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Fertilizers & Chemicals Travancore Ltd.

BSE: 590024 Sector: Agri and agri inputs
NSE: FACT ISIN Code: INE188A01015
BSE 14:47 | 20 Jan 149.75 -1.95
(-1.29%)
OPEN

154.00

HIGH

154.00

LOW

149.65

NSE 14:39 | 20 Jan 150.30 -1.50
(-0.99%)
OPEN

152.45

HIGH

153.80

LOW

149.70

OPEN 154.00
PREVIOUS CLOSE 151.70
VOLUME 18253
52-Week high 160.00
52-Week low 73.50
P/E 24.71
Mkt Cap.(Rs cr) 9,690
Buy Price 149.65
Buy Qty 13.00
Sell Price 149.90
Sell Qty 1.00
OPEN 154.00
CLOSE 151.70
VOLUME 18253
52-Week high 160.00
52-Week low 73.50
P/E 24.71
Mkt Cap.(Rs cr) 9,690
Buy Price 149.65
Buy Qty 13.00
Sell Price 149.90
Sell Qty 1.00

Fertilizers & Chemicals Travancore Ltd. (FACT) - Chairman Speech

Company chairman speech

Dear shareholders

It gives me immense pleasure and satisfaction to present the 77th AnnualReport of FACT for the year 2020-21.

The 77th Annual General Meeting of the Company is convened as a virtualmeeting in compliance with the guidelines issued by the Ministry of Corporate Affairs(MCA) and the Securities and Exchange Board of India (SEBI).

It is an honour and satisfaction for me to address you third time in succession and toshare the performance highlights and achievements of your Company during the financialyear 2020-21 and its future outlook.

You may recall that while addressing you at the last AGM I have shared some of thestrategic initiatives taken by the Company for its consistent growth and sustenance in thelong run. I am happy to inform you that your Company has successfully implemented thestrategy and as a result your Company has achieved excellent performance in productionmarketing and finance during the financial year 2020-21.

In a volatile environment FACT generated an EBITDA from operation of D 620 Crorewhich is higher by 100 percentage as compared to previous year. The Company has achievedall time high operating profit of D 352 Crore. The turnover of the company has also beenincreased by 18.73%.

During the financial year 2020-21 Covid-19 continues to have a devastating effect oneconomic activities around the world. I want to pay sincere gratitude to all frontlineworkers who have been working tirelessly combating Covid-19 and its ill effects. FACTcontinued to meet the fertiliser demand of the farmers as an essential service provider bymodifying the production plan and strategies following all Covid protocols.

I am happy to share some of the highlights of the performance of your Company duringthe year 2020-21.

• All time high operating profit of D 352 Crore.

• Surpassed the MoU excellent targets for all end- products in Production andSales.

• Surpassed One Million MT mark in fertilizer production and sales.

• All time high Production of Factamfos (NP 20:20:0:13) - 8.61 Lakh MT.

• All time high Ammonium Sulphate production - 2.46 Lakh MT.

• All time high Factamfos sale - 9.23 Lakh MT.

• All time high sale of Ammonium Sulphate - 2.51 Lakh MT.

• All time high sale of City Compost - 13238 MT. Fertilizer Industry

The Global fertilizer sector is witnessing a paradigm shift in recent years bypromoting best practices in fertilizer production and consumption to achieve high cropyield and to reduce greenhouse gas emissions and increasing energy efficiency. In order toprovide quality fertilizers at a reasonable rate to farmers Government has announcedvarious reforms in fertilizer sectors including increase in subsidy.

Production and consumption of fertilizers in India is showing an increasing trend.India made rapid growth in fertilizer consumption after the introduction of high yieldingvarieties of crops and the country become the second largest user of fertilizers in theworld in terms of total nutrients. During the past several years Government of India hasbrought economic reforms and ensured that fertilizers are available at affordable pricesto increase agriculture productivity. Due to subsidy eligibility on notified fertilizersthe Indian fertilizer industry has been able to provide fertilizers at an affordable priceto farmers to ensure food security for the Nation. However the country is still dependingon import of fertilizers to a large extend to meet the demand.

During the financial year 2020-21 the production import and sale of fertilizers inIndia has increased considerably as compared to previous year. During the financial year2020-21 total production of all fertilisers increased by 1.69% as compared to thefinancial year 2019-20. The increase in import for the financial year 2020-21 is 10.42%and increase in sale is 9.59% as compared to previous year.

Indian fertilizer market is estimated to record a Compound Annual Growth Rate of 11.9%during the next five years.

The prices of fertilizers and fertilizer inputs are showing an increasing trend inGlobal market. The overall increase in the prices of fertilizers and fertilizer input is amajor challenge being faced by fertilizer industry in India.

Serving the Nation

Your Company is committed to serving the Nation by providing essential fertilizers forthe farming community at affordable price. When the second wave of Covid- 19 startedacross the country and faced with a massive surge in demand for medical Oxygen yourCompany has set up two PSA Oxygen plants in the State of Kerala and one in the State ofUttar Pradesh and have also helped the nearby affected community by providing essentialrequirements to fight the pandemic.

FACT as a responsible corporate entity always stand in solidarity with society andextended all possible assistance to the country during the peak time of Covid- 19pandemic.

Inorder to meet the demand for MOP and supplement the NP production FACT had importedsix parcels of MOP totalling 161104 MT and one parcel of NPK 16:16:16. With a view toprovide fertilizers to farmers at affordable rate FACT has started coastal shipping fortransport of fertilizers. The Company has extended the fertilizer marketing operations PanIndia. FACT has successfully completed the trial run of Caprolactam Plant and re-start theoperation after a gap of nine years. The re-start of Caprolactam would result in reductionof import of Caprolactam in the Country and it is a bold step towards the‘Atmanirbhar’ policy of the Government of India.

Market Capitalization

The excellent production and financial performance of FACT has reflected in thesentiments of the investors and the share price of the Company has touched a new high of D153 per share and market capitalization at 1 9900 Crore. FACT is now one amongthe top fortune 500 Companies.

Supplementary Audit

I am happy to inform you that the Comptroller and Auditor General of India has notissued any comments on the Standalone financial statements of the Company. This shows thetransparency of the systems and procedures being followed by the Company in financialaccounting and commitment of FACT for compliance of the provisions of Companies Act 2013and Indian Accounting Standard and the Guidelines issued by the Ministry of CorporateAffairs.

Way Forward

As a leading fertilizer Company your Company has aligned itself with Government’svision to play a vital role in fertilizer sector in the Country. The activities of yourCompany has been extended to Pan India. All fertilizer plants of the Company are operatingat 110120% of its installed capacity. Caprolactam plant which was in shut down for thelast 9 years has been re-started.

I am happy to inform you that the performance of the Company for the 1stquarter of the financial year 202122 is encouraging. The Company has recorded an all timehigh operating profit of D 39.80 Crore during the quarter ended 30.06.2021.

Various CAPEX projects worth D 700 Crore including setting up of 1650 TPD NP Plant atFACT Cochin Division is on various stages of implementation.

Setting up of 1650 TPD Factamfos plant and implementation of other CAPEX projects mayresult in increase the fertiliser production of the Company from 10 Lakh MT to 14 Lakh MTand the turnover will increase form D 3250 Crores to D 5000 Crores by the year 202425with a continuous profit of D 250 to D 300 Crores per annum.

Challenges and Opportunities

I am failing my duties if I only paint a rosy picture without touching the challengesbeing faced by your Company to sustain its operations in the long run.

To maintain at least one Million Ton production of fertilizers year after year isreally a challenge. Company do not have much control on the prices of fertilizer inputs.The prices of almost all fertilizer inputs are showing an unprecedented increase. Pricesof RLNG the feedstock for Ammonia has almost doubled during the year 2021-22 as comparedto previous year. The delay in connecting Cochin terminal to National Grid is alsoadversely affected the availability and supply of RLNG at reduced rate. Shortage offertilizers and its sky rocketing prices Globally has affected the import plan of theCompany for the year 2021-22.

Implementation of CAPEX in time bound manner is another challenge for FACT in thispandemic time. Due to travel and other restrictions potential bidders seek more time forsite visit and other start up activities. However we are confident to implement the CAPEXin a time bound manner.

The success of a corporate to a certain extend depend on its ability to convert thechallenges into opportunities.

I have witnessed from my past experience that FACT always emerges stronger after eachcrisis. The Company has signed an agreement with Petronet LNG Ltd. and GAIL BPCL and IOCLfor supply of RLNG for the year 2021-22. The contract for the year 2021-22 is based onGorgon Gas price which is beneficial to the Company at present since spot prices ofNatural Gas is ruling high.

Corporate Governance

FACT is committed to protect the interest of all Stakeholders such as investorsEmployees Customers Suppliers Bankers the Central and State Governments and thecommunity by ensuring transparency in all aspects of the Company.

Your Company is committed to comply all directives and guidelines of Government andstatutory authorities relating to corporate governance. The philosophy of the Company inrelation to Corporate Governance is to ensure transparency disclosure and reporting thatconforms to the provisions of Companies Act 2013 SEBI (LODR) Regulations 2015 and allother applicable laws and regulations. The Company is also complying the guidelines issuedby Department of Public Enterprises.

Acknowledgement

Before I conclude on behalf of the Board of Directors I wish to convey my sincereregards and deep gratitude to valued stakeholders for continued support and trust. Youalways have been the motivational force and has facilitated us to move ahead and achievethe excellent results despite the numerous challenges.

I hereby place on record my sincere thanks to my colleagues on the Board of Directorsfor their advice and support the Officers’ Forums the Trade Unions and allemployees of the Company for their dedicated efforts and unstinted support for overcomingvarious challenges being faced by the Company and for their contribution for the revivaland sustainable growth of FACT. I must also thank the various departments of Government ofIndia in particular the Department of Fertilisers and Government of Kerala for theirsupport and cooperation.

(Kishor Rungta)
Udyogamandal Chairman & Managing Director
Date: 26-08-2021 DIN-00231106

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