Gujarat State Fertilizers & Chemicals Ltd Management Discussions.

Macro-economic review: 2020-21

The Indian economy was negatively impacted by an unprecedented health crisis in 2020-21 with the highly contagious corona virus (Covid-19) spreading across the country. In response to the pandemic, Government has taken several proactive preventive and mitigating measures starting with progressive tightening of international travel, issue of advisories for the members of the public, setting up quarantine facilities, contact tracing of persons infected by the virus and various social distancing measures. Government imposed a strict 21 days nationwide lockdown from 25th March, 2020, under the Disaster Management Act, 2005, with subsequent extensions and relaxations, to contain the spread of Covid-19 while ramping up the health infrastructure in the country. The lockdown measures, imposed to contain the spread of Covid-19 pandemic in India, ubiquitously affected employment, business, trade, manufacturing, and services activities.

The real Gross Domestic Product (GDP) growth is projected to contract by 7.7 percent in 2020-21 as compared to a growth of 4.2 percent in 2019-20. GDP growth, however, is expected to rebound strongly in 2021-22 owing to the reform measures undertaken by the Government.

The Government announced a special economic and comprehensive package under Atmanirbhar Bharat of Rs. 20 lakh crore - equivalent to 10 percent of Indias GDP - to fight the Covid-19 pandemic in India. Several structural reforms announced as part of the package, inter alia, include deregulation of the agricultural sector, change in definition of MSMEs, new PSU policy, commercialization of coal mining, higher FDI limits in defence and space sector, development of Industrial Land/Land Bank and Industrial Information System, Production Linked Incentive Schemes, revamp of Viability Gap Funding scheme for social infrastructure, new power tariff policy and incentivizing States to undertake sector reforms.

To support economic growth the Government has initiated interest free 50-year loan to states, additional capital expenditure budget for the central Government, launch of Emergency Credit Line Guarantee Scheme (ECLGS) 2.0, Rs. 1.46 lakh crore boost for manufacturing through Production-linked incentives for ten Champion Sectors, Rs. 18,000 Crores additional outlay for PM Awaas Yojana (PMAY) -Urban, Equity infusion in National Investment and Infrastructure Fund (NIIF) Debt Platform, Demand booster for Residential Real Estate Income Tax relief for Developers & Home Buyers, Boost for Project Exports, Capital and Industrial Stimulus.

Economic growth

As per the first Advance Estimates of annual national income released by the National Statistical Office (NSO), Real GDP is estimated to contract by 7.7 percent in 2020-21, as compared to a growth of 4.2 percent in 2019-20. This contraction in GDP growth is mainly attributed to the contraction in industry and services sector. The growth of Gross Value Added (GVA) at constant (2011-12) basic prices is estimated to contract by 7.2 percent in 2020-21, as compared to a growth of 3.9 percent achieved in 2019- 20. Positive growth in real GVA in agriculture & allied sectors at 3.4 percent in 2020- 21 against 4.0 percent in PE of 2019-20 indicates resilience of rural economic activity to the Covid-19 pandemic.

From the demand side, private consumption expenditure is estimated to contract at 9.5 percent in 2020-21 as against a growth of 5.3 percent in 2019-20 and fixed investment is estimated to decline by 14.5 percent in 2020-21 as against 2.8 percent in 2019-20. Government consumption final expenditure is estimated to grow at 5.8 percent in 2020-21 as against 11.8 percent in 2019-20. Exports and imports of goods and services are estimated to contract at 8.3 percent and 20.5 percent (at constant prices) respectively in 2020-21.


While the difficulties created by COVID induced lockdowns adversely affected the performance of the non-agricultural sectors, Indias agricultural sector has shown its resilience. The Agriculture and Allied activities clocked a robust growth rate of 3.4 per cent at constant prices during 2020-21 (first advance estimate).

About 54.6 per cent of the total workforce in the country is still engaged in agricultural and allied sector activities (Census 2011). As per the Provisional Estimates of National Income released by CSO on 29th May, 2020, the share of Agriculture and Allied Sectors in Gross Value Added (GVA) of the country at current prices is 17.8 per cent for the year 2019-20.

The sector has got renewed thrust due to various measures on credit, market reforms and food processing under the Atmanirbhar Bharat announcements. Various interventions of the Government for the development of allied sectors including animal husbandry, dairying and fisheries exhibit its resolve towards tapping the potential of allied sectors to further enhance farm welfare. In addition to various measures aimed at increasing productivity and improving marketing of agricultural produce, the Government also carries out a large food management programme with a significant financial implication in terms of food subsidy. Under the Pradhan Mantri Garib Kalyan Anna Yojana, 80.96 Crores beneficiaries were provided additional food grains, i.e. above the National Food Security Act (NFSA) mandated requirements, of 5 kg per person per month free of cost till November 2020. Over 200 LMT of food grains were provided amounting to a fiscal outgo of over Rs. 75000 Crores. Also, under Atmanirbhar Bharat Package, 5 kg per person per month was distributed for four months (May to August) to benefit approximately 8 Crores migrants who are not covered under NFSA or state ration card entailing subsidy of Rs. 3109 Crores approximately.

COVID-19 pandemic has influenced the lives of people across the globe and India is no exception to that. The farming activities also experienced the impact of this pandemic as the COVID induced lockdowns influenced the movement of farm inputs including farm machinery from one location to other. The national lockdown coincided with the commencement of the harvesting season for the Rabi crops creating further adversity for the sector. Migration of agricultural laborers to their native places during the lockdown created a shortage of farm laborers. Indias agricultural system demonstrated its resilience amid such adversities. Against all adversities due to COVID-19, continuous supply of agriculture commodities, especially staples like rice, wheat, pulses and vegetables, has been maintained thereby enabling food security. In order to further strengthen and support the agricultural sector, several initiatives have been taken by the Government of India under the Atmanirbhar Bharat Abhiyan.

Record Food grain Production

According to the Economic Survey in the Agriculture year 2020-21 (as per Second Advance Estimates), total food grain production in the country is estimated at record 303.34 million tons which is higher by 5.84 million tons than the production of food grain of 297.5 million tons achieved during 2019-20.

Minimum Support Price

The Economic Survey says that "The Union Budget for 2018-19 had announced that MSPs would be kept at the level of 1.5 times of the cost of production. On the basis of the above-mentioned principle, Government recently increased the MSPs for all mandated Kharif and Rabi crops for 2020-21 season."

Atmanirbhar Bharat Abhiyan

The Economic Survey observes that the major announcements for agriculture and food management under the Atmanirbhar Bharat Abhiyan have been Rs. 1 lakh Crores Agriculture infrastructure fund; Rs. 10,000 Crores scheme for Formalisation of Micro Food Enterprises (MFE); Rs. 20,000 Crores for fisherman through Pradhan Mantri Matsya Sampada Yojana (PMMSY); National Animal Disease Control Programme; Animal Husbandry Infrastructure Development Fund- Rs. 15,000 Crores; Reforms in Essential Commodities Act, Agriculture Marketing and Agriculture Produce Pricing and Quality Assurance; PM Garib Kalyan Ann Yojana; One Nation One Ration Card.

Agricultural Credit

The Economic Survey notes "Given the large proportion of resource constrained small and marginal farmers in India, timely availability of adequate credit is fundamental for the success of farming activities." The agricultural credit flow target for the year 2019-20 was fixed at Rs. 13, 50,000 Crores and against this target the achievement was Rs. 13, 92,469.81 Crores. The agriculture credit flow target for 2020-21 has been fixed at Rs. 15, 00,000 Crores and till 30th November, 2020 a sum of Rs. 9, 73,517.80 Crores was disbursed. The Economic Survey notes that the Agriculture Infrastructure Fund announced as a part of Atmanirbhar Bharat Abhiyan will further boost credit flow to the agriculture sector.

According to the Economic Survey, consequent upon budget announcement on inclusion of livestock sector in Kisan Credit Card in February 2020, 1.5 Crores dairy farmers of milk cooperatives and milk producer companies were targeted to provide Kisan Credit Cards (KCC) as part of Prime Ministers Atmanirbhar Bharat Package. As of mid-January 2021, a total of 44,673 Kisan Credit Cards (KCCs) have been issued to fishers and fish farmers and an additional 4.04 lakh applications from fishers and fish farmers are with the banks at various stages of issuance.

Pradhan Mantri Fasal Bima Yojana

The Survey observes that Pradhan Mantri Fasal Bima Yojana (PMFBY) is a milestone initiative to provide a comprehensive risk solution at the lowest uniform premium across the country for farmers. The PMFBY covers over 5.5 crore farmer applications year on year. As on 12th January, 2021, claims worth Rs. 90,000 Crores have already been paid out under the Scheme. Aadhar seeding has helped in speedy claim settlement directly into the farmers accounts. Even during COVID-19 lock down period nearly 70 lakh farmers benefitted and claims worth Rs. 8741.30 Crores were transferred to the beneficiaries.


An amount of Rs. 18000 crore have been deposited directly in the bank account of 9 crore farmer families of the country in December, 2020 in the 7th installment of financial benefit under the PM-KISAN scheme.

Performance of Fertilizer Industry in India Production

Overall fertilizer production has increased moderately to 434 Lakh MT in 2020-21, as against 426 Lakh MT in 2019-20, exhibiting a marginal growth of 1.83% over 2019-20. Individually, production of DAP witnessed a decline of 17% during the period. Production of Urea, NP/NPK complex fertilizers and SSP increased by 0.6, 7.7 and 16%, respectively, during 2020-21 over 2019-20.


Overall imports of fertilizers has gone up sharply by 14.3% during the period 2020-21. Import of all major fertilizers showed increase to 209 Lakh MT during 2020-21 as against 183 Lakh MT during 2019-20. Imports of Urea increased by 7.7%, DAP 6.8%, NP/NPKs 102.1% and MOP by 23.1% during 2020-21 over 2019-20.

Import dependence (imports as a proportion of production plus imports) has increased to 33% during 2020-21 compared to 30% in 2019-20.

Urea production increased slightly by 0.6% during 2020-21. Urea is largely sourced domestically however, high demand necessitates imports which have risen by 7.7% to supplement the increase in demand. Import dependence of Urea (imports as a proportion of production plus imports) has increased to 29% during 2020-21 compared to 27% during 2019-20.

DAP production fell by 17% during 2020-21. Decline in production can be attributed to the shortage in raw material availability and increase in prices of inputs. Imports on the other hand have risen by 6.8% in the same period and import dependence of DAP (imports as a proportion of production plus imports) has increased to 61% during 2020-21 compared to 54% during 2019-20.

MOP imports have increased sharply by 23.1% during 2020-21. India meets its Potassium chloride (commonly referred to as Muriate of Potash or MOP) requirements completely through imports from Canada, Russia, CIS+ Belarus, Israel, Jordan and Lithuania.

The production of SSP which is an indigenous phosphatic multi-nutrient fertilizer increased sharply by 16% during 2020-21. SSP is a cheaper alternative to DAP.

India witnessed an on-time arrival of Southwest monsoon, followed by a quick spread across the region which has resulted in higher sowing thus augmenting the sales of fertilizers which has led to an increase in production. Increase in production can also be ascribed to restocking activities undertaken by the manufacturers in order to keep up with the sharp increase in fertilizer sales witnessed during the year.

According to CARE Ratings in its March 2021 Fertilizer Industry sector update, the rural demand and markets has been buoyed and very promising despite the coronavirus pandemic and macroeconomic uncertainty. This has translated in improving the underlying macros for the Indian fertilizer industry. Agricultural operations have been well placed and have grown backed by a bumper Rabi harvest and good monsoon during the Kharif season. With surplus reservoirs levels, record high Kharif crop sowing and plentiful rainfall during the monsoon season, demand for the procurement of fertilizers has been promising till date.

Status on the Progress of the Revival of 5 fertilizer plants:

The Government is reviving 5 closed fertilizer plants - 4 of Fertilizer Corporation of India Limited (FCIL) in Talcher, Ramagundam, Gorakhpur and Sindri and 1 of Hindustan Fertilizer Corporation Ltd. (HFCL) in Barauni. This is being done by setting up new ammonia-urea plants with a capacity of 12.7 LMT (Lakh Metric Ton) per annum. The Government expects that with the commissioning/ start of the above plants, it can increase indigenous urea production significantly leading to a substantial reduction in imports and make India self-sufficient in the years to come.

- Ramagundam Fertilizers and Chemicals Limited (RFCL) has already achieved 99.92% (upto January 2021) of physical progress. Presently the project is in pre-commissioning/commissioning stage.

- Gorakhpur, Sindri and Barauni fertilizer plants have achieved 88%, 84.6% and 83.7% of progress respectively (upto January 2021).

- Overall project progress for the Talcher Fertilizer Plant in Odisha is around 9.26%.

Post the commissioning of all the above plants the domestic indigenous Urea production is slated to increase by at least 63.5 LMT/ year which will bring down the imports of Urea by 70% (assuming FY20 level of imports).

Raw material prices:

The international prices of raw materials were having upward trend during FY 2020-21 as compared to 2019-20.

The average CFR prices of Phosphoric Acid (PA) which was USD 650 per ton during 2019-20 went upward to USD 679 (4.54%) per ton during 2020-21.

The average prices of Ammonia increased during 2020-21 as compared to 2019-20. The average CFR prices of Ammonia during 2019-20 was USD 262 per ton went up to USD 269 per ton during 2020-21. On an average, there was 2.67 % increase in prices of Ammonia as compared to 2019-20.

The average CFR price of Rock Phosphate slightly declined in 2020-21 as compared to 2019-20. The average CFR price of Rock Phosphate during 2019-20 was USD 94.61 per ton went slightly down to USD 94.50 per ton during 2020-21. On an average there was 0.12% decrease in price of Rock Phosphate compared to 2019-20.

The price of Sulphur increased during 2020-21 as compared to 2019-20. The average CFR price of Sulphur during 2019-20 was USD 91.15 per ton went up to USD 94.91 (4.13%) per ton during 2020-21. On an average, there was 4.13% increase in price of Sulphur as compared to 2019-20.

The price of Benzene decreased during 2020-21 as compared to 2019-20. The average CFR price of Sulphur during 2019-20 was USD 689.50 per ton down up to USD 517.29 (-24.98%) per ton during 2020-21. On an average, there was 24.98 % decrease in price of Benzene as compared to 2019-20.

Average price of Raw Material products ($ / MT):

Product 2019-20 2020-21 % Increase / Decrease
Phos. Acid (C & F) 650 679 (+)4.54
Ammonia (C & F) 262 269 (+)2.67
Rock Phosphate (C & F) 94.61 94.50 (-)0.12
Sulphur (C & F) 91.15 94.91 (+) 4.13
Benzene (C & F) 689.50 517.29 (-)24.98


The financial year started under the shadow of covid-19 pandemic and nation-wide lock down declared in phased manner in India. All economic activities were practically stopped for more than 2 months projecting a grim scenario for the economy at the start of financial year; this unprecedented and extraordinary economic & health crisis also gravely affected the global economy with acute intensity and spread.

Volatility gradually reduced as the large fiscal & monetary policy measures were taken in time by the Government. Equity markets across the globe were highly volatile and touched the bottom, however, they subsequently recovered some lost ground, while the yield from government bonds remained range-bound. Crude oil prices firmed up modestly as oil producing countries (OPEC plus) agreed to cut production, and prospects for revival in demand improved on expectations of imminent easing of lockdowns. Gold prices remained elevated on hedging demand as the equity markets across the globe faced volatility.

The impact of the shock arising from Covid-19 pandemic got compounded by the interaction of supply disruptions and demand compression. Beyond the destruction of economic and financial activity, livelihood and health also got severely affected. Govt. announced the fiscal stimulus to the tune of 10% of GDP to rescue the economy from further fall and keeping the balance between countrys credit rating as well as ensuring the liquidity in the system. The prices of major Industrial products like Caprolactam, Nylon- 6 & Melamine witnessed bottom level during the H1 (FY 20-21) in the decade. Organized sectors like Automobile, Textile & Consumer durables sectors reduced their plant operations and inventories piled up across the entire supply chain. Unorganized sectors like laminates, plywood, plastics processing and other MSMEs experienced drastic fall in demand and severe cash crunch. However, Pharmaceutical sector along with allied chemicals witnessed double digit growth hence the raw material for downstream pharmaceutical sector also witnessed boom in demand and its prices. Downstream sectors of Melamine like Laminates, plywood being in nonessential category faced devastating impact due to lock down. Company restarted operations of its Methanol plant after gap of nearly 6 years during August 2020 in order to substitute the imports under the vision of AATMANIRBHAR BHARAT regime by Government of India. This has helped in increasing the top line during the year.

The Industries were grappling to restart during UNLOCK 1.0 phase from 1stJune 2020 due to shortage of labor, poor cash flow from the market and flip flop stand by local administrations in different states after nation-wide lock down. Post lock down, downstream industries were struggling with poor cash flow from the market and looking for further extension of credit period from the suppliers to maintain the plant load and provide fresh impetus for buying cycle.

In a scenario where output of the economy contracted by about 24% during Q1, recovery is not expected to be uniform across sectors due to the differences in the nature of supply chains and demand conditions, hence pace of economic activity was hesitant and uneven. Sale of Automobiles started improving from July 20 onwards. Downstream sectors of Nylon-6 chips like packaging films, auto components, fishnet has observed increase in pent up demand due to festival seasons started from August 20 onwards. This has supported increase in sales of Nylon-6 chips. Also Laminates & Plywood sectors has observed pent up demand during post lock down and their operations achieved pre-covid level from Aug2020 which has resulted in ever highest sale of Melamine during the FY2020-21.

Moving forward, the reflection of the disruptions in the production processes was also seen in the rising price pressures. The firming up of commodity prices in the international markets affected domestic prices also. Limited availability of containers and disrupted shipping routes has resulted into limited flow of goods in international market, which led to immediate demand and higher prices of various chemicals in the short terms period registering double digit growth within 2-3 months of time period. During Q4 of FY2020- 21, the demand has further increased and price in international market has also gone up due to immediate demand across various sectors. This has helped to surpass the turnover of Industrial products as compared to previous year.

World trade recorded a rebound as the lockdowns were eased, but inventory restocking is completed and trade related uncertainty is rising with second wave. There was growing confidence that an end to the health pandemic is in sight and the prospects for the global economy are finally looking up positive. The second wave of virus outbreaks checked the pace of the global recovery.

The rise of Second wave in Asian countries particularly; India has pulled back all the estimated growth projection for the days to come amid growing uncertainties among downstream sectors due to various lock down measures imposed by Govt. in different states. Second wave of covid-19 has compelled various economies to relook at their projection for growth and economy recovery during FY2021-22.

Despite the challenges, unprecedented situation, company could achieve higher turnover and better profits for Industrial products in FY2020-21 as compared to previous financial year.


Particulars Units 2019-20 2020-21 Change Change in % Reason For Change
Debtors Turnover * Days 65.16 46.73 -18.43 -28% Debtors turnover ratio improved due to better collection from overdue debtors.
Inventory Turnover Times 9.29 12.12 2.83 30% Inventory turnover ratio improved because of lower stock in trade as on 31.03.2021
Interest Coverage Ratio Times 3.74 20.04 16.3 436% The Ratio improved due to growth of EBITDA and lower interest cost on borrowings in FY 20-21.
Current Ratio Ratio 1.90 3.58 1.68 88% Current Ratio improved due to major reduction in current liabilities, mainly on account of repayment of short term borrowings by the company in FY 20-21.
Debt Equity Ratio Ratio 0.23 0.00 -0.23 -100% The debt equity ratio became Nil since the company repaid its entire long term borrowing and major portion of its short term borrowings in FY 20-21.
Operating Profit Margin % 5.40 9.77 4.37 81% Operating profitability improved due to soft raw material prices & higher capacity utilisation and sales of Industrial products in FY 20-21.
Net Profit Margin % 1.30 5.57 4.27 328% Net profit margin improved due to higher operating profits and lower finance costs in FY 20-21.
Return on Net Worth % 1.45 4.57 3.12 215% The return on net worth was higher because of improved profitability.

*Debtors Turnover is excluding subsidy income and receivables.


There exist a comprehensive system of internal controls in place. The internal auditors of the Company comprehensively carry out their audit and their observations/audit queries are being discussed and debated at length by the Audit Committee. The Audit Committee of the Company also reviews the follow-up actions in respect of the items which did not get closed and seek explanation for the open items. The internal control system is so designed that a particular transaction gets filtered at different levels so as to ensure that proper recording of such transaction takes place and no unscrupulous elements get into the system. The Company uses the SAP platform where-in the roles, responsibilities and authorities are well defined and no deviation is allowed without proper management approval.


The last 10 years Product-wise performance years is given below:

Product-wise performance in terms of production and sales for the last ten years is given below:

PARTICULARS Unit 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12
FERTILIZERS MT 19,08,828 16,65,824 17,33,957 16,78,958 15,07,911 14,91,741 13,85,857 14,23,059 14,36,535 14,70,350
Ammonium Sulphate MT 4,87,250 4,45,630 3,74,720 3,72,330 3,37,370 3,34,030 3,18,680 3,06,671 3,15,145 2,98,000
Ammonium Sulphate Phosphate MT 2,68,730 2,67,140 2,91,940 2,82,360 3,13,860 3,28,430 3,37,930 3,36,340 2,94,600 3,02,800
Di-Ammonium Phosphate MT 5,65,790 4,84,720 4,59,090 5,03,830 4,11,850 3,70,200 3,14,600 3,90,300 4,24,520 5,34,100
N P K MT 2,08,730 1,28,120 1,93,150 1,54,220 38,340 47,650 15,460 19,520 10,280 -
UREA MT 3,70,700 3,32,705 4,05,360 3,61,181 4,06,571 4,11,431 3,99,187 3,70,228 3,91,990 3,35,450
CAPROLACTAM MT 81,927 83,093 91,479 86,662 86,191 86,297 89,918 84,856 83,180 80,503
NYLON-6 MT 24,455 24,296 23,887 20,215 17,421 9,885 9,400 9,751 9,659 8,914
MELAMINE MT 38,732 29,215 14,161 15,188 14,886 15,697 14,284 14,916 14,001 15,279
ARGON 000NM3 3,325 3,116 3,574 3,319 3,549 3,581 3,611 3,334 3,458 3,270
MONOMER MT - 1,709 3,993 3,187 751 2,281 3,435 3,227 3,116 4,287
ACRYLIC SHEETS MT - - - 10 - 122 79 780 566 876
ACRYLIC PELLETS MT - - - 9 285 1,346 969 1,701 1,974 2,046
NYLON FILAMENT YARN MT - - - 811 4,044 4,219 3,427 3,643 3,080 3,910
NYLON CHIPS MT - - - 2,749 6,559 8,397 9,114 9,219 6,563 5,103
FERTILIZERS* MT 19,45,122 16,82,171 15,98,428 16,04,222 14,12,044 14,34,684 13,20,471 13,83,154 13,95,376 14,41,232
Ammonium Sulphate MT 4,97,430 4,46,117 3,96,109 3,62,972 3,08,214 3,29,778 3,15,926 3,09,843 3,20,007 3,02,915
Ammonium Sulphate Phosphate MT 2,99,160 2,44,482 2,54,633 2,99,025 2,90,107 3,34,072 3,34,193 3,35,865 2,96,470 3,04,940
Di-Ammonium Phosphate MT 5,63,510 5,24,410 3,99,309 5,00,999 4,17,820 3,68,874 3,02,666 3,86,585 4,31,238 5,43,699
N P K MT 2,14,999 1,41,409 1,84,181 1,30,194 35,024 46,558 14,628 25,811 3,925 -
UREA MT 3,61,049 3,25,536 3,66,763 3,13,448 3,60,879 3,55,402 3,53,058 3,25,051 3,43,736 2,89,678
CAPROLACTAM* MT 58,170 58,764 65,596 63,217 63,101 66,483 68,901 65,725 64,728 63,082
NYLON-6 MT 28,150 23,752 25,311 22,569 13,697 9,999 9,701 9,915 9,732 8,756
MELAMINE MT 40,173 26,216 13,953 15,298 15,341 15,096 14,283 15,378 14,166 15,283
ARGON 000NM3 3,349 3,099 3,563 3317 3,546 3,599 3,622 3,313 3,453 3,272
MONOMER* MT - 2,200 3,989 3,236 480 1,947 2,934 1,316 2,108 2,036
ACRYLIC SHEETS MT - - - 76 91 112 122 707 678 726
ACRYLIC PELLETS MT - - 9 44 344 1,365 984 1,705 1,978 1,993
NYLONE FILAMENT YARN MT 9 5 20 991 4,309 2,706 3,233 3,378 2,924 3,319
NYLON CHIPS MT - - 146 3,730 4,296 6,262 6,514 6,455 6,331 5,121

"excluding captive consumption


Changes in Government policy, currency risk, fluctuation in input prices, increase in NG prices, insufficient availability of natural gas and raw material in the international market will have an impact on Companys profitability.

Market may experience frequent changes in the price of domestic Phosphatic Fertilizers depending upon the cost of production of the manufacturers. The resistance from farming community has impacted demand. DAP sales was 111 Lakh MT during 2010-11 which has gone down substantially during the subsequent years (74 Lakh MT during 2013-14, 76 Lac MT in 2014-15 & 98 Lac MT in 2015-16). With sharp increase in NG price, prices of Phosphatic fertilizers would go up. In the current scenario, good and widely distributed rainfall, smooth & comparatively cheaper availability of raw materials and timely reimbursement of subsidy by the Govt. of India would be the prime catalysts for the Company to sustain its operations profitably.

In the above likely scenario, the Company is focusing on the efficiency improvement with higher production levels, efficiencies in raw material procurement, increased availability through imports, reduction in marketing & distribution costs, production of various complex grades at Sikka and proper product/ segment strategies to maximize the sales to achieve better contribution from its product basket.

To control the financial risks associated with the Foreign Exchange/ Currency rate movements and their impact on raw material prices, the Company has put in place a sophisticated Foreign Exchange Risk Management System.


Your company has a well-established DSIR approved Research Center established in 1977 at Vadodara complex. A team of young scientists continuously works on conceptualization of emerging ideas in the field of fertilizers, industrial & chemical products, biotechnology, polymer science, waste utilization & corrosion & metallurgy. The R&D facilities at Vadodara Unit also includes a demo pilot plant for scale up of new processes developed at lab scale and to manufacture products in small quantity for initial market seeding.

Your company has developed various new products in the segments of Industrial products, Fertilizer products and also opened up a new avenue in the segment of Pharma grade products in recent past. Based on process developed in-house and efforts put in by respective operations group, your company has started manufacturing of NPK 16:20:00:13, Boronated NPK12 & NPK 14:28:00 at Sikka Unit Jamnagar & Nutri+ (Fortified Gypsum), NPK Liquid Consortia & WSF 13:40:13 at Baroda Unit under the fertilizer segment.

With a view to open up new avenues in the business, your company has diversified its portfolio with addition of Pharma Grade Ammonium Sulphate, Potassium DiHydrogen Phosphate and Dipotassium Hydrogen Phosphate products. Being in-house process, these products are manufactured in small quantities at R&D pilot plant to establish market.

It is a matter of pride for your company to be a part of Aatma Nirbhar Bharat, the vision of Honble Prime Minister. In this line, your company has selected various products from the gamut of products currently being imported and developed process of manufacturing these products in-house. From these, Calcium Nitrate & Boronated Calcium Nitrate (water soluble fertilizers 100% imported currently) in granular form and micronutrient enriched Liquid variants of Calcium Nitrate like Calcium Nitrate fortified with Boron, Boron+Zinc, Boron+Magnesium & Boron+Zinc+Magnesium are already commercialized. All these Liquid variants are currently being manufactured at Pilot plant of R&D. This step will help in becoming self-reliant.

To meet with upcoming challenges and to keep up a pace with new trends in industrial products segment, Your Company has developed various processes of producing Melamine Derivatives, which can be translated to premium quality products in Industrial Product basket of GSFC in future. Your Company is also constantly working on development of New Generation Fertilizers like Nano Fertilizers for Direct Absorption Technology, Fortification of micronutrients in complex, straight & water soluble fertilizers, bio fertilizers and value addition of existing products for better application and market needs. These efforts shall provide a steady supply of high-quality products to fulfill portfolio strategy of your company.

GSFC Agrotech Limited

GSFC AgroTech Ltd., a wholly owned subsidiary of GSFC was established in the year 2012 with the aim of providing single stop solution to the farmers by providing reliable Agri-products at reasonable prices and promoting extension services either directly or in association with Government. Today GATL is one of the pioneers in organized agri-input retail in India and its services are synonymous with innovation and path breaking ventures in the agri-input industry.

GATL manages 285 plus retail outlets across the state of Gujarat and 11 in Rajasthan with a vision to expand its retail chain to other states in the upcoming year. We take pride in the fact that we are the only agri-input company in India which has deployed trained Agriculture Graduates / Post Graduates to manage its retail outlet.

We consider farmer as our partner and are committed to providing an assured supply of a comprehensive range of agri-inputs to our customers. We have thus collaborated with leading agri-inputs companies National Seed Corporation, Pioneer, Coromandel International, Indian Potash Limited, Kribhco, Rise N Shine, etc. to ensure the all-round availability of multi brand products at our retail outlets.

Keeping in view the Governments agenda of doubling farmers income, we have worked on price rationalization of our products like WSF to offer best quality agri-inputs at most reasonable prices. Product innovation is yet another endeavour at GATL. Keeping in view the best interest of the farmer, soil and environment, we are continuously involved in development and launch of newer products and variants.

With a commitment to serve the farmers, GATL is in constant touch with the latest technology and innovations. State-of-the-art Tissue Culture lab which is certified by DBT (Department of Biotechnology, Government of India) has already developed tissue culture protocols for over 10 varieties of fruits, flowers and commercial crops. We sell approximately 64 lacs plants annually in Gujarat and have also expanded our distribution network to other states.

GATL has also established itself as a trusted implementation partner with various departments of the Government of Gujarat for its farmer welfare schemes. Projects worth Rs. 70 crore have been successfully implemented for the Department of Agriculture & Tribal Development Department of Gujarat.


During the year under review, Health Safety Management System as well as elements of Process Safety Management were strengthened in GSFC both of which are the fundamental building block of Safety functionaries in an industry.

HAZOP studies have been conducted as necessitated by inviting external agencies. Facelift is provided to the modules of the Contractors Safety and Visitors safety training topics. Visitors Visual Display near Plant gate has been provided. Focused efforts have been pinned on trainings related to personal protective equipment and basic fire prevention; Safeguard from COVID, utilization of fire extinguishers, Emergency preparedness etc.

Safety and Fire Trainings have covered more than 3079 employees, Contractors and visitors during the FY 20-21.

Plant shutdown and start up activities pose hazards that are different than operational plant hazards and therefore intensified safety covers have been provided in a structured way, ensured right kind of hand tools, power tools, lifting tools and tackles as well as material handling and shifting devices to ascertain robust safety exists during plant shut down and start up activities. Pre Start up Safety Review and work permit are part of Process Safety Management which have been issued as per checklist and in accordance with Company safety stipulations. Personal protection often termed as the last line of defense has always been emphasized and ensured for Employees, Contractors and Visitors.

Project commissioning work for S90 has been completed successfully which had its own set of safety challenges. Adequate measures have been taken to ensure safety during Construction, Mechanical and Electro-mechanical work by elevating the safety measures and employing safety mechanisms utilized for project related works. Site Tool box talks, Use of certified tools and tackles, Safety Supervision and capturing near miss have been ensured.

Measures have been put in place to impart mechanical turnaround to fire fighting vehicles and as such Fire tenders are quick response vehicles now and can be used on the spur of the moment.

Safety measures to safeguard against COVID —-19:

Because of very nature of COVID-19; precautions are the key to stay safe.

GSFC Ltd, Vadodara, is committed to take care of employees, contractors and all stake holders. Following preventive measures have been exercised at GSFC Vadodara:

• Sanitization Tunnel was made available at all the entry gates and it was ensured that the same is utilized cent percent.

• Sanitization and fumigation drives were conducted on daily basis.

• N 95 Face masks & hand gloves, Face shields are distributed among all employees on a regular basis.

• All the entrants must necessarily pass through a Temperatures scan at the entrance gate of factory itself at all time.

• All employees have been made aware of maintaining social distance by way of drawn circles.

• Medical services are acting on proactive basis.

• Instructions of State and Central Government as well as advisories are being followed in toto.

• Circulars and precautions are being utilized as flyers for the sake of employees, Contractors and all stake holders.

• Cleanliness and Hygienic activities are being maintained in all plants and departments of GSFC Vadodara.

• Chewing of tobacco, spitting here and there attracts penalty and is punishable too in GSFC Vadodara.

• Non usage of Face mask is punitive in GSFC.

• A number of interactive programs have been arranged by HR and Safety on how to remain safe during COVID 19 pandemic.

• Employees, Contractors and other stake holders who have a travel history, need to obtain medical fitness certificate before entering in GSFC Vadodara. Personal protective Equipments often termed as the last line of defense has always been emphasized and its implementation ensured for Employees, Contractors and Visitors.


Shareholders are requested to refer to point # 26 of the Directors Report which forms part of the Annual Report.

For and on behalf of the Board
Place : Fertilizernagar Anil Mukim, IAS
Date : 11th August, 2021 Chairman


Some of the statements made in this "Management Discussion & Analysis Report" regarding the economic and financial conditions and the results of operations of the Company, the Companys objectives, expectations and predictions may be futuristic within the meaning of applicable laws/regulations. These statements are based on assumptions and expectations of events that may or may not materialize in the future.

The Company does not guarantee that the assumptions and expectations are accurate and/or will materialize. The Company does not assume responsibility to publicly amend, modify or revise the statements made therein nor does it assume any liability for them. Actual performance may vary substantially from those expressed in the foregoing statements. The investors are, therefore, cautioned and are requested to take considered decisions with respect to these matters.

Data sources: Websites of (1) Ministry of Finance, Department of Economic Affairs, (2) Ministry of Fertilizers & Chemicals, Department of Fertilizers, Govt. of India, (3) Central Statistical Bulletin, (4) FAI, New Delhi, (5) Economic Survey- 2020-21, (6) Fertilizer Market Bulletins and (7) Ministry of Agriculture & Farmers Welfare, GoI. (7) Union Budget 2020-21 (8) India Meteorological Department (IMD), Government of India.