Your Board of Directors takes pleasure in presenting their 41stAnnual Report on the performance of the Company, together with the Audited Annual Accounts for the year ended 31st March, 2024 and reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.
1. FINANCIAL RESULTS
The financial performance of the Company for the year ended 31st March, 2024 is summarized below: (Rs. in lacs)
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Particulars
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2023-24
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2022-23
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Revenue from operations
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0.00
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0.00
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Other income
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208.21
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210.90
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Total Income
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208.21
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210.90
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Total expenditure
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85.49
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722.21
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Profit/(Loss) before tax
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122.72
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(511.31)
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Other Comprehensive income/(loss)
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0.00
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0.00
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Total comprehensive income/(Loss)
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122.72
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(511.31)
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2. RESERVES (Section 134(3)(m
Company has not transferred any amount to reserves due to continuous losses.
3. DIVIDEND (Section 134(3)(k))
The Board of Directors did not recommend any dividend on the equity shares for the year ended 31st March, 2024 as HFL had stopped its operations.
4. OPERATIONS AND OVERALL PERFORMANCE
Pursuant to CCEA order for closure and shutting of operations, HFL had stopped its operations.
5. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY:i. DECISION FOR CLOSURE OF HFL
HFL Board at its meeting held on 30.07.2019, after considering all options, concluded that sustainable operations of HFL is not feasible and recommended for closure of the unit subject to approval of the administrative Ministry. The Board of HOCL, parent company of HFL, at its meeting on 09.08.2019 has also given ‘in principle’ approval for closure of HFL subject to approval of Administrative Ministry.
ii. CCEA APPROVAL
HFL had received letter from Ministry of Chemicals and Fertilizers, Department of Chemicals and Petro chemicals vide File. No. 9-5101506/2019-Ch.NI dated 29.01.2020 informing the decision of Cabinet Committee on Economic Affairs (CCEA) for closure and shutting of operations of HFL. HFL has received approval of shareholders for the shutting down of the plant/unit and closure of the company and to sell or otherwise dispose off the whole or substantially the whole of the undertaking of the company through postal ballot notice dated February 10, 2020.
iii. SALE/DISPOSAL OF HFL FREEHOLD LAND
HFL is in the process of sale of land and the subject to receipt of NOC from TSICC/TS Govt.
iv. PLANT AND MACHINERY AND OTHER MOVABLE ASSETS
Sale of Plant & Machinery and other movable assets was done through MSTC as per decision taken by CCEA on 29.01.2020 and was executed as per DPE guidelines. HFL has only one plant/unit located at Rudraram, District Sangareddy in Telangana.
v. RECEIPT OF GOI INTEREST FREE LOAN
HFL had received interest free loan of Rs.75.87 crore from GoI for closure related activities. As per GoI order HFL to utilize funds for payment of liabilities viz. VRS/VSS to existing employees, Clearing liabilities of Ex-employees, Statutory dues and secured / unsecured creditors, etc. related to shutting down of plant / unit of HFL as per CCEA decision dated 29.01.2020.
vi. OBTAINING MLF FUNDING FROM MOEFCC FOR THE PLANT CLOSURE
In case of closure of HCFC-22 plant, Multilateral Fund (MLF) is providing the financial assistance for this process through World Bank. HFL is in touch with DCPC and MoEFCC on MLF funding.
A DO letter No.42/31/2017-PMU-OC dated 28-Sep-2021 addressed to Director (C&PC), from Hon’ble Additional Director (Ozone Cell), MoEFCC and intimated that an email was received from World bank and informed that MLF funding will not be provided to HFL since closure decision was taken by GoI and HFL would be closed by December, 2021 no further intervention from MoEFCC is admissible as per the rules and procedures of Ex-Com of the MLF.
vii. VRS -2020 SCHEME
The VRS-2020 scheme is implemented in the company vide Part-I Order No.01/2020, Dated: 19.02.2020, accordingly the employees were relieved on 30.05.2020 (30), 30.06.2020 (25) 20.07.2020(9) and 31.07.2021 (1), 16 employees got superannuated, one employee left the organisation on lien, 02 employees were resigned and other 05 employees were transferred to Hindustan Organic Chemicals Limited (HOCL).
6. SHARES
There was no change in the equity share capital of the company during the year. The Authorized Share Capital of the company is Rs. 21,00,00,000 and the paid up capital of the company is Rs.19,59,91,000. The company’s shares are listed in BSE (Scrip ID: 524013). During the period under review, the company has not: (i) bought back any of its securities (ii) issued any sweat equity shares (iii) issued any bonus shares (iv) provided any stock option scheme to employees.
7. THE RIGHT TO INFORMATION ACT, 2005.
In consonance with the provisions of the Right to information Act, 2005, Company has appointed Appellate Authorities/ Public Information officer at the office of the company to respond effectively to the request of the applicants under the acts in synchronization with the direction of Central Information Commission (CIC), for promotion of Institutional transparency within the public authority through proactive and effective implementation of section 4 of the RTI Acts, 2005.
The number of RTI applications received and disposed off during the year 2023-24 is given below:
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Total number of RTI applications received during the year 2023-24
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28
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Applications rejected during the year 2023-24, if any
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Nil
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Information submitted during the year 2023-24
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28
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Pending to reply as on 31.03.2024
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Nil
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8. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
The company was not required to transfer any amount towards IEPF
9. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
The Board of Directors met six (6) times during the financial year 2023-24 on: 17th May, 2023, 7th August, 2023; 09th October, 2023; 8th November, 2023; 25th January, 2024 and 08th February, 2024. For details of meetings of the Board, refer to Corporate Governance Report, which is a part of this report.
10. BOARD OF DIRECTORS
Changes in the Board of Directors during the year is given below:
1. Shri T P Sachidanandan, was ceased to be HOCL Nominee Director w.e.f. 31.05.2023.
2. Shri Awijit Rakshit was ceased to be Government Nominee Director w.e.f. 18.03.2024.
3. Shri Ram Sajeevan was appointed as Government Nominee Director w.e.f. 18.03.2024. Pursuant to the provisions of Section 203 of the Companies Act, 2013 the Key Managerial Personnel of the Company as on March 31,2024 are:
1. Shri. P.O. Luise, Chief Financial Officer;
2. Shri Subramonian H, Company Secretary.
11. COMPANY’S POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION
The Company being a CPSE, appointment of all the Directors on the Board of the Company are made by the Government of India/President of India and under the supervision, control and directions of the Department of Chemicals & Petro-Chemicals (DCPC) and by parent company (HOCL) and the prescribed DPE Guidelines are also followed.
12. COMPANY’S POLICY RELATING TO APPOINTMENT AND PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES OF KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
Company has constituted Nomination and Remuneration Committee under section 178(1) of the Companies Act 2013 and complied the criteria for determining qualifications positive attributes and independence of appointment and remuneration of a Key Managerial Personnel and other employees as provided under Section 178(3) of the Companies Act, 2013.
13. FORMAL ANNUAL EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Company being a CPSU is governed by the DPE Guidelines and the Annual Evaluation of Performance of Board, its committees and of individual Directors are carried out by the Administrative Ministry.
14. RATIO OF DIRECTORS REMUNERATION TO MEDIAN EMPLOYEES REMUNERATION AND OTHER PRESCRIBED ELABORATE DISCLOSURES AND DETAILS
The Company being a CPSE which is under the supervision, control and direction of the Administrative Ministry the prescribed DPE Guidelines are being followed in respect of employee’s remunerations and DPE Guidelines are being followed, as regards other prescribed Perquisites
15. TRAINING OF BOARD OF DIRECTORS:
The company furnishes set of documents and booklets to the Directors on their joining the Board. This includes important data about the performance of the Company, Memorandum & Articles of Association, Corporate Governance guidelines, Delegation of powers, Product line brochures etc.
A copy of the monograph on position, duties and liabilities of Directors is also circulated among the Directors. Besides, the Directors also attend various training/workshops organized by the Department of Public Enterprises (DPE).
16. COMMITTEES OF THE BOARD
The Committees of the Board includes, Audit Committee, Nomination and Remuneration Committee, and Stakeholders Relationship Committee. For details of Composition and meeting of Committee, refer to Corporate Governance Report, which is a part of this report.
17. INDEPENDENT DIRECTORS DECLARATION
Company has obtained necessary declarations from the Independent Directors as stipulated under Section 149(7) of the Companies Act, 2013.
18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information in accordance with the provisions required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 Regarding Conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo are given at Annexure I, Form A and B to this Report.
19. RESEARCH & DEVELOPMENT:
As the company is in the process of closure of operations, R&D operations were not carried out during the period.
20. INDUSTRIAL RELATIONS
Employee relations continued to be cordial throughout the year. Your Company had been implementing reservation policies of GOI for SCs/STs/OBCs/Persons with disabilities. Representatives of SCs/ STs Categories are associated in Recruitment of Departmental Promotion Committees. As on 31.3.2024, there are no employees in your company.
21. ANNUAL RETURN
Pursuant to sub-section 3(a) of Section 134 of the Companies Act 2013, read with Section 92 (3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 an extract of the Annual Return as at March 31,2024 is available in the website of the company at http://www.hfl.co.in/ investors
22. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Management Discussion and Analysis Report is annexed hereto in Annexure - II and forms part of the Directors’ Report.
23. CORPORATE GOVERNANCE
The Company has complied with the requirements of Corporate Governance Code. Report on the Compliance with Corporate Governance Code is attached as Annexure-III The certificate obtained from Practicing Company Secretary regarding compliance of the conditions of corporate governance are attached in Annexure - IV.
24. DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility statement:
a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) Cabinet Committee on Economic Affairs [CCEA], Government of India has approved the closure and shut down of operations of the Company. Accordingly, company is no longer a Going Concern Entity and
e) The directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively
25. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company do not have any Subsidiary, Joint venture or Associate Company.
26. DEPOSITS
The Company has neither accepted nor renewed any deposits during the year under review and the company has not accepted any deposits during the previous years
27. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.
28. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
There were no contract or arrangements made with related parties as defined under Section 188 of the Companies Act, 2013 during the year under review accordingly disclosure in form AOC 2 is not required.
29. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS U/S 143 OTHER THAN THOSE REPORTABLE TO CENTRAL GOVERNEMENT:
During the year, no frauds were reported by the auditors and the same is not applicable to the company.
30. CORPORATE SOCIAL RESPONSIBILITY:
As the Company is making Continuous losses and the company is in the process of closure the provision of Section 135 of the Companies act related to the CSR is not applicable to the Company for the financial year 2023-24.
31. RISK MANAGEMENT
The company has put in place Risk Management process which includes risk identification, risk assessment, risk evaluation, categorization and risk treatment plan for mitigation of risks and escalation / reporting of risks to Board. Risk Management Committee is not applicable for the Company.
32. VIGILANCE
With the approval of the Ministry, an officer of the company has been nominated as “Vigilance Officer” (Part time) from amongst the Officers of the Company to take care of Vigilance functions. Vigilance activities have mainly been directed to check the improvements in the existing systems and procedures through periodic checks and to encourage preventive vigilance. The instructions of the Central Vigilance Commission received from time to time have been implemented to strengthen the vigilance machinery in the company. There is part time Chief Vigilance Officer in HFL.
33. MATERIAL ORDERS OF JUDICIAL BODIES/ REGULATORS
In the case of Rockwell Industries Limited vs. HFL, the High Court vide Order Dated: 02.11.2022 (Case No. COM.C.A. 16/2020) has directed HFL (Appellant) permitted to dispose of the plant, machinery and other equipment through Metal Scrap Trading Corporation Limited, a Central Government corporation. The appellant shall furnish the inventory of plant, machinery and other equipment to decree holder and decree holder shall also be put on advance notice of date of conducting of auction. After successful auction, the appellant shall inform the amount realised from out of the sale proceeds to the decree holder; shall open a separate bank account and the proceeds of auction shall be kept in a fixed deposit in said bank account and said bank account shall not be operated without orders of this Court.
34. AUDITORS:
The Statutory Audit for the FY 2023-24 of your Company was conducted by M/s. AVRSK & Associates LLP, Chartered Accountants who were appointed as Statutory Auditors for the Financial year 202324 by Comptroller and Auditor General of India (C&AG) as per Section 139(5) of the Companies Act, 2013, Auditors Report on the Accounts of the Company for the financial year ended 31st March, 2024 forms part of Annual Report.
35. EXPLANATIONS IN RESPONSE TO AUDITORS’ QUALIFICATIONS
The Statutory Auditors has given unqualified report. The comments of the Comptroller and Auditor General of India u/s 143(6)(b) of the Companies Act, 2013 on the accounts of the company for the year 2023-24 is annexed to the Annual Report. C&AG have decided not to conduct the supplementary audit of the financial statements of the Company.
36. SECRETARIAL AUDIT
Board has appointed M/s. Mehta & Mehta, Company Secretaries LLP as Secretarial Auditor of the company for the financial year 2023-24. The explanations/comments made by the Board relating to the qualifications, reservations or adverse remarks made by the Auditors in their report are furnished and forms part of Annual Report. The reply to the observation in the Secretarial Audit Report is given below:
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Observation
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Management Response
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As per the requirement stated in the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015), the Company has not maintained Structured Digital Database (“SDD”) for the Financial Year ended 2023-2024.
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HFL had been recording the UPSI in digitally signed pdf document. Thus, HFL is maintaining the Structured Digital Database. Now, HFL has also obtained software solution provided by M/s. Orion Legal Supplies, Mumbai for updating the UPSI. Thus, HFL has complied with the relevant SEBI Regulations.
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37. COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has generally complied with the Secretarial Standards issued by the Institute of Company Secretaries of India.
38. THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL Act, 2013
The company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Company has not received any case relating to the sexual harassment of women at work place.
Annual Report for the year 2023 The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013-:
No. of complaints received: Nil
No. of complaints disposed of: Nil
No. of cases pending for more than 90 days: Nil
39. HEALTH AND ENVIRONMENT
Your Company has shut down the factory/plant. There are no production activities. Therefore, compliance relating to pollution norms are not applicable.
40. IMPLMENTATION OF OFFICIAL LANGUAGE POLICY
During the year under report, your Company continued to promote Hindi as official Language in day to day working in line with the Government policies for its intensive and extensive efforts for progressive use of the official language.
41. PARTICULARS OF EMPLOYEES
None of the employees of the company is drawing remuneration requiring disclosure pursuant to the provisions of the Companies (Particulars of Employees) Rules, 1975.
42. LEGAL COMPLAINCE
The Company has complied with all the applicable legal provisions effectively during the year 2023-24.
43. INSURANCE
All properties and insurable interest of the company including building, plant and machinery and goods are adequately insured.
44. TRADING AND DEMAT FACILITIES FOR SHARES
The shares of the Company are compulsorily traded in Dematerialized mode. To facilitate the shareholders to dematerialize the shares, the Company has signed the agreement with both i.e. National Securities depositories Limited (NSDL and Central Depositories Services (India) Ltd., (CDSL) under ISIN No. INE806J01013. 87.38% of the Share Capital of the Company has been dematerialized, as on 31st March, 2024.
45. COMPLIANCE OF DPE GUIDELINES & POLICIES
The Guidelines & policies issued by the Department of Public Enterprises from time to time are being complied with and implemented with the approval of the Board of Directors/ Competent Authority.
46. CODE OF CONDUCT
The Company has adopted “Code of Conduct and Ethics” for the Directors and Senior Executives of the Company as per DPE guidelines and as per HOCL (Parent Company). The object is to conduct the Company’s business ethically and with responsibility, integrity, fairness, transparency and honesty.
47. ACKNOWLEDGEMENTS
I place on record my appreciation and gratitude to all the employees and others who had extended their support and co-operation during the year to achieve the targeted goals of the Company. In particular I am grateful to various officials of the Govt of India, especially from the Ministry of Chemicals & Fertilizers, Department of Chemicals and Petrochemicals, the Finance Ministry, Ministry of Environment, Forest and Climate Change, Govt. of India, Govt of Telangana, Promoter Company i.e. HOCL and Board Members. I would like to convey my sincere appreciation to our valued customers, suppliers, Statutory Bodies, Investors, our bakers State Bank of India, Statutory/Govt Auditors etc. for the continued support.
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