CHAIRMAN’S REVIEWDURING THE YEAR <strong>2011</strong>-<strong>12</strong>,THE COMPANY’S REVENUESINCREASED BY ASIGNIFICANT 61.71% WITH61.98% GROWTH INTOPLINE AND 15.86%GROWTH IN BOTTOMLINE.For decades, the world lived in a period ofrelatively stable food prices. There is a growingconcern that this era may well be over.Indian population is rising rapidly but theagricultural growth rate has been relativelystagnant.Arable land has mostly peaked. Growingurbanization and industrialization is graduallyeating into precious arable land. Large tractsof arable land is becoming semi arid due tooveruse of ground water and global warming.There is a growing diversion of food towardsindustrial uses like fuels and feed stocks due topressures on the environment and the growingcosts of hydrocarbon.Income levels are growing at a faster pacethan food production.Before food prices become unaffordable for alarge section of humanity, there is a criticalneed to enhance agricultural productivity.Over 60% to 80% of agricultural productivity isdirectly attributable to fertilizer use and watermanagement.Despite India being the 2nd largest fertilizermarket in the world due the sheer quantum ofarable land, India consumes only 1/3rd ofwhat China consumes per hector as fertilizerand its key grain yields are also 1/2 of that ofChina. Water management through microirrigation has become an important way toconserve water and enhance yields butapproximately 3.16% of India's land is undermicro irrigation.Fertilizer and Micro Irrigation contributesignificantly to agricultural yields and farmersincomes and both markets in India aregrowing at twice the international growthrates. The company occupies marketleadership positions in the products andmarkets it operates in.The company had decided to refocus on itscore business in India, integrate similarbusinesses within the Group (especially inmicro irrigation to increase productioncapacity, enhance customer base and marketpositioning, product portfolio and reducecosts) and separate dissimilar businesses inorder to invest and grow each businessindependently and unlock shareholder value.Consequently after receipt of all necessaryclearances and approvals, the company wentthrough a restructuring.The restructuring resulted in the erstwhileNFCL de-merging its oil business into<strong>Nagarjuna</strong> Oil Refinery Limited and merged theresidual fertilizer and micro-irrigation businessand Ikisan (agro informatics and microirrigationbusiness) into NFCL's wholly-ownedsubsidiary called Kakinada <strong>Fertilizers</strong> Limited.Following the merger of these businesses intoKakinada <strong>Fertilizers</strong> Limited, the companychanged its name to <strong>Nagarjuna</strong> <strong>Fertilizers</strong> andChemicals Limited. The Company has obtainedall approvals including that of the StockExchanges and awaits relaxation from SEBIunder Rule 19(2)(b) of the Securities Contracts(Regulation) Rules, 1957 for listing.The company is in the process of exiting CDR.The company can now concentrate ongrowing its core business with the completionof restructuring. Consequently, the companyshall now aggressively embark to create alarger and more profitable fertilizer businessthrough new investments in expanding thefertilizer manufacturing capacity (PrimarilyUrea) in India and Overseas to address thegrowing Indian demand / supply gap forfertilizers currently met through imports.New investment policy to encourageindigenous urea manufacturing andinternational joint ventures is underconsideration. This policy is long awaited andif conducive would usher in a long awaitedgrowth in the indigenous urea manufacturingindustry, reduce the ever increasing subsidybill and increasing local availability of a criticalnutrient. The company is well poised to takeadvantage of the policy as and when it isannounced.ReviewDuring the year <strong>2011</strong>-<strong>12</strong>, the Company'srevenues increased by a significant 61.71%with 61.98% growth in topline and 15.86%growth in bottomline.However external unforeseen factors like arapidly depreciating rupee (and correspondingforex loss despite proactively hedging a largeportion of forex exposure) and delayed inflowsfrom the government and consequently highinterest costs reduced profits. Replacingtrading revenues with manufactured productrevenues over the medium to long term wouldenhance margins and arrest major fluctuationsin revenue and income levels. The Companydid well to arrest the decline in its bottom-linethrough a shorter-than-usual maintenancedowntime and a commendable capacityutilization for the year.It is a matter of pride that the companyreceived the prestigious RC 14001:2008(Responsible Care) certification during the yearunder review. The scope of this reward extendsbeyond traditional environmentalmanagement system to include health andsafety, security, transportation, outreach,emergency response and other responsiblecare requirements. The seven key areas for thiscertification comprise community awareness,emergency response, security, distribution,employee health and safety, pollutionprevention, process safety and productstewardship.Though the Company has always maintainedhighest levels of transparency, the Companyhas felt investor awareness requires morefocus. Our <strong>Annual</strong> <strong>Report</strong> and the upcomingupdated company website is a step towardsthis direction.I thank you for your continued support.K.S. Raju, Chairman10 | <strong>Nagarjuna</strong> <strong>Fertilizers</strong> and Chemicals Limited
CORPORATEINFORMATIONBoard of DirectorsK S RajuChairmanChandra Pal Singh YadavNominee of KRIBHCON C B NathS R RamakrishnanM P RadhakrishnanNominee of SBIMedha JoshiNominee of IDBI BankS P AroraNominee of IFCIYogesh RastogiNominee of ICICI Bank LtdK Rahul RajuManaging DirectorAuditorsM/s. M Bhaskara Rao & Co.,Chartered AccountantsHyderabad - 500 082. INDIARegistered OfficeD. No - 8-2-248<strong>Nagarjuna</strong> Hills, PunjaguttaHyderabad - 500 082, INDIAWebsitewww.nagarjunafertilizers.comFactoryKakinada, East Godavari Dist.Andhra PradeshNacharam, HyderabadAndhra PradeshSadashivpet Mandal, Medak Dist.Andhra PradeshHalol, Panchmahal Dist.GujaratSecretaryM Ramakanth<strong>Annual</strong> <strong>Report</strong> <strong>2011</strong>-<strong>12</strong> | 11
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