To the Members of HINDUSTAN ORGANIC CHEMICALS LIMITED
The Directors are pleased to present the 51st Annual Report and the
Audited Annual Accounts of the Company for the financial year ended
31st March, 2012.
The financial performance of the Company for the year ended March 31,
2012 is summarized below:
Year ended Year ended
Sales 60636.71 73803.91
Operating Profit/(Loss) (2,801.42) 7285.91
Less: Interest 2373.78 2138.86
Depreciation 2304.51 2517.74
Profit/(Loss) before tax (7,479.71) 2629.31
Less: Provision for taxation - -
Less: Prior Period adjustments &
Exceptional Items (327.14) 57.72
Profit/(Loss) after tax & Prior period
adjustments, Provisions and
Exceptional Items. (7,806.86) 2571.59
Results of Operations
During the year under review the Company was under Net loss of Rs.
78.07 crores, while the Net profit during the previous year was Rs.
25.72 crores .
As regards the unit wise performance, the Net Profit of Kochi Unit was
Rs.26.02 crores which was much lesser as compared to the previous
year''s profit of Rs.130.08 crores. The Rasayani Unit recorded a Net
Loss of Rs. 104.10 crores as compared with the previous year''s loss
of Rs. 104.37 crores.
Reporting to BIFR under SIC(SP)Act, 1985 .
In view of the fact that as on 31-03-2012 as the Company''s
Accumulated Losses have resulted into erosion of more than 50% of the
Peak net worth (of the immediately preceding 4 years), Company is
taking necessary steps under Section 23(c) of SIC (SP)Act,1985.
During the year under report your company''s Kochi unit achieved a
sales turnover of 64298 MTs valuing 43200 Lacs as against 84082 MTs
valuing 58120 Lacs of the previous year.
With the production of 178792 MTs during the year 2011-12 as against
the production of 251007 MTs in 2010-11, your company could achieve an
overall capacity utilization of 42% during the year. Your company has
recorded the sale of 115566 MTs during the year (previous year 145173
MTs) valuing Rs.54827 lacs ( previous year Rs. 66736 lacs).
The high labour cost and high incidence of cost on closed plants at
Rasayani Unit are the major concerns . Company decided to operate those
plants which are giving contribution. Your company has continued its
cost cutting measures to counter these problems and in order to be
competitive and improve performance and profitability.
During the year your company''s Kochi unit could achieve 126076 MTs of
production as against the previous year''s production of 167886 MTs.
The capacity utilization for the year was 82 %. Rasayani Unit:
During the year your company''s Rasayani unit could achieve 52716 MTs
of production as against the previous year''s production of 66798 MTs.
The capacity utilization for the year was 27 %.
In the highly volatile chemical market, sluggish demand & stiff
competition from import of HOC''s main products, during the Year
2011-12, Company has achieved the sales turnover of Rs. 548.27 Crores
(net of excise duty) as against Rs. 667.36 crores (net of excise duty)
of the previous year(2010-11) . The sale value achieved because of
continued support from its valuable customers and due to excellent
quality products produced at Kochi and Rasayani Units. The sales volume
during year 2011-12 was 1,15,566 MTs against 1,45,173.65 MTs for the
year 2010-11. STATUS OF OPERATIONS AND FUTURE PLANS Refurbishment of
CNA/N2O4 Plant - Ph. II is in progress with implementation of new DCS
and will be completed during F.Y.2012-13.
Hydrogen Peroxide Plant capacity will be enhanced to the targeted
capacity of 14,000MT/p.a. from installed capacity of 10450MT/p.a. by
carrying out in house de-bottlenecking.
ENERGY CONSERVATION/TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
Information in accordance with the provisions required to be disclosed
under Section 217(2)(e) of the Companies Act, 1956 read with the
Companies (Disclosures of particulars in the Report of Board of
Directors) Rules, 1988, regarding conservation of energy, Technology
Absorption and Foreign Exchange Earning and outgo, are given at
Annexure II to this Report. RESEARCH & DEVELOPMENT
R&D efforts this year too have continued in the IPR (Intellectual
Property Rights) portfolio as regards filing of new patents is
concerned. Three numbers of Indian Patents were granted this year.
After successful laboratory scale development of vapour phase
continuous process for ISRo specific grade kerosene fuel, pilot plant
scale study is being started. Various process parameter are being
correlated by a model.
HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:
Our strength is our Human Resource. The Company continues to recognize
that human asset is very much valuable for the continual improvements
in the performance of the company, particularly in the context of
competition all around. The company greatly values their contribution
and dedication and is committed to the development and growth of this
vital resource. In order to attain the twin objective of reducing
manpower and restructuring of human resources for optimum utilization
of available man power. Company continues to implement Government
Policy of Reservation for SC/ST and other categories. The position
relating to SC/ST/Women personnel in the Company is given in Annexure -
III to the Directors'' Report.
A developed human resource is an asset for the enterprise. Company
gives utmost importance to enhance the skills of our employees through
Training & Development Programmes. Training is imparted based on
identification of Training Needs in areas such as Safety, Advanced
Technology, Modern Management Techniques, Soft Skills, Energy and
Environment Management Systems, First Aid, Participative Management and
Workers Education, Information Technology etc. During the Financial
Year 2011 - 2012 at Kochi Unit, Company has organised various Training
Programmes both Inhouse and External covering 537 mandays with the help
of External/Internal Experts based on requirement and identification of
Training Needs. At Rasayani Unit, In house as well as outside training
programs have been arranged for the benefit of the employees. During
the year 2011-2012, in all 74 training programs were conducted,1239
mandays were trained through inhouse training programs, 356 mandays
were trained by sponsorship i.e. outside training and 248 mandays were
trained through on job training. Thus, total 1843 mandays were trained
during the year.
As part of the implementation of ERP in HOCL at Kochi Unit much
emphasis was given in imparting training to the employees. ERP
training imparted in various levels, that is Core Committee Training,
Steering Committee Training and Functional Heads Training and Core User
Training. Training was imparted in general as well as for the Core
functionalities, Usage of Employees Self Service etc. End user training
on different modules are also imparted so as to keep the system more
Regular Refresher courses were arranged in Safety & ISO
implementations. First Aid Recertification course was also arranged
during this year.
Considering the importance of Energy conservation, training on Energy
conservation by experienced faculty members from Petroleum Conservation
Research Association Mumbai was conducted.
In Chemical Industry, First Aid training to the employees is of prime
importance in safety point of view. Accordingly, 75 employees at
Rasayani Unit were trained by Life Line Institute of First Aid
&Emergency Medicine, Thane, Mumbai.
By and large the climate of harmonious and cordial industrial relation
was maintained in the Company throughout the year.
IV. Suggestion Scheme
The Suggestion Scheme is in existence in the Company. All employees in
the Company are eligible to participate in this scheme. The Suggestions
received from the employees are evaluated by a Suggestion Committee and
the selected suggestions are awarded with Cash Prizes ranging from
Rs.100/ - to Rs. 5000/- CORPORATE SOCIAL RESPONSIBILITY The company is
very much conscious about its social responsibility, right from its
inception. To fulfill this, company has provided basic civic amenities
to the neighboring villages, rendering assistance to the neighborhood
in different forms viz. Financial assistance, drinking water supply,
To promote school education, company is giving scholarship to X and XII
Std. Students. Company extends need based assistance to deserving SC/ST
students in the nearby villages of their graduate education. Company
also extends vocational training facilities to the wards of employees
studying in nearby engineering colleges/ and Management institutes for
enhancing their practical knowledge. Company also engages diploma
(sandwich course) apprentices as a part of their curriculum for
imparting practical training.
Company has also constructed and maintained a hall in the name of
Bharatratna Dr. Babasaheb Ambedkar with a view to provide a platform
for discussion / seminars/ symposiums on principles / teachings of Dr.
HOCL, Kochi Unit has sponsored Medical Equipments to Govt. Taluk
Headquarters Hospital, Tripunithura at a total cost of Rs.8,70,000/-.
Kochi Unit has donated Rain Coats to Ambalamedu Police Station for the
use of Police Personnel and Uniforms to the poor students of Mar
Athanesius High School, Kakkanad .
PARTICULARS OF EMPLOYEES - INFORMATION REQUIRED UNDER SECTION 217(2A)
OF THE COMPANIES ACT, 1956
No employee of the Company has drawn the remuneration during the year
2011-12 or any part thereof, in excess of the limits specified under
the Company''s (Particulars of Employees) Rules 1975.
Accordingly particulars of employees'' remuneration prescribed u/sec
217 (2A) of the Companies Act, 1956 are not furnished.
The Vigilance Department, headed by Chief Vigilance Officer, appointed
by Government of India on deputation, has three main functional
Offices, one at Rasayani (Raigad) in Maharashtra, and at Ambalamugal
(Kochi) in Kerala and another at Corporate office, Mumbai. Keeping in
view of the Principles of Corporate Governance, the main focus of the
Vigilance department has been to help the sincere, dedicated and honest
personnel working in the Organization to discharge their duties
effectively and efficiently so that the target of optimum turnover and
profitability are achieved in a transparent manner. More emphasis is
given in improving the functioning of all sections and maintaining
The Vigilance department takes appropriate and timely action in respect
of complaints received. There is a comprehensive complaint handling
policy and prescribed punitive action is duly suggested, after
conducting fair and impartial investigation/ enquiry, where ever
required. The Annual Property Returns of the Officers are periodically
scrutinized and inspection of departmental activities are undertaken to
detect deviations, if any, and suggest corrective measures. Various
Vigilance Awareness Programmes, as per guidelines issued by the CVC,
are observed and awareness sessions are conducted for the personnel
regarding vigilance related matters as well as in respect of CDA Rules,
RTI Act, PIDPI (Whistle Blowers Act) etc. from time to time. The
vigilance department has been instrumental in updating the existing
manuals and policies i.e. the Purchase Policy, the Works Policy, the
Marketing Manual, the Vigilance Manual etc., so that the laid down
procedures, policies, rules, regulations etc., of the Company and that
of the Central Vigilance Commission are duly followed.
HEALTH, ENVIRONMENT, FIRE & SAFETY Health :
- Based on the toxicity of chemicals periodic medical examination of
all the employees is carried out by doctors specially trained in
occupational health and hygiene at Company''s Health Centers at both
- Various health awareness training programs were carried out by
specialist doctors (both external and internal) for the benefit of
employees. Large number of employees attended the same.
Environment, Fire & Safety:
The Company pays special attention to ensure safety of the factory and
workers employed therein.
The Company accords the same priority attention to safety aspects as it
does to production and productivity, be it in a personal safety,
process safety, environmental safety or product stewardship and
allocated adequate resources of men, machine, money, time and energy to
maintain the standards. Thus performance during the year is very good.
During the year under review, Company has Nil reportable accidents.
The company continued to maintain good safety record without any major
accident of Fire. Consistent safety training, safety audit, safety
inspection and Hazop studies were performed to keep the safety standard
high. The company is taking active participation in Off-site Emergency
drills, Local and District Crisis group activities. In order to augment
our fire fighting capacity, mutual aid scheme for emergency help
between HOCL, BPCL - KR & FACT (CD) is in existence.
HOC is a signatory to Responsible Care movement. We are committed
to the concept of self-realization and improvement in all aspects of
Emergency Response Centre (ERC), a voluntary commitment undertaken by
Rasayani unit to tackle emergencies arising out of road transportation
of hazardous chemicals is functioning quite well and this effort is
acknowledged by general public as well as government authorities.
Our employees have bagged maximum awards in zonal level safety
competitions. HOC is a major contributor to Mutual aid Response Group -
Khopoli, Rasayani, Patalganga zone (MARG-KRAPA). HOCL Kochi unit could
maintain the quality of treated effluent, stack emission and ambient
air quality well with in the limits stipulated by statutory authorities
through out the year.
HOC Kochi unit received safety awards from Dept. of Factories &
Boilers, Govt. of Kerala for outstanding performance in industrial
safety for the year 2011.
The Company has made it mandatory to have fire and safety training for
ISO CERTIFICATION :
HOCL, Rasayani Unit, has been awarded ISO-9001:2008 certificate on
11.01.2011. This certificate has been awarded by M/s Bureau Veritas
Certification (India) Pvt. Ltd. and is valid till 9/02/2014.
First Surveillance Audit was carried out under ISO-9001:2008 standard
on 10th & 11th January, 2012 by M/s. BVCI.
HOC Kochi unit is an ISO 9001: 2008 (Quality Management System) and ISO
14001: 2004 (Environmental Management System) certified unit.
BVCI conducted recertification audit of ISO 9001: 2008 and
recertification is valid up to 18th June 2014.
BVCI recertified HOC Kochi unit for ISO 14001:2004, Environmental
Management System and certificate is valid up to 19th November 2014.
IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
In compliance of section 3(3) of the Official Language Act, 1963 and
Official Language Rules 1976 framed thereunder, Company has implemented
various measures effectively given in the annual programme for 2011-12.
All documents coming under Section 3(3) like Part I Orders, Part II
Orders, Circulars, Administrative and other Records, Press-Release etc.
were issued bilingually. All Hindi Letters were answered in Hindi
only. Our Company participated in all the programmes organized by
Mumbai Town Official Language Implementation Committee.
To comply with the provision of Official Language Act 1963 and Rules
there under we have implemented various items at both Units as per the
Annual Program for the year 2011-12
1. The Hindi letters received are being replied in Hindi to comply
with the rule 5 of Official Language Rules 1976. All name plates, Sign
Boards, Visiting Cards, daily Official Letters and letter heads are
prepared in Bilingual form. All documents that are issued under rule
3(3) of Official Language Act 1963 are prepared in bilingual form.
2. Cash Incentive scheme for doing original work in Hindi is existing
in our Units and during September 2010 to August 2011-12 employees have
received the incentive. To improve the Hindi word power of the
employees, one bilingual word is being exhibited in the presto board
kept in the reception and the list of the same is being circulated in
the end of the month.
3. To comply with the Official Language Policy of the Government,
Workshops on Official language are regularly conducted for the
employees who possess working knowledge in Hindi so as to encourage
them to use Hindi in their day to day office work. 5 workshops and One
Unicode training were conducted during the period under report.
4. Kochi Unit received Third Prize for Best Implementation of OL from
Kochi Town Official Language Implementation Committee.
5. Hindi Fortnight was organized at both Rasayani and Kochi Units and
in the Corporate Office in Mumbai from 14th September, 2011 to 28th
September, 2011. During this period various competitions were
organized. Employees were actively participated in these competitions.
6. Efforts are being made to fulfil the target set in the Annual
Programme issued by Department of Official Language, Ministry of Home
Affairs. CMD has himself participated in the Hindi Salahakar Committee
Meeting of the Chemicals & Fertilizers Ministry in the year 2011.
7. A five days Hindi Translation Training programme was organized with
the help of HTS Mumbai. For the progressive use of Information
Technology through medium of Hindi all the computers are being loaded
All properties and insurable interest of the Company including
building, plant and machinery and goods are adequately insured. As
required under Public liability Insurance Act, 1991 the company has
taken necessary insurance cover.
With regard to Fixed Deposits, nothing is outstanding towards Fixed
Deposits for the Financial Year 2011-12.
As the members are aware your company''s shares are tradable
compulsorily in electronic form and your Company has established
connectivity with both the depositories i.e. National Securities
Depository Limited (NSDL) and Central Depository Services (India)
Limited (CDSL). In view of the enormous advantages offered by the
Depository system, Members are requested to avail the facility of
dematerialisation of the Company''s shares on either of the
depositories as aforesaid.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the listing agreement, the Management Discussion and
Analysis Report is annexed hereto in Annexure V and forms part of the
The Company has complied with the various requirements of Corporate
Governance. The details in this regard form part of this report in
The Directors confirm:
a) that in the preparation of the annual accounts, the applicable
accounting standards have been followed and that no material departures
have been made from the same;
b) that they 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 or loss
of the company for that period;
c) that they have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act,1956, for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern
HINDUSTAN FLUOROCARBONS LIMITED :
OPERATION AND OVERALL PRODUCTION AND MARKETING PERFORMANCE:
During the year, the sales turnover was Rs.4557.30 lacs as against
Rs.3039.38 lacs in the previous year. During the year under report
production of PTFE was 139.19 MTs as against 124.58 MTs in the previous
year. During the year, 291.77 MTs of CFM-22 was sold in the market and
balance quantity was used as feed stock to manufacture various products
including Fluoro Specialty Chemicals. Accordingly, during the year
265.17 MTs of Tetra Fluoro Etylene (TFE) was used to manufacture
TFE-ETHER. Quality of company''s all products continued to be well
accepted by the customers. Company has achieved 100% capacity
utilization consecutively for this year also and produced 1265 MTs.
This will enhance revenue earning from CDM for the next year.
CLEAN DEVELOPMENT MECHANISM (CDM):
Company has successfully implemented the CDM Project and earned
Rs.17.47 Crore against first issuance. It is expected that during the
financial year 2012-13 also, company will get CDM Income.
The Statement Pursuant to Sec. 212 of the Companies Act, 1956 is given
in Annexure I.
In terms of provisions of Section 619(2) of the Companies Act,1956, the
Comptroller & Auditor General of India, under its letter No. CA
V/COY/CENTRAL G0VT,H0CL(2)/102 dated 18/ 8/2011 has appointed M/s FORD
RHODES PARKS & CO, Chartered Accountants, Mumbai as Auditors of the
Company to audit the accounts of the Rasayani unit and to audit the
consolidated accounts of the company. Further, C&AG under its letter
No. CA V/COY/CENTRAL GOVT.HOCL (2)/102 dated 18/ 8/2011 has appointed
M/s SASI VIJAYAN & RAJAN, Cochin as Branch Auditors to audit the
accounts of Cochin unit for the year ended 31st March, 2012.
The remarks of the Board of Directors on the Auditors'' Report to the
members are furnished in Annexure IV.
The report of the Comptroller & Auditor General of India under section
619(4) of the Companies Act, 1956, on the Accounts of the Company for
2011-12 is annexed to the Statutory Auditors'' Report in the Annual
Pursuant to directions from the Ministry of Company Affairs for
appointment of Cost Auditors, Board of Directors of the company
appointed M/s V.J.Talati & Co. as the Cost Auditors of Rasayani Unit
for 2011-2012 for Sulphuric Acid, Aniline, Formaldehyde, Caustic Soda,
Nitro Benzene Products and M/s Panikar & Company as cost Auditors of
Kochi Unit for the year 2011-12 for Phenol, Acetone & Polypropylene
The Tenure of all the Independent Directors had expired in the previous
year and as no fresh appointment by the Government of new Independent
Directors has been received by the Company, as on 31st March, 2012,
there are no Non Official Independent Directors [NOIDs] on the Board of
HOCL. However, during May, 2012, Company has received an order from the
Govt. of India appointing Dr, N.J.Gaikwad from Nagpur, as Non official
part time Director on the Board. We are awaiting the appointment of 4/5
Independent Directors from GOI.
The GOI has appointed vide GOI Order No. 51/05/2009-Ch-III dated 30th
April, 2011, Shri J.N. Suryawanshi, CGM(Marketing) HOCL as Director
Marketing, HOCL w.e.f. 30th April, 2011, the date of Assumption of
GOI has appointed Director Shri Suresh Kumar R. , General Manager
(Finance), HOCL as Director (Finance) on the Board of HOCL vide GOI
Order No. 51/18/2011-Ch-III dated 11th May, 2012 w.e.f.11-05-2012.
GOI has appointed Dr. N.J.Gaikwad, Professor &Head,Deptt. Dept. of
Pharmaceutical Science, Rashtrasant Tukadoji Maharaj Nagpur University,
for second term as part time non official Director on the Board of HOCL
(from the date of assumption of the the charge i.e. from 22nd May, 2012
) , vide GOI Order No. P.51/011/1/2012-32-Ch-III dated 9th April,
GOI has appointed Shri S.B. Bhide, Chief General Manager, HOCL as
Director (Technical) on the Board of HOCL vide GOI Order No.
51/14/2011-Ch-III dated 14th June, 2012 w.e.f.14-06- 2012.
During the Year, Shri M.K.Mittal has relinquished the charge as
Director (Finance), in HOCL on 28th July, 2011,(AN) to enable him to
repatriate to his parent Organisation viz. REC Ltd.
With the above position of the Composition of the Board of Directors,
the Company is partially complying with the provisions of Clause 49 of
the Listing Agreement with Stock Exchanges, as on 31.03.2012.
In terms of Article 76(4) of the Articles of the Association of the
Company, Government Nominee Directors, viz. Dr. V. Rajagopalan,
Special Secretary &Financial Advisor and Dr. A.J.VaraPrasad, Joint
Secretary, will retire at this 51st AGM in 2012 and are eligible for
reappointment. Company has received letter dtd.13/08/2012 from the
Government reappointing Dr. V. Rajagopalan SS&FA and Dr. A. J. Vara
Prasad, JS from ensuing 51st A.G.M. of 2012 and till the holding of the
next A.G.M. of the Company to be held in 2013 or till futher Orders.
Your Directors gratefully acknowledge the valuable guidance, support
and directions given by the Government of India. Your Directors also
gratefully acknowledge the support and co- operation extended by the
State Governments, by the valued and esteemed customers, shareholders,
suppliers, bankers, Statutory/Internal and Tax Auditors, Bondholders,
Your Directors place on record their appreciation for the whole hearted
efforts and contribution from all the employees and also acknowledge
the support and co-operation of the entire Workers'' Unions and
Employees'' Unions and their members for the smooth functioning of the
For and on behalf of the Board of Directors of
Hindustan Organic Chemicals Limited,
Place : Mumbai R. N. Madangeri
Date : 08/08/2012 Chairman & Managing Director