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Directors Report of Hindustan Organic Chemicals Ltd.

Mar 31, 2018

The Board of Directors presents herewith the 57th Annual Report of your Company along with the Auditors statement of Accounts for the financial year 2017-18.

A. FINANCIAL RESULTS

The financial results for the year ended 31.03.2018 with the comparative figures of Company’s operations for the previous year is as under:

(Rs. In Lakhs)

Particulars

2017-18

2016-17

Revenue from operations

24232.94

14330.51

Other Income

6630.47

627.59

Total

30863.41

14958.10

Expenditure

50129.82

39255.36

Profit before Depreciation & Tax

(-)19266.41

(-)24297.26

Less Depreciation

680.54

1260.20

Profit /(Loss) before Exceptional Items and Tax

(-)19946.95

(-)25557.46

Less : Exceptional Items

-

-

Less : Provision of Tax (1) Current Tax

-

-

(2) Deferred Tax

-

-

Profit/(Loss) for the Period

(-)19946.95

(-)25557.46

Other Comprehensive Income :

(i). Items that will not be classified to Profit or Loss

12478.07

-

a). Revaluation of Plant , Property & Equipment’s

(2793.25)

357.33

Less : Deferred Tax Assets

873.02

-

b). Changes in defined benefit plan

Other Comprehensive Income for the year, Net of Tax

10557.84

357.33

Total Other Comprehensive Income for the year

(9389.11)

(25200.13)

B. DIVIDEND

In view of the continuous losses during the current year as well as in the previous years, the Board of Directors do not recommend any Dividend for the current year under review.

C. CHANGE IN NATURE OF BUSINESS IF ANY

As per the approval of Government of India, the operation of the all the plants at Rasayani Unit (except C NA / N204 plant along with the manpower transferred to ISRO) has been closed. In Kochi Unit, two plants (Phenol and Hydrogen plant) is operational.

Further Government has approved sale of 442 acre of land at Rasayani to BPCL for Rs.618.80 crore. Out of the 442 acre, sale of 251 acre has been completed for which an amount of Rs.351.40 crore has been received from BPCL and in addition, a bridge loan of Rs.360.26 crore has been received from GoI, which has been utilized to clear liabilities partially and for implementation of VRS to the employees of the Rasayani unit of the company.

D. FINANCIAL HIGHLIGHTS

During the year 2017-18 the Company registered an impressive growth of 106 % under Revenue .The Gross income of the Company stood at Rs.308.63 crore as against Rs.149.58 crore achieved during the previous year. The Loss before Tax for the year 2017-18 was (-) Rs.199.47 crore as against (-) Rs.255.57 crore incurred during the corresponding period of last year.

E. 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:

29th May 2017, 19th July 2017, 26th July 2017, 12th September 2017, 11th December 2017, 9th February 2018 and 16th March 2018.

OTHER DETAILS ARE FURNISHED IN THE Corporate Governance Report in Annexure VI to this Report.

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

HOCL being CPSU governed by the DPE Guidelines the Annual Evaluation of Performance of Board, its committees and of individual Directors have been carried out by the Administrative Ministry (DCPC).

G. However, as the appointment of adequate number (2/3) of independent directors on Company’s Board was taken place only during Feb., 2017 resulting in reconstitution of the Board committee/s only in March, 2017 (and thereafter), Board Committees’ evaluation during the year did not arise.

H. DETAILS OF DIRECTORS AND/OR KMP’S WHO HAVE BEEN APPOINTED OR RESIGNED DURING THE YEAR

None

I. COMPOSITION OF AC AND NON ACCEPTANCE OF ANY RECOMMENDATIONS OF AC

(only for public and listed companies)

The Audit Committee has been reconstituted during the year; - No such cases.

J. DIRECTOR’S RESPONSIBILITY STATEMENT

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

a. That in the preparation of the annual accounts for the year ended 31st March, 2018; the applicable accounting standards had been followed along with proper explanation relating to material departures.

b. That such accounting policies as mentioned in the Notes of 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 at the financial year ended 31st March, 2018 and the profit or loss of the Company for that period.

c. 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.

d. That the annual accounts for the year ended 31st March, 2018 had been prepared on a going concern basis.

e. 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.

K. INDEPENDENT DIRECTORS DECLARATION - submitted on appointment.

L. DISCLOSURE ON REAPPOINTMENT OF INDEPENDENT DIRECTORS -not applicable.

M. COMPANIES POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF DIRECTORS ETC.

Company being a CPSE and appointment 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 directors of the DC&PC; the prescribed DPE Guidelines are being followed. The Terms and Conditions of appointment of Independent and other directors as disclosed in the Company’s website are given in Annexure to this Report.

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

Company being a CPSE which is under the supervision, control and directors of the DC&PC, the prescribed DPE Guidelines are being followed in respect of employee’s remunerations and DPE Guidelines as well as CVC Guidelines are being followed, as regards other prescribed perquisites

O. 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., 31.3.2018 stood at Rs.11.06 Crore. In addition, the company has given Secure Loan of Rs.35.10 Crores 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 and investments made in HFL and HOC Chematur Ltd., during earlier years under section 186 of the Companies Act 2013, were shown in the financial statements.

P. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

- None

1. Details of Contracts or arrangement or transactions not at arm’s length basis:

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

b) Nature of Contracts/arrangements/transactions

c) Duration of contracts/arrangements/transactions

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

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

f) Amount paid as advances, if any

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

2. Details of material contracts or arrangements or transactions at arm’s length basis; : -None.

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

b) Nature of contracts/arrangements/transactions

c) Duration of contracts/arrangements/transactions

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

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

f) Amount paid as advance, if any:

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

There were no qualifications, reservations or adverse remarks made by the Auditors in their Audit report. The replies to the observations of the auditors are forming part of the Directors Report.

The Secretarial Auditors of the company have submitted their Secretarial Audit Report for the year 2017-18 and management replies to the audit observations thereof are annexed to the Directors’ Report and forming part of 57th Annual Report of the Company.

The observations of the auditors and notes to accounts are self - explanatory, and are forming part of the Directors’ Report.

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

None - In view of the accumulated losses and loss incurred during the year.

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

The closure of all the non-viable plants at Rasayani Unit and transfer to the CNA/ N204 plant to ISRO as per the approval of the Government of India, GoI released bridge loan of Rs.360.26 crore and the matured Bonds have been paid off and all statutory liabilities has been cleared out of the bridge loan. Further out of 442 acre of land sale approved by GoI, 251 acre has been registered and received Rs.351.40 crore as consideration. The VRS has been implemented at Rasayani and all employees except the skeletal 15 and staff retained 8 have been relieved and their dues have been settled. The working capital loan availed from SBI and Canara Bank has been repaid.

T. 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 and branch offices for effective and proactive services and businesses.

Board periodically reviews the internal controls, audit programme, financial results and recommendation of the replies of the management to Government Audit and internal audit etc.

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

A) Conservation of energy : Nil

i. The steps taken or impact on conservation of energy : Nil

ii. The steps taken by the company for utilizing alternate sources of energy and : Nil

iii. The capital investment on energy conservation equipments : Nil

B) Technology Absorption : Nil

(i) the efforts made towards technology absorption : Nil

(ii) the benefits 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

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

Key Threats include :

o Competition from Imports and fluctuation in the input prices

o High input costs

o High utility costs

o High overheads

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

o Acute working capital shortage affecting continuous operations

o High interest cost and employee remuneration.

Some risks and concerns :

o High manpower cost per ton of finished product.

o Depreciated plants, requiring high maintenance cost.

o Dumping in main products Phenol / Acetone.

o Volatility in main input Benzene.

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

HOC Chematur Ltd., a Joint Venture subsidiary abandoned due to non-achievement of the financial closure for the proposed MDI Project and Company has applied to for striking of the name under Early Exit scheme of MCA and ROC has approved the striking of the name of the Company and necessary Gazette notification is awaited.

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

Company has recognized its social obligations and extends the following:

o On closure of Rasayani Unit, Company’s Library Books at Rasayani Unit Library were donated to Dr.Babasaheb Ambedkar Marathwada University, Aurangabad.

o 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.

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

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

Y. DISCLOSURES PRESCRIBED IN TERMS OF SECTION 67 (only for public and listed companies)- N.A.

Z. 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.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future: None

Under Sec.177(10) of Companies Act,2013:

VIGILANCE MECHANISM:

Hindustan Organic Chemicals Limited, being a Government Company, a Vigilance Department is already existing in pursuance of CVC Guidelines. And 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 Company’s Website.

Q. ACKNOWLEDGEMENT

Board places on record its gratitude to the members of the Company for their continued support and confidence in the management

For and on behalf of the Board of Directors of

Hindustan Organic Chemicals Limited

Sd/-

Date : 10-08-2018 S.B. Bhide

Place: CBD Belapur Chairman and Managing Director


Mar 31, 2016

To the Members of

HINDUSTAN ORGANIC CHEMICALS LIMITED

Dear Shareholders

The Board of Directors presents herewith the 55th Annual Report of your Company along with the Auditors statement of Accounts for the financial year 2015-16.

A. FINANCIAL RESULTS

The financial results for the year ended 31.03.2016 with the comparative figures of Company''s operations for the previous year is as under:

Particulars

2015-16

2014-15

Revenue from operations

10914.77

15013.24

Other Income

489.21

833.03

Total

11403.98

15846.27

Expenditure

27938.55

36515.42

Profit before Depreciation & Tax

(16534.57)

(20669.15)

Less Depreciation

856.49

879.62

Profit /(Loss) before Tax

(17391.06)

(21548.77)

Less : Provision of Tax

0

0

Profit/(Loss) after Tax

(17391.06)

(21548.77)

B. DIVIDEND

In view of continuous incurring of losses during the current year as well as in the previous years, the Board of Directors did not recommend any Dividend for the current year under review.

Status of the Company at BIFR under SIC(SP)Act, 1985 :-

As per BIFR Summary Record of Proceedings of the Hearing of HOCL Case No.501/2014 Held on 22-07-2015 before the Bench, BIFR declared the Company as Sick under Section 3(1)(o) of the Act and appointed State Bank of India as the Operating Agency with directions to prepare a viability study report and revival scheme for the Company, if feasible, keeping in view the provisions of Section 18 of the Act and the guidelines given. BIFR also directed the Company to submit the Draft Rehabilitation Proposal (DRP) with in period of 8 weeks considering the Cut Off Date(COD) as 31-3-2015. BIFR directions also include among other directions, that OA to submit its report thereof before the next date of the hearing (on 4-112015) and to examine the DRP on its receipt from the Company etc. Accordingly during September, 2015 Company had submitted HOCL Revival Study Report of the consultants, M/s. JPS Consultants Pvt. Ltd. to the Administrative Ministry for consideration and a copy thereof to the OA, SBI as per directions. As at the BIFR Board, consequent to demitting of office by Hon''ble Member, all Hearings w.e.f.28th October, 2015 listed before the Bench of BIFR were postponed till further orders and hence the matter of HOCL was pending in BIFR till a Bench is constituted in BIFR. Later at BIFR, the Bench is constituted and hearing is resumed in April, 2016. Company is at present awaiting further directions from the Ministry as well as from the BIFR.

C. CHANGE IN NATURE OF BUSINESS IF ANY : None

D. FINANCIAL HIGHLIGHTS

The Gross income of the Company stood at Rs.114.04 crore as against Rs.158.46 crore achieved during the previous year. The loss for the year 2015-16 was Rs.173.91 crore as against the loss of Rs.215.48 crore of the corresponding period of last year.

E. 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:

28/04/2015, 28/05/2015, 25/06/2015, 11/08/2015, 03/09/2015, 12/11/2015, 11/02/2016 and 08/03/2016

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

HOCL being a CPSU governed by the DPE Guidelines the Annual Evaluation of Performance of Board, its committees and of individual Directors has been carried out by the Administrative Ministry (DCPC).

However, Board Committees evaluation during the year did not arise in view of non existence of Independent Directors during the year under review, on Company''s Board.

G. DETAILS OF DIRECTORS AND/OR KMP’S WHO HAVE BEEN APPOINTED OR RESIGNED DURING THE YEAR.

Government has appointed Shri Samir Kumar Biswas , Joint Secretary (Chemicals), as Official, part time (Govt. Nominee) Director on the Board of the Company, w.e.f. 02/09/2015 in place of Dr. A.J.Vara Prasad, JS

Government has appointed Shri Vinod Kumar Thakral, SS&FA, (C&F), as Official, part time (Govt. Nominee) Director on the Board of the Company, w.e.f. 17/09/2015 in place of Shri Rajiv Yadav, SS&FA.

Government has appointed Shri Sunil Kumar Sharma, Director (Chemicals), as Official, part time (Govt. Nominee) Director on the Board of the Company, w.e.f. 06/05/2016 in place of Shri Vinod Kumar Thakral, SS&FA.

Government has appointed Ms. Pushpa Trivedi, Professor, HSS Dept., IIT Bombay, Powai, Mumbai, as Part time Non Official (Independent &woman) Director on the Board of the Company, w.e.f. 15/06/2016 for a period of 3 years or till further orders, whichever is earlier.

Government, vide Order No. 23011/9/2015-Org.Estt. approved the pre-mature termination of tenure of Shri V.B.Ramchandran Nair, as CMD, HOCL with immediate effect from 22/02/2016 (by payment of 3 moths'' notice pay).

Government, vide order dated 25-02-2016 directed Shri S.B.Bhide, Director (Technical) to hold the additional charge of CMD, HOCL for a period of 3 months which later was extended for further period of 3 months up to 24-08-2016 or till further orders whichever is earlier.

As Director (Finance) Shri Sureshkumar R. was continuous remained absent himself from all the board meetings of the Company for the period of 12 months from March, 2015 to 29/02/2016 . The position of Director (Fin.) of Mr. Sureshkumar has become vacant w.e.f. 01-03-2016. Pursuant to application of Sect. 167 of the Company''s Act , 2013. The company has communicated the facts as such to the Administrative Ministry.

Vide Government Order dated 03-08-2016 The President has approved the non extension of the tenure of Mr. J.N.Suryawanshi, as Director Marketing of the Co. with immediate effect from 03-08-2016. (A.N.)

H. COMPOSITION OF AC AND NON ACCEPTANCE OF ANY RECOMMENDATIONS OF AC None. - Not Applicable.(during the year under review.)

I. DIRECTOR’S RESPONSIBILITY STATEMENT

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

a. That in the preparation of the annual accounts for the year ended 31st March, 2016; the applicable accounting standards had been followed along with proper explanation relating to material departures.

b. That such accounting policies as mentioned in the Notes of 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 at the financial year ended 31st March, 2016 and the profit or loss of the Company for that period.

c. 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.

d. That the annual accounts for the year ended 31st March, 2016 had been prepared on a going concern basis.

e. 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

f. That, during the year under review, in view of sick unit status of the Company, pending revival, the employees'' salary dues and corresponding statutory dues were unpaid and outstanding for the last 13 Months (March, 2015 to March, 2016 and to that extent various compliances by the KMPs and Directors have not been complied with.

J. DISCLOSURE ON REAPPOINTMENT OF INDEPENDENT DIRECTORS

Not Applicable during the year under review, in view of non-existence of independent directors on the Board of the Company.

K. COMPANIES POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF DIRECTORS ETC.

Company being a CPSE and appointment 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 DC&PC, the prescribed DPE Guidelines are being followed. The Terms and Conditions of appointment of Independent and other directors as disclosed in the Company''s web site are given in Annexure to this Report.

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

Company being a CPSE which is under the supervision, control and directions of the DC&PC, the prescribed DPE Guidelines are being followed in respect of employees remunerations and DPE Guidelines as well as CVC Guidelines are being followed, as regards other prescribed elaborate disclosures and details.

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

There were 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, cumulative total as on 31-03-2016 of the particulars of Secured Loans to its subsidiary Co., viz. HFL, Company''s Rs.11.03 crore, Corporate Guarantee extended to its subsidiary Co., Hindustan Fluorocarbons Ltd.[HFL], or investments made in earlier years in its subsidiary companies viz. in HFL and in HOC Chematur Ltd., etc. under section 186 of the Companies Act, 2013 all were shown in the financial statements. Guarantees including Rs.100 crore 4 year Government Guarantee, Rs. 150 crore, 3 year Government Guarantee renewable on year to year basis , both granted by the Government of India for the issue of respectively, Rs.100 crore and Rs.150 crore Bonds.

N. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

1. Details of Contracts or arrangement or transactions not at arm''s length basis: During the year, NIL.

2. Details of material contracts or arrangements or transactions at arm''s length basis : NIL during the year under review. However, cumulative total as on 31-032016 of the particulars of contracts or arrangements of the previous years'' made with the subsidiaries, were shown in the financial statements.

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

In view of the non-existence of adequate number of Independent directors and woman directors on the Board of the Co., suitable Management Replies to the auditors'' observations in the Secretarial Audit Report -2015 were furnished during the year under review and were considered by the secretarial auditors, M/s. SNA & Co., the PCS. The Secretarial Audit Report annexed hereto, forms part of the Annual Report- 2015-16 of the Company.

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

None - in view of the accumulated losses incurred by the Company.

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

Ongoing financial crisis in the Company, pending revival of the Company etc.

R. The details in respect of adequacy of internal financial controls with reference to the Financial statements. Internal controls are supported by Internal Audit and Management Reviews. Company ensures existence of adequate internal control through documented policy and procedures to be followed by the executives at various levels. The Management is keen on these issues and initiated various measures such as upgrading IT infrastructure, evaluating & implementing ERP software, web based application and establishing connectivity amongst manufacturing units and branch offices for effective & proactive services and business benefits.

With the objective of improving the systems and removing bottlenecks, systems review is carried out and policies and procedure manuals are amended.

Board periodically reviews the internal controls, Audit Programmes, Financial Results, Recommendations of the Auditors and Management''s Replies to those Recommendations etc.

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

A) Conservation of energy

(i) the steps taken or impact on conservation of Energy : Nil

(ii) the Steps taken by the company for utilizing alternate source of energy :

We have already identified the Administrative Building roof top admeasuring @1500 sq.m for installation of grid connected Solar Roof Top photovoltaic panels. However, due to the financial constraints that your company is facing at present, the scheme is not being implemented.

(iii) the capital investment on energy conservation equipments - NIL

B. Technology Absorption

(i) the efforts made towards technology absorption - NIL

(ii) the benefits 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

T. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK

MANAGEMENT POLICY OF THE COMPANY

KEY THREATS INCLUDE

- Tough competition in Petro sector along with downward movement in prices.

- Availability of cheaper imported chemicals

- High raw material costs

- BIFR has declared the company Sick Company under the provisions of SICA (Special Provisions) Act and pending and delays in revival of the Company had worsened the financial status of the Company led to non-payment of employee dues for over 13 months during the period under review.

- Availability of Anti-dumping support for Phenol and Acetone manufactures at Kochi unit.

- The Company is facing acute working capital shortage which has affected the operations and payment obligations.

- High interest burden, high employees'' remuneration.

SOME RISKS & CONCERNS.

- The man power cost per ton of finished product remains very high.

- Old depreciated plants, requires high maintenance cost.

- Huge investments required for revamp/replacement/modernization of the old plants.

- In view of the fact that as on 31.03.2016 as the Company has been declared as Sick Unit, pending revival of the Company, markets for the finished products, customers credentials have lost.

- Dumping of cheap imports chemical products to the detriment of domestic chemical industry.

- Volatility in the raw material prices mainly Benzene prices.

- Excess manpower of non-operative plants.

U. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES WHICH HAVE BECOME OR CEASED TO BE : HOC Chematurl Ltd. a J.V Subsidiary of one abandoned MDI Project proposed to exit under MCA''s Early Exit Scheme.

V. DETAILS OF CSR POLICY AND ITS IMPLEMENTATION DURING THE YEAR Company right from its inception is cognizant about its social responsibilities. To promote School Education Company is giving need based assistance to the deserving students along with SC/ST students for their school/ graduate education. Company also extends vocational training facilities to the wards of employees in company as well as nearby Engineering/ Management Colleges for enhancing their particular skill/ knowledge. Company also engages ICWA Trainees, CS Trainees and vocational Trainees as a part of their curriculum for imparting practical training by paying stipend.

W. DISCLOSURES PRESCRIBED IN TERMS OF SECTION 67.

X. DEPOSITS: None / 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.

Y. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future : NONE

Z. EXTRACT OF ANNUAL RETURN

Form No. MGT -9 EXTRACTS OF ANNUAL RETURN

As on the financial year ended 31.03.2016

I. REGISTRATION AND OTHER DETAILS

i)

CIN

L99999MH1960G0I011895

ii)

Registration Date

12/12/1960

iii)

Name of the Company

HINDUSTAN ORGANIC CHEMICALS LTD.,

iv)

Cateqorv/Sub-Cateqorv of the Company

PSU

v)

Address of the Registered Office and contact Details

P.O. Rasayani, Dist. Raigad PIN 410 207

vi)

Whether Listed Company

Yes

vii)

Name, Address and contact details of Registrar and Share Transfer Agent, if any

M/s. Bigshare Pvt. Ltd.,E-2/3 Ansa Indl. Estate, Saki Vihar Road,Saki Naka, Andheri (E), Mumbai 400 072; Email id.: [email protected]:

II. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sl. No

Name and address of the company

CIN/GIN

Holding/ subsidiary/ Associate

% of shares held

Applicable section

1

HINDUSTAN FLUORO CARBON Ltd.

L25206AP1983PLC004037

Subsidiary

56.43

2

HOC-CHEMATUR LTD.

U24100MH1997PLC112652

Subsidiary

60

III. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY: Manufacturing - C6 -100%

Sl. No.

Name and description of main products/services

NIC Code of the product/service

% of total turnover of the company

1

Phenol

40

2

Acetone

16

3

Dinitrogen Tetroxide (N2O4)

17

4

Hydrogen Peroxide (H2O2)

20

IV. SHAREHOLDING PATTERN:

i. Category- wise Share Holding

Category of shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

0/ % Change during the year

Demat

Physical

Total

% of Total Shares

Demat

Physical

Total

% of Total Shares

A. Promoters

(1) Indian

a) Individual/HUF

b) Central Govt

39481500

39481500

58.78

39481500

39481500

58.78

c) State Govt (s)

d) Bodies Corp.

e) Banks / FI

l) any other

Sub-total (A) (1):-

39481500

39481500

58.78

39481500

39481500

58.78

2) Foreign

a) NRIs - Individuals

22805193

22805193

33.95

818035

818035

1.22

b) Other - Individuals

839632

839632

1.25

c) Bodies Corp.

1100

1100

0.01

1100

1100

0.01

d) Banks / FI

e) Any other

Sub-total (A) (2):-

Total shareholding of Promoter (A) = (A)(1) (A)(2)

B. Public Shareholding

1. Institutions

a) Mutual Funds

11600

11600

0.02

11600

11600

0.02

b) Banks / FI

9900

9900

0.01

3900

3900

0.01

c) Central Govt

d) State Govt(s)

e) Venture Capital Funds

f) Insurance Companies

g) FIIs

1800

1800

0.00

1800

1800

0.00

h) Foreign Venture Capital Funds

i) Others (specify) Trust

159669

159669

0.24

159669

159669

0.24

Sub-total (B)(1):-

2. Non-Institutions

a) Bodies Corp.

i) Indian

ii) Overseas

3862706

3862706

5.75

3540528

3540528

5.27

b) Individuals

i) Individual shareholders holding nominal share capital upto Rs. 1 lakh

19605511

17833828

26.55

ii) Individual shareholders holding nominal share capital in excess of Rs 1 lakh

3549457

3549457

5.28

Sub-total (B)(2):-

27691600

27691600

41.22

27674300

25903615

38.56

Total Public Shareholding (B)=(B) (1) (B)(2)

27691600

25919917

38.59

C. Shares held by Custodian for GDRs & ADRs

Grand Total (A B C)

ii) Shareholding of Promoters:

Sr. No.

Shareholder’s Name

Shareholding

at the beginning of the year

Share holding at the end of the year

No. of Shares

% of total Shares of the company

%of Shares Pledged / encumbered to total shares

No. of Shares

% of total Shares of the company

%of Shares Pledged / encumbered to total shares

% change in share holding during the year

1

Promoters

39481500

58.78

39481500

58.78

2

Total

iii) Change in Promoter''s Shareholding (please specify, if there is no change)

Sr. No.

Shareholding at the beginning of the year

Cumulative Shareholding during the year

No of shares

% of total shares of the Company

No of shares

% of total shares of the Company

(i)

At the beqinninq of the year

39481500

58.78

39481500

58.78

(ii)

Date wise Increase / Decrease in Promoters Share holding during the year specifying the reasons for increase / decrease (e.g. allotment/ transfer / bonus/ sweat equity etc):

N.A.

p)

At the End of the year

39481500

58.78

39481500

58.78

iv) Shareholding Pattern of top ten shareholders( other than Directors, Promoters and Holders of GDRs and ADRs)

Sr. no.

Shareholding beginning at the of The year

Cumulative Shareholding during the year

For Each of the Top 10 Shareholders

No. of shares

% of total shares of the company

No. of shares

% of total shares of the company

At the beginning of the year

Date wise Increase /Decrease in Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

At the End of the year (or on the date of separation, if separated during the year)

Shareholding of Directors and Key Managerial Personnel:

Sl. No.

Shareholding of at the beginning The year

Cumulative Shareholding during the year

For Each of the Directors and KMP

No. of shares

% of total shares of the company

No. of shares

% of total shares of the company

At the beginning of the year:

1) J.N.Suroavanshi, Director (Mktg.)

2) Mrs. S.S.Kulkarni, CS

200

200

200

200

---n.a.--

Date wise Increase / Decrease in Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

1) J.N.Suryavanshi, Director (Mktg.)

2) Mrs.S.S.Kulkarni, CS

N.A.

N.A.

At the End of the year ( or on the date

of separation, if separated during

200

200

the year):

200

200

1) J.N.Suryavanshi, Director (Mktg.)

2) Mrs.S.S.Kulkarni, CS

II. INDEBTEDNESS :

Indebtedness of the Company including interest outstanding/accrued but not due for payment : as on 31-03-2016

Rs. in Lakhs

Secured Loans excluding deposits

Unsecured Loans

Deposits

Total Indebtedness

Indebtedness at the beginning of the financial year

i) Principal Amount

9018.23

31185.00

0.00

40203.23

ii) Interest due but not paid

0.00

6379.90

0.00

6379.90

iii) Interest accrued but not due

29.45

1688.90

0.00

1718.35

Total (i ii iii)

9047.68

39253.80

0.00

48301.48

Change in Indebtedness during the financial year

Addition

240.69

2461.00

0.00

2701.69

Reduction

0.00

0.00

0.00

0.00

Indebtedness at the end of the financial year

i) Principal Amount

9258.92

33646.00

0.00

42904.92

ii) Interest due but not paid

0.00

7379.15

0.00

7379.15

iii) Interest accrued but not due

24.29

1904.06

0.00

1928.35

Total (i ii iii)

9283.21

42929.21

0.00

52212.42

III. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

A. Remuneration to Whole time Director, Managing Director and/or Manager:

SI.

Particulars of

Name of Whole-time Director/Director

Total Amount

No.

Remuneration

i) Sri V. B. Ramachandran Nair, Chairman and Managing Director (up to 22.02.2016)

ii) Sri S.B. Bhide, Director (Technical) / Acting CMD w.e.f. 25.02.2016

iii) Sri J. N. Suryawanshi, Director (Marketing)

iv) Sri R. Suresh Kumar, Director (Finance) -CFO - up to 29-02-2016

( Rs. in lakhs)

1

Gross Salary a)Salary as per provisions contained in section 17(1) of Income Tax Act, 1961

16.00

19.40

20.09

7.85

63.34

b) Value of perquisites u/s 17(2) of Income Tax Act, 1961

-

-

-

-

-

c) Profits in lieu of salary u/s 17(3) of Income Tax Act, 1961

-

-

-

-

-

2

Stock Option

-

-

-

-

-

3

Sweat Equity

-

-

-

-

-

4

Commission

- As % of profit

- Others, specify

-

-

-

-

-

5

Others - retirement benefits

7.40

2.44

2.51

1.20

13.55

Total (A)

23.40

21.81

22.60

9.05

76.89

Ceiling as per the Act

-

-

-

-

b. Remuneration to other Directors:

Sl. No.

Particulars of Remuneration

Name of the Directors

Total Amount

-

-

-

-

1.

Independent Director

- Fee for attending board committee meetings

- Commission

- Others, please specify

N.A.

Total (1)

2.

Other Non-Executive Directors

- Fee for attending board committee meetings

- Commission

- Others, please specify

Total (2)

Total (B)(1 2)

Total Managerial Remuneration

Overall Ceiling as per the Act

B. Remuneration to Key Managerial Personnel other than MD/Manager/WTD:

Sl. No.

Particulars of Remuneration

Key Managerial Personnel

CEO

Company Secretary Smt. Susheela S. Kulkarni

CFO : Mr. P.O.Luise, DGM(Fin.) appointed on 20-05-2016.

Total Amount ( Rs.in lakhs)

1.

Gross Salary

a) Salary as per provisions contained in section 17(1) of Income Tax Act, 1961

-

12.73

16.00

28.73

b) Value of perquisites u/s 17(2) of Income Tax Act, 1961

-

-

-

-

c) Profits in lieu of salary u/s 17(3) of Income Tax Act, 1961

-

-

-

-

2.

Stock Option

-

-

--

-

3.

Sweat Equity

-

-

-

-

4.

Commission

- As % of profit

- Others, specify

-

-

-

-

5.

Others - retirement benefits

-

1.60

2.15

3.75

Total

-

14.33

18.15

32.48

V. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES : None

[as waived off on submission of explanations.]

Type

Section of the Companies Act

Brief

Description

Details of Penalty/ Punishment Compounding fees imposed

Authority

[RD/NCLT/

COURT]

Appeal made, if any(give details)

A. COMPANY

Penalty

Punishment

Compounding

B. DIRECTORS

Penalty

Punishment

Compounding

C. OTHER OFFICERS IN DEFAULT

Penalty

Punishment

Compounding

Q. ACKNOWLEDGEMENT

Board places on record its gratitude to the members of the Company for their continued support and confidence in the management.

For and on behalf of the Board of Directors of

Hindustan Organic Chemicals Ltd.

Sd/-

Date: 05-08-2016 S. B. Bhide

Place: Rasayani Acting Chairman & Managing Director & Dir. (Tech.)


Mar 31, 2015

Dear Members,

The Directors are pleased to present the 54th Annual Report and the Audited Annual Accounts of the Company for the financial year ended 31st March, 2015.

The financial performance of the Company for the year ended March 31, 2015 is summarized below:

(Rs.inLacs)

Year ended Year ended 31/03/2015 31/03/2014

Sales 16719.40 23679.73

Operating Profit/(Loss) (11460.02) (11498.14)

Less: Interest 5217.14 4261.94

Depreciation 879.61 1841.33

Profit/(Loss) before tax (17466.77) (17601.41)



Less: Provision for taxation - -

Less: Prior Period adjustments & Exceptional 4081.99 83.37

Items

Profit/(Loss) after tax & Prior period adjustments, (21548.76) (13798.91)

Provisions and Exceptional Items

[Note: Previous year's figures have been regrouped wherever necessary in the Current year]

In view of continuous incurring of losses during the current year as well as in the previous years, the Board of Directors did not recommend any Dividend for the current year under review.

Status of the Company at BIFR under SIC(SP)Act, 1985 :-

As per BIFR Summary Record of Proceedings of the Hearing of HOCL Case No.501/2014 Held on 22-07-2015 before the Bench, BIFR declared the Company as Sick under Section 3(1)(o) of the Act and appointed State Bank of India as the Operating Agency with directions to prepare a viability study report and revival scheme for the Company, if feasible, keeping in view the provisions of Section 18 of the Act and the guidelines given. BIFR also directed the Company to submit the Draft Rehabilitation Proposal (DRP) with in period of 8 weeks considering the Cut Off Date(COD) as 31-3-2015. BIFR directions also include among other directions, that OA to submit its report thereof before the next date of the hearing (on 4-11-2015) and to examine the DRP on its receipt from the Company etc., [Previous year, as on 31st March, 2015, we have already reported the fact of HOCL as a Sick Unit to BIFR and the company has been registered as a sick company vide BIFR Order No. Case No.501/2014 dated 30.9.2014].

RESULTS OF OPERATIONS :

During the year under review the Company has suffered Net loss of Rs. 215.49 crore, as against the Net Loss of the previous year of Rs. 176.85 crore .

As regards the unit wise performance, the Net Loss of Kochi Unit was Rs.72.58 crore as compared to the previous year's Loss of Rs.69.15 crore. The Rasayani Unit recorded a Net Loss of Rs. 142.90 crore as compared with the previous year's loss of Rs. 107.70 crore.

OPERATIONS :

During the year under report your company achieved a sales turnover of Rs. 16709.40 lacs as against Rs.23679.73 lacs of the previous year.

The high labour cost and high incidence of cost on closed plants at Rasayani Unit are the major concerns. Company decided to operate those plants, which were giving contribution. Your company has continued its cost cutting measures to counter these problems and in order to be competitive and improve performance and profitability.

Due to cash losses, the Company was not able to make payments to raw material suppliers of both the units which resulted in stoppage of raw material supplies and therefore the operations were affected. The Company could however successfully mobilise Rs.150 crore by issuing Redeemable, Non-convertible Unsecured Bonds with the Sovereign Guarantee issued by the Government of India in the month of September 2014 to clear the dues to raw material suppliers and other working capital payments. The company could once again restart the production at Kochi with BPCL resuming the raw material supplies.

PRODUCTION :

Kochi Unit:

During the year your company's Kochi unit could achieve 46476 MTs of production as against the previous year production of 51253 MTs. The capacity utilization for the year was 29.40 % [Installed capacity-158090]

Rasayani Unit:

During the year your company's Rasayani unit could achieve 1227 MTs of production as against the previous year production of 2564 MTs. The capacity utilization for the year was 0.88 %. Capacity utilization is affected due to high fixed cost & finance constrains. [Installed Capacity- 138725]

MARKETING :

The chemical market for various basic chemicals are volatile in the domestic market and in the international market.. There is stiff competition for HOC main products from domestic manufacturers as well importers. During the year 2014-15, the company has achieved the sales turnover of Rs. 150.13 crore ( net of excise duty) only as against Rs. 211.16 crores (net of excise duty) of the previous year(2013-14) and the sales volume during the year 2014-15 was 26474 MTs as against 32184 MTs for the previous year 2013-14.

The projected Sale Turnover & Sale Volume could not be achieved, because of shortage of working capital, easy availability of imported material at cheaper rate, increased price for major raw materials and less margin in selling prices. Even though the company could clear the raw material supplier's dues in the month of October 2014 and restart the operation of Plant at Kochi, due to drastic fall in international crude prices which resulted in sharp decline in the finished product prices as well as main raw material prices, company recovered only contribution on selling of high cost material. This has resulted the stoppage of Kochi Unit operations. This has resulted the loss on the value of inventory holdings as the stock had to be disposed of at market prices.

CURRENT / PRESENT SCENARIO.

The Kochi unit of the Company which was making profits continuously, year after year up to 2011-12 , but during the current year under review, for the third time (in the span of 10 years), the Kochi Unit has incurred a loss to the tune of Rs.72.58 Crores (during the current year). The main reason for the loss suffered by the unit was due to shortage of working capital and withdrawal of Anti-Dumping Duty on the Phenol and Acetone manufactured at Kochi unit, resulting in large scale import of /dumping of those imported products and forcing the company to reduce the prices to match the imported price of Phenol and Acetone. The company has filed review petition & fresh application for Anti-Dumping Duty to the concerned Authority, which will help to improve and better realisation. Due to the pursuance of the Company and also due to change in international scenario, anti-dumping duty has been imposed by GOI.

STATUS OF FUTURE PLANS & TURNAROUND / REVIVAL PLAN

Future Course of Action / Revival Plan:

The Company is declared as sick unit by BIFR in Company's reference and registration with BIFR under Case No. 501/2014. due to 100% erosion of its net worth.

Further, apart from BIFR appointing SBI as Operating Agency with directions to submit the revival plan , the appointed new Consultant M/s. J P S Associates (P) Ltd., have prepared the revival plan and submitted their report to the Board which is under consideration.

HOCL Plans to replace the catalyst of Cumene plant from SPA to Zeolite which will bring down the cost of production.

ENERGY CONSERVATION/TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Installed energy efficient H T motor of Siemens in place of old, rewound NGEF makes motor of the same capacity in H2O2 plant. Energy saved due to this modification is 18KW. Future Plans:

Installation of online BOD, COD & TSS analyser in treated effluent discharge line and transmission of these data to Kerala State Pollution Control Board / Central Pollution Control Board server.

Information in accordance with the provisions required to be disclosed under Section 217(2)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo, are given at Annexure II to this Report.

RESEARCH & DEVELOPMENT

After initial trial runs on pilot scale the 'In-house' developed vapour phase continuous process for ISRO's specific grade of Kerosene (Isrosene) was fine tuned. A model developed on laboratory scale was also verified on pilot plant scale. Regular runs with optimized parameters in 'scaled down version' of HOC's commercial plant were successfully completed. The product quality from these runs has been re-affirmed and the capacity of the plant has also been established, based on these runs. The technology is now ready for implementation in HOC's available commercial plant. In this regard meeting with ISRO was held. The detailed proposal was sent to ISRO. Company's further contribution in IPR field is maintained and grant of three nos. of Indian patents has been obtained during this year.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:

The Company has recognized the importance of Human Resource since its inception. The Company continues to recognize that human asset is very much valuable for the continual improvements in the performance of the Company, particularly in the context of competition all around. Since it is very vital resource, Company is upgrading the skills of their employees by systematically identifying training need of employees. The position relating to SC/ST/Women personnel in the Company is given in Annexure - III to the Directors' Report.

II. Training:

During the Financial Year 2014-15 at Kochi Unit, training was imparted to employees based on operational requirement/needs identifications with the allocated resources to enhance Soft Skills, Technical and Managerial Skills. Due importance was given and constant efforts were made to impart Health, Safety and Environment aspects considering the nature of hazards in our Unit. During the year under review, company has organized training programmes both Internal/External covering 505 mandays with the help of Internal/External Experts. Specific user training in functional module of ERP was also imparted to the employees so as to make the SAP system more users friendly. Regular refresher course in Safety and Environmental Management were organized. Apart from employees training our Company has extended the facilities and resources to students coming from different Engineering Colleges, Management Institutions to enhance their practical knowledge/for experiential learning. Company also engages Graduate/Technical/Trade/Vocational Apprentices to undergo Apprenticeship Training in different discipline under the Apprentices Act 1961.

III. Industrial Relations :

Industrial Relation climate in HOC Kochi Unit during the year 2014-15 was satisfactory.

IV. Suggestion Scheme:

The Suggestion Scheme is in existence in HOCL, Kochi Unit. All employees and Company Trainees are eligible to participate in this scheme. The Suggestions received from the employees are evaluated by a Suggestion Committee and the selected suggestions are awarded with Cash Prizes ranging from Rs.100/- to Rs.5000/-.

PARTICULARS OF EMPLOYEES - INFORMATION REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 .

No employee of the Company has drawn the remuneration during the year 2014-15 or any part thereof, in excess of the limits specified under the Company's (Particulars of Employees) Rules 1975.

Accordingly particulars of employees' remuneration prescribed u/sec 217 (2A) of the Companies Act, 1956 are not furnished.

VIGILANCE

The Vigilance Department, headed by Chief Vigilance Officer, appointed by Government of India on deputation, has three main functional officers, one each at Rasayani (Raigad) in Maharashtra, and at Ambalamugal (Kochi) in Kerala and third at Corporate office, CBD Belapur, Navi Mumbai. Keeping in view of the Principles of Corporate Governance, the main focus of the Vigilance Department has been to help the sincere, dedicated and honest personnel working in the Organization to discharge their duties effectively and efficiently so that the target of optimum turnover and profitability are achieved in a transparent manner. More emphasis is given in improving the functioning of all sections and maintaining transparency.

The Vigilance department takes appropriate and timely action in respect of complaints received. There is a comprehensive complaint handling policy and prescribed punitive action is duly suggested, after conducting fair and impartial investigation/enquiry, where ever required. The Annual Property Returns of the officers are periodically scrutinized and inspection of departmental activities are undertaken to detect deviations, if any, and suggest corrective measures. Vigilance Awareness Programmes, as per guidelines issued by the CVC, are observed and awareness sessions are conducted for the personnel regarding vigilance related matters as well as in respect of CDA Rules, RTI Act, PIDPI (Whistle Blowers Act) etc. The vigilance department has been instrumental in updating the existing manuals and policies i.e. the Purchase Policy, the Works Policy, the Marketing Manual, the Vigilance manual etc., so that the laid down procedures, policies, rules, regulations etc., of the Company and that of Central Vigilance Commission are duly followed.

The Vigilance Department maintains close interaction with CVC, CBI and other Government agencies. The Vigilance wing has been sincerely and consistently helping all personnel of the Organization in improving their efficiency and effectiveness and, in turn, achieving the set goals of the Organization.

CORPORATE SOCIAL RESPONSIBILITY

Company right from its inception is conscious about its social responsibilities. To fulfill this, Company has provided basic civic amenities to the neighboring villages, rendering assistance to the neighborhood in different forms viz. financial assistance, drinking water supply, medicines etc.

To promote School Education, Company is giving scholarship to X and XII standard students. Company extends need based assistance to the deserving SC/ST students in the nearby villages for their graduate education.

Company also extends vocational training facilities to the wards of employees in nearby Engineering/ Management Colleges for enhancing their practical knowledge. Company also engages ICWA Trainees, CS Trainees and Vocational Trainees, as a part of their curriculum for imparting practical training.

HEALTH, ENVIRONMENT, FIRE & SAFETY

Health :

* Physical Check-up, the Special Certificate of Fitness in Form No. 23 and ascertaining Health Status in Form No. 7 of all employees have been carried out by the Certifying Surgeon for the year 2013.

* Periodic Medical Check-up and regular monitoring of health records of all employees was done. Various health awareness training programmes were carried out by specialist doctors for the benefit of employees.

Environment:

* Our Laboratory has participated in the Proficiency Testing conducted by CPCB for the laboratories recognized under E.P. Act and other laboratories.

* To ascertain that the level of pollutants are maintained within acceptable limits, ambient air quality monitoring, Stack emissions, Noise monitoring, workplace monitoring & analysis of inorganic and organic chemicals is being carried out a various locations in plants and in other locations.

* Testing of Flammable gases for issue of hot permit under safety policy especially for plants held for disposal under idle assets #1.

Security System :

Kochi Unit of HOCL has been classified as 'MAJOR ACCIDENT HAZARD INSTALLATION' by the Govt. of Kerala. The security requirements are met from the agencies sponsored by the Director General (re-settlement), Ministry of Defense, Govt. of India. Security Guards are posted in the identified areas inside the Factory premises and also in Township round the clock. At present the strength of the security personnel is as under: Security Officer : 01; Security Supervisor : 03; Security Guards: 65 In view of the increased threat perception in Kochi, the Unit has been advised to take suitable measures for upgrading the security by the concerned authorities. Action is being taken to install CCTV Surveillance system.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY .

During the year under report, your Company continued its intensive and extensive efforts for progressive use of the official language. To promote Hindi as official language is day to day working in line with the Government policies. In Compliance with Section 3(3) of the Official Language Act, 1963 and Official Language Rules 1976 framed there under, Company has implemented various measures effectively given in annual program during the year under review. All documents coming under Section 3(3) like Resolutions, General Orders, Rules, Notifications, Reports Press Communiques, Contracts, Agreements, Licenses Permits, Tender Notices, Forms of Tender, Reports/ Papers submitted to the Parliament & Company letters like Part-I Orders, Part-II Orders, Circulars, transfer etc. were issued bilingually. The all Hindi Letters received are being replied in Hindi to comply with Rule 5 of Official Language Rule 1976. All name plates, sign-boards, visiting cards, Demi Official letter heads etc. are prepared in bilingual form. Our Company participated in all the programs organized by Mumbai town Official Language Implementation Committee. Hindi Workshops were conducted in every quarter to impart training in the working knowledge of Hindi to Officers as well as employees. The Official Language implementation Committee Meetings were held at both the Units to review the progressive use of Hindi for the Official purpose. Hindi Fortnight was organized at both Rasayani and Kochi Units and in the Corporate Office. During this period various competitions were organized & large number of Employees participated in this competitions. The other activities of the Company which was organized through the medium of Official Language was Vigilance Week, Security Week and Environment Day during the year. For the progressive use of Information Technology through medium of Hindi all the Computers are being loaded with Unicode.

Kochi Unit received Second prize for the best implementation of Official Language from Kochi Town Official Language Implementation Committee.

* Web site of the Company is prepared to Hindi also www.hocl.hindi.gov.in

* To improve the Hindi word power of the employees, every day one bilingual word being exhibited in the presto Board kept in the reception and the list of the same is being circulated in the end of the month.

* To comply with the Official Language Policy of the Government, Workshops on Official Language are regularly conducted for the employees who possesses working knowledge in Hindi so as to encourage them to use Hindi in their day to day office work. 7 Workshops were conducted during the period under the report.

* Out of the total amount spent for purchase of books for library, nearly 50% of the amount was spent for the purchase of Hindi Books. Hindi Newspaper and magazines are also subscribed in the Unit.

* The Official Language implementation Committee has been constituted for review of the OL implementation work in the Unit and the OLIC meets regularly.

Every year effort are made to fulfill the targets set in the Annual program issued by Department of Official Language Ministry of Home Affairs.

ISO CERTIFICATION :

HOCL Kochi unit is an ISO 9001: 2008 (Quality Management System) and ISO 14001: 2004 (Environmental Management System) certified company. The existing certificate for ISO 9001 & ISO 14001 is valid up to 2014.

BVCI Conducted routine surveillance audit periodically for both the systems.

INSURANCE

All properties and insurable interest of the Company including building, plant and machinery and goods are adequately insured. As required under Public liability Insurance Act, 1991 the company has taken necessary insurance cover.

FIXED DEPOSITS

With regard to Fixed Deposits, nothing is outstanding towards FDR for the Financial Year 2014-15.

DEPOSITORY SYSTEM

As the members are aware your company's shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the enormous advantages offered by the Depository system, Members are requested to avail the facility of dematerialisation of the Company's shares on either of the depositories as aforesaid. E-Voting facilities are available at the depositories and in respect of 54th AGM, Company has provided the e-voting facilities for the Shareholders of the Company at CDSL

MANAGEMENT DISCUSSION AND ANALYSIS REPORT.

In accordance with the listing agreement, the Management Discussion and Analysis Report is annexed hereto in Annexure V and forms part of the Directors' Report. CORPORATE GOVERNANCE

The Company has complied with the various requirements of Corporate Governance. The details in this regard form part of this report in Annexure VI.

RESPONSIBILITY STATEMENT

The Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) that they have selected such accounting policies and applied them 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 at the end of the financial year and of the profit or loss of the company for that period;

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the New Companies Act, 2013 & Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.

Subsidiary Companies :

HINDUSTAN FLUOROCARBONS LIMITED [HFL] : (Subsidiary) .

OPERATION AND OVERALL PRODUCTION AND MARKETING PERFORMANCE:

During the year, HFL has made Net loss of Rs.377.46 lacs from operations as against the net loss of Rs. 2482.47 lacs of the previous year. During the year, the sales turnover (net) was Rs.2915.07 lacs as against Rs.2788.92 lacs in the previous year. This is mainly due to employee benefits against wage revision, Decrease in sales realization of main product PTFE and discontinuation of CDM Project in international market. During the year under report production of PTFE was 107 Metric Tons as against 184 Metric Tons in the previous year. During the year, 726.58 Metric Tons of CFM-22 was sold in the market against 555.17 Metric Tons in the previous year and balance quantity was used as feed stock to manufacture various products including Fluoro Specialty Chemicals. Accordingly, during the year 45.80 Metric Tons of Tetra Fluoro Etylene (TFE) was used to manufacture Telomere. Quality of all company's products continued to be well accepted by our customers. Company has achieved 88% capacity utilization as against 86% in the previous financial year. In spite of better physical performance, financial performance was badly affected due to the reasons mentioned above.

Considering the Company's financial health, during the year on the recommendations of the BODs, though your Company has put up its proposals to (its Subsidiary,) HFL, demanding for the repayment of part of secured loan amount fallen due for payment (to HOCL) out of the proceeds of land sale (HFL Land sold to CIEPET), HFL had expressed its inability to repay to HOCL amount overdue stating that the funds not available due to Capex Programme.

CLEAN DEVELOPMENT MECHANISM (CDM) PROJECT:

In absence of buyers from European Union, CER prices was drastically come down, hence company is not generating CERs.

HOC CHEMATUR LTD. [Subsidiary JV)- Abandoned Project :

The subsidiary Co. HOC Chematur Ltd. existing only on records as it was incorporated as a Public Ltd. Co. under the Companies ACT and is subject to audit both by the statutory auditors appointed by the C&AG, and by the Govt. Audit, The statement of Profit & Loss is approved and audited as prescribed under the provisions of Companies Act, 2013 and are e-filed to the MCA/ROA authorities.

The Statement Pursuant to Sec. 129(3) of the Companies Act, 1956 is given in Annexure I & Annexure IA in respect of HOC Chematur Ltd.

Form AOC-I

Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014 , Form AOC-I is given in Annexure IB

AUDITORS

In terms of provisions of Section 619(2) of the Companies Act,1956, the Comptroller & Auditor General of India, under its letter No.CA. V/COY/CENTRAL GOVT,HOCL(2)/225 dated 30/7/2014 has appointed M/s FORD RHODES PARKS & CO, Chartered Accountants, Mumbai as Auditors of the Company to audit the accounts of the Rasayani unit and to audit the consolidated accounts of the company. Vide CAG under its letter No.CA. V/COY/CENTRAL GOVT. HOCL (2)/225 dated 30/7/2014 has appointed M/s AYYAR & CHERIAN Chartered Accountants, Cochin as Branch Auditors to audit the accounts of Cochin unit for the year ended 31st March, 2015.

The remarks of the Board of Directors on the Auditors' Report to the members are furnished in Annexure IV.

The report of the Comptroller & Auditor General of India under section 619(4) of the Companies Act, 1956, on the Accounts of the Company for 2013-14 is annexed to the Statutory Auditors' Report in the Annual Report.

Pursuant to directions from the Ministry of Company Affairs for appointment of Cost Auditors, Board of Directors of the company appointed M/s V.J.Talati & Co. as the Cost Auditors of Rasayani Unit and also as Lead Auditors for the Year 2014-2015 for cost audit of Company's Sulphuric Acid, Aniline, Formaldehyde, Caustic Soda, Nitro Benzene products (of Rasayani unit) and M/s Panikar & Company as Cost Auditors of Kochi Unit for the year 2014-15 for Kochi Unit products viz. Phenol, Acetone & Polypropylene products.

DIRECTORS

During the Financial Year 2014-15, GOI has appointed also Shri. Rajiv Yadav, Additional Secretary & Financial Advisor in the Ministry of Chemicals & Fertilizers as part-time Government Nominee Director in place of Dr. V.K. Subburaj, SS&FA, on the Board of HOCL, vide GOI Order No. 51/11/95-Ch-NI-(Vol.N) dated 23rd June, 2014.

During the year 2015, in the month of May, 2015 (21-5-2015, the tenure of one Independent Director, Dr. N.J. Gaikwad from Nagpur, ( Non official part time Director on the Board of HOCL ) on the Board of the Company was ended on 21st May, 2015.

In terms of Article 76(4) of the Articles of the Association of the Company, as on date of this Report ( 11-8-2015) the Government Nominee Directors, viz. Shri Rajiv Yadav, Special Secretary & Financial Advisor and Dr. A.J.V.Prasad, Joint Secretary, will retire at this 54th AGM in 2015 and are eligible for reappointment. Company is awaiting the necessary orders of the Government regarding reappointment of the said two Govt. Nominee Directors.

ACKNOWLEDGMENT

Your Directors gratefully acknowledge the valuable guidance, support and directions given by the Government of India. Your Directors also gratefully acknowledge the support and co-operation extended by the State Governments, by the valued and esteemed customers, shareholders, suppliers, bankers, Statutory/Internal/Cost and Tax Auditors, Bondholders, and Investors at large.

Your Directors place on record their appreciation for the whole hearted efforts and contribution from all the employees and also acknowledge the support and co-operation of the entire Workers' Unions and Employees' Unions and their members for the smooth functioning of the Company's operations.

For and on behalf of the Board of Directors of Hindustan Organic Chemicals Limited

Sd/- Place : Mumbai V.B. Ramachandran Nair Date 11 / 08 / 2015 Chairman & Managing Director


Mar 31, 2014

Dear Shareholders

The Directors are pleased to present the 53rd Annual Report and the Audited Annual Accounts of the Company for the financial year ended 31st March, 2014.

The financial performance of the Company for the year ended March 31, 2014 is summarized below:

(Rs. in Lacs)

Year ended Year ended 31/03/2014 31/03/2013

Sales 23679.73 62419.40

Operating Profit/(Loss) (11498.14) (8411.98)

Less: Interest 4261.94 2824.15

Depreciation 1841.33 2232.95

Profit/(Loss) before tax (17601.41) (13469.08)

Less: Provision for taxation - -

Less: Prior Period adjustments & Exceptional Items 83.37 (329.83)

Profit/(Loss) after tax & Prior period (17685.28) (13798.91) adjustments, Provisions and Exceptional Items.

[Note: Previous years figures have been regrouped wherever necessary in the Current year]

In view of continuous incurring of losses during the current year as well as in the previous years, the Board of Directors did not recommend any Dividend for the current year under review.

Reporting to BIFR under SIC(SP)Act, 1985 :-

As on 31st March, 2014, we have already reported the fact of HOCL as a Sick Unit to BIFR and have submitted required information and details in Form AA and are awaiting the Registration No. for the same on Registration of HOCL as a Sick Company.

RESULTS OF OPERATIONS :

During the year under review the Company has suffered Net loss of Rs. 176.85 crores, as against the Net Loss of the previous year of Rs. 137.99 crores.

As regards the unit wise performance, the Net Loss of Kochi Unit was Rs.69.15 crores as compared to the previous year''s loss of Rs.36.05 crores. The Rasayani Unit recorded a Net Loss of Rs. 107.70 crores as compared with the previous year''s loss of Rs. 101.94 crores.

OPERATIONS :

During the year under report your company''s Rasayani unit achieved a sales turnover of 3142MTs valuing Rs. 1254 lacs as against 55562 MTs valuing Rs. 16164 lacs registering a 94 % decrease in sales.

During the year under report your company''s Kochi unit achieved a sales turnover of 29042 MTs valuing Rs. 19862 Lacs as against 55242 MTs valuing Rs. 39337 Lacs of the previous year.

With the production of 53817 MTs during the year 2013-14 as against the production of 150979 MTs in 2012-13, your company could achieve an overall capacity utilization of 18.13% during the year. Your company has recorded the sale of 32184 MTs during the year (previous year 110804 MTs) valuing Rs21116 lacs (previous year Rs. 55501 lacs). The high labour cost and high incidence of cost on closed plants at Rasayani Unit are the major concerns. Company decided to operate those plants, which were giving contribution. Your company has continued its cost cutting measures to counter these problems and in order to be competitive and improve performance and profitability.

Due to cash losses, the Company was not able to make payments to raw material suppliers of both the units which resulted in stoppage of raw material supplies and therefore the operations were affected.

PRODUCTION :

Kochi Unit:

During the year your company''s Kochi unit could achieve 51253 MTs of production as against the previous year production of 100003 MTs. The capacity utilization for the year was 32.42 %

Rasayani Unit:

During the year your company''s Rasayani unit could achieve 2564 MTs of production as against the previous year production of 50976 MTs. The capacity utilization for the year was 1.85 %. Capacity utilization is affected due to high fixed cost & finance constrains.

MARKETING :

The chemical market for various basic chemicals are volatile and most competitive. There is stiff competition for HOC main products which were available at cheaper rate from domestic manufacturers, as well as importers, considering the logistic advantage to the importers & domestic manufacturers and increase in raw material prices. During the year 2013-14, the company has achieved the sales turnover of Rs. 211.16 crore (net of excise duty) only as against Rs. 555.01 crores (net of excise duty) of the previous year (2012-13) and the sales volume during the year 2013-14 was 32184 MTs as against 1,10,804 MTs for the previous year 2012-13. The projected Sale Turnover & Sale Volume could not be achieved, because of funds constraint, cheaper importer''s selling prices, increase in major raw material prices and less margin in selling prices. During the last quarter of the financial year there was a good demand for the Company''s products, but Company could not run all the plants continuously due non availability of working capital.

CURRENT / PRESENT SCENARIO.

The Kochi unit of the Company which was making profits continuously, year after year for the last (gap of) 10 years, but during the current year under review, for the second time (in the span of 10 years), the Kochi Unit has incurred a loss to the tune of Rs.69.15 Crores. The main reason for the loss suffered by the unit was due to withdrawal of Anti-Dumping Duty on the Phenol and Acetone manufactured at Kochi unit, resulting in large scale import of /dumping of those imported products and forcing the company to reduce the prices to match the imported price of Phenol and Acetone. The raw material cost also went up drastically which increased the cost of production. The company has filed review petition & fresh application for Anti-Dumping Duty to the concerned Authority, which will help to improve the better realisation. Due to the pursuance of the Company and also due to change in international scenario, anti-dumping duty has been imposed by GOI.

STATUS OF OPERATIONS AND FUTURE PLANS & TURNAROUND / REVIVAL PLAN

Status of Operations -

During the year, the operations of the Company, both at Kochi Unit and Rasayani Unit, suffered badly due to erosion of working capital.

As per the decision of the Board, several cost cutting measures were implemented. The Company had also introduced VRS during the year to reduce the manpower cost. However due to shortage of funds all the employees who had opted VRS could not be relieved during the financial year 2013-14.

The Company had entrusted FEDO to conduct a revival study .

The Company had done necessary planning to restore its operations to normal level by raising working capital through issue of Bonds of Rs. 150 Crore, backed by Government of India Guarantee. The Company had already received Government of India Guarantee for raising Rs. 150 Crore through Bond issue.

Further Tripartite Agreement will be executed between the Company, GOI and Trustee for this bond

Future Course of Action / Revival Plan:

The Company is referred to BIFR for restructuring due to 100% erosion of its net worth. The Company had already appointed M/s FEDO as consultant for preparing suitable revival plan for long term sustainability of the Company.

HOCL plans to lease about 60 acres of land at Rasayani to M/s CONCOR to set up a multi model logistic park and have a revenue sharing arrangement also. With the completion of CNA plant refurbishment HOCL proposes to meet the requirement of ISRO for supply of N2O4.

HOCL Plans to replace the catalyst of Cumene plant from SPA to Zeolite which will bring down the cost of production.

ENERGY CONSERVATION/TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information in accordance with the provisions required to be disclosed under Section 134(3m) of the Companies Act, 2013 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules thereon, regarding conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo, are given at Annexure II to this Report.

RESEARCH & DEVELOPMENT

After initial trial runs on pilot scale the ''In-house'' developed vapour phase continuous process for ISRO''s specific grade of Kerosene (Isrosene) was fine tuned. A model developed on laboratory scale was also verified on pilot plant scale. Regular runs with optimized parameters in ''scaled down version'' of HOC''s commercial plant were successfully completed. The product quality from these runs has been re-affirmed and the capacity of the plant has also been established, based on these runs. The technology is now ready for implementation in HOC''s available commercial plant. Company''s further contribution in IPR field is maintained and grant of three nos. of Indian patents has been obtained during this year.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:

I. The Company has recognized the importance of Human Resource since its inception. The Company continues to recognize that human asset is very much valuable for the continual improvements in the performance of the Company, particularly in the context of competition all around. Since it is very vital resource, Company is upgrading the skills of their employees by systematically identifying training need of employees. The position relating to SC/ST/Women personnel in the Company is given in Annexure - III to the Directors'' Report.

II. Training:

Rasayani Unit:

During the Financial Year 2013-14 total 65 in-house training programmes were conducted in Company''s Training Centre. Total man-days trained are 976.5. Further, under Value Addition Programme (VAP) total 13 employees were trained against the assigned objective of atleast 8 front line supervisors to be trained under VAP. Total five technical presentations were organized and conducted to create operational awareness about working systems against the assigned objective of atleast four no. of presentations to be conducted during the year.

Training Section Team of the Company had made presentations on behalf of HOCL in the Best HR Practises Competition conducted by National Institute of Personnel Management, Raigad Chapter, Western Region and won the cash prize with certificate and trophy.

Kochi Unit:

Training was imparted to employees based on operational requirement/needs identifications with the allocated resources to enhance Soft Skills, Technical and Managerial Skills. Due importance was given and constant efforts were made to impart Health, Safety and Environment aspects considering the nature of hazards in the Unit. During 2012-13 the unit had organized training programmes both Internal/External covering 505 mandays with the help of Internal/ External Experts. Specific user training in functional module of ERP was also imparted to the employees so as to make the SAP system more users friendly. Regular refresher course in Safety and Environmental Management were organized.

Apart from employees training the Company had extended the facilities and resources to students coming from different Engineering Colleges, Management Institutions to enhance their practical knowledge/for experiential learning. Company also engages Graduate / Technical / Trade / Vocational Apprentices to undergo Apprenticeship Training in different discipline under the Apprentices Act 1961.

III. Industrial Relations :

Industrial Relation climate in the Company during the year 2013-14 also continued to remain cordial on all fronts.

IV. Suggestion Scheme:

The Suggestion Scheme is in existence in HOCL, Kochi Unit. All employees and Company Trainees are eligible to participate in this scheme. The Suggestions received from the employees are evaluated by a Suggestion Committee and the selected suggestions are awarded with Cash Prizes ranging from Rs.100/- to Rs.5000/-.

PARTICULARS OF EMPLOYEES - INFORMATION REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956.

No employee of the Company has drawn the remuneration during the year 2013-14 or any part thereof, in excess of the limits specified under the Company''s (Particulars of Employees) Rules 1975.

Accordingly particulars of employees'' remuneration prescribed u/sec 217 (2A) of the Companies Act, 1956 are not furnished.

VIGILANCE

The Vigilance Department, headed by Chief Vigilance Officer, appointed by Government of India on deputation, has three main functional officers, one each at Rasayani (Raigad) in Maharashtra, and at Ambalamugal (Kochi) in Kerala and third at Corporate office, CBD Belapur, Navi Mumbai. Keeping in view of the Principles of Corporate Governance, the main focus of the Vigilance Department has been to help the sincere, dedicated and honest personnel working in the Organization to discharge their duties effectively and efficiently so that the target of optimum turnover and profitability are achieved in a transparent manner. More emphasis is given in improving the functioning of all sections and maintaining transparency.

The Vigilance department takes appropriate and timely action in respect of complaints received. There is a comprehensive complaint handling policy and prescribed punitive action is duly suggested, after conducting fair and impartial investigation/enquiry, where ever required. The Annual Property Returns of the officers are periodically scrutinized and inspection of departmental activities are undertaken to detect deviations, if any, and suggest corrective measures. Vigilance Awareness Programmes, as per guidelines issued by the CVC, are observed and awareness sessions are conducted for the personnel regarding vigilance related matters as well as in respect of CDA Rules, RTI Act, PIDPI (Whistle Blowers Act) etc. The vigilance department has been instrumental in updating the existing manuals and policies i.e. the Purchase Policy, the Works Policy, the Marketing Manual, the Vigilance manual etc., so that the laid down procedures, policies, rules, regulations etc., of the Company and that of Central Vigilance Commission are duly followed.

The Vigilance Department maintains close interaction with CVC, CBI and other Government agencies. The Vigilance wing has been sincerely and consistently helping all personnel of the Organization in improving their efficiency and effectiveness and, in turn, achieving the set goals of the Organization.

CORPORATE SOCIAL RESPONSIBILITY

Company right from its inception is conscious about its social responsibilities. To fulfill this, Company has provided basic civic amenities to the neighboring villages, rendering assistance to the neighborhood in different forms viz. financial assistance, drinking water supply, medicines etc.

To promote School Education, Company is giving scholarship to X and XII standard students. Company extends need based assistance to the deserving SC/ST students in the nearby villages for their graduate education.

Company also extends vocational training facilities to the wards of employees in nearby Engineering/ Management Colleges for enhancing their practical knowledge. Company also engages ICWA Trainees, CS Trainees, and Vocational Trainees, as a part of their curriculum for imparting practical training.

HEALTH, ENVIRONMENT, FIRE & SAFETY

Health :

* Physical Check-up, the Special Certificate of Fitness in Form No. 23 and ascertaining Health Status in Form No. 7 of all employees have been carried out by the Certifying Surgeon for the year 2013.

* Periodic Medical Check-up and regular monitoring of health records of all employees was done. Various health awareness training programmes were carried out by specialist doctors for the benefit of employees.

Environment:

* Revenue generation by Health and Hygiene department giving analytical support and technical support to nearby industries, as well as miscellaneous income amounting to total Rs. 5.6 lakhs.

* Our Laboratory has participated in the Proficiency Testing conducted by CPCB for the laboratories recognized under E.P. Act and other laboratories. It has undertaken outside samples analysis for physical and chemical parametres on chargeable basis generating a revenue to the tune of R. 22,000/-.

* To ascertain that the level of pollutants are maintained within acceptable limits, ambient air quality monitoring, Stack emissions, Noise monitoring, workplace monitoring & analysis of inorganic and organic chemicals is being carried out at various locations in plants and in other locations.

* Testing of Flammable gases for issue of hot permit under safety policy especially for plants held for disposal under idle assets was carried out.

Security System :

Kochi Unit of HOCL has been classified as ''MAJOR ACCIDENT HAZARD INSTALLATION'' by the Govt. of Kerala. The security requirements are met from the agencies sponsored by the Director General (re-settlement), Ministry of Defense, Govt. of India. Security Guards are posted in the identified areas inside the Factory premises and also in Township round the clock. At present the strength of the security personnel is as under:

Security Officer : 01 Security Supervisor : 03 Security Guards : 65

In view of the increased threat perception in Kochi, the Unit has been advised to take suitable measures for upgrading the security by the concerned authorities. Action is being taken to install CCTV Surveillance system. HOCL being a hazardous installation, National Security Guard (NSG) has conducted reconnaissance in this Unit form 7/11/2013 to 9/11/2013.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY .

Rasayani Unit:

During the year under report, your Company continued its intensive and extensive efforts for progressive use of the official language. To promote Hindi as official language in day to day working in line with the Government policies. In Compliance with Section 3(3) of the Official Language Act, 1963 and Official Language Rules 1976 framed there under, Company has implemented various measures effectively given in annual programme for 2013-14. All documents coming under Section 3(3) like Resolutions, General Orders, Rules, Notifications, Reports Press Communiques, Contracts, Agreements, Licences Permits, Tender Notices, Forms of Tender, Reports/ Papers submitted to the Parliament & Company letters like Part-I Orders, Part-II Orders, Circulars, transfer etc. were issued bilingually. The all Hindi Letters received are being replied in Hindi to comply with Rule 5 of Official Language Rule 1976. All name plates, sign-baords, visiting cards, Demi Official letter heads etc. are prepared in bilingual form. Our Company participated in all the programmes organized by Mumbai town Official Language Implementation Committee. Hindi Workshop were conducted in every quarter to impart training in the working knowledge of Hindi to Officers as well as employees. The Official Language implementation Committee Meetings were held at both the Units to review the progressive use of Hindi for the Official purpose. Hindi Fortnight was organized at both Rasayani and Kochi Units and in the Corporate Office in Mumbai from 14th September, 2013 to 28th September, 2013. Hindi Day celeberated on 14th September, 2013. During this period 11 various competitions were organized & large number of Employees participated in this competitions. To fulfill the target set in the Annual Programme issued by Department of Official Language, Ministry of Home Affairs CMD has himself participated in the Hindi Salahkar Committee Meeting of Chemical & Fertilizers Ministry in the year 2013. The other activities of the Company which was organized through the medium of Official Language was Vigilance Week, Security Week and Environment Day during the year. For the progressive use of Information Technology through medium of Hindi all the Computers are being loaded with Unicode.

Kochi Unit:

Kochi Unit received Second prize for the best implementation of Official Language from Kochi Town Official Language Implementation Committee.

1) All documents coming Under Sec. 3(3) of the Official Language Act, 1963 are issued in bilingual form.

2) The Hindi letters received are being replied in Hindi to comply with the rule 5 of Official Language Rules 1976. All nameplates, Sign Board, Visiting Cards, Demi-Official letters heads are prepared is bilingual form.

3) Web site of the Company is prepared in Hindi also www.hocl.hindi.gov.in

4) To improve the Hindi word power of the employees, every day one bilingual word being exhibited in the presto Board kept in the reception and the list of the same is being circulated in the end of the month.

5) Cash Incentive Scheme for doing original work in Hindi is existing in the unit and during September 2012 to August 2013, 15 employees have received the incentive.

6) To comply with the Official Language Policy of the Government, Workshops on Official Language are regularly conducted for the employees who possesses working knowledge in Hindi so as to encourage them to use Hindi in their day to day office work. 7 Nos. Workshops were conducted during the period under the report.

7) Out of the total amount spent for purchase of books for library, nearly 50% of the amount was spent for the purchase of Hindi Books. Hindi Newspaper and magazines are also subscribed in the Unit.

8) The Official Language implementation Committee has been constituted for review of the OL implementation work in the Unit and the OLIC meets regularly.

Every year effort are made to fulfill the targets set in the Annual programme issued by Department of Official Language Ministry of Home Affairs.

ISO CERTIFICATION :

HOCL, Rasayani Unit, has been awarded ISO-9001:2008 certificate on 11.01.2011. This certificate has been awarded by M/s Bureau Veritas Certification (India) Pvt. Ltd. and is valid till 9/02/2017.

HOCL Kochi unit is having ISO 9001: 2008 (Quality Management System) and ISO 14001: 2004 (Environmental Management System) Certification. The existing certificate for ISO 9001 & ISO 14001 is valid up to 2017.

BVCI Conducted routine surveillance and recertification audits periodically for both the systems.

INSURANCE

All properties and insurable interest of the Company including building, plant and machinery and goods are adequately insured. As required under Public liability Insurance Act, 1991 the company has taken necessary insurance cover.

FIXED DEPOSITS

With regard to Fixed Deposits, nothing is outstanding towards FDR for the Financial Year 2013-14.

DEPOSITORY SYSTEM

As the members are aware your company''s shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the enormous advantages offered by the Depository system, Members are requested to avail the facility of dematerialisation of the Company''s shares on either of the depositories as aforesaid.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the listing agreement, the Management Discussion and Analysis Report is annexed hereto in Annexure V and forms part of the Directors'' Report. CORPORATE GOVERNANCE

The Company has complied with the various requirements of Corporate Governance. The details in this regard form part of this report in Annexure VI.

RESPONSIBILITY STATEMENT

The Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) that they have selected such accounting policies and applied them 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 at the end of the financial year and of the profit or loss of the company for that period;

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the New Companies Act, 2013 & Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.

HINDUSTAN FLUOROCARBONS LIMITED : (Subsidiary)

OPERATION AND OVERALL PRODUCTION AND MARKETING PERFORMANCE:

During the year, the sales turnover (net) was Rs.2788.92 lacs as against Rs.4080.31 lacs in the previous year. During the year under report production of PTFE was 183.96 Metric Tons as against 154.78 Metric Tons in the previous year. During the year, 555.17 Metric Tons of CFM-22 was sold in the market against 244.73 Metric Tons in the previous year and balance quantity was used as feedstock to manufacture various products including Fluoro Specialty Chemicals. Accordingly, during the year 22.38 Metric Tons of Tetra Fluoro Etylene (TFE) was used to manufacture TFE-ETHER. Quality of all company''s products continued to be well accepted by our customers. Company has achieved 86% capacity utilization for CFM-22 for this year.

The Statement Pursuant to provision under Sec. 129(3) of the Companies Act, 2013 is given in Annexure I.

AUDITORS

In terms of provisions of Section 619(2) of the Companies Act,1956, the Comptroller & Auditor General of India, under its letter No.CA. V/COY/CENTRAL GOVT,HOCL(2)/225 dated 8/8/2013 has appointed M/s FORD RHODES PARKS & CO, Chartered Accountants, Mumbai as Auditors of the Company to audit the accounts of the Rasayani unit and to audit the consolidated accounts of the company. Vide CAG under its letter No.CA. V/COY/CENTRAL GOVT.HOCL (2)/225 dated 8/8/2013 has appointed M/s SASI VIJAYAN & RAJAN, Cochin as Branch Auditors to audit the accounts of Cochin unit for the year ended 31st March, 2014.

The remarks of the Board of Directors on the Auditors'' Report to the members are furnished in Annexure IV.

The report of the Comptroller & Auditor General of India under section 619(4) of the Companies Act, 1956, on the Accounts of the Company for 2013-14 is annexed to the Statutory Auditors'' Report in the Annual Report.

Pursuant to directions from the Ministry of Company Affairs for appointment of Cost Auditors, Board of Directors of the company appointed M/s V.J.Talati & Co. as the Cost Auditors of Rasayani Unit and also as Lead Auditors for the Year 2013-2014 for cost audit of Company''s Sulphuric Acid, Aniline, Formaldehyde, Caustic Soda, Nitro Benzene products (of Rasayani unit) and M/s Panikar & Company as cost Auditors of Kochi Unit for the year 2013-14 for Kochi Unit products viz. Phenol, Acetone & Polypropylene.

DIRECTORS

During the Financial Year 2013-14, in the month of June, 2013, the Government of India, vide its Order ( GOI Order No. P 51011/8/2012-32-CH.III ) dated 13th June, 2013 has appointed Shri. V.B. Ramachandran Nair, Chief General Manager, HOCL as Chairman- cum- Managing Director (CMD), on the Board of HOCL who has assumed the charge of CMD HOCL (from ACMD Shri J.N.Suryawanshi, DM) on 17/6/2013 (F.N.) for the period of five years or till the date of superannuation or till further orders, whichever is earlier. Shri. J.N. Suryawanshi, Director (Marketing) HOCL held the additional charge of Chairman & Managing Director from 1st May, 2013, in addition to his duties & responsibilities as Director (Marketing), as per GOI Order No. P.51011/01/2013-32-Ch-III dated 30/4/2013 upto 17-06-2013.(F.N.)

Further, GOI has appointed also Shri. Rajiv Yadav, Additional Secretary & Financial Advisor in the Ministry of Chemicals & Fertilizers as part-time Government Nominee Director in place of Dr. V.K. Subburaj, SS&FA, on the Board of HOCL, vide GOI Order No. 51/11/95-Ch-III-(Vol.II) dated 23rd June, 2014.

In terms of Article 76(4) of the Articles of the Association of the Company, Government Nominee Directors, viz. Shri Rajiv Yadav, Additional Secretary & Financial Advisor and Dr. A.J.V.Prasad, Joint Secretary, will retire at this 53rd AGM in 2014 and are eligible for reappointment. Company has placed its request letter to the Government for reappointing Shri Rajiv Yadav, AS&FA and Dr. A.J. V.Prasad, JS from the ensuing 53rd AGm of 2014 and till the holding of the next A.G.M. of the Company to be held in 2015 or till further Orders(whichever is earlier as per GOI Order).

ACKNOWLEDGMENT

Your Directors gratefully acknowledge the valuable guidance, support and directions given by the Government of India. Your Directors also gratefully acknowledge the support and co-operation extended by the State Governments, by the valued and esteemed customers, shareholders, suppliers, bankers, Statutory/Internal/Cost and Tax Auditors, Bondholders, and Investors at large.

Your Directors place on record their appreciation for the whole hearted efforts and contribution from all the employees and also acknowledge the support and co-operation of the entire Workers'' Unions and Employees'' Unions and their members for the smooth functioning of the Company''s operations.

For and on behalf of the Board of Directors of Hindustan Organic Chemicals Limited,

Sd/-

Place : Mumbai V.B. Ramachandran Nair Date : 13/08/2014 Chairman & Managing Director


Mar 31, 2013

To the Members of HINDUSTAN ORGANIC CHEMICALS LIMITED

Dear Shareholders

The Directors are pleased to present the 52nd Annual Report and the Audited Annual Accounts of the Company for the fi nancial year ended 31st March, 2013.

The financial performance of the Company for the year ended March 31, 2013 is summarized below:

(Rs.in Lacs)

Year ended Year ended

31/03/2013 31/03/2012

Sales 62419.40 60636.71

Operating Profit/(Loss) (8411.98) (2880.50)

Less: Interest 2824.15 2474.33

Depreciation 2232.95 2335.98

Profit/(Loss) before tax (13469.08) (7690.81)

Less: Provision for taxation

Less: Prior Period adjustments & Exceptional Items (329.83) (116.04)

Profi t/(Loss) after tax & Prior period adjustments,

Provisions and Exceptional Items (13798.91) (7806.85)

[Note: Previous years fi gures have been regrouped wherever necessary in the Current year]

In view of continuous incurring of losses during the current year as well as in the previous years, the Board of Directors did not recommend any Dividend for the current year under review.

Reporting to BIFR under SIC(SP)Act, 1985 :

In view of the fact that as on 31-03-2013 as the Company''s Accumulated Losses have resulted into 100% erosion of Net worth, Company is taking necessary steps for making a reference to Board for Industrial & Financial Reconstruction (BIFR) under prescribed Section of the Sick Industrial Companies (Special Provisions) Act, 1985.

RESULTS OF OPERATIONS :

During the year under review the Company has suffered Net loss of Rs. 137.99 crores, as against the Net Loss of the previous year of Rs. 78.07 crores .

As regards the unit wise performance, the Net Loss of Kochi Unit was Rs.36.05 crores as compared to the previous year''s profi t of Rs.26.02 crores. The Rasayani Unit recorded a Net Loss of Rs. 101.94 crores as compared with the previous year''s loss of Rs. 104.10 crores.

OPERATIONS :

During the year under report your company''s Rasayani unit achieved a sales turnover of 55562 MTs valuing Rs.16164 lacs as against 51268 MTs valuing Rs.11627 lacs registering a 39 % increase in sales.

During the year under report your company''s Kochi unit achieved a sales turnover of 55242 MTs valuing Rs.39337 Lacs as against 64298 MTs valuing Rs.43200 Lacs of the previous year.

With the production of 150979 MTs during the year 2012-13 as against the production of 178792 MTs in 2011-12, your company could achieve an overall capacity utilization of 37% during the year. Your company has recorded the sale of 110804MTs during the year (previous year 115566 MTs) valuing Rs55501 lacs (previous year Rs. 54827 lacs). The high labour cost and high incidence of cost on closed plants at Rasayani Unit are the major concerns. Company decided to operate those plants which were giving contribution. Your company has continued its cost cutting measures to counter these problems and in order to be competitive and improve performance and profi tability.

PRODUCTION : Kochi Unit:

During the year your company''s Kochi unit could achieve 100003 MTs of production as against the previous year production of 126076 Mts. The capacity utilization for the year was 65 %.

Rasayani Unit:

During the year your company''s Rasayani unit could achieve 50976 MTs of production as against the previous year production of 52716 MTs. The capacity utilization for the year was 20 %. Capacity utilization is affected due to high fi xed cost & fi nance constrains. MARKETING :

The chemical market is very much volatile, slow down demand of HOC main products as well as downstream products based on HOC products & stiff competition from import of HOC ''s main products at cheaper rate, increased raw material prices, during the Year 2012-13, Company has achieved in the highly competitive market , the sales turnover of Rs. 555.01 Crores (net of excise duty) as against Rs548.27 crores (net of excise duty) of the previous year(2011-12). The sale value could be achieved because of continued support from its valuable customers and due to excellent quality products produced at Kochi and Rasayani Units. The sales volume during year 2012-13 was 1,10,804 MTs as against 1,15,566 MTs for the year 2011-12. During last quarter of the fi nancial year there was good demand for Company''s products due to improved market conditions.

CURRENT / PRESENT SCENARIO.

The Kochi unit of the Company which was making profi ts continuously, year after year for the last (gap of) 10 years , but during the current year under review, for the fi rst time (in the span of 10 years), the Kochi Unit has incurred a loss of Rs.36.05 Crores (during the current year) . The main reason for the loss suffered by the unit was due to withdrawal of Anti-Dumping Duty on the Phenol and Acetone manufactured at Kochi unit, resulting in large scale import of /dumping of those imported products and forcing the company to reduce the prices to match the imported price of Phenol and Acetone. The raw material cost also went up drastically which increased the cost of production. The company has fi led review petition & fresh application for Anti-Dumping Duty to the concerned Authority, which will help to improve the better realisation.

STATUS OF OPERATIONS AND FUTURE PLANS & TURNAROUND/REVIVAL PLAN

Future course of Action/Revival Plan

The following are the future course of action planned for revival of the company.

Rasayani Unit

Retrofi tting of Conc. Nitric Acid plant (C.N.A), where N2O4 is produced has been completed in January 2013 and production has started whereby 500 TPA of N2O4 for ISRO could be produced. This will reduce the cost of production of C.N.A which is used as input in Nitrobenzene and Aniline Plants.

Approval has been obtained for disposal of non performing (closed) plant and machinery at Rasayani Unit to generate funds to the tune of Rs 12.51 Crore (Rounded off). This amount will be utilized for clearing the outstanding Working Capital dues.

The Tankage facility in the 5 Acres leased land at JNPT to be operated on BOT basis with a third party investment with the approval from JNPT authorities.

It is proposed to carryout retrofi tting of Nitrobenzene and Aniline Plant at a cost of Rs 12 Crore (Approx) whereby the turnover could increase by Rs 60 Crore from the increased production and also reduction in cost of production to improve the margins.

In order to raise resources for repayment of Rs 100 Crore bonds and to meet working capital requirement, it is proposed to dispose of 8 Acre of temporary township land at Panvel, with the approval from the Govt of Maharashtra and Govt of India.

In connection with investment in future expansion plans, it is proposed to dispose of 50 acres of land at Rasayani.

Kochi Unit

HOCL Kochi Unit is using LSFO as fuel for boilers, Hot oil furnace and CPP. GAIL has laid pipeline network for the supply of gas and have already installed the metering station for LNG in HOCL premises. Kochi Unit has modifi ed its burner and other accessories in boiler, hot oil unit to suit LNG and LSFO (duel fi red) during the annual shutdown in the month of June''2013.The supply of LNG is expected to commence from September 2013. The replacement of LSFO by LNG as a fuel will give substantial cost reduction and savings to the company. The estimated annual saving on expenditure is Rs. 10 crore per annum.

The de-bottlenecking of Hydrogen peroxide plant at Kochi has been completed at the cost of Rs. 2 crores, which will increase the production capacity of the plant by 4000 MTPA (40% increase) and increase in turnover by Rs. 12 crores.

ENERGY CONSERVATION/TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information in accordance with the provisions required to be disclosed under Section 217(2)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo, are given at Annexure II to this Report. RESEARCH & DEVELOPMENT

Our R&D efforts for the ''in-house'' development vapour phase continuous process for ISRO-specifi c grade kerosene by name ''ISROSENE'' have succeeded in scale up of the laboratory scale process (developed during the previous year) to the pilot plant (HOC''s multi-purpose pilot plant) scale. Initial runs and samples from the same meet the desired specifi cation. Further runs to establish the plant scale process Parameters are also successful. Optimization of the same is being done to establish technology for commercial scale implementation. Two nos. of Indian patents have been granted to our Company in the area of Intellectual Property Rights (IPR). We earned a royalty of Rs. 11.5 lakhs based on the MOU for joint technological development of improved chrome- free copper oxide catalyst, with M/s Sud - Cheme (I) Pvt. Ltd.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:

Human Resource is a vital resource and Company has recognized the importance of the same. To meet the challenges of global competitive environment, the Company is up grading the skills of their employees by systematically identifying training need of employees. Accordingly, Company is arranging in house training programmes at its Training Centre and also sponsoring employees for outside training programmes. The position relating to SC/ST/Women personnel in the Company is given in Annexure - III to the Directors'' Report.

II. Training:

Training were imparted to employees based on operational requirement/needs identifi cations with the allocated resources to enhance Soft Skills, Technical and Managerial Skills. Due importance was given and constant efforts were made to impart Health, Safety and Environment aspects considering the nature of hazards in our Unit. During 2012-13 we have organized training programmes both Internal/External covering 505 mandays with the help of Internal/External Experts. Specifi c user training in functional module of ERP was also imparted to the employees so as to make the SAP system more user friendly. Regular refresher course in Safety and Environmental Management were organized.

Apart from employees training our Company has extended the facilities and resources to students coming from different Engineering Colleges, Management Institutions to enhance their practical knowledge/for experiential learning. Company also enages Graduate/Technical/Trade/Vocational Apprentices to undergo Apprenticeship Training in different discipline under the Apprentices Act 1961.

III. Industrial Relations :

By and large the climate of harmonious and cordial Industrial Relations was maintained in the Company throughout the year.

IV. Suggestion Scheme:

The Suggestion Scheme is in existence in the Company. All employees and Company Trainees are eligible to participate in this scheme. The Suggestions received from the employees are evaluated by a Suggestion Committee and the selected suggestions are awarded with Cash Prizes also.

CORPORATE SOCIAL RESPONSIBILITY

Company since its inception is very much aware about its social responsibility. For over fi ve decades , as a socially responsible and sensitive corporate, your Company continuous to remain committed to social thought and action to serve society. Company has provided basic civic amenities to the neighbouring villages, rendered assistance in different forms, drinking water, etc. Company has also undertaken tree plantation programme in the surrounding area. Company is also giving medicines to the needy poor persons in and around the area through Dr. Kasbekar Memorial Trust.

To promote the School education, Company is giving scholarship to SC/ST students studying in X and XIIth Stds.

Company has also constructed and maintained a hall in the name of Bharatratna Dr. Babasaheb Ambedkar with a view to provide a platform for discussion/ seminar/symposiums on principles/ teaching of Dr. Babasaheb Ambedkar.

Kochi Unit has donated Rain Coats to Ambalamedu Police Station for the use of Police personnel.

During the current year under review, as per Department of Public Enterprise (DPE)

Guideline on Corporate Social Responsibility (CSR), Company has constituted Board level Corporate Social Responsibility (CSR) and Sustainability (SD) Committee comprising of Independent Director & other two Directors from the Board of the Company.

The terms of reference of the said CSR&SD Committee included among others set up of the Committee with existence of the two tier organization structure with mandatory membership of an Independent Director on the Board level committee, frequency of meeting, range of decision, staff / stakeholder involvement etc.

PARTICULARS OF EMPLOYEES - INFORMATION REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 .

No employee of the Company has drawn the remuneration during the year 2012-13 or any part thereof, in excess of the limits specifi ed under the Company''s (Particulars of Employees) Rules 1975.

Accordingly particulars of employees'' remuneration prescribed u/sec 217 (2A) of the Companies Act, 1956 are not furnished.

VIGILANCE

The Vigilance Department, headed by Chief Vigilance Offi cer, appointed by Government of India on deputation, has three main functional offi cers, one each at Rasayani (Raigad) in Maharashtra, and at Ambalamugal (Kochi) in Kerala and third at Corporate offi ce, Mumbai. Keeping in view of the Principles of Corporate Governance, the main focus of the Vigilance Department has been to help the sincere, dedicated and honest personnel working in the Organization to discharge their duties effectively and effi ciently so that the target of optimum turnover and profi tability are achieved in a transparent manner. More emphasis is given in improving the functioning of all sections and maintaining transparency.

The Vigilance department takes appropriate and timely action in respect of complaints received. There is a comprehensive complaint handling policy and prescribed punitive action is duly suggested, after conducting fair and impartial investigation/enquiry, where ever required. The Annual Property Returns of the offi cers are periodically scrutinized and inspection of departmental activities are undertaken to detect deviations, if any and suggest corrective measures. Vigilance Awareness Programmes, as per guidelines issued by the CVC, are observed and awareness sessions are conducted for the personnel regarding vigilance related matters as well as in respect of CDA Rules, RTI Act, PIDPI (Whistle Blowers Act) etc. The vigilance department has been instrumental in updating the existing manuals and policies i.e. the Purchase Policy, the Works Policy, the Marketing Manual, the Vigilance manual etc., so that the laid down procedures, policies, rules, regulations etc., of the Company and that of Central Vigilance Commission are duly followed.

The Vigilance Department maintains close interaction with CVC, CBI and other Government agencies. The Vigilance wing has been sincerely and consistently helping all personnel of the Organization in improving their effi ciency and effectiveness and, in turn, achieving the set goals of the Organization.

HEALTH, ENVIRONMENT, FIRE & SAFETY Health :

- Physical Check-up, the Special Certifi cate of Fitness in Form No. 23 and ascertaining Health Status in Form No. 7 of all employees have been carried out by the Certifying Surgeon for the year 2012.

- Periodic Medical Check-up of all employees as well as various health awareness training programmes were carried out by specialist doctors for the benefi t of employees.

- No Complains are noticed among the employees working in the various plants.

Environment, Fire & Safety :

Revenue generation by Health and Hygiene department giving analytical support and technical support to nearby industries, as well as miscellaneous income amounting to total Rs. 5.36 lakhs.

- Our Laboratory is recognized by CPCB, undertaken outside samples analysis for physical and chemical parameter on chargeable basis generating a revenue to the tune of Rs.1 lakh.

- To ascertain that the level of pollutants are maintained within acceptable limits, ambient air quality monitoring, Stack emissions, Noise monitoring, workplace monitoring & analysis of inorganic and organic chemicals is being carried out a various locations in plants and in other locations.

- Testing of Flammable gases for issue of hot permit under safety policy.

The Company pays special attention to ensure safety of the factory and workers employed therein.

The Company accords the same priority attention to safety aspects as it does to production and productivity, be it in a personal safety, process safety, environmental safety or product stewardship and allocated adequate resources of men, machine, money, time and energy to maintain the standards. Thus performance during the year is very good.

The company continued to maintain good safety record without any major accident or Fire. Consistent safety training, safety audit, safety inspection and Hazop studies were performed to keep the safety standard high. The company is taking active participation in Off-site Emergency drills, Local and District Crisis group activities. In order to augment our fi re fi ghting capacity, mutual and scheme for emergency help between HOCL, BPCL- KR & FACT (CD) is in existence.

HOC is a signatory to "Responsible Care" movement. We are committed to the concept of self-realization and improvement in all aspects of safety.

Emergency Response Centre (ERC), a voluntary commitment undertaken by Rasayani unit to tackle emergencies arising out of road transportation of hazardous chemicals is functioning quite well and this effort is acknowledged by general public as well as government authorities.

Our employees have bagged maximum awards in zonal level safety competitions. HOC is a major contributor to Mutual aid Response Group - Khopoli, Rasayani, Patalganga zone (MARG-KRAPA).

The Company has made it mandatory to have fi re and safety training for all employees.

HOCL Kochi unit could maintain the quality of treated effl uent, stack emission and ambient air quality well within the limits stipulated by statutory authorities throughout the year.

HOC Kochi unit received pollution control award among very large scale industries from Kerala State Pollution Control Board for substantial and sustained efforts in pollution control in 2012.

The following improvements carried out in the fi eld of environment control.

a) Dewatering system is installed in effl uent treatment plant for fi ltering excess biological sludge bleed off from the system.

b) Installed system hardware at our main control room with software for online transmission of treated effl uent pH analyser data to KSPCB / CPCB server.

c) Recorders in effl uent treatment plant are changed to paperless recorder system. It help to retrieve the old data.

d) Level instruments with recorder is provided for Mixing Tank and Raw Effl uent Sump at ETP control room for better process control in ETP.

HOC Kochi unit received safety awards from Dept. of Factories & Boilers, Govt. of Kerala for outstanding performance in industrial safety for the year 2012.

Security System :

Kochi Unit of HOCL has been classifi ed as ''MAJOR ACCIDENT HAZARD INSTALLATION'' by the Govt. of Kerala. The security requirements are met from the agencies sponsored by the Director General (re-settlement), Ministry of Defense, Govt. of India. Security Guard are posted in the identifi ed areas inside the Factory premises and also in Township round the clock.

In view of the increased threat perception in Kochi, the Unit has been advised to take suitable measures for upgrading the security by the concerned authorities. Action is being taken to upgrade the present security system.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY .

During the year, your Company continued its intensive and extensive efforts for progressive use of the offi cial language. To promote Hindi as offi cial language is day to day working in line with the Government policies, Offi cial Language Implementation Cell of the Company continued to function effectively. Various cash incentive schemes have been introduced in the Company. Hindi workshops are being conducted regularly. Offi cial Language Implementation Committee meetings are arranged every quarter. Comprehensive programme like Hindi FORTNIGHT was organized at both Rasayani & Kochi units and the Corporate Offi ce in Mumbai during Sept. 2012. Several periodical meetings, training programmes, workshops, essay writing, noting & drafting, Hind Typing, Quiz Recitation, Word formation, Passage etc. Competitions were organized to progress the use of Hindi. Rasayani unit received a symbol for the best Hindi work done in year 2011-12 on "B" Region on behalf of Hindi advisory committee of Parliament. Kochi Unit received fi rst prize for the best implementation of Offi cial Language from Kochi Town Offi cial Language Implementation Committee.

1) All documents coming Under Sec. 3(3) of the Offi cial Language Act, 1963 are issued in bilingual form.

2) The Hindi letters received are being replied in Hindi to comply with the rule 5 of Offi cial Language Rules 1976. All nameplates, Sign Board, Visiting Cards, Demi- Offi cial letters heads are prepared is bilingual form.

3) Web site of the Company is prepared to Hindi also www.hocl.hindi.gov.in

4) Every day one bilingual word being exhibited in the pest Board.

Every year effort are made to fulfi ll the targets set in the Annual programme issued by Department of Offi cial Language Ministry of Home Affairs.

ISO CERTIFICATION :

HOCL, Rasayani Unit, has been awarded ISO-9001:2008 certifi cate on 11.01.2011. This certifi cate has been awarded by M/s Bureau Veritas Certifi cation (India) Pvt. Ltd. and is valid till 9/02/2014.

Second Surveillance Audit was carried out under ISO-9001:2008 standard on 24th & 25th January, 2013 by M/s. BVCI.

HOCL Kochi unit is an ISO 9001: 2008 (Quality Management System) and ISO 14001:

2004 (Environmental Management System) certifi ed company. The existing certifi cate for ISO 9001 & ISO 14001 is valid up to 2014.

BVCI Conducted routine surveillance audit periodically for both the systems.

INSURANCE

All properties and insurable interest of the Company including building, plant and machinery and goods are adequately insured. As required under Public liability Insurance Act, 1991 the company has taken necessary insurance cover.

FIXED DEPOSITS

With regard to Fixed Deposits, nothing is outstanding towards FDR for the Financial Year 2012-13.

DEPOSITORY SYSTEM

As the members are aware your company''s shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the enormous advantages offered by the Depository system, Members are requested to avail the facility of dematerialisation of the Company''s shares on either of the depositories as aforesaid.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the listing agreement, the Management Discussion and Analysis Report is annexed hereto in Annexure V and forms part of the Directors'' Report.

CORPORATE GOVERNANCE

The Company has complied with the various requirements of Corporate Governance. The details in this regard form part of this report in Annexure VI.

RESPONSIBILITY STATEMENT

The Directors confi rm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) that they have selected such accounting policies and applied them 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 at the end of the fi nancial year and of the profi t or loss of the company for that period;

c) that they have taken proper and suffi cient 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;

d) that they have prepared the annual accounts on a going concern basis.

HINDUSTAN FLUOROCARBONS LIMITED: (Subsidiary)

OPERATION AND OVERALL PRODUCTION AND MARKETING PERFORMANCE:

During the year, the sales turnover (net) was Rs.4080.31 lacs as against Rs.6282.93 lacs in the previous year. During the year under report production of PTFE was 154.78 Metric Tons as against 143.83 Metric Tons in the previous year. During the year, 244.73 Metric Tons of CFM-22 was sold in the market against 291.77 Metric Tons in the previous year and balance quantity was used as feed stock to manufacture various products including Fluoro Specialty Chemicals. Accordingly, during the year 156.14 Metric Tons of Tetra Fluoro Etylene (TFE) was used to manufacture TFE-ETHER. Quality of all company''s products continued to be well accepted by our customers. Company has achieved 82% capacity utilization for CFM-22 for this year.

CLEAN DEVELOPMENT MECHANISM (CDM):

Company has received payment of second and Third issuance during the fi nancial year.

Main customer for CERs was European Union, but due to various reasons they have banned the trading of CERs generated from R-23 Project.

Hence it is not economically viable to generate CER from R-23 Project.

The Statement Pursuant to Sec. 212 of the Companies Act, 1956 is given in Annexure I.

AUDITORS

In terms of provisions of Section 619(2) of the Companies Act,1956, the Comptroller & Auditor General of India, under its letter No.CA. V/COY/CENTRAL GOVT,HOCL(2)/76 dated 27/7/2012 has appointed M/s FORD RHODES PARKS & CO, Chartered Accountants, Mumbai as Auditors of the Company to audit the accounts of the Rasayani unit and to audit the consolidated accounts of the company. Vide CAG under its letter No.CA. V/COY/CENTRAL GOVTHOCL (2)/76 dated 27/7/2012 has appointed M/s SASI VIJAYAN & RAJAN, Cochin as Branch Auditors to audit the accounts of Cochin unit for the year ended 31st March, 2013.

The remarks of the Board of Directors on the Auditors'' Report to the members are furnished in Annexure IV

The report of the Comptroller & Auditor General of India under section 619(4) of the Companies Act, 1956, on the Accounts of the Company for 2012-13 is annexed to the Statutory Auditors'' Report in the Annual Report.

Pursuant to directions from the Ministry of Company Affairs for appointment of Cost Auditors, Board of Directors of the company appointed M/s VJ.Talati & Co. as the Cost Auditors of Rasayani Unit and also as Lead Auditors for the Year 2012-2013 for cost audit of Company''s Sulphuric Acid, Aniline, Formaldehyde, Caustic Soda, Nitro Benzene products (of Rasayani unit) and M/s Panikar & Company as cost Auditors of Kochi Unit for the year 2012-13 for Kochi Unit products viz. Phenol, Acetone & Polypropylene products .

DIRECTORS

Recently during the current FY 2013-14, during June, 2013, the Government of India, vide its Order ( GOI Order No. P 51011/8/2012-32-CH.III ) dated 13th June, 2013 has appointed Shri. V.B. Ramachandran Nair, Chief General Manager, HOCL as Chairman- cum- Managing Director (CMD), on the Board of HOCL. Shri. V.B. Ramachandran Nair, has assumed charge (from Shri J.N.Suryawanshi, DM&ACMD) on 17/6/2013 (FN.) for the period of fi ve years or till the date of superannuation or till further orders, whichever is earlier.

Earlier, on 30-04-2013, Shri R.N. Madangeri , Chairman & Managing Director, HOCL was retired on superannuation from the services of the Company in terms of GOI''s Order(of 9th June, 2011) and Shri. J.N. Suryawanshi, Director (Marketing) HOCL held the additional charge of Chairman & Managing Director, in addition to his duties & responsibilities as Director (Marketing), as per GOI Order No. P.51011/01/2013-32-Ch-III dated 30/4/2013 upto 17-06-2013.(Forenoon).

Further, GOI has appointed also Shri. V.K. Subburaj, Additional Secretary & Financial Advisor in the Ministry of Chemicals & Fertilizers as part-time Government Director in place of Dr. V. Rajagopalan, SS&FA, on the Board of HOCL, vide GOI Order No. 51/11/95-Ch-III-(Vol.II) dated 14th May, 2013.

During the previous year, during April, 2012 GOI has appointed [vide its Order dated 9th April, 2012] Dr. N.J. Gaikwad from Nagpur, as Non offi cial part time Director on the Board of HOCL who took the charge on 22nd May, 2012.

Further, in the same year 2012, GOI has appointed Director Shri Suresh Kumar R. , {ex GM(Fin.)Kochi Unit] as Director (Finance) on the Board of HOCL( vide GOI Order No. 51/18/2011-Ch-III dated 11th May, 2012) w.e.f.11-05-2012. And GOI has GOI has also appointed Shri S.B. Bhide, Chief General Manager, as Director (Technical) on the Board of HOCL [vide GOI Order No. 51/14/2011-Ch-III dated 14th June, 2012] w.e.f.14-06-2012.

In terms of Article 76(4) of the Articles of the Association of the Company, Government Nominee Directors, viz. Shri V.K. Subburaj, Additional Secretary & Financial Advisor and Dr. A.J.V.Prasad, Joint Secretary, will retire at this 52nd AGM in 2013 and are eligible for reappointment. Company has placed its request letter to the Government for reappointing Shri V.K. Subburaj AS&FA and Dr. A.J. V.Prasad , JS from the ensuing 52nd AGM of 2013 and till the holding of the next A.G.M. of the Company to be held in 2014 or till further Orders(which ever is earlier as per GOI Order).

ACKNOWLEDGMENT

Your Directors gratefully acknowledge the valuable guidance, support and directions given by the Government of India. Your Directors also gratefully acknowledge the support and co-operation extended by the State Governments, by the valued and esteemed customers, shareholders, suppliers, bankers, Statutory/Internal/Cost and Tax Auditors, Bondholders, and Investors at large.

Your Directors place on record their appreciation for the whole hearted efforts and contribution from all the employees and also acknowledge the support and co-operation of the entire Workers'' Unions and Employees'' Unions and their members for the smooth functioning of the Company''s operations.



For and on behalf of the Board

of Directors of Hindustan Organic Chemicals Limited,



Sd/-

Place : Mumbai V.B. Ramachandran Nair

Date : 05/08/2013 Chairman & Managing Director


Mar 31, 2012

To the Members of HINDUSTAN ORGANIC CHEMICALS LIMITED

Dear Shareholders

The Directors are pleased to present the 51st Annual Report and the Audited Annual Accounts of the Company for the financial year ended 31st March, 2012.

The financial performance of the Company for the year ended March 31, 2012 is summarized below: (Rs.in Lacs)

Year ended Year ended 31/03/2012 31/03/2011

Sales 60636.71 73803.91

Operating Profit/(Loss) (2,801.42) 7285.91

Less: Interest 2373.78 2138.86

Depreciation 2304.51 2517.74

Profit/(Loss) before tax (7,479.71) 2629.31

Less: Provision for taxation - -

Less: Prior Period adjustments & Exceptional Items (327.14) 57.72

Profit/(Loss) after tax & Prior period adjustments, Provisions and Exceptional Items. (7,806.86) 2571.59

Results of Operations

During the year under review the Company was under Net loss of Rs. 78.07 crores, while the Net profit during the previous year was Rs. 25.72 crores .

As regards the unit wise performance, the Net Profit of Kochi Unit was Rs.26.02 crores which was much lesser as compared to the previous year's profit of Rs.130.08 crores. The Rasayani Unit recorded a Net Loss of Rs. 104.10 crores as compared with the previous year's loss of Rs. 104.37 crores.

Reporting to BIFR under SIC(SP)Act, 1985 .

In view of the fact that as on 31-03-2012 as the Company's Accumulated Losses have resulted into erosion of more than 50% of the Peak net worth (of the immediately preceding 4 years), Company is taking necessary steps under Section 23(c) of SIC (SP)Act,1985.

OPERATIONS :

During the year under report your company's Kochi unit achieved a sales turnover of 64298 MTs valuing 43200 Lacs as against 84082 MTs valuing 58120 Lacs of the previous year.

With the production of 178792 MTs during the year 2011-12 as against the production of 251007 MTs in 2010-11, your company could achieve an overall capacity utilization of 42% during the year. Your company has recorded the sale of 115566 MTs during the year (previous year 145173 MTs) valuing Rs.54827 lacs ( previous year Rs. 66736 lacs).

The high labour cost and high incidence of cost on closed plants at Rasayani Unit are the major concerns . Company decided to operate those plants which are giving contribution. Your company has continued its cost cutting measures to counter these problems and in order to be competitive and improve performance and profitability.

PRODUCTION :

Kochi Unit:

During the year your company's Kochi unit could achieve 126076 MTs of production as against the previous year's production of 167886 MTs. The capacity utilization for the year was 82 %. Rasayani Unit:

During the year your company's Rasayani unit could achieve 52716 MTs of production as against the previous year's production of 66798 MTs. The capacity utilization for the year was 27 %.

MARKETING :

In the highly volatile chemical market, sluggish demand & stiff competition from import of HOC's main products, during the Year 2011-12, Company has achieved the sales turnover of Rs. 548.27 Crores (net of excise duty) as against Rs. 667.36 crores (net of excise duty) of the previous year(2010-11) . The sale value achieved because of continued support from its valuable customers and due to excellent quality products produced at Kochi and Rasayani Units. The sales volume during year 2011-12 was 1,15,566 MTs against 1,45,173.65 MTs for the year 2010-11. STATUS OF OPERATIONS AND FUTURE PLANS Refurbishment of CNA/N2O4 Plant - Ph. II is in progress with implementation of new DCS and will be completed during F.Y.2012-13.

Hydrogen Peroxide Plant capacity will be enhanced to the targeted capacity of 14,000MT/p.a. from installed capacity of 10450MT/p.a. by carrying out in house de-bottlenecking.

ENERGY CONSERVATION/TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information in accordance with the provisions required to be disclosed under Section 217(2)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo, are given at Annexure II to this Report. RESEARCH & DEVELOPMENT

R&D efforts this year too have continued in the IPR (Intellectual Property Rights) portfolio as regards filing of new patents is concerned. Three numbers of Indian Patents were granted this year. After successful laboratory scale development of vapour phase continuous process for ISRo specific grade kerosene fuel, pilot plant scale study is being started. Various process parameter are being correlated by a model.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:

Our strength is our Human Resource. The Company continues to recognize that human asset is very much valuable for the continual improvements in the performance of the company, particularly in the context of competition all around. The company greatly values their contribution and dedication and is committed to the development and growth of this vital resource. In order to attain the twin objective of reducing manpower and restructuring of human resources for optimum utilization of available man power. Company continues to implement Government Policy of Reservation for SC/ST and other categories. The position relating to SC/ST/Women personnel in the Company is given in Annexure - III to the Directors' Report.

II. Training

A developed human resource is an asset for the enterprise. Company gives utmost importance to enhance the skills of our employees through Training & Development Programmes. Training is imparted based on identification of Training Needs in areas such as Safety, Advanced Technology, Modern Management Techniques, Soft Skills, Energy and Environment Management Systems, First Aid, Participative Management and Workers Education, Information Technology etc. During the Financial Year 2011 - 2012 at Kochi Unit, Company has organised various Training Programmes both Inhouse and External covering 537 mandays with the help of External/Internal Experts based on requirement and identification of Training Needs. At Rasayani Unit, In house as well as outside training programs have been arranged for the benefit of the employees. During the year 2011-2012, in all 74 training programs were conducted,1239 mandays were trained through inhouse training programs, 356 mandays were trained by sponsorship i.e. outside training and 248 mandays were trained through on job training. Thus, total 1843 mandays were trained during the year.

As part of the implementation of ERP in HOCL at Kochi Unit much emphasis was given in imparting training to the employees. ERP training imparted in various levels, that is Core Committee Training, Steering Committee Training and Functional Heads Training and Core User Training. Training was imparted in general as well as for the Core functionalities, Usage of Employees Self Service etc. End user training on different modules are also imparted so as to keep the system more user friendly.

Regular Refresher courses were arranged in Safety & ISO implementations. First Aid Recertification course was also arranged during this year.

Considering the importance of Energy conservation, training on Energy conservation by experienced faculty members from Petroleum Conservation Research Association Mumbai was conducted.

In Chemical Industry, First Aid training to the employees is of prime importance in safety point of view. Accordingly, 75 employees at Rasayani Unit were trained by Life Line Institute of First Aid &Emergency Medicine, Thane, Mumbai.

III.Industrial Relations

By and large the climate of harmonious and cordial industrial relation was maintained in the Company throughout the year.

IV. Suggestion Scheme

The Suggestion Scheme is in existence in the Company. All employees in the Company are eligible to participate in this scheme. The Suggestions received from the employees are evaluated by a Suggestion Committee and the selected suggestions are awarded with Cash Prizes ranging from Rs.100/ - to Rs. 5000/- CORPORATE SOCIAL RESPONSIBILITY The company is very much conscious about its social responsibility, right from its inception. To fulfill this, company has provided basic civic amenities to the neighboring villages, rendering assistance to the neighborhood in different forms viz. Financial assistance, drinking water supply, medicine, etc.

To promote school education, company is giving scholarship to X and XII Std. Students. Company extends need based assistance to deserving SC/ST students in the nearby villages of their graduate education. Company also extends vocational training facilities to the wards of employees studying in nearby engineering colleges/ and Management institutes for enhancing their practical knowledge. Company also engages diploma (sandwich course) apprentices as a part of their curriculum for imparting practical training.

Company has also constructed and maintained a hall in the name of Bharatratna Dr. Babasaheb Ambedkar with a view to provide a platform for discussion / seminars/ symposiums on principles / teachings of Dr. Babasaheb Ambedkar.

HOCL, Kochi Unit has sponsored Medical Equipments to Govt. Taluk Headquarters Hospital, Tripunithura at a total cost of Rs.8,70,000/-. Kochi Unit has donated Rain Coats to Ambalamedu Police Station for the use of Police Personnel and Uniforms to the poor students of Mar Athanesius High School, Kakkanad .

PARTICULARS OF EMPLOYEES - INFORMATION REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956

No employee of the Company has drawn the remuneration during the year 2011-12 or any part thereof, in excess of the limits specified under the Company's (Particulars of Employees) Rules 1975.

Accordingly particulars of employees' remuneration prescribed u/sec 217 (2A) of the Companies Act, 1956 are not furnished.

VIGILANCE

The Vigilance Department, headed by Chief Vigilance Officer, appointed by Government of India on deputation, has three main functional Offices, one at Rasayani (Raigad) in Maharashtra, and at Ambalamugal (Kochi) in Kerala and another at Corporate office, Mumbai. Keeping in view of the Principles of Corporate Governance, the main focus of the Vigilance department has been to help the sincere, dedicated and honest personnel working in the Organization to discharge their duties effectively and efficiently so that the target of optimum turnover and profitability are achieved in a transparent manner. More emphasis is given in improving the functioning of all sections and maintaining transparency.

The Vigilance department takes appropriate and timely action in respect of complaints received. There is a comprehensive complaint handling policy and prescribed punitive action is duly suggested, after conducting fair and impartial investigation/ enquiry, where ever required. The Annual Property Returns of the Officers are periodically scrutinized and inspection of departmental activities are undertaken to detect deviations, if any, and suggest corrective measures. Various Vigilance Awareness Programmes, as per guidelines issued by the CVC, are observed and awareness sessions are conducted for the personnel regarding vigilance related matters as well as in respect of CDA Rules, RTI Act, PIDPI (Whistle Blowers Act) etc. from time to time. The vigilance department has been instrumental in updating the existing manuals and policies i.e. the Purchase Policy, the Works Policy, the Marketing Manual, the Vigilance Manual etc., so that the laid down procedures, policies, rules, regulations etc., of the Company and that of the Central Vigilance Commission are duly followed.

HEALTH, ENVIRONMENT, FIRE & SAFETY Health :

- Based on the toxicity of chemicals periodic medical examination of all the employees is carried out by doctors specially trained in occupational health and hygiene at Company's Health Centers at both the units.

- Various health awareness training programs were carried out by specialist doctors (both external and internal) for the benefit of employees. Large number of employees attended the same.

Environment, Fire & Safety:

The Company pays special attention to ensure safety of the factory and workers employed therein.

The Company accords the same priority attention to safety aspects as it does to production and productivity, be it in a personal safety, process safety, environmental safety or product stewardship and allocated adequate resources of men, machine, money, time and energy to maintain the standards. Thus performance during the year is very good. During the year under review, Company has Nil reportable accidents.

The company continued to maintain good safety record without any major accident of Fire. Consistent safety training, safety audit, safety inspection and Hazop studies were performed to keep the safety standard high. The company is taking active participation in Off-site Emergency drills, Local and District Crisis group activities. In order to augment our fire fighting capacity, mutual aid scheme for emergency help between HOCL, BPCL - KR & FACT (CD) is in existence.

HOC is a signatory to "Responsible Care" movement. We are committed to the concept of self-realization and improvement in all aspects of safety.

Emergency Response Centre (ERC), a voluntary commitment undertaken by Rasayani unit to tackle emergencies arising out of road transportation of hazardous chemicals is functioning quite well and this effort is acknowledged by general public as well as government authorities.

Our employees have bagged maximum awards in zonal level safety competitions. HOC is a major contributor to Mutual aid Response Group - Khopoli, Rasayani, Patalganga zone (MARG-KRAPA). HOCL Kochi unit could maintain the quality of treated effluent, stack emission and ambient air quality well with in the limits stipulated by statutory authorities through out the year.

HOC Kochi unit received safety awards from Dept. of Factories & Boilers, Govt. of Kerala for outstanding performance in industrial safety for the year 2011.

The Company has made it mandatory to have fire and safety training for all employees.

ISO CERTIFICATION :

HOCL, Rasayani Unit, has been awarded ISO-9001:2008 certificate on 11.01.2011. This certificate has been awarded by M/s Bureau Veritas Certification (India) Pvt. Ltd. and is valid till 9/02/2014.

First Surveillance Audit was carried out under ISO-9001:2008 standard on 10th & 11th January, 2012 by M/s. BVCI.

HOC Kochi unit is an ISO 9001: 2008 (Quality Management System) and ISO 14001: 2004 (Environmental Management System) certified unit.

BVCI conducted recertification audit of ISO 9001: 2008 and recertification is valid up to 18th June 2014.

BVCI recertified HOC Kochi unit for ISO 14001:2004, Environmental Management System and certificate is valid up to 19th November 2014.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

In compliance of section 3(3) of the Official Language Act, 1963 and Official Language Rules 1976 framed thereunder, Company has implemented various measures effectively given in the annual programme for 2011-12. All documents coming under Section 3(3) like Part I Orders, Part II Orders, Circulars, Administrative and other Records, Press-Release etc. were issued bilingually. All Hindi Letters were answered in Hindi only. Our Company participated in all the programmes organized by Mumbai Town Official Language Implementation Committee.

To comply with the provision of Official Language Act 1963 and Rules there under we have implemented various items at both Units as per the Annual Program for the year 2011-12

1. The Hindi letters received are being replied in Hindi to comply with the rule 5 of Official Language Rules 1976. All name plates, Sign Boards, Visiting Cards, daily Official Letters and letter heads are prepared in Bilingual form. All documents that are issued under rule 3(3) of Official Language Act 1963 are prepared in bilingual form.

2. Cash Incentive scheme for doing original work in Hindi is existing in our Units and during September 2010 to August 2011-12 employees have received the incentive. To improve the Hindi word power of the employees, one bilingual word is being exhibited in the presto board kept in the reception and the list of the same is being circulated in the end of the month.

3. To comply with the Official Language Policy of the Government, Workshops on Official language are regularly conducted for the employees who possess working knowledge in Hindi so as to encourage them to use Hindi in their day to day office work. 5 workshops and One Unicode training were conducted during the period under report.

4. Kochi Unit received Third Prize for Best Implementation of OL from Kochi Town Official Language Implementation Committee.

5. Hindi Fortnight was organized at both Rasayani and Kochi Units and in the Corporate Office in Mumbai from 14th September, 2011 to 28th September, 2011. During this period various competitions were organized. Employees were actively participated in these competitions.

6. Efforts are being made to fulfil the target set in the Annual Programme issued by Department of Official Language, Ministry of Home Affairs. CMD has himself participated in the Hindi Salahakar Committee Meeting of the Chemicals & Fertilizers Ministry in the year 2011.

7. A five days Hindi Translation Training programme was organized with the help of HTS Mumbai. For the progressive use of Information Technology through medium of Hindi all the computers are being loaded with Unicode.

INSURANCE

All properties and insurable interest of the Company including building, plant and machinery and goods are adequately insured. As required under Public liability Insurance Act, 1991 the company has taken necessary insurance cover.

FIXED DEPOSITS

With regard to Fixed Deposits, nothing is outstanding towards Fixed Deposits for the Financial Year 2011-12.

DEPOSITORY SYSTEM

As the members are aware your company's shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the enormous advantages offered by the Depository system, Members are requested to avail the facility of dematerialisation of the Company's shares on either of the depositories as aforesaid.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the listing agreement, the Management Discussion and Analysis Report is annexed hereto in Annexure V and forms part of the Directors' Report.

CORPORATE GOVERNANCE

The Company has complied with the various requirements of Corporate Governance. The details in this regard form part of this report in Annexure VI.

RESPONSIBILITY STATEMENT

The Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) that they have selected such accounting policies and applied them 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 at the end of the financial year and of the profit or loss of the company for that period;

c) that they 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;

d) that they have prepared the annual accounts on a going concern basis.

HINDUSTAN FLUOROCARBONS LIMITED :

(Subsidiary).

OPERATION AND OVERALL PRODUCTION AND MARKETING PERFORMANCE:

During the year, the sales turnover was Rs.4557.30 lacs as against Rs.3039.38 lacs in the previous year. During the year under report production of PTFE was 139.19 MTs as against 124.58 MTs in the previous year. During the year, 291.77 MTs of CFM-22 was sold in the market and balance quantity was used as feed stock to manufacture various products including Fluoro Specialty Chemicals. Accordingly, during the year 265.17 MTs of Tetra Fluoro Etylene (TFE) was used to manufacture TFE-ETHER. Quality of company's all products continued to be well accepted by the customers. Company has achieved 100% capacity utilization consecutively for this year also and produced 1265 MTs. This will enhance revenue earning from CDM for the next year.

CLEAN DEVELOPMENT MECHANISM (CDM):

Company has successfully implemented the CDM Project and earned Rs.17.47 Crore against first issuance. It is expected that during the financial year 2012-13 also, company will get CDM Income.

The Statement Pursuant to Sec. 212 of the Companies Act, 1956 is given in Annexure I.

AUDITORS

In terms of provisions of Section 619(2) of the Companies Act,1956, the Comptroller & Auditor General of India, under its letter No. CA V/COY/CENTRAL G0VT,H0CL(2)/102 dated 18/ 8/2011 has appointed M/s FORD RHODES PARKS & CO, Chartered Accountants, Mumbai as Auditors of the Company to audit the accounts of the Rasayani unit and to audit the consolidated accounts of the company. Further, C&AG under its letter No. CA V/COY/CENTRAL GOVT.HOCL (2)/102 dated 18/ 8/2011 has appointed M/s SASI VIJAYAN & RAJAN, Cochin as Branch Auditors to audit the accounts of Cochin unit for the year ended 31st March, 2012.

The remarks of the Board of Directors on the Auditors' Report to the members are furnished in Annexure IV.

The report of the Comptroller & Auditor General of India under section 619(4) of the Companies Act, 1956, on the Accounts of the Company for 2011-12 is annexed to the Statutory Auditors' Report in the Annual Report.

Pursuant to directions from the Ministry of Company Affairs for appointment of Cost Auditors, Board of Directors of the company appointed M/s V.J.Talati & Co. as the Cost Auditors of Rasayani Unit for 2011-2012 for Sulphuric Acid, Aniline, Formaldehyde, Caustic Soda, Nitro Benzene Products and M/s Panikar & Company as cost Auditors of Kochi Unit for the year 2011-12 for Phenol, Acetone & Polypropylene products .

DIRECTORS

The Tenure of all the Independent Directors had expired in the previous year and as no fresh appointment by the Government of new Independent Directors has been received by the Company, as on 31st March, 2012, there are no Non Official Independent Directors [NOIDs] on the Board of HOCL. However, during May, 2012, Company has received an order from the Govt. of India appointing Dr, N.J.Gaikwad from Nagpur, as Non official part time Director on the Board. We are awaiting the appointment of 4/5 Independent Directors from GOI.

The GOI has appointed vide GOI Order No. 51/05/2009-Ch-III dated 30th April, 2011, Shri J.N. Suryawanshi, CGM(Marketing) HOCL as Director Marketing, HOCL w.e.f. 30th April, 2011, the date of Assumption of Charge.

GOI has appointed Director Shri Suresh Kumar R. , General Manager (Finance), HOCL as Director (Finance) on the Board of HOCL vide GOI Order No. 51/18/2011-Ch-III dated 11th May, 2012 w.e.f.11-05-2012.

GOI has appointed Dr. N.J.Gaikwad, Professor &Head,Deptt. Dept. of Pharmaceutical Science, Rashtrasant Tukadoji Maharaj Nagpur University, for second term as part time non official Director on the Board of HOCL (from the date of assumption of the the charge i.e. from 22nd May, 2012 ) , vide GOI Order No. P.51/011/1/2012-32-Ch-III dated 9th April, 2012.

GOI has appointed Shri S.B. Bhide, Chief General Manager, HOCL as Director (Technical) on the Board of HOCL vide GOI Order No. 51/14/2011-Ch-III dated 14th June, 2012 w.e.f.14-06- 2012.

During the Year, Shri M.K.Mittal has relinquished the charge as Director (Finance), in HOCL on 28th July, 2011,(AN) to enable him to repatriate to his parent Organisation viz. REC Ltd.

With the above position of the Composition of the Board of Directors, the Company is partially complying with the provisions of Clause 49 of the Listing Agreement with Stock Exchanges, as on 31.03.2012.

In terms of Article 76(4) of the Articles of the Association of the Company, Government Nominee Directors, viz. Dr. V. Rajagopalan, Special Secretary &Financial Advisor and Dr. A.J.VaraPrasad, Joint Secretary, will retire at this 51st AGM in 2012 and are eligible for reappointment. Company has received letter dtd.13/08/2012 from the Government reappointing Dr. V. Rajagopalan SS&FA and Dr. A. J. Vara Prasad, JS from ensuing 51st A.G.M. of 2012 and till the holding of the next A.G.M. of the Company to be held in 2013 or till futher Orders.

ACKNOWLEDGMENT

Your Directors gratefully acknowledge the valuable guidance, support and directions given by the Government of India. Your Directors also gratefully acknowledge the support and co- operation extended by the State Governments, by the valued and esteemed customers, shareholders, suppliers, bankers, Statutory/Internal and Tax Auditors, Bondholders, and Investors.

Your Directors place on record their appreciation for the whole hearted efforts and contribution from all the employees and also acknowledge the support and co-operation of the entire Workers' Unions and Employees' Unions and their members for the smooth functioning of the Company's operations.

For and on behalf of the Board of Directors of

Hindustan Organic Chemicals Limited,

Sd/-

Place : Mumbai R. N. Madangeri

Date : 08/08/2012 Chairman & Managing Director


Mar 31, 2011

Dear Shareholders

The Directors are pleased to present the 50th Annual Report and the Audited Annual Accounts of the Company for the financial year ended 31st March, 2011.

The financial performance of the Company for the year ended March 31, 2011 is summarized below.

(Rs. in Lacs)

Year ended Year ended

31/03/2011 31/03/2010

Gross Sales 73803.91 52071.24

Operating Profit(Loss) 7235.40 (3456.57)

Less: Interest 2088.35 2323.10

Less: Depreciation 2517.74 2652.28

Profit/(Loss) before tax 2629.31 (8431.95)

Less: Provision for taxation

Less: Prior Period adjustments 57.72 (124.16)

Profit/(Loss) after tax & Prior period 2571.59 (8307.79)

adjustments/ Provisions,

However, in view of accumulated losses as at the end of the Financial Year 2010-11 are carried forward, your Directors do not recommend any dividend on equity shares for the year ended 31 st March, 2011.

RESULTS OF OPERATIONS

During the year under review the Company was able to generate the Net profit of Rs. 25.72 crores during the year, while the Net Loss during the previous year was Rs. 83.08 crores.

As regards the unit wise performance, the Net Profit of Kochi Unit was Rs. 130.08 crores which was much higher as compared to the previous year's profit of Rs.14.74 crores. The Rasayani Unit recorded a Net Loss of Rs. 104.37 crores as compared with the previous year's loss of Rs. 97.82 crores.

OPERATIONS :

During the year under Report, your Company's Kochi unit, achieved a sales turnover of 84082 MTs valuing Rs.58120.81 lacs as against 72172 MTs valuing Rs. 38032.63 lacs of the previous year.

With the production of 234684 MTs (main products) during the year 2010-11 as against the production of 221249 MTs (main products) in 2009-10, your Company could achieve an overall capacity utilization of 58% during the year. Your Company has recorded the sale of 129021.09 MTs during the year (last year 125512.48 MTs) valuing Rs.64142.59 lacs (last year Rs.45940.24 lares).

The high labour cost and high incidence of cost on closed plants at Rasayani unit are the major concerns. Your Company has continued its cost cutting measures to counter these problems and in order to be competitive and improve performance and profitability.

PRODUCTION :

Kochi Unit:

During the year, your Company's Kochi Unit could achieve 166886 MTs of production (main products) which was higher than previous year production (main products) of 137730 MTs. The capacity utilization for the year 2010-11 was 109%.

Rasayani Unit:

During the year, Rasayani unit of your Company could achieve only 67798 MTs (main products) of production as against 83520 MTs production (main products) of the previous year. The capacity utilization for the year 2010-11 was 27%.

MARKETING :

HOC continued to enjoy support from all its valuable customers during the year 2010-11 due to excellent quality of its products manufactured at Kochi and Rasayani. It has achieved sales turnover of Rs.667.36 Crores (net of excise duty) as against Rs. 478.63 crores (net of excise duty) of the previous year. The sales volume during year 2010-11 was 1,45,173.65 MTs against 1,43,747.48 MTs for the year 2009-10, registering an increase in sales realization for the year amounting to Rs. 188.73 crores as compared to previous years sales of Rs. 478.63 crores.

STATUS OF OPERATIONS AND FUTURE PLANS

HOCL has signed the Gas transmission Agreement with M/s GAIL. With the availability of Natural Gas from GAIL, the Company has changed over the feed stock of Hydrogen from Naphtha to Natural Gas to reduce the cost of production. Further for boiler operation, natural gas is used in place of furnace oil to reduce steam cost.

ENERGY CONSERVATION/TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information in accordance with the provisions required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo, are given at Annexure II to this Report.

RESEARCH & DEVELOPMENT

R&D continues to do good job in Research. Over the years, it has adopted to changing times and has been contributing with the current needs of the Company by maximum utilization of its existing resources. It has endeavored to generate revenues by way of Royalty through its catalyst development and various developments in processes. To generate revenues through licensing of intellectual property, it has displayed different process technologies developed by the R&D Dept. It is actively involved in research program with Sud-Chemie India Private Limited for re-use of spent catalyst by repelletization of FD catalyst/ Aniline catalyst.

R&D Dept. is developing vapour face process of Kerosene fuel and also accelerated method for in process monitoring of aromatic in Kerosene for ISRO.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:

Company has recognised the importance of human resource and as a plan of upgrading skills and knowledge of the employees, emphasis is continued to be given for training by organising inhouse training programmes and deputing employees to attend training programmes. During the year 2010-11, in all 43 training programmes were conducted, 734 mandays were trained through inhouse training programme, 510.5 mandays were trained by sponsorship (outside) training and 509.5 mandays were trained through on job training.

Thus, total mandays trained were 1754. Further, ISO & computer awareness programmes were conducted for employees. First Aid awareness programmes from outside faculty were also arranged for our employees.

As part of the implementation of ERP in HOCL, Kochi much emphasis was given in imparting training to the employees at Kochi Unit. In Kochi Unit regular Refresher courses were arranged in Safety & ISO implementations. First Aid Recertification course was also arranged during this year.

CORPORATE SOCIAL RESPONSIBILITY

Company right from its inception is conscious about its social responsibilities. To fulfil this, Company is providing basic civic amenities to the neighbouring villages, rendering assistance to the neighbourhood in different forms the details are given hereunder:

Company has provided land to Gulsunda Grampanchayat for construction of cremation shed at Turade village.

Company is giving scholarship to SC/ST students studying in X and XII std. The Company also extends need based assistance to deserving SC/ST students in the nearby villages for their graduation and post graduation.

Company is also extending vocational training facilities to the wards of employees, provides the facilities to carry out project work for students of nearby Engineering Colleges, Management Institutions for enhancing their practical knowledge.

Company has been active in doing peripheral development works for the betterment of villages around the factory area.

HOCL, Kochi Unit has extended support to the initiative taken by the City Police, Kochi towards a fool proof Security to the Citizens and safeguarding the critical installations of Kochi.

Kochi Unit has provided 03 Sodium Vapour Lamps to the newly constructed Bus Stand-cum-shopping complex of Chottanikkara Grama Panchayat.

Kochi Unit has sponsored the READ, Rotary Emplowerment against Aids and Drugs, a project of Rotary International for Higher Secondary School Students. The project was implemented at Govt.

Boys' Higher Secondary School, Tripunithura.

Kochi Unit extended financial support to the family Welfare Programme for the empowerment of Women of Vadavucode Grama Panchayat to supply School Kits for the visually impaired children and Diabetic Awareness Programme of Govt. Ayurveda College, Tripunithura.

PARTICULARS OF EMPLOYEES - INFORMATION REQUIRED

UNDER SECTION 217(2A) OFTHE COMPANIES ACT, 1956

No employee of the Company has drawn the remuneration during the year 2010-11 or any part thereof, in excess of the limits specified under the Companies (Particulars of Employees) Rules 1975.

Accordingly particulars of employees' remuneration prescribed u/sec 217 (2A) of the Companies Act, 1956 are not furnished.

VIGILANCE

The Vigilance Department headed by Chief Vigilance Officer, has two main functional Offices, one at Rasayani (Raigad) in Maharashtra and another at Ambalamugal (Kochi) in Kerala. Keeping in view of the Principles of Corporate Governance, the main focus of the Vigilance department has been to help the sincere, dedicated and honest personnel working in the Organisation to discharge their function effectively and efficiently so that the target of optimum turnover and profitability are achieved in a transparent manner.

The Vigilance department takes prompt action in respect of complaints received. There is a comprehensive complaint handling policy and prescribed punitive action is duly suggested, after conducting fair and impartial investigation/enquiry, where ever required. The Annual Property Returns of the Officers are periodically scrutinized and inspection of various transactions/activities are undertaken to detect deviation, if any, and advise corrective measures. Various Vigilance Awareness Programmes, as per guidelines issued by the CVC, are observed and awareness sessions are conducted for the personnel regarding vigilance related matters as well as in respect of CDA Rules, RTI Act, PIDPI (Whistle Blowers Act) etc. The vigilance department has been instrumental in revising the existing manuals and policies i.e. the Purchase Policy, the Works Policy, the Marketing Manual etc. so that the laid down procedures, policies, rules, regulations etc. of the Company and that of the Central Vigilance Commission are duly followed.

The vigilance department maintains close interaction with CVC, CBI and other government agencies. The personnel working in the vigilance department have undergone training in organization like CBI academy at Ghaziabad, Institute of Secretariat Training & Management at New Delhi etc. The vigilance wing has been sincerely and consistently helping all personnel of the Organisation in improving their efficiency and effectiveness and, in turn, achieving the set goals of the Organisation.

HEALTH, ENVIRONMENT, FIRE & SAFETY Health :

- Physical Check-up, the Special Certificate of Fitness in Form No. 23 and ascertaining Health Status in Form No. 7 of all employees have been carried out by the Certifying Surgeon for the year 2010-2011.

- The Industrial Health Centre is provided at both the Units and is well maintained to provide services and facilities to employees. This Industrial Health Centre is maintained in good order with services and facilities as per scale laid down.

- No complaints are noticed among the employees working in the various plants.

Environment, Fire & Safety:

The Company pays special attention to ensure safety of the factory and workers employed therein.

The Company accords the same priority attention to safety aspects as it does to production and productivity, be it in a personal safety, process safety, environmental safety or product stewardship and allocated adequate resources of men, machine, money, time and energy to maintain the standards. Thus performance during the year is very good. Your Company's both Units could maintain the quality of treated effluent, stack emission and ambient air quality well within the limits stipulated by statutory authorities through out the year.

The Company continued to maintain good safety record without any major accident of Fire. Consistent safety training, safety audit, safety inspection and Hazop studies were performed to keep the safety standard high at both Kochi and Rasayani units.

In order to augment our fire fighting capacity at Kochi unit, mutual aid scheme for emergency help between HOCL, BPCL - KR & FACT (CD) is in existence.

HOCL Rasayani Unit is a signatory to "Responsible Care" movement.

We are committed to the concept of self realization and improvement in all aspects of safety.

Emergency Response Centre (ERC), a voluntary commitment undertaken by Rasayani Unit to tackle emergencies arising out of road transportation of hazardous chemicals is functioning quite well and this effort is acknowledged by general public as well as government authorities.

The Company has made it mandatory to have fire and safety training for all employees.

HOC Kochi unit received safety awards from National Safety Council (Kerala Chapter) and Dept. of Factories & Boilers, Govt, of Kerala for outstanding performance in industrial safety during the year 2010.

Security System :

Kochi Unit of HOCL has been classified as 'MAJOR ACCIDENT HAZARD INSTALLATION' by the Govt, of Kerala. The security requirements are met from the agencies sponsored by the Director General (re-settlement), Ministry of Defense, Govt, of India. Security Guards are posted in the identified areas inside the Factory premises and also in Township round the clock.

In view of the increased threat perception in Kochi, the Unit has been advised to take suitable measures for upgrading the security by the concerned authorities. Action is being taken to upgrade the present security system.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

In compliance of section 3 (3) of the Official Language Act, 1963 and Official Language Rules 1976 framed thereunder, Company has implemented various measures effectively given in the annual programme for 2010-11. All documents coming under Section 3(3) like Part I Orders, Part II Orders, Circulars, Administrative and other Reports, Press-Release etc. were issued bilingually. All Hindi Letters were answered in Hindi only. Our Company participated in all the programmes organized by Mumbai Town Official Language Implementation Committee. Hindi Fortnight was organized at both Rasayani and Kochi Units and in the Corporate Office in Mumbai from 14th September, 2010 to 28th September, 2010. During this period various competitions were organized. Employees actively participated in this competitions. Annual Report of the Company was translated in Hindi and was printed bilingually. Efforts are being made to fulfil the target set in the Annual Programme issued by Department of Official Language, Ministry of Hon. Affairs. Website of the Company is prepared in Hindi also.

At Kochi Unit to comply with the official language Policy of the Government, Workshops on Official language are regularly conducted for the employees who possess working knowledge in Hindi so as to encourage them to use Hindi in their day to day office work. Total 10 workshops were conducted during the Year 2010 in which more than 100 employees were trained.

At Kochi Unit the Official Language Implementation Committee has been constituted for review of the Hindi Implementation at the Unit and the said committee meets regularly.

ISO CERTIFICATION :

HOCL, Rasayani Unit, has been awarded ISO-9001:2008 certificate on 11.01.2011. This certificate has been awarded by M/s Bureau Veritas Certification (India) Pvt. Ltd. and is valid till 9.02.2014. MS of Kochi Unit ISO-9001-2008 is recertified and is valid upto June, 2014. ISO-14001-2004 is valid up to November 2011.

INSURANCE

All properties and insurable interest of the Company including building, plant and machinery and goods are adequately insured. As required under Public liability Insurance Act, 1991 the Company has taken necessary insurance cover.

DEPOSITORY SYSTEM

As the members are aware your Company's shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the enormous advantages offered by the Depository system, Members are requested to avail the facility of dematerialisation of the Company's shares on either of the depositories as aforesaid.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the listing agreement, the Management Discussion and Analysis Report is annexed hereto in Annexure V and forms part of the Directors' Report.

CORPORATE GOVERNANCE

The Company has complied with the various requirements of Corporate Governance. The details in this regard form part of this report in Annexure VI.

RESPONSIBILITY STATEMENT

The Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) that we have selected such accounting policies and applied them 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 at the end of the financial year and of the profit or loss of the Company for that period;

c) that we 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;

d) that we have prepared the annual accounts on a going concern basis.

HINDUSTAN FLUOROCARBONS LIMITED : (Subsidiary)

During the year, the sales turnover was Rs. 3352.42 lacs as against Rs. 1927.06 lacs in the previous year. During the year under report production of PTFE was 124.58 MTs as against 85.88 MTs in the Previous year. Company has achieved 100% capacity utilization of CFM-22 plant and produced 1265 MT as against 940.5 MTs in the previous year. This wilt significantly improve the revenue from CDM.

During the year, 405.49 MT of CFM-22 was sold in the market and balance quantity was used as feed stock to manufacture various products including Fluoro Speciality Chemicals.

STATUS OF CLEAN DEVELOPMENT MECHANISM (CDM) PROJECT AT HFL:

The Company has received first lot of 210142 CERs from UNFCCC. Verification of second lot is in progress and issuance is expected in FY 2011-2012.

The Statement Pursuant to Sec. 212 of the Companies Act, 1956 is given in Annexure I.

AUDITORS

In terms of provisions of Section 619(2) of the Companies Act,1956, the Comptroller & Auditor General of India, under its letter No. CA V/COY/CENTRAL GOVT.HOCL(2)/1172 dated 31/8/2010 has appointed M/s NBS & Co. Chartered Accountants, Mumbai as Auditors of the Company to audit the accounts of the Rasayani Unit and to audit the consolidated accounts of the Company. Vide CAG under its letter No. CA V/COY/CENTRAL GOVT.HOCL(2)/8 dated 12/7/2010 has appointed M/s Sasi Vijayan & Rajan, Cochin as Branch Auditors to audit the accounts of Cochin Unit for the year ended 31 st March, 2011.

The replies of the Management/the Board of Directors on the Auditors Qualification in the Auditors' Report to the members are furnished in Annexure IV

The report of the Comptroller & Auditor General of India under section 619(4) of the Companies Act, 1956, on the Accounts of the Company for 2010-11 is annexed in this Annual Report.

Pursuant to directions from the Ministry of Corporate Affairs for appointment of Cost Auditors, Board of Directors of the Company appointed M/s V.J.Talati & Co. as the Cost Auditors of Rasayani Unit for 2010-2011 for Sulphuric Acid, Aniline, Formaldehyde, Caustic Soda, Nitro Benzene and M/s Panikar & Company as cost Auditors of Kochi Unit for the year 2010-11 for Phenol, Acetone & Polypropylene products.

DIRECTORS

During the year 2010-11, the tenure of Dr. B.D. Kulkarni, & Dr. Sukumar Devotta, Non-Official Independent Directors expired on 27th May, 2010.

Consequent to the superannuation of Shri A.S. Didolkar, CMD, HOCL on 31-8-2010, as per Govt. Order No. 51/14/2009-CH-lll dated 30th August, 2010, and other subsequent Orders, Shri R.N.

Madangeri, D(Tech) has assumed the additional charge of the office of Chairman & Managing Director, Hindustan Organic Chemicals Ltd. (HOCL) in addition to his duties and responsibilities as Director (Tech) up to 31st May, 2011. Further in pursuance of Article 76(1) of the Articles of Association of HOCL vide Govt. Order No.

51/14/2009-CH-lll dated 9th June, 2011, President has appointed Shri R.N. Madangeri, Director (Technical), HOCL as Chairman-cum- Managing Director,(CMD), HOCL for a period of 5 years from the date of assumption of charge on 9th June, 2011 or till date of his superannuation or till further order which ever is the earliest.

The Tenure of other 2 Independent Directors viz. Mr. Madan Verma and Dr. N.J. Gaikwad (NOID) was expired on 7-1-2011.

Later, during the Current Year 2011-12, Shri J.N. Suryawanshi, CGM(Marketing) HOCL, has been appointed as Director (Marketing) w.e.f. 30/04/2011 vide GOI Order No. 51/05/2009-Ch-lll dated 30th April, 2011.

In terms of Article 76(4) of the Articles of the Association of the Company, Government Directors, Shri S.C. Gupta, Joint Secretary and Dr. V. Rajagopalan, Additional Secretary and Financial Advisor, will retire at this 50th AGM in 2011. Company is awaiting for their re- appointment or for further orders on new appointment by the Govt. of India

ACKNOWLEDGMENT

Your Directors gratefully acknowledge the valuable guidance, support and directions given by the Government of India. Your Directors also gratefully acknowledge the support and co-operation extended by the State Governments, by the valued and esteemed customers, shareholders, suppliers, bankers, Statutory / Internal / Cost and Tax Auditors, Bondholders, and Investors.

Your Directors place on record their appreciation for the whole hearted efforts and contribution from all the employees and also acknowledge the support and co-operation of all the Workers' Unions and Employees' Unions and their members for the smooth functioning of the Company's operations.

For and on behalf of the Board of Directors of

Hindustan Organic Chemicals Limited



Place: Mumbai R. N. Madangeri

Date: 18th July, 2011 Chairman & Managing Director


Mar 31, 2010

The Directors are pleased topresent the 49th Annual Report and the Audited Annual Accounts of the Company for the financial year ended 31st March, 2010.

FINANCIAL HIGHLIGHTS

The financial performance of the Company for the year ended March 31, 2010 is summarized below: Rs.in Lacs

Year ended Year ended 31/03/2010 31/03/2009

Sales and Other Income 52071.24 62090.54

Operating Profit/(Loss) (3456.57) 2316.98

Less: Interest 2323.10 2210.37

Depreciation 2652.28 2680.12

Profit/(Loss) before tax (8431.95) (2573.51)

Less: Provision for taxation - -39.49

Less: Prior Period adjustments (124.16) -85.42 ProfiV(Loss) after tax & Prior period

adjustments/Provisions. (8,307.79) (2527.58)

However, in view of accumulated losses as at the end of the Financial Year 2009-10 are carried forward, your Directors donot recommend any dividend on equity shares for the year ended 31st March, 2010.

RESULTS OF OPERATIONS

During the year uncfer review, the post effects of global melt down during the Year 2009 had adverse impact on the Companys performance. The Company had however taken the best pos- sible measures both in cost reduction as well as in other areas to have a minimal effect of these unavoidable circumstances on its financial performance. In addition to the effects of global melt down, there was statutory necessity of making increased provision for leave encashment of employees Despite this, the Company was able to contain the Net Loss at Rs., 83.08 crores during the year, while the Net Loss during the previous year was Rs. 25.27 crores.

As regards the unit wise performance, the Net Profit of Kochi Unit was Rs. 14.74 crores which was lower as compared to the previous years profit of Rs.20 crores. The Rasayani Unit re- corded a Net Loss of Rs. 97.82 crores as compared with the previous years loss of Rs. 45.28 crores.

OPERATIONS :

During the year under Report, your Companys Kochi unit, achieved a sales turnover of 72171 MTs valuing Rs.38032.63 lacs as against 80210 MTs valuing Rs. 42796.42 racs of the previous year.

With the production of 221249 MTs (main products) during the year 2009-10 as against the production of 245192 MTs {main products) in 2008-09, your Company could achieve an overall capacity utilization of 55% during the year. Your Company has recorded the sale of 125512.48 MTs during the year (last year 132814.79 MTs) valuing Rs.45940.24 lacs (last year Rs.52669.52 lacs).

The high labour cost and high incidence of cost on closed plants at Rasayani unit are the major concerns. Your Company has continued its cost cutting measures to counter these prob- lems and in order to be competitive and improve performance and profitability.

PRODUCTION : Kochi Unit :

"During the year, your Companys Kochi unit could achieve 137730 MTs of production which was marginally less than pre- vious year production (main products) of 164436 MTs. The ca- pacity utilization for the year 2009-10 was 90%.

Basayani Unit :

During the year, Rasayani unit of your Company could achieve only 83519 MTs (main products) of production as against 80756 MTs production (main products) of the previous year. The ca- pacity utilization for the year 2009-10 was 33%.

MARKETING :

HOC continued to enjoy support from all its valuable custom- ers during the year 2009-10 due to excellent quality of its prod- ucts manufactured at Kochi and Rasayani. It has achieved sales turnover of Rs.478.63 Crores (net of excise duty) as against Rs.-546.54 crores (net of excise duty) of the previous year. The sales volume during year 2009-10 was-1,43,747.48 MTs against 1,50,188.69 MTs for the year 2008-09, registering a lower sales realization for the year amounting to Rs. 478.63 crores, which was mainly due to global meltdown and poor price realization.

The company could not export bulk parcels of Phenol during 2009-10 due to un remunerative prices of these products in the export market. The marketing strategy was mainly focused on domestic customers to maximize the market share by adopting flexible marketing-strategies which helped in meeting the threat posed by the importers and the domestic competitors as well.

STATUS OF OPERATIONS AND FUTURE PLANS

1. HOCL has signed the Gas transmission Agreement with M/s GAIL with the availability of Natural Gas-from GAIL, the Company would change the feed stock of Hydrogen from Naphtha to Natural Gas and also for boiler operation in place of furnace oil natural gas would be used. *

2. Further, with- the availability of natural gas, company also plans to put up Captive Power Plant based on Natural Gas to economize on the operation.

ENERGY CONSERVATION/TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information in accordance with the provisions required to be. disclosed under Section 217(2) (e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, Technology Absorption and Foreign Exchange Earning and outgo, are given at Annexure II to this Report.

RESEARCH & DEVELOPMENT

R&D Division contuinues o deliver goods through innovative developments. Its is actively involved in collab6rative research programme with Sud-Chemie India Private Limited for re-use of spent catealyst by repelletization. This will lead to cost re- duction of the product, and more importantly disposal of the waste catalyst will be possible through green chenustry route. It is also continuing its development work for a specific fuel for ISRO. R&D has also fucused its -activities in creating Intellec-. tual Property Rights by filing ten patents in India and US under PCT.

HUMAN RESOURCE DEVELOPMENT & INDUSTRIAL RE- LATIONS :

Company strongly believes that Human Resources are the only appreciating resources amongst all Other resources. To meet the challenges of global competitive environment, the Com- pany is upgrading the skills of their employees by systemati-

cally identifying training need of employees. Accodingly, in house training programmes are arranged and employees are also de- puted to attend the outside training programmes.

Company continued to implemtn Government Policy of reser- vation for SC/ST. Analysis relating to SC/ST Woment personnel in the Company is given in Annexure-lll.

CORPORATE SOCIAL RESPONSIBILITY :

I. Recognizing the.obligation to the society both in the areas . of environment protection and social development, Com- pany has taken up several initiatives towards implementing welfare Schemes for uplifting the quality of living of the community surrounding the Factory area. To fulfill this, Company is providing basic civic amenities to the neigh- boring villages, rendering assistance to the neighbourhood in different forms viz. financial assistance, building mate- rial, furniture, computers, laboratory equipments etc. to the neighboring schools, construction of approach roads and toilet blocks, drinking water supply, medicines, etc.

II: to promote school education, Company is giving scholar- ship to X and XII Std. Students. Company extends need based assistance to deserving SC/ST students in the nearby villages for their graduate and post graduate education. Company also extends vocational training facilities to the wards to employees, provides the facilities to carry out project work for students studying in nearby Engineering Colleges and Management Institutes for enhancing their practical knowledge.

III. Company has also maintained a hall in thename of Bharatratna Dr. Babasaheb Ambedkar with a view to pro- vide a platform for discussions /seminars / symposiums on principles / teachings of Dr. Babasaheb Ambedkar.

PARTICULARS OF EMPLOYEES - INFORMATION RE- QUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956

No employee of the Company has drawn the remuneration during the year 2009-10 or any part thereof, in excess of the limits specified under the Companys (Particulars of Employ- ees) Rules 1975.

Accordingly particulars of employees remuneration prescribed u/sec 217 (2A) of the Companies Act, 1956 are not furnished.

VIGILANCE

The Vigilance wing of HOCL is headed by a Chief Vigilance Officer. At present an IRS officer of 1988 batch, on deputation, is holding the post. Vigilance plays a pivotal role in protecting Governments property. It also ensures that prescribed rules and guidelines are followed by the personnel of HOCL A major thrust of this department has been towards system study and systems improvement to ensure the implementation of the laid down procedures, policies, rules, regulations etc. of the Com- pany and that of the Central Vigilance Commission. As a result of the efforts of vigilance initiatives, new Marketing Policy is approved. Besides, Work Policy and Purchase Policy are also amended to incorporate the latest circulars and guidelines of the Central Vigilance Commission. These policies have been approved by the Board. The Vigilance department takes imme- diate action regarding complaint received from various sources. The Vigilance wing of HOCL is not only prompt in investigation of complaints but also effective in ensuring that action, based on recommendations, is taken against rule violators. The peri- odic and surprise inspections conducted by the Vigilance de- partment have helped in bringing improvements in the field of tendering, transportation, general administration and overall functioning of the organization.

Vigilance department carries out periodic inspections to identify corruption prone areas and take corrective steps in respect of errors / blunders, if any. The Annual Property, Returns of the officers are scrutinized. The Vigilance Wing has ensured that all relevant information regarding Company and especially related to tenders are duly put on the web site to ensure transparency. Awareness programmes have been organized.for the HODs and other personnel.

During Vigilance Awareness Week 2009; efforts were focused on educating employees in respect of relevant circulars and guide- lines of the Commission. Special emphasis was given on the PIDPI or the whistle blower resolution.

The Vigilance Department has been maintaining close liaison with other government agencies i.e. CBI and CVC to ensure that there is no delay in taking appropriate action against any corrupt personnel. The main emphasis of the Vigilance wing has been on the preventive vigilance and system improvement.

The Vigilance wing has helped the management in cost cutting exercise by highlighting the apparent errors and suggesting , solutions. Vigilance wing has taken up many other activities to help the organization.

The Vigilance Personnel have been trained by the CBI / CVO and all of them take keen interest in all activities of the organiza- tion. Thus the Vigilance Wing is sincerely and consistently help- ing all other personnel improve their working and, in turn, en- sure increased productivity.

HEALTH AND ENVIRONMENT (HE) :

1.. The Management has taken the great responsibilities for continuous monitoring and protecting the Health and En- vironment as per statutory compliance of the Maharashtra Factory Rules 1963, especially maintaining the performance of its employees in manufacturing processes of nitro and amino aromatic organic and inorganic bulk chemicals. .

2. The environment is maintained clean as per standard emis- sions norms and with respect to noise pollution norms prescribed by Central Pollution Control Board and under guidelines of Ministry of Environment and Forests, Govt.. of India.

3. The Health record of employees working in Production Division is maintained in the Health Register in Form 7 and these employees are certified for the fitness to work in hazardous process by the Certifying Surgeon for the year 2010 as per Statutory requirement of Director of Industrial Health and Safety, Govt, of Maharashtra.

FIRE & SAFETY PERFORMANCE DURING 2009-2010

The Company pays special attention to ensure safety of the factory and workers employed therein.

The Company accords the same priority attention to safety aspects as it does to production and productivity, be it in a personal safety, process safety, environmental safety or prod- uct stewardship and allocated adequate resources of men, ma- chine, money, time and energy to maintain the standards. Thus performance during the year is very good.

The company continued to maintain good safety record with- out any major accident of Fire. The year 2009 is a Zero acci- dent year as there are no Accidents during the year, which is a record achievement in the history of HOCL, Rasayani Unit. Consistent safety training, safety audit, safety inspection and Hazop studies were performed to keep the safety standard high. The company is taking active participation in Off site Emergency drills, Local and District Crisis group activities. The , Company has conducted NDMA Offsite Mock drill very suc- cessfully which was appreciated by NDMA, DISH, Civil Authori- ties and others.

HOC is a signatory to "Responsible Care" movement. We are committed to the concept of self realization and improvement in all aspect s of safety.

Emergency Response Centre (ERC), a voluntary commitment undertaken by Rasayani unit to tackle emergencies arising out of road transportation of hazafdous chemicals is functioning quite well and this effort is acknowledged by- general public as well as government authorities.

Our employees have bagged maximum awards in zonal level safety competitions. HOC is a major contributor to Mutual aid Response Group - Khopoli, Rasayani, Patalganga zone (MARG- KRAPA),

The Company has made it mandatory to have fire and safety training for all employees.

IMPLEMENTlON OF OFFICIALLANGUAGE POLICY

¦During the year under report, your Company continued its intensive and extensive efforts for progressive use of the official language. To Promote Hindi as Official Language in day to day working in line with the Government policies, Official Lan- , guage Implementation Cell of the Company continued to func- tion effectively. Various Cash Incentive Schemes have been introduced in the Company. Hindi.Workshops are being con- ducted regularly. Official Languagelmplementation Committee meetings are arranged every quarter. Comprehensive programme like HINDI FORTNIGHT was organized at both Rasayani and Kochi units and in the Corporate Office in Mumbai during September, 2009. Several periodical meetings, training programmes, workshops, essay writings, noting and drafting competitions were organized to propagate the use of HINDI. All documents coming under Sec. 3 (3) of the Official Language Act, 1963 are issued in bilingual form. Efforts are being made to fulfill the targets set in the Annual Programme issued by Depart- ment of Official Language, Ministry of Home Affairs. Website of the Company is prepared in Hindi also.

ISO CERTIFICATION :

Quality Management System (QMS) of Rasayani Unit was recer- tified in January, 2008 and we are in the process of upgrading to ISO-9001 : 2008 standards by end November, 2010 as per the requirements of the standards.

GMS of Kochi was upgraded in June 2009 to ISO - 9001 : 2008 standards. This is valid up to June, 2011. ISO - 14001 : 2004 was recertified in October, 2008. This is valid up to November, 2011:

INSURANCE

All properties and insurable interest of the Company including building, plant and machinery and goods are adequately in- sured. As required under Public liability Insurance Act, 1991 the company has taken necessary insurance cover.

FIXED DEPOSITS

The outstanding deposits worth Rs. 18.04 lakhs as on 31.3.2009 have been settled in the year 2009-10 and nothing is remained unpaid as on 31.3.2010.

DEPOSITORY SYSTEM

As the members are aware your companys shares are tradable compulsorily in electronic form and your Company has estab- lished connectivity with both the depositories i.e. National Se- curities Depository Limited (NSDL) and Central Depository Ser- vices (India) Limited (CDSL). )In view of the enormous advan- tages offered by the Depository system, Members are requested to avail the facility of dematerialisation of the Companys shares on either of the depositories as aforesaid.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the listing agreement, the Management Dis- cussion and Analysis Report is annexed hereto in Annexure and forms part of the Directors.Report.

CORPORATE GOVERNANCE

The Company has complied with the various requirements of Corporate Governance. The details in this regard form part of this report in Annexure VI

RESPONSIBILITY STATEMENT

The Directors confirm:

a) That in the p/eparation of the annual accounts, the appli- cable accounting standards have been followed and that no material departures have been made from the same;

b) That they have selected such accounting policies and ap- plied them consistently and made judgments and esti- mates 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 ofthe financial year and of. the profit or loss of the company for that period;

c) That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956, for safe- guarding the assets of the company and for preventing and detecting fraud and other irregularities;

d} That they have prepared the annual accounts on a going concern basis.

HINDUSTAN FLUOROCARBONS LIMITED (Subsidiary) :

During the year under review HFL has achieved production of 85.88 MTs of PTFE & 940.50 MTs of CFM-22 as against 21.73 MTs of PTFE and 890.17 MTs of CFM 22 in the previous year. HFL posted a Net profit Of Rs.306.27 Lakhs in the current year under review as compared to Net profit of Rs. 55.51 lakhs of the previous year. .

STATUS OF CDM

Key Project Mile Stones :

Projeet Registration Date -14.11.2008

Pre-verification meeting at HFL between HFL, SRF & PWC - 29.12.2009

- First Phase Thermal Oxidation-from 15.1.2010to28.2.2010 -Total quantity incinerated is"36.881 MT.

Second phase of Thermal Oxidation - from 22.3.2010 to 28.3.2010 - Total quantity Incinerated is 5.787 MT

Reasons for delay :

The first verification period was permitted by DOE as 14.11.2008 to 28.2.2010 as per UNFCCC. Thus, the verifica- tion exercise could only start in March, 2010.

Prior to verification, the verifier(SGS) has pointed out cer- tain issues with the registered PDD in form of corrective action request/clarification request (CAR/CL) Which needs- to justify. To expedite this activity, meeting was held at SRF, Gurgaon between SRF, HFL and PWC on 17.3.2010. *To . response formulation to CAR/CL raised by DOE require LONG TERM APPROACH TO ENSURE THE CERTAINITY in view CER by document collection so as to response CAR/CL and also addressing larger issues such as revision of monitoring plan of the registered PDD.

As per recent UNFCCC guidelines Part 13 (EB52) it has been made mandatory to public monitoring report on UNFCCC website interface at least two.weeks prior toundertaking the verification site visit. This notification came around Feb,2010.

Considering the above additional activities, enclosed schedule is made.

The audited accounts along with Auditors report and Directors report are appended which are subject to the audit of CAG u/ sec.619(4) of the Companies Act, 1956.

The Statement Pursuant to Sec. 212 of the Companies Act, 1956 is given in Annexure I.

AUDITORS

In terms of provisions of Section 619(2) of the Companies Act, 1956. The Comptroller & Auditor General of India, under its letter No. CA V/COY/CENTRAL GOVT.HOCL(2)/26 dated 12/8/ 2009 has appointed M/s NBS & Co. Chartered Accountants, Mumbai as Auditors of the Company to audit the accounts of the Rasayani unit and to audit the consolidated accounts of the company and M/s. Elias George & Co., Cochin as Branch Auditors to audit the accounts of Cochin unit for the year ended 31st ,March ,2010.

The remarks of the Board of Directors on the Auditors Report to the members are furnished in Annexure IV.

The report of the Comptroller & Auditor General of India under section 619(4) of the Companies Act, 1956, on the Accounts of the Company for 2009-10 is annexed to the Statutory Auditors Report in the Annual Report .

Pursuant to directions from the Ministry of Company Affairs for appointment of Cost Auditors, Board of Directors of the com- pany appointed. M/s V.J.Talati & Co. as the Cost Auditors for Sulphuric Acid for 2009-2010.

DIRECTORS

During the year 2009-10 (w.e.f. 8-12-2009) Shri Mahesh Kumar Mittal has been appointed as Director (Finance), HOCL. Fur- ther, Shri. S.C. Gupta, IAS, Joint Secretary Dept. of Chemical & Petrochemical, Govt, of India has been appointed (w.e.f. 7-01- 2010) as Govt. Nominee Director, in place of Shri. BR Pandey, IAS, Joint Secretary. Later, during the Current Year 2010-11, Dr. V. Rajagopalan, AS&FA has been appointed (w.e.f. 4/5/2010) as Govt. Nominee Director, in place of Shri Mathew C. Kunnumkal,. SS&FA.

In terms of Article 76(4) of the Articles of the Association of the Company, Government Directors, Shri S.C. Gupta, Joint Secretary and Dr. V. Rajagopalan, Additional Secretary and Financial Advisor, will retire at this AGM and are eli- gible for re-appointment as per Government letter dated 6th July 2010.

ACKNOWLEDGMENT

Your Directors .gratefully acknowledge the valuable guidance, support and directions given by the Government of India. Your Directors also gratefully acknowledge the support and co-op- eration extended by the State Governments, by the valued and esteemed customers, shareholders, suppliers, bankers, Statu- tory/Internal and Tax Auditors, Bondholders, and Fixed Deposit holders.

Your Directors place on record their appreciation for the whole hearted efforts and contribution from all the employees and also acknowledge the support and co-operation of all the Work- ers Unions and Employees Unions and their members for the smooth functioning of the Companys operations.

Emergency Response Centre (ERC), a voluntary commitment undertaken by Rasayani unit to tackle emergencies arising out of road transportation of hazardous chemicals is functioning quite well and this effort is acknowledged by general public as well as government authorities.

Our employees have bagged maximum awards in zonal level safety competitions. HOC is a major contributor to Mutual Aid Response Group - Khopoli, Rasayani, Patalganga zone (MARG -KRAPA).

The Company has made it mandatory to have fire and safety training for all employees.

For and on behalf of the Board of Directors of

Hindustan Organic Chemicals Limited.

Place : Mumbai A.S DIDOLKAR

DAte : 13th July 2010 Chairman & MAnaging Director

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