On behalf of the Board of Directors of your Company, I have the pleasure in presenting
the 39th Annual Report on the business and operations of the Company together with the
Audited Financial Statements for the Financial Year 2012-2013.
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 (GoI) in 1984
entrusted the Company to execute the countrys 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. The
commercial production from Vijaipur Expansion Plant commenced w.e.f. 31st March, 1997.
Company successfully completed the revamping of urea plant at Nangal and commercial
production commenced from 1st February, 2001.
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 35.68 lakh tonnes
and has grown to the status of being the second largest producer of urea in the country.
This financial year has been a happening year in terms of growth plans of the Company.
Capacity Augmentation of Ammonia and Urea Plants undertaken at VijaipurI and II
Units got completed during the year including installation of Carbon Dioxide Recovery
Plant. Company has also implemented the feedstock conversion projects at Panipat, Bathinda
and Nangal Units by changing over the feed-stock from fuel-oil to Natural Gas. Since all
the five units took up shutdown during the financial year for hooking up and commissioning
activities of the projects, urea production was adversely affected.
During the year under review, the Company achieved turnover of Rs. 6747 crore (previous
year Rs. 7341 crore). The lower turnover was primarily due to lower urea production as all
the Units were under shutdown for hooking up and commissioning activities of the projects.
The earnings before interest, depreciation and tax (EBIDTA) at Rs. 74.19 crore were lower
than Rs. 342 crore achieved in previous year. The loss before tax was Rs. 230.62 crore
(previous year profit Rs. 184.20 crore) and loss after tax was Rs. 170.73 crore (previous
year profit Rs. 126.73 crore). The main reasons for loss include: -
Lower production / sale because of shut-downs taken for commissioning of Urea
Capacity Enhancement Projects at Vijaipur and changeover of feedstock from Fuel-oil to
Natural Gas at Nangal, Bathinda and Panipat Units;
Decrease in sale and contribution of industrial products due to non-availability
of cheaper ammonia; non-availability of gases; sulphur and argon gas at three Fuel-oil
based Units post commissioning.
Provision for Purchase Tax liability pertaining to previous years.
Higher interest expenditure mainly due to delay in receipt of subsidy.
The short-term borrowings of the company as at 31st March, 2013, stood at Rs. 1703.29
crore including cash credit utilization, short-term loans, working capital demand loan,
etc. (Rs. 1383.82 crore as at 31st March, 2012). Delay in receipt of urea subsidy lead to
more borrowings for meeting working capital requirements.
For changeover of feed stock from LSHS/FO to Gas at Nangal, Panipat & Bathinda
units, Rupee Term Loan of Rs. 3850crore has been arranged from Consortium of 13 Banks with
SBI as lead bank. As on 31st March,2013 long term loan of Rs. 3451 crore was outstanding.
For Energy Saving and Urea Capacity Augmentation Project at Vijaipur-I, Urea capacity
Augmentation Project at Vijaipur-II and installation of Carbon-Dioxide Recovery (CDR),
long term loan was raised by way of 9.42% Secured Redeemable Non-Convertible Taxable Bonds
of Rs.100.40 crore; Buyers Credit of USD 15.68 million and External Commercial
Borrowing (ECB) of USD 50 million.
In view of the loss incurred by the Company and considering the fact that three plants
at Nangal, Panipat and Bathinda converted to Gas shall get stabilized in next financial
year only and future capital expenditure and requirement of contribution of equity in the
proposed Joint Venture towards revival of Ramagundam Unit of FCIL, Board of Directors have
not recommended any dividend for the financial year 2012-13.
CAPITAL & RESERVES
The Paid-up Capital & Reserves and Surplus as at 31st March, 2013 were Rs.491 crore
and Rs.1093.12 crore respectively.
The Company produced 32.11 lakh MT of Urea (91.94% of revised proportionate installed
capacity of 34.92 lakh MT) against 34.01 lakh MT (105.27%) in CPLY.
Production during the year 2012-13 was lower than the CPLY primarily due to shut down
taken at Nangal, Panipat and Bathinda units for hooking up and commissioning of Ammonia
Feedstock Changeover Project (AFCP) and shutdown taken at Vijaipur I and II for hooking up
and commissioning of Revamp Project.
Availability of Administered Pricing Mechanism (APM)/ Non-APM and Panna Mukta Tapti
(PMT) Gases got reduced during the 3rd quarter of 2012-13. To sustain production at the
higher levels spot gas was procured continuously. Domestic gas is yet to be allocated for
three Fuel-oil Units converted to gas. As an interim arrangement, Company is purchasing
high cost spot RLNG for Bathinda, Panipat and Nangal Units. Allocation of indigenous gas
supply to these Units is being followed up regularly with the Department of Fertilizers (
SALES & MARKETING
Companys prime business is production and sale of urea. It sold 31.62 lakh tonnes
of Urea (including 10.92 lakh tonnes of Neem coated Urea) against 33.89 lakh tonnes
(including Neem Coated Urea of 6.40 lakh tonnes) in the previous year. The sale was less
due to lower production and limitation of dispatches from Vijaipur Unit owing to
insufficient availability of rail wagons.
The sale of Industrial Products was Rs. 95.63 crore against CPLY of Rs.170.91 crore.
The lower sale was attributed to lower production and sale of ammonium nitrate at Nangal
due to non-availability of surplus ammonia from Vijaipur Units post completion of revamp
projects and increase in the market price of ammonia. Stoppage of generation and sale of
industrial gases and sulphur at Nangal, Panipat and Bathinda Units and argon at Panipat
post conversion to gas has also affected the sale of industrial products.
During the year Bio-fertilizers (liquid & solid) worth Rs. 3.65 crore were sold
against Rs. 2.60 crore in the previous year.
The Company has been making regular forays into diverse agri-based business viz. Seeds,
Compost, Bentonite Sulphur and Pesticides. During the year, turnover of Rs. 30.08 crore
was achieved compared to Rs. 22.72 crore in the previous year.
Promotion of balanced use of fertilizers
The production and productivity at farm level are continuously deteriorating owing to
imbalanced fertilizer usage, mono cropping etc. Further the micronutrients in soil are
also depleting at a very alarming rate.
Your Company has been strongly advocating and promoting balanced and efficient use of
fertilizers. It has identified soil testing as a primary diagnostic technique towards soil
health management and balanced fertilizer use and is playing a pivotal role in educating
farmers about benefits of soil test based application of chemical fertilizers, appropriate
cropping pattern, the role of organic manure and bio-fertilizers in improving soil health.
Farmers` at demonstration plot developed by NFL with balanced use of fertilizers
undertaken to achieve this objective include farmers in house training at Kisan Vikas
Kendras, arranging farmers meets with eminent scientists to equip them with
Company has set up elaborate facilities for soil testing including 6 static and 4
mobile soil testing vans with capacity to test 50,000 samples annually. The soil samples
are collected across Companys marketing territory, analysed and soil test reports
are provided free of cost to farmers in time with fertilizer application recommendations
according to soil status and crops to be grown. During the year 2012-13, over 50,000 soil
samples were collected and analyzed and reports were provided to the farmers.
Company also undertakes dealers training programmes, field demonstrations, distribution
of crop literature, participated in kisan melas advising farmers on fertilizer dosages,
use of bio-fertilizers, compost etc for holistic approach to cultivation.
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 revamp plants have been successfully commissioned at Panipat and Bathinda on 24th and
16th January, 2013 respectively. After stabilization of these plants, commercial
production was declared w.e.f. 28th and 11th March, 2013 respectively. Nangal unit has
been commissioned on 9th April, 2013 and commercial production has
Revamped Nangal Plant been declared on 18th July, 2013.
Capacity Augmentation & Energy Saving Project (ESP) at Vijaipur
The Company has successfully commissioned Capacity augmentation and Energy Savings
Projects of Ammonia & Urea plants at Vijaipur-I & II units including installation
of Carbon Dioxide Recovery (CDR) plant during 2012-13 at an investment of around Rs. 650
crore. 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, an increase of 20%.
Joint Venture with KRIBHCO & 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 FCIL
Consequent upon nomination of NFL and EIL, by Government of India, for the revival of
Ramagundam plant of Fertilizer Corporation of India, it has been planned to set up a 2200
MTPD Ammonia and 3850 MTPD Urea plant. The project is envisaged to be undertaken at the
existing Fertilizer Complex of Ramagundam unit at an estimated cost of INR 4700 crore.
Pre-project activities towards setting-up of Joint Venture between NFL/EIL/FCIL,
lining-up of Process Licensor for Ammonia / Urea, finalization of Concessionaire Agreement
& Financial Model are in progress.
HUMAN RESOURCE CDR Plant at Vijaipur Unit
Strategic HR planning is an important component of Human Resource Management. It links
HR Management directly to the strategic plan of the Company in achieving organizational
goals and supporting future direction to the organization. A study on Organizational
Structure, Performance Management System, Recruitment and Promotion Policies of the
Company was conducted by an Expert Committee. The report of the committee is under
examination for implementation.
The manpower strength of the Company as on 31st March, 2013 was 4291 comprising 1802
Executives and 2489 Non-Executives. Total manpower includes 231 women employees, which is
5.38% of the total work force.
The Company undertakes several employee welfare schemes related to education, medical,
benevolence, housing etc. As a measure towards employee social security, a defined
Contribution Superannuation Pension Scheme has been implemented.
Company has always supported the participative culture in the management through
consultative approach. The efforts to Employees at Urea Control Room promote
employees` participation in various activities like Suggestion Scheme, Welfare, Safety,
interactions between Management and employees representatives on various issues
continued during the year.
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.
To develop the skills and instill behavioural and personality development traits in all
supervisory staff and managerial cadre, Company organized a number of training programmes
during the year. These training programmes were identified through Performance Management
System by systemizing organizational needs with individual needs. In these diverse
programmes, 12,574 man-days training was imparted to employees. Apart from in-house
training programmes, employees were also nominated for attending external training
programmes on contemporary subjects. To promote the efficient use of modern technology,
1288 man-days training was imparted to employees. 493 man-days of training programmes on
Sustainable Development were organized. Six officers attended training programmes abroad.
Company has undertaken Ammonia Plant Feedstock Changeover from Fuel-oil to Natural Gas at
Panipat, Bathinda and Nangal. Training workshops were conducted by various equipment
vendors at all the three sites.
Implementation of Official Language
The Company is making continuous efforts for propagation and implementation of Official
Language Policy of the Government of India. The quarterly meeting of Official Language
Implementation Committee (OLIC) is regularly held in all the Units/Offices of the Company
to review the progress. 28 Meetings of OLIC were held, 33 Hindi Workshops were organized
in which 789 employees participated. Hindi Pakhwara was organized in all the Units/Offices
of the Company to mark Hindi Day. During the year 58 programmes/competitions were held for
the promotion of Hindi in which 1132 employees participated. Information Technology is
widely used to promote use of official language. Unicode Font has been installed on all
the computers and training has been imparted to the employees. Bathinda Unit received
Rajbhasha Shield from Town Official Language Implementation Committee. Corporate Office
was awarded 2nd prize `Rajbhasha Shield` by the Department of Fertilizers.
REPRESENTATION OF SCs/STs, OBCs AND PHYSICALLY DISABLED
Your Company has been implementing reservation policies of Government of India for
SCs/STs/OBCs/Persons with Disabilities. Representatives of SCs/STs categories are
associated in Recruitment 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.
The Company is making use of information technology (IT) to improve efficiency and
productivity to bring transparency in its business functions. Local Area Networks (LAN)
are operational at all the Units/Offices. All the Units and Offices are also
interconnected through secured MPLS based Virtual Private Network (Wide Area Network).
Internet connectivity to the employees at Units and Offices has been provided through
Leased Line / Broadband. High-speed data cards have been provided to the Marketing
Personnel to upload sales data through internet. The Company is extensively making use of
e-procurement, e-payment and e-receipt for bringing in efficiency and transparency.
Implementation of Mobile based Fertilizer Monitoring System (mFMS) is under way for use in
Marketing Division. mFMS has been introduced by Department of Fertilizers (DoF) to monitor
and track the movement of fertilizers from the manufacturing unit to the farm gate and to
facilitate implementation of "Direct Cash Transfer of Subsidy" to farmers. Under
the system acknowledgement of receipt of fertilizers at wholesaler, retailer and end user,
forms the basis for ensuring equitable distribution to the farm sector.
INDUSTRIAL SAFETY, ECOLOGY & POLLUTION CONTROL
Company accords highest priority to Industrial Safety, Ecology & Pollution Control.
All manufacturing units are ISO 9001-2000 certified for Quality Management System,
ISO-14001 certified for Environment Management System. All the Units have also received
OHSAS-18001 Certification for Occupational Health Safety Management System.
Carbon Dioxide Recovery Plant of 450 MTPD capacity has been installed at Vijaipur-I for
recovery of carbon dioxide from fuel gases of primary reformer. This has also resulted in
reduction in discharge of Greenhouse Gases.
Silo System 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. These systems have reduced quantity of ash slurry for disposal and ecological
problems associated therewith. This has also helped in saving electrical energy used for
pumping of ash slurry.
State of the art safety practices were adopted during the project construction and
commissioning of revamp of plants. There was no reportable accident at any of the plant
sites. To safeguard the plants from emergencies like fire, explosion, toxic gas release,
own site emergency disaster plan is available at the Units.
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 Companys 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 activities that have helped in improving their socio economic status. 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, Company has incurred an expenditure of Rs. 1.47 Crores on CSR
initiatives. The expenditure pertained to the carry forward amount of schemes taken up for
execution in the previous year. 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
taken requisite measures and 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. The Act aims at
bringing in transparency in the functioning of organizations and to meet the objective,
your Company has created necessary mechanism. Further, in order to promote institutional
transparency within the Company through proactive and effective implementation of the
provisions of RTI Act 2005, a Transparency Officer has also been appointed in the Company.
During the year, 200 applications were received and the information was provided to the
applicants within the scheduled time.
Your Company relies on 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
policy provides for adequate safeguards against victimization of employees who avail of
the mechanism. During the year, no disclosures have been received under the whistleblower
mechanism. The policy is reviewed periodically. No employee has been denied access to the
In Vigilance, focus continued to be given to preventive vigilance. Due thrust was given
to maintaining high degree of awareness amongst the employees. Systems and procedures were
streamlined to provide timely information. Efforts were undertaken to build confidence
across the organization to enable faster decision making. To ensure transparency, emphasis
was made on computerization of activities relating to award of contracts, purchases, etc.
In line with instructions received from the Department of Fertilizers/Central Vigilance
Commission, emphasis is being given on leveraging of technology e.g. e-payment / receipts
/ procurement / tendering, to facilitate transparency and avoid delays.
During the year, interactions were organized between the vigilance functionaries and
the line managers on regular basis, with a view to understand the role of vigilance and to
educate them about the policies, guidelines and procedures of the Company. In all the
Units, Vigilance Awareness Week was also observed to create an environment of ethical
growth in the Company.
AWARDS & ACCOLADES
Company received "Excellent" rating for the MoU 2011-12, which is 12th
excellent rating in a row.
During the year, Company received following prestigious accolades and Awards.
a) "Shreshtha Suraksha Puraskar" for the year 2011 to the Panipat Unit from
National Safety Council (India), Mumbai, amongst the manufacturing sector of Chemicals
ED, Panipat Unit receiving Shreshtha Suraksha Puraskar products.
b) National Level Fertilizer Association of India `Runner-up Award` for excellence in
Safety in Nitrogenous and Complex Fertilizer Plant to the Panipat Unit presented by Shri
S.K. Jena, Honble Minister of State for Chemicals & Fertilizers.
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 & Company, Chartered Accountants, who were appointed as Joint
Statutory Auditors for the financial year 2012-13 by the Comptroller & Auditor General
of India (C&AG). Auditors Report on the Accounts of the Company for the
financial year ended 31st March, 2013 is at Annexure-II.
The review of Annual Accounts of your Company for the year ended 31st March, 2013 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.
Pursuant to the directions of Central Government for audit of Cost Accounts, your
company has appointed M/s. Sanjay Gupta & Associates for Nangal, M/s. Ravi Sahni &
Co. for Bathinda, V.P. Gupta & Co. for Panipat and M/s. Shome & Bannerjee for
Vijaipur-I & II as Cost Auditors for the year ended 31st March, 2013.
As prescribed under the Cost Accounting Records (Report) Rules, 2011, the cost
accounting records are being maintained by all the Units of the Company. Consolidated Cost
Audit Report and Compliance Replort for the financial year 2011-12 was filed on 20th
The Company believes Corporate Governance is the fountain head of value creation for
all stakeholders especially shareholders. 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.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND 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
During the year under review, none of employees of the Company has drawn 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 2012-13
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.
Ms. Neeru Abrol, Director (Finance) was relieved from her duties on completion of her
tenure on 31st December, 2012. Subsequently, Department of Fertilizers vide Orders dated
2nd May, 2013 reinstated Ms. Abrol as Director (Finance) with immediate effect and she
rejoined on 10th May, 2013.
Shri Sham Lal Goyal, Joint Secretary, DoF, Director, has ceased to be a Director and
Chairman & Managing Director on 5th January, 2013.
Shri R.G. Rajan, Chairman & Managing Director, Rashtriya Chemicals &
Fertilizers Limited has taken over the additional charge as Chairman Managing Director of
the Company w.e.f. 6th January, 2013.
Shri C.M.T. Britto, Director (Technical), Rashtriya Chemicals & Fertilizers Limited
has taken over the additional charge as Director (Technical) of the Company w.e.f. 7th
Shri Vikram Srivastava, Ex-DG, Bureau of Police Research & Development (BPR&D),
CRPF / ITBP and Shri M. Raman, Ex-Secretary to the Government of India, have been
appointed as Part-time Non-official Independent Additional Directors w.e.f. 6th May, 2013
and shall be holding office as Directors till the ensuing Annual General Meeting. Further,
notice has been received u/s 257(1) of Companies Act, 1956 for appointment of Shri Vikram
Srivastava and Shri M. Raman 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 Satish Chandra 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, 2013.
The Board of Directors acknowledge their gratitude for the valuable guidance and
support received from the various wings of Government of India, in particular Department
of Fertilizers, 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.