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National Fertilizer Ltd.

BSE: 523630 Sector: Agri and agri inputs
NSE: NFL ISIN Code: INE870D01012
BSE LIVE 15:45 | 22 Aug 66.90 -1.95
(-2.83%)
OPEN

69.00

HIGH

69.40

LOW

66.65

NSE 15:51 | 22 Aug 66.75 -2.20
(-3.19%)
OPEN

69.00

HIGH

69.55

LOW

66.50

OPEN 69.00
PREVIOUS CLOSE 68.85
VOLUME 82770
52-Week high 89.50
52-Week low 29.65
P/E 14.00
Mkt Cap.(Rs cr) 3,282
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 69.00
CLOSE 68.85
VOLUME 82770
52-Week high 89.50
52-Week low 29.65
P/E 14.00
Mkt Cap.(Rs cr) 3,282
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

National Fertilizer Ltd. (NFL) - Chairman Speech

Company chairman speech

Dear Shareholders

It gives me immense pleasure to present to you the 42nd Annual Report forthe year 2015-16.

Economic Environment & Fertilizer Industry

The Financial Year 2015-16 witnessed continued global volatility across differentmarkets. The fall in oil prices and commodities have had varied impact across differentcompanies and countries. The China slowdown continues to be an important economic factor.However the downward trend in crude oil prices has positively helped the Indian economyin terms of saving in import bill of crude oil and Government has also set an ambitioustarget of increasing the contribution of manufacturing output to 25 per cent of GrossDomestic Product (GDP) by 2025 from 16 per cent currently. The introduction of improvedmethods of agriculture and high yielding varieties (HYV) seeds mainly wheat had resultedin remarkable improvement in agricultural outputs. The productivity of land has increasedtremendously giving huge economic boost to the nation.

Government of India (GOI) has taken some of the major reforms through notification ofvarious policies such as 100% mandatory production of Neem Coated Urea w.e.f. 25.05.2015introduction of New Urea policy 2015 for existing gas based Urea manufacturing Unitseffective from 01.06.2015 and pooling of gas notified w.e.f. 01.06.2015. The New UreaPolicy 2015 incentivized the additional production beyond re-assessed capacity of theplants and thereby helped to achieve record domestic Urea production in the country during2015-16. The introduction of pooling of gas mechanism has facilitated delivery of gas atuniform price to all Urea manufacturers which has enabled production of Urea beyondre-assessed capacity viable. For the company it has also helped in reducing therequirement of working capital to some extent.

The GOI is planning to directly transfer the fertilizer subsidy to farmers. This wouldhelp the poor farmers reduce leakage and also reduce the government's subsidy burdenreleasing resources to plough back into agriculture in a way that can help a greaternumber of poor farmers.

Performance Highlights

Despite challenges your Company performed exceedingly well during the year 2015-16the Company has achieved the ever highest Urea production of 37.99 LMT with anoverall capacity utilization of 118%.The urea production includes ever best performance atNangal Panipat and Vijaipur-II plants. Urea sale was marginally lower at 36.41 LMT mainlydue to poor demand owing to deficit winter rainfall / glut like situation. However Ureasale of 19.16 LMT for Rabi season during 2015-16 was ever highest. Your company is thesecond largest domestic producer of Urea with market share of 15.5%. The Company recordedever highest sale of 55199 MT of Nitric Acid during 2015-16.The company made recordproduction & dispatches of Bio-fertilizers of 567 MT & 619 MT respectively againstprevious best of 506 MT (2014-15) & 605 MT (2013-14) respectively. After a gap of morethan 20 years during 2015-16 the company imported 33459 MT of DAP worth ' 102 crore whichwas sold in the States of Bihar MP and UP.

The Company achieved turnover of '7765.88 crore (including subsidy of '5433.58 crore)compared to '8519.69 crore of the CPLY (including subsidy of '6461.14 crore). The decreasein sales turnover was mainly due to cheaper gas price under Gas pooling mechanism ($ 9.96per mmbtu during current year from $ 12.43 per mmbtu during CPLY) w.e.f. June 2015 andlower sale quantity.

The Company earned profit before tax of '283.49 crore (CPLY ' 44.72 crore) and profitafter tax of ' 197.09 crore (CPLY ' 26.24 crore) during 2015-16 which was highest duringthe last ten years. The increase in profit is mainly attributed to increase incontribution from sale of urea beyond re-assessed capacity decrease in finance costincrease in contribution from Industrial products decrease in energy consumption etc.

Further all the Units of your Company except Vijaipur-I had achieved ever lowestenergy consumption in 2015-16 which had helped in optimizing energy consumption inproduction of urea.

I am pleased to inform you that the Board has recommended a dividend of 12.10% (' 1.21per equity share) for the year 2015-16 on equity share of '10 each amounting to ' 59.36crore.

Agricultural Extension Services

NFL is organizing Agriculture Extension Services with an objective to educate farmerson judicious use of fertilizers along with total know-how on improved and scientificmethods of cultivation enhancing farmers' knowledge about latest techniques thus helpingthem to increase productivity. During 2015-1688 farmer training programmes had beenorganized and more than 6000 farmers were benefited. During these educational programmesfarmers were sensitized to issues related to soil fertility status including deficiency ofvarious nutrients and remedy to increase fertilizer use efficiency and maximize yields.During the year more than 36000 soil samples were analyzed for major and micro nutrientsand recommendations given through six static and four mobile soil testing laboratories.Based on the analysis farmers were advised on soil fertility management through rationaluse of manure fertilizers and other inputs to make agriculture more productive andsustainable.

Further during the year 2015-16 NFL participated in 36 krishi melas / agricultureexhibitions organized by leading agriculture universities agriculture department inPunjab Haryana UP Uttarakhand MP Rajasthan.

Human Resource

The Company considers its Human Resource as its most important asset and makessustained efforts for the development of its manpower. Company has a well-establishedHuman Resource Department to cater to the training needs of employees keeping in view thechanging technology and overall business environment.

The Company has manpower strength of 3595 employees as on 31.03.2016 which comprisesof 1697 Executives and 1898 Non-Executives. Company promotes the employment of women andat present 202 women employees are on its roll which is 5.61% of the total work force.

To improve skills and instil behavioural and personality development traits in allsupervisory staff and managerial cadre NFL organised number of training programmes(in-house as well as external) on contemporary subjects during the year. The trainingprogrammes were identified through Performance Management System by synchronizingorganizational needs with individual needs. The Company also organized specially designedtraining programmes for developing women employees in various areas of expertise. In thesediverse programmes 12855 man-days training was imparted to employees and 421 man-daystraining to women employees.

The industrial relations in the company remained cordial during the year and noman-days were lost.

CSR Activities

The Company through its CSR initiatives continues to enhance value creation in thesociety. Under the "Swachh Vidyalaya Abhiyaan" a component of "SwachhBharat Mission" launched by Hon'ble Prime Minister Company constructed toilets inschools located in the vicinity of Panipat Nangal and Vijaipur Units and similar projectsin Bathinda is also underway. During the year the company also undertook relief work forChennai Flood victims. In addition various skill development programmes were alsoundertaken for woman.

Safety Environment and Sustainable Development

During the year the Company has undertaken various initiatives for in adopting bestpractices for health safety environment management and sustainable development. In orderto monitor the level of emission and effluent discharge from all the units all the unitshave installed On-line monitoring system both for effluent and emission discharges. Onlinemonitoring system is integrated with Central and State Pollution Control Boards in orderto monitor the level of pollutants on continuous and real time basis. Efficiency of Coalfired Boilers in Nangal Bathinda and Panipat Units is being improved by using varioustechniques such as use of Coal additives. This will help to reduce consumption of fossilfuel. Afforestation has been adopted in all the Units to improve the environmentsurrounding the Units. A total of about 20000 tree saplings were planted in and aroundvarious Units leaving a cleaner and greener earth for future generation. During the year5 rainwater harvesting system were installed in Units. This would help in conservation ofwater increase in underground water table and increase greenery in the surroundings.

Awards and Accolades

I am happy to share with you that during the year 2015-16 your company has receivednumber of prestigious awards in different spheres such as Safety Award (First prize) fromNational Safety Council of India (NSCI) to Panipat Unit "Chal-VaijayantiShield" (First Prize) for excellent work in Official language for the year2014-15 from Town Official Language Implementation Committee Noida First Awardtowards best pavilion in Kisan Agri Expo held in Jaipur Third Level SurakshaPuraskar (Bronze Trophy) for 2015 to Bathinda Unit under Group-B manufacturing sectorby NSCI Sarvashreshtha Suraksha Puraskar (Golden Trophy) to Panipat Unit underGroup B in manufacturing sector from NSCI and "Icon of the Year Award" to yourC&MD by The Institute of Cost Accountants of India for significant contribution to theprofession as well as society.

Growth Drivers

The company is focusing on the following areas for achieving growth in its business:

• Maximization of Urea production in energy efficient manner.

• Production of new products like Bentonite Sulphur MoP SSP etc.

• Maximization of production of Industrial Products including Ammonium Nitrate SProduction and sale of quality & certified seeds in own brand name through seedsmultiplication program.

• Domestic trading ofAgro products like pesticides compost Bentonite Sulphuretc.

• Import and sale of fertilizers like Urea DAP MoP and complex fertilizers.

• Revival of other closed plants in the country through Joint venture mode.

Joint Venture

As you are already aware the Company has formed a joint venture company RamagundamFertilizers & Chemicals Limited (RFCL) with Engineers India Limited (EIL) andFertilizer Corporation of India Limited for setting up of new gas based plant atRamugundam in Telangana with a capacity of 1.27 Million Tonnes per annum. The zero datefor the project has been declared on 25th September 2015. The Foundation StoneLaying ceremony was held on 07.08.2016 through the hands of Hon'ble Prime Minister ShriNarendra Modi at Gajwel Dist. Medak Telengana. It is expected that unit would beoperational by 30.09.2018.

Corporate Governance

The philosophy of your company in relation to Corporate Governance is to fully conformto applicable laws regulations and guidelines and to promote ethical conduct in theorganization. The company is committed to the highest standards of Corporate Governance.Report on Corporate Governance has been brought out separately as an annexure to theDirectors' Report. All Directors and Senior Management officials have affirmed complianceto Code of Conduct.

I welcome Shri Dharam Pal Joint Secretary Department of Fertilizers and Smt.Bhavnaben Kardambhai Dave Independent Director on joining the Board of the Company andhope that the Company will benefit greatly from their rich experience.

I will also like to place on record deep appreciation for the valuable guidance andsignificant contributions made by outgoing Directors Shri Vinod Kumar Thakral ShriRakesh Kumar Capt. Pavan Kumar Kaul Shri Vikram Srivastava and Shri M. Raman .

Acknowledgements

I also take this opportunity to express my sincere thanks and gratitude to mycolleagues on the Board of Directors for their valuable guidance and support in runningthe affairs of the company.

I am also thankful for the whole-hearted support received by the Company fromDepartment of Fertilizers Fertilizer Industry Coordination Committee(FICC) Railways andother Ministries and Departments of Government of India and the various State GovernmentsCompany's Bankers and Auditors and look forward to their continued support in Company'sfuture endeavours. In particular I shall like to thank all the shareholders for theircontinued confidence in the Company.

I sincerely thank the employees of NFL at all levels and would like to place on recordthat but for their contribution and dedication the results achieved would not have beenpossible. I expect the same determination and spirit to continue in future to furtherimprove the performance of the company.

Registered Office:
Scope Complex Core3 (Manoj Mishra)
7 Institutional Area Lodhi Road New Delhi-110003 Chairman and Managing Director
Date: 22nd August 2016 DIN:06408953