audited financial reports of subsidiaries (2 mb)

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EMnrgrEb ~m°`moâ`yëg {b{_Q oS� HPCL Biofuels Limited

(A wholly owned subsidiary company ofHindustan Petroleum Corporation Ltd.)

BOARD OF DIRECTORS

Mr. R. S. PandeyChairman

(Upto 19.2.2014)

Ms. Nishi VasudevaDirector

(Upto 24.2.2014)

Mr. Pushp Kumar JoshiDirector

Mr. Vinod NeheteCEO

Mr. B. K. NamdeoAddl. Director

Mr. K V RaoDirector

CHIEF EXECUTIVE OFFICER AND "MANAGER"

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2 NOTICE OF AGM

5 DIRECTORS' REPORT

10 MANAGEMENT DISCUSSION & ANALYSIS REPORT

11 C&AG'S COMMENTS

12 AUDITOR'S REPORT

16 BALANCE SHEET

17 PROFIT AND LOSS ACCOUNT

18 NOTES FORMING PART OF FINANCIAL STATEMENTS

36 CASH FLOW STATEMENT

37 CORPORATE GOVERNANCE REPORT

39 PROXY FORM

Board of Directors

Mr. P. K. Joshi

Mr. K.V. Rao

Mr. B. K. Namdeo

Manager & CEO

Mr. Vinod Nehete

Chief Financial Officer

Mr. R. Sankaran

Company Secretary

Ms. Heena Shah

Statutory Auditors

S. K. Jha & Associates

Chartered Accountants

Bankers

State Bank of India

Union Bank of India

Registered Office:

HPCL Biofuels LimitedNo. 271, Road No. 3E,Post Box No. 126,New Patliputra Colony,Patna – 800 013, Bihar.www.hpclbiofuels.co.inE-mail: [email protected]

Corporate Objectives

To become market leader in producing Ethanol from Sugarcane juice.The ethanol produced will be sold to Oil Marketing Companies for blendingin Petrol, thereby helping the nation in subsantial savings in foreign exchange.

5th Annual Report 2013-2014

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NOTICE OF FIFTH ANNUAL GENERAL MEETING

NOTICE is hereby given that the Fifth Annual General Meeting of HPCL Biofuels Limited will be held on 19th August, 2014 at theregistered office of the Company at No. 271, Road No. 3E, New Patliputra Colony, Patna – 800 013 at 04.00 p.m. to transact thefollowing business:

ORDINARY BUSINESS

1. To consider and adopt the audited financial statement of the Company for the financial year ended on March 31, 2014, the reportof the Board of Directors and Auditors thereon.

2. To appoint a Director in place of Mr. K V Rao (DIN: 05340626) who retires by rotation at this Annual General Meeting and beingeligible has offered himself for re-appointment.

SPECIAL BUSINESS

3. To consider and if thought fit to pass, with or without modification(s) the following Resolution(s) as an Ordinary Resolution:

“RESOLVED THAT Mr. Vinod Nehete, deputationist from HPCL be and is hereby re-appointed as ‘Manager’ under the CompaniesAct, 2013 to be designated as Chief Executive Officer (CEO) of the Company for a period of (03) three years with effect from01.06.2014, as per terms of deputation from HPCL.

RESOLVED FURTHER THAT in terms of the Article 123 of the Articles of Association of the Company, in accordance with theprovisions of Sections 203, 196, 197 read with Schedule V and all other applicable provisions of the Companies Act, 2013 andthe Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) orre-enactment thereof for the time being in force), subject to all such approval, as may be necessary, the consent of the Companybe and is hereby accorded to the appointment of Mr. Vinod Nehete as the Manager of the Company, to be designated as CEO, fora period of three years commencing from 01st June, 2014 or conclusion/completion of deputation or withdrawal of deputation byHPCL whichever is earlier, for a remuneration i.e. Salary ` 1,46,000/- p.m. and perquisite ` 73,000/- p.m. so as not to exceed thelimits specified in Schedule V of the Companies Act, 2013 or any amendments thereto .

RESOLVED FURTHER THAT any Director or Company Secretary be and is hereby authorized to do all such things as may benecessary including filing of the requisite returns containing such particulars and documents as may be prescribed with MCA withregards to the re-appointment of Manager ”.

4. To consider and if thought fit to pass, with or without modification(s) the following resolutions as an Ordinary Resolution:

“RESOLVED THAT pursuant to provisions of section 149, 152 and all other applicable provisions of the Companies Act, 2013 andthe Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactmentthereof for the time being in force) Mr. Balraj Kishor Namdeo (DIN: 06620620), who was appointed as an Additional Directorpursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company and whoholds office up to the date of Annual General Meeting, and who is eligible for reappointment under the relevant provisions of theCompanies Act, 2013, and in respect of whom the company has received a notice in writing under section 160 of the CompaniesAct, 2013 from a member proposing his candidature for the office of Director, be and is hereby appointed as Director of thecompany liable to retire by rotation.”

5. To consider and if thought fit , to pass the following resolution(s) as an Ordinary Resolution:

“RESOLVED that pursuant to Section 148 and all other applicable provisions of the Companies Act, 2013 and the Companies(Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force),M/s. R Nanabhoy & Co., Firm of Cost Auditors, be and is hereby appointed as Cost Auditor to conduct the audit of the cost recordsof the company for the financial year ending on 31st March, 2015.

RESOLVED FURTHER that the Cost Auditor for providing the said services shall be paid a remuneration of ̀ 51,000/- (Rupees FiftyOne Thousand Only) plus applicable taxes and out of pocket expenses.

RESOLVED FURTHER that the Director or Secretary of the Company be and is hereby authorized to submit the necessary Forms/Returns to MCA/Central Government and to do all such acts as may be necessary to give effect to the aforesaid resolution.

6. To consider and if thought to fit to pass with or without modification(s), the following resolutions as a Special Resolution:

“RESOLVED THAT pursuant to Section 180 (1) (c) of the Companies Act, 2013 and other applicable provisions, if any, consent beand is hereby accorded to the Board of Directors to borrow from time to time, at its own discretion, on such terms and conditionsas to repayment, interest or otherwise, any sums or sums of monies which together with the moneys already borrowed by theCompany (apart from temporary loans obtained from the bankers of the Company in ordinary course of business), may exceed theaggregate of the paid-up capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose,provided that the total amount so borrowed by the Board of Directors shall not at any time exceed the limit of ` 900 Crores[Rupees Nine Hundred Crores only].

RESOLVED THAT the consent of the Company be and is hereby accorded in terms of Section 180(1)(a) and other applicableprovisions, if any, of the Companies Act, 2013 for mortgaging, hypothecating, assigning and/ or charging by the Board of Directorsof the Company (hereinafter called the “Board” which term shall be deemed to include person(s) authorized and/or any committeewhich the Board may have constituted or hereinafter constitute to exercise its powers including the powers conferred by thisresolution), of the movable and immovable properties of the Company whereever situated, present and future, all the book debts,operating cash flows, receivables, all other current assets, commission, revenues of the Company, (both present and future) in

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favour of the Lenders or its agent or trustee to secure the Facility provided by the Lenders to the Company together with all fees,costs, charges, expenses and all other monies payable by the Company to the Lenders, its agents and/or security trustees inrelation to the Facility.

RESOLVED FURTHER THAT THE Board be and is hereby authorised to finalise with the Lenders, its agents and other persons thedocuments for creating aforesaid mortgage, assignment and/or the charge.

RESOLVED FURTHER THAT THE Board be and is hereby authorised to finalise with the Lenders, its agents and other persons thedocuments for disbursement of the Facility and to do all such acts deeds and things as may be necessary for giving effect to theabove resolution.”

All members are requested to kindly make it convenient to attend the meeting.

By Order of the BoardFor HPCL Biofuels Ltd.

Heena ShahDated: 30th July, 2014 Company Secretary

Registered Office:No. 271, Road No. 3EPost Box No. 126 (Patna GPO)New Patliputra ColonyPatna - 800 013, Bihar.

Notes:-

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of himself and theproxy need not be a member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company not later than forty eight hours priorto the time of commencement of the meeting.

3. Corporate member intending to send their authorized representative to attend and vote on their behalf at the Meeting are requestedto send letter of authorisation.

4. All documents referred to in the Notice are open for inspection at the Registered Office of the Company.

Statement pursuant to section 102 of the Companies Act, 2013, in respect of item no. 3 to 6 is enclosed and forms part of this notice.

Item No. 3

The Board, on recommendations of the Nomination & Remuneration Committee, at their meeting held on 22nd May, 2014 havere-appointed Mr. Vinod Nehete as Manager of the Company for a period of three years w.e.f. 01-06-2014 or his superannuation/completion of deputation/withdrawal of deputation by HPCL with ever is earlier. The matter is being placed at General Meeting forconsideration of shareholders to ratify the appointment and approving the remuneration terms in terms of section 197 to read withscheduled V to the Act and the Board of directors recommend passing of the resolution for re-appointment of Mr. Vinod Nehete. Theterms of re-appointment including remuneration are set out in the resolution.

Mr. Vinod Nehete is Mechanical Engineering Diplomaholder (DME) and has over 30 years’ experience in handing various challengingassignments at different departments of HPCL. He has also served Company as COO- Operations before his appointment as CEO andwell versed with Company’s business.

In absence or inadequacy of profits in any financial year, the remuneration as set out in the resolution is considered as the minimumremuneration to Mr. Vinod Nehete, and is within the limits and in any case maximum remuneration payable to him will not exceed thelimits prescribed by Schedule V to the Act. Mr. Vinod Nehete is currently in Deputy General Manager grade of Hindustan PetroleumCorporation Limited (HPCL), the holding Company and is deputed as CEO of HPCL Biofuels Limited and hence his remuneration isgoverned by terms of deputation from HPCL.

The Board is of the opinion that his appointment as Manager to be designated as Chief Executive Officer (CEO) of the Company wouldbe in the interest of the Company and accordingly the resolution at item no. 3 of the Notice is recommended for members’ approval.

Save and except Mr. Vinod Nehete, none of the other Directors/Key Managerial Personnel of the Company/their relatives are in anyway, concerned or interested, financially or otherwise, in the resolution set out in item no. 3.

The Board of Directors recommends the resolutions for your approval as Ordinary Resolution.

Item No. 4

Mr. Balraj Kishor Namdeo was appointed as an additional Director on the Board effective 24. 02.2014 in terms of section 161(1) of theCompanies Act, 2013, he holds office of Director up to the date of Annual General meeting and is eligible for appointment as Director.The company has received a notice in writing from a member along with the deposit of requisite amount, proposing him as a candidatefor the office of Director in terms of section 160 of the Companies Act, 2013. Mr. B K Namdeo is Director Refineries of HPCL. TheBoard recommends appointment of Mr. B K Namdeo as Director.


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Save and except Mr. B K Namdeo, none of the other Directors/Key Managerial Personnel of the Company/ their relatives are in anyway, concerned or interested, financially or otherwise, in the resolution set out in item no. 4.

The Board of Directors recommends the resolutions for your approval as Ordinary Resolution.

Item No. 5

The Board, on the recommendation of the Audit Committee, has approved the appointment and remuneration of the Cost Auditors toconduct the audit of the cost records of the company for the financial year ending March 31, 2015 for a remuneration of` 51,000/- (Rupees Fifty One Thousand only).

In accordance with provisions of section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014,the remuneration payable to Cost Auditors has to be ratified by the shareholders of the company.

Accordingly, the consent of the members is sought for passing the ordinary resolution as set out at item no. 5 of the notice forratification of the remuneration payable to cost auditors for the financial year ending on March 31, 2015.

None of the Directors/KMP of the Company/ their relatives are, in any way, concerned or interested, financially or otherwise, in theresolution set out at item no. 5 of the Notice.

The Board of Directors recommends the resolution set out at item no. 5 of the notice for approval of shareholders as an OrdinaryResolution.

Item No. 6

In terms of Section 180(1)(c) of the Companies Act, 2013, the Board of Directors of a Company, shall exercise the power to borrowmoney, where money to be borrowed, together with the money already borrowed by the Company will exceed aggregate of its paid upshare capital and free reserves, apart from temporary loans obtained from the Company’s bankers in the ordinary course of businessonly with the consent of the Company by passing a Special Resolution.

The Shareholders of the Company had at its general meeting held on 29th July, 2010 inter-alia passed an Ordinary Resolution pursuantto Section 293(1)(d) and any other applicable provisions of the Companies Act, 1956 authorising the Board of Directors of the Companyto borrow monies for and on behalf of the Company from time to time as deemed by it to be requisite and proper for the business of theCompany (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business) and remainingoutstanding shall not exceed ` 900 Crores (Rupees Nine Hundred Crores Only) in excess of the aggregate of the paid up capital of theCompany and its free reserve i.e. reserves not set apart for any specific purpose, as per the latest annual audited Financial statement.

Further Shareholders of the Company at its General meeting held on 29th July, 2010 also passed pursuant to Section 293(1)(a) & allother applicable provisions, if any, of the Companies Act, 1956 an Ordinary Resolution authorising Board of Directors of the Companyto create charge/provide security for the sum borrowed on such terms and conditions and in such form and manner and with suchranking as priority, as the Board in its absolute discretion thinks fit, on the assets of the Company.

The Ministry of Corporate Affairs (MCA), New Delhi vide their Notification No. 2754 dated September 12, 2013 had notified inter-aliathe applicability of provisions of Section 180(1)(c) and Section 180(1)(a) of the Companies Act, 2013 with effect from September 12,2013, which stipulates obtaining prior approval of the Shareholders of the Company by way of Special Resolution for exercising thespecified powers of the Board of Directors relating to borrowing and selling/disposing off etc. of an undertaking of the Companyrespectively. Further MCA also vide its circular No. 04/2014 dated 25.03.2014 have clarified that the resolution passed under Section293 of the Companies Act, 1956 prior to 12.09.2013 with reference to borrowings and / or creation of security on the assets of theCompany will be regarded as sufficient compliance of the requirements of Section 180 (Restriction on the Powers of the Board) of theCompanies Act, 2013 for a period of one year from the date of notification indicating the applicability of Section 180 of the Act, 2013.Therefore Company is now required to obtain consent of the Company by a Special Resolution before 12.09.2014.

Shareholders may kindly note that there is no change proposed in the Borrowing limits and the current proposal is only to comply withthe requirement of passing of Special Resolution under Section 180 of the Companies Act, 2013.

The relevant resolutions proposed for the Member’s approval are specified collectively at item No. 6.

None of the Directors, Key Managerial Personnel or their relatives are in any way concerned or otherwise interested in this Resolution.

The Board of Directors recommend the Special Resolution as set out in item No. 6 of the Notice for the approval of the Shareholders.

By Order of the BoardFor HPCL Biofuels Ltd.

Heena ShahCompany Secretary

Dated:30th July, 2014

Registered Office:

No. 271, Road No. 3EPost Box No. 126 (Patna GPO)New Patliputra ColonyPatna - 800 013, Bihar.

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Dear Shareholders,

Your Directors are pleased to present the Fifth Annual Report and audited accounts for the financial year ended31st March, 2014.

PHYSICAL PERFORMANCE

Highlights of the physical performance of the plants during the year 2013-14 are given below:

Particulars Unit of Measurement Sugauli Lauriya

No. of days operated Days 105 98

Quantity of cane crushed Lac MT 2.27 2.41

Sugar manufactured MT 17,528 15,724

Sugar Recovery % 8.02 7.95

Ethanol manufactured KL 4104 3,579

Power generated MWhr 26,570 22,495

Power exported MWhr 15,528 17,171

FINANCIAL PERFORMANCE

Summary of financial performance is given as under:

For the year ended For the year ended31.03.2014 31.03.2013

(`) (`)

Income from Operations 133,33,99,425 91,48,57,354

Other Income 20,55,114 56,47,752

Total Income 133,54,54,539 92,05,05,106

Total Expenses 139,77,12,769 1,17,81,37,334

PBDIT (6,22,58,230) (25,76,32,228)

Less-Depreciation 31,69,15,819 45,40,77,741

Less-Interest 78,85,58,964 76,03,56,798

Profit / (Loss) before Prior Period Items and Tax (116,77,33,013) (147,20,66,767)

Prior Period Item 89,15,457 (1,00,000)

Profit / (Loss) for the year before Tax (115,88,17,556) (147,21,66,767)

Provision/(Reversal) for Taxes 0 0

Profit / (Loss) for the year after Tax carried forward to Balance Sheet (115,88,17,556) (147,21,66,767)

PLANT OPERATIONS

The season pertaining to the financial year 2013-14 was the third year of operation of both the mills and they were geared upafter augmentation of the sugar boiling house to process the entire 3500 TCD of cane crushing. The major contractor for thisjob abandoned the job midway leading to stoppage of work and delay in the execution of the job. However, the efforts of theHBL personnel to get the job done through a third party within a short span of time, ensured that the plant was ready for theseason made it possible to run the plants during the season.

There was a delay in start of the crushing season this year due to the impasse in the fixation of the price to be paid for sugarcane. This had shifted the season to middle of December and accordingly, the season extended into April/May 2014 i.e. intothe next financial year. Thus the figures given above for the financial year 2013-14 do not fully capture the season 2013-14 andhence the discussion below covers the full season 2013-14, which is more realistic to analyse.

DIRECTORS' REPORT


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Sugar Plant

Sugar Plant performance was much better than previous year with Sugauli registering an increase of 18% and Lauriya 30%over previous year’s crushing figures. However, the sugar recovery was lower at both Sugauli and Lauriya which stood at7.24% and 7.53% (8.60% & 7.11% for previous year) respectively. Lower recovery was mainly due to lower quality of sugarcane supplied and certain process issues in the plant. Due to late of start of the plants resulting from delay in completion of BHexpansion work, early / premium variety of cane was used up by the neighbouring mills which affected the overall recovery.These are being addressed on war footing so that the ensuing season could be operated at better recovery rates.

Ethanol Plant

Ethanol plants have performed quite well and even beyond their rated capacity. However, the production was restricted to themolasses in stock and generated during the season as the efforts of the company to get additional allocation from GoB did notmaterialize. The company is looking other alternatives to maximize the utilization of the ethanol plants.

Cogen Plant

The Cogen plants have stabilised registering an increase of 21% at Sugauli and at Lauriya over the last year generation. Eventhe net power export saw significant increase with Sugauli seeing a hike of 33% and lauriya 15% over last year. The designcapacity is however yet to be achieved in both the plants.

CANE MANAGEMENT

Development of its cane command area in terms of increasing the acreage of cane cultivation as well as the productivity ofcane in the cane command area has been in the focus of your company all through. As a result the availability of cane in thecommand areas was quite good, which facilitated crushing of 30.19 lac quintals of sugar cane at Sugauli and 26.17 lac quintalsat Lauriya.

However, due to certain varieties of cane failing to meet the targets of sugar content, the total recovery at the plants was lowerthan the neighboring mills. This aspect is being addressed immediately and the farmers are being contacted and advisedpersonally by the cane department personnel for switching over to better and high yielding varieties, which is in the mutualinterest of both the mills and farmers.

The liquidity position of your company during the year was not quite healthy due to expenditures in the sugar boiling houseexpansion and payments to the bank. The company was not in a position to raise any further funds and hence there had beensome delay in payment to the farmers for the cane procured during the year. However, your company is taking all necessarysteps to meet the payment obligations expeditiously.

MARKETING ACTIVITIES

Sugar

Your company is marketing sugar only through the online platform NCEDX Spot and the entire sales during the year 2013-14has been sold through the platform. The realisation has been good and comparable to the neighboring mills. Taking cue on theupbeat trend during March 2014, your company could even collect advance payment from buyers for sale of sugar, whicheased the cash flow position to a good extent.

Ethanol

Ethanol is being sold only to the promoter company M/s HPCL and is being supplied even to far away depots like Ajmer, Rewarietc. Your company would like to acknowledge the timely help extended by HPCL by providing advance payment for ethanolsupplies, which funds were very handy for HBL during the latter part of the year.

Power

Your company has a PPA with BSEB under which the surplus power generated is sold to them and the payments from BSEB forthe power supply has been prompt.

LOAN CONVERSION

There was an outstanding balance of ` 385.46 Cr relating to bridge loans taken from the promoter company HPCL. As thecompany was not in a position to repay the loans and the interest payable thereon was putting lot of strain on the profitability,the company took it up with HPCL for converting the same to capital. With due approval from the Board of HPCL as well asHBL, the said balance along with the interest thereon for the year 2013-14 was converted to 5% Non cumulative 14 yearredeemable Preference Shares and the allotment has been made to HPCL in March 2014 itself.

DIVIDENDS

Since the company has just commissioned it’s both the plants during season of financial year 2011-12 and is yet to stabilize interms of commercial operations, Directors have decided not to declare any dividend for the year.

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CREDIT RATING

Your company has been able to retain rating as ‘Fitch A (ind)’ for the year 2013-14 from M/s Fitch Ratings for the National Long-Term rating, reinforcing the faith of the rating agency in the in built resilience of your company.

INSURANCE

Insurance for Plant & Machinery has been obtained from Oriental Insurance Company for the period 20th January 2014 to19th January 2015. With a good track record in safe operations and dialogue with the insurers, your company has been able toget a substantial reduction in the premiums amounts without any reduction in the coverage.

AUDITORS

M/s. S K Jha & Associates, Chartered Accountants, were appointed as Statutory Auditors by Comptroller & Auditor General ofIndia (C&AG) by their letter dated 26th August 2013 and will retire at the conclusion of this Annual General Meeting.

As per provisions of the Companies Act, the Board of directors have authorized CEO/CFO to advised C&AG to appointAuditors of the Company for the financial year 2014-15 to hold office of the auditors from conclusion of this Annual GeneralMeeting (AGM) till the conclusion of the next AGM

COST AUDITOR

M/s. R. Nanabhoy & Co have been appointed as cost auditors, in accordance with the guidelines issued in this regard. The coststatements for the year 2013-14 as stipulated under the cost audit rules have been prepared and submitted to them for audit.The cost audit report would be filed within the stipulated due date.

RENEWABLE ENERGY BENEFITS

Your company had got registered with the competent authority for issue of Renewable Energy Certificates (REC) in respect ofthe captive consumption of power generated by its cogen plant operating on Bagasse / Biomass. Renewable Energy Certificateshave been obtained by the company in accordance with the rules and they are being regularly sold through Power Exchange.The REC that is likely to be earned for the season 2013-14 is about ̀ 1.5 Cr which is under process. This has opened up anotherrevenue stream for the company.

AUDIT COMMITTEE

The Audit Committee of your Company has carried out its functions in accordance with provisions of the Companies Act.

DEPOSITS

Your Company has not accepted any deposits from Public during the year.

SAFETY, HEALTH AND ENVIRONMENT

Your Company is focused on the Health, Safety and Environment management which is an integral part of all activities carriedout at both the Plants i.e. at Sugauli& at Lauriya. It is a proud moment to note that your Company had accident free operationsduring the period under review.

Your Company has acquired all environmental approval & permission for its operations.

Your company believes that employees are its biggest assets and hence it takes care to ensure the health & well being of allemployees.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to provisions of the Companies Act, your Directors give hereunder the Director’s Responsibility Statement pertainingto the accounts of the Company that:

A) In the preparation of annual accounts, applicable accounting standards have been followed along with proper explanationsrelating to material departures;

B) The Company has selected such accounting Policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Company as on 31st March,2014 and of the Profit and Loss account of the Company for the year ended on that date.

C) The Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, for safeguarding the assets of the company and for preventing and detectingfraud and other irregularities.

D) These Accounts have been prepared on a going concern basis.


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DIRECTORS

Shri B Mukherjee, Director of the company superannuated from HPCL w.e.f. 31.05.2013, consequently, HPCL nominated ShriK V Rao as Director on Board of the company in place of Shri B Mukherjee effective 01.06.2013.

Shri K Murali, superannuated from HPCL w.e.f. 30.06.2013 and HPCL nominated Shri Pushp Kumar Joshi as Director on theBoard of the Company in his place effective 01.07.2013.

Shri R S Pandey, Chairman resigned from the post and the Board with effect from 19.02.2014.

Thereafter, HPCL nominated Shri B K Namdeo in place of Smt. Nishi Vasudeva on the Board of the company andShri B K Namdeo was appointed as additional Director with effect from 24.02.2014 and shall continue to hold the office ofDirector up to next Annual General Meeting of the Company.

The Board of Directors of the company presently comprises of Shri Pushp Kumar Joshi, Shri K V Rao and Shri B K Namdeo.

As per the provisions of the Companies Act, 2013, Shri K V Rao will retire by rotation at this Annual General Meeting and iseligible for re-appointment.

The Board of Directors places on record its sincere appreciation of the valuable services rendered by Shri R S Pandey,Shri B Mukherjee, Shri K Murali and Smt Nishi Vasudeva during their tenure on the Board.

PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNING/ OUTGO AS PER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS)RULES, 1988

In accordance with the requirements of the Companies Act, read with applicable Rules, statement showing the particulars withrespect to conservation of energy, technology absorption and foreign exchange earnings and outgo are enclosed hereto andforms part of this report marked as Annexure.

PARTICULARS OF EMPLOYEES

As regards provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees)Rules, 1975, none of the employees was in receipt of remuneration exceeding the limits prescribed.

ACKNOWLEDGMENTS

The Directors gratefully acknowledge the valuable guidance and support extended by HPCL, Dept. of Industries and Dept.Cane Government of Bihar, BSEB and BSPCB of Government of Bihar, MOE&F, GoI, Ministry of Food & Public Distribution GoIand other State Government Agencies.

Your Directors also wish to place on record their appreciation of the dedicated services of the employees of the Companyincluding those deputed by HPCL.

On behalf of the Board of Directors

Place : Mumbai P.K. JoshiDate : 30.07.2014 Director

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A. CONSERVATION OF ENERGY

(a) The Company is a green field project and is undertaking manufacturing of Sugar, Ethanol & Cogen Power fromcrushing of Sugar cane at Sugauli & Lauriya, in the State Bihar.

(b) The year 2013-14 has been the third year of the operation of the plants which are in the phase of stabilization andhence measures for reduction of energy consumption would be studied, implemented and their impacts would beassessed in the coming years.

B. TECHNOLOGY ABSORPTION

1. Specific areas in which R & D carried out by the company.

Your company is in constant dialogue with the Cane department of GoB as well as the agricultural university at Pusain various areas of cane development. In the years to come, as more specific program would be developed in

(a) Technology for improving cane yield per hectare and its recovery

(b) Intercropping options based on local needs

(c) Introduction of high yielding varieties of seeds for maximizing ethanol production

2. Future plan action.

Would embark on the scheme as the plants stabilize in commercial terms

3. Expenditure on R & D.

Nil (Previous year Nil)

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts in brief, made towards technology absorption, adaptation and innovation.

The following technologies have been used in the plants and the personnel are getting trained in operating andtrouble-shooting the equipments along with the technology.

a) Cane Diffusion Technology

b) Producing Ethanol directly from Sugar Cane Juice

c) Molecular Sieve Technology

2. Benefits derived as a result of the above efforts.

Benefits will accrue in the coming years as the plants stabilize on commercial terms.

3. Information regarding Technology imported during the last 5 years

(a) Details of technology imported and year of import.

Not Applicable

(b) Has technology been fully absorbed, and if not fully absorbed, areas where this has not taken place, reasonsthereof and future plans of action.

Not Applicable

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to exports; initiatives taken to increase exports; developments of new export markets for productsand services; and export plans.

-Nil-

(b) Total foreign exchange used and earned. (In ` ‘000s)

Total foreign exchange used

Consultancy services/others Nil

Total foreign exchange earnings Nil

ANNEXURE TO THE DIRECTOR’S REPORT


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MANAGEMENT DISCUSSION & ANALYSIS REPORT

Indian Sugar Industry welcomed the year 2013-14 with great cheers as the regulatory framework of the industry started giving

way to market dynamics. The recommendations of Rangarajan Committee were partially implemented by abolition of levy

sugar and quota release systems. However, this freedom, which has been felt perhaps for the first time in the memory of free

India, brought also some anxiety to the millers as the market became volatile and the prices slided substantially. Added to that

was the threat from raw sugar imports which literally ate into the millers pockets.

It is to the credit of the Indian Sugar Industry that they withstood this change over syndrome quite well and have faced the

2013-14 season with more stability and equanimity. For your company, which is a lone upstart public sector company in the

industry, it was a tough year but they have also managed to come out of the shocks with good credentials.

Specific to the state of Bihar, there was a long dispute between the farmers and the Government regarding fixation of the price

of cane for the season, which had delayed the start of the season by about three weeks which also pushed the closure of the

season well into April / May, 2014. This had an impact in the recovery of sugar towards the last leg of the season when the

ambient temperatures rose sharply but there was enough cane to be crushed.

Linking of the sugar cane prices to the sugar prices, which is a major recommendation of the Rangarajan Committee, is yet to

be implemented. In the wake of dropping prices, stiff competition from importers and rising cost of operations, this is more than

ever required and the industry is eagerly awaiting the same.

The year also opened with the decontrol of the Ethanol pricing. Instead of fixing the prices, the Union Government asked the

Oil Marketing Companies to procure ethanol through tendering process. This saw that the realisation of ethanol go up from

` 27 per litre to more than ` 34 per litre, which has added considerably to the bottom line of sugar mills producing ethanol. The

process is likely to be continued which rises the hopes that there would be periodical increase in ethanol prices reflecting the

current demand supply situation of the market and the cost of production.

An empowered committee of the Government of India had announced that the sugar mills will be extended interest free loan

to assist them in clearing the pending payments of cane growers. Though it raised expectations of the sugar mills for a respite

in the right direction, the guidelines and methodology for its implementation is yet to be announced.

The year ahead already has predictions about the El Nino effects which may hamper the rainfall and consequently the cane

crop for the season. Prospects of an upswing during the season year 2014-15 would largely depend on this factor as well as

government policies on matters like exports and subsidies.

Kindly check whether the given parameters are covered on the report, if not kindly includes the same as these are qualifying

parameter under Corporate Governance Report of DPE.

For and on behalf of Board of Directors


11

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619 (4)OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF HPCL BIOFUELS LIMITED FOR THE YEARENDED 31 MARCH, 2014.

The preparation of financial statements of HPCL Biofuels Limited for the year ended 31 March 2014 in accordance with the

financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the management of the

company. The statutory auditors appointed by the Comptroller and Auditor General of India under Section 619(2) of the

Companies Act, 1956 are responsible for expressing opinion on these financial statements under section 227 of the Companies

Act, 1956 based on independent audit in accordance with the standards on auditing prescribed by their professional body the

Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated

22 May 2014.

I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 619(3)(b)

of the Companies Act, 1956 of the financial statements of HPCL Biofuels Limited for the year ended 31 March 2014.

On the basis of my audit nothing significant has come to my knowledge which would give rise to any comment upon or

supplement to Statutory Auditors' report under section 619(4) of the Companies Act, 1956.

For and on the behalf of the

Comptroller and Auditor General of India

Parama Sen

Principal Director of Commercial Audit

& ex-officio Member Audit Board II, Mumbai

Place: Mumbai

Date: 17 July 2014


12

INDEPENDENT AUDITOR’S REPORT

To,

The Members of HPCL Biofuels Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of the HPCL Biofuels Limited, which comprise the Balance Sheetas at 31st March, 2014 and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financialposition, financial performance and cash flows of the Company in accordance with the Accounting Standards referred toin sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design,implementation and maintenance of internal control relevant to the preparation of the financial statements that are freefrom material misstatement, whether due to fraud or error.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the Company’s preparation and fair presentation of the financial statements in orderto design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluatingthe overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts togetherwith the notes thereon give the information required by the Companies Act, 1956, in the manner so required for companiesand give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(ii) in the case of the Profit and Loss Account of the loss for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of cash flows for the year ended on that date.

Emphasis of Matter

7. Your attention is hereby drawn to Note No.- 31A [relating to Provision for Gain/(Loss) on Inventory Variation] and NoteNo. 57 [dealing with the details of the said variation] of the financial statements. The reasons of such variations and theperiod to which the same relates could not be made available to us. However, considering that the said variation has beendisclosed as exceptional item in the statement of profit and loss, our opinion is not qualified in this matter.

8. The quantitative details of consumption of raw materials and production of manufactured goods mentioned in NoteNo. 33 of the Financial Statements could not be verified from the books of accounts. Our opinion is not qualified in thismatter.

Report on Other Legal and Regulatory Matters

9. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in terms ofSection 227 (4A) of the Companies Act, 1956 and in terms of the information and explanations given to us and also on thebasis of such checks as we considered appropriate, we enclose in the annexure a statement on the matters specified inparagraphs 4 & 5 of the said order.

10. As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessaryfor the purpose of our audit and have found them to be satisfactory;

13

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from ourexamination of those books.

c) The Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreementwith the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report complywith Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

e) In our opinion provisions of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not applicableto a Government Company in view of clarification issued by the Department of Company affairs vide No. 2/5/2001-CL-V; General Circular No. 8/2002 dated 22.03.2002.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid undersection 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the mannerin which such cess is to be paid, we are unable to comment on this particular issue.

For S. K. JHA & ASSOCIATESChartered Accountants

(CA. RATENDRA KUMAR)Partner

Place : Mumbai Membership Number- 075813Date : 22nd May, 2014 Firm Registration Number- 006189C


14

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORTReferred to in paragraph (9) of our report of even date on financial statements of HPCL Biofuels Limited

for the year ended on 31st March, 2014

(i) (a) The company has maintained proper records of fixed assets showing full particulars including quantitative detailsand situation of fixed assets.

(b) We have been explained that physical verification of fixed assets is planned in the next year in view of the age ofthe capital assets and no physical verification could be conducted during the year. Considering all the facts andeven after taking into account the age of the capital assets, it appears that physical verification of fixed assets havenot been conducted at intervals which might be considered reasonable. The question of any material discrepanciesnoticed on such verification and its dealing in books of accounts, therefore, does not arise.

(c) During the year, the company has not disposed off substantial part of its fixed assets.

(ii) (a) Physical verification of inventory has been conducted by the management during the year.

(b) The procedures of physical verification of inventory followed by the management appear reasonable and adequatein relation to the size of the company and nature of its business.

(c) On the basis of our examination of controls and records, proper records of inventory do not appear to have beenmaintained. Material discrepancies have been noticed on physical verification which have been properly dealtwith in the books of accounts.

(iii) According to the information and explanation given to us, the company has not granted or taken any loan, secured orunsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the CompaniesAct, 1956.

(iv) Except for the possible effects of the matters described in the Emphasis of Matter paragraph, in our opinion and accordingto the information and explanations given to us, there appears to be adequate internal control procedures commensuratewith the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and withregard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure tocorrect major weaknesses in internal controls.

(v) According to the information and explanations given to us, the company has not entered into any transactions that needto be entered into the register maintained under section 301 of the Companies Act, 1956.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted anydeposits from the public.

(vii) The internal audit of the company is carried out by the internal auditors belonging to the parent company which, in ouropinion, is commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of account relating to material, labour and other items of cost maintained by thecompany pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained.

(ix) (a) On the basis of our examination of the records and according to the information and explanations given to us, thecompany is generally regular in depositing undisputed statutory dues with appropriate authorities except for a fewinstances where it has delayed in depositing the statutory dues by few days. There is, however, no arrear of statutorydues as on the last day of the financial year which was outstanding for a period of more than 6 months from thedate the same became payable.

(b) According to the information and explanations given to us, there are no dues which have not been deposited withappropriate authorities on account of dispute. Further since the Central Government of India has, till date, notprescribed the amount of cess payable under Section 441A of the Companies Act, 1956, there is no statutory duepayable under Section 441A of the Act.

(x) The company has been registered for a period which is less than five years as at end of financial year 31.03.2014, hencethe provisions of clause 4(x) of the Companies (Auditor’s Report) Order, 2003 is not applicable.

(xi) On the basis of our examination of the records and according to the information and explanations given to us, thecompany has not defaulted in repayment of dues to a financial institution and bank.

(xii) According to the information and explanations given to us, the company has not granted loans and advances on thebasis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the company is not a chit fund or a nidhi mutual benefit fund/society and hence the provisions of clause4(xiii) of the Companies (Auditor’s Report) Order, 2003 is not applicable to the company.

15

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments and hence the provisionsof clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xv) The company has given guarantees for loans taken by others from banks or financial institutions, the terms and conditionswhereof do not seem prejudicial to the interests of the company.

(xvi) According to the information and explanations given to us, the term loans were applied for the purpose for which theywere obtained.

(xvii) In our opinion and according to the information and explanations given to us, funds amounting to ̀ 25,86,15,823 raisedon short term basis have been used for meeting commitments towards long term assets and therefore have been used forlong term investment.

(xviii) The company has not made any preferential allotment of shares during the year to the parties or companies covered inthe register maintained under section 301 of the Companies Act, 1956. Hence the provisions of clause 4(xviii) of theCompanies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xix) The company has not issued any debenture during the year. Hence the provisions of clause 4(xix) of the Companies(Auditor’s Report) Order, 2003 are not applicable to the company.

(xx) The company has not raised any money by public issue. Hence the provisions of clause 4(xx) of the Companies (Auditor’sReport) Order, 2003 are not applicable to the company.

(xxi) No fraud on or by the company during the year were either noticed during our checking or were reported to us.

For S. K. JHA & ASSOCIATESChartered Accountants

(CA. RATENDRA KUMAR)Partner

Place : Mumbai Membership Number- 075813Date : 22nd May, 2014 Firm Registration Number- 006189C


16

Balance Sheet as at 31st March, 2014

PARTICULARS Note No. As at 31.03.2014 As at 31.03.2013

Amount (`) Amount (`)

I EQUITY AND LIABILITIES

Shareholders’ Funds

(a) Share Capital 3 6,251,715,110 2,055,200,000

(b) Reserves & Surplus 4 (3,165,709,083) (2,006,891,527)

(c) Money Received against Share Warrants — —

Share Application Money Pending Allotment — —

Non-Current Liabilities

(a) Long-Term Borrowings 5 2,627,003,607 6,142,623,696

(b) Deferred Tax Liabilities (Net) — —

(c) Other Long Term Liabilities 6 — —

(d) Long-Term Provisions 7 3,283,373 3,501,469

Current Liabilities

(a) Short-Term Borrowings 8 220,012,985 13,631,957

(b) Trade Payables 9 979,435,059 229,097,565

(c) Other Current Liabilities 10 1,516,861,500 1,789,997,823

(d) Short-Term Provisions 11 38,201 145,027

TOTAL 8,432,640,752 8,330,981,490

II ASSETS

Non-Current Assets

(a) Fixed Assets

(i) Tangible Assets13

6,581,400,110 6,406,355,673

(ii) Intangible Assets 3,265,457 3,170,547

(iii) Capital Work-in-Progress 12 42,691,747 156,171,442

(iv) Intangible Assets under Development — —

(v) Fixed Assets Held for Sale — —

(b) Non-Current Investments 14 — —

(c) Deferred Tax Assets (Net) — —

(d) Long-Term Loans & Advances 15 323,906,716 419,647,172

(e) Other Non-Current Assets 16 — —

Current Assets

(a) Current Investments 17 — —

(b) Inventories 18 1,134,777,772 1,043,668,577

(c) Trade Receivables 19 102,589,994 62,168,820

(d) Cash & Cash Equivalents 20 86,379,097 70,458,425

(e) Short-Term Loans & Advances 21 140,011,969 54,262,314

(f) Other Current Assets 22 17,617,890 11,403,040

TOTAL 8,432,640,752 8,330,981,490

The Accompanying Notes are Integral Part of the Financial Statements

As per our report of even date attached For and on behalf of the BoardFor S K Jha & AssociatesChartered Accountants

(C A Ratendra Kumar) (B. K. Namdeo) (K.V. Rao) (P. K. Joshi)Partner Director Director DirectorMembership No. 075813Firm’s ICAI Reg. No. 006189C

Place : Mumbai (R. Sankaran) (Vinod Nehete) (Heena Shah)Date : 22

nd May, 2014 Chief Finance Officer CEO & Manager Company Secretary

17

Statement of Profit and Loss for the year ended 31st March, 2014

For the Year ended For the Year ended31.03.2014 31.03.2013

Amount (`) Amount (`)PARTICULARS Note No.IncomeI. Revenue from Operations (Gross) 23 1,394,006,357 954,827,164

Less: Excise Duty (60,606,932) (39,969,810)Revenue from Operations (Net) 1,333,399,425 914,857,354

II. Other Income 24 2,055,114 5,647,752

Total Revenue (I+II) 1,335,454,539 920,505,106

ExpensesCost of Materials Consumed 25 1,177,496,365 1,107,641,601Consumption of Stores & Consumables 24,020,423 13,302,725Packing Expenses 14,521,970 17,108,091Excise Duty on Inventory Differential 8,569,387 35,949,262Power & Fuels 26 49,439,319 99,846,810Changes in Inventories of Finished Goods, WIP & Stock in Trade 27 (92,176,953) (340,446,367)Employee Benefits Expense 28 121,661,153 112,942,772Chemicals Consumed 19,964,537 23,474,647Finance Costs 29 788,558,964 760,356,798Depreciation & Amortization Expense 316,915,819 454,077,741Other Expenses 30 95,220,122 108,317,793

Total Expenses 2,524,191,106 2,392,571,873

Profit/(Loss) Before Exceptional & Extraordinary Items and Tax (1,188,736,567) (1,472,066,767)Exceptional Items

Prior Period Items 31 8,915,457 (100,000)Provision for Gain/(Loss) on Inventory Variation 31A (9,649,027) —

Profit/(Loss) Before Extraordinary Items & Tax (1,189,470,137) (1,472,166,767)

Extraordinary Items 32 30,652,581 —

Profit/(Loss) Before Tax (1,158,817,556 (1,472,166,767)Tax Expense(1) Current Tax Expense for Current Year — —(2) (Less) MAT Credit — —(3) Provision for Tax for Earlier year Written off/provided for — —(4) Deferred Tax — —(5) Current Tax Expenses Pertaining to Prior Years — —Net Current Tax — —

— —

Profit/(Loss) from Continuing Operations (1,158,817,556 (1,472,166,767)

Discontinuing OperationsProfit/(Loss) from Discontinuing Operations (Before Tax) — —Total OperationsTax Expense on Discontinuing Operations — —Profit/(Loss) from Discontinuing Operations (After Tax) — —

Profit/(Loss) for the Year (1,158,817,556 (1,472,166,767)

Earnings Per Equity Share (of ` 10/- each) :(1) Basic before extraordinary items (5.79) (7.16)(2) Diluted before extraordinary items (5.79) (7.16)(3) Basic after extraordinary items (5.64) (7.16)(4) Diluted after extraordinary items (5.64) (7.16)The accompanying Notes Are Integral Part of the Financial Statements






18

1. CORPORATE INFORMATION

The Company has been formed as a wholly owned subsidiary of M/s Hindustan Petroleum Corporation Limited, a Public Sector undertaking,as a backward integration initiative. The Company had taken over two of the closed sugar mills of Bihar State Sugar Corporation atSugauli in East Champaran and Lauriya in West Champaran in the state of Bihar. The company is engaged in the business of manufacturingsugar and ethanol from crushing of sugar and generation of power from the bagasse generated in the process. Both the units of thecompany were commissioned during the financial year 2011-12.

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

A. Preparation of Financial Statements

The financial statements are prepared under historical cost convention and on accounting principles of going concern in accordancewith Generally Accepted Accounting Principles (GAAP), Accounting Standards referred to in the Companies (Accounting Standards)Rule, 2006 issued by the Central Government and the relevant provisions of the Companies Act, 1956. Presentation and Disclosureof Financial Statements is done in accordance with Revised Schedule VI.All income and expenditure having material bearing arerecognized on accrual basis, except where otherwise stated. Necessary estimates and assumption of income and expenditure aremade during the reporting period and difference between the actual and the estimates are recognized in the period in which theresults materialize.

B. Fixed Assets

1. Land acquired on lease for 99 years or more is treated as freehold land. Land acquired for less than 99 years is treated as leasehold land.

2. Fixed Assets are carried at cost less accumulated depreciation.

C. Intangible Assets

1. Costs incurred on technical know-how/license fee relating to process designs/plants/facilities are capitalized as IntangibleAssets.

2. Cost of Software directly identified with hardware is capitalized along with the cost of hardware. Application software iscapitalized as Intangible Asset.

3. Intangible Assets are amortized on a straight line basis over the useful life of the parent asset.

D. Construction Period Expenses

Expenditure directly or indirectly related with the project, during construction period, start-up and commissioning of the projectare capitalized. Pre-operative expenses have been capitalized up to the date of commencement of commercial production asprovided in AS 10.

E. Depreciation

1. Depreciation on Fixed Assets is provided on the Straight Line method on the basis of useful life determined, in the manner andat the rates prescribed under Schedule XIV to the Companies Act, 1956 and is charged pro rata on a daily basis on assets,from/up to and inclusive of the month of capitalization/sale, disposal or deletion during the year. In case of restatement ofcarrying value of any asset due to any price adjustments warranted due to receipt of government grants, the depreciation onrevised unamortised depreciable amount is charged prospectively over the residual useful life of the asset. If such revised rateof depreciation is less than the rates specified in Schedule XIV of the Companies Act 1956, then the rate as per the saidSchedule XIV is applied.

2. All assets costing up to ` 5000/- are fully depreciated in the year of capitalization.

3. Premium on leasehold land is amortized over the period of lease. The lease rent is charged in the respective year.

4. Machinery Spares, which can be used only in connection with an item of fixed asset and the use of which is expected to beirregular, are depreciated over a period not exceeding the useful life of the principal item of fixed asset.

F. Impairment of Assets

At each balance sheet date, an assessment is made of whether there is any indication of impairment. An impairment loss isrecognized whenever the carrying amount of assets of cash generating units (CGU) exceeds their recoverable amount.

G. Provisions, Contingent Liabilities and Contingent Assets

1. A provisions is recognized when there is a present obligation as a result of a past event and it is probable that an outflow ofresources will be required to settle the obligation in respect of which reliable estimate can be made.

2. No provision is recognized for:

• Any obligation that may arise from past events but the existence of which will be confirmed only by the occurrence ornon-occurrence of one or more uncertain future events not wholly within the control of the company.

• Any obligation that may arise from past events but is not probable that an outflow of resources embodying economicbenefits will be required to settle the obligation.

• Any obligation, the reliable estimate of which cannot be made.

Notes Forming Part of the Financial Statements for the year 2013-14

19

However such obligations are recorded as contingent liabilities. These are assessed at regular intervals and only that partof the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except inthe extremely rare circumstances where no reliable estimate can be made.

3. Contingent Assets are not recognized in the financial statements as this may result in the recognition of income that may neverbe realized.

H. Taxes on Income

1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

2. Deferred tax on account of timing difference between taxable and accounting income is provided by using tax rates and taxlaws enacted or substantively enacted as at the balance sheet date.

I. Employee Retirement Benefits

1. In respect of provident fund, the contribution for the period is recognized as expenses and charged to Profit & Loss Account.

2. Provision for Gratuity is made based on the actuarial valuation and the difference in the provision required at year end ischarged to the Profit & Loss Account. The provision is calculated using Projected Unit Credit Method which is also recommendedunder AS-15.

3. Provision for Leave Encashment is made based on the actuarial valuation and the difference in the provision required at yearend is charged to the Profit & Loss Account. The provision is calculated using Projected Unit Credit Method which is alsorecommended under AS-15.

J. Inventory Cost

1. Finished goods are valued at cost on FIFO basis or net realizable value whichever is lower. Cost includes Material Cost,Conversion cost and other cost incurred to bring the inventory to its present condition and location. Absolute Alcohol hasbeen considered as finished product as it meets all specs of ethanol.

2. Work In Progress is valued at lower of cost or estimated realizable value. Cost includes Material Cost & conversion cost asapplicable.

3. By products are valued at estimated realizable value.

4. Stock in trade is valued at cost on weighted average basis or net realizable value whichever is lower.

5. Stocks of stores are valued at cost on weighted average cost.

K. Cash Flow Statement

The cash flow statement is prepared by indirect method set out in AS-3 on cash flow statements and presents the cash flows byoperating, investing & financing activities of the company. Cash & cash equivalent presented in the cash flow statement consist ofbalance in the Bank account and cash in hand.

L. Excise Duty

Liability for excise duty in respect of goods produced by the company is accounted upon clearance and provision is made forexcisable manufactured goods lying in stock as on the balance sheet date.

M. Deferred Tax Assets / Deferred Tax Liabilities

Deferred Tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.Deferred Tax is recognised at the Balance Sheet date, subject to the considerations of prudence, on timing differences, being thedifference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or moresubsequent periods. Unabsorbed depreciation and carry forward of losses during the year which can be set off against futuretaxable income are also considered as timing differences and result in deferred tax assets, subject to consideration of prudence.Deferred Tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will beavailable against which such Deferred Tax assets can be realised. However, deferred tax assets originating due to unabsorbeddepreciation or carry forward of losses under tax laws are recognized only to the extent that there is virtual certainty supported byconvincing evidence that sufficient future taxable income will be available for their realization.

Notes Forming Part of the Financial Statements for the year 2013-14 (Contd.)

(Amount in `)

As At As At31st March, 2014 31st March, 2013

NOTE 3SHARE CAPITAL

A. Authorised:

25,00,00,000 Equity Shares of ` 10 each 2,500,000,000 2,500,000,000

45,00,00,000 Preference Shares of ` 10 Each 4,500,000,000 —

TOTAL 7,000,000,000 2,500,000,000

B. Issued, Subscribed, Called up & Fully Paid:

20,55,20,000 Equity Shares of ` 10 each Fully Paid up(100% Held by HPCL) 2,055,200,000 2,055,200,000

TOTAL 2,055,200,000 2,055,200,000


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1) Of the above 20,55,20,000 equity shares were allotted to the holding company“Hindustan Petroleum Corporation Ltd” except 6 equity shares which wereallotted to 6 nominees of the holding company.

2) Of the above paid up Equity Capital of ` 2,055,200,000/-` 1,51,68,25,525 was received in cash after adjustment of ` 53,83,74,475/-(` 49,17,15,248 towards preliminary & pre-incorporation expense and` 4,66,59,227 towards other expenses) incurred by HPCL, holding companyon behalf of HPCL Biofuels Ltd.

41,96,51,511 nos 5 % Non Cumulative 14 year redeemable Preference Shares@ ` 10/- each (100 % held by HPCL) 4,196,515,110 —

TOTAL 4,196,515,110 —

Above 41,96,51,511 Preference Shares were issued to HPCLon conversion of Bridge Loans of ` 385,46,00,000/-and accrued interest of ` 34,19,15,110/- as of 24th March 2014.

TOTAL 6,251,715,110 2,055,200,000

Reconciliation of outstanding shares (nos.) CY PY ` `

Equity Shares outstanding as on begingingof the year 20,55,20,000 20,55,20,000 2,055,200,000 2,055,200,000

Shares issued during the year Nil Nil — —

Equity Shares outstanding as on endof the year 20,55,20,000 20,55,20,000 2,055,200,000 2,055,200,000

Preference Shares outstanding as onbeginging of the year Nil Nil — —

Shares issued during the year 41,96,51,511 Nil 4,196,515,110 —

Preference Share outstanding as onend of the year 41,96,51,511 Nil 4,196,515,110 —

NOTE 4RESERVES & SURPLUS

Capital Reserve —

Capital Redemption Reserve —

Share Premium Account —

Debenture Redemption Reserve —

Revaluation Reserve —

General Reserve —

TOTAL — —

Capital Grant —

Surplus / (Deficit) in Statement of Profit and Loss

Opening Balance (2,006,891,527) (534,724,760)

Add: Profit / (Loss) for the Year (1,158,817,556) (1,472,166,767)

Profit Appropriated to General Reserve — —

Profit Appropriated to Debenture Redemption Reserve — —

Profit Appropriated to Proposed Dividend — —

Profit Appropriated to Tax on Distributed Profits — —

Closing Balance (3,165,709,083) (2,006,891,527)

Other Reserve —

TOTAL (3,165,709,083) (2,006,891,527)


As at 31.03.2014 As at 31.03.2013


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NOTE 5LONG-TERM BORROWINGS

Secured Loans (Against Hypothecation of Fixed & Current Assets)Bank Term Loan (Repayable in 36 Instalments Starting from 3,088,003,607 3,549,023,696Jan 2012) less 4 Instalments of ` 11.53 Cr Repayable in 2014-15(Rate of Interest @ Base Rate + 1.75% Fixed Spread) (461,000,000) (461,000,000)

TOTAL A 2,627,003,607 3,088,023,696

Un - Secured LoansLoans & Advances from related parties (Bridge Loan-I from HPCL) — 1,074,600,000Loans & Advances from related parties (Bridge Loan-II from HPCL) — —Loans & Advances from related parties (Bridge Loan-III from HPCL) — 1,000,000,000Loans & Advances from related parties (Bridge Loan-IV from HPCL ) — 980,000,000

TOTAL B — 3,054,600,000

TOTAL (A+B) 2,627,003,607 6,142,623,696

NOTE 6OTHER LONG TERM LIABILITIES

Other Deposits — —Accrued Charges/Credits — —Other Liabilities — —

TOTAL — —

NOTE 7LONG TERM PROVISIONS

Provision for Gratuity 2,131,467 1,956,362Provision for Leave Encashment 1,151,906 1,545,107

TOTAL 3,283,373 3,501,469

NOTE 8SHORT TERM BORROWINGS

Secured LoansCash Credit (Hypothecation of Debtors & Inventory) 220,012,985 13,631,957(Rate of Interest @ Base Rate + 1.75% Fixed Spread)Overdrafts from Banks (Secured by Hypothecation of Stock-in-Trade) —

TOTAL A 220,012,985 13,631,957

Un-Secured LoansShort Term Loans from Banks (Repayable in Foreign Currency) — —Clean Loans from Banks — —Inter Company Deposits — —Commercial Paper — —Loans & Advances from Related Parties — —

TOTAL B — —

TOTAL (A+B) 220,012,985 13,631,957

NOTE 9TRADE PAYABLES

(i) Total Outstanding dues of Micro, Small & Medium Enterprises — —(ii) Total outstanding dues of creditors other than above Creditors

Operating Expenses Payable to HPCL 49,264,122 36,738,858Accrued Expense - Payable 64,293,151 59,766,151Advance Received From Farmers for Cane seeds — —Payable to Cane Growers 835,794,831 112,813,695Retention from Vendors 12,120,553 8,524,608Payable to Trade Vendors 17,962,402 11,254,253

TOTAL 979,435,059 229,097,565


As at 31.03.2014 As at 31.03.2013



22


As at 31.03.2014 As at 31.03.2013

Amount (`) Amount (`)NOTE 10OTHER CURRENT LIABILITIES

WCT Payable (pertaining to March 2014) 230,126 300,991TDS Payable (pertaining to March 2014) 39,018,845 1,355,363Sales Tax Payable (pertaining to March 2014) 1,978,904 —Excise Payable (pertaining to March 2014) 44,531,877 35,949,262Payable to Contractor/Vendor (Capital Assets) 447,155,895 350,987,955Security Deposit from Contractors 11,248,733 9,434,414Road Map Scheme - Lauriya 11,032 11,032Farmer Loan 36,499 34,376Accrued Liability-EPCC Vendor 148,863,688 107,945,619Payable to Zone Development Council 692,828 —PF Contribution Employee 1,262,661 2,277,109Unclaimed Cheque 835,354 1,040,913HPCL-Other Payable — —Interest Accrued but not due 7,465,460 8,248,341

Current Maturities of Long Term Debt —— Bank Term Loan (4 instalments of ` 11.53 Cr each) 461,000,000 461,000,000— Loans & Advances from related parties (Bridge Loan-II from HPCL) — 800,000,000

Inter Office Balance — —Payable To Employee 15,651,601 8,632,040Payable To Govt (Others) 13,112 350,000Misc Other Current Liablities 117,067 2,430,408Advance From Customers 336,747,818 —

TOTAL 1,516,861,500 1,789,997,823

NOTE 11SHORT-TERM PROVISIONS

Provision for Other Employee Benefits 38,201 145,027

Provision for Tax (Net) — —

Provision For Dividend — —

Provision for Fringe Benefit Tax — —

Tax on Distributed Profits — —

Provision for Other Tax and Govt Payable — —

Provision for Other Liabliities — —

TOTAL 38,201 145,027

NOTE 12CAPITAL WORK-IN-PROGRESS

Unallocated Capital Expenditure and Materials at Site 42,691,747 156,171,442Capital Stores — —Capital Stores Lying with Contractors — —Capital Goods in Transit — —

TOTAL 42,691,747 156,171,442

Construction Period Expenses Pending Apportionment(Net of recovery) :

Establishment Charges — —Interest — —Other Borrowing Cost — —Depreciation — —Other Expenses Incurred During Construction — —

TOTAL — —

23


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24


As at 31.03.2014 As at 31.03.2013


NOTE 14NON-CURRENT INVESTMENTS

Trade Investments

QuotedInvestment in Equity — —Investments in Joint Venture — —

Un - Quoted —Investment in Equity — —Investments in Subsidiary — —Investments in Joint Venture — —Investment in Preference Shares — —Investments in Joint Venture — —

Total Trade Investments - A — —

Other Investments

QuotedInvestment in Equity — —Investment in Government or Trust Securities — —

Un - QuotedInvestment in Government or Trust Securities — —Investment in Debentures or Bonds — —Investment in Other non - Current Investments — —

TOTAL OTHER INVESTMENTS - B — —

TOTAL NON - CURRENT INVESTMENTS (A+B) — —

NOTE 15LONG-TERM LOANS & ADVANCES

Secured, Considered Good

Advances Recoverable in cash or in kind orfor value to be received — —

Interest Accrued thereon — —

Capital Advances 21,523,148 13,468,661

Unsecured, Considered GoodCapital Advances — —Advances Recoverable in Cash or in kind orfor Value to be Received (BSEB) 22,693,846 34,040,769Balances with Excise, Customs, Port Trust etc. 278,854,222 371,582,742Other Deposits 835,500 555,000Prepaid Expenses — —Amounts Recoverable under Subsidy Schemes — —Share Application Money Pending Allotment — —Advance Towards Equity — —Loan given to Subsidiaries & JVs — —Other Accounts Receivable — —Less : Provision for Doubtful Receivables — —

TOTAL A 323,906,716 419,647,172

Unsecured, Considered Doubtful:Accounts Receivable & Deposits — —Less : Provision for Doubtful Receivables — —

TOTAL B — —

TOTAL (A+B) 323,906,716 419,647,172

25


As at 31.03.2014 As at 31.03.2013


NOTE 16OTHER NON-CURRENT ASSETS —

NOTE 17CURRENT INVESTMENTS

Non - Trade Investments (Quoted) — —

TOTAL — —

NOTE 18INVENTORIES

A. Inventories as per books(Inventory Taken, Valued & Certified by the Management)Raw Materials (Including in Transit - Raw Materials) — —Finished Products 944,368,880 843,335,012Bio-Compost 4,550,000 4,275,000Stock-in-Trade 50,148 8,459,642Work in Progress 139,315,125 140,037,547Packages 7,090,525 8,426,798Process Materials & Lubes 13,144,451 22,324,716Stores & Spares 35,907,670 16,809,862

TOTAL 1,144,426,799 1,043,668,577

B. Provision for Gain/(Loss) on Inventory VariationFinished Products (15,476,743) —Work in Progress 5,827,716 —

TOTAL (9,649,027) —

C. Net InventoriesRaw Materials (Including in Transit - Raw Materials) — —Finished Products 928,892,137 843,335,012Bio-Compost 4,550,000 4,275,000Stock-in-Trade 50,148 8,459,642Work in Progress 145,142,841 140,037,547Packages 7,090,525 8,426,798Process Materials & Lubes 13,144,451 22,324,716Stores & Spares 35,907,670 16,809,862

TOTAL 1,134,777,772 1,043,668,577

NOTE 19TRADE RECEIVABLES OVER SIX MONTHS (FROM THE DUE DATE):

Over six months (from the due date):Secured Considered Good — —Un - Secured Considered Good — —Considered Doubtful — —Less: Provision for Doubtful Debts — —

TOTAL A — —

Others

Secured Considered Good — —Un - Secured Considered Good 102,589,994 62,168,820Considered Doubtful — —Less: Provision for Doubtful Debts — —

TOTAL B 102,589,994 62,168,820

Total (A+B) 102,589,994 62,168,820


26


As at 31.03.2014 As at 31.03.2013


NOTE 20CASH AND CASH EQUIVALENTS

i. Cash & Cash Equivalents

Cash on Hand 16,298 258,050

Cheques Awaiting Deposit — —

Balances With Scheduled Banks:

— On Current Accounts 86,362,799 70,200,375

— On Non-operative Current Accounts — —

ii. Other Bank Balances

With Scheduled Banks:

— On Fixed Deposit Accounts — —

— On Fixed Deposit Accounts (more than 12 months) — —

Earmarked for Unclaimed Dividend — —

TOTAL 86,379,097 70,458,425

NOTE 21SHORT-TERM LOANS & ADVANCES

Secured, Considered Good

Advances recoverable in cash or in kind or for value to be received — —

Interest Accrued thereon — —

Unsecured, Considered Good

Advances recoverable in cash or in kind orfor value to be received — —

Balances with Excise, Customs, Port Trust etc. 107,623,618 34,851,664

Other Deposits — 5,000,000

Prepaid Expenses 5,015,601 6,991,982

Amounts Recoverable under Subsidy Schemes 22,253,363 —

Share Application Money Pending Allotment — —

Loans to Related Party — —

Employee Advance 455,941 833,589

Vendor Advance 928,397 3,564,128

LD Recoverable — —

Receivable from Farmer for Cane Seed 863,049 146,951

Other Accounts Receivable 2,872,000 2,874,000

Less : Provision for Doubtful Receivables — —

Other Advances — —

TOTAL A 140,011,969 54,262,314

Unsecured, Considered Doubtful

Accounts Receivable & Deposits 31,119 —

Provision for Doubtful Receivables (31,119) —

TOTAL B — —

TOTAL (A+B) 140,011,969 54,262,314

NOTE 22OTHER CURRENT ASSETS

Interest Accrued on Bank Deposits/Investments — —

Rent Receivable 139,817 56,117

Other Recoverable 6,131,150 —

Instalment of BSEB Advance Receivable 11,346,923 11,346,923

TOTAL 17,617,890 11,403,040

27


As at 31.03.2014 As at 31.03.2013

Amount (`) Amount (`)NOTE 23REVENUE FROM OPERATIONS

Gross Sales

Sale of Products 1,386,757,660 954,827,164

Sale of Services — —

Other Operating Income 7,248,697 —

Excise Duty (60,606,932) (39,969,810)

Recovery under Subsidy Schemes — —

TOTAL 1,333,399,425 914,857,354

NOTE 24OTHER INCOME

Other Operating Revenue

Rent Recoveries 624,600 156,496

Miscellaneous Income 313,644 1,836,348

TOTAL A 938,244 1,992,844

Other Income

Interest On Deposits — —

Interest On Staff Loans — —

Interest On Customers’ Accounts — —

Interest (Gross) Long Term Investments — —

Interest (Gross) Current Investments — —

Interest (Gross) On Others 36,371 590,703

Profit on Sale of Fixed Assets (Net) — —

Miscellaneous Income 1,080,499 3,064,205

TOTAL B 1,116,870 3,654,908

TOTAL (A+B) 2,055,114 5,647,752

NOTE 25COST OF MATERIALS CONSUMED

Cane Purchase 1,151,453,286 1,070,037,557

Cane Transportation 17,575,358 25,290,577

ZDC Commission 2,182,374 10,640,943

Cane-Other Procurement cost 6,285,347 1,672,524

TOTAL 1,177,496,365 1,107,641,601

NOTE 26POWER & FUELS

Baggasse Cost ,Fuels & Handling 26,698,831 57,010,390

Rice Husk & Firewood 1,628,119 13,876,802

Power Import 21,112,369 28,959,618

TOTAL 49,439,319 99,846,810


28


As at 31.03.2014 As at 31.03.2013


NOTE 27CHANGES IN INVENTORIES OF FINISHED GOODSWORK-IN-PROGRESS & STOCK IN TRADE

Inventories at the end of the period (as per books)

Work in Progress 139,315,125 140,037,546

Finished Products 944,368,880 843,335,012

Bio Compost 4,550,000 4,275,000

Stock-In-Trade 50,148 8,459,641

TOTAL A 1,088,284,153 996,107,199

Inventories at the begining of the period

Work in Progress 140,037,547 83,568,673

Finished Products 843,335,012 569,455,399

Bio Compost 4,275,000 —

Stock-In-Trade 8,459,641 2,636,760

TOTAL B 996,107,200 655,660,832

TOTAL (B-A) (92,176,953) (340,446,367)

NOTE 28EMPLOYEE BENEFITS EXPENSE

Salaries, Wages, Bonus, etc. 93,230,610 86,814,252

Employees Allowances & Other Benefits 20,633,782 17,093,920

Employees Recruitment & Training 2,558,219 889,304

Contribution to Provident Fund 5,563,464 5,090,917

Pension, Gratuity etc. (324,922) 2,821,822

Employee Welfare Expenses — 232,557

TOTAL 121,661,153 112,942,772

NOTE 29FINANCE COSTS

(a) Interest Expense 788,446,604 760,356,798

(b) Other Borrowing Costs 112,360 —

(c) Applicable Net Gain/Loss on Foreign CurrencyTransactions & Translation — —

TOTAL 788,558,964 760,356,798

NOTE 30OTHER EXPENSES

Purchase of Stock in Trade — —

Repairs & Maintenance - Buildings 1,367,068 3,330,246

Repairs & Maintenance - Plant & Machinery 11,586,613 3,859,452

Repairs & Maintenance - Other Assets 5,131,591 8,895,171

Insurance 7,536,916 6,182,067

Rates & Taxes 8,998,045 642,214

Irrecoverable Taxes & Other Levies — —

Equipment Hire Charges — —

Rent 502,550 853,573

Travelling & Conveyance 8,092,956 14,757,606

Contract Labour 16,504,688 25,689,480

29

Printing & Stationery 401,469 1,051,185

Electricity & Water 292,327 287,838

Advisor Fees 186,192 1,259,368

Cane Development Expense 1,381,792 5,513,389

Discount on Cogen 50,896 1,010,179

Other Supplies 164,477 2,184,033

Telephone & Fax 473,454 256,006

Postage & Telegram 169,809 225,714

Sitting Fees 80,000 147,418

Provision for Doubtful Debts (After Adjusting Provision no Longer Required) — —

Other Manufacturing Expenses 4,929,684 5,974,172

Loss on Sale/ Write off of Fixed Assets/ CWIP (Net) — —

Security Charges 11,552,382 13,012,346

Advertisement & Publicity 442,310 —

Sundry Expenses & Charges (Not otherwise classified) 12,104,168 7,052,941

Consultancy & Technical Services 3,094,267 5,987,742

Auditor Expenses —

— Statutory Audit Fees 80,000 71,348

— Other Services 24,000 —

— Other Expenses 72,468 74,305

Exchange Rate Variation (Net) — —

TOTAL 95,220,122 108,317,793

NOTE 31PRIOR PERIOD INCOME/(EXPENSES)

Cane Development Expense 83,092 —

Other Expenses (37,475) (100,000)

Consumption of Stores & Consumables (1,226,253) —

Interest Received -Farmers 28,162 —

Interest on Borrowing Cost being Capitalised 9,339,931 —

Change in Fertiliser Inventory 728,000 —

TOTAL 8,915,457 (100,000)

NOTE 31APROVISION FOR GAIN/(LOSS) ON INVENTORYVARIATION (REFER NOTE NO. 57)

Finished Goods (15,476,743) —

WIP 5,827,716 —

TOTAL (9,649,027) —

NOTE 32EXTRAORDINARY ITEMS

Cane Subsidy from GOB 22,253,363 —

ZDC Commission Reversal of Last Year Provision 8,399,218 —

TOTAL 30,652,581 —


As at 31.03.2014 As at 31.03.2013



30

33 (a) Disclosures for a manufacturing company

Particulars 2013-14 2012-13

Provision for Provision forBook Stock Gain/(Loss) Net Inventory Book Stock Gain/(Loss) Net Inventory

Work In Progress ` ` ` ` ` `

Stock in Process 50,642,049 — 50,642,049 7,228,245 — 7,228,245

Sugar in Process 141,609 — 141,609 9,390,794 — 9,390,794

Rectified Spirit 29,936,592 — 29,936,592 82,098,287 — 82,098,287

Molasses 58,594,875 5,827,715.51 64,422,591 41,179,460 — 41,179,460

Syrup — — — 140,760 — 140,760

Total 139,315,125 5,827,715.51 145,142,841 140,037,546 — 140,037,546

(b) Raw Material

Raw Material Consumption Consumption(2013-14) (2012-13)

Particulars Quantity MT Amount ` Quantity MT Amount Rs

Purchase of Cane 467,860 1,151,453,286 435,544 1,070,037,557

Other costs incidental to cane purchase 26,043,079 37,604,044

Total 467,860 1,177,496,365 435,544 1,107,641,601

(c) Manufactured Goods

Particulars Opening Stock Production Sales Provision for Gain/(Loss) Closing Stock

Qty Amount ` Qty Qty Gross Turn Net Turn Qty Amount ` Qty Amount `over Rs. over `

Finished Goods

Sugar (MT) 21,951 707,756,791 33,252 32,433 962,622,491 931,486,412 (422.75) (15,474,895) 22,347 725,194,361(15,524) (452,018,548) (24,345) (17,918) (605,454,083) (588,270,676) — — (21,951) (707,756,791)

Ethanol (KL) 4,469 139,853,221 7,684 6,880 267,907,916 238,437,063 (0.05) (1,848) 5,273 203,697,776(4,350) (117,436,851) (6,947) (6,828) (208,086,955) (185,300,552) — — (4,469) (139,853,221)

Power (KWH) — — 51,812,000 32,600,518 152,244,418 152,244,418 — — — —— — (50,697,000) (30,651,725) (141,286,126) (141,286,126) — — — —

Note: Figures in brackets represent previous year figures.

34 DEFERRED TAX LIABILITY FOR THE YEAR ENDED MARCH 31,2014

For the year 2013-14, total DTL calculated is much lower than the DTA calculated as per the provisions and are also eligible to be nettedoff against each other. Considering the significant uncertainty of availability of future taxable income in view of the past performance,uncertainty in sugar cane prices and volatility of sugar prices, net figure DTA after offsetting the amount of DTL has not been taken intoaccounts, as a matter of conservative approach and prudence. The working of DTL and DTA for the year is given below:

Sl Timing differences Amount (Rs) DTA DTLNo. @ 30.90% @ 30.90%

1 Differences in book & tax depreciationWDV as per books of accounts as at March 31, 2014 6,584,665,567Less : WDV as per Income Tax Act as at March 31, 2014 4,159,388,667Difference (2,425,276,900) 749,410,562(If WDV as per IT is more than the WDV as per books thenDTA is created, othrwise DTL)

2 Expenditures covered by section 43 Bwhich are outstanding as on 31 March and not paid on orbefore the due date of filing of returnLeave Encashment (500,027) (154,508)Gratuity 175,105 54,107

3 Losses available for set off 4,758,318,143 1,470,320,306

Total as on March 31,2014 1,470,219,905 749,410,562Net Deferred tax asset as on March 31, 2014 720,809,343 —Net Deferred tax asset as on March 31 of the previous year

Amount to be debited / credited to statement of profit and loss 720,809,343 —


31

35. Segment Reporting

1. Company deals in the manufacturing and sales of Sugar, Ethanol and generation of Power. Business segment has been taken asPrimary Segment as three products are subject to different risks and rewards. There is no geographical segment as both the unitsoperate in same location and business environment.

Sl No. Particulars Year ended Year endedMarch 31, 2014 March 31, 2013

1 Segment Revenue ` `

a) Sugar 1,330,352,388 786,512,747

b) Ethanol 247,262,135 186,583,678

c) Co-Gen 434,527,901 229,448,119

d) Unallocated 6,089,464 5,647,752

Total 2,018,231,887 1,208,192,296

Less: Inter Segment 682,777,348 287,687,190

Net Segment Revenue 1,335,454,539 920,505,106

2 Segment Results

a) Sugar (165,723,918) (123,317,299)

b) Ethanol (29,748,592) (236,627,592)

c) Co-Gen (67,423,940) (150,533,110)

d) Unallocated (73,397,642) (163,038,204)

Total (336,294,093) (673,516,205)

Less: Interest 788,558,964 760,356,798

Less: Other Unallocabale Exp. 33,964,499 37,973,433

Total Profit Before Tax (1,158,817,556) (1,471,846,436)

3 Segment Assets

a) Sugar 3,643,439,691 3,871,522,899

b) Ethanol 1,471,192,090 1,603,738,237

c) Co-Gen 2,171,994,071 2,423,215,316

d) Unallocated 1,146,014,901 617,110,573

Total 8,432,640,752 8,515,587,024

4 Segment Liability

a) Sugar 1,281,013,221 305,049,714

b) Ethanol 539,466,093 169,974,947

c) Co-Gen 73,424,937 104,069,698

d) Unallocated 3,452,730,474 7,888,184,193

Total 5,346,634,725 8,467,278,552

5 Capital Employed

[segment assets-segment liability] 3,086,006,027 48,308,473

6 Capital Expenditure incl.change in CWIP

a) Sugar 395,773,597 7,450,559

b) Ethanol 2,134,452 —

c) Co-Gen 30,887,409 —

d) Unallocated — —

Total 428,795,458 7,450,559

7 Depreciation

a) Sugar 120,096,213 255,859,152

b) Ethanol 58,768,772 62,664,961

c) Co-Gen 114,160,399 113,046,802

d) Unallocated 23,890,434 22,506,825

Total 316,915,819 454,077,741

8 Non Cash expenditure otherthan Depreciation Nil Nil



32

Other Disclosures:

2. Segments have been identified in line with the Accounting Standard - 17 “Segment Reporting” taking into account the organisationstructure as well as differing risks and returns.

3. The Segment revenue, results, assets and liabilities include respective amounts identifiable to each of the segment and amountsallocated on reasonable basis.

4. The segment performance has been worked out after attributing the realisable value of inter segment transfer of material.

5. Segment assets and liabilities represents assets and liabilities in respective segment. Assets and liabilities that cannot be allocatedto segment on reasonable basis have been disclosed as unallocable.

6. Previous year figures have been regrouped/reclassified wherever necessary.

36. Lease Hold Land

Leasehold Land is being amortized over a period of 60 years on SLM. Amortization value corresponding to pre-capitalization period hasbeen capitalized. ` 1,50,44,688/- being amortization for the year 2013-14 (` 1,50,44,365/- for 2012-13) is being charged to Statementof Profit & Loss. The details of leasehold land (location wise) is as follows-

Unit wise Leasehold Land Lauriya Unit Sugauli Unit Total

Farm Area (Acres) 138.79 199.45 338.24

Plant Area (Acres) 56.65 89.92 146.57

Total Leasehold Land (Acres) 195.44 289.37 484.81

Total Lease Premium (`) 450,000,000 500,000,000 950,000,000

Acquisition Cost `

(Net of Scrap Sale) 408,443,952 494,237,312 902,681,264

37. Plant Capacity

Sl. Plant Name Capacity CapacityNo. (Sugauli) (Lauirya)

1 Sugar Plant 3500 TCD 3500 TCD

2 Ethanol Plant 60 KLPD 60 KLPD

3 Cogen Plant 20MW 20MW

38. Excise Claim with GOB

Claim has been lodged with Government of Bihar for Reimbursement of excise duty on sugar sales. Considering the significant uncertaintyover its realization, it would be accounted on receipt of the amount from GoB.

39. Consumption of Raw Materials

Consumption of bagasse generated from production is valued at ‘nil’ rate.

40. SLDC

SLDC charges or charges towards State Load Despatch Centre have been mentioned in the PPA with BSEB but SLDC in Bihar is yet to beestablished. Hence there has been no demand for SLDC charges and no provision has been made in this regard.

41. Renewable Energy Certificates (REC)

RECs earned for the captive consumption of power generated from renewable sources are not valued as stock on hand on the BalanceSheet dates, since the cost of obtaining them is very negligible and their realization is not certain. The income from the sale of RECs isaccounted as revenue in the year of sales. The RECs on hand on 31st March 2014 was 4559 units and their value at the floor price of` 1500/- stood at ` 68,38,500/-.

42. Micro, Small & Medium Creditors

The company has no sundry creditors falling under the Micro, Small & Medium Enterprises Development Act 2006.

43. Cane Development Expenditure

Cane development expenditure is net of sale of seeds and fertilizers to the farmers of cane command area and own farm production ofSugauli & Lauriya Unit.

44. Conversion of Loan to Capital

During the year, the balance of Bridge Loan taken from HPCL and the interest accrued (Net of TDS) was converted to Capital and 419,651,511nos. 5% non-cumulative 14 year redeemable preference shares of ` 10 each were issued to HPCL. The break-up of the amount is:

Loan Balance ` — 3,854,600,000

Accrued Interest ` 379,905,678 —

Less: TDS on Interest ` 37,990,568 341,915,110

Total conversion ` — 4,196,515,110


33

Notes Forming Part of the Financial Statements (Contd.)

The said conversion was approved by the Board of Directors of Hindustan Petroleum Corporation Limited. To facilitate the issue of suchPreference Shares, the Authorized Capital of the company was increased in its EGM from ` 2,500,000,000 to ` 7,000,000,000 theadditional ` 4,500,000,000 comprising of 450,000,000 of 5% non-cumulative 14 year redeemable preference shares of ` 10 each.

45. Secured Loan

Company had taken Term Loan of ` 4,125,400,000/- from Union Bank of India which is secured by equitable mortgage/hypothecationof Land, Building & Fixed Assets. Balance of Term loan as on 31.03.2014 being ` 3,088,003,607/-.(PY ` 3,549,023,696). WorkingCapital Loan of ` 220,012,985/- as on 31.03.2014 (` 13,631,957 as on 31.03.2013) is secured by hypothecation of Stocks & Debtors ofthe company. The limit of working capital loan is ` 431,400,000/-.

46. CENVAT / Input Tax Credit

The CENVAT credit available for set-off against liability for excise duty has been shown separately from provisions made for excise dutyagainst inventory and have not been netted off against each other. The unadjusted CENVAT credit is shown under the head Short TermLoans and Advances while provision for excise duty on closing stock is shown under the head Other Current Liability.

CENVAT credit utilized during the year on sale of ethanol and sugar is ` 52,912,339/- (` 35,663,943/- in 2012-13) and Input Tax creditutilized on sale of ethanol is ` 9,002,432/- (` 5,584,088 in 2012-13).

47. Government Grant for Ethanol Plants

Capital Subsidy of ` 70,000,000/- received from Government of Bihar (` 35,000,000/- each for the two Ethanol plants) during the monthof August 2013 which has been accounted as a reduction in the carrying cost of the Ethanol Plant & Machinery in line with theprovisions of Accounting Standard -12.

48. Provision for Gratuity & Leave Encashment

Provision for gratuity of ` 2,131,467/- (PY- ` 1,135,378/-) has been made towards Retirement benefits for employees during the yearbased on Actuarial Valuation as of 31.3.2014. Provision for Leave Encashment of ` 1,190,107/- (PY – ` 1,690,134) has been made basedon Actuarial Valuation as of 31.03.2014. The reduction in the provision on this account due to reduction in the number of employeesand their leave balances compared to previous period.

49. Penalty Recovered & Kept as Retention Money

An amount of ` 151,416,403/- was recovered through encashment of Bank Guarantees from one of the EPCC contractors. Out of this` 119,700,000/- is towards penalty for shortfall in performance and ` 31,716,403/- is towards additional retention against defectivesupplies. The contractor had invoked the Arbitration Clause and the Arbitrator has since been appointed. Hence this amount has beenaccounted as retention money in ‘Payable to Contractor / Vendor (Capital Assets)’ in Other Current Liabilities (Note no 10). Arbitrationproceedings are in progress and depending upon the outcome of the arbitration proceedings, necessary accounting would be done.

50. Provision for Income Tax

As company has incurred losses during the current financial year, no provision for income tax has been made.

51. Provision for Receivable from Employees

An amount of ` 31,119/- has been provided under Short Term Advances – Unsecured Considered Doubtful related to amounts receivablefrom employees. Action is being taken to recover the same from the amounts payable to the concerned employees. Additionally legalnotices have also been sent for recovery of the money. Depending upon the outcome of the recovery efforts, necessary action would betaken to account these provisions.

52. Remaining Contracts/Contingent Liabilities & Management Remuneration etc.

Sl. Description 2013-14 2012-13No. Amount (` ) Amount (` )

A. Estimated amount of contracts remaining to be executed on capitalaccount not provided for 1,824,088 386,491,673

B. Claims against the company not acknowledged as debts

Wrong disallowance of Input Tax Credit claimed on capital goods for 2010-11.Appeal lying before Sales Tax Tribunal, Bihar 69,844,013/- Nil

Erroneous demand for 2010-11 of Entry Tax based on proportional amounts,ignoring the actual tax paid 6,811,732/- Nil

Arbitration against M/s Robarant Engineers for termination of contract.Arbitration in progress 14,200,000/- Nil

C. Other Contingent Liabilities

Corporate Guarantee given to the State Bank of India for Agriculturefinancing arrangement with farmers 20,000,000 20,000,000

Interest and Penalty for Delay in deposit of Provident Fund dues. 32,103/- —


34

D. Managerial Remuneration

Salary & Allowances

(Chief Executive Officer on deputation from HPCL. The amount representsremuneration from HPCL and debited to the company. The salary includes salary,company contribution to PF, LFA, Bonus, medical, gratuity & leave encashment ) 3,406,460 2,706,758

E. Expenditure in Foreign Currency Nil Nil

F. Earning in Foreign Currency Nil Nil

G. C I F Value of imports during the year Nil Nil

53. Related parties

Nature of relationship Name of related parties

Promoters Hindustan Petroleum Corporation Ltd

Key Management Personnel Mr. Vinod Nehete (CEO)

Relative of Key Management Personnel Nil

54. Details of transaction between the company and related party (HPCL)

Nature of transaction 2013-14 2012-13(Amount in `) (Amount in `)

Bridge Loan availed from HPCL Nil 1,980,000,000

Advance Taken against supplies of Ethanol 540,000,000 Nil

Balance advance as on 31.03.2014 293,569,917 Nil

Interest Paid during the year to HPCL on Ethanol Advance 7,226,540 —

Interest Paid during the year to HPCL on Bridge Loan — 276,071,289

Sale of Ethanol to HPCL (Net of Excise Duty) 238,437,063 184,356,000

Purchase of Lubes from HPCL 1,997,894 2,718,448

Sale of Movable Fixed Assets 5,790,528 Nil

Other Expenditure incurred by HPCL on behalf of HBL 1,110,027 5,064,301

Manpower cost of employees on deputation and establishmentexpenses including Service Tax 11,415,236 20,823,846

55. Payments to the auditors

Expenses incurred towards statutory auditor’s remuneration during the year as under:

2013-14 2012-13

As Auditors – Statutory audit : ` 80,000/- ` 71,348/-

(a) For Taxation matters : — —

(b) For Company law matters : — —

(c) For management services : — —

(d) For other services : ` 24,000/- —

(e) For reimbursement of expenses : ` 72,468/- ` 74,305/-

56. Power Report

Description 2013-14 2012-13

Quantity Amount Quantity Amountin KWH (`) in KWH (`)

Generation 51,812,000 241,962,040 50,697,000 233,676,530

Export 32,600,518 152,244,419 30,651,730 141,286,126

Captive Consumption 23,005,652 107,436,397 19,269,130 88,814,337

Import 4,823,106 22,523,903 6,302,640 28,960,004

Energy Loss 1,028,935 4,805,128 776,140 3,576,067

Total Consumption 27,828,758 129,960,300 25,571,770 117,774,341


35

i. Power export and import figures are as per joint meter reading with Bihar State Electricity Board as provided in Power PurchaseAgreement.

ii. Generation, consumption and captive consumption figures are as per company meter.

iii. The figure stated as energy loss is a derived figure. Nature and reasons of energy loss is being looked into.

iv. Reconciliation of difference noticed between company’s own meter reading and joint meter reading is in progress.

v. The consumption for current year includes power consumed for Boiling House expansion project on chargeable basis from thecontractors amounting to ` 14,11,534/- (units- 302256 KWH) (PY - Nil).

57. Provision for Gain/(Loss) on Inventory

Considering the weak internal control and other factors pointed out by the independent auditor a physical verification was carried outby the HPCL internal auditors from 14/05/2014 to 19/05/2014 and based on their report the following variations were observed :-

Lauriya Plant Books Physical Variation (Qty.) Amount (` )

Sugar (bags) 289,639 290,730 1,091 2,124,406

Molasses-Sugar (MT) 6,592 6,748 156 293,400

Molasses-Ethanol (MT) 4,799 5,641 842 1,579,238

Ethanol (Ltrs.) 2,107,210 2,107,149 (61) (2,350)

Rectified Spirit (Ltrs.) 127,109 127,109 — —

Total Lauriya (A) 3,994,693

Sugauli Plant

Sugar (bags) 165,607 15,6061 (9,546) (17,599,300)

Molasses-Sugar (MT) 7,336 7,286.29 (49.71) (93,201)

Molasses-Ethanol (MT) 12,523.6 14,682.68 2,159.08 4,048,279

Ethanol (Ltrs.) 3,172,163 3,172,176 13 502

Rectified Spirit (Ltrs.) 942,055 942,055 — —

Total Sugauli (B) (13,643,720)

Total

Sugar (bags) 455,246 446,791 (8,455) (15,474,895)

Molasses-Sugar (MT) 13,928 14,035 107 200,199

Molasses-Ethanol (MT) 17,323 20,324 3,001 5,627,516

Ethanol (Ltrs.) 5,279,373 5,279,325 (48) (1,848)

Rectified Spirit (Ltrs.) 1,069,164 1,069,164 — —

Total (A+B) (9,649,027)

The reason for the differences could not be identified. Further the identified gain/(loss) is yet to get the approval of the appropriateauthority. Hence a provision for the same has been made which shall be appropriately accounted after due approval.

58. Change in Accounting Policy

In cases where restatement of carrying value of any asset due to any price adjustments was warranted due to receipt of governmentgrants, the Company was hitherto providing depreciation based on revised unamortized depreciable amount and the residual useful lifeof the asset. This year the policy has been modified to the extent that the depreciation rate so obtained shall not be lower than the rateprescribed in Schedule XIV to the Companies Act, 1956. Had the old accounting policy been followed this year also, the depreciationand net loss for the year would have been lower by ` 206,737/-.

59. Previous year figures

Previous year figures have been rearranged / regrouped where ever necessary. Figures have been rounded off to nearest rupee.

60. Presentation of Negative Amounts

Unless otherwise stated or the context requires it to be interpreted otherwise, figures in bracket in the financial statements representnegative amounts.






36

Cash Flow Statement for the Year Ended 31st March, 2014

Sl. PARTICULARS For the Year ended For the Year ended

No. 31st March, 2014 31st March, 2013


(A) CASH FLOW FROM OPERATING ACTIVITIES

1 NET PROFIT/(LOSS) BEFORE TAX AND EXTRAORDINARY ITEMS (1,189,470,137) (1,472,166,767)

(i) Depreciation 316,915,819 454,077,741

(ii) Provision for Deferred Tax Liability — —

(iii) Tax Payment of last year during Current Year — —

(iv) Interest Income — —

2 OPERATING PROFIT/(LOSS) BEFORE WORKING CAPITAL CHANGES (872,554,318) (1,018,089,026)

(a) Working Capital Changes —

(i) Decrease in Current Assets (Except Cash & Cash Equivalents) — 23,891

(ii) Increase in Current Liabilities 956,718,522 966,817,099

(iii) Decrease in Current Liabilities (273,243,149) (329,055,527)

(iv) Increase in Current Assets (Except Cash & Cash Equivalents) (223,494,874) (357,119,642)

(b) Changes in Long Term Provisions

Provision for Gratuity & Leave Encashment (218,096) 2,676,795

3 CASH GENERATED FROM OPERATIONS BEFORE TAX (412,791,915) (734,746,410)

(i) Income Tax Paid — —

(ii) Tax Refund Received — —

4 CASH FLOW BEFORE EXTRAORDINARY ITEMS (412,791,915) (734,746,410)

Less: Extraordinary Items- Cane Subsidy from GOB 30,652,581 —

5 MISC EXPENDITURE (LAST YEAR P&L BALANCE) -

NET CASH OUTFLOW FROM OPERATING ACTIVITIES AFTER TAX &EXTRAORDINARY ITEMS (382,139,334) (734,746,410)

(B) CASH FLOW FROM INVESTING ACTIVITIES

(i) Interest Received —

(ii) Purchase of Fixed Assets & Investments (396,314,710) 139,251,911

(iii) Capital Work in Progress - Project Management Expenses 113,479,695 (156,171,442)

(iv) Inventory from Trial Production — —

NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES (282,835,015) (16,919,531)

(C) CASH FLOW FROM FINANCING ACTIVITIES

(i) Proceeds from Issue of Shares 4,196,515,110 —

(ii) Loan Taken (3,515,620,089) 728,052,920

(iii) Advance against Equity pending Allotment — —

NET CASH INFLOW FROM FINACING ACTIVITIES 680,895,021 728,052,920

(D) NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS (A+B+C) 15,920,672 (23,613,021)

(E) Add: Cash & Cash Equivalent as at Beginning of the Year 70,458,425 94,071,446

(F) Cash & Cash Equivalent as at End of the Year 86,379,097 70,458,425





37

CORPORATE GOVERNANCE REPORT

Corporate Governance may be defined as a set of systems, processes and principles which ensure that a company is governedin the best interest of all stakeholders. It is the system by which companies are directed and controlled. In simple words,Corporate Governance is the key to proper management of the business of a company.

Your Company although unlisted company has been pioneer in voluntarily exercise of the good corporate governance practicesin order to maintain transparency, accountability and ethics in line with the governance parameters set by its the promoterCompany, Hindustan Petroleum Corporation Limited.

Although, Corporate Governance was mostly focused on listed companies with dispersed shareholdings and most of thecompliance was voluntary even for unlisted subsidiary companies of listed Companies. But with notification of the CompaniesAct 2013, the bar for Corporate Governance has been raised even for unlisted public companies like ours. There is a clear shifttowards closely monitoring unlisted public companies and large private companies with enhanced compliance requirementsencompassing disclosures, transparency and governance procedures. And your Company is gearing up to comply with thenew regime of compliances.

CORPORATE INFORMATION

Corporate Identity Number — U24290BR2009GOI014927

BOARD OF DIRECTORS

The Board of HPCL Biofuels Limited is consists of three Directors as under;

1. Mr. Pushp Kumar Joshi — Director

2. Mr. K V Rao — Director

3. Mr. B K Namdeo — Additional Director

Abbreviated resumes of all directors are furnished hereunder;

Mr. P K Joshi - Director

Mr. Pushp Kumar Joshi is a Bachelor of Law and an alumnus of XLRI, Jamshedpur, took charge as Director of the companyeffective 1st July, 2013. He is Director Human Resources of HPCL since August, 2012.

Mr. Pushp Kumar Joshi joined HPCL in 1986. Since then he has held various key positions in Human Resources and IndustrialRelations functions at HQO, Marketing and Refineries Divisions of HPCL. He has been responsible for the design and deploymentof key HR policies and practices that are employee oriented and aim at building high performance culture

Mr. K V Rao - Director

Mr. K V Rao is a member of the Institute of Chartered Accountants of India (ICAI), took charge as Director effective 1st June2013. He is Director Finance of HPCL.

Mr. Rao brings with him rich experience of over three decades in handling various challenging assignments in HPCL in thefields of Corporate Finance, Treasury Management, Internal Audit and Marketing & Refinery Finance.

Mr. Rao has expertise in various areas in Financial Management, and is credited with effective treasury management in raisingExternal Commercial Borrowing, Debentures, and various other types of financial instruments at very competitive interest ratesas compared with the Industry.

Mr. B K Namdeo- Additional Director

Mr. B. K Namdeo is appointed as additional Director effective 24th February, 2014 in place of Ms. Nishi Vasudeva. He isDirector Refineries of HPCL.

A Mechanical Engineer and a Master of Technology from IIT Bombay, he has over 32 years of experience in various refineryfunctions and has held key positions in Central Engineering (Refinery Projects), Operations, Projects and Maintenance of theRefineries.

SHAREHOLDING

HPCL Biofuels Limited is wholly owned subsidiary company of Hindustan Petroleum Corporation Limited.

DETAILS OF BOARD MEETINGS

During the year ended 31st March, 2014 Eight (08) meetings of the Board of Directors took place. The Company has held atleast one meeting in every quarter and the time gap between two board meetings did not exceed 120 days as prescribed underthe Companies Act.

The details of the board meetings as follows:

Meeting Date of Meeting Total Strength Directors Duration between thisNo. of the Board Present and next meeting

31 25th April, 2013 4 4 85

32 19th July, 2013 4 4 45

33 02nd September, 2013 4 3 38

34 10th October, 2013 4 3 27

35 6th November, 2013 4 4 77

36 22nd January, 2014 4 4 61

37 24th March, 2014 3 3 —

The overall attendance of Directors at the board meetings was 94%.

CONDUCT OF BOARD PROCEEDINGS

The day-to-day business is conducted by the CEO of the Company under the direction and the supervision of the Board. TheBoard holds periodic meetings to discuss the performance of the Company, provide directives, review the operations and otherpertinent issues relating to the Company.

DETAILS OF AUDIT COMMITTEE MEETING

Composition of Audit Committee was three members, namely;

Ms. Nishi Vasudeva — Chairperson,

Mr. Pushp Kumar Joshi — Member and

Mr. K V Rao — Member

Consequent to nomination of Mr. B K Namdeo as Director in place of Ms. Nishi Vasudeva by HPCL effective24th February, 2014, the Committee was reconstituted and presently, the Audit Committee consist of three Members as under;

Mr. Pushp Kumar Joshi — Chairman

Mr. K V Rao — Member

Mr. B K Namdeo — Member

There were four audit committee meetings were held during the year as under;

Meeting No. Date of Audit Committee Total Strength Members Present Duration between thisand next meeting

14 25th April, 2013 3 3 130

15 2nd September, 2013 3 3 38

16 10th October, 2013 3 3 165

17 24th March, 2014 3 3 -

COMPLIANCE

The Company monitors the compliance of applicable laws, regulations and rules including the Companies Act and all applicable

corporate laws and places confirmation of such compliance before the Board at regular interval.

DETAILS OF ANNUAL GENERAL MEETING

AGM No. Year Meeting Date Location

1 2009-10 10th December, 2010 Patna

2 2010-11 16th September, 2011 Patna

3 2011-12 15th December, 2012 Patna

4 2012-13 3rd December, 2013 Patna

For and on behalf of Board of Directors



38

HPCL BIOFUELS LIMITEDPatna atno. 271, Road No. 3E, New Patliputra Colony, Patna – 800 013

PROXY FORM

I/We

of in the district of

being a Member/Members of the above Company, hereby appoint of

in the district of or failing him

of in the district of

as my/our Proxy to attend and vote for me/us and on my/our behalf at the 5thAnnual General Meeting of the Company to be

held on 19th August, 2014 and any adjournment thereof.

Signed this day of , 2014

Registered Folio No.:

AffixRe 1/-

RevenueStamp

IJT-BOSCH chain less cane diffuser of Capacity 3500 TCD

Juice lines between DC heaters and diffusers

(A wholly owned subsidiary company of

Hindustan Petroleum Corporation Ltd.)

www.hpclbiofuels.co.in

HPCL BIOFUELS LIMITED

audited financial reports of subsidiaries (2 mb)

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