (0.91) (0.91)

Total 156.13 149.16

NOTE 17: REVENUE FROM OPERATIONS (Rs. in Lacs) 2012-13 2011 - 12

Revenue From Operations

(i) Sale of products

Polytetrafluoroethylene 1073.23 1668.02

Application Development Customer Support 73.29 5.68

CFM - 22 829.82 949.28

Tetrafluoroethylene 1319.53 2354.38

Hydrogenchloride 21.06 3316.93 55.17 5032.53

Gross Sales 3316.93 5032.53

(ii) Other operating revenues:

Job Work conversion 12.22 26.63

Sale of Scrap 13.80 0.00

Sale of DHF 2.62 1.92

CER’s Income 1101.94 1130.58 1697.08 1725.63

TOTAL TURNOVER 4447.51 6758.16

17(A) There is change in accounting policy in respect of CERs on recognition of income and valuationof inventory compared to earlier year, however as there are no inventory of CERs to the close of theyear, there is no impact on profit/loss and assets as on 31.3.2013 in the financial statements.

47


NOTE 18: OTHER INCOME (Rs. in lakhs)

2012-13 2011-12

Interest from Others 3.35 3.72Gain on Foreign Exchange Fluctuation 0.00 49.69Other non - operating income - Creditors for capital goods written back 342.35 0.00 - Others 30.04 79.75

Total 375.74 133.16

NOTE 19 : COST OF RAW MATERIAL AND PACKING MATERIAL CONSUMED: (Rs. in lakhs)

2012-13 2011-12

Inventory at the beginning of the year 46.49 91.16

Add : Purchases 1389.44 1902.68

Less : Inventories at the close of the year 52.06 46.49

Cost of Raw material and packing material consumed 1383.87 1947.35

19(A). Details of raw material and packing material consumed : (100% Indigenious)(Rs. in Lacs)

2012-13 2011-12

AHF 676.93 805.43

CHLOROFORM 486.07 904.44

RM - 258 88.02 115.3

OTHERS 119.56 110.57

PACKING MATERIAL 13.29 11.61

TOTAL 1383.87 1947.35

19(B). Details of Inventory : (Rs. in lakhs)

2012-13 2011-12AHF 17.8 19.77

CHLOROFORM 15.83 3.01RM - 258 4.17 0.00

OTHERS 12.63 21.33

PACKING MATERIAL 1.9 2.38

TOTAL 52.33 46.49


48

NOTE 20: CHANGES IN INVENTORIES OF FINSHED GOODS & WORK-IN-PROGRESS(Rs. in Lacs)

2012-13 2011-12Opening stock: Stock-in-process 130.78 65.85

CERs Stock 0.00 1697.07 Finished products 180.67 311.45 57.18 1820.11

Less:Closing Stock

Stock-in-process 301.78 130.78

CERs Stock 0.00 0.00

Finished products 473.08 774.86 180.67 311.45

(463.41) (1508.66)Add: Increase/(Decrease) in Excise duty

on Finished products 35.17 11.53

Total (428.24) 1520.19

NOTE 21: EMPLOYEE BENEFITS EXPENSES(Rs. in Lacs)

2012-13 2011-12Salaries wages and Bonus 1610.54 896.45

Contribution to Provident and other funds 68.98 126.20

Staff Welfare expense 69.34 73.25

VRS Expenditure written off 0.00 95.71

Total 1748.86 1,191.61

21(A). Both employer and employees make monthly contributions of 10% instead of 12% as per BIFR

scheme to a separately managed exempted EPF Trust.

21(B). As per Accounting Standard 15 “Employee benefits”, the disclosures as defined in the Accounting

Standard are given below:

DEFINED CONTRIBUTION PLANSContribution to Defined Contributions Plans, recognised as expense for the year is as under: (Rs.in lacs)

2012-13 2011-12Employers Contribution to Provident Fund 62.47 114.63Employers Contribution to ESI 1.78 1.70Other Contributions 12.00 9.87

The Company’s Provident Fund is exempted under section 17 of Employees’Provident Fund andMiscellaneous Provisions Act,1952.Conditions for grant of exemption stipulate that the employer shallmake good deficiency,if any,in the interest rate declared by the trust vis-à-vis statutory rate.

49


Defined Benefit Plan

The employees’ gratuity fund scheme managed by a trust(Life Insurance Corporation of India) is adefined benefit plan.The present Value of obligation is determined based on actuarial valuation usingthe projected unit credit method, which recognises each period of service as giving rise to additionalunit of employee benefit entitlement and measures each unit seperately to build up the final obligation.The obligation for leave encashment is recognised in the same manner as gratuity.

i) Reconciliation of opening and closing balances of Defined Benefit Obligation Rupees in lacs.

Gratuity Leave(Funded) Encashment

(Unfunded)2012-13 2012-13

Defined Benefit obligation at the beginning of year 310.75 144.10

Current service cost 17.51 18.73

Interest cost 24.86 11.53

Actuarial(gain)/loss (26.45) 32.60

Benefits paid (19.72) 0.00

Defined Benefit obligation at the year end 306.95 206.96

ii) Reconciliation of opening and closing balances of fair value of Plan assets Rupees in lacs.

Gratuity (Funded)2012-13

Fair value of plan asset at the beginning of year 97.98

Expected return on plan assets 8.74

Actuarial gain/(loss) 0.00

Employer contribution 16.73

Benefits paid (19.72)

Fair value of plan asset at the year end 103.73Actual return on plan assets (8.74)

iii) Reconcilition of fair value of assets and obligations (Rs. in lacs)Gratuity Leave

(Funded) Encashment(Unfunded)

2012-13 2012-13

Fair value of plan assets (103.73) 0.00

Present value of obligation 310.75 206.96

Amount recognised in Balance Sheet 203.21 206.96


50

iv) Expenses recognised during the year (Rs. in lacs)Gratuity Leave

(Funded) Encashment(Unfunded)

2012-13 2012-13

Current service cost 17.51 18.73

Interest cost 24.86 11.53

Expected return on plan assets (8.74) 0.00

Actuarial gain/(loss) (26.45) 32.60

Net Cost 7.18 62.86

v) Actuarial assumptionsGratuity Leave(Funded) Encashment

(Unfunded)2012-13 2012-13

(ultimate) (ultimate)

Mortality Table (LIC) 1994-96 1994-96

Discount Rate (per annum) 8% 8%

Expected rate of return on plan assets 9.25% –

Attrition Rate 10% 10%

Salary Rise 4% 4%

21(C) Actuarial valuation was carried out from last year onwards.

21(D). The arrears on account of pay fixation in the revised scale with effect from 01-01-1997 videwage revision settlement as per DPE guidelines, have been provided for in books at the close of theyear amounting to Rs.727.82 lakhs (Pr. year Rs.1159.85 Lakhs shown under contingent liability). Asper BIFR-MDRS, the company has implemented the wage revision for officers and non officers w.e.f.December 2010 and wage revision of 2007 for officers and non-officers was effected w.e.f.October,2012 and the arrears to this effect could not be charged to profit and loss account since BIFRcategorically has stipulated that arrears should be released subject to availability of funds. Accordingly,the liability has been shown under contingent liability.

NOTE 22: FINANCE COSTS(Rs. in Lacs)

2012-13 2011-12

Interest on Term Loan 0.00 6.14

Interest on Working Capital 24.54 10.57

Interest on secured loan-HOC 80.13 109.53

Interest to Others 1.15 2.45

Total 105.81 128.69

51


NOTE 23: OTHER EXPENSES(Rs. in Lacs)

2012-13 2011-12Consumption of stores and spares 75.18 92.42Power & Fuel 759.42 599.76Water Charges 94.49 132.48Rent 7.89 5.05Rates & Taxes 96.51 5.70Repairs and Maintenance

To Building 7.69 6.01To Machinery 4.76 47.25To Other Assets 68.21 80.67 8.69 61.95

Insurance 10.44 11.34Payments to auditors:

Statutory audit fees 0.95 0.85Limited Review 0.45 1.40 0.30 1.15Professional charges 109.84 216.57Transport charges 52.46 0.00Misc.Expenditure 93.37 132.96

Total 1381.67 1259.39

NOTE - 24 : EARNINGS PER SHARE(Rs. in Lacs)


Net Profit attributable to equity shareholdersProfit after tax (Rs. in lacs) 94.88 252.25Weighted average number of shares (Nos.) 19599100 19599100Basic and Diluted Earnings per share(Rs.) 0.48 1.29Face value per share(Rs.) 10.00 10.00

NOTE - 25 CONTINGENT LIABILITIES AND COMMITMENTS:(Rs. In lacs)


(i) Contingent Liabilities(a) ESI 13.46 13.46(b) Wage Revision arrears for employees 1070.34 1159.85

1083.80 1173.31(ii) Commitments(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 0.00 65.00

1083.80 1238.31


52

Note - 26 - TAXES ON INCOME:26(A). Provision for current tax on profits for the year has not been made under Minimum AlternateTax under section 115JB of Income Tax Act 1961 since the minimum of carried forward of losses orunabsorbed depreciation as per books of accounts are set off during the year against the current yearbook profit.26 (B). The company has not provided deferred tax asset due to huge accumulated losses incurredsince there is no virtual certanity to realise in future.

Note - 27 - DETAILS OF MANUFACTURED GOODS : (Rs. in Lacs)Particulars Sales Closing Opening

Value Inventory InventoryCFM - 22 829.82 64.75 85.43Tetrafluoroethylene 1319.53 25.10 3.51Polytetrafluoroethylene 1073.23 473.08 180.67

Note- 28 (Rs. in Lacs)2012-13 2011-12

CIF value of imports of Raw materials 36.35 24.20

Note - 29Expenditure in foreign currency :Travelling expenditure Rs. 0.00 Rs. 1.77

Note - 30Earning in foreign currency Rs. 573.40 Rs.1,746.76

Note - 31RELATED PARTIES DISCLOSURE:The company is a subsidiary of HOCL(HINDUSTAN ORGANIC CHEMICALS LIMITED)Interest payable to HOCL Rs. 80.13Less : Interest reversal of earlier years Rs. 0.00 Rs. 80.13 Rs. 61.44Secured Loan from HOCL Rs.3,701.42 Rs.3,929.33KEY MANAGEMENT PERSONNEL:SHRI T S GAIKWAD, Managing DirectorRemuneration paid to Director Rs. 14.68 Rs. 9.14

Note - 32

LITIGATIONS AT VARIOUS AUTHORITIES:

AUTHORITIES NATURE OF LITIGATIONS QUANTUM REMARKS Hon’ble High Court of A.P Recovery from Debtors Rs.132.00 lacs The company had a

favourable Judgementfrom the single bench.The deponent hadapproached full benchof High Court.

53


Note - 33The company has prepared these financial statements as per the format prescribed by Revised ScheduleVI of the Companies Act, 1956 (‘’the schedule’’) issued by Ministry of Corporate Affairs. Previousperiod’s figure have been recast/restated to confirm to the classification required by the revised Schedule-VI

Note - 34Previous year’s figures have been regrouped/reclassified, wherever necessary to confirm to currentyear’s classification.

As per our report of even date For and on behalf of the Board of Director of HFC Ltd.,





59


HINDUSTAN FLUOROCARBONS LIMITEDRegd. Office: 303, Babukhan Estate, Basheerbagh, Hyderabad - 500 001

ATTENDANCE SLIP

30th Annual General Meeting on Saturday the 7th September, 2013.

Name of the Shareholder(s) _______________________________________________________

Folio No. ______________________________________________________________________

I certify that I am Registered Member/Proxy for the Registered Member of the Company. I herebyrecord my presence at the 30th ANNUAL GENERAL MEETING of the company at the Press Club,Deshodharaka Bhavan, 5-9-60/B, Fateh Maidan, Hyderabad – 500 001 at 3.00 pm on Saturday the7th September, 2013.

________________________ _________________________ (Member’s Proxy Name) Member’s/Proxy’s Signature

---------------------------------------------------------Tear Here ---------------------------------------------------------

HINDUSTAN FLUOROCARBONS LIMITEDRegd. Office: 303, Babukhan Estate, Basheerbagh, Hyderabad - 500 001

FORM OF PROXY

30th Annual General Meeting, on Friday the 7th September, 2013.

Name of Shareholder(s)__________________________________ Folio No._________________

No. of Shares____________________________________________________________________

I/We _____________________________________ of _______________________being aMember(s) of the above vote for me/us behalf of the 30th ANNUAL GENERAL MEETING of thecompany at the Press Club, Deshodharaka Bhavan, 5-9-60/B, Fateh Maidan, Hyderabad – 500 001at 3.00 pm on Saturday the 7th September, 2013.

Signed_________________day of ____________2013 Signature ___________________

Note: This proxy form duly completed should be deposited at the Registered Office of the companymentioned above not less than 48 (Forty Eight) hours before the time of holding the meeting.

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BOOK - POSTPRINTED MATTER

If undelivered, Please return toHINDUSTAN FLUOROCARBONS LIMITED303, Babukhan Estate,Basheerbagh,Hyderabad - 500 001.

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hindustan fluorocarbons limited th annual …...1 hindustan fluorocarbons limited 30th annual report...

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