Gujarat Fluorochemicals Ltd

BSE: 500173 | NSE: GUJFLUORO | ISIN: INE538A01037 
Market Cap: [Rs.Cr.] 6,723.68 | Face Value: [Rs.] 1
Industry: Chemicals

Director's Report

To the Members of


Your Directors take pleasure in presenting to you their Twenty-Seventh Annual Reportfor the year ended 31st March, 2014.


Following are the working results for the year 2013-2014:

(Rs. in Lacs)
2013-2014 2012-2013
Continuing Operations
Net Sales / Income from Operations 113487 150416
Other Operating Income 607 9192
Total Income from Operations 114094 159608
Less: Total Expenses 105287 99019
Profit from operations before other income and finance cost and exceptional items 8807 60589
Add: Other Income 6506 5690
15313 66279
Less: Finance Cost 5528 6895
Profit from ordinary activities after finance cost but before exceptional items 9785 59384
Profit from ordinary activity before Taxation 9785 59384
Provision for Taxation 2243 19594
Profit for the year from Ordinary Activity 7442 39790
Discontinuing Operations
Profit / (Loss) before Tax 0 65
Tax Expense 0 21
Net Profit / (Loss) 0 44
Net Profit / (Loss) for the year 7442 39834
Profit brought forward form earlier year 722 374
Profit available for appropriations 8164 40208
Transferred to General Reserves 3000 35000
Interim Dividend 0 1648
Proposed Dividend subject to approval of the Shareholders 3845 2197
Tax on Dividend 653 640
Balance Carried forward to Balance Sheet 666 723
TOTAL 8164 40208


a. PTFE / Chemicals Business

Industry structure and developments

Total global PTFE market is around 150000 tpa, of which 60% is granular and 40% is finepowder and aqueous dispersion grades. The market is growing at a CAGR of 3-4% for lastseveral years. However, it had witnessed significant upheaval during last 3-4 years. Afterhaving seen a period of shortage and rising prices, the market entered a period of surplusand falling prices. During the financial year the prices remained subdued and demandsluggish, though there have been some signs of recovery towards the end of the year. Goingforward, demand is expected to get a boost due to increased usage in architectural andhousehold applications.

In terms of supply, the industry is dominated by two kinds of players - long term, highquality, large players from developed countries, who command around 50% market share, andnew players from developing countries who have around 50% market share. There is adistinct shift occurring towards the later.

The Company entered the PTFE business in 2008, and in a short span of time, became asignificant player in the global market. The Company is perceived as a high quality PTFEsupplier, who works closely with customers to meet their requirements. With the presentcapacity of about 16,000 tpa, your Company caters to a significant share of the globalmarket, putting it in the bracket of the top 3-4 PTFE suppliers globally. The Company hasalso introduced in the market various grades of fine powders and aqueous dispersion PTFE.Consistent with its commitment towards the environment, the Company manufactures finepowder and aqueous dispersion PTFE grades manufactured by using environment friendlysurfactant technology.

Your company has managed to retain its market share and has added a number of keycustomers with its relentless marketing efforts. In its efforts to be closer to thecustomer, your Company has incorporated a subsidiary in Germany, in addition to thesubsidiary in the US.

Indian market for PTFE is around 3000 - 3500 tpa, growing at a healthy 7 - 8% perannum. The Company has around 70% market share in India, being the only significantproducer in the country. There is an immense latent potential for higher PTFE demand andthe Company is working with Indian PTFE processors to develop new products andapplications to spur higher growth and demand in the domestic market.

Globally, established players are moving to higher value added polymers, leaving thespace in the traditional PTFE markets for players like your Company. The Company alsoplans to enter the segment of higher value added fluoropolymers and fluoroelastomers inthe near future. Due to its continued marketing efforts the Company has been able toincrease its market penetration and enlarge its customer base.

The Company enjoys a significant competitive advantage, because of its integratedoperations. It is amongst the most integrated players globally, giving it significant costcompetiveness amongst other global players. The Company has placed enormous emphasis onhigh and consistent quality of all PTFE grades matching the best in the business, bycontinuous operations and process improvements. The Company has adopted marketingstrategies to be proximate with customers and provide value added services such as officeand warehousing facilities in the US and EU markets, and technical services to drive valuefor customers. The Company has enlarged its sales field force both in domestic as well asin international market to further increase its market share.

Opportunities and threats

The key opportunities in the PTFE business include the vast undeveloped potential inthe Indian markets that would be converted into market demand by new product andapplication development, and the market gaps created by established players moving tohigher value added polymers. There also exists the potential to work with reputed globalplayers of PTFE based components to expand the PTFE market in India. Your company alsosees major opportunities in US, Latin America and Far East to boost its sales and globalmarket share. The Company has accordingly deployed sales personnel in these markets toachieve this goal.

Some of the significant threats include further capacity expansions in China, and theimpact of such expansion on PTFE prices.

Segment-wise product-wise performance

Caustic Soda accounts for around 25% of the Company's sales in value terms. Causticsoda sales, though increased by 8% in volume terms compared to last year, dropped byaround 4% in value terms, largely due to lower price realisations.

Chloromethanes account for around 19% of the Company's sales in value terms.Chloromethane sales has increased by around 15% in value terms, due to higher pricerealisations despite remaining the same in volume terms.

PTFE accounts for around 38% of the Company's sales in value terms. PTFE sales recordedincrease by 34% in volume terms and 12% in value terms.

Around 24% of the Company's PTFE sales last financial year came from the domesticmarket and more than 76% of PTFE sales came from the export markets, in value terms. TheCompany witnessed a 21 % fall in its PTFE exports in value terms.

A bulk of the Company's PTFE sales, more than 78%, comes from granular PTFE (includingmodified granular) with dispersion PTFE accounting for 18%, and APTFE for around 4%Granular PTFE sales increased by around 9%.


The demand sluggishness and consequently subdued prices witnessed in the previous yearspilled over in this year too. However, the US economy in particular, fuelled by shale gasdiscovery, is expected to do well in the coming year. This is expected to boost the globaleconomy. Therefore, the Company expects the growth momentum in PTFE sales to pick upduring this coming financial year.

With the introduction of fine powder and aqueous dispersion grades of PTFE in theproduct mix and growth in the modified and compounding businesses, the Company expectsvalue addition in the PTFE business to increase further.

The Company is, in addition to being the largest PTFE producer in the country, also thelargest producer of chloromethanes, and a significant player in the caustic soda businessin India.

The Company is also seriously considering other products in the fluoropolymer,fluoroelastomers and speciality fluorochemicals segments, and would take investmentdecisions in these areas shortly, after a complete evaluation of the market, technologiesand economics. This would provide an avenue of growth in the near future.

The Company has launched several profit improvement, cost reduction and energy savingprojects some of which have already started yielding good results. During the forthcomingfinancial year there will be significant contribution on revenues and profitability fromthese projects.

Risk and concerns

As indicated in the "threats" section, the key risk includes increasedcompetition and impact on pricing, due to any additional capacities set up by Chinesemanufacturers.

However, the Company remains confident of being able to maintain a healthy return oninvestment due to the cost competiveness arising out of its integrated operations and itsincreased efforts in the market to retain and expand customers and enhance market share.

b. Wind Energy Business

The Company has floated two subsidiaries to pursue its wind energy business - Inox WindLimited and Inox Renewables Limited. Inox Wind Limited manufactures state-of-the-art windturbine generators, rotor blades and tubular towers, at its two manufacturing plants, onein Himachal Pradesh and one in Gujarat, with technology sourced from a leading Europeanwind turbine technology developer. Inox Renewables Limited owns and operates wind farms.

Inox Wind Limited is one of India's leading wind power solutions providers. Itmanufactures wind turbine generators, and provides turnkey solutions by supplying WTGs andtheir components. Inox Wind Limited also, through its 100% subsidiary Inox WindInfrastructure Services Limited, offers a variety of services including wind resourceassessment, site acquisition, project development, erection and commissioning, and alsolong term operations and maintenance of wind power projects. During the financial yearended March 2014, Inox Wind Limited has emerged as one of the largest wind power solutionsprovider in the country.

Inox Renewables Limited, and its 100% subsidiary Inox Renewables (Jaisalmer) Limited,own and operate wind farms. By March 2014, Inox Renewables Limited with its subsidiaryoperates around 213.1 MW on wind capacity, making it one of the large wind IPPs in thecountry today.

The regulatory development in this business remains favourable, with various incentiveslike higher feed-in tariffs, generation based incentives, mandatory Renewable PurchaseObligations (RPOs) on distribution companies, and Renewable Energy Certificates (RECs) alladding to the revenue streams a wind energy producer can avail to improve the viability ofinvestments in wind farms. With access to a significant pool of viable land banks, andaccess to efficient wind turbines, the Company's subsidiaries are well-poised to mark asignificant presence in this business.

Discussion on financial performance with respect to operational performance

The financial performance of your Company continues to remain strong, and is expectedto show an improvement in the coming years, with the higher production levels at thechemical complex at Dahej and the commencement of revenues from the Wind Energy businessthrough its subsidiaries.


Your Directors would like to confirm that

I. in the preparation of the Annual Accounts, the applicable Accounting Standards havebeen followed;

II. the Directors have selected such Accounting Policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the Financial Year and ofthe Profit or Loss of the Company for that period;

III. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

IV. the Directors have prepared the Annual Accounts on a going concern basis.


Your Directors have recommended dividend of Rs 3.50 per share (350%) subject toapproval of the Members. The total dividend pay-out (including dividend distribution taxon dividend pay-out) for the year will be Rs 4498 lacs.


Shri Deepak Asher (DIN: 00035371) retires by rotation and being eligible, offer himselffor re-appointment.

Shri Shailendra Swarup (DIN: 00167799), Shri Om Prakash Lohia (DIN: 00206807), Dr. SRama Iyer (DIN: 00076549) and Shri Shanti Prasad Jain (DIN: 00023379), IndependentDirectors of the Company were appointed as Independent Directors of the Company by theBoard of Directors at its meeting held on 29th May, 2014 for a period of fiveconsecutive years with effect from 1st April, 2014 subject to approval ofMembers at the ensuing Annual General Meeting.

The Board of Directors has re-appointed Shri Dinesh Kumar Sachdeva (DIN 00050740) andShri Jitendra Singh Bedi (DIN: 01670022) as Whole-time Director /s of the Company for aperiod of one year subject to the approval of Members at the ensuing Annual GeneralMeeting. Shri Paresh Trivedi who was appointed by the Board of Directors as an Additionaland Whole-time Director at its meeting held on 22nd October, 2013 had resignedas Director and Whole-time Director with effect from 27th June, 2014. Theappointment of Shri Paresh Trivedi and payment of remuneration to him during the saidperiod is placed for approval of Members.

Necessary resolutions in respect of Directors seeking appointment / re-appointment andtheir brief resume pursuant to Clause 49 of the Listing Agreement are provided in theNotice of the Annual General Meeting forming part of this Annual Report.


In accordance with the General Circular issued by the Ministry of Corporate Affairs,Government of India, the Balance Sheet, Statement of Profit and Loss and other documentsof the subsidiary companies are not being attached with the Balance Sheet of the Company.However, the financial information of the subsidiary companies is disclosed in the AnnualReport in compliance with the said circular. The Company will provide a copy of separateannual accounts in respect of each of its subsidiary to any shareholder of the Company whoasks for it and the said annual accounts will also be kept open for inspection at theRegistered Office of the Company and that of the respective subsidiary companies.


The notes forming part of the accounts are self-explanatory and do not call for anyfurther clarifications under Section 217(3) of the Companies Act, 1956.


Members are requested to appoint Auditors for the current year and to fix, or authorisethe Board to fix, their remuneration. The Auditors, M/s. Patankar & Associates, retireand offer themselves for re-appointment. A certificate has been received from them thattheir appointment, if made, will be in compliance with the provisions of the Companies

Act, 2013.


Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a ManagementDiscussion and Analysis, Corporate Governance Report and Auditors' Certificate regardingcompliance of conditions of Corporate Governance are made a part of the Annual Report.

In compliance with the requirements of Clause 49(V), a certificate from the ManagingDirector and Director and Group Head (Corporate Finance) of the Company, who areresponsible for the finance function, was placed before the Board.

All the Board Members and Senior Management Personnel of the Company had affirmedcompliance with the Code of Conduct for Board and Senior Management Personnel. Adeclaration to this effect duly signed by the Managing Director is enclosed as a part ofthe Corporate Governance Report.


Information pursuant to Section 217(1) (e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988,relating to the matters contained therein is given by way of an Annexure to this Report.


In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 andthe rules framed there under, the names and other particulars are set out in the Annexureto the Directors' Report. In terms of the provisions of Section 219(1) (b) (iv) of theCompanies Act, 1956, the Directors' Report is being sent to all the Shareholders of theCompany excluding the aforesaid annexure. The annexure is available for inspection at theRegistered Office of the Company. Any Shareholder interested in obtaining a copy of thesaid annexure may write to the Company Secretary at the Registered Office of the Company.


The Company undertakes sustainable development work as part of its ongoing efforts toimprove the quality of life of the people in the areas surrounding its plant. Your companyhas spent around Rs 41.74 lakhs in the last financial year on these initiatives. Diligentand sincere efforts in this direction have had a positive and lasting impact on theneighbouring community. During the year, the Company has had its Corporate SocialResponsibility initiatives certified by Ernst and Young.


Safety, health and environment have been of prime concern to the Company and necessaryefforts were made in this direction in line with the safety, health and environment policylaid down by the Company. The Company has achieved certification of ISO: 14001:2004(Environment Management System) and ISO 18001:2007 (Occupational Health and SafetyManagement System) for its Ranjitnagar and Dahej Plant. Health of employees is beingregularly monitored and environment has been maintained as per statutory requirements.


The Company's property and assets have been adequately insured.


Your Directors express their gratitude to all other external agencies for theassistance, co-operation and guidance received. Your Directors place on record their deepsense of appreciation for the dedicated services rendered by the workforce of the Company.


In compliance with the provisions of The Sexual Harassment of Women at Workplace(Prevention, Prohibition and Redressal) Act, 2013, your Company has formed a Committee tolook into such cases.

During the period under review, no case was filed with the Committee.

By Order of the Board of Directors

Noida Devendra Kumar Jain Vivek Jain
29th July, 2014 Director Managing Director


To The Directors' Report

Information as required under Section 217(1) (e) read with Companies (Disclosure ofParticulars in the Report of Board of

Directors) Rules, 1988


(a) Energy conservation measures taken Ranjitnagar Plant:

• Process optimisation of both HF and HCFC plant resulting in significantreduction in Natural Gas and Power consumption. This is achieved without any investment.

• Replacement of old Chillers in Chilled water system resulted in 2% powerreduction in Chilling system.

Dahej Plant:

• DC power in CA Plant reduced by 25 KWH by efficient operation against Budget forthe financial year 201314 (Average Power) i.e. 2845 KWH.

• AC power in CA Plant reduced by 30 units due to increased production andconsistent membrane efficiency. AC power reduced from 2576 KWH/MT to 2525 KWH/MT againstbudget for the financial year 2013-14.

• CA plant Auxiliary power reduced from 295 to 285 KWH/MT.

• Steam consumption norm reduced in CMS plant from 2.35 to 2.30 MT.

• TFE Plant NG consumption reduced from 16.5 to 15.5 MMBTU/MT.

• Water pumping energy reduced in TFE-I & II cooling tower by 5040 KWH/Day.

• Two chillers (-35) and (-15), both operated at (-35) to save 4385 KWH/Day inTFE-II utilities.

• Pumping energy for chilled brine reduced by 2160 KWH/Day in TFE Plant utilities.

• Out of 4, 3 DI water generation plants operated in PTFE and saved 2200 KWH/Day.

• Daily steam consumption reduction by 2 TPD at SPTFE.

• Steam consumption reduced in DPTFE from 18.5 to 16 TPD.

• 4000 units/day saved by stopping one CT in Power Plant.

• ID/FD fan power saving of 1500 KWH/Day achieved by increasing boiler bed height.

• Condensate recovery improved by power plant from 65% to 80%.

• STG-2 power generation increased, post wet steam washing by 12000 KWH/Day.

• Filter water pumping energy reduction by 720 KWH/Day.

• 289 KWH/Day saved by implementation of temperature and humidity based controlmechanism for AHU's at DPTFE.

(b) Additional investments and proposals, if any, being implemented for reduction ofconsumption of energy

Ranjitnagar Plant:

1. Upgrading Cross flow cooling towers for HCFC plant to Counter Current Cooling Towerwith high efficiency fills and drift eliminator will result in better cooling efficiencythus saving in refrigeration system power consumption.

Dahej Plant:

1. Study and evolution started for next generation fluoropolymer products.

a. PFA

b. FEP

c. Other Fluorochemicals

2. Stabilization of Aqueous PTFE in domestic market.

3. Development of PTFE micro powder grade for grease and lubricant application.

4. To develop market and application of modified PTFE in domestic market.

5. Technical support to domestic customers for increasing applications in areas wellproven in developed countries.

(c) Impact of measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production of goods at Dahej;

(1) The impact of the measures indicated in (a) and (b) above are expected to befavourable i.e., reduced energy and resource consumption and its consequential effect oncost of production.

(d) Total energy consumption and energy consumption per unit of production as per FormA;

Consumption per unit of production Current Year Previous Year
Dahej Plant
A Power and Fuel Consumption
1 Electricity
A Purchased
Units (in lacs) 2778 2096
Total Amount (Rs in lacs) 15589 12654
Rate/Unit (Rs.) 6 6
B Own Generation
Units (in lacs) 2201 2727
Total Amount (Rs in lacs) 9625 16078
Rate/Unit (Rs.) 4 6
2 Coal
Quantity (MT) 150332 138333
Total amount (Rs in lacs) 6197 5719
Average Rate (Rs) 4122 4134
3 Furnace Oil
Quantity (k. ltrs.) 81 74
Total Amount (Rs. in lacs) 40 33
Average Rate (Rs.) 49 44
Quantity (scm) 210 422
Total Amount (Rs. in lacs) 5918 8310
Average Rate (Rs.) 28 20
B Consumption per unit of production
Ranjitnagar (Fluorochemicals) Plant
1 Electricity KWH/MT 761 740
2 Fuel Oil LTR/MT 2 2
3 RLNG SCM/MT 267 280
4 Coal 0 0
5 Others 0 0
Dahej (Chloroalkalies)
1 Electricity KWH/MT 1460 2015
2 Fuel Oil LTR/MT 0.01 0.07
3 RLNG SCM/MT 36 141
4 Coal Qty MT/Coal Power unit lacs 193 217
5 Others 0 0


(e) efforts made in technology absorption as per Form B ; Ranjitnagar Plant :

Research and Development

(1) Specific Area in which R &D carried out :

i. Development of TFE based process & non-TFE based process for the manufacturingof EDFA, a valuable intermediate for Agro and Pharma Industries.

ii. Development of commercially viable process for manufacture of 2-Bromoheptafluoropropane and RfA, key intermediates for Agro-industries.

iii. Development of process for manufacture of DHA, an intermediate in Agro-industries.

iv. Development of process for manufacture of EDFAA, an Agro-intermediate.

v. Development of process for the manufacture of DFMSC.

vi. Development of process for the manufacture of Difluoro acetone.

(2) Benefits derived as a result of the above R & D :

i. Process for manufacture of EDFA by non-TFE route has been established. Thecommercial production has been started and the first 25 MT consignment will be supplied toBASF by mid-August.

ii. Process for manufacture of 2-Bromoheptafluoro propane has been established.Commercial production will be started soon and the first 2 MT consignment will be suppliedto PI Industries by mid-August. From September onwards it will be continuous supply of 15MT/ month to PI Industries.

iii. Process for the manufacture of EDFA by TFE route has been established.

iv. Process for the manufacture of DHA has been established.

v. Process for the manufacture of RfA has been established.

vi. Process for the manufacture of DFMSC has been established.

vii. Process for the manufacture of Difluoro acetone has been established.

(3) Future Plan of Action :

i. Development of process for manufacture of Pyrazole derivative for PI industries.

ii. Development of process for manufacture of Trifluoro acetyl chloride for LONZA.

iii. Development of process for manufacture of 2-bromo-5-fluoro benzotrifluoride forBASF.

iv. Development of process for manufacture of 3,5-difluoro aniline for BASF.

v. Commercial Production of DHA as per requirement from Syngenta.

vi. Commercial production of EDFAA as per requirement of PI Industries.

Dahej Plant :

Research and Development

R&D Centre at Dahej is recognized by DSIR (Department of Scientific and IndustrialResearch) for Research activities

(1) Specific areas in which R & D carried out:

i. Development of PTFE Semi free flow moulding grade for Iso-static and large dimensionsheets moulding.

ii. Development of Aqueous PTFE dispersion grades for Metal coating and Glass fabriccoating.

iii. Development of high wear resistance PTFE filled grade for hydraulic sealingapplications.

iv. Development of special PTFE moulding grade for porous PTFE articles for Automobileand Optical application.

v. Development of suspension and emulsion PTFE based micro-powder grades for variousapplications like plastic additives, coating additives, ink additives.

vi. Development of modified PTFE fine powder grades for transparent tube application inautomobile and semiconductor industry.

(2) Benefits derived as a result

Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

D K Jain , Chairman

Shailendra Swarup , Director

Pavan Jain , Director

Vivek Jain , Managing Director

Company Head Office / Quarters:

Survey No 16/3 26 & 27,
Ranjitnagar Ghoghamba Taluka,
Panch Mahal,
Phone : Gujarat-91-02678-248153/248152/248107 / Gujarat-
Fax : Gujarat-91-02678-248153 / Gujarat-
E-mail :
Web :


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