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Directors Report of Tanfac Industries Ltd.

Mar 31, 2016

To The Members,

The Directors are pleased to present the report on the Company''s business operations together with the audited statement of accounts for the financial year ended 31st March, 2016, for your review.

FINANCIAL RESULTS

Details

Year ended 31st

March 2016

(Rs. in Crores)

Year ended 31st

March 2015

(Rs. in Crores)

Net sales/Income from Business operations

129.01

117.91

Other Income

4.67

2.29

Total Income

133.68

120.20

Gross Profit / [Loss] after Interest but before, Finance Cost, Depreciation and Taxation

8.55

7.83

Less: Finance Cost

7.13

9.29

Less: Depreciation / Impairment / Amortisation

4.77

5.63

Profit/[Loss] before Taxation

(3.35)

(7.09)

Exceptional items/Excess Income Tax provision

(3.72)

-

Profit/(Loss) after Exceptional items

0.38

(7.09)

Less: Deferred Tax / (Reversal)

(0.03)

(1.32)

Profit/(Loss) after Tax

0.40

(5.77)

Extraordinary items / Insurance claim1

-

(0.48)

Net profit/[Loss] for the period

0.40

(5.29)

Add: Balance brought forward

(48.89)

(43.60)

Profit/(Loss) available for appropriation

(48.49)

(48.89)

Transferred from General Reserves

-

-

Balance Carried forward to Balance Sheet

(48.49)

(48.89)

The Company''s sales performance had increased by 9% at Rs. 129.01 Crores against Rs. 117.91 Crores in the previous year, due to increase in volume of its main products viz., Hydrofluoric Acid, Aluminium Fluroide and Sulphuric Acid. This was despite lower sales realization on account of stiff competition and pass through due to reduction in main raw materials.

Other operating income during the year had doubled at Rs. 4.31 Crores against Rs. 2.01 Crores during the previous year due to increase in conversion charges of IBAP on job work basis and also toll manufacturing of Poly Aluminium Chloride (PAC). PAC plant had started operation from April 2015.

Profit before depreciation, interest and taxation (EBIDTA) was higher at Rs.8.55 Crores during the year, compared to Rs.7.83 crores in the previous year despite adverse factors like higher interest rate due to poor credit rating, drop in sales realization in HF from both domestic and overseas customers due to stiff competition from China. These were offset by gains from reduction in input cost of main raw materials, fuel oil and also tight control on working capital. Infusion of Rs.5 crores in the form of Redeemable Cumulative Non-Convertible Preference Shares at the fag end of the previous financial year and proceeds from sale of vacant freehold land around Rs.4 crores had also helped in reducing the overall debt and the interest burden.

DIVIDEND:

Your Directors have not recommended any dividend for the year 2015-16 on account of accumulated losses and inadequacy of profits during the current year.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

In terms of Section 125 of the Companies Act, 2013, unclaimed or unpaid Dividend relating to the financial year 2008-2009 is due for remittance on or before 29.9.2016 to the Investor Education and Protection Fund established by the Central Government.

REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS:

The ongoing steps taken by the Company to turn around the operations have started yielding results. After incurring continuous losses during the second and third quarters of the financial year, the Company has registered positive Profit after Tax of Rs.0.99 crore during the last quarter of the financial year.

Further, the Company has taken several initiatives to improve its overall operational performance which includes-

- Increase in volume of HF exports to existing and new markets.

- Focus on PV grade DHF and Specialty fluorides

- Tight control on working capital to reduce overall debt.

- Increase the volume of new product developed during previous year.

- Negotiate with its key suppliers for overall reduction in the prices of key raw materials.

- Optimization of regular and contract Manpower.

Your Board of Directors is optimistic about the turnaround of the Company in the coming years.

ALUMINIUM FLUORIDE:

During the year your company had significantly increased the volume of Aluminium Fluoride as it had received increased orders from its long term customers compared to previous year.

Your company has strategically reduced its focus on Aluminium Fluoride due to its lower contribution. However, your company will continue to serve its long term customers.

HF ACID:

The higher gap between supply and demand continues on the entire value chain of HF Acid. The segment growth rate for refrigerant gases, PTFE, Aluminum Fluoride, Stainless Steel, Surface Treatment etc. continued to be low due to tepid demand. Chinese manufacturers take advantage of 10% reduction on export duty on HF, impacting the India’s export market. However, taking advantage of reduction in main raw materials and the oil prices, the company is continuously working on improving the operational efficiency to improve its competitiveness.

EXPORTS:

Export turnover was marginally higher by 3% at Rs.19.27 Crores, as compared to Rs.18.63 crores in the previous year, despite lower off take by overseas customers on account of market demand and stiff competition from China.

Your Company endeavors continuously to increase export revenues in the coming years by expanding the customer base in the current market and penetrating to new markets.

ISOBUTYL ACETOPHENONE (IBAP):

Your Company has successfully revived the IBAP project by adding values to the by-product.

Besides the Company has further improved the IBAP process and achieved targeted input norms of main raw materials and utilities.

MATERIAL CHANGES AND COMMITMENT IF ANY:

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year and the date of this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of The Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished as Annexure DA to the Annual Report.

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

Your Company has not provided any loan (s), guarantee(s) to any person or body corporate and has not made any investment(s) during the year under Section 186 of the Companies Act, 2013.

PUBLIC DEPOSITS

The Company has not accepted any deposits from Public within the meaning of Section 73(1) of The Companies Act, 2013, during the year under review.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

In line with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has formulated a Policy on Related Party Transactions which is available on Company’s website at www.tanfac.com. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

The Company has obtained necessary prior omnibus approval from the Board pertaining to Related Party Transactions which were in the ordinary course of business and on an armDs length basis. All such transactions which are of repetitive nature and / or entered in the Ordinary Course of Business and are at ArmDs Length are placed before the Audit Committee on a quarterly basis for its review and approval.

AUDITORS & AUDITORS'' REPORT:

M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai (Firm Registration No.105146W) were appointed as Statutory Auditors of the Company by the Members at their Annual General Meeting held on 29th September, 2015.

The Report given by the Auditors on the financial statements of the Company is forms part of the Annual Report. There were no qualifications, reservations or adverse remarks made by the Auditors in their report.

The Company has received a letter from the above auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of The Companies Act, 2013 and that they are not disqualified for reappointment.

The Audit Committee and the Board of Directors of the Company have recommended M/s.Khimji Kunverji & Co., for their appointment as Statutory Auditors of the Company for a term of five consecutive years subject to approval of Members at this Annual General Meeting and further ratification at every subsequent four Annual General Meetings till completing the tenure of appointment.

The necessary resolution for item of business to be transacted is set out in the Notice for the Members approval.

AUDITORSD certificate on corporate GOVERNANCE

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Compliance Certificate on Corporate Governance given by the Statutory Auditors, viz., M/s.Khimji Kunverji & Co., is forming part of the Annual Report.

COST AUDITOR

The Board of Directors of the Company has, on recommendation of the Audit Committee, approved the appointment of Shri N. Krishnakumar, Cost Accountant, Cuddalore (Membership No.27885) for conducting the audit of cost records of the Company pertaining to

Inorganic and Organic products manufactured by the Company covered under Central Excise Tariff Heading Chapter Nos.28 and 29 respectively in compliance with The Companies (Cost Records and Audit) Rules, 2014.

The Board of Directors at their meeting held on 24th May, 2016, have appointed Shri N. Krishnakumar, Cost Accountant as cost auditor for the financial year 2016-2017 and necessary filing has been made with the Central Government.

SECRETARIAL AUDIT REPORT

The Board has appointed Ms. Kalyani Srinivasan (Practicing Company Secretary, Chennai (C.P. No.6047 & FCS No.5854), to conduct Secretarial Audit for the financial year 2015-2016, which, inter alia, includes audit of compliance with the Companies Act, 2013, and the Rules made under the Act, Listing Agreement and Regulations and Guidelines prescribed by the Securities and Exchange Board of India.

The Secretarial Audit Report as required under Section 204 of The Companies Act, 2013 read with Rule 9 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is furnished under Annexure D C, does not contain any qualification, reservation or adverse remark.

RISK MANAGEMENT POLICY

The details of Risk Management as practiced by the Company are provided as part of Management Discussion and Analysis Report.

POLICIES

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandated the formulation of certain policies for all listed entities. The policies are reviewed periodically by the Board and updated based on need and new compliance requirements and are available in the Company''s official website viz., www.tanfac.com.

Name of Policy

Brief description

Web URL

Related Party Transaction

The policy to regulate all transactions between the Company and its Related Parties in compliance with various applicable laws, including under The Companies Act, 2013/ SEBI (LODR) Regulations, 2015

http: / /www.tanfac. com/documents/policy_ Materiality Of Related Party_Transactions.pdf

SEBI (prohibition of Insider Trading) Regulations, 2015

The Policy provide for fair disclosure of unpublished price sensitive information in dealing with securities of the Company.

http://www.tanfac.com/

documents/policy_sebi.pdf

Whistle Blower Policy (vigil mechanism)

The Company has established a vigil mechanism for its Directors and Employees to report their genuine concerns or grievances or violation of the Company''s code of conducts and ethics, which will be monitored by the Audit Committee

http://www.tanfac.com/

documents/policy_Whistle_

Blower.PDF

Criteria for making payment to Non Executive Directors

Except sitting fee for attending Board, Audit Committee and Stakeholders Relationship Committee meetings NO other remuneration paid to Directors.

http://www.tanfac.com/ documents / w ho non executive_directors.pdf

Policy for determination of materiality of information or event

This Policy facilitating prompt disclosure of material price sensitive information to the listed Stock Exchange(s) prepared in terms of SEBI (LODR) Regulations, 2015.

http://www.tanfac.com/

documents/policy_matrl_

event.pdf

Policy on Archival of documents

The policy framed for archival of the Company''s records as required under SEBI (LODR) Regulations, 2015

http://www.tanfac.com/

documents/policy_archival_

policy.pdf

Policy on preservation of documents

The policy deals with retention of documents in permanent nature and not less than eight years after completion of the relevant transactions.

http: / /www.tanfac. com/documents/policy_ preservation_Doc.pdf

RELATED PARTY TRANSACTIONS

All related party transactions entered into during the year were in the ordinary course of business and on arms length basis. There have been NO materially significant related party transactions. None of the directors have any pecuniary relationships or transactions with the company. Details of related party transactions are disclosed under Annexure DB'' to the Boards Report.

INTIMATION TO BIFR

The net worth of the Company for the financial year 2015 - 2016 has eroded by more than 50% of its peak net worth during the immediately preceding four financial years.

As required under the provisions of Section 23(1)(a)(i) of The Sick Industrial Companies (Special Provisions) Act, 1985, your Company will comply with the above provisions within the stipulated time for the financial year ending 31st March, 2016 after the accounts are adopted by the Members at their ensuing Annual General Meeting to be held on 28th September 2016.

The Ministry of Corporate Affairs vide its Notification S.O.1933(E) dated 1st June,

2016, has constituted The National Company Law Tribunal and The National Company Law Appellate Tribunal both with effect from 1st June, 2016. Though the Company Law Board has been replaced by NCLT, Notification pertaining to NCLT subsuming BIFR is awaited. Therefore the company will continue to comply with the existing provision under BIFR.

DIRECTOR RETIRING BY ROTATION:

In terms of Articles of Association of the Company, Shri R. Karthikeyan, Director, retires by rotation and being eligible, offer himself for re-appointment.

DECLARATION BY INDEPENDENT DIRECTORS:

The Independent Directors of your Company have given the certificate of independence stating that they meet the criteria of independence as mentioned under Section 149 (6) of the Companies Act, 2013.

The details of the training and familiarization programmes and the Annual Board Evaluation process for Directors have been provided in the Corporate Governance Report.

The terms and conditions of appointment of Independents Directors, in line with the provisions of Schedule IV of the Companies Act, 2013 are available in the Company’s official URL viz. http://www.tanfac.com/documents/who_ appointment_independent_directors.pdf

REVISED LISTING AGREEMENT

The Securities and Exchange Board of India vide its Extraordinary Notification dated 2nd September, 2015, had formulated SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, replacing the existing listing agreement with effect from 1st December, 2015, with a view to aim to consolidate and streamline the provisions of listing agreement for different segments of capital segments of capital market and hence all listed entities to execute a simplified listing agreement within six month from the effective date. Your Company had executed the said simplified listing agreement with BSE Limited on 15th February, 2016, where the securities are listed.

BOARD EVALUATION:

The evaluation of Board of Directors and the Board, as required under Section 149(8) of The Companies Act, 2013, read with Schedule IV under Chapter VIII were done through selected parameters related to their roles, responsibilities and obligations of the Board and functioning of the Committees.

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board shall monitor and review evaluation frame work, which includes, Board dynamics and relationships, information flows, decision making, relationship with Stakeholders, Company performance and strategy, tracking Board and Committees effectiveness and peer evaluation. Accordingly, the performance of the Board was evaluated after seeking inputs from all the directors on the basis of the criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. Similar evaluation was carried out by the Committee of the Board of Directors after seeking their inputs.

SEPARATE INDEPENDENT DIRECTORSD MEETINGS:

The Independent Directors met during the year in the absence of Non-Independent Director and discussed inter alia the performance of Non-Independent Directors and the Board as a whole and the quality, quantity and timeliness of the flow of information between the Company management and the Board for effective and reasonable performance of their duties to comply with Schedule IV of The Companies Act, 2013. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

FAMILIRISATION PROGRAMME:

The Familiarization Programme as required under SEBI (LODR) Regulations, 2015, aims at providing insights into the Company to enable Independent Directors to understand their roles, rights, responsibilities as Directors of the Company, the nature of the industry in which the Company operates, business model of the Company. The details of training programme are provided in the Company’s website under URLD http://www.tanfac.com/documents/who_ directors_familiarization_programme.pdf

NUMBER OF MEETINGS OF THE BOARD

During the financial year 2015 - 2016, the Board met four times and the details of which are given in the Report on Corporate Governance that forms part of this Annual Report. The time gap between two meetings as required under the listing agreement was well within the period.

BOARD COMMITTEES

Presently, the Board has three Committees, viz., Audit Committee, Nomination and Remuneration Committee and Stakeholders'' Relationship Committee, comprising of the required combination of Non Independent and Independent Directors. Committee-wise details are furnished in the Report on Corporate Governance section of the Annual Report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extracts of Annual Return under Form MGT-9, pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in the Annexure D D.

INTERNAL FINANCIAL CONTROL (IFC):

The Internal Financial Control (IFC) stipulates a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Internal Control systems of the Company comprising of policies and procedures adopted to ensure the orderly and efficient conduct of its business, including adherence to the Company''s Policies, the safeguarding of its assets, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The audit observation by the Internal Auditors and corrective actions thereon are presented at the Audit Committee which also oversees and evaluates the IFC periodically.

The Directors Responsibility Statement as required under Section 134(3)(c) of The Companies Act, 2013, are available elsewhere in the Directors Report.

CORPORATE GOVERNANCE:

Your Company is strongly committed towards its philosophy of Corporate Governance. The Corporate Governance Report, along with the Auditors Certificate regarding compliance of the conditions of the Corporate Governance as stipulated in Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with listing agreement with BSE Limited is forming part of the Annual Report.

A Certificate of the CEO and CFO of the Company, in terms of Regulation 17(8) as specified in Part B of Schedule II read with SEBI (LODR) Regulations, 2015, confirming the correctness of the financial statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is annexed.

Your Directors are pleased to report that the Company is fully complied with the SEBI guidelines and corporate governance as on financial year ended 31st March, 2016 and continue to comply with the same.

INSURANCE

The Company''s properties of fixed asset, including building, plant and machinery, and insurable assets and currents assets including stock of raw materials, finished goods, stores and spares etc., are adequately insured.

MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with the listing agreement with the stock exchanges, the Management''s Discussion and Analysis Report for the year under review has been made as forming part of the Annual Report.

PERSONNEL:

Except sitting fees for attending the Board, Audit Committee and Stakeholders Grievance Committee meetings, no other remuneration is being paid to the Directors. Shri Lalit Naik, Manager and Director has not drawn any remuneration, including a sitting fee, for attending the Board / Committee meetings.

Further, No employees are coverded under section 197(12) of The Companies Act, 2013 read with rule 5(1) of The Companies (Appointment and Remunerations of Managerial Personnel) Rule 2014, as amended regarding drawing remuneration in excess of the limit as prescribed under the aforesaid rule.

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended are furnished in Annexure - D.

INDUSTRIAL RELATIONS:

Employee relations continued to be cordial throughout the year. The whole-hearted support of employees in the implementation of WCM, ISO-9002 systems and ISO 14001 amply demonstrate the high level of team work, sense of belonging to the organization and solidarity with the Management.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has adopted a vigil mechanism. Details are posted on the website of the Company.

POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE:

The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the work place in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under and constituted a committee to inquire into complaints of sexual harassment if any and the same will be recommended to the committee for appropriate action. During the year, your company has not received any complaint on sexual harassment.

PUBLIC DEPOSIT

The Company has not accepted any deposits from the public during the year and there was no outstanding towards unclaimed deposit payable to depositors as on 31st March, 2016.

RESEARCH AND DEVELOPMENT:

Your company has put the following efforts in Research & Development.

- Development and commercialization of a new product using by-product. This product finds application in sanitation of industrial Processing Equipment, Microbial Control Disinfection and Sanitizing, bleaching and Food preservative industry.

- Last year your Company had developed a new product finding application in water and waste water industry. This year two more grades of same product have been developed, one of which is commercialized.

Continuous R&D efforts are being carried out towards product stability and product quality improvements.

SAFETY, HEALTH AND ENVIRONMENT PROTECTION (SHE):

Your Company is committed to Safety, Health and Environmental Management System and processes. Your Company implemented various best practices and initiatives during this year which helped to maintain good safety performance statistics.

Your Company is an Integrated Management System (IMS) certified. This comprises ISO 9001D 2008 for Quality Management System (QMS), ISO 14001-2004 for Environmental Management System (EMS) and OHSAS 18001:2007 for Occupational Health and Safety Assessment Series for Safety Management System by DNV GL AS, India.

We ensure stringent implementation of Safety and Environment Protection measures and the Board has mandated accordingly.

Your Company Periodically Conducts Safety audit and Risk analysis to monitor risks and to have action plan for countering the risks. Your Directors also periodically visit the factory to review the safety Performance.

Your Company motivates employees, workers and contract workmen through training and retraining on safety aspects and also rewards best performers in Safety and Environmental aspects.

Your Company periodically conducts onsite mock drills and actively coordinates with the local Government and other nearby companies for off site emergency mock drill / Mutual Aid.

MANAGEMENT POLICY

We at Tanfac Industries Limited are committed to continual improvement of the processes of Management System affecting Quality, Cost and Delivery along with Environmental Impact to prevent pollution and to comply with requirements of customers and interested parties and public at large.

SUSTAINABLE DEVELOPMENT D COMMUNITY DEVELOPMENT INITIATIVES D CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your company has continued its commitment to CSR activities despite not falling under the ambit of section 135 of the Companies act 2013. Your Company’s CSR initiatives are an integral part of Business policy and aligned with business goals.

CSR is a continuing commitment by business to behave ethically and contribute to economic development of the local community and society at large. Creating value for the society is one of the major initiatives of CSR.

Projects are identified in consultation with the community and arriving their basic needs. After taking to the participatory appraisal process and based on consensus and discussion with the village panchayat, projects are implemented.

CSR focused areas includes Education, Health, Sustainable Livelihood, Infrastructure development and social empowerment. All our CSR activities are carried out under the support and guidelines of Aditya Birla Centre for Community Initiatives and Rural Development. Your company is carrying out its community welfare activities in and around Cuddalore for more than a decade to undeserved communities.

Aditya Birla Group''s vision:

“To actively contribute the social and economic development of the communities in which we operate. In doing so, build a better, sustainable way of life for weaker sections of society and raise the country''s human development index.”

Your company focuses on the specific initiatives include D

- Girl Child education under Kasturba Gandhi Balika Vidhyalay (KGBV) Scheme.

- Education support to nearby schools.

- Downtrodden women empowerment projects

- Health Management including family welfare

- Identification of Needs

- Linking with Government agencies, NGO''s and other partners

- Implementing activities for upliftment of communities involving government departments, village panchayats so as to benefit for the society in the specific areas of education, health, sustainable livelihood and health to cater the needs of children, women, old aged and physically challenged to the overall development of communities.

HUMAN RESOURCES DEVELOPMENT:

Human resources play a significant role in your Company’s growth strategy. Your Company believes that its knowledge capital will drive growth and profitability. The ongoing focus is on attracting, retaining and engaging talent with the objective of creating a robust talent pipeline at all levels. Initiatives like hiring freeze at some levels, robust talent reviews, career development conversations and best-in-class development opportunities will help enhance the employee experience at your Company.

Your Company is engaged in a constructive relationship with employees with an emphasis on productivity and efficiency and underlining safe working practices.

As on 31st March, 2016, your Company’s employee strength was 162 employees (previous year 161 employees).

ACKNOWLEDGEMENT:

Your Directors wish to express their appreciation for the continued assistance and cooperation of the consortium banks, Government authorities, customers, vendors and members during the year under review.

On behalf of the Directors and all shareholders, I would like to place on record my sincere appreciation of the committed services by the entire TANFAC family, comprising officers, staff and workers.

Finally, I look forward to your continued understanding and support in taking your Company forward in these challenging times.

For and on behalf of the Board

CHAIRMAN

Place: Chennai

Date: 9th August, 2016.


Mar 31, 2015

The Directors are pleased to present the report on the Company's business operations together with the audited statement of accounts for the financial year ended 31st March, 2015, for your review:

FINANCIAL RESULTS

[Rs, in Crores]

Year ended Year ended Details 31st March 2015 31st March 2014

Net Sales/Income from Business operations 117.91 116.32

Other Income 2.29 1.24

Total Income 120.20 117.56

Profit/ [Loss] after Interest but before Depreciation and (1.46) 1.41 Taxation

Less: Depreciation/ Impairment/Amortization 5.63 6.93

Profit/[Loss] before Taxation (7.09) (5.52)

Exceptional items - -

Profit/(Loss) after Exceptional items (7.09) (5.52)

Less: Deferred Tax Provision / (Reversal) (1.32) (2.48)

Profit/(Loss) after Tax (5.77) (3.03)

Extraordinary items / Insurance claim* (0.48) -

Net profit/[Loss] for the period (5.29) (3.03)

Add: Balance brought forward (43.60) (40.57)

Profit/(Loss) available for appropriation (48.89) (43.60)

Transferred from General Reserves - -

Balance Carried forward to Balance Sheet (48.89) (43.60)

* Insurance Claim full and final settlement received against claim for Business Interruption/Loss of Profit due to natural calamity (cyclone) on 30th December 2011.

OPERATIONS AND OVERALL PERFORMANCE:

The Company's sales performance was maintained at the previous year's level, despite continued drop in demand for HF in domestic markets post-withdrawal of CDM benefits on R22, and stiff competition from China in the Aluminum Fluoride segment. To turn around

the operations, the Company has taken various steps to improve operational performance:

(a) Continuous focus on cost reduction

(b) Increasing vendor base and developing alternate sources for its main raw material, Fluorspar and Sulphur, to reduce input costs.

(c) Improving customer and product mix

(d) Continuously engaging with suppliers of other raw materials and packing materials for reduction in rates.

(e) Exploring market for HF in Asia Pacific and Europe.

(f) Effective utilization of working capital limits.

Profit before depreciation, interest and taxation (EBIDTA) was Rs, 7.83 crores during the year, compared to Rs, 11.12 crores in the previous year.

However, factors such as a significant depreciation of the Indian Rupee against the US Dollar, currency volatility, and higher interest outgo on working capital limits due to poor credit rating, impacted cash profits.

DIVIDEND:

As the Company has incurred loss in the current year, your Directors have not recommended any dividend for the year 2014 - 2015.

REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS:

The steps taken by the Company to turn around the operations as enumerated above under the heading Operations and Overall Performance, have started yielding results. After incurring continuous losses during the first three quarters of the financial year, the Company has registered improved performance during the fourth quarter and registered Profit After Tax (PAT) of Rs, 0.83 crore.

The Company is also taking steps to revive the IBAP plant and increase its viability by working on value-added products out of by-product generated during production of IBAP. Your company is also working on some other value-added products and will continue to focus on moving up the value chain in specialty products where it can have competitive advantage and grow sales volumes and margins.

Your Board of Directors is optimistic about the turnaround of the Company in the coming years.

ALUMINIUM FLUORIDE:

Your Company has strategically reduced the production of Aluminum Fluoride due to its lower contribution. However, your Company will continue to service its long-term strategic customers.

HF ACID:

The entire value chain of Fluorspar – Hydrofluoric Acid suffers due to a wide gap in supply and demand. China, which continues to enjoy the benefits of backward and forward integration in the value chain, is competing more aggressively. Capacity shifting is possible in proximity to Fluorspar sources. The withdrawal of the 10% export duty by China has added further pressure on the price of the product, both in the domestic and export markets. However, we are continuously working on improving the operational parameters in order to increase margins.

EXPORTS:

Export turnover was higher by 9% at Rs, 18.63 crores, as compared to Rs, 17.13 crores in the previous year, despite lower off take by overseas customers on account of market demand and stiff competition from China.

Your Company endeavors continuously to increase export revenues by expanding the customer base in new markets.

MATERIAL CHANGES AND COMMITMENT IF ANY:

ISSUE OF PREFERENCE SHARES::

During the year, the Company has issued and allotted 5,00,000 – 11% Redeemable Cumulative Non Convertible Preference Shares ('the Preference Shares") of face value of Rs, 100/- each for cash at par on private placement basis to M/s. Aditya Birla Chemicals (India) Limited ("ABCIL") for general corporate purposes, and also to meet the ongoing business requirements of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under Section 134 (3)(m) of The Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished as Annexure-A to the Annual Report.

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

Your Company has not provided any loan (s), guarantee(s) to any person or body corporate and has not made any investment(s) during the year under Section 186 of the Companies Act, 2013.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is available on Company's website at www.tanfac.com. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

The Company has obtained necessary prior omnibus approval from the Board pertaining to Related Party Transactions, in the ordinary course of business and on an arm's length basis. All such transactions which are of repetitive nature and / or entered in the Ordinary Course of Business and are at arm's Length are placed before the Audit Committee on a quarterly basis for its review and approval. Details of related party transactions are made available under Annexure-B.

AUDITORS & AUDITORS' REPORT:

M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai (Firm Registration No.105146W) were appointed as Statutory Auditors of the Company by the Members at their Annual General Meeting held on 13th August, 2014.

The Report given by the Auditors on the Financial Statements of the Company forms part of the Annual Report. There were no qualifications, reservations or adverse remarks made by the Auditors in their report.

The Company has received a letter from the above auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of The Companies Act, 2013 and that they are not disqualified for re- appointment.

COST AUDITOR

The Board has appointed Shri N. Krishnakumar, Cost Accountant, Cuddalore (Membership No.27885) for conducting the audit of cost records of the Company pertaining to Inorganic and Organic products manufactured by the Company covered under Central Excise Tariff Heading Chapter Nos.28 and 29 respectively

SECRETARIAL AUDIT REPORT

The Board has appointed Ms. Kalyani Srinivasan (Practicing Company Secretary, Chennai (C.P. No.3109 & FCS No.5854), to conduct Secretarial Audit for the financial year 2014- 2015, which, inter alia, includes audit of compliance with the Companies Act, 2013, and the Rules made under the Act, Listing Agreement and Regulations and Guidelines prescribed by the Securities and Exchange Board of India. The Secretarial Audit Report furnished under Annexure-C, does not contain any qualification, reservation or adverse remark.

RISK MANAGEMENT POLICY

The Company has already laid down the

procedure regarding risk assessment and

minimization.

Pursuant to Clause 49(VI) of the revised listing agreement, which was made effective from 1st October, 2014, the Company has constituted a Risk Management Committee to define its roles and responsibilities and laid down the procedure to assess the risk and minimization procedures. The risk management includes identifying types of risks and its assessment, risk handling and monitoring and reporting. The Board shall also be responsible for framing, implementing and monitoring the risk management plan for the company. The details of identified risk and mitigation plan would be reviewed by the Committee every quarter and forwarded to the Board with their recommendation, if any, and the same will be reviewed and discussed by the Board in their meeting.

DISCLOSURE

AUDIT COMMITTEE AND VIGIL MECHANISM

Pursuant to the provisions of Section 177 of the Companies Act, 2013, read with Rules 6 and 7 of the Companies (Meetings of the Board and its Powers) Rules, 2014, the Company has constituted the Audit Committee, comprising of six Members, including four Independent Directors, viz., Shri M.R. Sivaraman, IAS (Retd.), Shri Lalit Naik, Shri V.T. Moorthy, Shri R. Karthikeyan, Shri Kannan K Unni and Dr. Shankar Narasimhan. All the recommendations made by the Audit Committee were accepted by the Board.

Pursuant to Section 177(9) of The Companies Act, 2013 read with Rule 7 of The Companies (Meetings of Board and its Powers) Rules, 2014 and also as per clause 49(II)(F) of the listing agreement with the stock exchanges, the Company has established a vigil mechanism in line with its Group Policy for Directors and Employees to report their genuine concerns or grievances.

The audit committee would be monitoring the established vigil mechanism which provide for adequate safeguards against victimization of employees and directors who avail of the vigil mechanism and also provide for direct access to the Chairman of the Audit Committee.

CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING

In accordance with the Regulations of The SEBI (Prohibition of Insider Trading) Regulation, 2015, vide its Notification dated 15th January, 2015, effective from 15th May, 2015, the Company has established systems and procedures for Code of Practices and Procedures for Fair Disclosure of unpublished price sensitive information and a Code of Conduct to regulate, monitor and report trading by insiders, which includes, Directors, Employees and their relatives and other connected persons to restrict insider trading, on the basis of any unpublished price sensitive information, available to them by virtue of their position in the Company.

The objective of this Code is to prevent misuse of any unpublished price sensitive information and prohibit any insider trading activity, in order to protect the interest of the shareholders at large. The details of dealing in Company's shares by the insiders, if any, would be placed before the Board on a quarterly basis.

The Code of Practices and Procedures for Fair Disclosure of unpublished price sensitive information is available on the Company's website www.tanfac.com.

INTIMATION TO BIFR

The Net Worth of the Company for the financial year 2014-2015 has eroded by more than 50% of its peak Net Worth during the immediately preceding four financial years.

As required under the provisions of Section 23(1)(a)(i) of The Sick Industrial Companies (Special Provisions) Act, 1985, your Company, shall with in a period of 60 days from the date of adoption of accounts of the Company for the financial 2014-2015 by the members at their Annual General Meeting to be held on 29.9.2015 report to BIFR under the specified guideline.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year, the Board of Directors has appointed Smt. R. Rajalakshmi, as an Additional

Director with effect from 24th March, 2015, as required under clause 49 of the equity listing agreement, after recommendation by the Nomination and Remuneration Committee. The Committee has evaluated her skills, experience and knowledge to hold office as an Additional Director up to the date of the forthcoming Annual General Meeting. Being eligible, Smt. R. Rajalakshmi, offered herself to be appointed as the Independent Director of your Company and not be liable to retire by rotation. Smt. R. Rajalakshmi will hold office of Director for a term up to five consecutive years if approved by the Members at the ensuing Annual General Meeting as per applicable provisions of the Companies Act, 2013 and Clause 49 of the Equity Listing Agreement.

The following Independent Directors, viz., Shri V.T. Moorthy, Shri M.R. Sivaraman, IAS(Retd.), Shri T.S. Raghavan and Dr.Shankar Narasimhan are seeking their re-appointments for a term of five consecutive years upto March 31, 2020.

The Independent Directors of your Company have given their certificates of independence, stating that they meet the criteria of independence as mentioned under Section 149 (6) of the Companies Act, 2013. The details of the training and familiarization programmes and the Annual Board Evaluation process for Directors have been provided in the Corporate Governance Report.

The policy on Director's appointment, including criteria for determining qualifications, positive attributes and independence of Director forms part of the Corporate Governance Report of this Annual Report.

BOARD EVALUATION

The evaluation of Board of Directors and the Board, as required under Section 149(8) of The Companies Act, 2013, read with Schedule IV under Chapter VIII and clause 49 of the listing agreement, were done through selected parameters related to their roles, responsibilities and obligations of the Board and functioning of the committee. The evaluation criteria for Directors was based on their participation, contribution/ guidance and suggestions for improvement, wherever required, made to the Company. The Board approved the evaluation results as presented by the Nomination Committee.

SEPARATE INDEPENDENT DIRECTORS' MEETINGS

The Independent Directors met during the year in the absence of Non-Independent Director and discussed inter alia the performance of Non-Independent Directors and the Board as a whole and the quality, quantity and timeliness of the flow of information between the Company management and the Board for effective and reasonable performance of their duties.

NUMBER OF MEETINGS OF THE BOARD

During the financial year 2014-2015, the Board met six times and the details of which are given in the Report on Corporate Governance that forms part of the Annual Report. The time gap between two meetings as required under the listing agreement was well within the period.

BOARD COMMITTEES

Presently, the Board has four Committees, viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee and Risk Management Committee, comprising of the required combination of Non Independent and Independent Directors. Committee wise details are furnished in the Report on Corporate Governance section of the Annual Report.

ANNUAL RETURN

The details forming part of the extracts of Annual Return under Form MGT-9, pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished as an Annexure-D.

RESEARCH AND DEVELOPMENT

Your Company successfully commercialized production of a new product which finds application in the Water and Waste Water Industry. Your company is working on the development of two more new products, one finding application in the sanitation and food preservative industry, which will be commercialized in financial year 2015-2016, and another product, a Sulphuric Acid derivative which finds applications in the textiles, water treatment and food industries

SAFETY, HEALTH AND ENVIRONMENT PROTECTION (SHE)

Your Company is committed to sound Safety Health and Environmental Management Systems and processes and has implemented various best practices during the year, which helped to maintain its good safety record.

Your Company is Integrated Management System (IMS) certified. This comprises ISO 9001–2008 for Quality Management System (QMS), ISO 14001-2004 for Environment Management, System (EMS) & OHSAS 18001:2007 for Occupational Health, and Safety Assessment Series for Safety Management System by DNV GL AS, India.

We ensure that economic considerations do not compromise safety and environment protection measures and the Board has mandated accordingly. We are constantly working to reduce the use of corrosive material, conserve energy and water, reduce chemical consumption, and recycle water and process wastes.

Your Company regularly updates its safety and risk management processes, conducts safety audits, and carries out HAZOP study for existing and new projects. Your Directors also periodically visit the factory to review the safety arrangements. Their suggestions are implemented systematically.

Your Company motivates employees, workers and contract workmen, through training on aspects related to safety, and by rewarding the best performers in the area of safety and environment.

As recommended by the Members of the Audit Committee, the Company takes continuous measures towards structural and foundation rehabilitation work and takes corrective action wherever necessary for further strengthening safety features of the plants, for safe operations.

Your Company periodically conducts on-site mock drills and actively coordinates with the local government and other nearby companies for off- site emergency mock drills and mutual aid.

MANAGEMENT POLICY

We, at Tanfac Industries Limited, are committed to continual improvement of the processes affecting quality, cost, and delivery, and also the environment, in order to prevent pollution and to comply with the requirements of customers, interested parties and the public

MANAGEMENT OBJECTIVE

Your Company's Management Policy entails:

- Meeting customer needs and expectations.

- Compliance with all applicable environmental regulations and other related requirements.

- Continuous improvement of Quality Management System (QMS) and Environmental Management System (EMS) through monitoring of performance indicators, identifying and updating environmental aspects, implementing management programmes, and pollution prevention.

- Establishing and reviewing management objectives at functional level, to meet contemporary requirements for improvement of the management system.

- Elimination of waste and conservation raw materials, energy and water.

- Involvement of staff in order to bring about a better work environment and culture.

- To provide value for money to our customers through continuous up gradation of technology and enhancing productivity through benchmarking.

- Maintaining a safe and healthy work environment.

- Minimize customer complaints and improve customer perception / feedback.

- Communicate the policy to all persons working for or on behalf of the organization.

- To take all safety measures as mandated by law and by the Board.

- The Environment Management Cell ensures effective implementation of the policy.

Your management allocates all necessary resources on a priority basis.

CORPORATE GOVERNANCE

Your Company is strongly committed towards its philosophy of Corporate Governance. The Company has already constituted a Committee of Directors to assist the Board in good Corporate Governance. Your Company affairs are managed in a fair manner. The Corporate Governance Report, along with the Auditors certificate regarding compliance of the conditions of the Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchange, is attached herewith.

A Certificate of the CEO and CFO of the Company, in terms of sub-clause (IX) of Clause 49 of Listing Agreement, inter alia, confirming the correctness of the financial statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed.

Your Directors are pleased to report that the Company is fully complied with the SEBI guidelines and corporate governance as on financial year ended 31st March, 2015 and continue to comply with the same.

INSURANCE

The Company's properties of fixed asset, including building, plant and machinery, and insurable assets and currents assets including stock of raw materials, finished goods, stores and spares etc., are adequately insured.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

As required under clause 49(VIII)(D) of the listing agreement with the stock exchanges, the Management's Discussion and Analysis Report for the year under review has been made as forming part of the Annual Report.

PERSONNEL

Pursuant to Section 197(12) of The Companies Act, 2013, read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of disclosure of remuneration are not applicable to the Company as no employees are covered under the specified ceiling of drawing remuneration of Rs, 5 Lakhs per month.

Except sitting fees for attending the Board, Audit Committee and Stakeholders Relationship Committee meetings, no other remuneration is being paid to the Directors. Shri Lalit Naik, Manager and Director has not drawn any remuneration, including sitting fees, for attending the Board/Committee meetings.

Details pertaining to remuneration as required under Section 197(12) of The Companies Act, 2013 read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished forms part of the annual report.

INDUSTRIAL RELATIONS

Employee relations continued to be cordial throughout the year. The whole-hearted support of employees in the implementation of WCM, ISO-9002 systems, and ISO 14001 amply demonstrate the high level of team work, sense of belonging to the organization, and solidarity with the Management.

PUBLIC DEPOSIT

The Company has not accepted any deposits from the public during the year and there was no outstanding towards unclaimed deposit payable to depositors as on 31st March, 2015.

SUSTAINABLE DEVELOPMENT – COMMUNITY DEVELOPMENT INITIATIVES – CORPORATE SOCIAL RESPONSIBILITY (CSR):

CSR is a continuing commitment by business to behave ethically and contribute to economic development, while improving the quality of life of the workforce and their families, as well as of the local community and the society at large.

Your company has continued its commitment to CSR activities despite continuous losses. Your Company's CSR initiatives are an integral part of overall business policy and aligned with its business goals.

Projects are identified in a participatory manner, in consultation with the community, literally sitting with them and gauging their basic needs. We take recourse to the participatory rural appraisal mapping process. Subsequently, based on a consensus and in discussion with the village panchayats and other influential's, the projects are prioritized.

Arising from this, the focus areas that have emerged are education, health care, sustainable livelihood, infrastructure development, and espousing of social causes. All our community projects are carried out under the aegis of The Aditya Birla Centre for Community Initiatives and Rural Development.

Your Company is carrying out its community welfare activities in and around Cuddalore for more than a decade. Your Company has been reaching out to under-served communities under the aegis of The Aditya Birla Centre for Community Initiatives and Rural Development. This has entailed transcending business interests and grappling with the "Quality of Life" challenges the poor face, and working to make a meaningful difference to them.

Our Group vision is:

"To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country's human development index."

Your Company's focus areas include education, health care, sustainable livelihood, infrastructure development and espousing social causes. The specific initiatives include:

- Girl child education under Kasturba Gandhi Balika Vidyalaya (KGBV) Scheme

- Health - including Family Welfare and Total Health (Disease) Management

- Child/Women Empowerment Projects

- Need Assessment

- Identification of funding sources and opportunities

- Link up with Government agencies, NGO's and other potential partners

- Implementation of community upliftment projects involving government authorities, village Panchayats and end beneficiaries in specific areas of social development, such as health, education, water management, etc. The projects also cater to the needs of children, women, adolescents, the physically challenged, and to the overall development of villages and communities.

OTHER DISCLOSURES

- There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations

- Your Company has not issued any shares with differential voting.

- There was no revision in the financial statements.

- Your Company has not issued any sweat equity shares.

- During the year your Company has not received any complaints under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

HUMAN RESOURCES DEVELOPMENT:

Your Company is widely acclaimed for its people development practices and has reinforced its position in this area. This, coupled with the ability to attract best talent, provides a competitive edge to the organization. Business priorities are aligned with the aspirations of employees, culminating in the development of an empowered and responsive human capital.

Our work environment encourages innovation and creativity and promotes a culture that facilitates entrepreneurial activity within the organization, while adhering to Group values. Your Company has been investing in progressive employee relations practices to build capability at the grass root level. Employees are motivated through various skill development, engagement and volunteering programs, for their continuous performance improvement.

ACKNOWLEDGEMENT:

Your Directors wish to express their appreciation for the continued assistance and cooperation of the consortium banks, Government authorities, customers, vendors and members during the year under review.

On behalf of the Directors and all shareholders, I would like to place on record my sincere appreciation of the committed services by the entire TANFAC family, comprising officers, staff and workers.

Finally, I look forward to your continued understanding and support in taking your Company forward in these challenging times.

For and on behalf of the Board

Chennai (LALIT NAIK)

10.8.2015 DIRECTOR


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 40th Annual Report along with the Audited Accounts of your Company for the financial year ended 31st March 2014 for your review.

FINANCIAL RESULTS

[Rs. in Crores]

Year ended Year ended Details 31st March 31st March 2014 2013

Turnover 116.32 143.42

Gross Profit/ [Loss] after Interest but 0.31 12.51 before Depreciation and Taxation

Less: Depreciation and Impairment 5.83 9.38

Profit/[Loss] before Taxation (5.52) (21.88)

Exceptional items/ Excess Income Tax provision - (3.82)

Profit/(Loss) after Exceptional items (5.52) (18.06)

Less: Deferred Tax/ (Reversal) (2.48) (4.04)

Profit/(Loss) after Tax (3.03) (14.02)

Extraordinary items/ Insurance claim - (2.67)

Net profit/[Loss] for the period (3.03) (11.35)

Add: Balance brought forward (40.57) (29.22)

Profit/(Loss) available for appropriation (43.60) (40.57) Transferred from General Reserves

Balance Carried forward to Balance Sheet (43.60) (40.57)

OPERATIONS AND OVERALL PERFORMANCE:

The Company''s sales performance was impacted due to the continued sluggishness in the key end user segments of Hydrofluoric Acid and stiff competition from China in Aluminium Fluoride segment. Despite this 19% drop in sales, the Company had improved its operational performance due to the following efforts by the management :

(a) Continuous improvements in operational parameters like consumption norms of raw materials and utilities

(b) Continuous focus on cost reduction

(c) Developing alternate sources for its main raw material Fluorspar from Thailand and Kenya to take advantage of competition and reduce dependence on China

(d) Improved customer and product mix

(e) Continuously engaging with suppliers of other raw materials for reduction in rates compared to market price.

(f) Tight control on Working Capital

These factors helped in achieving Profit Before Depreciation, Interest and Tax (PBDIT) of Rs. 10.02 crores during the year compared to a loss of X 0.95 crore during the previous year.

However, significant depreciation of Indian Rupee against US Dollar and also its volatility in Foreign Currency market, higher interest outgo on working capital limits due to poor credit rating impacted the cash profit. Profit before Depreciation and Tax (PBDT) during the year was X 0.31 crores against a loss of X 12.50 Crores during the previous year.

DIVIDEND:

As the Company has incurred a loss in the current year, your Directors have not recommended any dividend for the year 2013-2014.

FUTURE OUTLOOK:

The Company is considering moving to new-generation products using the existing infrastructure to ensure its future growth. Your Company will continue to focus on moving up the value chain in speciality products where it can have a competitive advantage and grow sales volumes and margins.

For optimum utilisation of its Isobutyl Acetophenone (IBAP) plant, your Company has signed a Memorandum of Understanding (MoU) with an interested party for producing IBAP on a long term conversion basis.

Your Board of Directors is optimistic on the turn around of the Company in coming years.

ALUMINIUM FLUORIDE:

Your Company has strategically reduced the production of Aluminium Fluoride due to its lower contribution. However, your Company will continue to service its long term strategic customers.

HF ACID:

Sluggish demand continued in key end user segments of Hydrofluoric Acid - Refrigerant gases, Fluoro polymers and stainless steel leading to under utilisation of its HF capacity.

EXPORTS:

The Export turnover was higher by 10% at Rs. 17.13 crores as compared to Rs. 15.64 cores in the previous year despite lower off take by its overseas customers given the market demand and stiff competition from China.

Your Company endeavors continuously to increase export revenue by expanding its customer base in new countries.

RESEARCH AND DEVELOPMENT:

Your Company successfully carried out pilot trials of a product which finds application in Water and Waste Water Industry. This product will be commercially launched this year. Additionally, the Company is in the process of developing few more products which find application in various segments like the Textiles, Pulp and Paper and the Chemical Industries.

SAFETY, HEALTH AND ENVIRONMENT PROTECTION (SHE):

Your Company is committed to follow Safety, Health and Environmental Management System and process.

A report on Safety, Health and Environmental Management System and Process is already forming part of the Management Discussion and Analysis.

RESIGNATION OF DIRECTOR

Shri M.S. Shanmugam, IAS, Director of the Company, representing TIDCO has been transferred to Tamil Nadu Health System Project as Project Director. Consequent to this, Tamilnadu Industrial Development Corporation Limited (TIDCO) vide its letter No.71/SECT/2014 dated 13th March, 2014 has forwarded the letter of resignation by Shri M.S. Shanmugam, IAS as Director of the Company. The Board of Directors of the Company at their meeting held on 29th May, 2014, accepted the resignation and recorded the appreciation of the valuable services rendered by Shri M.S. Shanmugam, IAS, during his tenure as Director of the Company.

RETIREMENT BY ROTATION:

In terms of Articles of Association of the Company, Shri Kannan K Unni, Director, retires by rotation and being eligible, offer himself for re-appointment. As required under Clause 49 (IV) (G) of the Listing Agreement of the Stock Exchanges, the relevant details of Directors retiring by rotation and seeking re-appointment at the ensuing Annual General Meeting are given in the annexure to the notice of the Annual General Meeting. The Company has received the Notice in writing along with the requisite deposit from a Member proposing Shri Kannan K Unni for appointment as an Independent Director as per Section 149(4) of The Companies Act, 2013.

The Company has received declarations from all the Independent Directors of the Company. These confirm that they meet with the criteria of independence as prescribed both under Section 149(6) of The Companies Act, 2013 and under clause 49 of the listing agreement with the Stock Exchanges by the Company.

COMPANY SECRETARY

The Company had appointed a full time Company Secretary on 1st February, 2013 as required under the provision contained in The Companies Act, 1956. Due to personal reason, he has resigned from the services of the Company as Company Secretary with effect from 3rd January, 2014.

In the absence of the Company Secretary, the financial statements have not been authenticated by a whole time Company Secretary under section 215 of the Companies Act 1956 and under the new provision of Section 134 of The Companies Act, 2013.

The Company''s CFO has been authorised by the Board as Compliance Officer and he acts as Secretary to the Audit Committee/ Investors Relation Committee, complying with the requirements under the Companies Act and listing agreement with the Stock Exchanges until the appointment of full time Company Secretary. He also assists the Board in the conduct of the affairs of the Company, facilitate the convening of meetings and attends the Board, Committee and General Meetings.

The Company is taking continuous efforts to appoint a full time Company Secretary in line with the provision of section 203 of The Companies Act 2013.

CORPORATE GOVERNANCE:

Your Company is strongly committed Corporate Governance. The Company has already constituted Committees of Directors to assist the Board in good Corporate Governance. The Corporate Governance Report along with the Auditors certificate regarding compliance of the conditions of the Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchange is attached herewith.

A Certificate of the CEO and CFO of the Company in terms of sub-clause(v) of Clause 49 of Listing Agreement, inter alia, confirming the correctness of the financial statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed.

Your Directors are pleased to report that the Company has fully complied with the SEBI guidelines and corporate governance as on the financial year ended 31st March, 2014 and continued to comply with the same.

The Ministry of Corporate Affairs has made a majority of the provisions of the Companies Act, 2013 effective from 1st April, 2014. The new act is a positive step towards strengthening the corporate governance regime in the country.

MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

As required under clause 49 of the listing agreement with the stock exchanges, Management''s Discussion and Analysis Report for the year under review forms part of the Annual Report.

AUDITORS & AUDITORS'' REPORT:

M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai, the Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter from the above auditors to the effect that their re- appointment, if made, would be within the prescribed limits under Section 141(3)(g) of The Companies Act, 2013 and that they are not disqualified for re-appointment.

COST AUDITOR

The Company has filed the cost audit report for the financial year 2012-2013 under Form I -XBRL with the Ministry of Corporate Affairs within the stipulated time of 180 days from the end of the financial year.

Pursuant to the directions of the Central Government under the provisions of Section 233B of The Companies Act, 1956, Shri N. Krishnakumar, Cost Accountant, Cuddalore (Membership No.27885) has been appointed to conduct an audit of the cost accounts for the financial year 2013-2014 pertaining to Inorganic and Organic products manufactured by the Company covered under Central Excise Tariff Heading Chapter Nos.28 and 29 respectively, as notified by the Central Government vide its Order F.No.52/26/CAB-2010 dated 24th January, 2012 and such other amendments thereto by the Government from time to time and necessary forms have been filed.

INTIMATION TO BIFR

The net worth of the Company for the financial year 2013-2014 has eroded by more than 50% of its peak net worth during the immediately preceding four financial years.

As required under the provisions of Section 23(1)(a)(i) of The Sick Industrial Companies (Special Provisions) Act, 1985, your Company will comply with the above provisions within the stipulated time for the financial year ending 31st March, 2014 after the accounts are adopted by the Members at their ensuing Annual General Meeting to be held on 13th August, 2014.

PARTICULARS OF EMPLOYEES:

The details of employees drawing remuneration, requiring disclosures under Section 217(2A) of The Companies Act, 1956, read with The Companies (Particulars of Employees) Rules, 1975, as amended, shall be made available to the Shareholders on his/ her specific request to the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required under Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, a statement containing the particulars relating to conservation of energy, research and development and technology absorption is annexed.

INDUSTRIAL RELATIONS:

Employee relations continued to be cordial throughout the year. The whole-hearted support of employees in the implementation of WCM, ISO-9002 systems and ISO 14001 amply demonstrates team work and a sense of belongingness with the organization and solidarity with your Management.

PUBLIC DEPOSIT

The Company has not accepted any deposits from the Public during the year. There was no outstanding towards unclaimed deposit payable to depositors as on 31st March, 2014.

SUSTAINABLE DEVELOPMENT - COMMUNITY DEVELOPMENT INITIATIVES - CORPORATE SOCIAL RESPONSIBILITY (CSR) :

Corporate Social Responsibility (CSR) is a continuing commitment by business to behave ethically and contribute to the economic development while improving the quality of life of the workforce and their families as well as of the local community and the society at large.

Though your Company does not fall under the ambit of Section 135 of the Companies Act 2013, it continues to commit itself to the tenets of CSR through the active support and guidance of the Aditya Birla Centre for Community Initiatives and Rural Development. Its CSR initiatives are an integral part of overall business policy and aligned with its business goals.

Projects are identified in a participatory manner, in consultation with the community, literally sitting with them and gauging their basic needs. Projects are prioritized based on consensus arising out of discussions with the Village Panchayats and other influential person.

Your Company is carrying out its community welfare activities in and around Cuddalore for more than a decade, reaching out to underserved communities under the aegis of The Aditya Birla Centre for Community Initiatives and Rural Development. This entails transcending business interests and grappling with the "Quality of Life" challenges the poor face and working towards making a meaningful difference to them.

Our Group vision is:

"To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country''s human development index."

Your Company''s focus areas include education, health care, sustainable livelihood, infrastructure development and espousing social causes.

- Girl child education under Kasturba Gandhi Balika Vidyalaya (KGBV) Scheme

- Health - including Family Welfare and Total Health (Disease) Management

- Child/Women Empowerment Projects

- Need Assessment

- Identification of funding sources and opportunities

- Link up with Government agencies, NGO''s and other potential partners

- Implementation of Community Upliftment Projects involving government authorities, Village Panchayat and the end beneficiaries in specific areas of social development, such as health, education, water management, etc., to cater to the needs of children, women, adolescents, and the physically challenged, as also to contribute to the overall development of villages/community.

HUMAN RESOURCES DEVELOPMENT:

Your Company is widely acclaimed for its people development practices and has reinforced its position in this area. This, coupled with the ability to attract best talent, provides a competitive edge to the organization. So business priorities are aligned with the aspirations of employees, culminating in the development of an empowered and responsive human capital. Our work environment encourages innovation and creativity and promotes a culture that facilitates entrepreneurial activity within the organization and adhering to group values. Your Company has been investing in progressive employee relations practices to build capability at the grass root level. Regular programs are held to enhance the knowledge, skill and performance commitment of the employees for continual performance improvement.

ACKNOWLEDGEMENT:

Your Directors wish to express their appreciation for the continued assistance and cooperation rendered by the consortium banks, Government authorities, customers, vendors and members during the year under review.

On behalf of the Directors and all of you Shareholders, I would like to place on record my sincere appreciation of the committed services by the entire TANFAC family consisting of officers, staff and workers.

Finally, I look forward to your continued understanding and support in taking your Company forward in these challenging times.

For and on behalf of the Board

Chennai

29.5.2014 CHAIRMAN


Mar 31, 2013

The Directors are pleased to present the 39th Annual Report along with the Audited Accounts of your Company for the financial year ended 31st March 2013 for your review.

FINANCIAL RESULTS

[Rs.in Crores]

Year ended Year ended Details 31st March 31st March 2013 2012

Turnover 143.42 146.36

Gross Profit/ [Loss] after Interest but (12.51) 11.14

before Depreciation and Taxation

Less: Depreciation and Impairment 9.38 5.99

Profit/[Loss] before

Taxation (21.88) (17.13)

Exceptional items/

Excess Income Tax provision (3.82)

Profit/(Loss) after

Exceptional items (18.06) (17.13)

Less: Deferred Tax / (Reversal) (4.04) 2.54

Profit/(Loss) after Tax 14.02 (19.68)

Extraordinary items / Insurance claim (2.67) 4.42

Net profit/[Loss] for the period (11.35) (24.10)

Add: Balance brought forward (29.22) (5.12)

Profit/(Loss) available for appropriation (40.57) (29.22)

Transferred from General Reserves

Balance Carried forward to Balance Sheet (40.57) (29.22)

OPERATIONS AND OVERALL PERFORMANCE:

During the year under review Sales Turnover has decreased to Rs.143.42 Crores against Rs.146.36 crores in the previous year which is marginally lower at 2% on account of sluggish demand.

Your Company has suffered loss after interest but before depreciation and taxation at Rs.12.51 Crores as against Rs. 11.14 Crores in the previous year due to continued sluggish demand in key end user segments of Hydrofluoric Acid and stiff competition from China in Aluminium Fluoride segment leading to lower sales volumes and higher interest outgo.

DIVIDEND:

As the Company has incurred loss in the current year, your Directors have not recommended any dividend for the year 2012-2013.

FUTURE OUTLOOK:

Due to sluggish demand in current business segments, the Company is considering moving to new generation products using the existing infrastructure to ensure its growth in the future. The Company does not have the required technology, know-how and experience in these new generation products. Further technology for these new products is not easily available.

The Company, is therefore, approaching existing players in these new lines of business for a possible tie up or any other suitable arrangement(s) which is mutually acceptable, in the overall interest of the company.

Your Company will continue to focus on moving up value chain in speciality products where we can have competitive advantage and grow our sales volumes and margins.

Your Board of Directors are optimistic on the turn around of the Company in coming years.

ALUMINIUM FLUORIDE:

Your Company has strategically reduced the production of Aluminium Fluoride due to its lower contribution. However, your Company will continue to service its long term strategic customers.

HF ACID:

Sluggish demand continued in key end user segments of Hydrofluoric Acid - Refrigerant gases, Fluoro polymers and stainless steel leading to under utilisation of HF capacity.

EXPORTS:

Export turnover was lower by 39% at Rs. 15.64 crores as compared to Rs. 25.58 cores in the previous year due to lower off take by overseas customer on account of market demand and stiff competition from China.

Your Company endeavors continuously to increase export revenue by expanding customer base in new geographies.

RESEARCH AND DEVELOPMENT:

Your Company successfully commercialised new products which are Pharma and Agrochemical intermediate. Also the Company is in process of developing another few products which finds application in agrochemical industry.

SAFETY, HEALTH AND ENVIRONMENT PROTECTION (SHE):

Your Company is committed to following Safety, Health and Environmental Management System and Process.

Your Company is Integrated Management System certified. This comprises ISO 14001- 2004 for Environment Management System Standards, Occupational Health and Safety Assessment Series (OHSAS) 18001:2007 for Safety and ISO 9001 - 2008 for Quality Management by Det Norske VERITAS (DNV) India.

We ensure that economic considerations do not compromise Safety and Environment Protection measures. Identifying activities that offer scope for conserving energy, water, reduce chemical consumption norms and recycling water and waste in process are ongoing initiatives.

Your Company continuously updates its safety management and risk management processes to carry out HAZOP study for the existing and new projects. Accordingly Safety Management programmes are implemented.

Your Company motivates employees, workers and contract workmen through training and retraining on safety aspects and also rewards best performers.

As recommended by the Members of the Audit Committee, the Company has involved external consultants to assess the structural safety of the plants after cyclone ''Thane''. The Company had carried out structural and foundation rehabilitation work in Anhydrous Hydrofluoric Acid and Aluminium Fluoride plant and taken corrective action wherever necessary for further strengthening safety features of the plants for safe operations.

Your Company carries out safety management programmes to upgrade safety standards. Your Company periodically conducts onsite mock drills and actively coordinates with the local government and other nearby companies for off site emergency mock drill.

RETIREMENT BY ROTATION:

Shri A.K. Agarwala, Shri M.R. Sivaraman, IAS (Retd.) and Dr. Shankar Narasimhan, retire by rotation and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE:

Your Company is strongly committed towards its philosophy of Corporate Governance. The Company has already constituted Committees of Directors to assist the Board in good Corporate Governance. The Corporate Governance Report along with the Auditors certificate regarding compliance of the conditions of the Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchange is attached herewith.

AUDITORS & AUDITORS'' REPORT:

M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai, the Auditors of the Company retire at the conclusion of this Meeting and are eligible for re-appointment.

The observations made in the auditors'' report are self-explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

COST AUDITOR

The Company has filed the cost audit report for the financial year 2011-2012 under Form I -XBRL with the Ministry of Corporate Affairs within the stipulated time of 180 days from the end of the financial year.

Pursuant to the directions of the Central Government under the provisions of Section 233B of The Companies Act, 1956, Shri N. Krishnakumar, Cost Accountant, Cuddalore (Membership No.27885) has been appointed to conduct an audit of the cost accounts for the financial year 2012-2013 pertaining to Inorganic and Organic products manufactured by the Company covered under Central Excise Tariff Heading Chapter Nos.28 and 29 respectively, as notified by the Central Government vide its Order F.No.52/26/CAB-2010 dated 24th January, 2012 and such other amendment thereto by the Government from time to time and necessary forms have been filed.

INTIMATION TO BIFR

The networth of the Company for the financial year 2012-13 has eroded by more than 50% of its peak networth during the immediately preceding four financial years.

As required under the provisions of Section 23(1)(a)(i) of The Sick Industrial Companies (Special Provisions) Act, 1985, your Company will comply with the above provisions within the stipulated time for the financial year ending 31st March 2013 after the accounts are adopted by the Members at their ensuing Annual General Meeting to be held on 12th September, 2013.

PARTICULARS OF EMPLOYEES:

The details of employees drawing remuneration, requiring disclosures under Section 217(2A) of The Companies Act, 1956, shall be made available to the Shareholders on his/ her specific request.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required under Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, a statement containing the particulars relating to conservation of energy, research and development and technology absorption is annexed.

INDUSTRIAL RELATIONS:

Employee relations continued to be cordial throughout the year. The whole-hearted support of employees in the implementation of WCM, ISO-9002 systems and ISO 14001 amply demonstrates team work and a sense of belongingness with the organization and solidarity with your Management.

PUBLIC DEPOSIT

The Company has not accepted any deposits from the Public during the year within the meaning of Section 58-A of The Companies Act, 1956.

SUSTAINABLE DEVELOPMENT - COMMUNITY DEVELOPMENT INITIATIVES - CORPORATE SOCIAL RESPONSIBILITY (CSR):

CSR is a continuing commitment by business to behave ethically and contribute to the economic development while improving the quality of life of the workforce and their families as well as of the local community and the society at large.

Your Company''s CSR initiatives are an integral part of overall business policy and aligned with its business goals.

Your Company is carrying out its community welfare activities in and around Cuddalore for more than a decade, reaching out to underserved communities. This entails transcending business interests and grappling with the "Quality of Life" challenges the poor face and working towards making a meaningful difference to them.

Our Group vision is:

"To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country''s human development index."

Your Company''s focus areas include education, health care, sustainable livelihood, infrastructure development and espousing social causes.

- Girl child education under Kasturba Gandhi Balika Vidyalaya (KGBV) Scheme

- Health - including Family Welfare and Total Health (Disease) Management

- Child/Women Empowerment Projects

- Need Assessment

- Identification of funding sources and opportunities

- Link up with Government agencies, NGO''s and other potential partners

- Implementation of Community Upliftment Projects involving government authorities, Village Panchayat and the end beneficiaries in specific areas of social development, such as health, education, water management, etc., to cater to the needs of children, women, adolescents, and the physically challenged, as also to contribute to the overall development of villages/community.

HUMAN RESOURCES DEVELOPMENT:

Your Company believes that our people give us our competitive edge. So business priorities are aligned with the aspirations of employees, culminating in the development of an empowered and responsive human capital. Our work environment encourages innovation and creativity and promotes a culture that facilitates entrepreneurial activity within the organization and adhering to group values. Regular programs are held to enhance the knowledge, skill and performance commitment of the employees for continual performance improvement.

ACKNOWLEDGEMENT:

Your Directors wish to thank the Government of India, Government of Tamilnadu, and the Banks for their guidance, help and support.

On behalf of the Directors and all of you Shareholders, I would like to record my sincere appreciation of the commitment of the entire TANFAC family consisting of officers, staff and workers.

Finally, I look forward to your continued understanding and support in taking your Company forward in these challenging times.

For and on behalf of the Board

Chennai

31.07.2013 CHAIRMAN


Mar 31, 2012

The Directors are pleased to present the 38th Annual Report along with the Audited Accounts of your Company for the financial year ended 31st March 2012 for your review.

FINANCIAL RESULTS

[Rs in Crores]

Details Year ended Year ended 31st March 31st March 2012 2011

Turnover 146.35 152.43

Gross Profit/ [Loss] after Interest but before Depreciation and Taxation [11.14] 7.68

Less: Depreciation 5.99 5.37

Profit/[Loss] After [17.13] 2.31 Depreciation

Less: Provision for Taxation - Current Tax - -

Extraordinary items 4.42 -

Net Profit / [Loss] after [21.55] 2.31 Extraordinary items

Less: Deferred Tax / 2.54 [0.68] Reversal

Net profit/[Loss] for the (24.10) 2.99 period

Add: Balance brought forward (5.12) (8.11)

Profit/(Loss) available for (29.22) (5.12) appropriation

Transferred from General Reserves - 0.58

Proposed dividend

- (Current Year: NIL - Previous year: Rs 0.50 per Equity Share) - 0.50

Dividend Tax on Equity Shares - 0.08

Balance Carried forward to Balance Sheet (29.22) (5.12)

OPERATIONS AND OVERALL PERFORMANCE

During the year under review the Sales Turnover at Rs146.35 Crores is lower against Rs152.43 crores in the previous year which is marginally lower at 4% on account of loss of production due to cyclone "Thane".

Your Company has suffered loss before depreciation, interest and taxation at Rs 11.14 Crores as against profit of Rs 7.68 Crores.

YOUR COMPANY'S OPERATIONS HAVE BEEN IMPACTED BY:

- The slow down in demand for Hydrofluoric Acid and Aluminium Fluoride leading to a lower margin.

- Severe damage of Plant and Machinery due to the cyclone 'Thane', resulting in the shut down of the plants for more than 30 days.

- Foreign Exchange losses because of highly volatile Indian Rupee.

- Higher Interest charge, given the increase in interest rates and higher working capital requirements.

DIVIDEND:

As the Company has incurred a loss in the current year, your Directors have not recommended any dividend for the year 2011-2012.

FUTURE OUTLOOK:

The economic slow-down in the global economy as also in India has adversely affected most of the sectors of the economy. As a manufacturer, your Company's working is closely linked to the development and growth of its customers. The Company continued to face stiff competition from China in most of its products. Our strategy would be to spread the risk of products across various geographies. We will continue to focus on moving up the value chain in speciality products where we can have a competitive advantage and grow our sales volumes and margins.

Your Company has taken a number of initiatives to reduce the cost of production which should enable it to compete effectively with Chinese products and increase sales volumes and margins. Your Board of Directors are optimistic on the turnaround of the Company in 2012-13.

ALUMINIUM FLUORIDE:

Your Company has reduced the production of Aluminium Fluoride due to its lower contribution. However, your Company will continue to service its long term strategic customers.

HF ACID:

Your Company is a dominant player in the Hydrofluoric Acid [HF] market and will continue to maintain its dominant position by increasing volumes in future.

EXPORTS:

The export turnover fell by 23% at Rs 25.58 crores as compared to Rs 33.06 cores in the previous year as the off take by overseas customers was much less on account of market demand.

Your Company endeavors continuously to increase its export revenue by expanding customer base in new geographies.

IMPACT ON CYCLONE "THANE" :

Cyclone "Thane" struck Cuddalore in the early hours of 30th December, 2011. Your Company's proactive measures ensured that there was no injury to any person in the plant as also there were no leakages thus avoiding any impact on the environment inside or outside the factory premises. The damage to property and material are covered by insurance. The insurance claim is under process.

RESEARCH AND DEVELOPMENT:

Your company's R&D all has developed two new products during the year, which are drug and agrochemical intermediates. A sample of these products has been approved by multinational companies and the process of commercialization is under way.

Your company had improved upon the process of Specialty Organic Chemical whose quality is well accepted, it is now exploring the possibility of a tie up with interested parties for continuous production so as to improve the throughput and yield.

SAFETY, HEALTH AND ENVIRONMENT PROTECTION (SHE):

Your Company is committed to following Safety, Health and Environmental Management System and process.

Your Company is Integrated Management System certified. This comprises ISO 14001-2004 for Environment Management System Standards, Occupational Health and Safety Assessment Series (OHSAS) 18001:2007 for Safety and ISO 9001 - 2008 for Quality Management by Det Norske VERITAS (DNV) India.

We ensure that economic considerations do not compromise Safety and Environment Protection measures. Identifying activities that offer scope for conserving energy, water, reduce chemical consumption norms and recycling water and waste in process are ongoing initiatives.

Your Company continuously updates its safety management and risk management processes to carry out HAZOP study for the existing and new projects. Accordingly Safety Management programmes are implemented.

Your Company motivates employees, workers and contract workmen through training and retraining on safety aspects and also rewards best performers.

Your Company carries out safety management programmes to upgrade safety standards. Your Company periodically conducts onsite mock drills and actively coordinates with the local government and other nearby companies for off site emergency mock drill.

DIRECTORS:

TIDCO has nominated Shri M.S. Shanmugam, IAS, as Director of the Company in place of Selvi Apoorva, IAS, with effect from 6th August, 2011. TIDCO has withdrawn the nomination of Shri B. Elangovan as Director with effect from 22nd August, 2011. Dr. Pragnya Ram has resigned from the Board as Director with effect from 22nd August, 2011.

Your Company has received a Notice under Section 257 of The Companies Act, 1956, from a Member of the Company proposing the appointment of Shri M.S. Shanmugam, IAS, as Director in the forthcoming Annual General Meeting.

RETIREMENT BY ROTATION:

Shri V.T. Moorthy and Shri T.S. Raghavan, retire by rotation and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE:

Your Company is committed to ensuring the highest standards of Corporate Governance. The Company has already constituted Committees of Directors to assist the Board in good Corporate Governance. The Corporate Governance Report along with the Auditors certificate regarding compliance of the conditions of the Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchange is attached herewith.

APPOINTMENT OF COMPANY SECRETARY:

Mr. D.M. Thiyagesh, had resigned from the services of the Company as "Company Secretary" with effect from 17th September, 2011. The Company is in the process of appointing a full time Company Secretary under the provision of Section 383A of the Companies Act 1956. In the absence of the Company Secretary, financial statements have not been authenticated by a whole time company secretary under section 215 of the Companies Act 1956.

To comply with the statutory requirements in time, the Board had authorized its CFO to act as "Compliance Officer" with effect from 1st October, 2011, untill the appointment of Company Secretary. He will monitor the share transfer process, redressel of investors grievance, compliance of statutory compliances with the listed Stock Exchanges, SEBI, Registrar of Companies and other statutory requirements under The Companies Act, 1956. The Compliance Officer has also acted as Secretary to the Audit Committee.

AUDITORS & AUDITORS' REPORT:

M/s.Khimji Kunverji & Co., Chartered Accountants, Mumbai, the Auditors of the Company retire at the conclusion of this Meeting and are eligible for re-appointment.

The observations made in the auditors' report are self-explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

COST AUDITOR

The Company has filed the cost audit report for the financial year 2010-2011 under prescribed form with the Ministry of Corporate Affairs on 24.9.2011, within the stipulated time of 180 days from the end of the financial year. Pursuant to the directions of the Central Government under the provisions of Section 233B of The Companies Act, 1956, in respect of the audit of cost records of the Company for our Sulphuric Acid product, Shri V. Gopalakrishnan, Cost Accountant, has been appointed as Cost Auditor for the financial year ended 31.3.2012 and necessary forms have been filed by both the Company and Cost Accountant, Shri V. Gopalakrishnan, for his appointment.

PARTICULARS OF EMPLOYEES:

The details of employees drawing remuneration, requiring disclosures under Section 217(2A) of The Companies Act, 1956, shall be made available to the Shareholders on his/ her specific request.

CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required under Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, a statement containing the particulars relating to conservation of energy, research and development and technology absorption is annexed.

INDUSTRIAL RELATIONS:

Employee relations continued to be cordial throughout the year. The whole-hearted support of employees in the implementation of WCM, ISO-9002 systems and ISO 14001 amply demonstrates team work and a sense of belongingness with the organization and solidarity with your Management.

PUBLIC DEPOSIT

The Company has not accepted any deposits from the Public during the year within the meaning of Section 58-A of The Companies Act, 1956.

SUSTAINABLE DEVELOPMENT - COMMUNITY DEVELOPMENT INITIATIVES - CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your Company's CSR initiatives are an integral part of overall business policy and aligned with its business goals.

Your Company is carrying out its community welfare activities in and around Cuddalore for more than a decade, reaching out to underserved communities. This entails transcending business interests and grappling with the "Quality of Life" challenges the poor face and working towards making a meaningful difference to them.

Our Group vision is:

"To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country's human development index."

Your Company's focus areas include education, health care, sustainable livelihood, infrastructure development and espousing social causes.

- Girl child education under Kasturba Gandhi Balika Vidyalaya (KGBV) Scheme

- Health - includeing Family Welfare and Total Health (Disease) Management

- Child/Women Empowerment Projects

- Need Assessment

- Identification of funding sources and opportunities

- Link up with Government agencies, NGO's and other potential partners

- Implementation of Community Upliftment Projects involving government authorities, Village Panchayat and the end beneficiaries in specific areas of social development, such as health, education, water management, etc., to cater to the needs of children, women, adolescents, and the physically challenged, as also to contribute to the overall development of villages/community.

As a part of CSR initiatives, your Company has taken welfare measures by providing basic amenities in and around villages of the factory premises which have badly affected by "Thane" cyclone, which crossed coastal area of Cuddalore on 30th December, 2011.

HUMAN RESOURCES DEVELOPMENT:

Your Company believes that our people give us our competitive edge. So business priorities are aligned with the aspirations of employees, culminating in the development of an empowered and responsive human capital. Our work environment encourages innovation and creativity and promotes a culture that facilitates entrepreneurial activity within the organization and adhering to group values. Regular programs are held to enhance the knowledge, skill and performance commitment of the employees for continual performance improvement.

Directors' Responsibility Statement u/s 217 (2AA) of the companies Act, 1956 as amended.

Your Directors would like to inform its members that the audited accounts containing the financial statements for the financial year 2011 - 2012 are in full conformity with the requirement of the Act. They believe that the financial statements reflect fairly the form and substance of transactions carried out during the year and reasonably present the company's financial conditions and results of operations.

Your Directors further confirm that:

i) in the preparation of annual accounts, applicable accounting standards have been followed;

ii) the accounting policies are consistently applied and reasonable, prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the company at the end of the financial year;

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT:

Your Directors wish to thank the Government of India, Government of Tamilnadu, and the Banks for their guidance, help and support.

On behalf of the Directors and all of you Shareholders, I would like to record my sincere appreciation of the commitment of the entire TANFAC family consisting of officers, staff and workers.

Finally, I look forward to your continued understanding and support in taking your Company forward in these challenging times.

For and on behalf of the Board

Chennai

29.05.2012 CHAIRMAN


Mar 31, 2010

The Directors are pleased to present the 36th Annual Report along with the Audited Accounts of your Company for the financial year ended 31st March 2010 for your review.

FINANCIAL RESULTS

[Rs. in Crores]

Details Year ended Year ended 31st March 31st March 2010 2009

Turnover 147.90 216.69

Gross Profit [Loss] after Interest but before

Depreciation and Taxation [6.22] 5.52

Less: Depreciation 5.23 3.97

Profit/[Loss] After _

Depreciation [11.45] 1.55

Less: Provision for Taxation

- Current Tax - 0.15

- Fringe Benefit Tax - 0.17

Net Profit / [Loss] [11.45] 1.23

Less: Deferred Tax [1.67] 0.43

Net profit/[Loss] after tax [9.78] 0.80

Add: Balance brought forward 1.67 2.03

Profit available for appropriation [8.11] 2.83

Less: General reserve Proposed dividend

- (Current year : Rs.NIL Previous year: Re. IZ- per Equity Share (10%) - 1.00

Dividend Tax on Equity Shares - 0.16

Balance Carried forward to Balance Sheet [8.11] 1.67

OPERATIONS AND OVERALL PERFORMANCE:

Your Company has sales turnover at Rs. 147.90 Crores is lower by 32% compared to the previous year mainly due to lower sales volume of Aluminum Fluoride, Specialty Fluorides as well as lower realization in most of the products.

Your Companys performance has been constrained due to -

- A steep drop in demand for Aluminum Fluoride and realization

- Lower demand for specialty fluorides

- Poor realization for Sulphuric Acid

- Technical difficulties relating to new organic products being implemented

- Provisions on account of past liabilities treated as contingent liability earlier

Your company however increased the sales volume of Hydrofluoric Acid to counter lower volumes of Aluminum Fluoride.

Your company suffered a gross loss after interest but before depreciation and taxation of Rs. 6.22 Crores against a gross profit of Rs. 5.52 Crores in the previous year. After providing for depreciation and reversal of deferred tax, your companys net loss stands at Rs. 9.78 Crores as against a profit of Rs.0.80 Crore in the previous year.

DIVIDEND:

As the Company did not record any profit, your Directors have not recommended any dividend for the year.

FUTURE OUTLOOK:

The effect of the economic slow down continued during the first half of the year. We are witnessing some improvement in the latter part of the year. The Company continued to face stiff competition from China in most of its products. Our strategy would be to increase the volumes of higher contributing products and optimize production of products which are giving very low or insignificant contribution. We will continue to focus on moving up the value chain in the speciality products where we can have competitive advantage and grow our sales volumes and margins.

We are exploring new markets for our products as well as working on various cost reduction initiatives which will give benefits during the year 2010-11. This will also enable us to move on the growth path and utilize our capacities to the fullest extent. By working on our strengths and improving on some of our weakness, we trust that the outlook for the financial year 2010-11 will be better than the financial year 2009-10.

ALUMINIUM FLUORIDE:

Your Company continues to maintain its leadership position in the Aluminium Fluoride sector in India. Volumes during 2010-11 will depend on price levels and competition from China.

HF ACID:

Your Company is the dominant player in the Hydrofluoric Acid (HF) segment as well. Sustained efforts are on to enter into new markets and grow the volume.

EXPORTS:

During the year under review, export turnover was lower at Rs.39.51 Crores as compared to Rs.71.05 Crores in the previous year registering a decrease of 44% which was mainly due to lower realization.

Your companys constant endeavors is to increase its export revenue.

RESEARCH AND DEVELOPMENT:

Your Company is working in close coordination with Aditya Birla Science and Technology Company Limited [ABSTCL]. They cater to the research and development needs of the Aditya Birla Group, by providing laboratory and scale-up facilities, modelling and simulation areas, recognised by The Department of Scientific & Industrial Research (DSIR), to enhance the R&D capabilities, new product introduction and to reduce dependance on imported technology.

SAFETY, HEALTH AND ENVIRONMENT PROTECTION (SHE):

Your Company is committed to Safety, Health and Environmental Management System.

Your Company was primarily responsible for conducting Off-Site Emergency mock drills during July, 2009 in coordination with The District Collectorate, Inspector of Factories and National Disaster Management Authority [NDMA].

Your Company is certified Occupational Health and Safety Assessment Series (OHSAS) 18001:2007 and re-certified for ISO 9001 - 2000 and ISO 14001 - 2004 environment Management System Standards by Det Norske VERITAS (DNV) India. Your Company engaged M/s. Chilworth Safety & Risk Management Pvt Ltd., U.K., to conduct risk monitoring behavior based safety to eliminate unsafe activities completely.

We ensure that economic considerations do not compromise Safety and Environment Protection measures. Identifying activities that offer scope for conserving energy, water, reduce chemical consumption norms and recycling water and waste in process, are ongoing initiatives.

Your Company continuously updates safety management and risk management to carry out Hazop study for the existing and new projects. Accordingly safety Management programmes are implemented.

Your Company motivates employees, workers and contract workmen through training and retraining on safety aspects and also rewards best performers.

Your Company carries out safety management programmes to upgrade safety standards. Your Company periodically conducts onsite mock drills and actively coordinates with local government / other nearby companies for off site emergency mock drill.

DIRECTORS:

TIDCO has nominated Selvi Apoorva, IAS, as Director of the Company with effect from 14th May, 2010. TIDCO has withdrawn Shri P. Sivasankaran, IAS, as Chairman and Director of the Company w.e.f. form 23rd October 2009. TIDCO has withdrawn the nomination of Shri S.J. Chiru, IAS, as Director with effect from 23rd October, 2009 and in his place Shri B. Elangovan has been appointed.

Your Company has appointed Shri Lalit Naik as Director of the Company and has accepted the resignation of Shri K.K. Maheshwari with effect from 22nd January, 2010,

Your Company has received Notices under Section 257 of The Companies Act, 1956, from Members of the Company proposing the appointment of Selvi Apoorva, IAS, Shri B. Elangovan and Shri Lalit Naik, in the forthcoming Annual General Meeting.

RETIREMENT BY ROTATION:

Shri A.K. Agarwala, Shri M.R. Sivaraman, IAS [Retd.] and Dr. Shankar Narasimhan, retire by rotation and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE:

Your Company is strongly committed to Corporate Governance. The Company has already constituted Committees of Directors to assist the Board in ensuring good Corporate Governance. The Corporate Governance Report along with the Auditors certificate regarding compliance of the conditions of the Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchange, is attached;

AUDITORS REPORT:

M/s. Bhaskaran & Krishnan and M/s. Singhi & Co., Chartered Accountants, Chennai, the Auditors of the Company retire at the conclusion of this Meeting and are eligible for re-appointment.

The observations made in the auditors report are self-explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

COST AUDITOR:

Pursuant to the directions of the Central Government under the provisions of Section 233B of The Companies Act, 1956, in respect of the audit of cost records of the Company for our

Sulphuric Acid product, Shri V. Gopalakrishnan, Cost Accountant, has been appointed as Cost Auditor for the financial year ended 31.3.2010. The Company has submitted the cost audit report for the financial year 2008-2009 to the Central Government in time.

PARTICULARS OF EMPLOYEES:

The details of employees drawing remuneration, requiring disclosures under Section 217(2A) of The Companies Act, 1956, shall be made available to the Shareholders on his/ her specific request.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required under Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, a statement containing the particulars relating to conservation of energy, research and development and technology absorption is annexed.

INDUSTRIAL RELATIONS:

Employee relations continued to be cordial throughout the year. The whole-hearted support of employees in the implementation of WCM, ISO- 9002 systems and ISO 14001 amply demonstrate team work and a sense of belongingness with the organization and solidarity with your Management.

PUBLIC DEPOSIT:

The Company has not accepted any deposits from the Public during the year within the meaning of Section 58-A of The Companies Act, 1956.

SUSTAINABLE DEVELOPMENT - COMMUNITY DEVELOPMENT INITIATIVES - CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your Companys CSR initiatives are an integral part of overall business policy and aligned with its business goals. Your Company also motivates employees for voluntary effort for social development and evolves a system of need assessment and impact assessment while undertaking CSR initiatives.

Your Company is carrying out its community welfare activities in and around Cuddalore for more than a decade, reaching out to underserved communities. This entails transcending business interests and grappling with the "Quality of Life" challenges, that the poor face and working towards making a meaningful difference to them.

OUR GROUP VISION IS:

"To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the countrys human development index."

Your Companys focus areas include education, health care, sustainable livelihood, infrastructure development and espousing social causes.

- Health - including Family Welfare and Total Health (Disease) Management

- Child/Women Empowerment Projects

- Need Assessment

- Identification of funding sources and opportunities

- Link up with Government agencies, NGOs and other potential partners

- Implementation of Community Upliftment Projects involving government authorities, village panchayat and the end beneficiaries in specific areas of social development, such as health, education, water management, etc., to cater to the needs of children, women, adolescents, and the physically challenged, as also to contribute to the overall development of villages/community.

HUMAN RESOURCES DEVELOPMENT:

Your Company believes that our people give us our competitive edge. So business priorities are aligned with the aspirations of employees, culminating in the development of an empowered and responsive human capital. Our work environment encourages innovation and creativity and promotes a culture that facilitates entrepreneurial activity within the organization. Regular programs are held to enhance the competencies and skill set of the employees for the performance improvement.

ACKNOWLEDGEMENT:

Your Directors wish to thank the Government of India, Government of Tamilnadu, and the Banks for their guidance, help and support.

On behalf of the Directors and all of you Shareholders, I would like to record my sincere appreciation of the commitment of the entire TANFAC family consisting of officers, staff and workers.

Finally, I look forward to your continued understanding and support in taking your Company forward in these challenging times.

For and on behalf of the Board

Chennai CHAIRMAN 14.05.2010

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