GUJARAT NARMADA VALLEY FERTILIZERS COMPANY LIMITED
ANNUAL REPORT 2001-2002
26th ANNUAL GENERAL MEETING
Ladies and Gentlemen,
I feel privileged and honoured to be with you this afternoon. On behalf of
my colleagues on the Board and on my behalf, I extend you all a very
cordial welcome to this 26th Annual General Meeting of the Company. It is
my pleasant duty to present to you the Annual Report and Audited Accounts
of the Company for the year ended 31st March, 2002, for your consideration
and adoption. The Annual Report containing the Directors' Report and
Audited Accounts for the year ended 31st March, 2002, is already with you
and with your permission, I shall take them as read.
The Annual Report gives a comprehensive account of the Company's
performance and hence, I would like to mention only the outstanding
features of the performance of the Company in my statement.
It is indeed in gratifying to note that the year 2001-2002 has been yet
another rewarding year for the Company. The COmpany has, during the year,
achieved several records on the operational, marketing and financial
fronts. Before I share the achievements of your Company, I purpose to give
you the background of the Economic Scenario and of the Government Policy
for Fertilizer Industry so as to enable you to appraise the performance of
your Company vis-a-vis the environment in which the Company has been
functioning over the last few years.
The year 2001-2002 proved to be. a very difficult year for the Indian
Economy. The continued global recession coupled with economic slowdown
adversely affected the Indian Economy too. The terrorist attack on the,
World Trade Centre on September 11, 2001, in USA aggravated the
recessionary trend. Even in these trying circumstances, the Indian Economy
showed greater resilience and registered an appreciable growth rate of 5.4%
in the year 2001-2002 compared to 4% in the year 2000-2001. The Agriculture
Sector wits the mainstay of the growth during the financial year. The
sector-wise analysis of the Country's economic performance during 2001-2002
shows that Agriculture and allied sectors registered an impressive growth
rate of 5.7% during 2001-2002, as against the growth mete of 0.2% in 2000-
2001. The Industrial Sector recorded the lowest growth rate of only 3.3%
since 1992-93. Inflation as measured by Wholesale Price index was lower at
3.7% during 2001-2002 in comparison to 7.1% during2000-2001.
Realising the need of the hour, the Government of India (GoI), pushed
through various economic reforms such as disinvestment of Public Sector
Undertakings, allowing Foreign Direct Investment and various other reforms
in Telecom, Oil and Insurance Sectors to boost up the economy. As announced
recently by Reserve Bank of India, the Country's forex reserves as at 13th
September, 2002 amounted to $6,202.1 Million. This has caused the Rupee to
strengthen against the Dollar.
The economic performance of the Country largely depends upon the Monsoon.
The late onset of Monsoon in the several parts of the Country and condition
of drought in several states will have dampening effect on the Indian
Economy. It is, however, hoped that the Indian Economy will emerge out of
the recessionary trend with the signs of recovery. It is projected that the
GDP will grow at 6 to 6.5% while the inflation will remain low below 4%
during the current year.
FERTILIZER INDUSTRY- GOVERNMENT POLICY
I had mentioned to you last year about the Government of India is decision
to implement the recommendation of the Expenditure Reforms Commission
(ERC). The Government of India has made a modest, beginning by announcing
5% increase in the retail selling price of Urea as against 7% annual
increase recommended by ERC. The new group concession scheme recommended by
ERC is yet not finalized by Government of India.
The Government of India is making all efforts to frame the long term policy
for the Fertilizer Industry and in this direction, it has set up a group of
Ministers to look into the matters relating to the 7th and 8th pricing
period under the retention price scheme, to advise on implementing the
recommendations of ERG and Fertilizer Policy in general. The Department of
Fertilizers hats finalized the retention price as applicable to Urea
manufactured by the Company in respect of the 7th and 8th pricing period
from July 1997 to March, 2003 or till the new pricing polity is announced,
whichever is earlier. It is hoped that the long term policy for Fertilizer
Industry will be announced during the current year.
During the year 2001-2002, as many as 68 new records of production and
sales were established. The Company has, during the year, crossed many
milestones, a few of which deserve special mention. They are:
Highest ever turnover of Rs.1,477.63 Crore and the highest ever profit
before tax of Rs.118.19 Crore were achieved during the year.
Both the Ammonia and Urea Plants achieved more than 100% capacity
utilization for the 11th year in succession.
Ammonia Plant produced 5,21,589 MTs of Ammonia achieving the highest ever
capacity utilization of 117%.
Formic Acid Plant produced 10,415 MTs of Formic Acid registering the
highest ever capacity utilization of 208%.
Acetic Acid Plant produced 71,079 MTs of Acetic Acid registering the
highest ever capacity utilization of 142%.
Nitrophosphate Group of Plants excelled in the production performance
achieving the highest ever yearly production by producing 274,385 MTs of
Weak Nitric Acid, 56,404 MTs of Concentrated Nitric Acid and 166,010 MTs of
Ammonium Nitrophosphate. These Plants also achieved highest ever capacity
The Fertilizer Association of India awarded the Company:
(i) the best Technical Innovation Award for novel approach to H2S removal
and Ammonia recovery from D-403 Process Condensate; and
(ii) the Production Performance Award for nitrogen (Ammonia Plant)
(A) Project completed during 2001-2002
Third Gasifier Train
The Third Gasifier Train with an investment of Rs.66 Crore has been set up
in Ammonia Plant. It was successfully commissioned in May 2001 and is in
operation since then. The Third Gasifier Train has improved the plant
reliability to a considerable extent and has contributed towards the record
production of Ammonia Plant and its down stream units.
(B) Projects under execution
1.0 Acetic Acid Expansion Project
The capacity of existing Acetic Acid Plant is being enhanced from 50,000
MTA to 1,00,000 MTA by debottlenecking, using improved technology developed
by BP Chemicals, UK, the original licensor. The Project is expected to be
completed well before the scheduled date of completion and commissioning
activities of the Project will commence by end October 2002.
2.0 Carbon Monoxide (CO-II) Plant
To meet with the additional requirement of Carbon Monoxide for Acetic Acid
Expansion Project, another CO Plant with a capacity of 3,500 NM3/Hr has
been put up with technology from M/s. Linde AG, Germany. This CO-II Plant
has been commissioned during May, 2002.
3.0 Isothermal Reactor for Methanol -I Plant
The existing Adiabetic (Quench Type Reactor) for Methanol - I Plant is
being replaced with energy efficient Isothermal Reactor, at an estimated
investment of Rs.13.88 Crore. Contracts for basic engineering, supply of
imported items and expatriate services have been entered into with M/s.
Linde AG, Germany. It is likely to be commissioned by end 2003.
4.0 Fomic Acid Plant - Capacity Enhancement
Presently, around 2000 MTA Formic Acid is being imported in the Country
every year. To cater to this domestic demand of Formic Acid, it has been
decided to enhance the capacity of existing Formic Acid Plant from 10,500
MTA to 12,705 MTA, with an investment of Rs.5.9 Crore through in-house
efforts only. This project is slated to be completed by end 2003.
(C) Projects on anvil
With a view to achieving the stability and reliability in Plant operations,
as also better profitability, the Company is actively evaluating revamping
of existing Air Separation Unit, expansion of Methanol Capacity, setting-up
of Prilled Ammonium Nitrate (ANFO-Grade) based on Ammonium Nitrate Melt,
small capacity WNA Plant and other revamping / modification schemes.
Following the footprints of your Company Narmada Chematur Petrochemicals
Limited (NCPL), the Subsidiary of your Company also excelled in the
production performance despite the longer Annual Shutdown taken during the
First Quarter. NCPL achieved the highest ever yearly production of 26,170
MTs of Aniline and 10,770 MTs of TDI during the year 2001-2002, crossing
International benchmarks of capacity utilization. It also achieved a
turnover of Rs.241.32 Crore and profit after tax of Rs.17.80 Crore during
the year 2001-2002 after wiping out the past accumulated losses of Rs.2.66
Your Company accords the highest priority to the protection preservation of
environment and human safety. Adequate steps have been taken by your
Company for the treatment of effluent and gaseous emission. In appreciation
of the R&D efforts in the field of pollution control and environment
protection, your Company has been awarded "National Award-2001" by the
Department of Scientific Research, Ministry of Science & Technology
Government of India. For fulfilling the objectives laid down in the
Environment Policy of the Company, the Company carried out an analysis of
the environmental aspects of its activities in detail. Internal Audit of
the Environment Management System (EMS) covering all the Departments was
also carried out, as per the documented procedure. The Members will he
happy to note that your Company has been accredited with the Certification
front M/s. RWTUV, Anlagentechnik, GmbH for establishing an Environmental
Management System for its entire Plant campus, fulfilling the requirements
of ISO 14001.
People are our greatest strength. Your Company has a high quality work
force and the motivation amongst the Employees is high. Through their
dedication, commitment to hardwork, creativity from strength to strength.
Our congratulations are due to the Management and the Employees at all
With the modernization of Methanol, Formic Acid and Nitric Acid Plants, the
production capacity of these plants has improved. With the commissioning of
Acetic. Acid expansion project during November 2002, additional revenue
will he generated. The Company is the market leader in most of the
Chemicals it produces and enjoys the confidence of its customers. The
international prices of Methanol, Acetic Acid and Formic Acid are looking
up. All these will have a positive impact on the profitability of the
The selling price of CAN has direct relationship with subsidized selling
price of Urea and. with the 5% increase in selling price of Urea announced
by Government of India, the realization of decontrolled CAN Fertilizer will
also improve. With its inherent strengths and equipped with the strong
network of distribution in the Country, no serious problems are envisaged
in the distribution and sale of fertilizer products when Urea is
You would be happy to know that your Company has continued its excellent
performance during the first quarter of the current financial year. You
would have noticed from the published unaudited financial results for the
quarter ended 30th June, 2002, that the Company has during the first three
months, achieved a sales turnover of Rs.269.74 Crore and earned net profit
of Rs.23.17 Crore. After providing for deferred tax liability, the net
profit of the Company for the first quarter remained at Rs.17.33 Crore as
against Rs.14.81 Crore during the corresponding period for the financial
year 2001-2002. This is indeed a welcome trend for the beginning of the new
year. The poor monsoon and the drought conditions in many parts of the
Country, may however, impact your Company's performance in the remaining
quarters. We are, however, hopeful that with the aggressive marketing
efforts, the Company will have little difficulty in selling the
Fertilizers. We look to the future with optimism and hope that the year
will bring happiness and wealth.
EARTHQUAKE - REHABILITATION WORK
In the aftermath of the Earthquake that hit Gujarat on 26 January, 2001,
your Company participated in a humble way by undertaking reconstruction
/rehabilitation of Village Sokhda in Morbi Taluka. In less than 10 months
time, 141 seismic resistant houses were built under the joint aegis of
Government of Gujarat and Narmadanagar Rural Development Society, a
voluntary organization affiliated to the Company. Besides this, the Company
constructed the amenity building, and two public schools with seismic
resistant design. The World Bank Team, which visited the site, appreciated
the efforts of the Company in the reconstruction / rehabilitation of
Village Sokhda. Hon'ble Chief Minister of Gujarat dedicated these houses to
earthquake affected people of Sokhda Village on 20th April, 2002 and since
then, the people have been using the houses, schools and other public
I shall be failing in my duties if I fail to mention my gratitude to the
Governments, both at the Centre and at the State but for whose support and
cooperation, it would not have been possible for the Company to achieve
such a splendid performance. We owe our gratitude to the Financial
Institutions and Banks, Farmer Consumers, Dealers, other Customers and
Valued Investors for the confidence reposed by them in the Management of
the Company. The Management, Employees and my Colleagues on the Board, join
the in conveying our heartfelt thanks to every Stakeholder in the Company.