hindustan fluoro carbons ltd Auditors report

To

The Members of

M/s Hindustan Fluorocarbons Limited

Hyderabad

Report on the Audit of Ind AS Financial Statements:

Opinion:

1. We have audited the accompanying financial statements of M/s Hindustan Fluorocarbons Limited (“the Company”), which comprise the Balance Sheet as at 31^st March, 2023, the Statement of Profit and Loss, Cash Flow Statement and Statement of changes in Equity for the year ended on that date and notes to financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the Ind AS financial statements”).

2. In our opinion and to the best of our information and according to the explanations given to us, and read with our comments below under the para ‘Material Uncertainty relating to Going Concern, the aforesaid Ind AS financial statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended, (“Ind AS)” and other accounting principles generally accepted in India, of the state of affairs of the said Company as at 31^st March, 2023, the Loss for the year ended on that date including other Comprehensive Income, change in Equity and its Cash Flow for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the Ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the financial statements.

Material Uncertainty related to Going Concern

4. Attention is drawn to Note 35 to the Notes of Accounts wherein there is disclosure regarding the decision of the Cabinet Committee on Economic Affairs to close the operations of the Company which has been communicated to them through letter dated 29^th Jan, 2020 from Ministry of Chemicals & Fertilizers, Department of Chemicals & Petrochemicals, Govt of India vide File No. 51015/06/ 2019 together with timelines for implementation of the said directions, the process of which is being initiated by the Board.

In this regard, while noting the above, in our view considering the decision of the Government to close the operations of the Company and the steps taken by the Company including grant of Interest Free Unsecured Loan for settling various liabilities by the GoI, receipt of the same, significant payments being made out of the total estimated liabilities by the year end, plan of action for balance payments, initiation of follow up measures regarding various legal cases filed by/against the Company and its follow up, adoption of applicable Ind AS 105 in the books of account, there is material uncertainty relating to Going Concern and the Company is no longer a Going Concern Entity.

Emphasis of Matter

5. We draw attention to the Note No.3 in the Notes to Accounts regarding the sale of Plant, other assets and inventory of the company, which were e-auctioned by MSTC and e-bid opened on 15.3.2023. The assets were sold to the H1 bidder M/s Gaurav Worldwide Trading Private Limited for Rs.1,437 Lakhs and final payment received on 29.03.2023. Though the sale of assets and demolishing of buildings was awarded to the party on 30.03.2023, the following items were included in the balance Sheet with the following values as possession and control is with the Company itself. Original cost of Time Office building (Rs.4.33 Lakhs), Security Post (Rs. 4.55 Lakhs) and Fencing & Compound Wall (Rs.Rs.145.58 Lakhs) comes to Rs.154.46, accumulated depreciation: Rs.39.56 Lakhs and Net value Rs.114.90 categorised as Buildings. Our opinion is not modified in this regard.

6. We draw attention to Note No.2(a) in the Notes to Accounts regarding the decision of the Government of India to close the operations of the Company resulting in the Company ceasing to be a Going Concern entity and the adoption of applicable Accounting Standard Ind-AS 105 ‘Non Current Assets held for Sale or Discontinuing Operations. Accordingly, the Company had re-classified the assets which are part of disposal group as ‘assets held for sale at its carrying cost without providing for any pro-rata depreciation in the absence of any specific cut off date being adopted for the purpose which is not determinable. Our opinion is not modified in this regard.

Information other than the Financial Statements and Auditors Report thereon

7. The Companys management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material mis-statement of this other information, we are required to report that fact. We have nothing to report in this regard.

Management Responsibilities for the Ind AS Financial Statements

8. The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act 2013, with respect to the preparation of these financial statements that give a true

and fair view of the financial position and financial performance, including other comprehensive income, cash flows and Statement of changes in Equity of the Company in accordance with the Accounting Principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

9. In preparing the Ind AS financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

10. The Board of Directors are responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Ind AS Financial Statements

11. Our objectives are to obtain reasonable assurance about whether the Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Ind AS financial statements.

12. As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to

events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosure are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Ind AS financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

13. Materiality is the magnitude of misstatements in the Ind AS financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

14. We also communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings that we identify during our audit.

15. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

16. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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

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

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

c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of changes in Equity and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on March 31,2023, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2023 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to Financial Statements of the Company, and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls with reference to Financial Statements.

g) The Company did not pay any remuneration to its Directors during the year. Accordingly, we have nothing to report u/s 197(16) of the Act.

h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company had disclosed the impact of pending litigations as on 31^st March, 2023 on its financial position in its Ind AS financial statements;

ii. The Company had made provision, as required under the applicable law or accounting standards for material foreseeable losses, if any, on long term contract. The Company neither entered into any derivative contracts during the year nor have any outstanding derivative contract at the end of the year;

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no

funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

(b) The Management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties) with the understanding, whether writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries” or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) or Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v The Company had not declared or paid any dividend during the year under report. Accordingly, we have nothing to report with regard to compliance of provisions of Section 123 of the Act

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i) As required under section 143(5) of the Companies Act, we report that:

i. As per the information, explanations and records produced for our verification, the Company has a system in place to process all the accounting transactions through IT system and there are no instances of processing of accounting transactions outside the IT system;

ii. During the year under review, there are no instances of any restructuring of existing loan availed by the Company or cases of waiver/write off of debts/loans/interest made by a Lender to the Company on account of companys inability to repay the loan;

iii. As per the information, explanations and records produced for our verification, as a part of closure direction given by Gol, an amount of Rs.7720 Lakhs was sanctioned by Gol as Interest Free Term Loan to be exclusively utilized for closure related expenditure including (a) implementation of VRS/VSs for HFL employees, their dues, statutory dues, payment to suppliers/contractors/ utilities dues and repayment of SBI working capital loan (b) salary/wages and administrative expenses of HFLs skeletal staff to be temporarily retained for completing the closure of HFL for two years.

Following table shows the said Interest Free Loan amount sanctioned, received and spent during the FY 2022-23 for the said purpose against each head of expenditure (Amt. in Lakhs)

Sl. Particulars of No. Fund requirements for closure	Estimated Amount	Amount Released	Actual amount spent upto 31.03.2023	Amount yet to be spent
1 Implementation of VRS / VSS	2350	2232	1745	487
2 Payment of salary/ wages and statutory dues of employees	2000	1840	1790	50
3 Payment of wage revision arrears (1997 & 2007)	1430	1430	1415	15
4 Provision for salary/wages and administrative expenses of skeletal staff to be retained for implementation of closu plan (for 2 years @ 350 Lakhs per year)	700 re	967	918	49
5 Suppliers / Contractors dues	525	403	156	247
6 Working capital cash credit (SBI)	515	515	515	0
7 Water & Electricity dues	200	200	84	116
Total	7720	7587	6623	964

Considering the timelines given for the purpose, as could be seen from the above, there was delay in spending the amounts, particularly in case of Suppliers/Contractor Dues, Water & Electricity Dues, Implementation of VRS as well as Payment of Salaries/Wages/Statutory Dues of employees

18. As required by the Companies (Auditors Report) Order, 2020 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.

	For Niranjan & Narayan
	C h a rte red Acco u nta nts
	Firm Registration No: 005899S
	Sd/-
	M. Niranjan
	Partner
Date: 17.05.2023	Membership No. 029552
Place: Hyderabad	UDIN : 23029552BGXBKJ5323

“Annexure - A” to the Independent Auditors Report of even date on the Ind AS Financial Statements of M/s Hindustan Fluorocarbons Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the

Companies Act, 2013 (“the Act”)

1. We have audited the internal financial controls with reference to Financial Statements of M/s Hindustan Fluorocarbons Limited (“the Company”) as of 31^st March, 2023 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

2. The Companys management is responsible for establishing and maintaining internal financial controls with reference to Financial Statements based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (“the Guidance Note”) issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls with reference to Financial Statements that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys 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, as required under the Companies Act, 2013.

3. The Companys Management has in present financial year amongst other areas has specifically identified the following areas (i) Property Plant & Equipment (ii) Loans (iii) Trade Receivables (iv) Other Financial Liabilities (v) Trade Payables; and (vi) Provisions, as a benchmark criteria for establishing Internal Financial Controls with reference to Financial Statements.

Auditors Responsibility

4. Our responsibility is to express an opinion on the Companys internal financial controls with reference to Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls with reference to Financial Statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to Financial Statements was established and maintained and if such controls operated effectively in all material respects.

5. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to Financial Statements and their operating effectiveness.

6. Our audit of internal financial controls with reference to Financial Statements included obtaining an understanding of internal financial controls with reference to Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls with reference to Financial Statements.

Meaning of Internal Financial Controls with reference to Financial Statements

8. A Companys internal financial control with reference to Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control with reference to Financial Statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

9. Because of the inherent limitations of internal financial controls with reference to Financial Statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control with reference to Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

10. In our opinion, the Company has, in all material respects, an adequate internal financial controls with reference to Financial Statements and such internal financial controls with reference to Financial Statements were operating effectively as at 31^st March, 2023, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the Institute of Chartered Accountants of India.

	For Niranjan & Narayan
	C h a rte red Acco u nta nts
	Firm Registration No: 005899S
	Sd/-
	M. Niranjan
	Partner
Date: 17.05.2023	Membership No. 029552
Place: Hyderabad	UDIN : 23029552BGXBKJ5323

“Annexure B” to the Independent Auditors Report

(Referred to in paragraph 18 under the heading ‘Report on Other Legal & Regulatory Requirements of our report of even date to the financial statements of the M/s Hindustan Fluorocarbons Limited for the year ended 31^st March, 2023)

As per the books and records produced before us and as per the information and explanations given to

us and based on such audit checks that we considered necessary and appropriate, we confirm that:

i. In respect of the property, plant and equipment of the Company

(a) A. The Company has maintained proper records showing full particulars, including quantitative

details and situation of Property, Plant & Equipment.

B. The Company had written off Intangible assets during the Financial year 2021-22.

(b) Fixed Assets comprising of Property, Plant & Equipment have been physically verified by the management at reasonable intervals in accordance with its phased programme designed to cover all the assets by physical verification over a period of one to five years, which in our opinion, is reasonable having regard to the size of the Company and nature of assets. No material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the Company

(d) During the year under review, the Company had undertaken the revaluation of its Property, Plant & Equipment through a Registered Valuer; this resulted in decrease in the value of carrying cost in respect of class of PPE pertaining to Furniture & Fixtures by more than 10% amounting to Rs. 3.58 Lakhs and increase in the fair value of carrying cost in respect of land by more than 10% amounting to Rs. 14,663.57 Lakhs. Accounting in respect of these were made in accordance with the applicable provisions of the Ind-AS 105 ‘Assets held for Sale which is being followed consequent to the decision to close the Company

(e) There are no proceedings which were either initiated or pending against the Company for holding any benami properties under the Benami Transactions (Prohibition) Act 1988

ii. (a) The management has conducted the physical verification of inventories at reasonable intervals.

In our opinion, the coverage & procedure of such verification is appropriate. The discrepancies noticed on physical verification of the inventory as compared to book records are not more than 10% and those have been properly dealt in the books of account.

(b) The Company was not sanctioned any Working Capital Loan during the year under review on the basis of current assets. Hence the provisions of Clause 3(ii)(b) are not applicable.

iii. The Company has not made any investments in, or provided guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties during the period under review. Accordingly, the provisions of Clause 3(iii) (a) to Clause 3 (iii)(f) of the said Order are not applicable for the Company during the year under review

iv. In our opinion and according to the information and explanations given to us, the company has not given any loans, made any investments, provided any guarantees, and given any security to which the provisions of section 185 and 186 of the Companies Act, 2013 are applicable.

v According to information and explanation given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (v) of Paragraph 3 of the Order are not applicable to the Company

vi. Going by the nature of the activities to be undertaken by the Company, maintenance of Cost Records specified under sub-section (1) of Section 148 of the Act are required to be maintained. However, the Company was ordered to be closed by the directions of the Central Govt and hence no manufacturing activity was carried out by the Company during the year under review

vii. (a) The Company has been regular in depositing undisputed statutory dues including provident

fund, employees state insurance, GST, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31,2023.

(b) There are no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax or GST have not been deposited on account of any dispute.

viii. There are no transactions recorded in the books which have been surrendered or disclosed as Income during the year in the Tax Assessments under Income Tax Act.

ix. (a) In our opinion and according to the information and explanations given to us, the Company

has defaulted in repayment of dues to Govt. of India, Ministry of Chemicals & Fertilizers (Dept. of Chemicals and Petrochemicals). However, as per the directions given by the GoI relating to closure proceeds, this existing loan of Rs.1580 Lakhs together with interest needs to be settled from the sale proceeds of the assets of the Company.

Nature of borrowing	Name of Lender	Amount not paid on Due date	Whether Principal or Interest	No. of days delay or unpaid	Remarks, if any
Loan for manufacture of MPTFE & refurbishment of P&M	Govt. of India	Rs.1580 Lakhs	Principal & Interest upto 31.03.2019	Unpaid since 2015-16	As part of closure order, interest on this loan freezed upto 31.03.2019 and this has to be paid out of sale proceeds of assets of the Company

(b) Company had not been declared a Wilful Defaulter by any Bank.

(c) There are no Term Loans which were raised by the Company.

(d) There are no instances of any short term funds raised which were used for Long Term purpose.

(e) There are no funds which are raised by the Company to meet the obligations of any other entities.

(f) Company had not raised any loans on the pledge of any securities held.

x. (a) During the year under review, Company had not raised any moneys by way of initial public offer or term loans from any Banks/Financial Institutions. However, as a part of closure

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direction given by GoI, an amount of Rs.7720 Lakhs was sanctioned by GoI as Interest Free Unsecured Loan to the Company to be exclusively utilized for closure related expenditure including (a) implementation of VRS/VSs for HFL employees, their dues, statutory dues, payment to suppliers/contractors/ utilities dues and repayment of SBI working capital loan (b) salary/wages and administrative expenses of HFLs skeletal staff to be temporarily retained for completing the closure of HFL for two years.

The Company had received an amount of Rs.7,587 Lakhs (Rs.7,370 Lakhs during FY 202021 & Rs. 217 Lakhs during FY 2021-22) as Interest Free Term Loan, out of which an amount of Rs.6,623 Lakhs was utilized till 31.03.2023 for the purpose towards implementation of VRS/VSS, payment of salaries/wages/ statutory dues of employees, wage revision arrears, suppliers dues, repayment of entire Working Capital loan, Water & Electricity Dues as well as salaries/wages of skeletal staff.

(b) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

xi. (a) Based upon the audit procedures performed and the information and explanations given by

the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year. Accordingly, there are no instances of filing of Form ADT-4 as prescribed during the year under review.

(b) As per the information and explanations given to us, there are no instances of any Whistle Blower complaints received during the year.

xii. As the Company is neither carrying on business of Nidhi nor reported as a Nidhi company, paragraph 3(Xii) of the order is not applicable.

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

xiv. (a) The Company has an internal audit system commensurate with the size and nature of its

business.

(b) We have considered the reports of the Internal Auditor while framing our report.

xv. The Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, the paragraph 3(XV) of the order is not applicable.

xvi. (a) The Company is not carrying on the business of Non- Banking Finance and hence the

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

(b) The Company did not conduct any Non Banking Financial or Housing Finance activities

(c) The Company is not a Core Investment Company as defined in the regulations made by the Reserve Bank of India

xvii. The Company had incurred cash losses during the current financial year as well as in the preceeding financial year, amounting to Rs.511.31Lakhs and Rs. 612.87 Lakhs respectively.

xviii. During the year under review, there has been no instance of any resignation of the Statutory Auditors. Hence the provisions of para (xviii) of the said Order are not applicable.

xix. The Company, being a Govt Owned Entity was ordered to be shut down as per the directions of the Ministry of Chemicals & Petrochemicals and had granted Financial Assistance for the closure settlement related expenditure including implementation of VRS/VSS for employees, statutory dues payments, Bank Loan repayment, payment to various suppliers/utilities and the Company had cleared substantial portion of these liabilities and is in the process of clearing the balance obligations in this regard.

The Company is no longer a Going Concern Entity. Taking all these into consideration, we are of the opinion that Companys ability to meet its liability existing at the date of balance sheet are dependent on the amounts which they presently have (which are given for closure proceeds and are being utilized for the same) and in case if they fall short, Company again needs to take the financial assistance from the Ministry.

xx. There are no amounts which are required to be spent in accordance with Section 135 of the Act by the Company by virtue of their regular losses. Accordingly, the provisions of para (xx) of the said Order is not applicable.

xxi. The Company does not have any subsidiaries. Accordingly, the provisions of para (xxi) of the said Order is not applicable.

	For Niranjan & Narayan
	Chartered Accountants
	Firm Registration No: 005899S
	Sd/-
	M. Niranjan
	Partner
Date: 17.05.2023	Membership No. 029552
Place: Hyderabad	UDIN : 23029552BGXBKJ5323