The year 2019-20 had been a dif cult year for the Global as well as Indian economywhich was further impacted due to CoVID-19 pandemic disrupting entire supply and demandsides.
However against this challenging backdrop Agriculture is one sector in Indian economywhich has largely been unaffected because of many factors primarily attributed to normalmonsoon preemptive actions undertaken by the Government to enable hassle free harvestingof Rabi crops sowing of Kharif crops and uninterrupted supply chain for movement &sale of farm harvests and uninterrupted availability of farm inputs such as SeedsFertilizers and Agro Chemicals etc.
I am pleased to share with you that during 2019-20 your Company has registered everbest sale of fertilizers to the tune of 57.04 LMT comprising of 36.08 LMT of own Urea11.85 LMT of imported Urea and 9.11 LMT of non-Urea Fertilizers. Your Company has achievedhigher sale by 16.51% as compared to previous year. Your Company's sale of fertilizers hadbeen more than sale of all the fertilizer PSUs put together for the 2nd consecutive year.The major thrust of the company in overall sale was due to signi cant increase in importbusiness and non-Urea business. Your Company has achieved total turnover of Rs 13135.36crore (increase of 6% over previous year). The sales turnover was higher over previousyear mainly due to increase in sale of Imported (Non-Urea) Fertilizers by 2.69 LMTincrease in sale of Imported Urea by 8.15 LMT increase in trading of domestic SSPFertilizers however it was partially offset by lower sale of own manufactured Urea by2.90 LMT decrease in Import Party Price and decrease in Gas prices. Your Company iscontinuously augmenting its business of producing and trading certi ed seeds under itsflagship Seeds Multiplication Program. In 2019-20 the Company has achieved the ever bestproduction & sale of certi ed seeds to the tune of 1.38 Lakh Quintals. Owing to highlyregulated and low margin Urea sector your company is consistently working on shifting itsstrategy. As a result the composition of gross sale of the Company has undergone visiblechange over the years. This year contribution of non-Urea business has increased to 31%as compared to 22% achieved last year. I am happy to share with you that as a long termstrategy your Company has been moving steadily to diversify its product line in order toincrease margins. With this objective' your Company has added more products duringthe year i.e. Water Soluble Fertilizers Calcium Nitrate & Single Super Phosphate(SSP) in its product basket.
During 2019-20 though your company has achieved record fertilizers sale operating prot of the company of Rs 80 crore has been on the lower side as compared to Rs 408 crore inprevious year mainly due to part mopping of energy norms with 5% penalty lower production& higher energy consumption at Vijaipur due to reactor problem increase in nancecharges and employee remuneration. Further due to retrospective withdrawal of theprovision of minimum xed cost by the government w.e.f. 02.04.2014 under NUP-2015 yourcompany has to reverse the xed cost subsidy income of Rs 388.85 crore which has led to aloss before tax of Rs 252.71 crore as compared to Pro t before Tax of Rs 463.37 crore ofprevious year. As you know your Company had maintained the momentum of the operationsduring lockdown triggered by CoVID-19 in close liaison with different government agenciesdespite disruption in supply chain. All the plants of the Company were kept operating withminimum required staff by following social distancing norm and other safety protocolsduring this lockdown period.
The progress of the ongoing energy reduction projects of installation of Gas TurbineGenerators along with Heat Recovery Steam Generation Units at Panipat Bathinda &Nangal Energy Reduction Scheme at Vijaipur-I&II also remain adversely affected due tooutbreak of CoVID-19 pandemic. The projects at Nangal Panipat and Bathinda Units are nowexpected to be completed in December 2020 while energy reduction schemes at Vijaipur Unitsare now expected to be completed by June 2021. Your Company has also taken up the matterwith the Government of India to provide suitable dispensation for the investment beingmade by the Company on these energy saving schemes. Owing to CoVID-19 pandemic thecommercial operation schedule of Ramagundam Joint Venture Urea project of your Company hasalso been affected due to delay in arrival of material shortage of labour at site anddelay in arrival of commissioning experts at site. The commercial production from RFCLproject is now expected to be commenced shortly. After commissioning of the project NFLwould be leveraging its existing marketing network to sell 100% Urea to be produced bythis JV Company as per Marketing arrangement agreed with RFCL. NFL has geared up itsmarketing teams and network in southern states for marketing of RFCL urea. NFL is alsoextending Manpower Management Consultancy to the Ramagundam Plant which includesrecruitment & training of RFCL employees.
In order to integrate and to bring transparency in various business processes yourCompany is in the process of implementing ERP based integrated Software solution which isscheduled to be implemented across the company by July 2021. Your Company is expanding itsSeed business vertical. The Company has already commissioned its two Seeds ProcessingUnits (SPUs) at Bathinda and Panipat during February 2020 and August 2020 respectivelywhile the third SPU is coming up at Indore in Madhya Pradesh. The Company would beprocessing seeds to be grown & harvested under its flagship Seed MultiplicationProgram which was otherwise being processed through outsourcing to third party. The totalseeds processing capacity of the Company after commissioning of all the 3 plants would be1.20 Lakh quintals per annum. I am pleased to inform that your company has also obtainedNABL accreditation for its laboratory at Panipat Unit which will help the company toimprove its testing standards and making the laboratory self-sustaining.
In order to promote appropriate use of fertilizers and to bene t farmers your Companyhas strengthened its Soil Testing facility. The Company has recently launched ve newMobile Soil Testing Labs for testing the soil samples for Macro & Micro Nutrients atthe doorstep of farmers free of cost. Other than the Mobile Soil Testing Labs the Companyis also serving farming community through six Static Soil Testing Labs located indifferent parts of country. All these Labs tested around 25000 soil samples free of costin the year 2019-20.
Your Company is implementing various development activities under its Corporate SocialResponsibility (CSR). During the year 2019-20 the focus of activities was on HealthSchool Education and Nutrition. The Company incurred an expenditure of Rs 574.56 Lakhduring the year. The Company continued taking up wide range of welfare activities indifferent areas like Sanitation Solar lights & Solar Panels Environment etc. TheCompany also supported
Government of India and State Government in Disaster Management by contributing andtaking different initiatives in the relief work for CoVID-19 pandemic Punjab FloodsCyclone "Fani" and flood affected Assam. Your Company contributed Rs 1.56 Croretowards PMCARES Fund to support Government efforts to combat CoVID-19 pandemic. Thisincluded contribution of one day's salary by NFL employees towards PMCARES Fund amountingto Rs 92.00 Lakh and contribution of Rs 64.00 Lakh from CSR funds. In addition to thisduring the year your company contributed an amount of Rs 1.5 Crore for flood affectedpeople of Assam. NFL's contribution included one day's salary of employees alongwith asizeable contribution by the company. The philosophy of your Company on CorporateGovernance is to ensure transparency disclosures and reporting that conforms fully withthe laws and regulations of the country in order to promote ethical conduct &practices throughout the organization for enhancing stakeholder's value. Your Company iscommitted to comply with the provisions of SEBI (Listing Obligations & DisclosuresRequirements) Regulations 2015 relating to Corporate Governance and the guidelines onCorporate Governance for Central Public Sector Enterprises issued by Department of PublicEnterprises Government of India.
As we continue our eventful journey I express my gratitude for your continued supportand faith in our endeavours. I also take this opportunity to sincerely thank and laud mycolleagues on the Board of Directors for their valuable guidance and support in runningthe affairs of the Company. I also wish to express my thanks to the Department ofFertilizers (Ministry of Chemicals and Fertilizers) Fertilizer Industry CoordinationCommittee (FICC) Railways other Ministries and Departments of the Government of Indiaand the various State Governments for their valuable guidance and look forward to theircontinued support.
I would like to thank Statutory Secretarial Cost and Government Auditors BanksRegulatory Authorities for their guidance and support. I sincerely thank all our customersand business associates for their continued support. I would also like to thank all ouremployees for their commitment hard work and contribution to the Company's performance.
With the trust and con dence shown by all of you we are looking forward to continueour journey in a manner that develops trust and enhances the long term value for allstakeholders.
|With best regards |
|Yours sincerely |
|(Virendra Nath Datt) |
|Chairman & Managing Director |
|DIN: 07823778 |