NATIONAL FERTILIZERS LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
To,
Dear Members,
On behalf of the Board of Directors of your Company, I have the pleasure in
presenting the 38th Annual Report on the business and operations of the
Company together with the Audited Financial Statements for the Financial
Year 2011-2012.
Your Company was incorporated in the year 1974 for implementation of two
fertilizer plants at Panipat and Bathinda with annual installed capacity of
5.11 lakh tonnes of urea each. The commercial production from these plants
commenced in 1979. In April, 1978, the Nangal Group of Plants of Fertilizer
Corporation of India Limited (FCIL) were transferred to NFL consequent upon
reorganization of NFL-FCIL. The Government of India (Gol) in 1984 entrusted
the Company to execute the country`s first inland gas based urea project at
Vijaipur in Madhya Pradesh, which commenced commercial production w.e.f.
1st July, 1988. Expansion of Vijaipur Plant was taken up in the year 1993
for doubling its capacity.
Presently, the Company has five urea production plants, one each at
Panipat, Bathinda and Nangal and two plants at Vijaipur with a total
installed capacity of 32.31 lakh tonnes and has grown to the status of
being the second largest producer of urea in the country. Your Company has
undertaken revamp of fuel-oil based plants at Nangal, Bathinda and Panipat
for changeover of feedstock from Fuel-oil to Natural Gas, which on
scheduled completion during 2012-2013 will reduce the cost of production
and the subsidy outgo from the Gol substantially. This would also
contribute to clean environment. The revamp projects undertaken at
Vijaipur-I & II would reduce energy consumption and augment the installed
production capacity of the Company by 10.4% to 35.68 lakh tonnes.
FINANCIAL HIGHLIGHTS
During the year under review, your Company achieved a turnover of Rs.7341
crore (including subsidy of Rs.5363 crore) as compared to Rs.5804 crore
(including subsidy of Rs.3918 crore) in the previous year, registering an
increase of 26%. The increase in turnover is due to higher sales of urea
and industrial products and increase in subsidy due to escalation in prices
of inputs i.e. petroleum products and natural gas.
The earnings before interest, depreciation and tax (EBIDTA) at Rs.342 crore
was higher than Rs.302 crore achieved in previous year inspite of higher
salaries and wages, repairs & maintenance, etc. mainly due to higher
production/sale of urea and industrial products. The profit before tax was
Rs.184.20 crore (previous year Rs. 203.92 crore) and profit after tax was
Rs.126.73 crore (previous year Rs.138.50 crore). The reduction in net
profit was due to higher incidence of interest expenditure of Rs. 66.24
crore (previous year Rs. 9.15 crore) mainly attributed to higher
utilization of working capital and short term loans arising out of delay in
receipt of subsidy and increase in input prices and interest rates.
Interest amounting to Rs.75.09 crore was capitalized during theyear.
BORROWINGS
For Ammonia Feedstock Changeover Projects (AFCP) at Panipat, Bathinda and
Nangal, Rupee term loan of Rs.3850 crore has been arranged from consortium
of 13 Banks with State Bank of India as lead Bank. As on 31st March, 2012,
long term loans of Rs.1342 crore were outstanding for the AFCP capital
scheme. In terms of Gol Policy notified on 6th March, 2009, the Company is
entitled to capital subsidy after successful commissioning of AFCP projects
over a period of five years towards project cost, interest on borrowed
capital and return on own funds. For financing Urea Capacity Enhancement
Projects at Vijaipur, Rs.80.96 crore of Buyers Credit, Rs.100.40 crore
through Bonds and Rs.77.45 crore through External Commercial Borrowings
(ECBs) have been utilized. The short-term borrowings of the Company as at
31st March, 2012, stood at Rs. 1383.82 crore, including cash credit
utilization, short-term loans, working capital demand loan, etc. (Rs.421.84
crore as at 31st March, 2011). Delay in timely receipt of urea subsidy and
hike in the prices of inputs (Gas/FO/LSHS) lead to higher working capital
borrowings. For identifying and managing the foreign exchange and interest
risks, Company has put in place Foreign Currency and Interest Rate Risk
Management Policy.
DIVIDEND
Your Company has a consistent track record of dividend payment. So far,
your Company has disbursed cumulative dividend of Rs.981.74 crore to the
shareholders. The Board of Directors have recommended payment of dividend @
7.8% (Rs.0.78 per share) for the year 2011-12. The total dividend pay out
would be Rs.44.48 crore (including dividend tax of Rs.6.21 crore), and a
sum of Rs.12.67 crore has been transferred to the General Reserves.
CAPITAL & RESERVES
The Paid-up Capital and Reserves and Surplus as at 31st March, 2012 were
Rs.491 crore and Rs.1264 crore respectively.
OPERATIONS
Production
During the year, your Company produced 34.01 lakh tonnes of Urea compared
to 33.80 lakh tonnes in the previous year. This included ever best neem
coated urea production of 6.4 lakh tonnes compared to 1.2 lakh tonnes in
the previous year. The overall urea capacity utilization was 105.3%.
Vijaipur Plants registered ever-best production of 19.14 lakh tonnes
surpassing previous best of 18.71 lakh tonnes achieved in 2004-05. Extra
production from Vijaipur Plants over and above the installed capacity was
1.85 lakh tonnes. Vijaipur-I and Vijaipur-II units achieved ever-best
Ammonia production of 5.44 lakh tonnes and 5.86 lakh tonnes respectively,
surpassing previous best of 5.29 lakh tonnes and 5.60 lakh tonnes in 2005-
06 and 2006-07 respectively. Vijaipur-II plant achieved ever-best urea
production of 10.12 lakh tonnes surpassing previous best of 9.74 lakh
tonnes in 2006-07.
Due to operational problems, there was a production shortfall of urea at
Panipat and Bathinda against the rated capacity, which was partially
compensated by additional production of 25.1 thousand tonnes from Nangal.
Company in its endeavour to optimally utilize surplus ammonia from Vijaipur
Unit and to produce cost effective/competitive industrial products at
Nangal, achieved ever-best production of industrial products during the
year.
Input Availability
During the year, Company had to procure spot gas intermittently up to
December, 2011 to meet additional requirement of gas at Vijaipur-II after
partial retrofitting in April, 2011 and shortfall arising out of reduced
availability of Administered Pricing Mechanism (APM)/Panna Mukta Tapti
(PMT) Gas. Supply of additional gas commenced from December, 2011 against
allocation made by Gol for Vijaipur. Poor coal quality continues to be an
area of serious concern, one of the factors responsible for higher energy
consumption at Panipat, Bathinda and Nangal Units, for improvement of which
continuous efforts are being made.
SALES & MARKETING
Urea
Company`s prime business is production and sale of urea. It sold 33.89 lakh
tonnes of Urea (including 6.4 lakh tonnes of Neem coated Urea) against
33.59 lakh tonnes (including Neem Coated Urea of 1.21 lakh tonnes) in the
previous year.
Industrial Products
Sales performance in the Industrial Products segment, which include Nitric
Acid, Ammonium Nitrate (Lumps & Melt) has been significant at Rs.171 crore
vis-a-vis Rs.122 crore in the previous year, registering a growth of 40%.
This included, sales worth Rs.38 crore of Ammonium Nitrate (Melt), a new
product marketed this year.
Bio-Fertilizers
During the year Bio-fertilizers (powder and liquid) worth Rs.2.59 crore
were sold against Rs.0.87 crore in the previous year.
Agri-Business
The Company has been making foray into diverse agri-based business viz.
Seeds, Compost, Micorhizza and Bentonite Sulphur. During the year, turnover
of Rs.22.72 crore was achieved compared to Rs.10.28 crore in the previous
year primarily on account of sale of seeds.
Promotion of balanced use of fertilizers
During the last three decades, the Company has been working closely with
farming community by ensuring supply of quality fertilizers and other agri-
inputs. Company believes in marketing its products and services through
extensive field demonstrations coupled with an effort to build
relationships with the end users, the farmers. To promote Company`s "Kisan
Urea" as a household name, various promotional activities including 100
farmers education programmes, 40 dealers/retailers orientation programmes,
415 field days, 120 block and front line demonstrations were organized
during the year. Company participated in 44 kisan melas in its marketing
territory spread across 18 states.
Company has four Mobile Soil Testing units attached to Nangal and Vijaipur
Units and Lucknow and Bhopal Zonal Offices. It also has five static Soil
Testing Laboratories at Nangal, Panipat, Vijaipur, Bhopal and Barabanki.
One more static Soil Testing Laboratory is being set up at Balasore in
Odisha. Micro Nutrient`s Labs at Nangal, Vijaipur and Panipat Units are
also being set-up. During the year, 48276 Samples for macro nutrients and
766 samples for micro nutrients were analyzed. 15 Trials on non-pressure
Urea Ammonium Nitrate solution have been laid out at Punjab Agriculture
University, Ludhiana. 33 Trials on use of Liquid Bio-Fertilizers were
conducted at Kisan Vikas Kendras in the marketing territory of the Company.
MODERNIZATION AND EXPANSION PROJECTS
Revamp of fuel-oil based plants at Nangal, Bathinda & Panipat
The Company has undertaken capital schemes for change over of feedstock
from Fuel-oil to Natural Gas at Panipat, Bathinda and Nangal involving a
total investment of Rs.4066 crore with a completion period of 36 months
from the Zero date i.e. 29th January 2010. The commissioning of the project
at Nangal is scheduled by the end of December, 2012 and that of Panipat and
Bathinda by January, 2013. Capital expenditure of Rs.1546.17 crore towards
these projects has been incurred upto 31st March, 2012.
These Projects are being implemented on Lumpsum Turnkey (LSTK) basis.
Panipat and Bathinda projects are being implemented by M/s. Larsen & Toubro
(L&T) with process licence from M/s. Haider Topsoe Associates. Nangal
Project is being implemented by consortium of M/s. Tecnimont SPA Italy and
M/s. Technimont ICB, Mumbai with process licence from M/s. KBR. M/s.
Projects & Development India Limited (PDIL) has been engaged as Project
Management Consultant for all the three projects.
Gas Pipeline
Firm allocation of gas from Gol is awaited to meet the gas requirement
after completion of feedstock conversion projects. Company is following up
for allocation of indigenous gas, alternatively RLNG shall be utilized for
feed. The natural gas pipelines have already been laid and commissioned for
Nangal and Bathinda units. Last mile connectivity to Panipat unit is in
progress.
Capacity Augmentation & Energy Saving Project (ESP) at Vijaipur
The Company has undertaken Capacity Augmentation of Ammonia & Urea plants
at its Vijaipur-I & II units, including installation of Carbon Dioxide
Recovery (CDR) plant at an investment of around Rs.650 crore. Commissioning
of capacity augmentation of Ammonia and Urea Plants was earlier planned for
November, 2011, however, due to delay in supply of certain equipment, the
same has been undertaken in April/July, 2012. Ammonia and Urea Revamp
Projects of Vijaipur-I have been commissioned on 24th April, 2012. Carbon
Dioxide Recovery (CDR) Plant was commissioned on 23rd May, 2012 and Ammonia
and Urea Revamp Projects at Vijaipur-II are likely to be commissioned in
July, 2012. The capital expenditure of Rs.426.26 crore has been incurred
upto 31st March, 2012.
JOINT VENTURES
Joint Venture with M/s. KRIBHCO & M/s. RCF
Company has a Joint Venture "Urvarak Videsh Limited" with M/s. KRIBHCO and
RCF as promoters. The main object of the joint venture company is to
explore investment opportunity abroad and within the country in
nitrogenous, phosphatic and potassic sectors and to render consultancy
services for setting up projects in India and abroad.
Revival of closed units of M/s. FCIL
Government of India on nomination basis has allotted NFL & Engineers India
Limited (EIL) and NFL & Steel Authority of India Limited (SAIL) for revival
of closed units of FCIL at Ramagundam and Sindri respectively. Separate
MoUs have been entered with EIL and SAIL and pre-project activities have
been undertaken. First Stage clearance of BIFR for these projects is
awaited.
HUMAN RESOURCE
Amongst the three Ms, management of human resource is most important for
success of any organization. NFL continues to strive for development of its
human resource for realization of its full potential. The total Manpower
strength of the Company as on 31st March, 2012 was 4515 comprising of 1942
Executives and 2573 Non Executives. The total manpower includes 242 women
employees of which 104 are in Executive cadre.
Various HR initiatives for the benefit of employees have been undertaken
including implementation of Defined Contribution Superannuation Pension
Scheme, Review of Performance Management System and implementation of
Performance Related Pay.
Training Initiatives
During the year, to hone the skills and instill behavioral and personality
development traits in all supervisory staff and managerial cadre, Company
achieved 18,250 mandays training for employees with the aid of in-house and
external training programmes. Training programmes were identified by
systemizing organizational needs with individual needs through Performance
Management System.
To give exposure to technology change in connection with Ammonia Feed Stock
Change over Project being undertaken at Company`s three Units, 41 personnel
were sent to Copenhagen, Denmark for training principally on Haider Topsoe
Technology, which is being put to use at Panipat and Bathinda Units. On
site training at KRIBHCO, Hazira for 50 persons was arranged to expose them
to the KBR technology being used for Nangal Revamp. Training on
Distributive Control System/Emergency Shutdown System at Honeywell Works,
Pune was also arranged.
Industrial Relations
Industrial relations in the Company continued to be harmonious during the
year. Continuous interaction between the Management and Employees`
representatives contributed in maintaining the harmony.
IMPLEMENTATION OF OFFICIAL LANGUAGE
Your Company is continuously making efforts for the propagation and
successful implementation of the Official Language Policy of the Union of
India. The Official Language Implementation Committees at Unit and
Corporate Level regularly held their quarterly meetings to monitor and
review the progress made in achieving the targets fixed as per the annual
programme of Department of Fertilizers (DoF).
In order to increase the use of Hindi in office work, 32 Hindi workshops
were organized during the year in which 710 employees participated. Hindi
Pakhwara, on the occasion of Hindi Divas (14th September), was observed in
all the Offices/Units of the Company. Various Hindi competitions/programmes
were organized during the Hindi Pakhwara in which 325 employees
participated. Winners of Hindi Competitions were suitably awarded. 59
Employees were awarded cash prize under the Cash Incentive Scheme for doing
maximum work in Hindi. Panipat Unit and Zonal Office Bhopal have been
awarded Raj Bhasha Shield by respective Town Official Language
Implementation Committees for outstanding work in Hindi.
Information Technology (IT) is being widely used to promote the official
language in the various offices of the Company. Bilingual software was
provided across the Units to impart working knowledge of Hindi as well as
computer training programmes were extensively held to enable employees to
use the software.
REPRESENTATION OF SCs/STs, OBCs AND PHYSICALLY DISABLED
Your Company has been implementing reservation policies of Gol for
SCs/STs/OBCs/Persons with Disabilities. Representatives of SCs/STs
categories are associated in Recruitment of Departmental Promotion
Committees. A statement showing representation of employees belonging to
Scheduled Castes/Scheduled Tribes/Backward Classes/Physically Disabled
categories is appended as Annexure-VIII to this report.
INFORMATION TECHNOLOGY
The Company is making use of information technology (IT) to improve
efficiency & productivity in its various business functions. Presently home
grown software applications are in use for various business functions. In
its endeavour to bring about uniformity in implementation of IT
Applications across the company, In-house common Financial Accounting &
Payroll Systems based on Oracle were implemented across the company.
Company has implemented Local Area Network (LAN), Multi-protocol Label
Switching (MPLS) based Virtual Private Network (Wide Area Network) for
connectivity amongst Corporate Office, Units and Marketing Offices.
Internet connectivity to the employees at Units and Offices has been
provided through Leased Line/Broadband. High-speed datacards have been
provided to the field personnel of marketing to upload sales data through
internet.
Company is extensively using the facility of e-procurement, e-payment and
e-receipt for bringing efficiency and transparency in the business system.
Implementation of Mobile based Fertilizer Monitoring System (MFMS) is under
way, which will provide information on the movement of fertilizers from the
manufacturers to the retailers.
ENVIRONMENT MANAGEMENT
Company accords highest priority to Industrial Safety, Ecology & Pollution
Control. The safety and occupational health of its employees and external
stake-holders are of paramount importance and all these attributes are
embedded within the core values of the organization. Safety/Environment
Audit is carried out at production units from time to time.
Silos for collecting fly ash from ESP hoppers using dense phase pneumatic
Conveying System have been installed at Panipat, Bathinda and Nangal Units
for evacuation of ash from the plants. All the Units are ISO 9001-2000
certified for Quality Management System, ISO-14001 certified for
Environment Management System and have received OHSAS-18001 certification
for occupational health and safety management system.
Recognizing the need to balance human economic development with environment
protection, Company has adopted the concept of sustainable development. A
separate chapter at Annexure-VI in this report deals at length with your
Company`s initiatives and commitment to environment conservation and
sustainable development.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is an evolving concept and has moved
away from being just philanthropic to becoming an integral part of strategy
of the company. The Company is committed towards upliftment of under
privileged sections of the society and has supported various social and
community initiatives touching the lives of a large number of people. Under
the umbrella of CSR, Company is engaged in undertaking farmer friendly
social activities that have helped in improving socio economic status of
farming community. The major focus of these programmes is on creating
awareness about health and hygiene, children education, women empowerment,
skill development for self-employment, water conservation, rain-water
harvesting and ground water recharging.
During the year 2010-11 and 2011-12, Company earmarked Rs.3 crore and
Rs.3.25 crore respectively for CSR activities, against which till 31st
March, 2012, an expenditure of Rs.1.90 crore has been incurred and Rs.3.19
crore stands committed towards activities under execution. The unspent
amount has been carried over to 2012-13. The major CSR initiatives
undertaken by your Company are detailed in a separate Annexure-VII.
THE RIGHT TO INFORMATION ACT, 2005
In consonance with the provisions of the Right to Information Act, 2005,
Company has appointed Appellate Authorities/Public Information
Officers/Assistant Public Information Officers at all the Units/Offices of
the Company to respond effectively to the requests of the applicants under
the Act.
In synchronization with the directions of Central Information Commission
(CIC), for promotion of Institutional transparency within the Public
Authority through proactive and effective implementation of Section 4 of
the RTI Act, 2005, the Company has also appointed a Transparency Officer.
Company has created necessary mechanism to meet the objective to bring out
transparency in the functioning of organization as envisaged by RTI Act.
WHISTLE BLOWER POLICY
Your Company relies in transparency and propriety in its business dealings.
To take this object further, Company has put in place a Whistle Blower
Policy providing for a mechanism to the employees and other stakeholders to
report concerns about unethical behaviour, actual or suspected fraud or
violation of Code of Conduct or Ethics Policy. The disclosures under the
Policy are to be made to Ethics Committee Chaired by Director (Finance). In
case of conflict of interest, the whistle blower can directly approach the
Chairman of the Audit Committee. The policy provides for adequate
safeguards against victimization of employees who avail of the mechanism.
During the year, no disclosures have been received under the whistle blower
mechanism.
VIGILANCE
In Vigilance, focus continued to be given to preventive vigilance. Due
thrust was given to maintaining high degree of awareness amongst the
employees. Apart from streamlining the systems and providing flexibility to
the Units to perform better, efforts were made to build confidence across
the organization to facilitate faster decision making.
Emphasis was on for computerization of activities relating to award of
contracts, purchases, etc. to ensure transparency. In line with
instructions received from the Department of Fertilizers/Central Vigilance
Commission, emphasis is being given on leveraging of technology e.g. e-
payments/ receipts/procurement/tendering to facilitate transparency and
avoid delays.
Regular interactions were organized between the vigilance functionaries and
the line managers to understand the role of vigilance and to educate them
on the policies, guidelines and procedures of the Company. In order to
impart proper training to the employees, a detailed programme was prepared
for organizing training programmes/workshops related to Vigilance
activities at various offices/Units of the Company. Vigilance Awareness
Week was observed at all the Units involving all employees to create an
environment of ethical growth in the Company.
AWARDS & ACCOLADES
MoU
Company has received "Excellent" rating for the MoU 2010-11, which is
eleventh excellent rating in a row.
Awards
During the year, Company and its employees received number of prestigious
Accolades and Awards.
a) First Award for excellence in `Cost Management` in the category of Large
Public Sector Enterprises (PSEs) for 2010 from the Institute of Cost
Accountants of India.
b) Panipat Unit was conferred as the `WINNER` for the year 2009 & `RUNNERS-
UP` for the year 2008 by the Government of Haryana for "Lowest Accident
Frequency rate" for Panipat Unit.
c) Ms Neeru Abrol, Director (Finance) was awarded "Best Business Achiever"
Award in Woman Category by the Institute of Chartered Accountants of India.
d) Scope Excellence Award 2009-10 was awarded to Ms. Neeru Abrol, Director
(Finance) for "Outstanding Woman Manager" among all the CPSEs, which was
presented by Hon`ble Prime Minister of India at Vigyan Bhawan, New Delhi.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Management Discussion & Analysis Report covering the operations and future
prospects of the Company is appended as Annexure-I to this report.
STATUTORY AUDITORS & STATUTORY AUDITORS REPORT
The Statutory Audit of your Company was conducted by M/s. DSP & Associates
and M/s. Thakur, Vaidyanath Aiyar & Co., Chartered Accountants, who were
appointed as Joint Statutory Auditors for the financial year 2011-12 by
Comptroller & Auditor General of India (C&AG). Auditors` Report on the
Accounts of the Company for the financial year ended 31st March, 2012 is at
Annexure-II.
The review of Annual Accounts of your Company for the year ended 31st
March, 2012 by the C&AG under Section 619(4) of the Companies Act, 1956
forms part of this report as Annexure-III and do not call for any reply as
no comments as supplementary to Statutory Auditor Report have been made.
COST AUDIT
Pursuant to the directions of Central Government for audit of Cost
Accounts, your company has appointed Shri S.D.M. Nagpal for Nangal, M/s.
Sanjay Gupta & Associates for Bathinda, Shri Shome & Bannerjee for Panipat
and M/s. Chandra Wadhwa & Co. for Vijaipur-I & II as Cost Auditors for the
year ended 31st March, 2012.
As prescribed under the Cost Accounting Records (Report) Rules, 2001, the
cost accounting records are being maintained by all the Units of the
Company.
The Cost Audit Reports for the financial year 2010-11 were filed as
follows:-
Unit Date of filing
of Report
Nangal 05.09.2011
Bathinda 16.09.2011
Vijaipur I 05.09.2011
Vijaipur II 05.09.2011
Panipat 12.09.2011
CORPORATE GOVERNANCE
The Company believes Corporate Governance is the fountain head of
shareholder`s value creation. The Company has in place a well defined
"Corporate Governance Mechanism" which considers the interests of all
stakeholders. A separate section on Corporate Governance forming part of
this Directors` Report alongwith the Auditors` Certificate conforming to
the Compliance of Corporate Governance Code as provided in Clause 49 of the
Listing Agreement is at Annexure-IV.
REPORT ON ENERGY CONSERVATION TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUTGO
Disclosures in terms of Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988, in respect of conservation of
Energy and Technology Absorption and Foreign Exchange earnings and outgo
are at Annexure-V.
PARTICULARS OF EMPLOYEES
None of employees of the Company is drawing remuneration in excess of the
limits prescribed under section 217(2A) of the Companies Act, 1956 read
with Companies (Particulars of Employees) Rules, 1975.
DIRECTORS` RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956,
your Directors confirm that: -
i. in the preparation of the Annual Accounts, the applicable Accounting
Standards have been followed and no material departure has been made
therefrom by the Company;
ii. the Directors had selected such Accounting Policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year 2011-12 and of the profit of the
Company for that period;
iii. the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
and
iv. the Directors have prepared the Annual Accounts on a going concern
basis.
DIRECTORS
Shri Satish Chandra, Joint Secretary, DoF, Director on the Board of the
Company held the Additional Charge as Chairman & Managing Director from
31st March, 2011 to 23rd December, 2011.
Shri Munikoti Niranjan Rao, a practicing Chartered Accountant who was
appointed as an Additional Director on the Board on 6th May, 2011, has been
elected as Director at the previous AGM held on 12th September, 2011.
Shri Suresh Chandra Gupta, Joint Secretary, DoF has been appointed as
Additional Director w.e.f. 12th September, 2011 and Shri Sham Lai Goyal,
Joint Secretary, DoF has been appointed as Additional Director and assigned
the additional charge as Chairman & Managing Director since 23rd December,
2011.
Notice has been received u/s 257(1) of Companies Act, 1956 for appointment
of Shri Suresh Chandra Gupta and Shri Sham Lai Goyal as Directors at the
Annual General Meeting.
In accordance with the provisions of Article 76(2) of the Articles of
Association of the Company, Shri Munikoti Niranjan Rao shall retire by
rotation at the Annual General Meeting and being eligible has offered
himself for reappointment.
CODE OF CONDUCT
In line with the requirements of Clause 49 of Listing Agreement, the Board
Members and the Senior Management Personnel have affirmed compliance with
the Code of Conduct for the financial year ended 31st March, 2012.
ACKNOWLEDGEMENTS
The Board of Directors acknowledge their gratitude for the valuable
guidance and support received from the Gol in particular DoF, Fertilizer
Industry Coordination Committee (FICC), various State Governments,
Financial Institutions, Banks, stakeholders and all others whose continued
support has been a source of strength to the Company.
Your Directors also acknowledge the suggestions received from Statutory
Auditors, Cost Auditors and Comptroller and Auditor General of India and
are grateful for their continued support and cooperation.
The Board would like to place on record its appreciation to the hard work,
commitment and unstinting efforts put in by the employees at all levels.
For and on behalf of the Board of Directors
(Sham Lai Goyal)
Chairman & Managing Director
Place: New Delhi
Date : 25th July, 2012
FORM - A
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
(Annexure to Directors` Report)
2011-12 2010-11
A. POWER & FUEL CONSUMPTION
1. ELECTRICITY
a) Purchased
Unit Mwh 246670 213582
Total amount Rs. in Lakh 13900 11109
Average rate/Unit Rs./Mwh 5635 5202
b) Own Generation
i) Through diesel generator Unit
Unit Mwh 2.999 1.871
Unit per Itrs. of diesel oil Mwh/ltrs 0.001 0.001
Cost/Unit Rs./Mwh 54963 53635
ii) Through Steam Turbine/Gas
Turbine
Unit Mwh 535546 533457
Coal/unit of Power MT/Mwh 0.937 0.997
Oil/unit of Power MT/Mwh 0.055 0.040
Gas/unit of Power 000sm3/Mwh 0.187 0.192
Costper Unit Rs./Mwh 4277 3361
iii) From Waste Steam Mwh - -
2. COAL (Slack coal used
for operating boilers)
Quantity MT 1404071 1456361
Total cost Rs. in Lakh 47998 45281
Average rate Rs./MT 3418 3109
3. FURNACE OIL/LSHS
Quantity MT 117096 96295
Total cost Rs.in Lakh 56316 33927
Average rate Rs./MT 48094 35233
4. OTHERS
Natural Gas
Quantity 000sm3 164090 166484
Total cost Rs.in Lakh 19071 15436
Rate/Unit Rs./000sm3 11622 9272
Naphtha
Quantity MT 365 1156
Total cost Rs. in Lakh 86 272
Rate/Unit Rs./MT 23509 23509
B. CONSUMPTION PER UNIT OF PRODUCTION
i) Electricity Mwh 0.216 0.212
ii) Fuel Oil MT 0.079 0.064
iii) Coal MT 0.944 0.970
iv) Gas 000sm3 0.086 0.089
v) Naphtha MT 0.000 0.001
FORM - B
Disclosure of Particulars with respect to Conservation of Energy &
Technology Absorption
(Annexure to Director`s Report)
A. Technology Absorption
* Revamp of F.O. based units at Nangal, Panipat & Bathinda for changeover
of feedstock for Ammonia plant from Fuel Oil/LSHS to NG/RLNG has been taken
up at a total investment of Rs. 4,066 crores. M/s. Tecnimont SPA are LSTK
contractors for Nangal Unit and M/s. Larsen & Toubro (L&T) are LSTK
contractors for Panipat and Bathinda Units. Zero date of the project has
been declared as 29th January, 2010 and is scheduled to be completed and
commissioned within 36 months. The commissioning of the project at Nangal
is scheduled by end of December, 2012 and that of Panipat and Bathinda by
January, 2013. The revamp of these plants will improve the process
technology, lower effluent discharge due to use of cleaner feed stock and
also reduce energy consumption from the present level of 9.5-9.6 GCal/MT of
Urea to 7.1 GCal/MT for Nangal, 7.5 GCal/MT for Bathinda and 7.6 GCal/MT
for Panipat unit.
* Revamp of boilers for use of cleaner Natural Gas as support fuel in place
of Fuel oil at the F.O. based plants is also being implemented.
* Vapour Absorption Machine suction section of air compressor at Vijaipur-I
is under process of procurement to improve the energy efficiency of the
Ammonia-I plant at Vijaipur.
B. R&D efforts
* 15 trials on Non-pressure Urea Ammonium Nitrate solution have been laid
out at Punjab Agriculture University. 33 trials on use of Liquid Bio-
fertilizers have been conducted at Kisan Vikas Kendras.
C. Future Action Plan
* Production of neem coated urea at NFL, Nangal Unit so as to maximize its
production from NFL plants.
* Joint ventures with M/s. EIL and M/s. SAIL for setting up mega Ammonia-
Urea projects at Ramagundam and Sindri respectively. First Stage clearance
of BIFR for these projects is awaited.
* Large scale production of liquid bio-fertilizers at NFL, Vijaipur.
D. Energy Conservation Measures
The company is committed to further improve the plant performance &
reducing energy consumption. Few of the energy conservation measures
undertaken are as follows:
Energy Saving Project (ESP) of Ammonia Plant along with capacity
augmentation of Urea plant at Vijaipur-I has been commissioned on 24th
April, 2012. Energy savings to the tune of 0.12 GCal/MT of Urea is expected
in addition to increase in production by 16%.
Capacity augmentation project of Vijaipur-ll unit is likely to be
commissioned in July, 2012. In addition to increase in production by 23%,
energy savings to the tune of 0.04 GCal/MT of Urea is expected.
Project for installation of Carbon Dioxide Recovery (CDR) plant in
Vijaipur-I has been commissioned on 23rd May, 2012. This will help in the
augmentation of production of Ureaand also reduce emission of Green House
gases.
Against the approved cost of Rs. 894 crores for the above three projects,
the actual estimated expenditure is around Rs. 650 crores.
At Vijaipur, scheme for utilization of off gases from MP inert washing
columns in Urea plant of Vijaipur-I as fuel in CPP boilers has been
implemented. This has resulted in saving of 1.4 Gcal/hr energy in terms of
Natural Gas fuel amounting to a financial saving of Rs. 1.4 crore annually.
Similar scheme for Vijaipur-II is under implementation.
E. Foreign Exchange earnings & Outgo in crore)
Particulars For the year ended
31.03.2012 31.03.2011
Foreign Exchange used:-
(a) CIF Value of import 214.52 16.78
(b) Other expenditure in
foreign currency 105.19 77.46
including Consultancy
and Professional charges
There was no earnings of foreign exchange during the year.
F. Industrial Safety, Ecology and Pollution Control
Company accords highest priority to Industrial Safety, Ecology & Pollution
Control. Company is meeting all the statutory standards in this regard.
* All the Units are ISO-9001-2008 certified for Quality Management System
and ISO-14001-2004 certified for Environment Management System.
* All the units have received OHSAS-18001 certification for Occupational
Health & Safety Management System.
* A Carbon Dioxide Recovery plant of 450 MTPD capacity has been put up at
Vijaipur for recovery of Carbon Dioxide from flue gases of Primary Reformer
in Vijaipur-I. This will help in reduction in discharge of Greenhouse
gases.
* Consultant has been lined up who is evaluating the revamp projects for
changeover of feed-stock from FO to NG for consideration under Clean
Development Mechanism (CDM) in order to enable NFL to trade equivalent
Carbon Credits.
* Silos for collecting fly ash from ESP hoppers using dense phase pneumatic
conveying system have been installed at Panipat & Bathinda for evacuation
of ash from the plants. Similar system has been commissioned at Nangal
recently. These systems have reduced the quantity of ash slurry for
disposal and the ecological problem associated in disposal thereof and has
also resulted in saving in electrical energy used for pumping the ash
slurry.
MANAGEMENT DISCUSSION AND ANALYSIS
STATE OF ECONOMY & INDUSTRY
The Indian Economy is estimated to grow by 6.9% in 2011-12 compared to 8.4%
in the preceding two years, indicating a slow down compared to the previous
years. With agriculture and services continuing to perform well, slow down
can be attributed to the weakening of industrial growth. The global
economic environment turned sharply adverse in September, 2011 owing to the
turmoil and near recessionary conditions prevailing in Europe, sluggish
growth in many other countries like USA, stagnation in Japan and hardening
international prices of crude oil. Domestic factors like monetary policy,
in particular raising the repo-rate to control inflation, also resulted in
slowing down of investment and growth.
FERTILIZER INDUSTRY
Indian Fertilizer Industry is considerably dependent on Government`s
intervention. Stagnation in domestic capacity and steady growth in demand
for fertilizers and consequent substantial imports of fertilizers and raw
materials in recent years have thrown new challenges in meeting fertilizer
requirements. Inadequate supply of domestic natural gas and high prices of
imported LNG have been major bottlenecks in attracting fresh investment for
additions in domestic capacity for urea. Policy initiatives are needed to
enhance in domestic capacity. Initiatives are also needed to secure supply
of fertilizers and raw materials by setting up joint ventures abroad and
long term off take agreements.
Fertilizer use efficiency trend at national level has been declining mainly
due to imbalanced use of fertilizers and dependence on rains, which play
truant many a times. Shrinking ground water levels, climate change, etc.
put more agriculture areas at risk of severe water scarcity.
Fertilizer marketing is undergoing a sea change in the emerging scenario in
view of entry of new players and broadening of product portfolios.
Identifying and understanding customer behaviour and relationship
management would be key for the future. The use of customized fertilizers,
water soluble fertilizers are finding place in the markets, which provide
suitable nutrient alternatives to the farmers. The budget provision for
fertilizer subsidy for the year 2012-13 has been kept at Rs.60974 crore,
which is significantly lower compared to actuals of 2011-12 estimated at
Rs.85000 crore. Delayed subsidy payments to the industry lead to higher
working capital entailing additional borrowings and interest thereon, which
are not reimbursed by the Government.
The Government has accepted the recommendations of the Task Force headed by
Shri Nandan Nilekani on strategy to direct transfer of subsidy. Mobile
Based Fertilizer Management System providing end to end information on the
movement of fertilizers and subsidies from the manufacturers to the
retailers is expected to be rolled out nationwide during 2012.
In addition to urea, 25 grades of P&K fertilizers namely di-ammonium
phosphate (DAP), muriate of potash (MoP), mono-ammonium phosphate (MAP) and
10 grades of NPKS complex fertilizers are provided to farmers at subsidized
prices under the Nutrient Based Subsidy (NBS) Policy. India is meeting 80%
of its urea requirement through indigenous production and 20% urea
requirement is met through imports.
The estimated production of urea during 2011-12 is 22.29 million tonnes.
Availability of raw materials/intermediates has been abottleneckfor
increase in production.
BUSINESS ORGANIZATION
Company is mainly in the business of production and marketing of urea. It
has five Urea plants, one each at Nangal and Bathinda (Punjab), one at
Panipat (Haryana) and two at Vijaipur (Madhya Pradesh). Company is the
second largest producer of urea in the country with a share of 15.46% of
total urea production.
Company also deals in various Industrial Products including Nitric Acid,
Ammonium Nitrate (lumps & melt), Sulphur, Liquid Argon, Liquid Nitrogen,
Sodium Nitrate, Carbon Dioxide, etc.. Company has also a 100 tonnes p.a.
bio-fertilizers plant at Vijaipur, where three strains of bio-fertilizers
namely Phosphate Solubilising Bacteria (PSB), Rhizobium and Azotobacter are
produced. Company also markets certified seeds, compost, Mycorrhiza and
Pesticides.
Company has got an extensive marketing network comprising of Central
Marketing Office, Zonal Offices, State Offices and Area Offices spread
across the country with significant presence in Northern and Central India.
OPPORTUNITIES
Commissioning of changeover of Feedstock Project from Fuel-oil to Gas is
expected by end of December, 2012 at Nangal and at Panipat and Bathinda is
expected by end of January, 2013. After commissioning of these projects,
cost of production of urea from these units will become competitive in the
market. Further, completion of capacity augmentation of urea projects at
Vijaipur would enable the Company to consolidate its position as a leader
in urea production.
NFL is the first fertilizer manufacturer in the country, which has
developed technique for coating of normal prilled Urea with neem oil on
large scale. Wider acceptability of neem coated urea in the market, offers
an opportunity to augment the production of neem coated urea. During 2011-
12, it has produced 6.4 lakh tonnes of neem coated urea.
Company has been producing and marketing a number of industrial products
including Nitric Acid, Ammonium Nitrate, Sulphur, liquid argon, liquid
nitrogen and is exploring to expand further in this segment.
Company has a well knit marketing set-up and dealer-network with
significant presence in Northern and Central India. With the implementation
of Nutrient Based Subsidy (NBS) from April, 2010 for P&K fertilizers, there
is an opportunity for undertaking trading of P&K fertilizers. Marketing of
agro-inputs like seeds, compost, pesticides could be explored on a large
scale. Company also sees an opportunity in use of customized fertilizers.
THREATS
Company primarily has a single nutrient product base i.e. Urea. Increasing
input costs of feed-stock i.e. Fuel-Oil/Natural Gas has raised the cost of
production of Urea and Industrial Products. Globalized competitive scenario
coupled with reducing trend of import duties and dumping at low price may
affect the sale and margins on industrial products being produced by the
Company. Rising prices and reduced availability of natural gas may be an
area of concern for the Company.
Dependence on Monsoons is increasing. Scanty rains because of Monsoon
failures affect the urea off takes resulting in high inventory and delayed
realization, affecting the liquidity and funds availability.
RISKS & CONCERNS MANAGEMENT PERCEIVES
Firm allocation of gas is required for commissioning of feed-stock
conversion projects at Panipat, Bathinda and Nangal. Company is following
up with the Government of India for allocation of indigenous gas,
alternatively RLNG shall be utilized for feed.
Fertilizer marketing is undergoing a sea change in the emerging scenario in
view of entry of new players and broadening of product portfolios.
Identifying and understanding customer behaviour and relationship
management is a challenge in the competitive market.
Many experienced technical and other professionals will be superannuating
in the next few years. Skilled and trained manpower would be required to
sustain the organization. Company is rationalizing manpower through
selective recruitment, job rotation and diversification. Employees are also
being exposed to technical trainings to upgrade their skills to meet the
organizational requirements.
POSITIONING FOR THE FUTURE
(A) PROJECTS: Stagnation in domestic capacity and steady growth in demand
for fertilizers and consequent large scale import of fertilizers and raw
materials in recent years have thrown-up new challenges. Considering the
opportunities available, Company has undertaken the following initiatives:
Revamp of fuel-oil based plants at Panipat, Bathinda & Nangal
Company has undertaken revamp of fuel-oil based plants at Panipat, Bathinda
& Nangal for changeover of feedstock from FO/LSHS to NG/RLNG at a total
investment of Rs.4066 crores and a completion period of 36 months from the
Zero date i.e. 29th January 2010. Panipat and Bathinda projects are being
implemented by M/s. Larsen & Toubro Ltd. (L&T) with process licence from
M/s. Haider Topsoe Associates. Nangal Project is being implemented by
consortium of M/s. Tecnimont SPA Italy and M/s. Technimont ICB, Mumbai with
process licence from KBR. M/s. Projects & Development India Limited (PDIL)
has been engaged as Project Management Consultant for all the three
projects. Commissioning of the project at Nangal is expected by end of
December, 2012 and Panipat and Bathinda by end of January, 2013. After
revamp, urea would be produced at these plants on competitive prices.
Urea Capacity Augmentation & Energy Saving Project (ESP) at Vijaipur
The Company has undertaken Capacity augmentation of Ammonia & Urea plants
at Vijaipur-I & II units including installation of Carbon Dioxide Recovery
(CDR) plant at an investment of around Rs.650 crore. The revamp at
Vijaipur-I has been commissioned on 24th April, 2012, Carbon Dioxide
Recovery Plant has been commissioned on 23rd May, 2012 and Vijaipur-ll is
likely to be commissioned in July, 2012. The total urea capacity of
Vijaipur Units after commissioning of these projects has been augmented to
20.66 lakh tonnes from 17.29 lakh tonnes per annum.
Revival of closed units of M/s. FCIL
Government of India on nomination basis has allotted NFL & Engineers India
Limited (EIL) and NFL & Steel Authority of India Limited (SAIL) for revival
of closed units of FCIL at Ramagundam and Sindri respectively. Separate
MoUs have been entered with EIL and SAIL and pre-project activities have
been undertaken. First Stage clearance of BIFR for these projects is
awaited. These ventures will provide the Company an opportunity to
establish itself as a market leader in urea.
(B) MARKETING:
Sale of other fertilizers
The present market is very competitive and in view of the globalization
scenario and to exploit the opportunities in the Nutrient Based Subsidy
(NBS) regime a dedicated team has been formed. Company intends to make use
of New Fertilizer Policy by entering into customized fertilizers. Company
has plans to import fertilizers like MoP, DAP, depending upon the price and
availability, for trading through its distribution network. Company is also
exploring setting up of Single Superphosphate Plant at one of its Unit to
add to its product range.
Seeds
Company has been selling substantial quantity of seeds sourced from
Government agencies. It has been producing certified seeds in pilot
projects at selected farms in adopted villages. Company endeavours to
produce and market quality seeds of various high yield variety crops under
its own brand.
REVIEW OF PERFORMANCE OFTHE COMPANY
Production Review
Company produced 34.01 lakh tonnes of Urea compared to 33.80 lakh tonnes of
the previous year. The total included neem coated urea production of 6.4
lakh tonnes compared to 1.20 lakh tonnes of the previous year. The overall
capacity utilization was 105.3%. Vijaipur Plant registered ever-best
production of 19.14 lakh tonnes surpassing previous best of 18.71 lakh
tonnes achieved in 2004-05. Extra production from Vijaipur Plants over and
above the installed capacity was 1.85 lakh tonnes. Vijaipur-I and Vijaipur-
II units achieved ever-best Ammonia production of 5.44 lakh tonnes and 5.86
lakh tonnes respectively surpassing previous best of 5.29 lakh tonnes and
5.60 lakh tonnes in 2005-06 and 2006-07 respectively. Vijaipur-II plant
achieved ever-best urea production of 10.12 lakh tonnes surpassing previous
best of 9.74 lakh tonnes in 2006-07. There was a shortfall of urea
production at Panipat and Bathinda against their rated capacity, which was
partially covered by additional production of 25.1 thousand tonnes from
Nangal.
Ever-best lowest energy consumption of 9.438 Gcal/tonne was achieved at
Nangal surpassing the previous best lowest energy consumption of 9.446
Gcal/Tonne achieved during 2010-11. Energy consumption at all the Units was
within the norms except for Panipat.
MARKETING REVIEW
Sales & Marketing
Company sold 33.89 lakh tonnes of Urea (including 6.4 lakh tonnes of Neem
coated Urea) against 33.59 lakh tonnes (including Neem Coated Urea of 1.21
lakh tonnes) in the previous year. The sales turnover including subsidy for
the year was Rs. 7341 crore, an increase of 26% over Rs.5804 crores of the
previous year. The higher turnover as compared to the previous year is due
to higher sales of urea and industrial products and increase in subsidy due
to escalation in prices of inputs i.e. petroleum products and natural gas.
Sales performance in the Industrial Product segment has been significant at
Rs.171 crore vis-a-vis Rs.122 crores of the previous year registering a
growth of 40%.
Agri-business
The Company has been making foray into diverse agri-based business viz.
Seeds, Compost, Micorhizza, Bentonite Sulphur, Bio-fertilizer (Liquid &
Powder). During the year, turnover of Rs.22.72 crore was achieved as
compared to Rs.10.28 crore in the previousyear in this segment.
HUMAN RESOURCE
In the coming years, number of employees in executive and non-executive
cadre shall be superannuating. Manpower cost of the Company has arisen
substantially since implementation of last pay revision. The qualification
mix/skill set of the employees is required to be improved commensurate with
the technological upgradation undertaken at all the plants. To improve
talent retention and to maintain competitive edge, a study by outside
experts for optimum manpower including organizational structure,
performance management system and promotion policy has been undertaken.
REVIEW OF FINANCIAL PERFORMANCE
During the year under review, the Company achieved turnover of Rs.7341
crore (previous year Rs.5804 crore). The earnings before interest,
depreciation and tax (EBIDTA) at Rs.342 crore was higher than Rs.302 crore
achieved in previous year inspite of higher salaries and wages, repairs &
maintenance, etc. mainly due to higher production/sale of urea and
industrial products. The profit before tax was Rs.184.20 crore (previous
year Rs.203.92 crore) and profit after tax was Rs.126.73 crore (previous
year Rs.138.50 crore). The short-term borrowings of the company as at 31st
March, 2012, stood at Rs.1383.82 crore including cash credit utilization,
short-term loans, working capital demand loan, etc. (Rs.421.84 crore as at
31st March, 2011). Delay in receipt of urea subsidy and hike in the prices
of Gas/LSHS/FO lead to more borrowings for meeting working capital
requirements. In addition, during the year, long-term loans of Rs.1342
crore have been availed for Ammonia Feedstock changeover Projects and
Rs.80.96 crore of Buyers Credit, Rs.100.40 crore Bonds and Rs.77.45 crore
External Commercial Borrowings have been utilized for financing Capacity
Enhancement of Urea at Vijaipur.
Analysis of the Financial Performance of the Company:
(a) Turnover
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Sales Turnover 7341 5804 26.15
(Gross)
The increase in sales turnover is on account of higher volume and increase
in prices of input cost (Gas/LSHS/FO/Coal/Power) impacting the subsidy
component.
(b) Interest Earned
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Interest earned-Bonds - 2.71 (100)
Others (Term deposit etc.) 4.64 8.13 (42.93)
TOTAL 4.64 10.84 (57.20)
Interest income reduced due to disposal/sale of Fertilizer Bonds and non-
availability of any surplus funds for short-term deposits.
(c) Other Income
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Other Income (Rent, 32.73 33.38 (1-94)
profit on sale of
assets, misc.
income etc.)
(d) Consumption of Raw Materials
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Raw Materials Consumed 4399.91 3292.35 33.64
The increase in consumption of raw materials is mainly on account of
increase in prices of inputs materials i.e. FO/LSHS (36%) and Natural Gas
(27%)
(e) Repairs & Maintenance
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Repairs and Maintenance 80.31 74.20 8.23
The increase in Stores & spares consumption and Repair & Maintenance is due
to forced shutdown at Bathinda Unit during May/June 2011 and breakdowns at
Panipat unit.
(f) Employees Benefits
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Employee Remuneration 407.83 386.96 5.39
& Benefits
Employee remuneration and benefits increased on account of higher acturial
provisioning towards employee benefits scheme.
(g) Power and Fuel
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Power and Fuel 1618.73 1248.77 29.63
The increase in consumption of power and fuel is mainly on account of
increase in prices of input material i.e. Fuel oil (36%), Coal (10%), Power
(11%) and Natural Gas (27%).
(h) Freight and Handling
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change(%)
Freight and Handling 274.20 245.51 11.69
The increase in freight and handling expense is mainly due to higher
dispatches of Urea during the year.
(i) Other Expenses
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change(%)
Other Expenses 128.21 109.80 16.77
The increase in other expenses is mainly due to interest payable on land
compensation arising out of Apex Court Verdict at Bathinda Unit, exchange
rate fluctuation and increase in security expenses.
FINANCIAL STATUS
(a) Fixed Assets
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change(%)
Tangible Assets 548.35 598.03 (8.31)
Intangible Assets 1.27 0.98 29.59
Capital work in progress 2653.38 525.56 404.87
Total Fixed Assets 3203.00 1124.57 184.82
The increase is mainly due to increase in capital work in progress due to
expenditure incurred on projects of Energy Saving and Urea capacity
enhancement at Vijaipur and changeover of feedstock from fuel oil to
natural Gas at Nangal, Bathinda and Panipat units.
(b) Non-current Investment
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Investments
(Net of Provisions) 0.03 - -
(c) Inventories
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Raw Materials 177.68 118.09 50.46
Storesand Spares 196.74 158.69 23.97
(including packing
material)
Semi-finished/
finished products 142.40 86.36 64.89
Total 516.82 363.14 42.32
Increase is due to rise in value of stock of raw materials and finished
products due to higher prices of FO/LSHS/Natural Gas and other inputs.
(d) Trade Receivables
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Gross Debtors-FICC 2333.82 1497.37 55.86
-Others 105.76 116.91 (9.54)
Less: Provision for
Doubtful Debts 11.86 12.83 (7.56)
Net Debtors 2427.72 1601.45 51.60
The increase in debtors is mainly due to higher receivables (subsidy) from
Fertilizer Industry Coordination Committee (FICC) for reimbursement towards
the price of inputs.
(e) Short term Loans & Advances
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Loans and Advances 142.22 97.69 45.58
The increase is mainly due to increase in advance to suppliers and Income
tax refund.
(f) Current Liabilities
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Short Term Borrowings 1383.82 421.84 228.04
Trade Payables 437.84 430.88 1.62
Other current Liabilities 902.94 333.51 170.75
Short Term Provisions 66.55 64.42 3.31
Total 2791.15 1250.65 123.18
The increase in short term borrowings is on account of higher working
capital requirement arising from delay in receipt of subsidy from
Government. The increase in other current liabilities is due to increase in
creditors for capital works.
(g) Non-current Liabilities
(Rs. in crore)
Particulars FY 2011-12 FY 2010-11 Change (%)
Long Term Borrowings 1600.81 191.22 737.16
Other long term
liabilities 22.93 13.41 70.99
Total Loans 1623.74 204.63 693.50
The increase in long term borrowings is due to Rupee Term Loans, non-
convertible bonds, Buyer`s Credit facility and ECB loans taken for
financing the projects of changeover of feedstock at Nangal, Bathinda and
Panipat units and Energy Saving and Urea capacity enhancement at Vijaipur.
In terms of Government Policy notified on 6th March, 2009, the Company is
entitled to capital subsidy after successful commissioning of AFCP projects
over a period of 5 years towards project cost, interest on borrowed capital
and return on own funds.
INTERNAL CONTROLS
The Company has put in place adequate internal control measures in all
areas. These measures are in the form of various codes, manuals and
procedures issued by the Management, covering all critical and important
activities viz. Budget, Purchase, Material, Stores, Works, Finance,
Personnel, etc. These codes, manuals and procedures are updated from time
to time and are subject to strict compliance, which is monitored by
Internal Audit. Company has an internal audit set up empowered to examine
the adequacy and compliance with policies, plans and statutory
requirements.
Continuous audit and verification of the systems enables to plug any
shortcomings. The Internal Audit functions of all manufacturing units,
Corporate Office and Marketing Division including Industrial Products have
been assigned to external audit firms of Chartered Accountants.
Audit Committee and Management periodically review the functioning of
internal audit and adequacy of internal control system.
CAUTIONARY STATEMENT
Statements in the Management Discussions and Analysis describing the
company focal objectives, expectations or anticipations may be forward
looking statements within the meaning of applicable securities, laws and
regulations that describe our objectives, plans or goals. All these forward
looking statements are subject to certain risks and uncertainties,
including but not limited to, Government action, economic development, and
risks.
REPORT ON SUSTAINABLE DEVELOPMENT
Continuous and excessive use of non-renewable resources like coal, fuel
oil, naphtha, natural gas etc. by the industry and for domestic comforts is
fast depleting these resources besides leading to generation of pollutants
rendering the eco-system fragile. Recognizing the need to balance human
economic development with environmental protection, Company has adopted the
concept of Sustainable Development.
Company`s vision
Company`s vision is to provide farmers with sufficient good quality
fertilizers and other agri-inputs that provide sustainable development and
help India achieve self-sufficiency in food grain production. At present,
around 56% of NFL`s urea production is based on natural gas, a clean and
greener fuel. The remaining production is from fuel oil based plants, which
are also undergoing revamp for changeover of feedstock to natural gas.
Sustainable Development Policy
Taking the above initiatives further, Company has put in place a Sustained
Development Policy, which will explore use of alternate energy, composting,
greening supply chain etc. through well defined short, medium and long term
objectives.
Sustainable Technology
Company is implementing Ammonia feedstock changeover projects (AFCP) at
Nangal, Panipat and Bathinda Units. Shifting to a cleaner fuel consumption
would also result in reducing the consumption of non-renewable energy
resources like Coal/FO.
> Before embarking on these projects, a Risk Analysis and Rapid
Environmental Impact assessment was got done by an expert agency. The
projects were evaluated and appraised by Ministry of Environment and
Forests and their consent was obtained.
> Hazard and operability study (HAZOP) was made part of the LSTK contract
to analyze operational concerns of the process and provide suitable safety
mechanisms in the design stage itself, which minimize the hazards to
equipment & personnel.
> Rain water harvesting has been adopted in all these projects.
> State of the art safety practices have been adopted to ensure that the
construction and erection activities continuing at the site next to
existing continuous operating plant do not hinder and minimum time is
required to hook up the new plant with the existing sections that need to
be retained
> In line with Zero Effluent strategy following provisions are included in
the design stage:
* Disc oil separation to treat oily water and separate the oil and water
* Acoustic noise hoods for integral gear Process air compressor to contain
noise so that noise levels at the ammonia plant battery limit do not exceed
the level of 65 decibels.
* A flare header system wherein all inflammable gas vents shall be
connected to a smokeless type flare stack.
Operational Sustainability
Company remains focused towards achieving sustained energy efficient
operation of its ageing manufacturing facilities while maintaining
pollution free environment and process safety. Initiatives taken in this
regard are as follows:
> Utilization of idle assets: Company identified idle assets lying in other
fertilizer units that can be refurbished for future and immediate
replacement in its manufacturing units. This has led to savings in energy
costs associated with manufacture of a new item whilst utilizing an idle
asset.
> Improved energy Efficiency and increased through put: Company is
continuously endeavoring to improve the energy efficiency of its
manufacturing Units by improving its operation and maintenance practices,
increased throughput and implementing energy saving schemes.
> Company has adopted established procedures for involving local
communities for contingency planning for environmental and industrial
accidents, and maintaining an open exchange of information of local
hazards. "On site Emergency Plan" is available in Units, which lays out
procedures to face emergency before, during and after the incident in an
efficient manner, in minimum time and without loss of human life and
property. The procedures are regularly reviewed and updated.
Similarly an "Offsite Emergency Plan" is available, which has been
developed to meet any contingency arising out of major accidents/leakage in
any of the industrial establishments in that area. The major activities
include declaration of emergency, communication to the surrounding
population, evacuation plans, medical aid, involvement of civil authorities
in controlling the situation etc.
> All manufacturing Units of the Company are ISO 9001-2008, ISO -14001-2004
and OHSAS-18001 certified, which indicate Company`s commitment to Quality
Management system, Environment Management system and Occupational Health
and Safety System
Contribution towards integration of Environment
The growing environment consciousness is deeply integrated in Company`s
practices. Following initiatives have been taken in this direction.
> Afforestation: Company planted 72781 plants/trees in and around various
units/marketing offices in its drive towards leaving a cleaner and greener
earth for future generations.
> Replacement of lights with energy efficient lights: In a well chartered
strategy ensuring energy efficiency, Panipat Unit has replaced all its tube
lights to energy efficient CFL`s. Other units of the Company have replaced
more than 150 lights in various buildings of plants and Corporate Office
with energy efficient CFL.
> Dense fly ash collection system: Silos for collecting fly ash from ESP
hoppers using dense phase pneumatic conveying system have been installed at
Panipat and Bathinda for evacuation of ash from the plants. Similar system
has been commissioned at Nangal recently. These systems have helped to
reduce the quantity of ash slurry for disposal and the ecological problem
associated therewith and savings in electrical energy used for pumping the
same.
Development of sustainable products
> Neem Coated urea: Company has been pioneer for production of environment
friendly neem coated fertilizers. During the year 2011-12, Company produced
6.4 lakhs MT of neem coated urea, which besides regulating release of the
nutrient Nitrogen also provides the crop with a natural pesticide.
> Manufacture of liquid bio-fertilizers: Bio-fertilizers, more commonly
known as microbial inoculants, are artificially multiplied cultures of
certain soil organisms that can improve soil fertility and crop
productivity. Besides accessing nutrients, bio-fertilizers control soil
borne diseases and improve the soil health and soil properties and helps in
effectively utilizing chemical fertilizers and result in higheryield rates.
> Company is already producing three types of liquid solid bio-fertilizers
namely Rhizobium, Azectobacter, and PSB. In order to increase the shelf
life of these fertilizers, liquid bio-fertilizers have been successfully
prepared on pilot scale at its Vijaipur plant.
> Crop seed contains inert material that make them unfit for sale without
processing. The farmer must get the quality seed that is free from all
undesired materials because farmer`s entire crop depends on it. Thus, Seed
processing is a vital part of the seed production needed to move the
improved genetic materials of the plant breeder into commercial channels.
With this in view, Company has been selling substantial quantity of seeds
sourcing from government agencies. It has been producing certified seeds in
pilot projects at selected farms in adopted villages. Company endeavours to
produce and market quality seeds of various high yield variety crops under
its own brand.
REPORTON CORPORATE SOCIAL RESPONSIBILITY
Corporate social responsibility (CSR) is strategic approach towards
sustainable community development and is key to inclusive growth. NFL as a
socially responsible corporate has been supporting community development
programmes covering wide range of welfare activities in rural areas.
The major focus of these programmes is on creating awareness about health
and hygiene, children education, women empowerment, skill development for
self-employment, use of non-conventional energy resources like solar
lights, water conservation, rain water harvesting and ground water
recharging. Company during the year 2011-12 undertook the following
initiatives:-
INTEGRATED DEVELOPMENT OF VILLAGES
The development of villages is one of the means of returning to the society
what has been taken away to achieve industrialization and economic
progress. Primarily the underdeveloped villages are selected based on
discussions with Agriculture Deptt./BDO/State Govt. Baseline Survey is
conducted to identify the developmental needs of the village by specialized
agencies / NGOs involving village Panchayat and need based programmes are
short listed for development of village. To inculcate sense of ownership
and belongingness, villagers are involved in all the activities. Under this
project development of six villages i.e. Bamuria (Hoshangabad) & Sendel
(Indore) in Madhya Pradesh (M.P.), Baglehar & Malheni in Himachal Pradesh
(H.P) and Bamer (Jhansi) and Sisya Nangla (Baduan) in Uttar Pradesh (U.P)
were taken up. Projects In M.P. and H.P. have been completed and activities
in other villages are under progress.
CHILDREN & WOMEN HEALTH CAMPS
True to saying - Health is Wealth, NFL believe that a healthy population
only can bring about the social and economic progress of a nation.
Healthcare facilities in rural areas are poor. NFL organised 20 Children
and Women Health Camps to create awareness about health and hygiene, at
various villages in the states Uttar Pradesh, Madhya Pradesh, Himachal
Pradesh, Haryana and Maharashtra. Specialist Doctors were invited for free
medical check ups and required medicines were also distributed free of
cost. Lectures/tips on preventive healthcare were also arranged.
ANIMAL HEALTH CAMPS
Domestic animals are the backbone of rural economy. Company organized
animal health camp for farmers cattle. The livestock is vaccinated, cattle
are checked for common diseases and medicines are distributed free of cost
to the owners. Farmers are trained to look after their livestock by the
team of veterinary doctors. 20 Animal Health camps were organized in
various villages of Uttar Pradesh, Madhya Pradesh, Himachal Pradesh,
Haryana, Rajasthan and Maharashtra. 7270 no. of animals were brought to
these camps by the farmers.
INSTALLATION OF SOLAR LIGHTS
There is acute power shortage in the country especially in the rural areas.
Company in its own endeavour to help the rural community has been trying to
illuminate village streets/common areas by installing solar lights. 45
Solar Street Lights have been installed in the village Bamer, Sessia Nagla,
Sendal, Bhamuria, Malheni, Baglehar, Beladhyani and Kaith in the States of
Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Punjab & Haryana.
WATER HARVESTING/GROUNDWATER RECHARGING
Due to global warming climatic changes are taking place and the amount and
pattern of rainfall has been affected and underground water level is
depleting. In such a situation farmers with small and marginal holdings who
cultivate different rain-fed crops are badly hit. Rainwater harvesting is a
big initiative being promoted by the Govt, of India to combat water
scarcity.
Company has been educating farmers about water conservation measures. The
Company has taken up projects with the twin objective of ensuring water
conservation by constructing different water harvest structures and
enrichment of soil health through measures of contour bunding and
regeneration of biomass cover. The Company has also undertaken construction
of check dams, water sheds and renovation of ponds and village wells with
active participation of village panchayats to conserve water in the adopted
villages of Sendal and Bhamuria under district Indore and Hoshangabad in
Madhya Pradesh. The stop dams have helped in making water available round
the year both for the farmers and animals. Construction work of 4 stop dams
has been completed and construction work of 2 stop dams is in progress.
Rejuvenation and improvement of 2 village ponds, construction of water
storage tanks was taken up for roof top rain water harvesting in the
adopted villages of Malheni and Baglehar in Distt. Solan, Himachal Pradesh.
Above projects have helped in conservation of rainwater and preventing soil
erosion, adding to irrigated and cultivated area, resulting in increase in
farmers income.
CHILDREN EDUCATION
In order to improve literacy level in village schools, programmes providing
computers, bags, uniform, school furniture, strengthening of school
infrastructure and arranging safe drinking water were taken up to encourage
maximum participation by rural children.
Company provided kitchen sheds, Boundary wall, sports infrastructure, Force
lift pump, furniture, computers, Ceiling Fans to the primary and middle
schools in the various villages situated in Uttar Pradesh, Madhya Pradesh,
Himachal Pradesh & Haryana benefiting 2245 children. NFL has also
collaborated in construction of auditorium cum gallery class room in Govt,
aided college at Bitnoti in Mayurbhanj, a tribal district in Odisha State
with the objective to prepare students of backward/tribal areas to face the
competitive world by developing their presentation skills, public speaking
which will help them in getting jobs and developing entrepreneurship etc.
Company is actively participating in construction and renovation of Utkal
Balashram in Balasore distt of Odisha state. Utkal Balashram is one of the
oldest and reputed Orphanage of Balasore district established in the year
1944 and has been rendering valuable service to the orphan children of
Balasore district and other surrounding districts. At present about 250
orphan children are staying in the Utkal Balashram. The Balashram is
functioning in a very old building which is more than 100 years old. NFL
has collaborated with District Welfare Board to make available basic
facilities like hygienic kitchen, dining hall, reading room, play area and
adequate hostel facilities. This has helped in upgrading the Utkal
Balashram to a model institute providing facilities to the under privileged
children of the society.
WOMEN EMPOWERMENT
Women are the backbone of rural economy. Education, health,
entrepreneurship and participation in village panchayat activities are the
focus areas outlined by Govt, of India for women empowerment. Taking this
forward NFL under its women empowerment initiatives has takes up Skill
development activities like Stitching/Embroidery/Food Processing/
Beautician/Sanitary Pad Making/Soft Toy making. There were 312
beneficiaries.
In village Bamuria in Hoshangabad, flour and masala grinding mill has been
provided for Mahila Self Help Group, which has immensely helped local
people and is a source of income for the concerned women.
In village Baglehar, Himachal Pradesh, one Multi Purpose Women Centre has
been built on land donated by panchyat for the purpose. This center is the
meeting point for all women trainings/activities in the village. Such
centers are being built in other adopted villages also for education,
awareness and empowerment of rural women.
SOCIAL FORESTRY
Social forestry aims at tree plantation on barren lands outside the
conventional forest area for the benefit of rural and urban communities and
to prevent environmental degradation on account of large scale reduction in
forest cover. Social forestry programmes were taken up in the adopted
villages where saplings of various locally grown trees were planted on
panchayat barren lands, school campus and office boundary, etc. In all
approx.330000 saplings were planted during the year.
Farmers are educated about the importance of trees and are encouraged to
look after them.
Various other activities like drinking water facility, toilets, water tank,
tubewells, overhead tanks, compost structures like NADEP/Vermi Compost Pits
in villages, training on low cost agriculture practices to the Farmers etc
were also taken-up as per need of the villages. |