Fertilizers & Chemicals Travancore Ltd Management Discussions

Industry Structure and Development

The fertilizer industry plays a vital role in ensuring food security by significantly enhancing agricultural productivity. As an agrarian economy, India hosts one of the largest fertilizer markets globally. The sector is deeply in uenced by government policies and subsidy frameworks, which play a pivotal role in its operations and growth. Recognized as one of the fastest-growing core industries in the country, the Indian fertilizer sector is propelled by increasing food demand driven by a rapidly growing population and the constraints of limited cultivable land.

The fertilizer industry has been instrumental in the success of Indias Green Revolution and the nations subsequent achievement of self-reliance in food grain production. Fertilizer consumption in the country has been on a steady rise and is projected to increase further in the coming years. Fertilizers are expected to continue playing a vital role in enhancing average agricultural yields. However, both the intensity of fertilizer use and yield per unit of cultivated area in India remain significantly lower compared to many developed and emerging economies. Despite notable progress, the pattern of fertilizer use in the country continues to be imbalanced.

The declining fertility of agricultural land, coupled with the growing demand for food grains, has significantly underscored the importance of the fertilizer industry in India. To ensure long-term food security, the Government of India is implementing various measures aimed at enhancing self-suf ciency in the sector. At present, the entire requirement of potash is met through imports, and the country remains heavily dependent on imported raw materials and hydrocarbons for the production of other fertilizers.

To address the high volatility in international prices and the availability of fertilizer inputs, the country is actively pursuing measures to reduce import dependence by enhancing domestic production capacity and introducing more effective and innovative products.

Over the past year, the prices and availability of raw materials witnessed significant volatility, largely due to geopolitical tensions. In response, the Government of India took timely measures to ensure the availability of fertilizers and raw materials. Encouragingly, raw material and gas prices are gradually stabilizing.

Fertilizers continue to be a vital input for Indian agriculture, essential to meeting the food grain demands of a growing population. However, maintaining full-capacity operations of fertilizer plants and ensuring uninterrupted availability of inputs remain key challenges for the industry. Additionally, the prevailing global economic climate continues to influence the operational dynamics of the Indian fertilizer sector.

About the Company

The Fertilisers and Chemicals Travancore Limited (FACT) was incorporated in 1943. In 1947, FACT started production of Ammonium Sulphate with an installed capacity of 10,000 MT per annum at Udyogamandal, near Cochin. In the year 1960, FACT became a Kerala State PSU and on 15th August, 1962, Government of India became the major shareholder.

From a modest beginning, FACT has grown and diversi ed into a multi-division/multi-function Organisation with basic interest in manufacture and marketing of Fertilisers and Petrochemicals, Engineering Consultancy and Design and Fabrication and Erection of Industrial Equipment.

Installed capacity of FACT plants are given below.

Product	Installed Capacity
a. Factamfos (NP 20:20:0:13)	633,500 MT per annum
b. Ammonium Sulphate	225,000 MT per annum
c. Caprolactam	50,000 MT per annum

FACTs mission is to be a significant player in Fertilisers, Petrochemicals and other businesses such as Engineering and Technology services.

FACTs objectives are: a. To produce and market Fertilisers & Caprolactam and other products efficiently and economically, besides achieving a reasonable and consistent growth. b. To effectively manage the assets and resources of the company to ensure a reasonable return on investment. c. To focus on cost reduction and technology upgradation in order to become competitive in business. d. To constantly innovate and develop new products and services to satisfy customer requirements. e. To invest in new business lines, where profit can be made on a sustainable basis. f. To provide services to the farming community by organizing technical training, soil testing and other productivity improvement services in agriculture.

SWOT Strengths l Premium product in the complex fertilizer segment. Factamfos NP 20:20:0:13 is the most preferred complex fertilizer containing sulphur in South Indian Market. l FACT is having extensive market network in South India. FACTs products are being marketed through dealer network of about 5500 dealers. l Operational ef ciency and high capacity utilisation of plants. FACT plants are capable of achieving 120% - 130% of its installed capacity. l The Company is having land resources for generating additional revenue. l Petronet LNG has set up a re-gasi cation / storage facility of Natural Gas at Kochi. FACT plants are connected with a pipeline of GAIL for transmission of re-gasi ed Natural Gas.

Weakness l The fertiliser plants now in operation in the Company are of very old vintage. l The production facilities of the Company are located away from the main consuming areas. l The Company is heavily dependent on imports.

Opportunities l Fertilizer segment : Factamfos NP 20:20:0:13 is the most preferred complex fertilizer in South Indian Market containing Sulphur. l FACT is having extensive market network in South India. FACTs products are being marketed through dealer network of about 5500 dealers. l Substantial infrastructure facilities: FACT is having infrastructure facilities like dedicated berth for importing of raw materials and facilities for movement of fertilizer input through road and water ways in barges.

l Scope for expansion and diversi cation: FACT is having scope for expansion of its activities to other States. l The Company can diversify to manufacture other grades of fertilizer. l The Company can also enter into manufacturing and trading of various chemicals also.

Threats l Volatility in the price of Raw Materials: The Company does not have any control over the price of raw materials. All the major fertilizer inputs are imported and prices are highly volatile. l High interest on Government of India Loan: Government of India is charging 13.5% interest on the loan availed by the Company. The liability in this regard is 240 Crore approximately per annum. This will affect the pro tability of the Company. l Exchange rate variations: The Company is depending on import for fertilizer inputs. The adverse impact in exchange rate variations is a serious threat to the pro tability of the Company. l Major raw materials required for the production of fertilizers are met partly by captive production and imports. The availability of raw materials which is vulnerable to global supply chain disruptions, is a key factor for maintaining production at optimum levels in recent years. l During the year 2024-25, shortage in Phosphoric Acid availability from external sources has affected the Phosphatic fertilizer production in FACT Ltd. l Seasonal nature of product demand: Fertilizer consumption is seasonal and dependent on rainfall in the region.

Operational Performance during 2024-25 - Segment wise / Product wise a. Udyogamandal Complex

Fertilizer Units: Udyogamandal Complex produced 141428 MT of Factamfos, (NP 20:20:0:13), which is 95% of the installed capacity and 64% of the Ministry target. Ammonium Sulphate production was 250578 MT, which is 111% of the installed capacity and 96% of the Ministry target. This is against the production of 221267 MT and 242577 MT respectively in the previous year.

Nutrient wise production during 2024-25 was 79905 MT of Nutrient Nitrogen as against MoU target of 97560 MT and 28286 MT of P O against MoU target of 44000 MT. 2 5

Petrochemical Unit: Caprolactam and allied products were not available for sale owing to shut down of the plant. 996.5 MT was available for sale during the year. b. Cochin Division:

Cochin Division produced 100668 MT each of nutrient nitrogen and nutrient P O , which is 103.78% of 2 5

the installed capacity and 78.65% of the internal target. The production of Nutrient Nitrogen and P2O5 during the previous year was 121290 MT. The division also produced 252640 MT of Sulphuric Acid and 43066 MT of Phosphoric Acid as compared to 226060 MT of Sulphuric Acid and 58535 MT of Phosphoric Acid in the year 2023-24.

c. Marketing Division:

A total sales of 11.63 lakh MT was recorded across all products, compared to 11.76 lakh MT in the previous year.

Ammonium Sulphate sales stood at 2,66,683 MT, up from 2,22,349 MT in the previous year, marking a 20% increase. Similarly, MOP sales rose significantly to 82,949 MT from 22,884 MT last year, reflecting a 247% growth.

As a result, the Marketing Division achieved its highest-ever sales in both Ammonium Sulphate and Organic Fertilisers. The Division also recorded an all-time high sale of Organic Fertilisers, reaching 20,734 MT, including PM-PRANAM products such as FACT-FOM, FACT-PDM, and FACT-PROM.

The Marketing Division has continued to strengthen and expand its distribution network. During 2024-25, Madhya Pradesh was added to the operational area, with a total supply of 25,000 MT of NPK 20:20:00:13 (FACTAMFOS) to the state.

FACT continues to maintain a market share of over 30% in the sales of NPK 20:20:0:13 in South India, a position that is well acknowledged by the dealer community across Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana.

Marketing Division is optimistic of achieving the target of 11.75 Lakh MTS of indigenous products, 3 Lakh MTS of imported products and 43000 MTS of traded products nalized for the year 2025-26. While the Division continue to maintain a strong hold in its traditional markets and newly added states in network, progress is made to further expand the marketing activities in potential markets of Chhattisgarh, Gujarat and Uttar Pradesh in 2025-26.

d. FACT Engineering and Design Organisation (FEDO):

Apart from the internal projects of FACT, FEDO is focused on exploring new technological areas like Green Hydrogen domain and execution of major jobs of its external clientele. Substantial progress was achieved in completion of major milestones laid out in the spectrum of Design, Engineering, Procurement and Inspection fronts as well as in the Projects and Constructions. FEDO actively participated in the E tenders/Enquiries from several Indian clientele in Oil & Gas, Fertilizers, Chemicals, Minerals & Metals etc., like HPCL, KMML, HURL, RIL, NGIL, BHEL, OIL etc.

FEDO received new external orders for a value of Rs. 510.38 lakhs during the year and achieved a turnover of Rs.20.07 Crore as compared to Rs. 18.65 Crore in the previous year.

e. FACT Engineering Works (FEW):

FEW bagged External orders worth Rs.151.6 lakh compared to Rs. 67.31 lakh during the previous year. The total value of the orders for the year is Rs.1053.6 lakhs, reflecting a 127.4% increase compared to FY 2023-2024.

FEW has potential projects from several nearby industries. Leveraging its infrastructure, FEW takes up shop fabrication works and project-based contracts for these industries.

Outlook for the future

The Company expects to continue the excellent production and marketing performance during the year 2025-26. Company is also planning to increase fertilizer trading activities this year for which an MoU has been entered into with OCP Nutricrops, Morocco for supply of DAP and TSP. The financial restructuring package has been submitted to Govt. of India seeking approval for conversion of a part of Government of India loan into equity and write off of interest on Govt. of India loan and restructuring of balance Govt. of India loan. The Financial Restructuring proposal submitted by the Company is under the consideration of Department of Fertilisers. The Company expects an early implementation of the same. The Company has submitted its request to Department of Fertilisers for granting Mini Ratna Status and the proposal is also under consideration. The Capex projects for the Company is progressing as per the plan. Setting up of 1650 TPD NP plant and implementation of the CAPEX could result in increase in fertilizer production of the Company from 10 lakh MT to 15 lakh MT and this, along with improved trading volumes of different grades of fertiliser products, can considerably increase the turnover and profit of the organization. Proposal of enhancing the production capacity of intermediates like Phosphoric Acid and Sulphuric Acid, increasing the storage capacity of shore tanks for Sulphuric Acid and Ammonia and setting up of a new Urea Plant for better CO2 utilization are also in the pipeline.

Risk and Concern

The fertilizer business is exposed to various risks arising from fluctuations in international raw material prices, foreign exchange rate, geo-political uncertainties etc., which can have an adverse impact on the financial position and impact margins. Cyber security issues like information breach, unauthorized access, loss of sensitive or con dential information etc. also pose significant risks to the Company.

Internal Control systems and their adequacy

FACT is having an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit wing of FACT, headed by the Company Secretary monitors and evaluates the ef cacy and adequacy of Internal Control System in the Company. The observations and recommendations of internal audit along with corrective action thereon are presented to the Audit Committee of the Board. Based on the recommendation of Internal Audit, the functional heads take necessary corrective action in their functional area, thereby strengthening internal control.

Performance of the Company Financial performance

The Company has achieved turnover of 4050.91 Cr and earned a net profit of 41.23 Cr. For the Financial Year 2024-25, the Board has recommended a Dividend of 0.39/- (thirty nine paise) per equity share of face value of Rs.10/- each.

Particulars	2024-25
Net Sales	4050.91
Other Income	216.45
Total Revenue	4267.36
Total Expenses	4238.23
Pro t before Exceptional Items and Tax	29.13
Exceptional Items	24.61
Earnings before Taxes	53.74
Interest	245.54
Depreciation	36.62
Deferred Tax	12.51
Pro t for the year	41.23
Other comprehensive Income	34.40
Total Comprehensive Income	75.63

Operational performance

On the Production front, Factamfos production for the scal year 2024-25 was 6.44 lakh MT and Ammonium Sulphate was 2.5 lakh MT.

Material developments in Industrial Relations / Human Resources 1. Industrial Relations

During the financial year 2024-2025, cordial industrial relations were maintained across all Divisions of the Company. Discussions were regularly held between Management and the Trade Unions and Of cer Associations on various matters. There was no loss of productivity due to Industrial Relation issues.

2. Human Resources

The Company values Human Resources as an important asset and recognizes its contribution in achieving high levels of production and sales during the year including achievement of many records in these areas. 32 employees joined the permanent rolls of the Company during the year. There were 1518 employees on permanent rolls as on 31.03.2025.

For enhancing employees skills & knowledge to improve performance & meeting organisational requirements, employees are imparted training through the FACT Training & Development Centre. The new recruits were provided induction training, followed by on the job training in Divisions. The web based Learning Management System developed and implemented in-house, whereby intranet users, while in of ce, can access learning modules on various subjects, is also in place. The Company has a well-structured and effective Employees Grievance Management System for redressing employee grievances, concerns and building a positive work environment. It provides an easily accessible machinery for settlement of grievances, for ensuring expeditious settlement of grievances of all the employees to inspire con dence of employees in the system leading to increased satisfaction in the job and resulting in improved productivity and ef ciency of the organization. Besides ensuring a safe & healthy work environment, for employees, Compensation & benefits and Employee engagement activities are also given due importance to foster a sense of belonging and commitment among employees.

3. Development of Scheduled Castes/ and Scheduled Tribes (SC/ST).

Regular in house training programmes are being arranged to employees including SC/ST employees through FACT Training Centre. Apprentices under the Apprentices Act, are engaged with due representation as per rules is provided. The representation for SC/ST in Apprentices as on 31.03.2025 is as follows:

Total No of Apprentices	GEN	OBC	SC	ST
111	24	71	14	02

14 SC and 2 ST Apprentices underwent training during 2024-2025.

4. Steps taken for the welfare of SC/ST employees

The directives of the Government in recruitment and promotion of reserved categories are followed by the Company. SC/ST of cers are nominated on the selection committees and their representation in other committees and forums is also promoted. Due consideration is given for allotment of residential quarters and also for nominations for training. Welfare benefits are extended to employees and their dependents by way of medical facilities, housing, social security measures etc. SC/ST Employees Associations are also functioning in the Company to empower and support employees belonging to these categories.

The representation of SC/ST in recruitments during the year 2024-25 is given below:

Recruitment	Numbers	SC	ST
01.04.2024 - 31.03.2025	Recruited
Managerial cadre	31	03	01
Non managerial cadre	01	00	00
Grand Total	32	03	01

The employment of Reserved categories as on 31.03.2025 is given below:

	Total	SC	ST	OBC	PWBD
No of Employees	1518	219	53	653	35
% of total employees		14.43	3.49	43.02	2.31

SC/ST Grievance Cell

An SC/ST Grievance Cell is functioning in the Company comprising the Chairman, (who is also Chief Liaison Of cer for matters pertaining to reservation of SC/ST, and their grievances in the Company), liaison of cers of various Divisions and of cers belonging to SC & ST. The grievances received are examined in detail by the Cell and appropriately redressed wherever possible..

Allotment of Residential Quarters

25% of the quarters are presently occupied by SC/ST Employees. Details of the quarters allotted to SC/ST employees are furnished below:

Total number of quarters occupied by the employees in the Townships	SC Employees	ST Employees
349	76	12

Reservation of Dealership

FACT is having 5794 dealers for distribution of fertilisers. FACT is encouraging SC/ST category dealers to apply for the dealership in accordance with policy of Department of Fertilizers, Government of India.

Total number of dealers and the representation of SC/ST in dealership as on 31.3.2025 is given below:

Sl.No. State	Total Dealers	SC Dealers	ST Dealers
1 Kerala	1573	21	2
2 Tamil Nadu	1144	67	0
3 Karnataka	1741	43	36
4 Telangana	549	3	6
5 Andhra Pradesh	676	4	0
6 Maharashtra	83	2	0
7 Bihar	28	0	0
TOTAL	5794	140	44

Sexual Harassment of women at workplace

Sexual Harassment Complaint received during 2024-25	Disposed cases	Pending at the end of 2024-25
1	1	0

Key Financial Ratios

Key financial ratios of the Company for the financial year 2023-2024 and financial year 2024-2025 are given below

Sl No	Particulars	2024-25	2023-24	Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year)
i	Debtors Turnover Ratio	2.85	4.36	Due to reduction in subsidy and sales of Caprolactam
ii	Inventory Turnover Ratio	3.87	4.76	NA
iii	Interest Coverage Ratio	1.22	1.17	NA
iv	Current Ratio	1.02	1.05	NA
v	Return on Capital employed (%)	5.92	6.01	NA
vi	Operating Pro t Margin (%)	7.29	10.68	Due to decrease in Turnover & Operating Pro t
vii	Net Pro t Margin (%)	1.02	2.54	Due to decrease in Turnover & Net Pro t
viii	Debt Equity Ratio	3.36	3.27	NA

As on 31.03.2024 the Networth was Rs. 1230.62 Crore. During the Financial year 2024-25, the Company earned a profit of Rs.41.23 Crore. After adjusting for payment of dividend and re-measurement of Direct Benefit Plan the Networth as on 31.03.2025 is Rs. 1215.77 Crore.

Cautionary Statement

Statements in the Management Discussion and Analysis and in the Boards Report, describing the Companys objectives, projections and estimates, contain words or phrases such as “will”, “aim”, “believe”, “expect”, “intend”, “estimate”, “plan”, “objective”, “contemplate”, “project” and similar expressions or variations of such expressions, are “forward-looking” and progressive within the meaning of applicable laws and regulations. Actual results may vary materially from those expressed or implied by the forward-looking statements due to risks or uncertainties associated therewith depending upon economic conditions, government policies and other incidental factors. Readers are cautioned not to place undue reliance on these forward-looking statements.

Place: Mumbai	(S. C. Mudgerikar)
Date : 29.08.2025	Chairman & Managing Director
	DIN-03498837