hindustan organic chemicals ltd share price Directors report


The Board of Directors presents herewith the 60th Annual Report of your Company along with the Audited Statement of Accounts for the financial year 2020-21.

1. FINANCIAL RESULTS

The financial results for the year ended 31.03.2021 with the comparative figures of companys operations for the previous year is as under:

(Rs. in Lakhs)

Particulars 2020-21 2019-20
Revenue from operations 41157.80 30,001.23
Other Income 1927.64 2203.36
Total 43085.44 32204.59
Expenditure 41418.07 41550.87
Profit before Depreciation & Tax 1667.37 (9346.28)
Less Depreciation 120.61 128.76
Profit /(Loss) before Exceptional Items and Tax 1546.76 (9475.04)
Less : Exceptional Items
Less : (1) Current Tax - -
(2) Deferred Tax - -
Profit/(Loss) for the Period after Tax 1546.76 (9475.04)
Other Comprehensive Income for the year, Net of Tax 1543.06 (244.05)
Total Comprehensive Income for the year 3089.82 (9719.09)

2. MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA

Company has been entering into a Memorandum of Understanding (MOU) with the Ministry of Chemicals & Fertilizers, Government of India, setting the performance parameters and targets every year. Company secured "very good" rating for the year 2018-19. The performance rating for 2019-20 MoU is yet to be finalised by the Government.

3. COVID-19 IMPACT ANALYSIS

During the financial year 2020-21 operation of the Company was scaled down for three weeks during the month of April, 2020. The Company was in lock down for 24 days and thereby resulting in a decrease in production of Phenol, Acetone, Hydrogen Peroxide, H.E. of Cumene and Cumox Oil.

There was a reduction in turnover for an amount of Rs.44.58 crore and revenue loss for an amount of Rs.14.72 crore due to the production loss in April/May 2020 and price reduction of Phenol and by-products.

a. The Company was quick in restoring the operations by ensuring health, safety and wellbeing of its employees after obtaining all necessary permissions.

b. COVID-19 has affected all the sectors of industry and commerce sectors that has much affected including logistics, auto, drugs, pharmaceuticals and electronic goods where our products are used. COVID-19 had indirectly affected HOCL, its effect on other industries and restriction in logistics resulted in non-availability and increased cost of spares and services, which in turn had small impact on HOCL. The impact of COVID-19 for the financial year 2020-21 may lead to decline in demand or prices, suspend or significantly reduce operations of factory and affect movement of interstate transportation of goods etc.

As per our current assessment, no significant impact on tangible assets, intangible assets, trade receivables, investments and other financial assets is expected, and we continue to monitor the changes in future economic conditions. The Management does not see any risk in the ability to continue as a going concern and meeting its liabilities as and when they fall due. However, the actual impact of Covid-19 on the Companys financial statements may differ from what is estimated.

4. CONSOLIDATED FINANCIAL STATEMENT

In accordance with the provisions of the Companies Act, 2013 ("the Act") and Ind AS 110 - Consolidated Financial Statement, the audited consolidated financial statement for the period ending 31.03.2021 is provided in the Annual Report.

5. DIVIDEND

In view of the accumulated losses carried forward by the Company during the current year, the Board of Directors do not recommend any Dividend for the year under review.

6. CHANGE IN NATURE OF BUSINESS IF ANY

As per the approved restructuring plan during the year previous year sale of 85.27 acre of land out of 242-acre sale of land at township at Rasayani has been registered and an amount of Rs.67.82 crore was received after deduction of TDC and dues to BPCL amounting to Rs.69.36 crore on 08.05.2019.During the year 2020-21, 0.386 acre land was sold to IOCL (Petrol Pump area) for an amount of Rs.75 lakhs.

Consequent to the decision of the Govt. of India for closure of Subsidiary Company Hindustan Fluorocarbons Ltd., an amount of Rs.73.70 crore has been released to the Subsidiary company as loan from Govt. of India to meet the expenses related to VRS/VSS to employees and settling dues to Bank and other liabilities.

7. FINANCIAL HIGHLIGHTS

During the year 2020-21, the company has achieved a Gross Income of Rs.430.85 crore registering an increase of 33.78 % as against the Previous Year Gross Income of Rs.322.05 Crore. The Company has earned a Net Profit before Tax of Rs.15.47 Crore during the year as against Net loss of Rs.94.75 crore incurred during the previous year.

8. NUMBER OF MEETINGS OF BOARD (including the dates of Board and committee meetings indicating the number of meetings attended by each director in every financial year)

During the year the Board Meetings were held on the following dates:

26th June 2020, 13th August 2020, 29th October 2020, 27th January 2021, 6th March 2021.

Other details are furnished in the Corporate Governance Report in Annexure IV to this Report.

9. CORPORATE GOVERNANCE

There has not been any appointment of Independent Directors on the Companys Board with effect from 21.02.2020 and there has been non -compliance to that extent with the various requirement of Corporate Governance under provisions of Companies Act 2013, under SEBI LODRRs and various Rules / Regulations made there under. The details in this regard forms part of Corporate Governance Report as Annexure IV to the Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

10. COMPLIANCE OF CORPORATE GOVERNANCE GUIDELINES ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISES

DPE, Government of India, has laid down certain parameters for the purpose of grading the CPSEs on the basis of their compliance with guidelines on Corporate Governance and this report needs to be submitted to the Government on quarterly/annual basis. Company has been complying with the Guidelines on Corporate Governance for CPSEs laid down by DPE and regularly submits reports to the Government. DPE issued Very Good Rating to your Company for the year 2020-21.

11. MANAGEMENT DISCUSSION & ANALYSIS REPORT

The details in this regard forms part of Corporate Governance Report as Annexure III to the Annual Report.

12. MANNER IN WHICH FORMAL ANNUAL EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS HAS BEEN CARRIED OUT :

The provisions of Section 134 (3)(p) of the Act shall not apply to a Government Company in case the Directors are evaluated by the Ministry, which is administratively in charge of the Company as per its own evaluation methodology. HOCL, being a Government Company, the performance evaluation of the Directors is carried out by the Administrative Ministry (MoC&F), Government of India, as per applicable Government guidelines.

13. KEY MANAGERIAL PERSONNEL:

The following are Key Managerial Personnel of the Company:

a) Shri Subodh B. Bhide [DIN: 05323535], Chairman & Managing Director

b) Smt Susheela S. Kulkarni [FCS: 5145], Company Secretary & Compliance Officer

c) Shri P.O Luise, GM (Finance) & CFO w.e.f. 6-11-2020

d) Shri Chander P. Bhatia [DIN:08554234], Director (Finance) & CFO up to 5-11-2020

14. DETAILS OF DIRECTORS AND/OR KMPSWHO HAVE BEEN APPOINTED OR RESIGNED DURING THE YEAR:

i. GOI has assigned additional charge of the post of Managing Director, Hindustan Fluorocarbons Limited (HFL), to Shri Chander Prakash Bhatia, Director (Finance), HOCL, vide File No. 51011/1/2019-CHEM.III-CPC dated 28th May, 2020 w.e.f. 01.06.2020 and till closure activities of HFL are completed or till the date of his superannuation or till further orders, whichever is earliest. Accordingly, ShriChanderPrakash Bhatia assumed the charge of Managing Director, Hindustan Fluorocarbons Limited (HFL) on 1st June, 2020. Further, with reference to this Departments order No. P-51011/1/2018- CHEM.III- CPC dated 02.11.2020, approval of the President was conveyed for premature termination of the tenure of ShriChanderPrakash Bhatia, Director (Finance), HOCL, on his personal request, with effect from the date of completion of the three months notice period (i.e., 05.11.2020, A/N)

Consequent to the premature termination (on his personal request) with effect from 05.11.2020 (A/N) of the tenure of Shri C P Bhatia, Director (Finance), HOCL, who is also holding the additional charge of Managing Director, HFL, the President is pleased to assign additional charge of the post of Managing Director, HFL, to Shri S B Bhide, Chairman & Managing Director, HOCL, w.e.f. 06.11.2020 till completion of closure of HFL or his superannuation or till further orders, whichever is the earliest.

Further, Approval of the Competent Authority is hereby conveyed for entrustment of the additional charge of the post of Director (Finance), Hindustan Organic Chemicals Limited (HOCL) to Shri S.B. Bhide, Chairman & Managing Director (CMD), HOCL, w.e.f. the date of his assumption of additional charge of the post and up to 31.07.2021 (date of his superannuation) or till the regular appointment to the post, or until further orders, whichever is the earliest.

ii. Mr.C.P.Bhatia was holding the position of CFO of the Company. However, as Director (Finance) Mr. C.P. Bhatia (also CFO, HOCL) had submitted his application for repatriation back on lien to his earlier organization, viz. REC Ltd., vide his letter dated 06-08-2020, by giving 3 months notice, therefore on 5-11-2020, Mr.C.P.Bhatia was relieved from the Post of Director (Finance) of HOCL as per Govt. Order in this regard. Therefore the position of CFO of the Company was statutorily required to be filled up , to be effective from 6-112020. Further, Mr.P.O.Luise, GM(Fin.), HOCL was appointed as CFO of the Company w.e.f. 6th November, 2020 and till further orders.

iii. Mr. S. B. Bhide CMD, HOCL also holds the Additional charge of Director Finance HOCL from 18-02-2018 upto 06-08-2019. Further with reference to this Departments Order No.P-51011/1/2018- CHEM.III-CPC dated 02.11.2020 regarding premature termination (on his personal request) with effect from 05.11.2020 (A/N) of the tenure of Shri C P Bhatia, Director (Finance), HOCL, who is also holding the additional charge of Managing Director, HFL, the President is pleased to assign additional charge of the post of Managing Director, HFL, to Shri S B Bhide, Chairman & Managing Director, HOCL, w.e.f. 06.11.2020 till completion of closure of HFL or his superannuation or till further orders, whichever is the earliest.

15. COMPOSITION OF AUDIT COMMITTEE (AC) AND NON ACCEPTANCE OF ANY RECOMMENDATIONS OF AC (only for public and listed companies).

The Audit Committee was not in place for the year 2020-21 in compliance with the Companies Act, 2013 and LODRRs as it does not have any Independent Directors. Thereafter in the absence of Independent Directors, in the Board Meeting held on 13.08.2020, the name of the Audit Committee has been changed to Sub-Committee of the Board.

Details of Composition, meetings of Audit Committee/Sub-Committee are provided in Corporate Governance Report in Annexure IV to this Report.

16. COMMITTEES OF THE BOARD

Consequent to the completion of tenure of Mr. Mukesh Pareek and Ms. Lata Alker (Independent Directors) on 20-02-2020, there are no Independent Directors on the Board of the Company as on 31-03-2021. Therefore, the following Committees (were in existence up to 5-11-2020) were cease to exist with effect from 6-11-2020 and as on 31-03-2021.

i. Stakeholders Relationship Committee.

ii. Nomination and Remuneration Committee

iii. Committee on Corporate Social Responsibility (CSR)

The Companys Board has the following Committees:

i. Audit Committee though existing, but as it does not have any Independent Directors, therefore w.e.f. 13-08-2020 Board Meeting the name has been changed to Sub-Committee of the Board.

ii. The Share Transfer committee (constituted under Regulation 40 of the LODRRs)

The details of the committees along with their composition, number of meetings held and attendance of each director at the meetings are provided in the Corporate Governance Report.

17. SECRETARIAL STANDARDS

Applicable Secretarial Standards, i.e., SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings, respectively, have been duly complied by the Company.

18. DIRECTORS RESPONSIBILITY STATEMENT

Your Directors make the following statement in terms of Section 134(5) of the Companies Act, 2013 -

i. That in the preparation of the annual accounts for the year ended 31st March, 2021; the applicable accounting standards had been followed along with proper explanation relating to material departures.

ii. That such accounting policies as mentioned in the Notes on Accounts had been applied consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at the financial year ended 31st March, 2021 and the profit or loss of the Company for that period.

iii. That proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. That the annual accounts for the year ended 31st March, 2021 had been prepared on a going concern basis.

v. That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

19. INDEPENDENT DIRECTORS DECLARATION -

As there are no Independent Directors on the Board of the Company w.e.f. 20-02-2020 the requirement of Independent Directors Declaration is not applicable during the year under review (FY 2020-21).

20. DISCLOSURE ON REAPPOINTMENT OF INDEPENDENT DIRECTORS

Not applicable.

21. COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF DIRECTORS ETC.

As per notification dated 5th June, 2015 issued by Ministry of Corporate Affairs, provision of section 134(3) (e) of the Companies Act, 2013 regarding disclosure of its policy on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matter provided under sub- section (3) of section 178 of the Companies Act, 2013 are not applicable to a Government company. Company being a CPSE and appointments of all the Directors on the Board of the Company are made by the Govt. of India/President of India and under the supervision, control and directions of the Department of Chemicals & Petrochemicals and the prescribed DPE Guidelines are being followed. The Terms and Conditions of appointment of Independent Directors and other directors, are as per the Government Orders are disclosed on the Companys website.

22. RATIO OF DIRECTORS REMUNERATION TO MEDIAN EMPLOYEES REMUNERATION AND OTHER PRESCRIBED ELABORATE DISCLOSURES AND DETAILS :

The provisions of Section 134 (3)(e) of the Act are not applicable to a Government Company. Consequently, details on Companys policy on Directors appointment and other matters are not provided under Section 178 (3) of the Act. Similarly, Section 197 of the Act shall not apply to a Government Company. Consequently, disclosure of the ratio of the remuneration of each Director to the median employees remuneration and other such details including the statement showing the names and other particulars of every employee of the Company, who if employed throughout / part of the financial year, was in receipt of remuneration in excess of the limits set out in the Rules are not provided in terms of Section 197 (12) of the Act read with Rule 5 (1) / (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Chairman & Managing Director and the Whole-time Directors of the Company did not receive any remuneration or commission from any of its Subsidiaries. HOCL, being a Government Company, its Directors are appointed / nominated by the Government of India as per the Government / DPE Guidelines which also include fixation of pay criteria for determining qualifications and other matters.

23. AUDITORS

a) M/s. BSJ & Associates, Chartered Accountants, were appointed as Statutory Auditors of your Company for Corporate Office and Kochi Unit for FY 2020-2021 by C&AG.

The auditors have furnished a declaration confirming their independence as well as their arms length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company. The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the audit process. The auditors attend the Annual General Meeting of the Company

b) The Board of Directors have appointed M/s. C.Y. Associates, Cost Accountants as Cost Auditors of your Company for FY 2020-2021.

c) M/s. N. C. Mittal & Co., Chartered Accountants were appointed as Internal Auditor of your Company for Corporate office and Kochi unit for FY 2020-2021.

d) Supplementary Audit is conducted by Director General of Commercial Audit and ex-Officio Member, Audit Board-I, Mumbai.

e) The Board had appointed D. S. Momaya & Co., Practising Company Secretaries to conduct Secretarial Audit for the FY 2020-2021. The Secretarial Audit Report for the Financial Year ended March 31, 2021 is annexed to this Report as Annexure and complied with Section 204 of Companies Act and Regulation 24A of SEBI LODRRs. The Company has also obtained Annual Secretarial Compliance Report form the PCS D. S. Momaya & Co. for the year 2020-21 under Regulation 24A of LODRRs.

24. SAFETY, HEALTH AND ENVIRONMENT

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. Audiometry tests were carried out for those who are exposed with Noise and Autotoxicity tests were carried out for the Benzene handlers apart from other statutory regular check-ups.

Periodic awareness session on Hygiene, Covid precautions and guidelines were imparted. In order to control the spread, Fumigation and disinfection were done on regular basis. Additional dining /rest rooms were provided for contract workers and waiting Shed were provided for tanker drivers to ensure social distancing. All the tankers were disinfected before entering.

As part of the safety improvements, many positive measures have been undertaken by the organisation. IMS (Integrated Management System) was implemented integrating Quality Management System (ISO-9001), Environment Management System (ISO-14001) and Occupational Health and Safety Management System (ISO 45001). This gives more importance to the safety and health aspects. The objectives of each department has been set in line with the same including Near Miss accident reporting, Hazard identification Risk Assessment identification of each activity, Tool Box Talks prior to commencement of work inside the plant so as to make the employee more aware of the hazard involved in the work. During the covid situation online training were organised. By complying with Covid Protocols "First aid training" was imparted being a statutory requirement, thereby meeting the availability of required certified first aiders in the organisation. Live practical sessions on safety were conducted for the employees.

During 2020-21 an "Offsite Emergency Drill" was organised in association with District Administration, NDRF, Statutory Authorities, nearby PSUs and Local bodies apart from our regular on-site mock drill. "Lock out Tag Out" system was implemented for Electrical isolations for safe electrical permits across the plant.

HOC Kochi unit received safety awards from Department of Factories & Boilers, Govt. of Kerala for outstanding performance in industrial safety for the year 2020. HOCL Kochi unit also received Suraksha Puraskar from M/s. National Safety Council, Kochi Chapter among the large chemical Industries category for the year 2020.

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.

Continuing the use of RLNG (Regasified Liquefied Natural Gas) has resulted in tremendous reduction in air pollution.

As part of protecting the environment, awareness sessions, competitions, swachh Bharat activities, promoting employees for vegetable cultivation under a "Green Mission", Beautification of the plant premises involving the entire employees of the organisation were carried out. E-Calendar and E-Diaries were introduced and widely circulated as per Government Directives to reduce paper consumption and thereby conserving natural resources.

On-line Effluent Monitoring and stack monitoring system is implemented to comply with Central Pollution Control Board regulations.

HOCL is in the process of implementing ISO 50001. All the products of HOCL are certified by BIS.

During 2020-21, HOCL received Commendation certificate for the best practices in Energy Conservation activities in the organisation from M/s. Kerala Energy Management Centre.

The Company has implemented several measures to prevent the spread of COVID-19 pandemic during the year like suspension of Bio-metric punching, temporary banning of visitors entry, work from home for some of the non-essential staff and encouraging the use of protective measures like use of Mask, hand hygiene, safe distance, disinfection of all trucks and tankers coming inside, etc. Posters have been displayed at various locations to educate the employees in this regard. In addition, Contributions were made by employees to PM Care Fund and CMDRF. Homeo preventive medicines were supplied to the employees of all categories.

Hot Water dispenser provided at various locations for employees. Partitions done at Dining Table and Wash Area of Canteen to ensure physical distancing. Awareness session on Covid-19 conducted for Housekeeping staffs and other contract workers at HOC Township. The classes were held at our Township by complying with all Covid-19 protocols by our Medical Officer. Covid-19 Awareness session conducted for Security Staffs at our Training Centre. The Session was handled by our Medical Officer. Separate Home Quarantine facility provided at Township for employees and their family. Also Separate isolation centre was arranged for those who have tested positive. Fumigation done at Township and work place when positive cases reported.

Hydrogen Peroxide (H202) one of our products is widely used as a disinfectant. Company has distributed it some of the Institutions/ Local Bodies, free of cost. In order to promote Hydrogen Peroxide, 5% concentrated H2O2 (5 Litre) is also provided to employees. Face Shields were provided to all employees, Local authorities, Health Workers, Police Dept. and Municipality. Webinar on "Ignorance spreads faster than Covid-19" was conducted by M/s. National Safety Council, Kerala Chapter for Covid-19 Advisory Committee members and Chief Executives of the Organization. Webinar on "Sustainability and Energy Conservation ideas in a pandemic situation" conducted for the Executives of the Organization. Covid-19 -Social Behaviour Norms Pledge was administered to all employees.

Hand washing facility for tanker lorry drivers and cleaners inside the plant area were provided adjacent to the finished product filling area. Hot Water dispenser provided to various locations. "Break the chain" Diary (500 Nos.) given to Health Dept for distributing to Auto Drivers/ Shopkeepers.

As a part of preventive measures, the selection process for engaging apprentices under Apprentices Act were conducted through online mode. The selected candidates were allowed to join after certified for a negative RTPCR Test. Posters on Covid-19 displayed at various locations to create awareness.

25. RESERVATION AND OTHER WELFARE MEASURES FOR SCHEDULED CASTES/ SCHEDULED TRIBES/ OTHER BACKWARD CLASSES AND PERSONS WITH DISABILITIES.

All guidelines laid down in respect of Reservation and other welfare measures for Scheduled castes/Scheduled Tribes/Other Backward Classes are complied with. The provisions for special arrangement for Persons with Disabilities at work place have been complied with.

26. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

During the year under report, the company continued its efforts to promote Hindi as Official Language in its day today official activities. 10 Hindi workshops were conducted during the years including special programme on Annual Programme 2020-21 issued by the dept of OL. Hindi week and Hindi Fortnight were organized at corporate office and Kochi units on 1421 September and 07th -21st September respectively. During this period various competitions were also organized and large number of employees participated. HOCL, Kochi Unit bagged Third prize for the best implementation of OL policy by Town official language Implementation Committee (TOLIC). Our Corporate and Kochi Unit were actively participated in various programmes conducted by TOLIC (PSU), Kochi and TOLIC, Navi Mumbai. Official Language Seminar was conducted online mode at Kochi in association with TOLIC, Kochi on 17 &18 February 2021 on the subjects "Emerging Dimensions of OL "and "IT Tools in Hindi". OL orientation programme was conducted exclusively for senior officers of Corporate and Kochi Office. All documents under section 3(3) of OL Act 1963 were issued both in Hindi and English. The Website of the company is available both in Hindi and English. Competitions in Hindi were organized in connection different day celebrations including Constitution Day, World environment Day, Vigilance Awareness Week. Various promotional scheme including incentives for better implementation of Official Language has been adopted by our organization.

27. CITIZENS CHARTER, PUBLIC GRIEVANCE REDRESSAL (PG), CUSTOMER CARE SYSTEM (CCS) & RIGHT TO INFORMATION (RTI)

In line with the provisions of RTI Act 2005 to promote transparency and accountability, our organisation has taken efforts to handle the Right to Information sought for. Company has laid down procedure to provide information through Public Information Officer/CPO and Appellate Authority.

28. MICRO & SMALL ENTERPRISES

All efforts have been taken to comply with the Government Directive to procure items specified for procurement from MSMEs. Necessary procedures has been made in all tenders stating the eligibility of MSMEs to participate in tenders. We have removed the restricted clauses in the tender conditions and modified the same which will help in greater participation of MSMEs and especially SC/ST MSMEs in the procurement processes. Company has modified the purchase policy also to comply with the directions.

HOCL always takes efforts to fulfill the requirements. Our 95% of the purchases by value are petroleum products (LPG, Benzene, LNG and Hydrogen - which are our raw materials.) supplied by M/S. BPCL through pipeline transfer. These items are not manufactured by MSMEs and not available in GeM portal. Out of the balance 5% procurement, HOCL s target is to procure minimum 25% from MSME includes 4% from MSEs owned by SC/ST and 3% from women owned MSEs. Special efforts have been made to ensure participation of SC/ST representative, women representatives.

29. SOCIAL, ENVIRONMENTAL AND ECONOMIC RESPONSIBILITIES AND BUSINESS RESPONSIBILITY REPORT

Hindustan Organic Chemicals Limited has adopted and realizes the benefits of Management Principles into daily activities to achieve the goals of the organization. These Management Principles will provide a foundation to continually improve upon the Organizations performance. The organization believes the following principles to align with the business processes.

1. Customer focus

2. Leadership

3. Utilization of resources with improved information flow within the organisation

4. Process approach; & its Continual improvement,

5. Risk & opportunity and real time decisions

6. Developing internal resources & maintaining better human relations at work.

We have adopted the "Process Approach" into daily operations including the PDCA Cycle. We have considered the utilization of Risk-Based Thinking when developing, implementing, and improving the effectiveness in most of our Management System. This approach enables Hindustan Organic Chemicals Limited to enhance the overall performance of the Organization by effectively controlling the interrelationships and the interdependencies among the processes. The understanding and consistency with achieving customer specific requirements;

• The consideration of our processes in terms of added value;

• The achievement of effective process performance;

• Improvement of our processes based on real time data and information.

We also effectively plan and implement various actions to address risks and opportunities to maximize the outcomes including, but not limited to achieving improved results and preventing negative effects of our products, Operations, services.

Our businesses provide goods and services that are safe and contribute to sustainability throughout their life cycle and to promote the wellbeing of all employees, respect the interests of the stake holders, responsive towards all stake holders, especially those who are disadvantaged, vulnerable and marginalized. Our businesses respect, protect, and make efforts to restore the environment in a safe and better manner by complying with the relevant Statutory regulations. Our businesses also support and provide value to their customers and consumers in a responsible manner.

30. DETAILS OF CSR POLICY AND ITS IMPLEMENTATION DURING THE YEAR

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 neighbouring villages, rendering assistance in different forms.

Your Company is not required to carry out any CSR activities on account of losses incurred during the previous years and also in the current year. However, Company has recognized its social obligations and extended the following during the year under review.

In order to help fighting the COVID-19 pandemic, Company extended the following during the year.

• One day salary each of all employees contributed to the PM Cares Fund (Rs.6.19 Lakhs) and Kerala Chief Ministers Distress Fund (Rs.6.02 Lakhs).

• Medicine kit donated to local Police station for distributing to the needy suffering people (Rs.25,000/).

• Donated H2O2 to local bodies for sanitisation purpose (Rs.40,500/-).

• Face shields distributed to local police and Government Hospitals 9Rs.12,150/-).

• As a part of social obligation, the company is extending need-based assistance to deserving students along with SC/ST students for their School / Graduate education.

• As part of social obligation face masks, face shield, medical kit, hydrogen peroxide for disinfection, supply of lunch to the health workers of medical camp etc were supplied to Health and Police Authorities and nearby villages.

• Vocational training facilities to the wards of employees of the company in the nearby Engineering / Management colleges for enhancing skill / knowledge.

• Engaging professional students of ICAI/ICSI who have completed intermediate level as trainees for imparting practical knowledge of company working by paying stipend.

Other activities.

SWACHH BHARAT ABHIYAN

Swachh Bharat Abhiyan is given utmost importance by the Company and various activities were conducted during the year.

Inaugural Function was organised with Executive Director administering Pledge on Swachhta Mission in front of the Administrative Building where all employees gathered and the relevance of Swachhta Mission and Action Plan of Swachhta 2020 were explained to the gathering.

A team of 16 volunteers from different departments were selected and suggestions were sought from them how to proceed the activities in their departments apart from the common activity. Accordingly, each team planned their activity chart of the programme.

Banners with logo on "Swachhta Pakhwada" were displayed in the main gate of the factory and Township to give wide publicity. All the activities conducted in our Unit were published through social media along with photographs on daily basis.

Awareness session on Covid 19 given to Housekeeping staff, security and Township staff. Vegetable gardening was promoted and employees were volunteered under a Green Mission and vegetables cultivated at our premises. Swachhta activity was done at vegetable garden. Employees were promoted to beautifying the company premises and they were formed into groups and competitions were organised and the best departments were awarded for the best beautification

Essay and cartoon competitions conducted

As part of the promotional activities face mask, sanitizer pen etc were provided to the employees

Distributed plantable pen with seeds to promote elimination of plastic usage.

Senior executives attended swachhta seminar.

Swachhta activities carried out at Township

The Factory area is cleaned by the employees/trainees/apprentices and contract workers including the work places, office building, approach roads. Removing of old files and segregation of items in stores connected with each department were carried out.

Awareness session on Covid -19 given to Housekeeping staff, security and Township staff. Vegetable gardening was promoted and employees were volunteered under a Green Mission and vegetables cultivated at our premises. Swachhta activity was done at vegetable garden. Employees were encouraged to beautify the company premises. They were formed into groups and competitions were organised and the best departments were awarded for the best beautification. Essay and cartoon competitions were also conducted.

As part of the promotional activities face mask, sanitizer pen etc were provided to the employees. Distributed plant-able pen with seeds to promote elimination of plastic usage. Senior executives attended Swachhta seminar organised Swachhta activities carried out at Township.

INTERNATIONAL YOGA DAY

As part of Yoga Day on 21st June 2020, Common Yoga protocols e-book were widely circulated for the information of all employees through our portal and social media.

31. INDUSTRIAL RELATIONS:

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

32. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There are no loans, guarantees, or investments made by the company under Section 186 of the Companies Act 2013 during the year under review and hence said provisions are not applicable.

However, the cumulative investment on the subsidiary company Hindustan Fluorocarbons Ltd. as on 31.3.2021 stood at Rs.11.06 Crore. In addition, the company has given secured loan of Rs.31.97 Crore to HFL [on the security of HFL Land] and Company has also extended Corporate Guarantee to the working capital loan to the subsidiary company HFL. The investments made in HFL during earlier years under section 186 of the Companies Act 2013, were shown in the financial statements.

Consequent to the decision of the Govt. of India for closure of Subsidiary Company Hindustan Fluorocarbons Ltd., an amount of Rs.73.70 crore has been released to the Subsidiary company as loan from Govt. of India to meet the expenses related to VRS/VSS to employees and settling dues to Bank and other liabilities.

33. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES - None.

1. Details of Contracts or arrangement or transactions not at arms length basis:- None

a) Name(s) of related party and nature of relationship - NA

b) Nature of Contracts/arrangements/transactions - NA-

c) Duration of contracts/arrangements/transactions - NA

d) Salient terms of the contracts or arrangements or transactions including the value if any - NA-

e) Justification for entering into such contracts or arrangements or transactions date (s) of approval by the Board - NA-

f) Amount paid as advances, if any Nil

g) Date on which a special resolution was passed in general meeting as required under first proviso to section 188 - NA-

2. Details of material contracts or arrangements or transactions at arms length basis:- None.

a) Name(s) of related party and nature of relationship -NA

b) Nature of contracts/arrangements/transactions -NA-

c) Duration of contracts/arrangements/transactions -NA

d) Salient terms of the contracts or arrangements or transactions including the value, if any: -NA-

e) Date(s) of approval by the Board if any: -NA-

f) Amount paid as advance, if any: Nil

34. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND PRACTISING COMPANY SECRETARY IN THEIR REPORTS

There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their audit report for the Financial Year 2020-21.

The Secretarial Auditors of the company have submitted their Secretarial Audit Report for the year 2020-21 without any qualification, reservations, adverse remark or disclaimer.

35. AMOUNTS IF ANY WHICH IT PROPOSES TO CARRY TO RESERVES.

The Company has earned a Net Profit before Tax of Rs.15.47 Crore during the year as against Net loss of Rs.94.75 crore incurred during the previous year. The Retained earnings (including Other Comprehensive Income) transferred to Balance Sheet during the year is Rs.30.89 crore.

36. MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

Nil

37. THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

Company ensures existence of adequate internal controls through documented policy and procedures laid down in the manuals to be followed by the executives at various levels. Internal controls are supported by periodical internal audits and management reviews. The management is keen on these issues and initiated various measures such as upgrading the IT infrastructure, evaluating and implementing ERP software, web-based application and establishing connectivity amongst manufacturing units, Corporate office and branch offices for effective and proactive services and businesses.

Board periodically reviews the internal controls, audit programme, financial results and recommendations, the replies of the management to Government Audit and internal audit etc. The Company has maintained adequate financial control system, commensurate with the size, scale and complexity of its operations and ensures compliance with various policies, practices and statutes in keeping with the organizations pace of growth and increasing complexity of operations.

38. CONSERVATION ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A. The steps taken and impact on conservation of energy:

Major Energy Conservation Activities / Projects Implemented in 2020-21

• Boiler oxygen trimming. In order to reduce the dry flue gas loss in Boiler, oxygen content in flue gas is optimized by reducing combustion air their by reducing oxygen in flue gas from 7.85% to 3.04%.

• C3-C4 Overhead condenser tube replacement and channel head modification thereby saving Electrical energy saving of Rs.15.94 Lakhs

• Drift eliminator replacement in cooling tower with new design Drift eliminator thereby saving Rs.6.56 Lakhs on water cost.

• Damaged insulation replaced on pipe lines and steam trap replacement thereby attaining considerable saving.

• Usage of Water as sealant instead of Mercury in ETP thereby eliminating the spillage of Mercury and achieving a saving of Rs 5 Lakhs per year.

• Maximum contract demand with KSEB reduced from 9000KVA to 8000KVA resulting in a saving of Rs.20/- Lakhs a year.

• Revamping of UPS - Considering present load, company has placed order to replace the existing UPS which is obsolete.

• Up gradation of DCS at Boiler house and Revamping at H2O2 Plant.

i. The steps taken by the company for utilizing alternate sources of energy - Company is using LNG as fuel in place of Furnace oil, resulting in saving of fuel cost during 2020-21.

ii. Company is availing open access power trading resulting in a saving of Rs.2.6 Crores on power cost for the year 2020-21.

B. Technology Absorption: Nil

i. The efforts made towards technology absorption: Nil

ii. The beneffts derived like product improvement, cost reduction, product development or import substitution: Nil

iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil

a) the details of technology imported;

b) the year of import;

c) whether the technology been fully absorbed;

d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and

iv. The expenditure incurred on Research and Development: Nil

39. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

Key Threats include:

• Competition from domestic / imports and fluctuation in the input prices

• High input costs

• High utility costs

• High overheads

• Continued availability of anti-dumping support for the main products Phenol and Acetone.

• Working Capital availability for continuous operations

• High interest cost and employee remuneration.

Some risks and concerns:

• High manpower cost per ton of finished product.

• Depreciated plants, requiring high maintenance cost.

• Dumping in main products Phenol / Acetone.

• Volatility in main input Benzene.

• COVID-19 impact on downstream industries.

• Drastic reduction in skilled and experienced manpower.

• Quality/availability of main raw materials like LPG. Benzene and Hydrogen.

40. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES WHICH HAVE BECOME OR CEASED TO BE.

Ministry of Chemicals and Fertilizers, Department of Chemicals & Petrochemicals vide No. P. 51015/06/2019-Ch. III dated 29-01-2020 informed the decision of Cabinet Committee on Economic Affairs, directing closure of Hindustan Fluorocarbons Limited, Subsidiary of HOCL, which was approved by the shareholders on 30-03-2020.

Consequent to the decision of the Govt. of India for closure of Subsidiary Company Hindustan Fluorocarbons Ltd., an amount of Rs.73.70 crore has been released to the Subsidiary company as loan from Govt. of India to meet the expenses related to VRS/VSS to employees and settling dues to Bank and other liabilities.

41. DEPOSITS: NIL

During the period under review, the Company has not invited or accepted any deposits either from the directors or from shareholders of the Company.

42. THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE: Nil

43. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (Act) and rules made there under, your Company has adopted a Sexual Harassment Policy for women to ensure healthy working environment without fear of prejudice, gender bias and sexual harassment. The policy has been widely disseminated. A Complaint Committee is in existence as per the Act.

The Board states that there were no cases or complaints filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Annual Report for the year 2020 The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013-:

No. of complaints received: Nil

No. of complaints disposed of: Nil

No. of cases pending for more than 90 days: Nil

No. of Workshop/Awareness programmes carried out: One day Workshop was attended by our Committee Member. Awareness training given to the newly joined Trainees.

Nature of action taken by the Employer: N.A.

44. VIGILANCE MECHANISM: (Under Sec.177(9) of Companies Act,2013)

Hindustan Organic Chemicals Limited, being a Government Company, a Vigilance Department is already existing in pursuance of CVC Guidelines. Therefore, Vigilance Mechanism is being handled by the Vigilance Department and the Company has already adopted a Vigilance Manual in pursuance of CVC Guidelines. Vigilance Manual is available on Companys Website.

45. GENERAL

No disclosure or reporting is required in respect of the following matters as there were no transactions on these items during the year under review:

• Issue of equity shares with differential rights as to dividend, voting or otherwise.

• Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

• The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

• Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

• No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future save and except mentioned above during previous year.

• No fraud has been reported by the Auditors to the Audit Committee or the Board.

• There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.