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Madras Fertilizers Ltd.

BSE: 590134 Sector: Agri and agri inputs
NSE: MADRASFERT ISIN Code: INE414A01015
BSE 00:00 | 14 Aug 19.85 -0.85
(-4.11%)
OPEN

20.80

HIGH

20.80

LOW

19.35

NSE 00:00 | 14 Aug 19.90 -0.85
(-4.10%)
OPEN

20.40

HIGH

20.60

LOW

19.05

OPEN 20.80
PREVIOUS CLOSE 20.70
VOLUME 41021
52-Week high 25.25
52-Week low 8.86
P/E
Mkt Cap.(Rs cr) 320
Buy Price 19.85
Buy Qty 4000.00
Sell Price 20.45
Sell Qty 500.00
OPEN 20.80
CLOSE 20.70
VOLUME 41021
52-Week high 25.25
52-Week low 8.86
P/E
Mkt Cap.(Rs cr) 320
Buy Price 19.85
Buy Qty 4000.00
Sell Price 20.45
Sell Qty 500.00

Madras Fertilizers Ltd. (MADRASFERT) - Director Report

Company director report

The Shareholders Madras Fertilizers Limited

Your Directors have pleasure in presenting herewith the 53rd Annual Report togetherwith the Balance Sheet as on March 31 2019 and the Statement of Profit & Loss for theyear 2018-19.

SUMMARY OF FINANCIAL RESULTS

Cr
2018-19 2017-18
Turnover 1593.00 1617.14
Profit Before Interest Depreciation Exceptional items and Tax 42.17 52.76
Interest 100.03 75.39
Depreciation 22.99 22.01
Exceptional items - 0.17
Other Comprehensive Income (2.39) (17.15)
Profit / (Loss) Before Tax (83.24) (61.96)
Provision for Tax - -
Profit / (Loss) After Tax (83.24) (61.96)
Cash Profit / (Loss) (60.25) (39.95)

The Company's operations for the year ended with a loss of Rs 83.24 Cr due to higherinterest and Plant was not making production for first two quarters due to working capitalcrisis.

REVIVAL

The Company has submitted a Revival Proposal to Department of Fertilizers Governmentof India for its consideration.

DIVIDEND

The Company does not propose to declare any Dividend to shareholders during the fiscal2019 as per the Companies (Declaration and Payment of Dividend) Rules 2014 due to hugeaccumulated losses ( 749.80 Cr) and negative net worth ( 575.27 Cr) as on March 31 2019.

HIGHLIGHTS OF PLANT PERFORMANCE

• 45 Kgs Neem Coated Urea bagging was started on May 24 2018.

• During 3rd & 4th quarter the Company made a profit of Rs 7.73 Cr and Rs 3.00Cr respectively.

• Urea Plant production of above 100% load (1475 MT) was achieved for more than174 Days during this year.

• RO B & C stream membranes were renewed Permeate and TTP water productionincreased thereby taken immunity against water crisis.

• Advance Process Control (APC) commissioned in Ammonia plant during Nov 2018 andexpected to get the profit of Rs 7.30 Cr annually. Already APC installed in Urea Plantfetching us Rs 4.14 Cr annually.

• At the close of Mar 31 2019 1815 days were completed without any lost timeaccident covering 6.594 million man-hours. (Previous best Achieved- 5.66 millionman-hours.)

FEED STOCK CONVERSION

Gas Supply Agreement (GSA) and Gas Transmission Agreement (GTA) were signed with IndianOil Corporation Limited (IOCL) on Feb 06 2019 for the supply of 1.16 MMSCMD of RLNG toMFL. RLNG partially hooked up to MFLsince 22nd March 2019 and fully from 24.07.2019. NowMFLproducing Ammonia with RLNG a low cost and clean fuel.

MARKETING PERFORMANCE Fertilizer Sales

• During the year 2018-19 MFLallowed rebates of Rs 36.54 lakhs as against CPLY of12.15 Crores thereby saved Rs 11.79 Crores.

• Achieved 419766.18 MT of Vijay Neem Coated Urea sales which is 8.23% of totalconsumption in MFL's marketing territory. (Total consumption for the year 2018-19 is5096421 MT and for 2017-18 it was 5183847 MT).

• Sold total available quantity of 27429.55 MT of Vijay 17-17-17

Neem Pesticides Bio-Fertilizers Organic Manure Sales

• Achieved a sale of 76.53 KL of Vijay Neem which is 27% increase over last yearsale of 60.12 KL

• Under "Swachh Bharat Mission" Marketing of City Compost a productfrom Municipality/Factory waste has been undertaken and 8087 MT sold which is 15.6% sharein the MFLmarketing territory. MFLstood 8th position in terms of City Compost sale in AllIndia level and 3rd position in South India.

• Achieved a sale of 150 MT of Vijay Bio Fertilizers which is 81% increase overlast year sale of 83 MT

• Sold 905 MT of Vijay Organic compared to last year sale of 1684 MT.

By Product CO2

During the year MFL generated revenue of about 2.68 Cr. by selling CO2.

MARKET DEVELOPMENT & AGRO-SERVICE PROGRAMMES:

MFL's Marketing personnel have contacted 25850 farmers during the year and continuouslyimparted knowledge to farmers on use of eco-friendly products for soil health soilfertility and vitality of soil health and balanced fertilization (Integrated NutrientManagement) by direct farmer contact soil sample collection method demonstration andfarmer seminar in coordination with State Agricultural extension departments.

Under corporate social responsibility to farming community Marketing personnel hadcollected 4206 soil samples got analysed and communicated to the farmers about the micro& macro nutrient recommendations 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 continues its service to the farmersthrough "Kisan Suvidha Kendra" at Gangavathy and Shimoga in Karnataka State.Farmer services like soil sample analysis and recommendation of fertilizer dosage based onsoil test report educating the farmers on weather crop Insurance and other improved farmtechnologies were offered.

DBT Implementation

• In order to sustain sales thru PoS machines and to comply with PAN Indiaimplementation through DBT MFLeducating the wholesalers and retailers on the importanceof PoS sales consistently.

• Generated all subsidy bills up to date. We are much ahead among many of ourcompetitors and no issues of DBT pending with NIC / DOF.

Vijay Neem Vijay
Coated Urea 17-17-17
Bills generated - Qty (MT) 453086.54 29736.53
Bills generated - Value (Cr.) 1227.25 22.87

Effective Jan 1st 2018 entire MFLmarketing territory is under DBT scheme.

ISO 9001 / 14001

ISO 14001: 2015 Accreditation done by M/s ICS and Certificate obtained on Jan 22 2018valid for 3 years. 1st Surveillance Audit on EMS was successfully carried out by M/s ICSon February 11 2019.

MEMORANDUM OF UNDERSTANDING

The Company entered into MOU with Department of Fertilizers (DOF) Government of Indiafor the year 2019-20 on May 14 2019 setting up targets for performance of the Company interms of static and dynamic parameters.

VIGILANCE

Activities and Achievements of Vigilance Department During 2018-19

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

• Continuously monitoring the progress of the Disciplinary Proceedings in respectof Vigilance Cases for timely completion.

• Agreed List of Suspected Officers and List of Officers of Doubtful Integritywere finalised and sent to DoF.

• CVC Guidelines / Circulars on Tenders and Disciplinary Proceedings and othermatters as and when received were communicated to Management for necessary action.

• As per the Central Vigilance Commission CVO had Structured Meeting with theCMD MFL on March 28 2019 and pending issues were discussed and suggestions given to theManagement.

• For all the Tenders with value more than Rs 2 lacs e-Tendering and e-reverseauction method is being followed per CVC guidelines.

• Annual Property Returns of the Officers were scrutinized 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 2018 from 29.10.2018 to 03.11.2018 asdirected by CVC. The following are the highlights:

• On October 29 2018 Vigilance Awareness Week pledge was administered to allemployees at 1100 hours in the Administrative Building by Shri U Saravanan Chairman &Managing Director in the presence of CVO.

• On Oct 29 2018 a Workshop was conducted by Shri G Loganathan ChiefMaterials Manager Southern Railways Chennai on Tendering Process &Preventive Vigilance.

In this workshop he dealt at length the topic of Tendering Process & PreventiveVigilance. The Workshop was well received by a house full attendance in the TrainingCentre Auditorium of MFL.

• On Oct 30 2018 a Quiz Competition was conducted for the Employees at theTraining Centre. Five Teams consisting of 2 Employees per Team enthusiasticallyparticipated in the competition.

• On Nov 1 2018 a Keynote Address on "Eradicate Corruption – Builda New India" was delivered by Smt Sujatha Jayaraj Director – FinanceCMRL. In this lecture she dealt at length the topic of Corruption its ill-effectsand ways to counter the same.

• Essay competitions (in English & Tamil) on the topic viz. "EradicateCorruption – Build a New India" was held for students of two neighbouringschools to create awareness and to involve the youth in Vigilance awareness.

• MFLRegional Offices (11) were also involved in the Vigilance Awareness Weekprogrammes. Banners were displayed in all the Regional Offices of MFLand Customers andCitizens were educated on "Eradicate Corruption – Build a New India".The Regional Offices also enabled a number of Customers and Citizens to undertakee-Pledge.

• As an endeavour of Youth Outreach the Regional Offices organized events relatedto this year's VAW Theme "Eradicate Corruption – Build a New India".

• Prizes and Certificates were distributed to the Winners of the VigilanceAwareness Week competition on 23.11.2018 by CMD.

• MFLVigilance organized a Workshop on Information Security to Officials of MISF&A Materials Management Production and Marketing & Distribution on 28.03.2019at MFLTraining Centre. Shri A Vijayakumar a distinguished Information Securityprofessional was the Faculty.

HUMAN RELATIONS AND INDUSTRIAL RELATIONS MANPOWER & TRAINING

• The total strength of MFLas on 31.03.2019 is 593 as against 632 as on31.03.2018. 284 employees have been trained during the period Apr 2018 to Mar 2019 onTechnical Soft and Life skills for the enduring benefit and development of theOrganisation.

INDUSTRIAL RELATIONS

• During the year the overall Industrial Relation situation in the Company hasbeen normal and cordial.

SC / ST WELFARE ACTIVITIES

• The Presidential Directives and various guidelines issued by the Government ofIndia from time to time relating to the welfare of SC / ST employees are beingscrupulously followed. A Liaison Officer for SC / ST has been posted at DGM level toensure implementation of Government Directives. SC/ST cell has been constituted forredressing the grievances of SC/ST employees.

• 60000/- was granted for celebrating Dr. Ambedkar Jayanthi on 14th April 2019.

BC/MBC/OBC WELFARE ACTIVITIES

• 30000/- was paid to the Association for the celebration of Thanthai Periyar E VRamasamy's Birthday on 17th September 2018.

OFFICIAL LANUAGE IMPLEMENTATION

The target fixed by Department of Official Language for letter correspondence in Hindiand other implementation programs is being taken care positively. Hindi fortnight wascelebrated at Head Office and Regional Offices. Various competitions were organised andprizes were distributed.

INVESTOR RELATIONS CELL (IRC)

IRC is functioning in the Company under the Chief Financial Officer (GeneralManager-F&A) & Company Secretary with members from various Groups to createawareness of the Company's strength and ensuring timely communication to shareholders.

DIRECTORS

Government of India have appointed the following GOI Nominee Directors in MFLBoard:-Shri Siya Sharan (DIN. 07401363) Department of Fertilizers in place of Smt. MeenakshiGupta (DIN. 07686646) effective December 21 2018.

The Board placed on record the valuable and outstanding contribution made by theoutgoing Director Smt. Meenakshi Gupta during his tenure as Directors on the Board forthe substantial and sustainable development of the Company.

STATUTORY INFORMATION Annual Evaluation of Board

MFLbeing a Government Company all appointments in the Board are made by the Governmentof India Ministry of Chemicals and Fertilizers Department of Fertilizers. Theperformance of Directors are evaluated by the Ministry of Chemicals & FertilizersDepartment of Fertilizers Government of India. As per Government of India Ministry ofCorporate Affairs notification dated 5th June 2015 clause (e) and (p) of sub-section 3 ofSection 134 of Companies Act 2013 relating to appointment remuneration and Annualevaluation of Board on its performance are not applicable to MFL. However the company isevaluating the performance of its Directors as per the guidelines issued by SEBI.

Meeting of the Board

During the year 2018-19 seven meetings of Board were convened and held. The details ofthe meetings of the Board of Directors are given in the report on Corporate Governancewhich is part of this report. The intervening gap between the meetings was within theperiod prescribed under the Companies Act 2013.

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 Rs 5 lacs per month.

Directors' Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors hereby statethat

a) in the preparation of the annual accounts for the year ended March 31 2019 theapplicable accounting standards (Ind AS) had been followed along with proper explanationrelating to material departures.

b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the company for that year;

c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

d) the directors have prepared the annual accounts on a going concern basis.

e) the directors have laid down internal financial control to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Prevention of Sexual Harassment

Disclosures in relation to the Sexual Harassment of Women at workplace (PreventionProhibition and Redressal) Act 2013 have been provided in the Report on CorporateGovernance report.

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.

Management Discussion and Analysis Report

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

Corporate Governance

The Company is committed to maintain the highest standard of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The Board lays emphasison transparency and accountability for the benefit of all stakeholders of the Company. TheReport on Corporate Governance as stipulated under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 has been enclosed as Annexure – IIIforming part of the 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 - IV forming part of this report.

Extract of Annual Return

As provided under Section 92 (3) of the Act the details of extract of the AnnualReturn in form MGT 9 is enclosed as Annexure V forming part of this report.

Auditors

a) The Comptroller & Auditor General of India have appointed M/s J V Ramanujam& Co. (MD0377) Chartered Accountants Chennai as Statutory Auditors of the Companyfor the year 2019-20.

b) Smt Aruna Prasad Cost Accountant has been reappointed as Cost Auditor of theCompany for the year 2019-20.

c) In terms of the provisions of Section 204 of the Companies Act 2013 and Rulesframed thereunder 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 306th meeting held on May 27 2019 has appointed Mr. V Esaki (CPNo.11022) Practicing Company Secretary as the Secretarial Auditor of your Company. TheSecretarial Auditors' Report (Form No.MR-3) for the year 2018-19 is enclosed as Annexure– VI forming part of this report. Further in terms of SEBI LODR RegulationsSecretarial Compliance Report has also been obtained from Mr V Esaki (CP No.11022) for theyear 2018-19.

Audit Committee

In line with the provisions of Section 177 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 an Audit Committee of the Boardhas been constituted. Details of Members/ Meetings of the Audit Committee are elaboratedin the report on Corporate Governance. The Board has accepted all recommendations of AuditCommittee.

Public Deposit

During the financial year 2018-19 the Company has not accepted any deposit frompublic. However as on 31.3.2019 Rs 266176/- is lying in unclaimed matured fixeddeposit account.

Contract or arrangement with Related Parties

The transactions entered with related parties for the year under review were on armslength basis and in the ordinary course of business. The disclosure in Form No.AOC-2for the transactions with related parties during the period under review is enclosed as Annexure- VII of the report.

Corporate Social Responsibility (CSR)

The Company has constituted "Corporate Social Responsibility Committee"comprising of three independent directors. The Committee monitors CSR activities. TheCompany has carried out the following CSR activities during the financial year 2018-19:

• Amount Rs 50000/- has been spent for distribution of artificial limbs to thephysically challenged persons by Non-official Director Smt. Vanathi Srinivasan on03.04.2018 through an NGO named "SAKSHAM"

• An amount of Rs 136000/- was spent in organizing Farmers Seminar inCoordination with Coconut Development Board in Pollachi Coimbatore District on 04.12.2018for creating awareness about Government of India Crop Insurance Scheme and e-NAM (NationalAgriculture Market Online Trading Platform).

• A sum of Rs 544000/- was spent for supplying wholesome drinking water throughpipeline to the neighbouring village Harikrishnapuram in Manali town during the periodApril – December 2018.

• A sum of Rs 150000/- was spent on 21.11.2018 for Gaja Cyclone Relief inThiruvottiyur.

• An amount of Rs 200000/- has been spent for distribution of Students aidmaterials in primary schools in Manali on 29.03.2019.

The details are contained in the Annual Report on CSR activities is enclosed as Annexure– VIII forming part of this report.

Material changes and commitments

There were no material changes and commitments affecting the financial position of thecompany between the end of financial year (March 31 2019) and the date of the report.

CEO/CFO Certification

As required by Regulation 17(8) of the SEBI Regulation a Certificate on the FinancialStatements and Cash Flow Statement of the Company for the year ended March 31 2019 dulysigned by the Chairman & Managing Director and General Manager (Finance &Accounts) & Company Secretary was submitted to the Board of Directors at their meetingheld on May 27 2019 is enclosed as Annexure – IX forming part of this report.

Vigil Mechanism

MFLis having vigil mechanism for directors and employees to report their concerns. TheDirectors and employees can approach Chairman Audit Committee of the Board directly andreport their concern in appropriate case. The vigil mechanism and whistle blower policy ispublished in the website of the Company www.madrasfert.co.in.

Prevention of Insider Trading

No instances of insider trading have been reported on MFLshares till date. None of thedirectors and key managerial personnel is holding any shares in MFL. A code of conduct ofprevention of insider trading and code for corporate disclosure is published in thewebsite of the Company www.madrasfert.co.in.

APPRECIATION

Your Directors wholeheartedly place on record their appreciation for the continued andunstinted support of Department of Fertilizers Government of India Government ofTamilnadu NICO Financial Institutions Banks Depositors and all stakeholders during theyear. It is most appropriate to mention that the Directors convey their gratitude to theDepartment of Fertilizers for settlement of subsidy bills on priority basis and to thedealers and farmers for their sustained support to Vijay products. Last but not the leastthat your Directors also place on record their appreciation for the dedication commitmentand sincere services rendered by the employees for sustained improvements.

By order of the Board
Chennai U Saravanan
Aug 14 2019 Chairman & Managing Director