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Nagarjuna Fertilizers & Chemicals Ltd.

BSE: 539917 Sector: Agri and agri inputs
NSE: NAGAFERT ISIN Code: INE454M01024
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OPEN 4.14
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VOLUME 24572
52-Week high 7.69
52-Week low 2.56
P/E
Mkt Cap.(Rs cr) 248
Buy Price 4.14
Buy Qty 30057.00
Sell Price 3.95
Sell Qty 40.00

Nagarjuna Fertilizers & Chemicals Ltd. (NAGAFERT) - Director Report

Company director report

Dear Members

Your Directors present the Twelfth Annual Report on the business and operations ofNAGARJUNA FERTILIZERS AND CHEMICALS LIMITED ("NFCL" / "the Company")together with the Audited Financial Statements of your Company for the year ended

March 31 2018 and other accompanying reports notes and certificates.

A. BUSINESS AND FINANCIAL HIGHLIGHTS

The Company adopted Indian Accounting Standards ("Ind AS") from April 12016 with transition date from April 1 2015. Accordingly the financial reports forcurrent financial year 2017-18 and previous financial year 2016-17 have been prepared asper Ind

AS reporting framework. The Financial Results and the Consolidated Financial Results ofthe Company for the year ended March 31 2018 are as under:

Financial Results Rs. in Crores
2017 – 2018 2016 – 2017
Particulars
Current year Previous year
Net Sales/Income from 3923.68 3385.07
Operations
Other Income 44.97 35.27
Total Expenditure
a. Changes in inventories of finished goods stock-in- trade and work in progress 66.05 13.10
b. Cost of materials con- sumed 1381.46 1164.58
c. Employee Benefits ex - pense 173.50 154.52
d. Purchase of Stock-in-Trade 458.54 461.56
e. Power and Fuel 1002.43 840.68
f. Excise duty 2.28 8.79
g. Other expenses 513.44 521.09
Total 3597.70 3164.32
Finance cost 308.21 324.90
Depreciation and amortiza- tion 89.28 89.20
Profit/ (Loss) before excep - tional items and tax (26.54) (158.08)
Exceptional Items - -
Profit/(Loss) before tax (26.54) (158.08)
Provision for tax 0.57 (6.29)
Deferred tax (5.59) (30.02)
Profit / (Loss) after tax (21.52) (121.77)
Other Comprehensive income (net of tax) 2.41 0.30
Total Comprehensive income (19.11) (121.47)
Dividend – equity shares - -
Tax on proposed dividend - -
Balance c/d to Balance Sheet (19.11) (121.47)
Paid Up equity share capital (Face value of Re.1/- per share) 59.81 59.81
Reserves excluding revalua- tion reserve 1013.47 1032.57
Earnings per share (annualized) – in Rs. - -
Basic and Diluted (0.36) (2.04)

 

Consolidated Financial Results Rs. in Crores
2017 – 2018 2016 – 2017
Particulars
Current year Previous year
Net sales/income from operations 3923.68 3385.07
Other income 44.98 35.28
Total expenditure
a. Changes in inventories of finished goods stock-in- trade and work in progress 66.05 13.10
b. Cost of materials consumed 1381.46 1164.58
c. Employee Benefits expense 173.52 154.54
d. Purchase of Stock-in-Trade 458.54 461.56
e. Power and Fuel 1002.43 840.68
f. Excise Duty 2.28 8.79
g. Other expenses 513.45 521.09
Total 3597.73 3164.34
Finance cost 308.21 324.90
Depreciation and amortization 89.28 89.21
Profit/ (Loss) before exceptional items and tax (26.56) (158.10)
Exceptional Items - -
Profit/ (Loss) before tax (26.56) (158.10)
Provision for tax 0.57 (6.29)
Deferred tax (5.59) (30.02)
Profit / (loss) after tax before mi - nority interest (21.54) (121.79)
Share of Loss transferred to Mi- nority Interest 0.00 0.00
Share of Loss from Associate Company - -
Profit / (Loss) for the year (21.54) (121.79)
Other Comprehensive income (net of tax) 2.41 0.30
Total Comprehensive income (19.12) (121.49)
Dividend-equity shares - -
Tax on proposed dividend - -
Balance c/d to Balance Sheet (19.12) (121.49)
Paid-up equity share capital 59.81 59.81
(Face value of Re.1/- per share)
Reserves excluding revaluation reserve 1013.41 1032.54
Earnings per share (annualized) - -
– in Rs.
Basic and Diluted (0.36) (2.04)

Indian Accounting Standards (Ind AS)

The Ministry of Corporate Affairs (MCA) vide its Notification dated February 16 2015has made the application of the Companies (Indian Accounting Standards) Rules 2015(Ind-AS Rules) effective for certain categories of companies from accounting periodsbeginning on or after April 01 2016.

The audited financial statements of the Company drawn up both on standalone andconsolidated basis for the financial year ended March 31 2018 are in accordance with therequirements of the Ind-AS Rules. Figures for the previous year have also been re-statedin line with the requirements of the above Rules.

In the preparation of financial statements for FY2018 there is no treatment of anytransaction which is different from that prescribed in the Indian Accounting Standards(Ind AS) notified by the Government of India under section 133 of the

Companies Act 2013 read with rule 7 of the Companies (Accounts) Rules 2014 and theCompanies (Indian Accounting Standards) Rules 2015 as amended from time to time theguidelines issued by SEBI and other accounting principles generally accepted in India.

Financial Summary

The loss after tax for the year was Rs.21.52 Crore as against Rs.121.77 Crore for theprevious year. The Company reduced losses during the current year on account of higherproduction of manufactured urea due to adequate supply of Natural Gas by the suppliersresulting in higher contribution and energy incentives. Further higher other income andreduction in under recovery of transport costs are also contributed to reduction oflosses.

Share Capital

The Paid-up Equity Capital of the Company as on March 31 2018 is Rs.598065003/-consisting of 598065003 Equity Shares of Re.1/- each. All Equity Shares issued by thecompany carry equal voting rights. During the financial year ended

March 31 2018 the company has not raised any money from public issues right issuespreferential issues etc.

During the year under review the company has not issued shares with differentialvoting rights nor granted stock options or sweat equity. No disclosure is required underSection 67(3) (c) of the Companies Act 2013 in respect of voting rights not exerciseddirectly by the employees of the Company as the provisions of the said Section are notapplicable to the Company.

Transfer to Reserves

There has been no transfer to General Reserves during the Financial Year 2017-18 inview of losses incurred by the Company.

Dividend

Considering the operating performance for the financial year ended on March 31 2018your Directors do not recommend any dividend for the year.

Plant Operations Urea

Your Company during the year manufactured 15.90 LMT of urea as against 14.98 LMT in theprevious year.

Micro-Irrigation

Your Company achieved a production of 1271 Lakh Mtrs against 1236 Lakh Mtrs during theprevious year.

MARKETING Urea

Your Company achieved a sale of manufactured urea of 16 LMT compared to15.27 LMT in theprevious year.

The total urea sales for both manufactured and imported urea was 20.83 LMT compared to18.91 LMT of previous year.

Other Traded Products Traded Bulk Products

Your Company could not sell any of the Traded Bulk Products during the year incomparison with sales of 29675 MT during the previous year.

Specialty Fertilizers

Your Company sold 20847 MT of Specialty Fertilizer during the year in comparison withsales of 19127 MT during the previous year.

Micro-nutrients

Your Company sold 5391 MT of Micro-nutrients during the year in comparison with salesof 5547 MT during the previous year.

Supplements

Your Company sold 28805 MT of Supplements during the year in comparison with sales of26162 MT during the previous year.

Customized Fertilizers

Your Company sold 18625 MT of Customized Fertilizers during the year in comparison withsales of 18368 MT during the previous year.

Environment and Safety Environment

Your Company continues its mission of protecting the environment and has inculcated theconcept right down the organization. The statutory compliance on environmental matters isbeing complied from time to time.

Health &Safety

By following the best practices and with adoption of international standards andprocedures Plant Operations continued without any accident during the year. Your Companyas on March 31 2018 completed 12624145 accident free man-hours by employees andcontractors of the Company.

Further to strengthen the procedures and practices MAH inspection at Ammonia StorageTanks and Cooling Towers Area Safe Work Practices Audit PPE Audit etc. were conducted.Refresher Training has been given to Rescue Squad and basic Fire Fighting techniques toAssociates.

Kakinada Maintenance Scheme

The Company is taking necessary steps in relation to the revised Energy Norms andTarget set by Department of Fertilizers (5.50 Gcal/MT Urea from 2020-21 onwards).

Research and Development

The Company's Research and Development is actively pursuing development of cutting edgetechnologies to propel core business and commercialize new and allied business. The focusareas for technology development are in the areas of Plant Nutrition Green ChemicalsNutraceuticals and Renewable fuels. In each area Company has made substantial progress.The new products and processes will provide a sustainable competitive advantage to theCompany. All the technology developed shall be protected through robust IP network.

Change in the nature of business

During the year there was no change in the nature of business of the company.

Subsidiaries Joint Ventures or Associate Companies

During the year under review the company has only one subsidiary viz. JaiprakashEngineering And Steel Company Limited (A company incorporated under Companies Act 1956bearing CIN U00337KA1993PLC014694 having its Registered Office at 510 3RD A Cross 2 ndMain3rdBlock Rajmahal Vilas-II Dollars Colony Bangalore-560094 Karnataka.The company has two Associate Companies viz. Nagarjuna Agricultural Research AndDevelopment Institute Private Limited (A company incorporated under Companies Act 1956bearing CIN U29100TG1995NPL022409 and having its registered office at Nagarjuna HillsPanjagutta Hyderabad

500082 Telangana) and K V K Raju International Leadership Private Limited (A companyincorporated under Companies Act 1956 bearing CIN U51100TG1995PLC022410 and having itsregistered office at Nagarjuna Hills Panjagutta Hyder -abad – 500082 Telangana).The Associate companies have ceased to be Section 8 (Section 25 under Companies Act 1956)Company's during the year under review.

There is no change in the status of subsidiaries or associates companies during theyear under review. There is no material fact that requires mention on the performance andfinancial position of the Associate Companies.

Accounts of Subsidiaries

Consolidated financial statements incorporating the accounts of the Subsidiary Companyare enclosed along with the financial statements of the Company. Jaiprakash EngineeringAnd Steel Company Limited is not a material subsidiary whose income or net worth in theimmediately preceding accounting year exceeds 20% of the consolidated income or net worthrespectively of the Company and its subsidiaries as per the thresholds laid down under theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as "Listing Regulations").

Statement containing salient features of the financial statement of Subsidiary /Associate Companies appears as Annexure I to this Report.

There is no material fact that requires mention on the performance and financialposition of the Jaiprakash Engineering and Steel Company Limited as the subsidiary isconsidering implementing various projects to utilize the available land appropriately andgainfully.

The Financial Statements of the Subsidiaries Associates and Joint Venture Companiesare available for inspection by the

Members at the Registered Office of the Company pursuant to the provisions of Section136 of the Companies Act 2013.

The Company shall provide free of cost a copy of the financial statements of itssubsidiary companies to the Members upon request. The statements of the subsidiariescompanies are also available on the website of the Company at http://www.nagarjunafertilizers.com/investor.htm.

Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of the financial statements of each of the Subsidiaries AssociatesCompanies in the prescribed Form AOC-1 is attached as Annexure I.

Material changes and commitments

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the Financial Year of the Company to whichthe financial statements relate up to the date of this Report.

B. DIRECTORS BOARD COMMITTEES KEY MANAGE RIAL PERSONNEL AND REMUNERATION

The assessment and appointment of members to the Board is based on a combination ofcriterion that includes ethics personal and professional stature domain expertisegender diversity and specific qualification required for the position. A potential boardmember is also assessed on the basis of independence criteria defined in Section 149 ofthe Act and Listing

Regulations.

Directors and Key Managerial Personnel

During the year following changes took place in the Board of Directors and the KeyManagerial Personnel: a) Mr. Chintapalli Srinivasu Chief General Manager IDBI Limitedhas joined the Board as Nominee Director of IDBI Limited with effect from November 072017 in place of Mr. Shailendra Govind Nadkarni.b) b) Mr. S R Ramakrishnan resigned fromthe Board with effect from October 23 2017 c) Capt. Hariharan Ramanathan has beenappointed by the Board as Independent Director with effect from January 20 2018. d)Consequent to retirement of Mr. Sudhir Bhansali as Chief

Financial Officer the Board of Directors appointed Mr. H Muralidhar as Chief FinancialOfficer / Key Managerial

Personnel with effect from September 1 2017.

The following changes took place in the Board of Directors and the Key ManagerialPersonnel post March 31 2018 till the date of report: a) Mr. D Ranga Raju IndependentDirector ceased to be director with effect from May 27 2018. b) The ICICI Bank Limitedwithdrew Mr. Anilkumar Rad-hakrishna Pullattu as Nominee Director on the Board of theCompany with effect from April 16 2018 and has appointed Mr. Ramana Reddy Deputy GeneralManager as Nominee Observer. c) Mr. M Ramakanth Company Secretary has been relived fromthe services of the company with effect from April

30 2018 upon retirement and the Board of Directors at the meeting held on May 25 2018accorded their approval for the appointment of Mr. K Chandra Sekhar Naidu as CompanySecretary / Key Managerial Personnel and

Compliance Officer. d) Mr. O. Ramesh Babu Nominee Director has been withdrawn from theBoard of Directors of the Company with effect from July 17 2018.

The Board placed on record its appreciation for the invaluable contribution made by Mr.D. Ranga Raju Mr. S R Ramakrish-nan Mr. Shailendra Govind Nadkarni and Mr. P R AnilKumar during their tenure as Directors on the Board. The Board also placed on record theappreciation for the invaluable services rendered by Mr. Sudhir Bhansali and Mr. MRamakanth. In terms of the provisions of Section 152 of the Companies Act 2013 andArticles of Association of the company Mr. Chandra Pal Singh Yadav retires at theforthcoming Annual General Meeting and being eligible offers himself for reappointment.The Board of Directors recommend the reappointment of Mr. Chandra Pal Singh Yadav asdirector liable to retire by rotation for consideration of the Members.

Independent Directors

During the year under review Capt. Hariharan Ramanathan has been appointed by the Boardas Independent Director with effect from January 20 2018.

In accordance with Section 149 152 and Schedule IV read with relevant Rules of theCompanies Act 2013 Capt. Hari-haran Ramanathan subject to approval of shareholders ofthe company was appointed as Independent Director by the Board on January 20 2018. TheBoard of Directors recommend for approval of shareholders the appointment of Capt.Hariharan Ramanathan as Independent Director of the Company not liable to retire byrotation upto the conclusion of Seventeenth Annual General Meeting pursuant to theprovisions of Section 149 of the Companies Act 2013 and Listing Regulations. A briefresume nature of expertise details of other directorships and other information of Capt.Hariharan Ramanathan Independent Director as stipulated in Secretarial Standard II issuedby Institute of Company Secretaries of India and Regulation 36 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is appended as an annexure tothe notice of the ensuing Annual General Meeting.

Mr. D Ranga Raju Independent Director has vacated his of-

. fice with

Declaration by Independent Directors

The Independent Directors have submitted their declaration to the Board that theyfulfill all the requirements of independence so as to qualify as an Independent Directorunder Section 149(6) of the Companies Act 2013 as well as Regulation 25 of ListingRegulations.

Executive Directors

The Shareholders of the Company at their Annual General Meeting held on September 262017 considered and accorded their approval to the appointment of Mr. K S Raju Chairman /whole Time Director and Mr. K Rahul Raju Managing Director for a term of three years witheffect from August 1 2017. There is no change in status of Executive Directors during theyear under review.

The details of Directors being recommended for appointment or re-appointment pursuantto Regulation 36(3) of the Listing Regulations is appended as an annexure to the notice ofthe ensuing Annual General Meeting.

Key Managerial Personnel

The following are the Key Managerial Personnel of the Company as defined under Sections2(51) 203 of the Companies

Act 2013 read with The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as on date of this report: a) Mr. K. Rahul Raju Managing Directorb) Mr. H Muralidhar as Chief Financial Officer (w.e.f. Septem -ber 1 2017) c) Mr. KChandra Sekhar Naidu Company Secretary (w.e.f. May 25 2018)

Meetings of the Board

The Board of Directors of the Company had met four times during the year on May 262017 August 9 2017 November 8 2017 and February 9 2018.

Remuneration and other particulars of the Directors/ Key

Managerial Personnel/ Employees

The information relating to remuneration and other particulars of the Directors / KeyManagerial Personnel / Employees as required under Section 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 appears as

Annexure – II(a). Personnel

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 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said Rules appearsas Annexure – II (b).

Familiarization Programme and Performance Evaluation

Details of the Familiarization Programme and Performance Evaluation are incorporated inthe Corporate Governance Report.

Remuneration Policy

The salient features of the policy on director's appointment and remunerationincluding criteria for determining qualifications positive attributes independence of adirector and other matters provided under Section 178(3) of the Companies Act 2013adopted by the Board is appended as Annexure VII to the Board's report. We affirmthat the remuneration paid to the directors is as per the terms laid out in the nominationand remuneration policy of the Company. The Nomination and Remuneration Policy may beaccessed on the Company's web-site at the link: www.nagarjunafertilizers.com/investor.htm.

COMMITTEES Audit Committee

The Audit Committee of the Board of Directors is in compliance with the provisions ofSection 177 of the Companies Act 2013 and Regulation 18 of Listing Regulations. The termsof reference are in compliance with the provisions of the Law.

The Chairman of the Committee is Dr. N C B Nath an Independent Director and theCommittee consists of three Independent Directors one nominee director and one Whole TimeDirector. The Board has accepted all the recommendation made by the Audit Committee.

The Committee meets periodically to review the internal audit report quarterlyfinancial statements and annual financial statements and recommends its findings to theBoard apart from taking action independently whenever required. The Statutory Auditorsthe Internal Auditor Cost Auditors attend and participate in the Audit CommitteeMeetings.

The Audit Committee comprises of
Chairman and Independent
Dr. N C B Nath
Director
Mr. S R Ramakrish- nan* Member and Independent Direc- tor
Mrs. Lalitha Raghuram Member and Independent Direc- tor
Mr. C B Mouli Member and Independent Direc- tor
Mr. K S Raju Member and Chairman
Mr. Syed Shahabuddin Member and Nominee Director

* Ceased to be a Member with effect from October 23 2017

Nomination and Remuneration Committee

The Nomination and Remuneration Committee was constituted with effect from April 222014 in compliance with the provisions of the Companies Act 2013 and Regulation 19 ofListing Regulations.

The Company has adopted a Nomination and Remuneration Policy with effect from October1 2014 for determining inter-alia qualifications positive attributes and independenceof a

Director matters relating to the remuneration appointment removal and evaluation ofperformance of the Directors Key Managerial Personnel Senior Management and otheremployees.

The Nomination and Remuneration Committee comprises of:

Chairman and Independent
Dr. N C B Nath
Director
Member and Independent
Mr. S R Ramakrishnan *
Director
Member and Independent
Mrs. Lalitha Raghuram
Director
Member and Whole Time
Mr. K S Raju
Director
Mr. Srinivasu Chintapalli@ Member and Nominee Director

* Ceased as a Member with effect from October 23 2017

@ Inducted as Member with effect from November 07 2017.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee was constituted with effect from April 22 2014in compliance with the provisions of the Companies Act 2013 and Regulation 20 of Listing

Regulations. The Committee reviews and ensures redressal of investors grievances.

The Stakeholders Relationship Committee comprises of:

Chairman and Independent
Dr. N C B Nath
Director
Mr. Srinivasu Chintapalli@ Member and Nominee Director
Mr. S G Nadkarni * Member and Nominee Director

* Ceased as a Member with effect from November 07 2017.

@ Inducted as Member with effect from November 07 2017.

Corporate Social Responsibility (CSR) Committee

The CSR Committee comprises of four members of which one is an Independent Director.The Chairman of the Committee is an Independent Director.

The details as to number of meetings the attendance thereat the terms of reference ofCommittee of the Board are given in Corporate Governance Report.

C. DISCLOSURES

Company Policy Matters

Your Company's endeavor has always been to maintain transparency and accountability toits stakeholders. In this direction various policies mentioned in the CorporateGovernance Report have been implemented to enable the stakeholders to appreciate thevarious interventions the Company has taken. The implementation of these policies arereviewed periodically by the Board of Directors and updated regularly. The Company has setup a Grievance Redressal Mechanism for all its associates. The Grievance RedressalMechanism is aimed to redress the grievances of associates expeditiously to ensure goodworking atmosphere and culture in the organization.

The Company has drawn-up Policy on Bio-diversity Gift Policy Health Safety andEnvironment Policy and Human Rights Policy.

Risk Management Policy

Even though Regulation 21 of Listing Regulations is not applicable to the Company theBoard of Directors of the Company as a Good Governance practice constituted a RiskManagement Committee of the Board which frames implements and monitors Risk ManagementPlan of the Company and lays down procedures to inform the Board of the risk assessmentand risk minimization procedures in the Company.

The Company has an Enterprise Risk Management (ERM) System set up as required by theListing Regulations.

As per the Risk Management System (RMS) the risks of the

Company are being regularly identified/assessed and documented by way of individualprofiles and risk registers. The

Company is also maintaining web based risk management application by eachdepartment/division at Plant as well as

Corporate Office to manage and control the risk in structured manner.

The Risk Management Organization Structure consists of Risk Management SteeringCommittee (RMSC) at apex level and at divisional level Corporate Risk ManagementCommittee (CRMC) and Plant Risk Management Committee (PRMC) were formed to facilitatemonitoring and governance of the

ERM process under the purview of Chief Risk Officer on an ongoing basis. Periodicalmeetings of the CRMC and PRMC are being held wherein the critical cautionary andacceptable risks are presented by the departments through web based RMS application.During such presentations various cross-functional deliberations take place on thecontributing factors and the control measures to mitigate the risks. The outcome of CRMCand PRMC deliberations and the analysis of risks are presented to RMSC on a quarterlybasis.

The Chief Risk Officer of the Company and the Compliance Officer attend all themeetings of the Risk Management Committee.

Policy on Board Evaluation

The Policy on Board Evaluation was adopted with effect from October 1 2014 by theBoard of Directors in compliance of Companies Act 2013 and Listing Regulations.

The purpose of the policy is to assess the effectiveness of the Board as a wholeCommittees of Board and Individual Directors on regular basis and to take necessary stepsfor improving the effectiveness of the Board.

The Nomination and Remuneration Committee has devised the methodology identifiedsample tools for evaluation and also laid down the parameters for evaluation ofIndependent Directors Chairman Managing Director and Committees of the Board and theBoard.

The Nomination and Remuneration Committee based on the responses received fromDirectors evaluated the Directors and conveyed the opinion of the Committee to the Boardat the meeting held on July 26 2018.

In view of the evaluation not linked to payment of remuneration as the Company hasopted only for payment of sitting fees the evaluation has no financial implications onthe Company.

Whistle Blower Policy/Vigil Mechanism

The Company formulated the policy in compliance with Regulation 22 of ListingRegulations and Section 177(9) of the Companies Act 2013. The Policy aims to prohibitmanagerial personnel from taking adverse personnel action against employees disclosing ingood faith alleged wrongful conduct on matters of public concern involving violation ofany law mismanagement and misappropriation of public funds among others.

Employees / associates aware of any alleged wrongful conduct are encouraged to make adisclosure to the Audit Committee. The Audit Committee periodically reviews the existenceand functioning of the mechanism. No personnel of the Company have been denied access tothe Audit Committee. The above mechanism has been appropriately communicated within theCompany across all levels and has been displayed on the Company's website. Web link forthe same is www. nagarjunafertilizers.com/investor.htm

Corporate Social Responsibility (CSR)

The Company has in place a CSR Policy in line with Schedule VII of the Companies Act2013. The CSR Policy may be accessed on the Company's website at the link: http://www.nagarjunafertilizers.com/investor.htm.The Company has always desired to play a proactiverole in societal development with an intention to bring positive change in the lives ofmany. An initiative started in 2009 with the spirit of making a difference has todaydeepened its roots and is making a bigger impact and changing many more lives. Thededicated support strength initiative and encouragement from the associates of the Groupto be part of this initiative gave impetus to the movement.

During the year under review the Company was not required to spend any amount on CSRas it did not have any profits.

The Company under the aegis of Nagarjuna Foundation started several CSR activities andcontinues to support the initiatives. Your Company during the year has spent Rs.69 Lakhtowards CSR activities. The details of such activities carried out with the support ofNagarjuna Foundation signed by Managing Director and Chairman of CSR Committee appears asAnnexure- III to this Report.

Your Company made contribution in areas of education sports healthcare and communitywelfare under the aegis of Nagarjuna Foundation and during the year proposes tocollaborate with various leading organizations charitable and other funds or trusts.

Corporate Governance

Your Company driven by a desire to be more competitive and recognized globally hadinculcated more than a decade ago rules defining ethical business much before it wasintroduced as statutory compliance.

Your Company firmly believes that building a culture of com -pliance is more thanmeeting regulations and standards. Your Company has always proactively met mandatedstandards and practiced Corporate Governance in spirit and not just as letter of the law.

The goal of the Company in the area of Corporate Governance is to ensure fairness forevery stakeholder; the company believes best practice Corporate Governance is critical toenhance and retain investor trust and to perform with integrity. The Annual Reportcontains a separate section on the Company's corporate governance practices together witha certificate from M/s. KBG Associates Practicing Company Secretaries on compliance withconditions of Corporate Governance as stipulated under Listing Regulations.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed report on the Management Discussion and Analysis in terms of the provisionsof Regulation 34 of the Listing Regulations is provided as a separate section in theAnnual Report.

Related Party Transaction

All related party transactions done by the Company during the financial year were atarm's length and in ordinary course of business. During the financial year your Companyhas not entered into any material transaction as per the Listing Regulations with any ofits related parties which may have potential conflict with the interest of the Company atlarge.

Disclosures pursuant to Accounting Standards on related party transactions have beenmade in the notes to the Financial Statements (refer Note 37). All related partytransactions are placed before the Audit Committee and the Board for review and approvalas appropriate. To identify and monitor significant related party transactions theCompany has also framed a Policy on the Related Party Transactions and the same isavailable on the Company's website. Web link for the same ishttp://www.nagarjunafertilizers.com/investor.htm All the related party transactionsentered during the year were in Ordinary Course of the Business and on Arm's Lengthbusiness and hence disclosure under section 134(3)(h) in Form AOC-2 of the Companies Act2013 is not applicable.

Particulars of loans guarantees or investments

Particulars of loans guarantees and investments under Section 186 of the Act as at theend of the Financial Year 2017-18 are provided in the Notes forming part of the financialstatements for the year ended March 31 2018 (refer Note No. 46).

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

Disclosure in terms of Section 134(3)(m) read with Rule 8(3) of The Companies(Accounts) Rules 2014 in respect of conservation of energy technology absorptionearnings and outgo of foreign exchange is attached as Annexure-IV to this Report.

Extract of Annual Return

Details forming part of the extract of the Annual Return in Form MGT 9 is enclosed as AnnexureV.

Compliance with Secretarial Standards

The Board of Directors affirms that the Company has complied with the applicableSecretarial Standards issued by the Institute of Companies Secretaries of India relatingto Meetings of the Board and its Committees and the General Meetings which have mandatoryapplication during the year under review.

Significant or Courts or Tribunals impacting the going concern status and Company'soperations in future

There were no significant awards any Court or Judicial Authority against the companyduring the Financial Year 2017-18 impacting the going concern status and Company'soperations in future.

Adequacy of Internal Financial Controls with reference to Financial Statements

The Company maintains all its records in SAP system and the work flow and approvals arerouted through SAP.

The Company's Internal Auditors scrutinize on periodical basis and ensure that theinternal controls and the work flow of the organization are being done through theapproved policies of the Company. In every quarter the Internal Auditors present theInternal Audit Report and Management comments on the Internal Audit observations to theAudit Committee.

The Board of Directors of the Company have adopted various from the Peer Review Boardof the ICAI policies like the Related Party Transaction Whistle Blower

Policy etc. for ensuring the orderly and efficient conduct of its business forsafeguarding its assets prevention and detection of frauds and errors accuracy andcompleteness of accounting records and timely preparation of reliable financialinformation.

The Auditors in their Report of Internal Financial Controls (Annexure A to theIndependent Auditors' report) have opined that the Company has in all material respectsan adequate

Internal Financial Controls system over financial reporting and were operatinglyeffective as at March 31 2018 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.

Details in respect of frauds reported by Auditors other than those which are reportableto the Central Government

The Statutory Auditors Cost Auditors or Secretarial Auditors of the Company have notreported any frauds to the Audit Committee or to the Board of Directors under Section143(12) of the Companies Act 2013 including rules made thereunder.

Registrar and Share Transfer Agents

The Company has been functioning as Category II Share Transfer Agent (in-house)pursuant to the Securities and Exchange Board of India approval to the Company.

Deposits

The Company has not accepted any deposits falling under the ambit of Chapter V of theCompanies Act 2013 and the Rules framed thereunder during the year nor are there anyunpaid /unclaimed deposits at the end of the year. Accordingly no disclosure or reportingis required in respect of details relating to deposits.

Transfer of unpaid and unclaimed amounts to Investor Education and Protection Fund(IEPF)

Pursuant to the provisions of the Companies Act 2013 read with IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 as amended declared dividends whichremained unpaid or unclaimed for a period of seven years have been transferred by thecompany to the IEPF which has been es- that have been passed by tablished by the centralgovernment.

D. AUDITORS AND AUDIT REPORT STATUTORY AUDITORS

M/s. M Bhaskara Rao & Co. Chartered Accountants (Firm Registration No-000459S)Hyderabad the Company's auditors were appointed at the Eighth Annual General Meeting fora term of five years from the conclusion of Eighth Annual Gen -eral Meeting to theconclusion of Thirteenth Annual General

Meeting subject to ratification by the Members of the Com -pany every year.

M/s. M Bhaskara Rao & Co have signified their willingness to accept ratification oftheir appointment and have further con -firmed their eligibility under Section 141 of theCompanies Act

2013.The Company's Statutory Auditors have also furnished a certificate that they haveundergone the process of peer review. The Board of Directors in accordance with theprovisions of Section 139 of the Companies Act 2013 and Rules made thereunder recommendthe ratification of the appointment of

Statutory Auditors for the Financial Year 2018-19 for consideration of theshareholders.

The details of remuneration paid to Statutory Auditor's for

2017-18 are detailed in Notes forming part of the financial statements for the yearended March 31 2018.

Auditors Report

The Statutory Auditors' of the Company have invited attention to emphasis on the matterin relation to: a) Diminution in the value of investments made for the value of investmentin Jaiprakash Engineering and Steel Company Limited (JESCO). A subsidiary and its adequacybased on Management assessment. b) Recognizing income from urea operations includingreimbursement claims for additional fixed cost input escalation/de-escalation and forproduction beyond reassessed capacity based on prices and provisions applicable under

NPSIII Modified NPSIII pending notification of final under New Urea Policy 2015 andconsequential adjustments if any that may arise. c) Arbitration awards passed against theCompany for USD 15275688 GBP 1145630 and Rs.221.39 Lakhs.

Management Explanation to emphasis on the matter a) Emphasis of Matter given inNote (a) of the Auditor's Report on standalone financial statements read with Note 5.1 ofNotes forming part of the standalone financial statements for the year ended March 312018 are self-explanatory and do not call for any further comments b) Emphasis of Mattergiven in Note (b) of the Auditor's Report on standalone financial statements read withNote 25.1 of Notes forming part of the standalone financial statements for the year endedMarch 31 2018 are self-explanatory and do not call for any further comments. c) Emphasisof Matter given in Note (c) of the Auditor's Report on standalone financial statementsread with Note 36.1.1(b) of Notes forming part of the standalone financial statements forthe year ended March 31 2018 are self-explanatory and do not call for any furthercomments.

Cost Auditor

Pursuant to Section 148 of the Companies Act 2013 and the Rules made thereunder theCentral Government has directed that the cost accounts maintained by the Company beaudited by a Cost Auditor. The Board of Directors on the recommendation of the AuditCommittee at their meeting held on May 25 2018 accorded their approval to theappointment of M/s. Sagar & Associates as Cost Auditor and recommended for approvalof shareholders a remuneration of Rs.4 Lakh plus taxes as applicable and reimbursement ofout-of-pocket expenses for conducting the audit of cost records of the company for theFinancial Year 2018-19.

M/s. Sagar & Associates Cost Auditors have issued cost audit report for FinancialYear 2017-18 which does not contain any qualification reservation or adverse remark.

Secretarial Auditor & Secretarial Audit Report

The Board of Directors at their meeting held on May 25 2018 pursuant to the provisionsof Section 204 of the Companies Act 2013 have appointed Mr. C S S Krishna Partner M/s.KBG Associates Company Secretaries Hyderabad as the Secretarial Auditor of the Companyto undertake Secretarial Audit for the Financial Year 2018-19.The Secretarial Audit Reportfor the Financial Year 2017-18 appears as Annexure - VI to this Report which isself-explanatory.

Internal Audit

The Company has well established system of Internal Audit which carries out audit onRisk Management framework covering the gamut of financial marketing plant operations andservice functions.

The Company's Internal Audit function has obtained Quality

Management System (ISO 9001: 2000) certificate in Decem-ber 2006 and the same has beenconfirmed.

A Chief Internal Auditor of the Company has been appointed by the Board of Directorsin compliance with the Companies Act 2013 and Listing Regulations.

E. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) and 134(5) of the Companies Act 2013 your Directorshereby report that: (a) In the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures; (b) The Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; (d)The Directors had prepared the annual accounts on a going concern basis;

(e) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

(f) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

GREEN INITIATIVES

Electronic Copies of the Annual Report and the Notice of the Twelfth Annual GeneralMeeting are sent to all Members whose email addresses are registered with theCompany/depository participant(s). For Members who have not registered their emailaddresses physical copies of Annual Reports are sent in the permitted mode.

The Ministry of Corporate Affairs has taken a "Green Initiative in the CorporateGovernance" by allowing paperless compliances by companies and has issued circularstating that service of notice/documents including Annual Report can be sent by e-mail toits Members. Similarly the Securities and Exchange Board of India ("SEBI")encourages paperless communication. We fully support the Ministry's green initiative.Accordingly the Members who have not registered their e-mail addresses so far arerequested to register their e-mail addresses. Members who have electronic holdings mayregister through their concerned Depository Participants.

The Annual Report including the complete Balance Sheet

Statement of Profit & Loss other statements and notes thereto prepared as per therequirements set out in Schedule III to the Act and Indian Accounting Standards (Ind AS)will also be available at the Company's website http://www.nagarjunafer-tilizers.com(Investor's Desk section).

BUSINESS RESPONSIBILITY REPORTING

Fulfilment of environmental social and governance responsibility is an integral partof the way the Company conducts its business. The Listing Regulations mandates that theAnnual Report of top 500 listed entities based on market capitalization calculated as onMarch 31 of every financial year shall contain the Business Responsibility Reportdescribing the initiatives taken by them from an environmental social and governanceperspective. Even though the said Regulation of Listing Regulations is not applicableyour Company has voluntarily prepared a Business Responsibility Report.

As a green initiative a detailed information on the initiatives of the Company onSocial Environmental and Governance Perspectives in the prescribed format is available onthe Company`s websitehttp://www.nagarjunafertilizers.com.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act

2013

Your Company has in place Policy on Sexual Harassment at workplace in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013. An Internal Complaints Committee (ICC) has been set up toaddress complaints received regarding sexual harassment. All employees (permanentcontractual temporary trainees) are covered under this Policy. The following is asummary of sexual harassment complaints received and disposed of during the FY ended March31 2018: Number of complaints received: NIL

Number of complaints disposed of: NIL

INDUSTRIAL RELATIONS

During the year the industrial relations at all the works of the company were cordial.

ACKNOWLEDGEMENT

Your Directors place on record their gratitude to the Government of India Governmentof Andhra Pradesh Government of Telangana and the Financial Institutions and Company'sBankers for their assistance and cooperation.

Further the Company places on record its sincere appreciation for the continuingsupport and unstinting efforts of investors dealers and associates and all stakeholdersin ensuring an excellent all round operational performance.

CAUTIONARY STATEMENT

The Board's Report may contain certain statements that the Company believes are or maybe considered to be "forward looking statements" within the meaning ofapplicable securities law and regulations. All these forward looking statements aresubject to certain risks and uncertainties including but not limited to Governmentaction economic developments risks inherent to the Company's growth strategy and otherfactors that could cause the actual results to differ materially from those contemplatedby the relevant forward looking statements and the company is not obliged to update anysuch forwarding looking statements.