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Madras Fertilizers Ltd.

BSE: 590134 Sector: Agri and agri inputs
NSE: MADRASFERT ISIN Code: INE414A01015
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VOLUME 7465
52-Week high 31.75
52-Week low 11.71
P/E
Mkt Cap.(Rs cr) 338
Buy Price 0.00
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Sell Price 21.00
Sell Qty 61.00
OPEN 20.95
CLOSE 0.00
VOLUME 7465
52-Week high 31.75
52-Week low 11.71
P/E
Mkt Cap.(Rs cr) 338
Buy Price 0.00
Buy Qty 0.00
Sell Price 21.00
Sell Qty 61.00

Madras Fertilizers Ltd. (MADRASFERT) - Director Report

Company director report

The Shareholders Madras Fertilizers Limited

Your Directors have pleasure in presenting herewith the 50th Annual Report togetherwith the Balance Sheet as on March 31 2016 and the Profit & Loss Statement for theyear 2015-16.

SUMMARY OF FINANCIAL RESULTS (Cr)
2015-16 2014-15
Turnover 1201.64 1701.87
Profit Before Interest Depreciation DRE and Tax 2.93 (33.10)
Interest 82.32 83.98
Depreciation 18.15 17.61
Extraordinary items (92.00) Nil
Profit / (Loss) Before Tax (189.54) (134.69)
Provision for Tax Nil Nil
Profit / (Loss) After Tax (189.54) (134.69)
Cash Profit / (Loss) (171.39) (117.08)

The Company's operations for the year ended with a loss of ' 189.54 Cr (Previous Yearloss ' 134.69 Cr). The total accumulated loss as of 31.3.2016 was ' 706.68 Cr. (PreviousYear ' 517.14 Cr).

SICKNESS AND REVIVAL

As mentioned in the earlier Annual Reports the main reasons for the continuous lossesand consequent sickness were due to cost and time overrun of revamp of Ammonia and UreaPlants delay in stabilization of revamped Plants due to Technology related issues higherenergy poor reliability lack of maintenance of the existing Plant for want of funds andunfavorable Pricing policies up to March 2009.

The Company's operation became profitable thereafter due to amendments in policiesand improvement in production performance. The Company shall come out of sickness oncethe Draft Rehabilitation Scheme (DRS) is approved by DoF & BIFR and the same isimplemented.

DIVIDEND

The Company does not propose to declare any Dividend to shareholders during the Fiscal2016 as per the Companies (Declaration and Payment of Dividend) Rules 2014 due to hugeaccumulated losses (' 706.68 Cr) and negative net worth (' 532.15 Cr) as on March 312016.

PLANT PERFORMANCE

During 2015-16 Urea production was 407311 MT (83.7% capacity) with an annual specificenergy consumption of 7.645 Gcal/MT. Urea production of 50900 MT during Mar 2016 is thehighest ever monthly production since inception.

Main reason for the lower production is (i) From April 17th 2015 to June 15th 2015Plants were shut down due to GoI Policy of denying operation of fertilizer Plant onNaphtha as feed stock and (ii) From 01st December to 27th December 2015 Plants were shutdown due to heavy flooding of entire MFL complex owing to heavy rain and the letting outof water from overflowing "Puzhal" reservoir.

On receipt of GOI approval vide DoF Notification No.12018/4/2014/ FPP dated 17th June2015 for continuation of production using Naphtha as feedstock till gas connectivity theAmmonia Plant re-start operations began on June 12 2015. Ammonia and Urea productioncommenced at 15.30 hrs on June 15 2015 and 00.35 hrs on June 17 2015 respectively.

With respect to Complex Fertilizers MFL produced 0.35 lac MT of NPK17-17-17 during 2015-16 and the production was low due to non-availability of rawmaterials.

GAS CONVERSION

MFL Ammonia Plant is gas compatible with minor modifications in the Front End of theAmmonia Plant and the Basic Engineering Design Package has already been completed by M/sHaldor Topsoe A/S (HTAS) Denmark MFL Ammonia Plant Process Licensor. The detailedengineering was carried out by M/s Projects & Development India Ltd. (PDIL).

The procurement of major equipment viz. NG fired heater Primary Reformer Burners NGPreheat Coil NG fuel preheater are under tendering stage under the guidance of PDIL.

MFL has signed the Heads of Agreement (HOA) with M/s.Indian Oil Corporation Ltd (IOCL)for Regasified Liquid Natural Gas (RLNG) supply from its proposed Ennore RLNG terminalwhich is expected to become operational by June 2018. Memorandum of Agreement (MOA) hasbeen signed with IOCL for gas transportation through pipelines on 29.05.2016.

MARKETING PERFORMANCE

Fertilizer Sales

The company has sold 327883.50 MT of Vijay Neem Coated Urea and 27239.65 MT of VijayUrea totaling to 355123.15 MT during 2015-16 as compared to previous year's sale of325532.10 MT of Vijay Urea and 967 MT of Neem Coated Urea totaling to 326499.10 MT.The Company also sold 34807.30 MT of Vijay 17-17-17 as compared to previous year's sale

74225.60 MT. The seasonal condition by and large in South India was satisfactoryexcept in Karnataka & Telangana States wherein the rainfall was around 70% andconcentrated in isolated parts. The Market share of MFL Urea was 6% in South India during2015-16.

Based on GOI directives MFL is producing 100%Neem Coated Urea since June 2015 for slowrelease of Nitrogen in the soil. Cash sales thru RTGS payment accounted for 97.90% oftotal sales. There has not been a single case of Bad Debt for this year also.

Neem Pesticides Bio-fertilizers & Organic Manure

70.09 KL of Neem Pesticides valuing ' 152.43 lakh of Ecofriendly Neem Pesticides wastraded during the year as against 113.62 KL value of ' 197.37 lakh for the previous year.

The Company has sold 276.76 MT of bio-fertilizers during the year as against 349 MT forthe previous year.

Under basket approach the Company has also sold 8247 MT of Organic Manure during theyear in Tamil Nadu Pondicherry Karnataka Andhra Pradesh Telangana and Kerala States asagainst 5432.88 MT sold during the last year. The concerted promotional effort helped inincreasing the volume. MFL continues to promote the eco-friendly products like; Vijay Neemand Vijay Organic. Vijay City Compost is also introduced during 2015-16. Our endeavor isto develop and sustain the eco-friendly agricultural environment.

MARKET DEVELOPMENT & AGRO-SERVICE PROGRAMS:

MFL's Marketing personnel have contacted 31594 farmers during the year and educatedthem about the package and practices of cultivation of major crops soil health techniquesand optimum usage of chemical fertilizers bio-fertilizers and Neem products to enhancesoil fertility and food grains productivity for consequent growth in economy.

Under corporate social responsibility to farming community the Marketing personnel hadcollected 5521 soil samples analysed and communicated the micro & macro nutrientrecommendations of various crops to farmers during the year.

In pursuance to the Prime Minister's Mission on empowering the Farmers vide SupportiveSchemes & Education on farming techniques MFL celebrated ‘World Soil Health Day'in a grand manner by conducting 15 programs during Dec 5-19 2015 in entire MFL MarketingTerritories.

PUBLIC DEPOSIT

There are no Public Deposits with the Company.

ISO 9001 / 14001

CMD has approved the annual Quality / Environment objectives for all the functionalareas and the same has been communicated to the respective functional area for complianceduring the year 2015-16.

The EMS (ISO 14001:2004) Renewal Certification valid upto 31st May 2017 was obtainedfrom M/s Indian Register Quality Systems (IRQS) our certifying body.

The QMS (ISO 9001:2008) Renewal Certification valid upto 29th December 2016 wasobtained from M/s.Indian Register Quality Systems (IRQS) our certifying body.

MEMORANDUM OF UNDERSTANDING

The Company submitted a draft MOU with Department of Fertilizers (DOF) Government ofIndia for the year 2016-17 setting up targets for performance of the Company in terms ofstatic and dynamic parameters. Finalisatin of performance parameters is underway throughnegotiation.

VIGILANCE ACTIVITIES AND ACHIEVEMENTS OF VIGILANCE DEPARTMENT DURING2015-16

• Complaints received were attended and reports submitted as per ComplaintsHandling Policy of the Company / Central Vigilance Commission (CVC) guidelines.

• Continuously monitoring the progress of Disciplinary Proceedings in respect ofvigilance cases for timely completion.

• Agreed List of suspected Officers and List of Officers of Doubtful Integritywere finalised and sent to DOF.

• CVC guidelines on Tenders and disciplinary proceedings and other matters as andwhen received were communicated to Management for necessary action.

• As per the Central Vigilance Commission's requirement CVO had one Structuredmeeting with the CMD MFL (on 21.12.2015) and pending issues were discussed andsuggestions given to the Management.

• In the Structured Meeting cited CVO informed CMD about DOF's communicationdated 07.12.2015 on CVC's Office Order dated 13.02.2012 on PIDPI resolution and emphasisedthe need for giving wider publicity to PIDPI provision. Consequently MFL Management hasput up on the Company's website CVC's resolutions on PIDPI and other guidelines in thisregard from CVC / DOPT.

• For all Tenders with value more than ' 2 lacs e-Tendering and e-reverse auctionmethod is being followed.

• Annual Property Returns of Officers were scrutinized as per CVC guidelines.

• Rotation of Officers in sensitive posts effected as per CVC guidelines.

• For easy reference CVC Guidelines / Circulars on Tenders were uploaded in MFL'sOnline Integrated System (OLIS).

• MFL observed Vigilance Awareness Week 2015 from Oct. 26 to 31 2015 as directedby CVC. The following are the highlights:

> CMD administered Vigilance Awareness pledge on Oct. 26 2015 at 11 AM to mark thecommencement of Vigilance Awareness Week 2015.

> On Oct. 26 2015 after noon a Guest Lecture by Shri. N. Gopalaswami former ChiefElection Commissioner of India. was organized on the topic ‘Preventive Vigilance'.

• Slogan contest in English Tamil and Hindi on "Preventive Vigilance"was organized for the employees of MFL.

• An Essay Competition on the theme "Preventive Vigilance as a tool of GoodGovernance" was organized for MFL employees.

• A similar Essay Competition on the theme "Preventive Vigilance as a tool ofGood Governance" was organized for the School children of two neighboring Schools.Prizes were distributed to the winners of the above competitions on Nov 18 2015 by CMDMFL.

• Parliamentary Standing Committee on Personnel Public Grievances Law andJustice visited Chennai on June 22-23 2015 for discussions with various institutionsorganizations and political parties. On June 23 2015 the Committee held discussions onVigilance administration in the context of

Lokpal and Lokayuktha with MFL and other organizations. CMD-MFL and Shri. J. VinayanCVO-FACT who was nominated to represent MFL (in view of CVO's training program) and otherSenior Officials attended the Meeting.

HUMAN RELATIONS AND INDUSTRIAL RELATIONS MANPOWER & TRAINING

The total strength of MFL as on 31.03.2016 is 723 as against 693 as on 31.03.2015. 415employees have been trained during the period Apr 2015 - Mar 2016 on Technical Soft andLife skills for the enduring benefit and development of the Organisation.

INDUSTRIAL RELATIONS

During the year the overall Industrial Relation situation in the Company has beennormal and cordial.

OFFICIAL LANGUAGE IMPLEMENTATION

MFL has been continuously exceeding the target fixed by Department of Official Languagefor letter correspondence in Hindi and other implementation programs. Hindi Fortnight wascelebrated at Head Office and Regional Offices. Various competitions were organized andprizes were distributed.

SC / ST WELFARE ACTIVITIES

Dr Ambedkar Jayanthi was celebrated on 15th April 2015 at our Training Centre byinviting Chief Guest from outside and conducted in a grand manner.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

• During heavy floods in Chennai on December 6 2015 MFL conducted food camp anddistributed food packets and medical kit to around 1000 people at Salaimanagar villageManali adjoining MFL Plant premises.

• On December 15 2015 MFL conducted free medical camp with the help of ourOccupational Health Centre Team under the guidance of Company Medical Officer which servedaround 500 people at Salaimangar Village Manali Chennai.

• Subsequently on December 25 2015 MFL distributed around 1000 relief materialpackets containing 4 kgs of rice dhoti sari and bed sheet worth of ' 600 per familythrough the local member of Legislative Assembly in Manali area Thiruvottiyur AssemblyConstituency Thiruvallur District.

In total the company has incurred an amount of ' 8.00 lacs towards this noble cause asa part of CSR activities 2015-16.

INVESTOR RELATIONS CELL (IRC)

IRC is functioning in the Company under the Chief Financial Officer General Manager(F&A) & Company Secretary with members from various Groups to create awareness ofthe Company's strength and ensuring timely communication to shareholders.

DIRECTORS

Government of India have appointed the following GOI Nominee Directors in MFL Board :-

a) Dr A K Padhee IAS (DIN 00730620) Joint Secretary Department of Fertilizers inplace of Shri Heeralal Samariya IAS (DIN 00054859) effective Jan 14 2016; and

b) Shri Piyush Srivastava IES (DIN 07266407) Economic Advisor Department ofFertilizers in place of Rajiv Yadav IAS (DIN 00322778) effective Jan 14 2016.

c) The Appointments Committee of the Cabinet (ACC) vide O.M.No.2/13/2016-EO(ACC) datedJune 06 2016 has approved the appointments of the following Non-Official Directors on theBoard of Madras Fertilizers Limited with effect from June 06 2016 for a period of threeyears or until further orders whichever is earlier.

1) Dr. Hemant A Thakore

2) CA. Sunil Vashisht

3) Shri C Ramesh

4) Smt Vanathi Srinivasan

The Board placed on record the valuable and outstanding contribution made by theoutgoing Directors Shri Rajiv Yadav IAS and Shri Heeralal Samariya IAS during theirtenure as Directors on the Board for the substantial and sustainable development of theCompany.

AUDITORS

The Comptroller & Auditor General of India have appointed M/s B Thiagarajan &Co Chartered Accountants Chennai as Statutory Auditors of the Company for the year2015-16.

STATUTORY INFORMATION

Particulars of Employees and Related Disclosures

In terms of the provisions of Section 197 (12) of the Companies Act 2013 read withRules 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 it is stated that No employee of your Company was in receipt ofremuneration for any part of the year at a rate which is more than ' 5 lacs per month.

Energy Technology & Foreign Exchange

The data on Conservation of Energy Technology Absorption and Foreign Exchange Earningsand Outgo in accordance with the provisions of Section 134 of Companies Act 2013 are givenin the Annexure-I forming part of this report.

Directors’ Responsibility Statement

Directors' Responsibility Statement as required under Section 134 of Companies Act 2013is furnished in Annexure-II forming part of this report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report as required under Listing Agreement isenclosed as Annexure-III forming part of this report.

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines as stipulatedin Securities and Exchange Board of India under Clause 49 of the Listing Agreement andalso the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") . Certificate receivedfrom the Auditors of the Company regarding compliance of Corporate Governance guidelinesof SEBI as required under Listing Regulatiions is enclosed as Annexure IV forming part ofthe report.

Code of Conduct

Declaration affirming compliance with the code of conduct pursuant to the provisions ofRegulation 17(5) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") is enclosedas Annexure V forming part of this report.

Extract of Annual Return

As provided under Section 92 (3) of the Act the details forming part of extract of theAnnual Return in form MGT 9 are annexed herewith as Annexure VI.

Secretarial Audit

In terms of the provisions of Section 204 of the Companies Act 2013 and Rules framedthereunder a Secretarial Report in the prescribed format obtained from a CompanySecretary in practice is required to be annexed to the Board's Report. In view thereofyour Board at its meeting held on May 27 2016 appointed Mr V Esaki No.47 VOC NagarNehru Street Anna Nagar East Chennai 600 102 as the Secretarial Auditor of your Company.The Secretarial Auditor's Report for the year 2015-16 is annexed as Annexure VII.

APPRECIATION

Your Directors wholeheartedly place on record their appreciation for the continued andunstinted support of Government of India Department of Fertilizers Government ofTamilnadu NICO Financial Institutions Banks and all stakeholders during the year. It ismost appropriate to mention that the Directors convey their gratitude to the Department ofFertilizers for settlement of subsidy bills on priority basis and to the dealers andfarmers for their sustained support to Vijay products. Last but not the least that yourDirectors also place on record their appreciation for the dedication commitment andsincere services rendered by the employees for sustained improvements.

By order of the Board
Chennai A B Khare
August 12 2016 Chairman & Managing Director

THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF DIRECTORS) RULES 1988

FORM A

Disclosure of Particulars with respect to Conservation of Energy

Financial Year Previous Year
2015-16 2014-15
A. Power and fuel consumption
1. Electricity
(a) Purchased
Unit (lakhs) * 970.900 952.877
Total amount (' in lakhs) 7541.696 6679.422
Rate / unit (Rs.) 7.77 7.01
Includes power consumed at TTP Kodungaiyur
(b) Own generation
(i) Through diesel generator
Units (lakhs) 14.454 13.349
Diesel consumption (KL) 538.800 399.630
Units per ltr. of diesel oil 2.683 3.340
Cost/unit (Rs.) 17.50 17.50
2. Coal Not applicable Not applicable
3. Furnace oil & LSHS
Quantity (tonnes) 96815 90144
Total cost (' in lakhs) 23070.512 39686.699
Average rate (' per tonne) 23829.48 44025.89
4. Others/generation: Nil Nil

B. Consumption per unit of production

FICC Norm 2015-16 2014-15
(a) Product: Ammonia
Electricity (KWH) * 115.000 125.346 160.908
Fuel oil + LSHS (MT) 0.2341 0.2090 0.2567
Naphtha (MT) 0.7829 0.7912 0.7912
* includes own generation
(b) Product: Urea
Electricity (KWH) 202.000 160.175 180.616
Fuel oil + LSHS (MT) 0.1309 0.1159 0.1157
(c) Product: NPK
Electricity (KWH) 43.410 63.444 56.566
Fuel oil + LSHS (MT) 0.0069 0.0125 0.0116

FORM - B

DISCLOSURE OF PARTICULARS WITH RESPECT TO RESEARCH & DEVELOPMENT AND TECHNOLOGYABSORPTION RESEARCH & DEVELOPMENT

1 Specific areas in which R&D carried out by the Company
2 Benefits derived as a result of the above R&D
3 Future plan of action
4 Expenditure on R&D NIL
a) Capital
b) Recurring (in lacs)
c) Total (in lacs)
d) Total R&D expenditure as a percentage of total turnover
TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:
1 Efforts in brief made towards technology absorption adaptation and innovation.
2 Benefits derived as a result of the above efforts e.g. product improvement cost reduction product development import substitution etc. Nil
3 Details of imported technology (imported during the last 5 yrs reckoned from the beginning of the financial year)

FOREIGN EXCHANGE EARNINGS AND OUTGO

2015-16
1. Activities relating to export NIL
2. Total Foreign Exchange used (Rs. Cr)
a) Raw Materials 104.12
b) Components & Spare Parts 1.28
c) Books & Periodicals / Travel 0.03
Total 105.43
3. Total Foreign Exchange earned NIL

ANNEXURE - II

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134 of Companies Act 2013 your Directors based on therepresentations received from the Operations Management confirmed that :-

• in the preparation of the annual accounts the applicable accounting standardshave been followed and that there are no material departures;

• they have in the selection of the accounting policies consulted the StatutoryAuditors and have applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit and loss of the company forthat year;

• they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the company and forpreventing and detecting fraud and other irregularities;

• they have prepared the annual accounts on a going concern basis.

• they have laid down internal financial control to be followed by the Company andthat such internal financial controls are adequate and were operating effectively.

• they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.