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Gujarat Fluorochemicals Ltd

BSE: 500173 | NSE: GUJFLUORO ISIN: INE538A01037
Market Cap: [Rs.Cr.] 7,533.65 Face Value: [Rs.] 1
Industry: Chemicals

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Director's Report

To the Members of


Your Directors take pleasure in presenting to you their Twenty-Seventh Annual Report for 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 fine powder and aqueous dispersion grades. The market is growing at a CAGR of 3-4% for last several years. However, it had witnessed significant upheaval during last 3-4 years. After having seen a period of shortage and rising prices, the market entered a period of surplus and falling prices. During the financial year the prices remained subdued and demand sluggish, though there have been some signs of recovery towards the end of the year. Going forward, demand is expected to get a boost due to increased usage in architectural and household applications.

In terms of supply, the industry is dominated by two kinds of players - long term, high quality, large players from developed countries, who command around 50% market share, and new players from developing countries who have around 50% market share. There is a distinct shift occurring towards the later.

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

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

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

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

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

Opportunities and threats

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

Some of the significant threats include further capacity expansions in China, and the impact 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. Caustic soda sales, though increased by 8% in volume terms compared to last year, dropped by around 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 price realisations despite remaining the same in volume terms.

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

Around 24% of the Company's PTFE sales last financial year came from the domestic market and more than 76% of PTFE sales came from the export markets, in value terms. The Company 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 (including modified 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 year spilled over in this year too. However, the US economy in particular, fuelled by shale gas discovery, is expected to do well in the coming year. This is expected to boost the global economy. Therefore, the Company expects the growth momentum in PTFE sales to pick up during this coming financial year.

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

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

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

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

Risk and concerns

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

However, the Company remains confident of being able to maintain a healthy return on investment due to the cost competiveness arising out of its integrated operations and its increased 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 Wind Limited and Inox Renewables Limited. Inox Wind Limited manufactures state-of-the-art wind turbine generators, rotor blades and tubular towers, at its two manufacturing plants, one in Himachal Pradesh and one in Gujarat, with technology sourced from a leading European wind turbine technology developer. Inox Renewables Limited owns and operates wind farms.

Inox Wind Limited is one of India's leading wind power solutions providers. It manufactures wind turbine generators, and provides turnkey solutions by supplying WTGs and their components. Inox Wind Limited also, through its 100% subsidiary Inox Wind Infrastructure Services Limited, offers a variety of services including wind resource assessment, site acquisition, project development, erection and commissioning, and also long term operations and maintenance of wind power projects. During the financial year ended March 2014, Inox Wind Limited has emerged as one of the largest wind power solutions provider 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 subsidiary operates around 213.1 MW on wind capacity, making it one of the large wind IPPs in the country today.

The regulatory development in this business remains favourable, with various incentives like higher feed-in tariffs, generation based incentives, mandatory Renewable Purchase Obligations (RPOs) on distribution companies, and Renewable Energy Certificates (RECs) all adding to the revenue streams a wind energy producer can avail to improve the viability of investments in wind farms. With access to a significant pool of viable land banks, and access to efficient wind turbines, the Company's subsidiaries are well-poised to mark a significant 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 expected to show an improvement in the coming years, with the higher production levels at the chemical complex at Dahej and the commencement of revenues from the Wind Energy business through its subsidiaries.


Your Directors would like to confirm that

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

II. the Directors have selected such Accounting Policies and applied them consistently and made judgements 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;

III. the Directors 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;

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 to approval of the Members. The total dividend pay-out (including dividend distribution tax on dividend pay-out) for the year will be Rs 4498 lacs.


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

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

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

Necessary resolutions in respect of Directors seeking appointment / re-appointment and their brief resume pursuant to Clause 49 of the Listing Agreement are provided in the Notice 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 documents of 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 Annual Report in compliance with the said circular. The Company will provide a copy of separate annual accounts in respect of each of its subsidiary to any shareholder of the Company who asks for it and the said annual accounts will also be kept open for inspection at the Registered 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 any further clarifications under Section 217(3) of the Companies Act, 1956.


Members are requested to appoint Auditors for the current year and to fix, or authorise the Board to fix, their remuneration. The Auditors, M/s. Patankar & Associates, retire and offer themselves for re-appointment. A certificate has been received from them that their 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 Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance 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 Managing Director and Director and Group Head (Corporate Finance) of the Company, who are responsible for the finance function, was placed before the Board.

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


Information pursuant to Section 217(1) (e) of the Companies Act, 1956, read with the Companies (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 and the rules framed there under, the names and other particulars are set out in the Annexure to the Directors' Report. In terms of the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors' Report is being sent to all the Shareholders of the Company excluding the aforesaid annexure. The annexure is available for inspection at the Registered Office of the Company. Any Shareholder interested in obtaining a copy of the said 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 to improve the quality of life of the people in the areas surrounding its plant. Your company has spent around Rs 41.74 lakhs in the last financial year on these initiatives. Diligent and sincere efforts in this direction have had a positive and lasting impact on the neighbouring community. During the year, the Company has had its Corporate Social Responsibility initiatives certified by Ernst and Young.


Safety, health and environment have been of prime concern to the Company and necessary efforts were made in this direction in line with the safety, health and environment policy laid down by the Company. The Company has achieved certification of ISO: 14001:2004 (Environment Management System) and ISO 18001:2007 (Occupational Health and Safety Management System) for its Ranjitnagar and Dahej Plant. Health of employees is being regularly 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 the assistance, co-operation and guidance received. Your Directors place on record their deep sense 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 to look 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 of Particulars 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 significant reduction in Natural Gas and Power consumption. This is achieved without any investment.

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

Dahej Plant:

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

• AC power in CA Plant reduced by 30 units due to increased production and consistent membrane efficiency. AC power reduced from 2576 KWH/MT to 2525 KWH/MT against budget 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 in TFE-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 control mechanism for AHU's at DPTFE.

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

Ranjitnagar Plant:

1. Upgrading Cross flow cooling towers for HCFC plant to Counter Current Cooling Tower with high efficiency fills and drift eliminator will result in better cooling efficiency thus 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 well proven in developed countries.

(c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent 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 be favourable i.e., reduced energy and resource consumption and its consequential effect on cost of production.

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

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 m

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 : bvdesai@gfl.co.in
Web : http://www.gfl.co.in


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