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Hindustan Organic Chemicals Ltd.

BSE: 500449 | NSE: HOCL | Series: NA | ISIN: INE048A01011 | SECTOR: Chemicals

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Chairman's Speech

Dear Shareholders,

My Colleagues on the Board and I extend a warm welcome, and sincere gratitude, to all of you present here at this 57th Annual General Meeting of your Company. The Annual Report of the Company, containing the Audited Annual Accounts together with the Directors’ Report and Auditors’ Report for the year 2017-18 and the AGM Notice to the Shareholders are in your hands for some time and with your permission, I take them as read.


I must now share with you, in brief, the status of our Company’s performance during the year 2017-18.

The production and sales figures are contained in the Directors’ Report before you and hence not repeated.

The company could stabilize operations of the Phenol Plant at Kochi and ensure continuous operation of the Phenol plant during the year. Even though the working capital constraints continued, the company could mobilize advance from major customers and achieve higher capacity utilization compared to previous year. During the year under review, your Company could achieve sales turnover of Rs.242.32 Crores (net of excise duty).

Your Company could successfully implement majority of the decision taken by the Government and close down the operation of Rasayani unit, implement VRS to the employees, hand over the C NA/N204 plant to ISRO and sell 251 acre of land to BPCL (out of 442 acre sale approved by the Government). The company as per the approved restructuring plan has disposed of the closed plants at Rasayani and has engaged NBCC for sale of balance unencumbered land in the possession of the company.

With the successful redemption of the Bonds and repayment of working capital dues to Banks, the company could achieve cost reduction and improve the performance of the Kochi unit where cost reduction measures are being implemented.

During the year, your Company incurred a loss of Rs.199.47 crore as against loss of Rs.255.57 crore incurred during the previous year.

I wish to inform you that with the implementation of the restructuring plan approved by the Government and with the help and support from various Ministries, mainly Ministry of Chemicals & Fertilizers, and other ministries like, Ministry of Finance, Ministry of Commerce & Industries, the company will be revived and with continuation of the anti-dumping duty support on Phenol and Acetone the company will turnaround in the shortest possible time.


Rasavani Unit

As per the approval of Government of India, the operation of all the plants at Rasayani Unit (except C NA / N204 plant handed over to ISRO along with related manpower) has been closed. The Government has approved sale of 442 acre of land at Rasayani to BPCL for Rs.618.80 crore. A bridge loan of Rs.360.26 crore was received from GoI, which has been utilized to pay the matured Bonds and clear the statutory liabilities of the company. Out of the 442 acre, sale of 251 acre has been completed and an amount of Rs.351.40 crore has been received from BPCL, which is utilized for implementation of VRS to the employees of the Rasayani unit and to clear partially the liabilities of the company.

Kochi Unit

The Phenol Plant operation at Kochi unit has been stabilized and the Hydrogen Peroxide plant is also in operation. The company could mobilize advance payments from major customers to tide over the working capital shortage and ensure continuous operation of the Phenol / Acetone plant.

Restructuring Plan.

As per the restructuring plan approved by the Government, all the closed plants at Rasayani Unit have been disposed of and the CNA/ N204 plant has been transferred to ISRO along with the manpower. As per the plan, a bridge loan of Rs.360.26 crore was received from GoI, which has been utilized to pay the matured Bonds and clear the statutory liabilities of the company. Further, out of 442 acre of land sale to BPCL approved by GoI, 251 acre has been sold for Rs.351.40 crore, which is utilized for implementation of VRS to the employees of the Rasayani unit and to clear partially, the liabilities of the company.


Company since its inception is very much aware about its social responsibility. For over five decades, as a socially responsible and sensitive corporate, your Company continues to remain committed to social thought and action to serve society through providing basic civic amenities to the neighboring villages, rendering assistance in different forms. As per Department of Public Enterprise (DPE) Guideline on Corporate Social Responsibility (CSR), Company had constituted Board level Corporate Social Responsibility (CSR) and Sustainability Development (SD) Committee. During the Year 2017, the CSR and SD Committee was reconstituted comprising of 3 Independent Directors & one Executive Director of the Board of the Company. The terms of reference of the said CSR and SD Committee included among others, CSR as per Section 135 of the Companies Act,2013 and Rules 2014 thereunder, alongwith Schedule Vll,etc.

Though the Company is not required to carry out any CSR activities due to incurring losses, in view of closure of Rasayani unit,Company has donated Rasayani unit’s Library books valuing Rs.3.19 lakhs (WDV) to Dr. Babasaheb Ambedkar Marathwada University, Aurangabad, as a CSR activity, as these books will be useful to the students community at the university.


In the areas of Health, Hygiene and Environment the company has undertaken periodic medical examination as well as statutory requirements of fitness check-up under form No. 23 for its employees. In our commitment to environment we have ensured that the level of pollutants from the factory and nearby surroundings was much below the permissible levels.

HOC Kochi unit received pollution control award among very large scale industries from Kerala State Pollution Control Board for substantial and sustained efforts in pollution control in 2012. HOC Kochi unit received safety awards from Dept. of Factories & Boilers, Govt. of Kerala for outstanding performance in industrial safety for the year 2012. No further awards received during the year 2017-18.


HOCL Kochi unit is having ISO 9001: 2008 (Quality Management System) and ISO 14001:2004 (Environmental Management System) certification. The existing certificate for ISO 9001 has been extended upto 2020 and ISO 14001 is valid up to 2017 audit for further extension is in progress.


The overall Industrial Relation situation continues to be peaceful and cordial during the year. There was no strike or lockout during the year..


The Company has complied with the various requirement of Corporate Governance.

The details in this regard form part of this report in Annexure V.


During the year, HFL has made Net loss of Rs.482.65 lacs (IND AS) from operations as against the net loss of Rs.633.43 lacs (IND AS) & Rs.488.55 (IGAAP) of the previous year. During the year, the sales turnover (net) was Rs.3685.36 lacs as against Rs.3383.51 lacs in the previous year. During the year under report production of PTFE was 21.754 Metric Tons as against 41.22 Metric Tons in the previous year. During the year, 3933.27 Metric Tons of CFM-22 was sold in the market against 3391.84 Metric Tons in the previous year and balance quantity was used as feed stock to manufacture various products including Fluoro Specialty Chemicals. Accordingly, during the year Metric Tons of Tetra Fluoro Etylene (TFE) was used to manufacture Telomere. Quality of all company’s products continued to be well accepted by our customers. Company has achieved 100 % capacity utilization as against 95.42 % in the previous financial year. The financial performance of the company improved during the year even though the Sales performance was more or less static compared to previous year.


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. In particular, I am grateful to various officials of the Government, especially Department of Chemicals and Petrochemicals, Ministry of Chemicals & Fertilizers, Department of Public Enterprises, Ministry of Finance, Ministry of Commerce & Industry, Bankers State Bank of India, and Central Bank of India, Board Members, Statutory/Govt. Auditors, Cost Auditors and all the agencies concerned. My gratitude is also to the shareholders, Bondholders and customers, who have stood by us in the present phase of transformation of the company.

We on our part would continue our efforts for time bound completion of the restructuring plan, in our endeavour, towards the path of achieving early turnaround of the company. We look forward to your continued support in this ongoing process.

In conclusion, I am optimistic that the Company would attain a turnaround coming financial year.


Chairman and Managing Director