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National Fertilizer Ltd.

BSE: 523630 Sector: Agri and agri inputs
NSE: NFL ISIN Code: INE870D01012
BSE LIVE 19:43 | 19 Oct 61.55 -0.05
(-0.08%)
OPEN

61.10

HIGH

62.00

LOW

61.10

NSE 19:43 | 19 Oct 61.40 -0.25
(-0.41%)
OPEN

61.65

HIGH

61.85

LOW

61.00

OPEN 61.10
PREVIOUS CLOSE 61.60
VOLUME 25890
52-Week high 89.50
52-Week low 29.65
P/E 12.88
Mkt Cap.(Rs cr) 3,020
Buy Price 0.00
Buy Qty 0.00
Sell Price 61.55
Sell Qty 2124.00
OPEN 61.10
CLOSE 61.60
VOLUME 25890
52-Week high 89.50
52-Week low 29.65
P/E 12.88
Mkt Cap.(Rs cr) 3,020
Buy Price 0.00
Buy Qty 0.00
Sell Price 61.55
Sell Qty 2124.00

National Fertilizer Ltd. (NFL) - Director Report

Company director report

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 state