Annual Report 2011 - 12 - Nagarjuna Fertilizers

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Directors’ ReportYour Directors have pleasure in presenting the 6th Annual Report together with theAudited Accounts of your Company for the year ended March 31, 2012.The financial results and the consolidated financial results of the Company for theyear ended March 31, 2012 are as under:FINANCIAL RESULTS` in CroresParticulars 2011 – 2012 2010 – 2011current year previous yearNet sales/income from Operations 4992.28 –Other Income 29.43 –Total Expenditurea. Increase/(decrease) in Stock (156.34) –b. Cost of materials consumed 638.22 –c. Employee benefits expense 134.75 –d. Purchase of traded products 3057.18 –e. Power and fuel 397.27 –f. Other expenses 449.89 –Total 4520.97 –Finance cost 153.05 –Depreciation and amortization 117.01 –Profit before tax 230.68 –Provision for tax 80.76 –Deferred tax 13.96 –Profit after tax 135.96 –Dividend – equity shares * 59.81 –Balance c/d to balance sheet 66.45 –Paid Up equity share capital 59.81 0.005(Face value of `1/- per share)Reserves excluding revaluation reserve 2238.91 –Earning per share (annualized) – in `Basic and Diluted 2.27*ProposedCONSOLIDATED FINANCIAL RESULTS` in CroresParticulars 2011 – 2012 2010 – 2011current year previous yearNet sales/income from operations 4992.28 –Other income 31.52 –Total expenditurea. Increase/(decrease) in stock (156.34) –b. Cost of materials consumed 638.22 –c. Employee benefits expense 134.75 –d. Purchase of traded products 3057.18 –e. Power and fuel 397.27 –f. Other expenses 449.94 –Total 4521.02 –Finance cost 153.06 –Depreciation and amortization 117.01 –Profit before tax 232.71 –Provision for tax 80.83 –Deferred tax 13.96 –Profit/(loss) after tax 137.92 –Dividend-equity shares * 59.81 –Balance c/d to balance sheet 68.41 –Paid-up equity share capital 59.81 0.005(Face value of `1/- per share)Reserves excluding revaluation reserve 2245.47 –Earning per share (annualized) – in `Basic and Diluted 2.31* ProposedThe Company (pre-scheme) did not have any operations during previous year.Accordingly, the comparative figures for previous year have not been furnished.With effect from the appointed date, all the assets and liabilities of Erstwhile NFCLand iKisan Limited were transferred to and vested in your Company and recordedat their respective fair values as determined by a reputed valuer appointed by theCompany.Your Company has drawn up the financial statements for the year 2011-12 as perthe revised Schedule VI of the Companies Act, 1956 which provides for a newpresentation of the information compared to the earlier format.Consolidated financial statements are also attached along with the financialstatements of the Company.DIVIDENDYour Directors after careful consideration of the accounts of the Companyrecommend a dividend of `1/- (previous year–Nil) per equity share to the equityshareholders of the Company for the year ended March 31, 2012.RESERVESYour Directors propose to transfer an amount of ` 1500 Lakhs (previous year Nil)to the general reserves account of the Company from out of the profits for the year.The post scheme net worth of the Company as on March 31, 2012 is ` 2298.72Crores (pre-scheme in Erstwhile NFCL ` 1549.28 Crores).RESTRUCTURINGThe Composite Scheme of Arrangement and Amalgamation between KakinadaFertilizers Limited, iKisan Limited, Nagarjuna Fertilizers and Chemicals Limited andNagarjuna Oil Refinery Limited (Scheme) was approved by the Hon’ble High Courtof Bombay at Mumbai on June 17, 2011 and by the Hon’ble High Court of AndhraPradesh at Hyderabad on June 27, 2011.Consequent to the Approval of the Jurisdictional High Courts the CompositeScheme was made effective on July 30, 2011 i.e., ‘Effective Date’ but operativefrom ‘Appointed Date’ i.e., April 1, 2011. With effect from July 30, 2011, the ‘OilBusiness Undertaking’ of Erstwhile NFCL was demerged into NORL and the residualNFCL along with iKisan were merged into your Company.The name of your Company was changed from Kakinada Fertilizers Limited toNagarjuna Fertilizers and Chemicals Limited with effect from August 19, 2011 andthe registered office was shifted from Maharashtra to Andhra Pradesh.Your Company had filed applications for listing of equity shares with Bombay StockExchange (BSE) and National Stock Exchange (NSE) on October 7, 2011. BSEapproved application of the Company for listing of 59,80,65,003 equity shares onDecember 14, 2011 and NSE provided in-principle approval for listing of59,80,65,003 equity shares on January 13, 2012.The Company awaits relaxation from SEBI under Rule 19(2) (b) of SecuritiesContracts (Regulation) Rules, 1957 to commence trading of the equity shares ofthe Company.PARTIAL REDEMPTION OF ZERO COUPON DEBENTURES/PREPAYMENT OFFUNDED INTEREST TERM LOANThe Board of Directors of the Erstwhile NFCL had in the year 2004 allotted334,936,238 Zero Coupon Debentures (ZCDs) of the face value of `1/- eachaggregating ` 334,936,238/- to banks and financial institutions in lieu of thesacrifice of interest made by them pursuant to the debt restructuring then carriedout.Certain Banks and Financial Institutions had converted the ZCDs into FundedInterest Term Loan (FITL). The above ZCDs/FITL were to be redeemed/repaid afterthe entire debt liabilities are fully repaid in March 2016.During the year under review, pursuant to the directions of the CDR EmpoweredGroup, of the CDR Cell of IDBI, Mumbai, your Company had redeemed2,64,78,014 ZCDs with no outstanding ZCDs as on date.SHARE CAPITALPreference Share CapitalThe Board of Directors of Erstwhile NFCL had in the year 2004 allotted37,20,372 0.1% Ordinary Redeemable Preference Shares (ORPS) of ` 100/- eachto banks and financial institutions in lieu of the sacrifice of interest made by thempursuant to the debt restructuring then carried out.16 | Nagarjuna Fertilizers and Chemicals Limited
The said Preference Shares were to be redeemed/repaid after the entire debtliabilities are fully repaid in March 2016.During the month of June, 2011, as per the directions of the CDR MonitoringCommittee, Erstwhile NFCL redeemed 18,60,187 ORPS of ` 100/- eachaggregating ` 18.60 crores and there are no outstanding ORPS as on date.Equity Share CapitalDuring the year the following changes were effected to the equity share capital ofyour Company:a) One equity share of ` 10/- each was subdivided into ten equity shares of `1/-eachb) Pursuant to the Composite Scheme 59,80,65,003 equity shares of `1/- eachwere issued to the shareholders of Erstwhile NFCL and iKisan Limited on October1, 2011c) The pre-scheme equity paid-up capital of ` 5 Lakhs consisting of 5,00,000equity shares of `1/- each held by promoters was cancelled.d) The paid-up equity capital of the Company as on March 31, 2012 is` 59,80,65,003/-PLANT OPERATIONSUreaYour Company during the year manufactured 15.62 LMT of urea as against 16.55LMT in the previous year.Your Company during the year undertook various initiatives for improving energyefficiency, safety, health, environment, reliability and cost reduction.Your Company during the year also obtained certification of ISO 14001: 2004 RC14001: 2008 and recertification of ISO 9001: 2008, OHSAS 18001: 2007 andISO 14001: 2004.Your Company in its quest to continue to protect the environment undertook rainharvesting projects at various locations in the plant.Micro-IrrigationYour Company achieved a production of 1373.51 Lakh Mtrs against of 1135 LakhMtrs during the previous year.MARKETINGUreaYour Company achieved a sale of manufactured urea of 1562556 MT comparedto 1645289 MT in the previous year.The total urea sales both manufactured and imported was 2288011 MT comparedto 2200179 MT of previous year.Other Traded ProductsBulk ProductsYour Company sold 802246 MTS during the year, in comparison with sales of407872 MTS during the previous year.SeedsYour Company sold 4765 MTS during the year, in comparison with sales of 3365MTS during the previous year.Customized FertilizersYour Company sold 16536 MTS during the year, in comparison with sales of12879 MTS during the previous year.Specialty FertilizersYour Company sold 12211 MTS during the year, in comparison with sales of 9226MTS during the previous year.Micro-nutrientsYour Company sold 5949 MTS during the year, in comparison with sales of4506MTS during the previous year.Bio-ProductsYour Company sold 245 KL during the year, in comparison with sales of 194 KLduring the previous year.Micro-IrrigationYour Company during the year achieved 37.56% growth in sales aggregating` 152.61 crores as compared with that of the previous year (` 110.94crores).Please note that reference to previous years figures on plant operation pertains toerstwhile NFCL.Operations in AfricaYour Company after a detailed analysis and market research considers itadvantageous to explore the opportunities available in Africa. Your Company tobegin with has set up a branch office in Nairobi, Kenya, to start its InternationalSales and Marketing operations in East Africa. In the initial stage, it is proposedto market plant nutrients and thereafter foray into Micro-Irrigation systems at alater stage.Your Company is also looking at various options to commence business activity tocater to the markets in West Africa.Your Company in view of the rapidly growing demand for fertilizers, micronutrientsand Micro-Irrigation systems, proposes to explore various other countriesin Africa in a phased manner.Government PolicyIn the year under review the fertilizer industry was into second year of theimplementation of the Nutrient Based Subsidy (NBS) scheme for phosphatic andpotassic fertilizers. The prices of these fertilizers witnessed significant increase inview of reduction in the subsidy component under NBS policy.On the urea front, the subsidy is still computed as per the stage III New PricingScheme which was extended from April 1, 2010 onwards till further orders. Inview to speed up the mechanism to set up a route to directly transfer subsidies toend users the Government of India in the recent Union Budget has announced theset up of a mobile based Fertilizer Management System (mFMS). This system wouldhelp provide end-to-end information on the movement of fertilizers and subsidies,from the manufacturer to the retail level. The Government of India plans to roll outthis system nation-wide during the current year and directly transfer subsidy tothe retailer, and eventually to the farmer which will be implemented in subsequentphases.The need of the hour is a new investment policy for urea which shall encouragesetting up new facilities to increase domestic production and reduce dependenceon costly imports. The government needs to address key issues like gas availability,pricing and urgently draw up a comprehensive long-term policy to attractinvestments in this vital sector.ENVIRONMENT, SAFETY AND AWARDSEnvironmentYour Company continues its mission of protecting the environment and hasinculcated the concept right down the organization.The statutory compliance of the Company on environmental matters is beingcomplied from time to time.SafetyYour Company on March 31, 2012 completed 3.16 million accident-free manhoursfor the first time since inception.AwardsYour Company during the year bagged various prestigious awards such as:NFCL won the prestigious ‘Prashansa Patra’ award from National Safety Councilof India for the year 2010.NFCL received the ‘FAI Award for Excellence in Safety for the year 2010-11’ underNitrogenous Fertilizer Category.Received ‘Certificate of Appreciation’ from NREDCAP, Hyderabad for“Implementation of Energy conservation measures” for the year 2010-11.NFCL has won the prestigious CII Environmental Best Practices Award 2012, in‘Most Innovative Environmental Project’ category for the year 2012.RESEARCH AND DEVELOPMENTYour Company has undertaken technology development in Research andDevelopment in areas of Plant Nutrition Solutions Technology Platforms and fuelsand feedstocks.In the area of Plant Nutrition Solutions Technology Platforms, your Company hasinitiated programmes in the areas of efficient plant nutrition with reference tomacro, micro and supplements. After a thorough technology gap analysis on aneed base; some of the programmes identified are for, in-house development,some through sponsored research and some through licensing technology at earlystage to do the pilot plant and scale up.In areas of Fuels and Feedstocks, your company along with active support fromDepartment of Biotechnology (DBT), Government of India has successfullycompleted the 1st phase of the Pilot Plant and actively engaged in completing the2nd phase of next generation renewable and sustainable fuel and feedback.EMPLOYEE WELFARE ACTIVITIESYour directors in order to ensure high employee morale, commitment, goodworking environment which differentiates the Company from others, intend toprovide the best employee welfare measures, ensuring retention of the scarceskilled manpower available.Your directors in this regard, have set up ‘NFCL Employee Welfare Trust’, which willprovide welfare benefits to the employees and their families through the returnsAnnual Report 2011-12 | 17
Page 1 and 2: Annual Report, 2011-12Strengthening
Page 3 and 4: STRENGTHENINGINDIAN FOOD SECURITY-
Page 5 and 6: CONSISTENTANDPROFITABLEGROWTH- Indi
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Page 10 and 11: SUSTAINABILITYNagarjuna Group's com
Page 12 and 13: CHAIRMAN’S REVIEWDURING THE YEAR
Page 14 and 15: NoticeNOTICE IS HEREBY GIVEN THAT T
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Page 20 and 21: eceived from the investments made i
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Notes to Consolidated Financial Sta
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Nagarjuna Fertilizers and Chemicals
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