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National Fertilizer Ltd.

BSE: 523630 Sector: Agri and agri inputs
NSE: NFL ISIN Code: INE870D01012
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OPEN 42.95
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VOLUME 102058
52-Week high 66.45
52-Week low 38.25
P/E 19.05
Mkt Cap.(Rs cr) 2,065
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Sell Price 0.00
Sell Qty 0.00
OPEN 42.95
CLOSE 42.75
VOLUME 102058
52-Week high 66.45
52-Week low 38.25
P/E 19.05
Mkt Cap.(Rs cr) 2,065
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

National Fertilizer Ltd. (NFL) - Director Report

Company director report

To

Dear Members

On behalf of the Board of Directors of your Company I have the pleasure in presentingthe 47th Annual Report on the business and operations of the Company togetherwith the Audited Financial Statements including Consolidated Audited Financial Statementsof the Company for the Financial Year 2020-21 and the Auditors' Reports and Comments ofComptroller & Auditor General of India (C&AG).

During the year 2020-21 Company achieved the Profit Before Tax (PBT) of ' 343.46 croreas against Loss before Tax of ' 252.71 crore during CPLY. PBT has increased mainly due toincrease in contribution from Urea Increase in profit from traded goods IndustrialProducts and Bentonite Sulphur one time conversion cost of AFCP decrease in finance costwhich was partially offset by reduction in energy norms.

Energy consumption per MT of Urea at all Units was within average energy norms for FY2020-21 fixed by GOI under New Urea Policy 2015 except for Vijai++r-I unit.

The energy consumption per MT of Urea at NFL plants during 2020-21 was as follows:

(Gcal/MT/Urea)

Units Energy Norms for 2020-21 Actual Energy
2020-21 2019-20
Nangal 6.768 6.750 6.722
Panipat 7.002 6.877 6.956
Bathinda 6.941 6.665 6.864
Vijaipur-I 5.682 5.782 5.950
Vijaipur-I I 5.500 5.482 5.527

Financial Highlights

Your Company's key financial parameters during the year 2020-21 and important financialhighlights are as under: -

(Rs. in crore)

Sr. No. Particulars 2020-21 2019-20
01. Sale of Urea quantity in (LMT) 39.65 36.08
02. Sale quantity of other Fertilizers (LMT) 19.72 20.95
03. Sale of Urea 2068.03 1911.85
04. Subsidy on Urea 5795.02 6898.51
05. Total Sales of Urea (3+4) 7863.05 8810.36
06. Sale of other products including subsidy 3652.92 3971.35
07. Sales Turnover (5+6) 11515.97 12781.71
08. Sale of Services 0.04 4.70
09. Other Operating Revenue 389.65 348.95
10. Revenue from operations (7+8+9) 11905.66 13135.36
11. Other Income 33.34 57.40
12. Total Revenue (10+11) 11939.00 13192.76
13. Total Expenses 10992.04 12276.71
14. Earnings Before Interest Depreciation and Taxes (EBIDTA)[12-13] 946.96 916.05
15. Interest 291.23 405.48
16. Depreciation 312.27 374.43
17. Profit Before Exceptional Item and Tax (14-15-16) 343.46 136.14
18. Exceptional Item - 388.85
19. Profit Before Tax (PBT) (17-18) 343.46 (252.71)
20. Provision for tax 93.83 (81.70)
21. Profit After Tax (PAT) (19-20) 249.63 (171.01)
22. Other Comprehensive Income (Net of Tax) 0.87 (25.30)
23. Total Comprehensive Income (21+22) 250.50 (196.31)

RESERVES CAPITAL RESERVES

The balance as at 31.03.2021 amounted to ' 2.51 crore which is at the same level aswas in the previous year.

(Corporate Social Responsibility

Corporate Social Responsibility (CSR) fund stood at Nil as on 31.03.2021 as compared to' 9.64 crore on 31.03.2020.The reasons for the same are detailed in Report on CSR isappended as Annexure-5 forms part of this report.

General Reserves

No amount was transferred during the year to General Reserve from the surplus. TheGeneral Reserve as on 31.03.2021 stood at ' 332.89 crore at same level as was on31.03.2020.

(Surplus

The balance retained in the surplus as at 31.03.2021 is ' 1345.46 crore as compared to' 1094.96 crore during the previous year.

Dividend

The Board of Directors has not recommended payment of dividend for the year 2020-21considering the various capex requirements in line with the guidelines on CapitalRestructuring of CPSEs issued by Department of Investment and Public Asset Management(DIPAM).

Major events during the year

(State of Affairs of the Company and Change in the nature of Business

FY 2020-21 has witnessed the best ever achievement in overall sale of Fertilizers dueto significant increase in sale of own manufactured Urea by 9.89%. Your company hasachieved ever best sale of fertilizers to the tune of 59.37 LMT comprising of 39.65 LMT ofown Urea 10.45 LMT of imported Urea and 9.27 LMT of non-Urea Fertilizers against CPLY of57.04 LMT that comprised of 36.08 LMT of own Urea 11.85 LMT of imported Urea and 9.11 LMTof non-Urea Fertilizers thus exhibiting higher sale by 4.10% as compared to previous year.Your Company's sale of fertilizers was more than sale of all the fertilizer PSUs puttogether during the year. Contribution of Non-Urea business to the top line of the companyincreased to around 34% during the year as compared to 31 % of the CPLY.

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 sale of Bio-Fertilizers Bentonite Sulphur & City-Compostduring the year was 528 MT 20028 MT & 21767 MT respectively. Your company has alsosold 27717 MT SSP (Powder and Plain) during the year.

To meet the new energy norms under NUP-2015 implemented w.e.f. 1st October2020 Gas Turbine Generator (GTG) along with Heat Recovery and Steam Generation (HRSG) hasbeen taken in line and commercial operations at Bathinda and Nangal has been started inMay 2021 whereas the same at Panipat Unit is under progress which was delayed due tospread of CoVID-19.

Your company has commissioned its second Seeds Processing Unit (SPU) at Panipat duringAugust 2020 while work on another SPU at Indore is under way and likely to becommissioned by end of 2021. The company is also in the process of setting up aAgrochemicals plant at Bathinda.

Material changes and commitments

No material changes and commitments have occurred between the date of the Balance Sheetand the date of the Board's Report affecting the financial position of the Company.

Details of revision of Financial Statements or Board's Report

Company has not revised Financial Statements or Board's Report in respect of any of thethree preceding financial years.

(General Information

a) Brief history of the Company overview of the industry and important changes in theindustry during the last financial year

Brief history of the Company forms part of Business Responsibility Report attached tothis Report.

Overview of the industry and important changes thereof during the last financial yearforms part of Management Discussion & Analysis Report.

b) Brief description of business segments and geographic segments;

Business Segment

In the light of present diversified business activities vis-a-vis IND AS 108 on SegmentReporting following operating segments have been considered for Segment Reporting for theAnnual Accounts for the FY 2020-21:

i) Own Fertilizers (Urea Bio Fertilizers and Bentonite Fertilizers).

ii) Fertilizers Trading (Indigenous and Imported).

iii) Other Products & Services (Industrial Products Agro Chemicals Traded SeedsSeeds under Seeds Multiplication Programme etc.).

c) External environment and economic outlook;

Details of external environment and economic outlook are given in Management Discussion& Analysis Report.

d) Induction of strategic and financial partners during the last financial year

No new strategic and financial partners have been inducted during the last financialyear.

Capital Structure Preference and Equity Shares

Company has not issued any equity shares or preference shares during the year.

Equity Shares with Differential Rights

During the financial year Company has not issued any equity shares with differentialrights as to dividend voting or otherwise.

Employees Stock Option

During the financial year Company has not issued any employees stock option.

Shares to Trustees for benefit of employees

Company has not introduced any scheme(s) for purchase/subscription of the Company'sshares to be held by trustees for the benefit of employees.

Other securities which carries right of conversion into equity shares

During the financial year Company has not issued any securities which carries a rightor option to convert such securities into equity shares.

Details of Deposits

The Company has not accepted any deposits d ring the year.

Credit Rating

During FY 2020-21 the credit rating of the Company was maintained with two creditrating agencies as under:

Rated Amount (Rs. in crore)

Instruments ICRA INDIA RATINGS
Credit Ratings Limits Credit Ratings Limits Credit Ratings Limits Credit Ratings Limits
2019-20 2020-21 2019-20 2020-21
Long Term Fund Based Working Capital Facilities
Cash Credit [ICRA] AA- (Stable) 5000 [ICRA] AA- (Stable) 4000 IND AA/ Negative 6000 IND AA-/ Stable 6000
Term Loan [ICRA] AA- (Stable) 1044 [ICRA] AA- (Stable) 1044 - - - -
ECB [ICRA] AA- (Stable) 123.75 [ICRA] AA- (Stable) 123.75 IND AA/ Negative 156 IND AA-/ Stable 57
Short Term Fund Based Working Capital Facilities
Commercial Papers [ICRA] A1 + 7000 [ICRA] A1 + 4000 [IND] A1 + 6000 [IND] A1 + 7000
Short Term Non Fund Based Working Capital Facilities
LC/BG [ICRA] A1 + 3000 [ICRA] A1 + 3000 [IND] A1 + 2000 [IND] A1 + 2000

During the year the Credit Rating of the Company had been reviewed by both the agenciesand the same is shown above in the table.

Buy-Back of Securities

Company has not introduced Buy-Back of its securities during the year.

Sweat Equity

Company has not issued any Sweat equity shares in terms of Rule 8 of the Companies(Share Capital and Debentures) Rules 2014.

Disinvestment of GOI Equity

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 National Fertilizers Limited (NFL) out of Government ofIndia's Shareholding through the "Offer for sale by promoters through the StockExchanges".

(Statement of deviation(s) or variation(s)

Company has not offered public issue rights issue preferential issue etc. during theyear and there is no requirement to submit statement of deviation(s) or variation(s).

(Foreign Exchange Earnings/Outgo

The Foreign Exchange earned in terms of actual inflows during the year were ' 12.47crore and the Foreign Exchange outgo during the year in terms of actual outflow amountedto ' 1640.79 crore.

Borrowings Long Term Loans

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

Short Term Loans

Short Term borrowings of ' 1135.11 crore (previous year ' 7333.77 crore) wereoutstanding as on 31.03.2021.

Debt Equity Ratio

Debt equity ratio as on 31.03.2021 has decreased to 0.87:1 as compared to 4.22:1 ofprevious year due to decrease in borrowings.

Revenue

The Company has achieved Revenue from Operations of ' 11905.66 crore during 2020-21 asagainst ' 13135.36 crore during previous year and total income of ' 11939.00 crore during2020-21 as against ' 13192.76 crore during previous year as detailed below:

(Rs. in crore)

Particulars 2020-21 2019-20 Change
Sale of products (including subsidy) 11515.97 12781.71 (1265.74)
Sale of services 0.04 4.70 (4.66)
Other Operating revenue 389.65 348.95 40.70
Revenue from operations 11905.66 13135.36 (1229.70)
Other income 33.34 57.40 (24.06)
Total Revenue 11939.00 13192.76 (1253.76)

Urea and other fertilizers

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 14071.90 MT of Bentonite Sulphur (BS) during the yearagainst CPLY of 12807 MT achieving a growth of around 9.88%.

On the sales front the Company has achieved ever best sale of Fertilizers of 59.37 LMTthat includes sale of 39.65 LMT of own Urea 10.45 LMT of Imported Urea 9.27 LMT ofNon-Urea Fertilizers including 0.22 LMT (21767 MT) of Compost during 2020-21 surpassingprevious best of 57.04 LMT during 2019-20 which includes sale of 36.08 LMT of own Urea11.85 LMT of Imported Urea 9.11 LMT of Non-Urea Fertilizers including 0.25 LMT ofCompost thus exhibiting higher sale by 4.10% as compared to previous year.

The detailed quantity of break-up of sale of urea and other fertilizers is as under:

(Lakh MT)

Product 2020-21 2019-20 Change
1. Manufactured
a) Urea 39.65 36.08 3.57
b) Bentonite Sulphur 0.20 0.08 0.12
c) Bio-Fertilizers 0.005 0.007 (0.002)
2. Traded Goods
a) Imported
i)DAP 5.09 6.85 (1.76)
ii) MOP 1.04 0.74 0.30
iii) NPK (12-32-16) 0.54 0.50 0.04
iv) NPK (10-26-26) 0.42 0.19 0.23
v) APS 1.47 0.39 1.08
vi) Calcium Nitrate 100% water soluble fertilizers - 0.002 (0.002)
vii) NPK (19-19-19) 100% water soluble fertilizers 0.0003 0.002 (0.0017)
b) Indigenous
i)Imported Urea (On Govt. A/c) 10.45 11.85 (1.40)
ii) SSP 0.28 0.10 0.18
iii) City Compost 0.22 0.25 (0.03)
iv) NPK (19-19-19) 100% water soluble fertilizers 0.005 - 0.005
v) RFCL Urea 0.002 - 0.002
Total Fertilizers 59.37 57.04 2.33

Industrial Products

The Company registered sale of Nitric Acid of 61387 MT during 2020-21 as compared toprevious sale of 69436 MT during 2019- 20. The Company also recorded sale of AmmoniumNitrate to the tune of 8619 MT during 2020-21 as compared to sale of 8341 MT achievedduring 2019-20.

In terms of revenue generation from production and sale of Industrial products theCompany achieved sale of Industrial-Products (IP) comprising of Nitric Acid SodiumNitrate etc. to the tune of ' 243.33 crore during 2020-21 against CPLY of ' 170.45 crore.

Bio-Fertilizers

The Company sold 528 MT of Bio-Fertilizers (Solid & Liquid) to the tune of ' 1.83crore in F.Y. 2020-21 as against 713 MT of ' 2.05 crore during CPLY.

Import & sale of Fertilizers

The Company sold 8.56 LMT of imported non-Urea Fertilizers including DAP MOP APS NPKetc. worth ' 2541.88 crore during 2020- 21 against 8.67 LMT worth ' 2879.20 crore during2019-20.

Apart from the above NFL also sold 10.45 LMT of Urea imported in government accountout of 9.98 LMT received & 0.52 LMT opening balance available at various ports during2020-21.

(Domestic Trading of Agro Products

The Company has registered total revenue of ' 90.98 crore towards trading of variousagro products such as seeds pesticides & compost during the year against ' 66.00crore during CPLY.

Gross Sale Composition

Item % of total Sale Composition % Increase/(Decrease)
2020-21 2019-20
Urea (manufactured) 68.28 68.93 (0.94)
Other Fertilizers 31.72 31.07 2.09

Owing to shift in strategy of the Company the composition of gross sale of the Companyhas undergone visible change. Against the Urea (main product) contribution of 94.49% inthe overall revenue of the Company during 2015-16 Urea contribution has reduced to 68.28%while contribution of non-Urea business has increased to 31.72% during 2020-21.

Agriculture Extension Activities

Agriculture is the main source of livelihood for the farmers which include cropsanimals and allied activities. Agriculture Extension Activities are being undertaken byyour Company by educating farmers on efficient use of all agro-inputs along with totalknow-how on improved and scientific methods of cultivation.

Dealers/Retailers are important link between the Company and the farmers. They are keychange agents in motivating farmers to use fertilizers in a balanced manner. During theyear 2020-2138 Dealer's/Retailer's Orientation Programmes were conducted and more than2000 dealers/ retailers were facilitated by upgrading their knowledge regardingfertilizers/ agro products and improved crop practices so that latest information can bedisseminated at point of purchase to the farmers. Information on Bio-fertilizers and CityCompost has also been given in each and every training programme.

Your Company has always laid emphasis on upliftment of farming community by educatingthem on various aspects of crop production animal husbandry and other allied agriculturesectors. 32 Farmer Training programmes were organized during 2020-21 and more than 2100farmers got benefited. Through these educational programmes farmers were sensitized toissues related with soil fertility status including deficiency of various nutrients theirremedy to increase fertilizer use efficiency and maximize yields. The farmers have alsobeen educated on benefits of long term usage of Bio-fertilizers and City Compost throughthese programmes.

A week long "Fertilizer Application Awareness Program" was conducted by NFLduring March 2021 on the theme of "Atma Nirbhar Bharat" on the occasion of the75th year of India's independence (India@75 Bharat Ka Amrit Mahotsav) in MadhyaPradesh. Six Awareness programmes were organized by NFL in Agriculture Universities/Krishi Vigyan Kendra (KVK)/ NFL Kisan Suvidha Kendras (KSK) of Gwalior Dewas SehoreJabalpur Ratlam and Hoshangabad districts of Madhya Pradesh with the objective to promotebalanced and sustainable use of fertilizers soil analysis mythology of application ofdifferent fertilizer new technologies etc. More than 320 farmers got benefitted through 6such programmes.

Agriculture Universities Research Stations KVKs are the knowledge centers for latestfarming techniques new and high yielding crop varieties innovative technologies inagriculture and allied agriculture sectors etc. During the year an opportunity was givento the farmers to practically visit the above places by organizing farmers visit to nearbyAgriculture University/Research Station/ KVKs. More than 150 farmers got benefittedthrough 4 programmes during the year 2020-21.

During the year 2020-21 total 233 demonstrations had been laid out at farmers' fieldsto demonstrate benefits of use of Bio-fertilizers City Compost and Bentonite Sulphurrespectively on crop growth and yield as 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.

To strengthen the soil testing and farm advisory services 05 new Mobile soil testingLabs for the states of UP(1) MP(Bhopal 1 & Vijaipur 1 with AAS) Haryana (1) andTelangana (1) have been launched by NFL.

During the year 2020-21 your Company continued its endeavour to render soil testingservices at all the farmers' doorstep by organizing soil testing campaigns. During thesecampaigns services of our Mobile Soil Testing Vans and laboratory staff were suitablyutilized for collecting soil samples by demonstrating the correct method of sampling tothe farmers and by offering on the spot soil analysis and advisory on the basis of soiltest results. Other than this 23 Jeep campaigns were organized in the States of PunjabHaryana Rajasthan HP J&K UP Bihar & Jharkhand. Farmers were educated on balancefertilizer use and new products launched by the Company and to share its benefits tofarmers. More than 4000 farmers got benefitted by these programmes.

Participation in agro exhibitions and university Kisan Melas is very effective way tocommunicate directly with the farmers and also to interact with scientists and expertsfrom various agricultural fields. During the year 2020-21 your Company participated in 27Krishi Melas/Agriculture Exhibitions organized by leading Agriculture UniversitiesAgriculture Departments etc. in the States of Punjab Haryana UP Uttarakhand Bihar MPChhattisgarh Rajasthan AP and Telangana which was attended by more than 35000 persons inrelated fields.

As per guidelines of Department of Fertilizers (DoF) and with the objective to provideall the agricultural inputs and services to the farmers under one roof along with soiltesting and advisory services 100 Kisan Suvidha Kendras (KSKs) were opened by yourCompany all across its marketing territory. During the year 2020-2155 farmers trainingprogrammes were organized in these KSKs and more than 3500 farmers got benefited. Morethan 64000 leaflets on NFL products and various crops were also distributed to farmersthrough programmes organized in these KSKs.

Projects

The details of the projects including capital expenditure envisaged are given in theManagement Discussion & Analysis Report.

[Management Discussion & Analysis Report

Management Discussion & Analysis Report covering business prospects includingmodernization diversification investments marketing plans raw materials humanresource internal management controls including financial performance review governmentpolicies and other factors having impact on the performance of the Company operations andfuture outlook of the Company is appended as Annexure-1 forms part of this Report.

[Business Responsibility Report

As required under Regulation 34 of SEBI (LODR) Regulations 2015 the BusinessResponsibility Report of the Company for the financial year ended 31.03.2021 is appendedas Annexure -2 forms part of this Report. Business Responsibility Policy isavailable on the website of the Company at www.nationalfertilizers.com.

Stakeholders' relationship

Details of stakeholders' relationship are given in the Business Responsibility Reportannexed to this Report.

Customers' relationship

Details of customer relationship are given in the Business Responsibility Reportannexed to this Report.

[Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governancebeing the fountain head of value creation for all stake holders especially shareholders.The Company has in place a well-defined "Corporate Governance Mechanism" whichconsiders the interest of all stakeholders.

Pursuant to SEBI (LODR) Regulations 2015 (as amended from time to time) and DPEGuidelines on Corporate Governance a report on Corporate Governance is appended as Annexure-3forms part of this Report.

The Secretarial Auditor of the Company have examined and certified Company's compliancewith respect to conditions enumerated in SEBI (LODR) Regulations 2015 and DPE guidelineson Corporate Governance. Secretarial Auditor Certificate on Corporate Governance andexplanations of the Management to Secretarial Auditors' observations during the year2020-21 is appended as Annexure-4 forms part of this Report.

Visits of Parliamentary Committees during 2020-21

The following Parliamentary Committee interacted with the Company during the year2020-21:

1. Committee on Public Undertakings (COPU)-selected NFL for comprehensive examinationduring the year 2020-21.

2. Standing Committee on Chemicals & Fertilizers for Examination of Demands ofGrants for the year 2021 -22 of the Ministry of Chemicals and Fertilizers.

Material Orders of Regulators

Following regulatory orders issued for implementation may affect/ have affected theoperations of the plants:

[1.0 Implementation of NUP-2015 Energy Norms

Department of Fertilizers (DoF) vide letter dated 28.03.2018 issued a Notificationrevising Energy Norms under NUP-2015 for years 2018-19 and 2019-20. Through thisnotification the Target Energy Norms under NUP-2015 for NFL Bathinda NFL

Panipat NFL Nangal and NFL Vijaipur-I were extended for further period of 2 years till31st March 2020 with a penalty of 2% & 5% for financial years 2018-19 and2019-20 respectively. Subsequently it was further extended till 30th Sept 2020with a penalty of 10%. The token penalty was equivalent to percentage energy differencebetween existing NUP Energy norms and Target Energy norms of NUP-2015. Beyond 30.09.2020the target energy norm for Bathinda Panipat and Nangal Units will be 6.5 Gcal/MT of Ureatill 31.03.2025 whereas for Vijaipur-I it will be 5.5 Gcal/MT of Urea.

To achieve these energy targets NFL is installing GTG-HRSG project at BathindaPanipat and Nangal Unit at a total cost of ' 675 crore whereas various energy savingschemes are being implemented at Vijaipur complex at a cost of ' 234 crores.

The above projects are at various stages of execution and were expected to be completedby March 20/June 20. However due to spread of pandemic and other unavoidable reasonscompletion of these projects has been adversely affected.

The GTG-HRSG project at Bathinda and Nangal has started its commercial operation in themonth of May 21. However owing to increase in CoVID-19 cases since Mar 21 commissioningof GTG-HRSG project at Panipat unit has been delayed and is expected to completed by Oct2021.

Similarly major part of the scheme for energy reduction has been implemented in Sept20 in Vijaipur-I whereas rest of schemes are expected to be completed by 2021 -22.

NFL has been requesting DoF that target energy norms for Nangal Bathinda and Panipatplants may be reviewed and reworked so that the Company is able to recover the amountinvested in Energy Saving Schemes failing which viability of these Units will getadversely affected due to non-recoupment of investments. In case NFL's request is notagreed by DOF the profitability of company may be adversely affected.

[2.0 Plastic Waste Management Rules 2016

The Ministry of Environment Forests and Climate Change (MoEF & CC) Government ofIndia vide Gazette Notification dated 18th March 2016 has specified rules forPlastic Waste Management. The Rules fix the responsibility of local bodies Gram Panchayatand Waste generators as well as producers importers and brand owners for collection andmanagement of plastic waste.

Fertilizer industry falls under the category of brand owners as the fertilizer productsare sold in plastic bags that are multilayered and composed of HDPE/HDPE lined withpolypropylene. All the Brand Owners who introduce the products in the market have toestablish a system or plan for collecting back the plastic waste generated due to theirproducts. As per rules NFL has to register with Central Pollution Control Board (CPCB) andsubmit action plan to comply with Extended Producer Responsibility (EPR) obligation asmentioned in the rule.

Further amendment dated 27.03.2018 on the above rules defines the method ofcollecting back the plastic waste quantity of waste to be collected andprocedure/methodology of recycling of plastic waste with introduction of PROs (Producerresponsibility Organizations). However these rules are yet to be notified by GOI. NFL hasengaged a consultant to complete these statutory obligations similar to other fertilizercompanies.

NFL applied for registration as Brand Owner with CPCB as required under the new rulesin the month of February 2021. However application form has been returned by CPCBstating that the form should be in line with newly issued Standard Operating Procedure(SOP) which has been issued in the month of March 2021. The SOP mainly provides guidelinefor filing the application form i.e. Form-1 as brand owner with CPCB. In latest SOP CPCBadditionally sought the quantity of plastic waste introduced by brand owner in variousstates/UT.

Accordingly NFL resubmitted its form in the month of May 2021. The same has beenreturned with instructions to fill the same through online portal.

The Right to Information

In consonance with the spirit of Right to Information Act the Company has creatednecessary mechanism as required under the Act. The Public Information Officers andAppellate Authorities are effectively responding to the requests and appeals of theapplicants. The names of all PIOs/ Appellate Authorities/ Transparency Officer aredisplayed on the Company's website. During the year 447 RTI applications were receivedand were dealt with as per provisions under Right to I nformation Act 2005.

Vigil Mechanism

Pursuant to the provisions of Sections 177(9) and (10) of the Companies Act 2013 aVigil Mechanism for employees and others to report genuine concerns has been established.

Whistle Blower Policy

Your Company believes in transparency and propriety in all its business dealings totake this object further Company has put in place a Whistle Blower Policy providing for amechanism to the employees and other stakeholders to report concerns about unethicalbehavior actual or suspected fraud or violation of Code of Conduct or Ethics Policy. ThePolicy provides for adequate safeguards against victimization of whistle blowers. Thepolicy is reviewed periodically. No employee or other stakeholders were denied access tothe Audit Committee. Whistle Blower Policy is available on the website of the Company atwww.nationalfertilizers.com.

Integrity Pact

With the commitment to maintain the highest standard of transparency and governanceyour Company has entered into an integrity Pact with Transparency International and hasalso appointed Independent External Monitors (IEMs) as approved by CVC. StructuredMeetings are held with IEMs on regular intervals and threshold value is ' 1 crore forsigning of Integrity Pact for purchase/works contracts.

[Vigilance

Vigilance Division of the Company is headed by CVO. The CVO is assisted by a team ofofficers drawn from various functional departments. Vigilance set up is operational inCorporate Office all Manufacturing Units as well as Zonal Marketing Offices. Promotion ofgood governance remains the core area of vigilance. Awareness is an important cornerstonefor good governance. An enlightened employee not only contributes in achieving theorganizational goals but is also instrumental in system improvement.

As an effort towards promoting Participative Vigilance Workshops / Training Programswere conducted during the year in all Offices & Production units. These trainingprogrammes focussed on various issues related to manuals and procedures. In Compliancewith guidelines of CVC and DoF two day online training programmes on Preventive Vigilancewere conducted for in service officials of NFL and also for the new appointees.

A Workshop on "Preventive Vigilance for Senior Management" was also organizedthrough Video Conferencing by CVO in the month of March 2021.

Regular preventive vigilance activities such as Scrutinies Surprise checks Vigilanceclearance for administrative decisions enforcement of Transfer Policy and Rotation ofOfficers on Sensitive Posts was also carried out in close coordination with theManagement. At the same time investigation of complaints received from various sourcesand follow up of pending departmental action on previous investigated cases were also donewith due diligence.

Periodic Vigilance Reports preparation of Agreed List of Officers List of Officers ofDoubtful Integrity Observance of Vigilance Week in Units Zonal offices and CorporateOffice were the other major activities conducted during the year.

The working of vigilance wing of NFL is based on a proactive participative and focusedapproach. The roles and responsibilities of vigilance officers are regularly monitored andreviewed to bring the focus on systemic improvements.

MOU

The Department of Public Enterprises Government of India in order to improveaccountability and giving higher autonomy to Public Sector Enterprises introduced theConcept of MoU during early nineties. NFL signed its first MoU with the Department ofFertilizers (DoF) for the year 1991 -92.

Based on financial performance and achievement of other parameters laid down yourCompany has been rated "Very Good" as per the Memorandum of Understanding (MoU)signed with the Government of India for the financial year 2018-19. The performance of thecompany under MoU for 2019-20 is also under evaluation by DPE. Further Company submittedself-evaluation after approval from Board to DPE through DoF on 06.07.2021.

(Awards & Accolades received during 2020-21

• Safety Award 2019 was received by NFL Panipat Unit from National Safety Councilof India.

• Safety Award 2019 was received by NFL Bathinda Unit in the month of October2020 from National Safety Council of India.

• Vijaipur Unit gets "Prashansa Patra" from National Safety Council ofIndia for its systems & Procedures and Good Performance in Occupational Health andSafety (OHS)

• Swachhata Award was received by NFL CO Noida from Department of Fertilizers forits Innovative and Effective activities during Swachhata Pakhwada 2020.

• NFL Nangal Unit received Golden Peacock Eco-Innovation Award for the year 2020for reduction in NOx emission from Nitric Acid Plant.

• NFL Nangal Unit received "20th Annual Greentech EnvironmentAward 2020" and has been awarded for the outstanding achievement in "EnvironmentProtection" Category.

• NFL Nangal Unit received "Winner of Gold Award in Fertilizer Sector forthe outstanding achievement" in "Eco-Innovation" Category.

• NFL Vijaipur Unit received "20th Annual Greentech EnvironmentAward 2020" in the month of November 2020.

Initiatives under Corporate Social Responsibility

Company is constantly working towards inclusive growth in society through CSR. Thecompany allocated a CSR budget of ' 340.00 Lakh for the FY 2020-21 and incurred anexpenditure of ' 606.25 Lakh during the year. This included expenditure on schemesapproved in previous years but carried forward in the year 2020-21.

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 ' 152.78 Lakh i.e. allocation of ' 38.20 Lakh to each Unit forTraining of Apprentices over and above the minimum mandate of 2.5% of total manpower. Theproject was envisaged to help youth in various placement linked skill training andcapacity 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.

During the year the Company undertook many CSR projects in the health sector. Tostrengthen the medical infrastructure the company provided Advance Life SupportAmbulances in Government hospitals in District Basti and District Sultanpur in UttarPradesh. These Ambulances will provide service to critical patients and to those whorequire care. Also the company provided Medical equipment in the District Hospital Basti(U.P). In addition to this fowler beds were provided to Civil Hospital Nangal tosupplement the existing facilities.

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 Nangal Unit adopted a Government School inKhamachon village Nawashehar for renovation and transformation through provision oflatest educational tools like smart classes computers educational toys etc. AlsoBathinda Unit installed Smart Classrooms in Mahant Gurbanta Das School for Deaf and Dumbin Bathinda.

The Company also installed 325 nos. LED Solar Street Lights in villages near NangalUnit for providing proper lighting in the area for the local residents. Solar streetlights are environment friendly as they use renewable form of energy and require lessmaintenance.

A detailed report on the Corporate Social Responsibility is appended as Annexure-5 formspart of this Report.

RESEARCH AND DEVELOPMENT

Cow dung processing and its conversion to bio- fortified fertilizer with enhancedfunctionality - A Pilot Study

ICAR-National dairy Research institute (NDRI) Southern Regional Station Bengaluruvide its letter dated 21.03.2018 submitted a research project proposal titled "Cowdung processing and its conversion to bio- fortified fertilizer with enhancedfunctionality: A pilot study" to NFL with budget requirement of ' 129.74 Lakh. Pilotstudy will evaluate conversion & bio-fortification of cow dung for production ofquality bio-fertilizer and optimize conversion process of bio-fertiliser to a suitableform for longer storage and distribution.

The benefits envisaged from this pilot study includes

(a) Bio-fertilizer with enhanced nutrient quality as an alternative to chemicalfertilizer

(b) The Biological manure shall help rejuvenate the soil health

(c) Collateral benefits in the form of Environmental protection savings on subsidy andsustainable agriculture

(d) Dairy farmers to get better value for animal byproduct thereby augmenting theirincome.

NFL Board in its 423rd meeting held on 28.03.2018 accorded approval forsponsoring the pilot study at ICAR - NDRI southern regional station Bengaluru forproject titled "Cow dung processing and its conversion to bio-fortified fertilizerwith enhanced functionality" with budget estimates of ' 129.74 Lakh spread over aperiod of three years. Agreement for the subject R&D work had been signed between NFLand NDRI on 14.09.2018.

A total payment of ' 67.5 Lakh has been made to NDRI for execution of the said R&Dwork. Major equipment's i.e. cow dung digester and manure dewatering pump has beeninstalled at NDRI Bengaluru site. Optimization of working condition of cow dung digesteris under progress. The project is expected to be completed by Dec 2021.

Indian Council for Fertilizer and Fertilizer Technology Research (ICFFTR)

Although our country has a number of research institutions doing research in the fieldof agriculture however there is no dedicated research institution in the country whichis exclusively devoted to research in fertilizer sector. There is a growing need forsetting up a National Level Research & Development Centre exclusively devoted topromotion of research in fertilizer sector.

Therefore in line with the direction of Department of Fertilizers Indian Council forFertilizers and Fertilizer Technology Research was formed as a society jointly by NFLRCF FAGMIL PDIL FACT BVFCL MFL FCIL and HFCL in Aug 2019. NFL RCF and FAGMIL beingthe founder members of the society provided corpus fund of Rupees two crore two crore andone crore respectively.

The society has two administrative organs named Governing Council and ExecutiveCommittee.

Governing Council and Executive Committee have held three and four meetingsrespectively. At present ICFFTR is funding following Research proposals:

1. Use of Phosphogypsum for production of Calcium nitrate Calcium ammonium nitrate andSulphur nutrient (Hydrometallurgy) - By PDIL

2. Development testing and pilot scale production of Organic Fertilizer - By RCF

3. Development testing and pilot scale production of Bio-stimulants - By RCF

Further ICFFTR has signed MoU with Institute of Competitiveness (IFC) regarding"Proposal on Transformation of Indian Fertilizer Subsidy Programme". IFC is aninternational initiative centered in India dedicated to enlarging and purposefuldisseminating of the body of research and knowledge on competition and strategy aspioneered over the last 25 years by Professor Michael Porter of the Institute for Strategyand Competitiveness at Harvard Business School.

ICFFTR has also signed MoU with International Fertilizer Development Centre (anautonomous non-profit international research centre) for collaboration for fertilizerresearch in India in thematic areas such as Energy efficiency improvement of thefertilizer manufacturing plants Pilot plant development in India Introduction of Mastersand PhD programmes on Fertilizer education and research in India Basic and strategicresearch on new fertilizer molecules Policy recommendation and market reforms.

ICFFTR has also hired resources from Institute of Competitiveness (IFC) for the studytitled "District wise identification of industries in the country using technicalgrade urea or urea based chemicals (Nitrogen) as a raw material and analysis ofconsumption pattern of use of technical grade urea or urea by those concernindustries."

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and outgo

Disclosure in terms of the Companies (Account) Rules 2014 in respect of Conservationof Energy Technology Absorption and Foreign Exchange Earnings and Outgo is appended as Annexure-6forms part of this Report.

[Safety Environment and Sustainable Development

Company has undertaken various initiatives for adopting best practices for healthsafety environment management and sustainable developments and the details of the same isappended as Annexure-7 forms part of this Report.

[Particulars of Loans Guarantees Security and acquisition under Section 186 of theCompanies Act 2013

Particulars of loans given guarantees provided investments in securities andacquisitions made by the Company during the year under review are given in Form MBP-2 andthe same is appended as Annexure-8 forms part of this Report.

Joint venture /Associates Companies

Details of Joint Venture/Associates Companies pursuant to Section129(3) of theCompanies Act 2013 the statement containing the salient features of the FinancialStatement of the Associate Company/Joint Venture Company is included in the ConsolidatedFinancial Statements and the same is appended as Annexure-9 forms part of thisReport.

Companies which have become or ceased to be subsidiaries associates and joint ventures

During the year 2020-21 Company has not acquired or formed any new subsidiaryassociate or joint venture. Similarly no subsidiary associate or joint ventures have beenceased by way of sale of shares amalgamation winding up etc.

Related Party Disclosures

The particulars of contracts/arrangement entered into by the Company with relatedparties referred to in Section 188(1) of the Companies Act 2013 including arm's lengthtransactions under third proviso there to are disclosed in Form AOC-2 and the same isappended as Annexure-10 forms part of this Report. Related Party Transaction Policyof the Company is available at www.nationalfertilizers.com.

[Capital Expenditure (CAPEX)

The achievement in CAPEX is ' 204 crore excluding capital work in progress (CWIP) inthe year 2020-21.

Risk Management

The chemical fertilizer industry is operated in a hazardous environment and faces manyrisks including those related to health safety and environment in addition to generalbusiness & financial risks. In order to mitigate them the Company has a comprehensiveRisk Management Policy which is regularly reviewed and a periodical review of the risksprocedures and strategies is undertaken.

To review the new risks evolved during the quarter along with mitigation actionundertaken as well as anticipated risks along with mitigation actions planned in futurethe Company has a two tier system where quarterly risks report is first reviewed by theRisk Assessment Committee (RAC) headed by C&MD and there after final report issubmitted to Risk Management Committee headed by an Independent Director for itsrecommendations before submission to Audit Committee and the Board of Directors. Effortsare made in a planned way to obviate the risks either fully or to minimize their impact.

Under Risk Management policy all the potential risks including risks arisen out ofCoVID-19 along with mitigation actions undertaken were reviewed by Risk Assessment andRisk Management Committees. Some of the risks having huge financial impact as identified& reviewed by the Company include tightening of energy norms w.e.f. 01.10.2020 withoutgovt. dispensation deletion of minimum fixed cost for Vijaipur -I Unit retrospectivelydelay in execution of ongoing projects such as energy reduction projects & RFCL UreaProject (a Joint Venture of the Company) due to CoVID-19 and higher interest burden due todelay in receipt of the subsidy from the Govt.

[Internal Financial Controls

Details in respect of adequacy of internal financial controls with reference tofinancial statements are given in Management Discussion & Analysis Report.

Particulars of Employees

As per provisions of section 197(12) of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 every listedCompany is required to disclose the ratio of the remuneration of each director to themedian employee's remuneration and other prescribed details in the Board's Report.

As per notification dated 05.06.2015 issued by Ministry of Corporate Affairs theseprovisions are not applicable to the Government Company. Accordingly these particularsare not included in the Board's Report.

Public Procurement Policy of Micro and Small Enterprises (MSEs) Order 2012

Public Procurement Policy for Micro and Small Enterprises (MSEs) was notified by theGovernment under the Micro Small and Medium Enterprises Development Act 2006 whichstipulates that 25% of total annual procurement of goods and services shall be made by allCentral Ministries/Departments/CPSEs from Micro & Small Enterprises (MSEs). Withinthis percentage a subtotal of 4% procurement is to be made from MSEs owned by SC/STentrepreneurs and 3% from MSEs owned by women. The requisite information for the year2020-21 is appended as Annexure-11 forms part of this Report.

[Procurement through GeM Portal

During the year total procurement through GeM portal was ' 3.74 Crore.

[Human Resource Management

The Company has man power strength of 3213 regular employees as on 31.3.2021 whichcomprises of 1621 Executives and 1592 Non-Executives. Company promotes the employment ofwomen and at present 204 women employees are on its roll which is 6.35% of the total workforce. The detailed analysis with regard to human resource including training andexecutive development programme have been made in the Management Discussion and AnalysisReport.

[Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

Policy on Prevention Prohibition and Redressal of Sexual harassment of women at workplace is in line with the requirements of the Sexual Harassment of women at Workplace(Prevention Prohibition & Redressal) Act 2013. The Internal Complaints Committee(ICC) has been set up to redress complaints received regarding sexual harassment. Sevenprogrammes related to Gender Sensitization and Prevention Prohibition and Redressal ofsexual harassment of women at workplace were held during the year 2020-2021. No complaintof sexual harassment was received in the year 2020-21.

Implementation of Official Language Policy

The Company is making continuous efforts for the promotion and implementation of theOfficial Language Policy of the Government of India. The quarterly meetings of OfficialLanguage Implementation Committee (OLIC) are held regularly at Corporate Office and alsoat all Units/Zonal Offices of the Company under the Chairmanship of Head of theUnit/Office to review the progress of use of Official Language 'Hindi'. A total of 36meetings of OLIC were held during the year.

To promote the use of Official Language 'Hindi' 36 Hindi workshops were organizedduring the year in which 882 employees have actively participated. Hindi Pakhwada wasorganized in all the Units/Offices of the Company to celebrate Hindi Diwas. During theyear a total of 50 programs/competitions were organized to promote official language inwhich a total of 962 employees participated out of which 547 winners and participantswere felicitated. Apart from this 64 employees were awarded cash prizes for doing theirofficial work in Hindi under the 'Cash Incentive Scheme'.

National Fertilizers Limited Corporate Office Noida was entrusted with theresponsibility of presiding & operating of 'Town Official Language ImplementationCommittee (TOLIC) (Undertaking) Noida' accordingly two half-yearly meetings through videoconferencing on 29.07.2020 & 11.11.2020 respectively were successfully organized underthe Chairmanship of Shri Virendra Nath Datt Chairman & Managing Director. In thismeeting the nominated Head of Member Offices (No. 29 22) and Official Language Officersalong with Deputy Director (Implementation) of Regional Implementation Office (NorthernRegion-2) Ghaziabad also participated.

During the year 2020-21 NFL Nangal Unit has been awarded Rajbhasha Shield as FirstPrize and Certificate by TOLIC Rupnagar Punjab for doing excellent work in Hindi.

Initiatives taken for development of employees belonging to Scheduled Casts/ScheduledTribes/ Other Backward Classes (SC/ST/ OBC categories)

Company is committed to the development of employees belonging to reserved categories.An Implementation Cell is functional in all Units/Offices of the Company to oversee theimplementation of Presidential Directives on Reservation Policy for SCs/STs. LiaisonOfficer has been appointed in each Unit/Office and Chief Liaison Officer at CO NOIDA toensure due compliance of orders and instructions pertaining to reservation for SCs and STsand other concessions admissible to them. Meetings were periodically held at Unit level aswell as at corporate level with the SC/ST Employees Welfare Associations by the Managementfor redressal of grievances of SC/ST employees. During 2020-211832 training man-days wereimparted to

SC/ST and OBC employees (including both in-house as well as external trainingprogrammes). A statement showing representation of employees belonging to ScheduledCaste/Scheduled Tribes/Other Backward Classes/Persons is appended as Annexure-12 formspart of this Report.

(Presidential Directives

Schedule of Compliances with Presidential Directive issued during financial year2020-21 and during last three year preceding the financial year 2020-21 is as below:

Financial Year Content of Presidential Directives Compliance
2020-21 NIL NIL
2019-20 NIL NIL
2018-19 Presidential Directive for pay revision Complied
2017-18 NIL NIL

Information Technology

Company realized the importance of I nformation Technology right at the beginning ofDigital Revolution and has been evolving to adopt the technology in all the spheres ofworking.

Various business applications earlier running in distributed environment at variousunits have been centralized significant centralized applications are Dispatch ManagementSystem Marketing Management & Information System Human Resource Management SystemEmployees Self Service portal and On-line APAR system. Database of all centralizedapplications are being handled in the Data Centre of Corporate Office Noida. Also keepingabreast with the latest compliance guidelines of the government /CBDT regarding indirecttaxations e-Invoicing integration of payment gateway and other compliances IT team hasbeen facilitating the company to meet various timelines.

In order to have optimum utilization of WAN links & Internet leased lines LinkLoad balancers have been provided at all locations of the company. In order to mitigatecyber threats intrusion prevention & ransom ware attacks UTM based securityappliances have been installed.

Being a pandemic year Company enhanced Video Conferencing facilities and all meetingsand interviews are being conducted through Video Conferencing with all its Plants ZonalOffices & Business partners. Trainings through Webinars and meetings through variousvirtual meeting platforms have been adopted by the Company. In order to promote the use oftechnology Company has installed Face Recognition Biometric Attendance System at itsPlants Zonal Offices & Corporate Office.

However the existing technology alone is not enough to enhance productivity. So inorder to increase productivity efficiency and data availability on real-time basisintegrated business solution is required. To achieve the same NFL has awarded the WorkOrder to M/s Tech Mahindra Ltd. for implementation of ERP solution SAP S4/HANA. Theproject is named as 'SANGAM' - Software Aligned for NFL's Growth and Modernization.

(Material impact of CoVID-19 pandemic on operations and performance of the Company

l .0 Impact of CoVID-19 on NFL operations i.e. production and energy

In the first nationwide lockdown from 25.03.2020 to 15.04.2020 all the five Units ofNFL namely Nangal and Bathinda in Punjab Panipat in Haryana and two Units of Vijaipur inMadhya Pradesh continued to operate at maximum possible capacity (around 108% to 125%)with minimum manpower required to operate the plants and after taking all precautionsrequired in the lockdown guidelines. The production levels could be sustained due tosufficient inventory of raw material and other intermediates like bags chemicalsconsumables and available unfilled capacity of silos for stocking the final product urea.

Later with extension of lockdown from 16.04.2020 to 03.05.2020 (Lockdown-II) andfurther up to 17.05.2020 (Lockdown-III) and lockdown IV (upto 31.05.2020) NFL facedvarious challenges like difficulty in evacuation of urea from plants due tonon-availability of adequate labour and trucks for transporting it to dealers' godownsdifficulty in movement of goods like bags neem oil PP thread and chemicals (sulphuricacid caustic lye liquid chlorine cooling water chemicals etc.) due to shortage oftrucks and inadequate supply of bags.

During the year ended 31st March 2021 the Company's overall productiondispatches sales and market conditions largely remained unaffected. The Company has beenable to operate all its five plant at normal levels. Later on owing to relaxations inlockdown and subsequent to lifting of lockdown operation of plants remained normal in therest of the period of 2020-21.

[2.0 Delay in Implementation of Energy saving Projects and Execution of RFCL Project:

NFL Units are implementing Energy saving projects to meet the energy target underNUP-2015. Most of the schemes were planned to be completed by March/June 2020. Howeverwith the onset of lockdown from 25.03.2020 arising out of CoVID-

19 various project activities at each unit with regards to project work werecompletely stopped.

Revamp activities as required in Vijaipur Unit in April 2020 and to be carried by theexperts from M/s Mitsubishi-Japan and M/s Dresser Rand-USA got delayed and revamp ofsyngas compressor and its steam drive was carried out in Sept 20 through Remote Advisory.Similarly installation of GTG-HRSG at Bathinda Nangal and Panipat got delayed owing torestriction on international flights the foreign experts for commissioning of GTG couldnot be mobilized to sites before Nov

20. After lot of efforts M/s Siemens expert have been mobilized to sites andcommissioning of GTG was started at Bathinda in Nov 20 Nangal in Dec 20 and Panipat inFeb 21 .GTG-HRSG project at Bathinda and Nangal has started its commercial operation inthe month of May 2021 and in Panipat it is expected to complete by October 2021.

Delay in execution of Energy Saving Schemes at all units and commissioning of JointVenture Project (RFCL) due to stoppage of project activity at site is because of shortageof labour and delay in the visit of foreign experts for commissioning of these projectsdue to travel restrictions arising from CoVID-19. Further delay in execution of RFCLproject has led to time and cost overrun impacting the financial performance of the RFCL.However RFCL has declared the commercial operation date on 22.03.2021.

AUDITORS

I (Statutory Auditors

The Statutory Audit of your Company was conducted by Chartered Accountants firms M/s.Arun K. Agarwal & Associates Chartered Accountants and M/s Mehra Goel & Co.Chartered Accountants Joint Auditors appointed by Comptroller & Auditor General ofIndia (C&AG). Auditor's Report on the Financial Statements including ConsolidatedFinancial Statements of the Company for the financial year 2020-21 is attached.

A Proposal authorising Board of Directors to decide & fix remuneration of StatutoryAuditors appointed/to be appointed by the Comptroller and Auditor General of India for theF.Y. 2021 -22 is placed for your approval.

Explanation in response to Auditor's Qualification

Statutory Auditors of the Company have issued an Audit Report with Unmodified opinionon Audited Financial Results of the Company (Standalone & Consolidated) for thefinancial year ended 31.03.2021.

Comments of C&AG

The Financial Statement (Standalone and consolidated) of the Company are subject tocomments of C&AG of India under Section 143(6)(b) read with Section 129(4) of theCompanies Act 2013 which shall be sent to shareholders separately.

Cost Auditors

As prescribed under Section148 of the Companies Act 2013 and the Companies (CostRecords and Audit) Rules 2014 the cost accounting records are being maintained by allthe Units of the Company. Cost Audit for 2020-21 was carried out by Cost Auditors M/s K.L. Jaisingh & Co. M/s Ravi Sahni & Co. M/s Sanjay Gupta & Associates and M/sR. K. Patel & Co. as prescribed under the Companies Act 2013 and Rules framedthereunder. M/s Sanjay Gupta & Associates acted as the Lead Cost Auditor. ConsolidatedCost Audit Report for the financial year 2019-20 was filed with Ministry of CorporateAffairs (MCA) on 12.10.2020.

(internal Auditors

Company has an Internal Audit Department headed by an Executive Director. To carry outNon-technical Audit your company had appointed nine Chartered Accountant firms namelyM/s. G.S. Mathur & Co. M/s. Goyal Parul & Co. M/s. Laxmi Tripti &Associates M/s. Raj Har Gopal & Co. M/s. S. Tandon & Associates M/s. Chaturvedi& Co. M/s. Amit Ray & Co. M/s.S.N. Kapur & Associates and M/s Ray & Rayfor the year 2020-21. Technical Audit and IT/ EDP Audit was carried out by in-houseinternal audit teams.

(Secretarial Auditors

M/s Parveen Rastogi & Co. Practicing Company Secretaries was appointed by theBoard for undertaking the Secretarial Audit for the Financial Year 2020-21 in terms ofSection 204 of Companies Act 2013 and Rules made thereunder. Secretarial Audit Report forthe year 2020-21 and Management's explanation to Secretarial Auditor's observations areappended as Annexure-13 forms part of this Report.

Annual Secretarial Compliance Report for the Financial Year ended 31.03.2021 issued byM/s Parveen Rastogi & Co. Practicing Company Secretaries under Regulation 24A ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is appended as Annexure-14forms part of this Report.

Compliance with Secretarial Standards

The Company complies with all applicable Secretarial Standards issued by The Instituteof Company Secretaries of India.

(Audit Committee

The detailed disclosures have been made in the Corporate Governance Report.

Nomination & Remuneration Committee and Remuneration Policy

Disclosures regarding Nomination & Remuneration Committee and Remuneration Policyare given in the Corporate Governance Report.

(Stakeholders Relationship Committee

Disclosures regarding Stakeholders Relationship Committee are given in the CorporateGovernance Report.

Corporate Social Responsibility and Sustainable Development Committee

Disclosures regarding Corporate Social Responsibility and Sustainable DevelopmentCommittee are given in the Corporate Governance Report.

Company's policy on Director's appointment and remuneration

Ministry of Corporate Affairs has granted exemption vide notification No.GSR463(E)dated 05.06.2015 to the Government Companies from the provisions of Section134(3) (p) ofthe Companies Act 2013. Director's appointment and remuneration is decided by theGovernment of India. Keeping in view the exemption no Remuneration Policy has beenformulated.

(Board & Committee Meetings)

The details of Board Meetings Committee Meetings and Meetings of Independent Directorsare given in the Corporate Governance Report annexed to this report.

Annual Return u/s 92(3) of the Companies Act 2013

MCA vide its notification dated 28.08.2020 had modified the sub-Rule (1) of Rule 12 ofCompanies (Management and Administration) Rules 2014 by inserting the proviso that aCompany shall not be required to attach the extract of the annual return with the Board'sReport in Form No. MGT-9 in case the web link of such annual return has been disclosed inthe Board's Report in accordance with Section 92(3). Accordingly in compliance of thenotification the Annual Return of the Company will be made available on the website of theCompany at www.nationalfertilizers.com.

(Investor Education and Protection Fund

The Company has complied with all the provisions relating to the Investor Education andProtection Fund (IEPF) under the Companies Act 2013 and The Investor Education andProtection Fund Authority (Accounting Audit T ransfer and Refund) Rules 2016 madethereunder. Company Secretary is the Nodal Officer to deal with I EPF Authority andcompliances related thereto.

During the year 2020-21 no unpaid/unclaimed dividend amount is due to be transferredto Investor Education and Protection Fund on account of unpaid/unclaimed dividend.Accordingly as per Section 124(6) of the Companies Act 2013 and Rules notified thereunder no shares were transferred to demat account of I EPF. The details of theunpaid/unclaimed dividend and shares transferred to IEPF Account for the previous yearsare available at the website of the Company www.nationalfertilizers.com.

Listing

Company's equity Shares are listed at National Stock Exchange of India Limited (NSE)and BSE Limited (BSE). Other disclosures regarding listing regulations have been made inCorporate Governance Report.

Listing Fee

Company has paid requisite listing fee to the stock exchanges during the year 2020-21.

(Service to Shareholders

All matters relating to transfer/transmission of shares issue of duplicate sharecertificates payment of dividend de-materialization and re-materialization of shares andredressal of investors grievances are carried out by the Company's RTA i.e. M/s. MASServices Limited New Delhi.

(Code of Conduct

Board Members and the Senior Management Personnel have affirmed compliance with theCode of Conduct for the financial year ended 31.03.2021. Code of Conduct has been uploadedon the website of the Company at www.nationalfertilizers.com.

(Corporate Policies & Codes

Details regarding corporate policies & codes are given in the Corporate GovernanceReport and also available on the website of the Company at www.nationalfertilizers.com.

(Disclosure pursuant to FEMA Regulation

FEMA Regulations applicable to Companies owned or controlled by non-resident entity(s)are not applicable to NFL.

Key Business Development

Details of key Business Development of the Company are given in the ManagementDiscussion & Analysis Report annexed to this report.

Disclosure regarding frauds

No fraud has been reported by the Auditor to the Audit Committee or to the Boardduring the financial year 2020-21.

Details of the sickness of the Company

Not applicable.

Management

Key Managerial Personnel (KMP)

In compliance with provisions of Section 203 of the Companies Act 2013 Key ManagerialPersonnel (KMP) position as on 31.03.2021 is as follows:

Shri Virendra Nath Datt Director (Marketing). [Entrusted with the Addl. Charge ofChairman & Managing Director w.e.f. 03.06.2020]

Shri Manoj Mishra Chairman and Managing Director. (Ceased to be Chairman and ManagingDirector w.e.f. 02.06.2020)

Shri Yash Paul Bhola Director (Finance) & Chief Financial Officer Shri Ashok JhaCompany Secretary

Board of Directors [Changes in Composition

Shri Nirlep Singh Rai was appointed as Director (Technical) on 01.04.2020 vide OrderNo. 82/1/2016-HR(PSU) dated 14.02.2020 issued by Department of Fertilizers Ministry ofChemicals & Fertilizers Government of India.

Dr. (Smt.) Kalpana Saini Independent Director ceased to be Director of the Companyw.e.f. 24.04.2020.

Shri Pandya Ashwinkumar Balvantray was appointed as Independent Director w.e.f.04.05.2020 vide Order No.78/2/ 2006- H R (PSU) dated 01.05.2020 issued by Department ofFertilizers Ministry of Chemicals & Fertilizers Government of India.

Shri Manoj Mishra ceased to be Chairman & Managing Director of the Company w.e.f.02.06.2020.

Shri Virendra Nath Datt Director (Marketing) has been entrusted with the Addl. Chargeof Chairman & Managing Director w.e.f. 03.06.2020 vide order no. 86/05/2008-HR-PSUdated 01.06.2020. His tenure for holding additional charge of the post of C&MD hasbeen further extended w.e.f. 03.06.2021 vide Order No.82/1/2014-HR-1dated 03rdJune 2021 issued by Department of Fertilizers Ministry of Chemicals & FertilizersGovernment of India.

Details of tenure of directors are provided in the Corporate Governance Report.

Re-appointment of Directors at the AGM

Pursuant to the provisions of Section 152 of the Companies Act 2013 Shri VirendraNath Datt (DIN:07823778) and Shri Nirlep Singh Rai (DIN: 08725698) will retire byrotation at the ensuing AGM and being eligible have offered themselves for re-appointment.

[Declaration by Independent Directors u/s 149(6) of the Companies Act 2013

All Independent Directors have given declaration that they meet the criteria ofIndependence as laid down in Section 149(6) of the Companies Act 2013 and SEBI (LODR)Regulations 2015.

[Re-appointment of Independent Directors

As per Section149(10) of the Companies Act 2013 none of the Independent Directors hasbeen reappointed on the Board of the Company during the FY2020-2021.

[Disqualifications of Directors

None of the Directors have committed any disqualification as provided under Section 164of the Companies Act 2013.

[Remuneration to Directors

Details of Remuneration to Directors and Company Secretary are given in the CorporateGovernance Report annexed to this Report.

Performance evaluation of Board and Directors

The details regarding performance evaluation of Board of Directors have been given inthe Corporate Governance Report.

[Directors' Responsibility Statement

Pursuant to the requirement of Section 134(3) (c) of the Companies Act 2013 yourDirectors confirm that:

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b) the Directors had 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 year2020-2021 and of the profit 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 the 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 are operatingeffectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.

Acknowledgements

The Board of Directors acknowledge their gratitude for the valuable guidance andsupport received from the various wings of Government of India in particular Departmentof Fertilizers Fertilizer Industry Coordination Committee(FICC)various StateGovernments Financial Institutions Banks stakeholders and all others whose continuedsupport has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory AuditorsInternal Auditors Cost Auditors Secretarial Auditors and Comptroller and Auditor Generalof India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work commitmentand unstinting efforts put in by the employees at all levels throughout the yearespecially in CoVID-19 pandemic situation. Board also place on record active support andcooperation received from Employees Trade Union and Officers Association for sustainedimprovements.

For and on behalf of the Board of Directors

Registered Office: (Virendra Nath Datt)
Scope Complex Core-III Chairman & Managing Director
7 Institutional Area Lodhi Road New Delhi-110003. Date: 26.08.2021 DIN:07823778

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