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National Fertilizer Ltd.

BSE: 523630 Sector: Agri and agri inputs
NSE: NFL ISIN Code: INE870D01012
BSE 00:00 | 04 Oct 47.60 0.65
(1.38%)
OPEN

47.75

HIGH

47.90

LOW

47.20

NSE 00:00 | 04 Oct 47.60 0.70
(1.49%)
OPEN

47.40

HIGH

47.85

LOW

47.10

OPEN 47.75
PREVIOUS CLOSE 46.95
VOLUME 48746
52-Week high 65.40
52-Week low 38.25
P/E 10.42
Mkt Cap.(Rs cr) 2,335
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 47.75
CLOSE 46.95
VOLUME 48746
52-Week high 65.40
52-Week low 38.25
P/E 10.42
Mkt Cap.(Rs cr) 2,335
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

National Fertilizer Ltd. (NFL) - Chairman Speech

Company chairman speech

Virendra Nath Datt

Chairman & Managing Director

Dear Shareholders

The CoVID-19 pandemic has caused disruptions in the world economy in many ways. Thepandemic has affected production and marketing through labour and logistical constraints.As the pandemic continued its trail in second year the year 2020-21 has been quitechallenging.

Fertilizers being covered under essential commodities this sector to a great extentremained immune to the CoVID-19 pandemic triggered lockdown in the country except minordisruptions in the initial period of lockdown. Moreover timely action initiated by theIndustry in collaboration with Central & State Governments and Local districtauthorities helped to keep all the Urea Plants in the country running along with movementof the fertilizers except minor disruptions due to shortage of labour & trucks.Fertilizer PSUs made strong contribution in making fertilizers available to farmers bykeeping their manufacturing units in operation and ensuring distribution of urea and otherfertilizers across the country.

I am pleased to share with you that during 2020-21 your Company has registered theProfit Before Tax (PBT) of Rs. 343.46 crore as against Loss before Tax of Rs. 252.71 croreduring CPLY. PBT has increased mainly due to increase in contribution from Urea increasein profit from traded goods Industrial Products and Bentonite Sulphur one timeconversion cost of AFCP decrease in finance cost & which was partially offset byreduction in energy norms.

Your Company has achieved total turnover of Rs. 1 1905.66 crore during 2020-21 asagainst Rs.13135.36 crore achieved during previous year and total income of Rs.1 1939.00crore during 2020-21 as against Rs.13192.76 crore during previous year. During the yearthere has been significant increase in sale of own manufactured Urea i.e. by 9.89%. Thecompany sold 39.65 LMT of own manufactured Urea as against 36.08 LMT in previous year.

The Company has achieved the Urea Production of 37.99 LMT with an overall capacityutilization of 117.58% during 2020-21 against previous year production of 37.27 LMTachieved during 2019-20 (CPLY). The Company has also produced 14072 MT of BentoniteSulphur (BS) during the year against CPLY of 1 2807 MT achieving a growth of around9.88%.

Your company has achieved ever best sale of fertilizers to the tune of 59.37 LMTcomprising of 39.65 LMT of own Urea 10.45 LMT of imported Urea and 9.27 LMT of nonUreaFertilizers against CPLY of 57.03 LMT that comprised of 36.08 LMT of own Urea 11.85 LMTof imported Urea and 9.10 LMT of non-Urea Fertilizers thus exhibiting higher sale by 4.10%as compared to previous year.

As a result this was a hat-trick year when your Company's sale of fertilizers was morethan sale of all the other fertilizer PSUs put together during the year. Your company isconstantly working towards changing the business strategy to diversify its product range.Consequently the composition of gross sale of the Company has undergone visible change.The contribution of other than own manufactured Urea business to the top line of thecompany increased to around 34% during the year as compared to 33% achieved last year.Against the Urea (main product) contribution of 94.49% in the overall revenue of theCompany during 2015-16 own Urea contribution now stands at 66.04% while contribution ofother than own manufactured Urea business has increased to 33.96% during 2020-21.

Your Company has achieved the ever-best production & sale of certified seeds to thetune of 1.86 Lakh Quintals during the year under its flagship Seeds Multiplication Programwhich started in 2015. The Company has already commissioned the seeds processing plant atBathinda and Panipat during February and August 2020 respectively while at Indore thework of setting up of Seed Processing Plant is underway. The total seeds processingcapacity of the Company after commissioning of all the 3 plants would be 1.20 Lakhquintals per annum.

The sale of Bio Fertilizers Bentonite Sulphur & City Compost during the year was528 MT 20028 MT & 21767 MT respectively. Your company has also sold 27717 MT SSPduring the year.

Your Company is also endevouring to expand domestic trading of Agro Products. Duringthe year the Company has registered total revenue of Rs. 90.98 crore towards trading ofvarious agro products such as seeds pesticides & compost against Rs. 66.00 crore inthe previous year.

Compared to last year in terms of revenue generation from production and sale ofIndustrial products the Company achieved sale of Industrial-Products (IP) comprising ofNitric Acid Sodium Nitrate etc. to the tune of Rs. 243.33 crore during 2020-21 againstRs. 170.45 crore in previous year.

As you know your Company had maintained the momentum of the operations during thelockdown triggered by CoVID-19 in close liaison with various government agencies. All thePlants of the Company worked continuously by maintaining the CoVID protocol and thusachieved overall capacity utilization of 117.58% during 2020-21.

As you know to achieve Target Energy Norms under NUP-2015 NFL is installing GTG-HRSGproject at Bathinda Panipat and Nangal Unit at a total cost of Rs 675 crore. Alsovarious energy saving schemes are being implemented at Vijaipur complex at a cost of Rs.235 crores.

The GTG-HRSG project at Bathinda and Nangal has started its commercial operation.However owing to increase in CoVID-19 cases since Mar 21 commissioning of GTG-HRSGproject at Panipat unit has been delayed and is expected to be completed by Oct.' 2021subject to mobilization of foreign experts at Panipat by end of AugustRs.21. Similarlypart of the schemes for energy reduction has been implemented in Oct. 20 in Vijaipur-Iwhereas rest of schemes are expected to be completed by Dec.Rs.21.

NFL has been requesting DoF that target energy norms for Nangal Bathinda and Panipatplants may be reviewed so that the Company is able to recover the amount invested inEnergy Saving Schemes failing which viability of these Units will get affected due tonon-recoupment of investments.

To meet the funding requirement for energy saving and capex schemes your Company hasentered into a Rupee Term Loan Agreement with SBI on 24.12.2018 for Rs. 1044 crore. Longterm net borrowings as on 31.03.2021 were Rs. 752.41crore outstanding against Rupee TermLoan. Short term borrowings of the Company as at

31.03.2021 stood at Rs. 1135.11 crore including cash credit utilization short termloans and working capital demand loan etc. as compared to Rs. 7333.77 crore as at31.03.2020. The short term borrowings have decreased by Rs. 6198.66 crore as on 31.03.2021as compared to last year mainly due to release of pending subsidy during the year.

It is a matter of relief that Government of India had recently approved the policy forproviding increased fixed cost of Rs. 350 per tonne of Urea and special compensation ofRs.150 per tonne of Urea as vintage allowance to more than 30 years old gas based plants.However the issue of minimum fixed cost which was retrospectively withdrawn in March 2020continues to be an area of concern for Vijaipur-I Unit of the Company as it affects itsviability.

There was no disinvestment of Government of India Shareholding during the FinancialYear 2020-21. However Department of Investment and Public Asset Management (DIPAM)Ministry of Finance Government of India had intimated regarding issue of RFP forengagement of Legal Advisors Merchant Bankers and Selling Brokers for the disinvestmentof 20% paid up equity capital in your Company out of Government of India's Shareholdingthrough the "Offer for sale" by promoters through the Stock Exchanges.

Recently your company signed Memorandum of Understanding (MoU) with Indian FarmersFertiliser Cooperative Limited (IFFCO) for 'transfer of technology' of a revolutionary andgame changer fertiliser Nano Urea Liquid on 27th July 2021. Under the agreement IFFCOwill transfer the technology of Liquid Nano Urea to NFL. It is envisaged that in the nearfuture NFL will establish Nano Urea production plant to increase the supply of Nano Ureato farmers of the country. As envisioned Nano

Urea will result in reduction in transportation cost and better production which willincrease the income of the farmers.

Your Company is consistently working on upliftment of farming community through variousprogrammes. During the year numerous training programmes were organised to educatefarmers about balanced use of fertilizers soil analysis new farming technologiesmethodology of application of different fertilizers etc. Throughout the yeardemonstrations had been laid out at farmers' fields to demonstrate benefits of use ofBiofertilizers City Compost and Bentonite Sulphur respectively on crop growth and yieldas compared to farmer's own practices.

Your Company is playing a vital role in supporting farmers by undertaking soil analysisfor macro and micro nutrients through its 6 Static and 5 Mobile Soil Testing Labs (MSTLs)in various States. Based on the analysis farmers are advised on soil fertility managementthrough rational use of manure fertilizers and other inputs to make agriculture moreproductive and sustainable. During the year more than 23000 soil samples were collectedanalyzed for macro and micro nutrients and recommendations were given to the farmers. Tostrengthen the soil testing and farm advisory services 05 new Mobile soil testing Labshave been launched by NFL.

Your Company is constantly working towards inclusive growth in society through CSR.Through its CSR programmes Company is supporting sectors like health education skilldevelopment environment and empowerment of underprivileged sections of the society. Oneof the major CSR projects of FY 2020-21 that the company undertook was for Training ofApprentices at a budget of Rs. 152.78 Lakh over and above the minimum mandate of 2.5% oftotal manpower. The project was envisaged to help youth in various placement linked skilltraining and capacity building through practical industrial experience.

In addition as per the need of the hour Company supported Government's efforts tocontrol the CoVID-19 pandemic. Under this initiative the company provided Cold ChainEquipments for storage of vaccine in Chandigarh to support the Government's CoVID-19vaccination programme. Company is also installing Oxygen Plants in some GovernmentHospitals in many districts. Ensuring adequate oxygen supply is the most critical need ofthe hour in the country.

The Company undertook many CSR projects in the health sector. To strengthen the medicalinfrastructure the company provided Advance Life Support Ambulances in Governmenthospitals in district Basti and district Sultanpur in Uttar Pradesh. These Ambulances willprovide service to critical patients and to those who require care. Also the companyprovided Medical equipment in the District Hospital Basti (U.P).

In the area of education all the Units of the Company have supported GovernmentSchools in their vicinity through provision of school desk & benches IT enabled smartboards swings fans RO facilities etc.

The philosophy of your Company on Corporate Governance is to ensure transparencydisclosures and reporting that conforms fully with the laws and regulations of the countryin order to promote ethical conduct & practices throughout the organization forenhancing stakeholder's value. Your Company is committed to comply with the provisions ofSEBI (Listing Obligations & Disclosures Requirements) Regulations 2015 relating toCorporate Governance and the guidelines on Corporate Governance for Central Public SectorEnterprises issued by Department of Public Enterprises 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 thank and appreciate mycolleagues on the Board of Directors for their valuable contribution and support inrunning the affairs of the Company. I also wish to express my thanks to the Department ofFertilizers Fertilizer Industry Coordination Committee (FICC) Department of PublicEnterprises (DPE) 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 confidence 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

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