Madras Fertilizers Ltd Management Discussions

Business

Madras Fertilizers Limited (MFL) incorporated in the year 1966 as a PSU under the administrative control of the Department of Fertilizers (DOF), Ministry of Chemicals & Fertilizers, and Government of India.

MFL is engaged in the manufacture of Ammonia, Urea and Complex Fertilizers at Manali, Chennai-68. MFL is also engaged in manufacturing Bio-fertilizers and marketing of eco-friendly Organic fertilizers and Neem Pesticides under the brand name "VIJAY".

Overview of the Economy

The government has continued its focus on augmenting farmer income through various steps. Increased allocation across the schemes to drive irrigation facilities, improve agricultural markets, augment the allied sectors supporting income, setting-up of FPOs, crop insurance schemes and income supplementation schemes are major positive. With these steps, a positive effect on fertiliser off-take is expected.

Industry Structure and Development

Fertilizer industry is one of the most industrial sectors that contributes mainly to achieve food security and sustainable agricultural development.

Indian fertilizer sector witnessed a sustained high growth in consumption. The Government has taken a number of initiatives for promoting balanced fertilization to accelerate agricultural growth.

Besides this, there have been efforts on the technological development in production processes that keep pace with the latest global production methods and environmental requirements.

Improvement in demand due to a good monsoon which resulted in higher sowing aided the increase in production. Overall Fertilizers Sales too have increased buoyed by a good monsoon and harvest season. As overall cost of production of urea produced using RLNG has seen decrease in the working capital intensity of the fertilizer manufacturers and it will also act as a relief for the fiscal spending of the government while disbursing the urea subsidy.

Agricultural Situations prevailed in Southern States: Tamil Nadu:

The State received actual rainfall of 1134.22 mm against the normal of 879.643 mm and CPLY of 1098.45 mm, which is 28% & 3% higher than normal & CPLY respectively. The State recorded normal to excess rains during the year. Districts adjacent to Western Ghats & Southern districts like Tirunelveli, Kanyakumari received heavy rains during Dec-March 2025 period. Some of the interior districts recorded normal rains. Due to poor storage in initial part of the year ie during June 2024, Mettur dam was not opened for Kuruvai cultivation. Cyclonic rains during Nov.2024 especially in Cuddalore, Perambalur, Mayiladuthurai & Tiruvarur districts heavily damaged the standing Paddy crop. Nearly 1,15,000 acres of Paddy got damaged. Unseasonal heavy rains during Feb-March 2025 affected the Thalady crop at its harvesting stage in delta districts. The rains also damaged 14000 acres of summer cotton in delta districts. Very hot summer during April-May months reduced the Summer Paddy acreages in Ranipet & Tiruvallur districts & in-turn which reduced the fertilizer application. Produce price of Paddy is 2500/Qtl, Maize: 2400- 2700/ Qtl, Sugarcane-Rs 2950/ MT, Coconut: Rs 60/ Kg, Cotton- Rs 6750/ Qtl, Rubber- Rs 10000/Qtl, Black Pepper- Rs 680/Kg, Cardamom- Rs 287/Kg. Urea supply was surplus throughout the year. No demand prevailed for Urea. Demand prevailed for DAP & 20-20-0-13 during third quarter of the year but later supplies were made good. All companies supplied sufficientquantity of fertilizers thru rake. Over all the year was good with normal or excessive rains with good storage in reservoirs & normal crop coverage even though some problems faced in few of the districts.

Puducherry:

Received 1818.50 mm of Actual rainfall against the normal of 1453.3 mm which is 23% higher than normal. Area under crop coverage are Paddy - 51,500 acres, Sugarcane - 3,500 acres, Pulses - 3,800 acres, G Nut – 1,300 acres, Fruits & Vegetables – 5,800 acres, Coconut - 3,900 acres and other crops – 10,300 acres. Paddy price tanged between Rs 1,300 to Rs 1,650 per bag of 77 kgs. During North East monsoon, Fengal Cyclone damaged 70 % of Paddy cropping area which affected December & January sales of Fertilizers. Major sugarcane area converted into Casuarina due to labour shortage & high input cost. No major reservoirs in Puducherry. Cultivable area is coming down due to Urbanization & commercial activities. FACT made good supply of 20-20-0-13, MOP & Ammonium sulphate during this year. MFL had taken 67.45% share in urea supply followed by SPIC-28.5%. In NP segment FACT 20-20-0-13 is the major supplier in Puducherry. In POS sales, achieved 100.77% against supply of urea in 2024-25.

Telangana:

Received 1056.10 mm rainfall against normal of 876.50 mm, which is 20% higher than normal leading to normal Agricultural seasonal conditions. Major Agriculture in Telangana depends on South-West Monsoon. The South West Monsoon is crucial for the Agriculture Sector. During Kharif major crops like Paddy, Maize, Jowar, Cotton, Chillies, Pulses, Oil Seeds and other crops including Vegetables sown in an area of 129.89 lakh acres against normal of 129.32 lakh acres. During Rabi , Paddy, Maize, Groundnut, Pulses and other crops sown in an area of 76.07 lakh acres against normal of 63.54 lakh acres. The crop coverage area for Paddy is 12244475 acres, Coarse grains are 7511311 acres, Total Pulses is 890236 acres and total Oil Seeds is 738440 acres. The MSP for Paddy is Rs. 2300/quintal, Jowar is Rs. 2500/quintal, Maize is Rs.2350/quintal,

Blackgram is Rs. 7400/quintal, Groundnut is Rs.6783/quintal, Sunflower is Rs. 5500/quintal and Cotton is Rs.7521/quintal.

Urea demand was observed in Aug/Sep 2024 and January/February 2025. But overall supplies are more than demand.

Andhra Pradesh:

Overall, the average rainfall received in Andhra Pradesh from 01.06.2024 to 19.03.2025 is recorded as 963.80 mm as against the normal as on date of 883.20 mm showing by 9.1% excess. All the major reservoirs are holding 371.06 tmc as on 19-03-25. By this time last year, the level had stood at 205.55 tmc. Major agriculture of AP depends on South West Monsoon. The South-West monsoon set over in Kerala on 30th May 2024 against the normal date of 01st June, 2024. The South west monsoon has entered in some parts of Rayalaseema Region in AP on 02nd June 24, and in Coastal AP on 04th June, 24 . The North East monsoon generally enters the state in the month of October. It provides almost 28.9% of states rainfall and mostly covers in the districts of Chittoor, Tirupati, Nellore, Annamayya and some parts of Prakasam, Kadapa & Anantapuram, Sri Satya Sai. The total area sown in the State is 18.56 lakh ha (86%) as against the normal area of 21.52 lakh ha. & normal as on date is 21.52 lakh ha (86%). Paddy crop coverage is 20.25 lak hectares, Coarse Grains is 4.84 lak hectares, Total Pulses is 11.36 lak hectares and Total Oil Seeds is 4.09 lak hectares. The MSP for the Paddy is Rs.2300/ quintal, Jowar is Rs. 3371/quintal, Maize is Rs.2225/quintal, Urad (Blackgram) is Rs.7400/quintal, Groundnut is Rs. 6783/ quintal, Sun flower is Rs.7280/quintal, Moong (Greengram) Rs.8682/quintal, Tur (Redgram) Rs.7550/Quintal and Cotton

(long staple) is Rs.7521/quintal. Overall MSP are increased reasonably by Government of India compared than last year. All the Fertilizer grades are available as per the demand more or less, but slight demand observed for DAP in the months of Sep & Oct, whereas demand observed for 20-20-0-13 in some parts of the State during the months of Dec,24 & Jan, 25.

Karnataka:

During the year, Karnataka received 1411 mm of rainfall against the normal of 1185 mm and CPLY of 881 mm, which is 19% & 60% higher than normal & CPLY respectively. The state recorded approximately 100 rainy days. The above-normal rainfall resulted in all reservoirs reaching full capacity by the middle of the Kharif season, supporting normal cropping patterns and acreage across the state. Karnataka experiences three cropping seasons – Kharif, Rabi, and summer – covering a total cropped area of 275 lakh acres. The Kharif season accounts for approximately 65% of the total crop coverage, followed by Rabi at 25%, with the remainder under summer crops. Major crops cultivated in the state include Paddy (25 lakh acres),

Sugarcane (16 lakh acres), Maize (30 lakh acres), Ragi (15 lakh acres), Red Gram (18,000 acres), Groundnut (8 lakh acres), Coffee (5.75 lakh acres), along with various horticultural and vegetable crops. Except for a few Kharif crops, the productivity of other crops remained normal. However, market prices for produce varied. Chilly prices fell significantly to Rs. 8,000 per tonne against the usual range of Rs. 18,000 to Rs. 25,000 per tonne. In contrast, Coffee fetched record-high prices, ranging from Rs. 26,800 to Rs. 27,600 per 50 kg of parchment Arabica. Arecanut cultivation continues to expand, particularly in the central districts of Davanagere and Shimoga, due to consistently good yields over recent years. Fertilizer availability across all grades was sufficient to meet demand. Market prices remained steady, although 20-20-0-13 continued to be in surplus.

Total fertilizer consumption for the year stood at 45.73 lakh tonnes, comprising of Urea -17.3 lakh tons, DAP - 4.94 lakh tons, MOP - 2.45 lakh tons, NPK - 7.24 lakh tons and 20-20-0-13 - 9.89 lakh tons. Overall, fertilizer supply aligned well with the agricultural activities in the state.

Kerala:

The state received 3085.450 mm of rainfall against a normal of 2948.600 mm shows a 5% excess. With normal precipitation levels, all major reservoirs, including Malampuzha, had adequate water storage. Water release for agricultural purposes was ensured from 15th November 2024 to 15th January 2025. In Kerala, major irrigated crops include Paddy, Banana, Vegetables, and Arecanut, while rainfed crops include Banana, Rubber, Coconut, Arecanut, and Pineapple. During the 2024 Kharif season, the actual cropped area was 25.68 lakh acres against the normal of 26.57 lakh acres. Out of that, 16.00 lakhs acres of Paddy and 43000 acres Banana, 1.80 lakh acres of Rubber, 5.70 lakhs acres of Coconut, 2.20 lakh acres of Arecanut has been cultivated. In the Rabi season, 74,900 acres of Paddy, 37300 acres of Banana, 11000 acres of Pineapple were grown. In Rabi, the cropped area stood at 1.71 lakh acres, exceeding the normal area of 1.57 lakh acres, reflecting good overall crop coverage in 2024–25. Farmers realized good market prices for most crops including Pineapple, Ginger, Banana, Coffee, Tea, Cardamom, Pepper, and Nutmeg, contributing to higher incomes and encouraging increased fertilizer usage.

Rubber prices also improved significantly, averaging Rs. 200 per kg, enhancing the financial position of rubber growers.

There were no reported shortages of Urea or other fertilizers in any district throughout the cropping seasons.

STRENGTH, WEAKNESS, OPPORTUNITIES & THREATS Strengths

MFLs strength is its Highly skilled manpower, its flagship product Brand viz., Vijay and its dedicated far and wide reach of marketing network throughout South India are its strength. It has its presence in the market over 5 decades and receive continuous support from the GoI. It has already converted its feed stock from Naptha to RLNG which is being supplied by M/s IOC located at the close proximity of MFL.

Weaknesses

Agro-climatic condition has a large effect on the performance of the Company. NPK raw materials which are imported are subject to severe volatility in terms of its availability and affordable price. Variation in the foreign currency exchange rates will also affect the profitability of the Company.

Opportunities

There is a compelling need for alternate fertilizers which will have lesser wastage and reduced fertilizer usage while keeping the same or more yield. This opens up for new investment with better return while ensuring food security.

Business diversification like Trading of fertilizer products will improve the bottom line of the company.

Threats

High volatility in the prices of raw material of NPK resulting in an adverse impact on production of NPK and marketing plans which eventually affects the bottom line of the company.

Outlook

The outlook for the fertilizer sector is positive on expectations of good monsoon. The underlying macros for the Indian fertilizer industry look promising. With surplus reservoir levels, forecasts for a good monsoon season, demand for the procurement of fertilizers seems also promising.

Risks and Area of Concern

The company face low operating margin due to working capital limitation for NPK production. But, the company ensured uninterrupted supply of vital plant nutrients besides ensuring safety of the plants and personnel including contract labor.

Fertilizer Sector:

(Lac MT)

PRODUCT	UREA		NPK
	2023-24	2024-25	2023-24	2024-25
Sales in
	65.13	62.81	54.75	54.05
MFL Marketing Territory				>
MFL Sales	4.27	5.23	-	-

For Complex fertilizers, NBS is applicable from 1.4.2010 where the subsidy is being fixed by Government of India and the MRP is allowed to be fixed by manufacturers based on market dynamics. Due to fluctuations in international prices of raw-materials during the year 2024-25, the subsidy for NPK 17-17-17 was marginally increased from Rs 11937/MT and fixed at Rs

13281/MT in Kharif & Rs 12954/MT in Rabi2024-25. Similarly for NPK 20-20-0, the Subsidy was increased from Rs 13568/

MT and fixed at Rs 15148/MT in Kharif & Rs 14764/MT in Rabi2024-25. Overall, the average subsidy extended for NPK

Complexes 17-17-17 & 20-20-0 during the year 2024-25 was declined by 24.22% and 19.30% respectively against previous year.

The consumption of UREA has surged by 8.3% over CPLY due to favorable agricultural situation across the nation and NP/ NPK/NPKS (Other than DAP) drastically increased by 28.30% over CPLY, there is a marginal decrease in consumption of both NC Urea & NPK fertilizers in MFLs marketing territory. y MFL Improved the Rail Road ratio to the ever highest of 87:13 against the DoF norms of 80:20 and the previous best of 86:14 recorded during 2022-23 & 2023-24. y For the 6th Consecutive year since 2019-20, MFL products were marketed without any additional rebates & credit periods, thereby saved a huge financial outgo on marketing costs, whereas Competitors offered various rebates & extended credit periods liberally. y For the 7th consecutive year, achieved 100 % on RTGS/online payments for all the sales transactions.

Global Scenario:

Trend in International prices of fertilizers

The trends of average international prices of fertilizers since April, 2024 are given below: y Price of Urea (FOB) has increased by about 23.91% from USD 343/MT in April, 2024 to USD 425/MT in March, 2025. y The price of DAP (CFR) has increased by about 18.10% from USD 542/MT in April, 2024 to USD 640/MT in March, 2025. y The price of MOP (CFR) has decreased by about 11.29% from USD 319/MT in April, 2024 to USD 283/MT in March, 2025. y The price of Phosphoric Acid (CFR) has increased by about 10.10% from USD 963/MT in April, 2024 to USD 1060/MT in March, 2025. y The price of Rock Phosphate (CFR) has decreased by about 6.42% from USD 187/MT in April, 2024 to USD 175/MT in March, 2025. y The price of Ammonia (CFR) has decreased by about 4.42% from USD 475/MT in April, 2024 to USD 454/MT in March, 2025. y The price of Sulphur (CFR) has increased by about 136.9% from USD 111/MT in April, 2024 to USD 263/MT in March, 2025.

Production, Imports and Consumption of Major Fertilizers (All India Basis) :

In the landscape of Indias Agricultural and Fertilizer sectors, the Fiscal Year 2024-25 stands out as a beacon of success of strategies implemented by Ministry of Fertilizers, Govt of India adorned with remarkable achievements and significant milestones. The nation has witnessed a remarkable surge in consumption of key Fertilizers, propelling the total production to an impressive 45.74 million tons.

Leading this charge is Urea, spearheading the fertilizer production with a monumental output of 30.64 million tons. Closely trailing behind the surge are the essential NPKs, contributing 11.33 million tons, and DAP with a contribution of 3.77 million tons. This collective accomplishment underscores Indias unwavering commitment to bolstering its agricultural infrastructure and ensuring food security for its populace.

The figures of production, imports and consumption of major fertilizers viz. Urea, complexes in India for the years 2023-24 and 2024-25 are given below:

								[Lakh MT]
PRODUCT	UREA		DAP		NP/NPK (Other than DAP)		MOP *
	2023-24	2024-25	2023-24	2024-25	2023-24	2024-25	2023-24	2024-25
PRODUCTION	314.1	306.4	42.9	37.7	95.5	113.3	-	-
IMPORTS	70.4	56.5	55.7	45.7	22.2	22.7	28.7	35.4
CONSUMPTION	357.8	387.7	108.1	92.8	110.7	142.1	16.4*	22.0*

* = For direct application only, Excludes supply to NPK/Complex fertilizers units.

With a growing population and increasing demands on agricultural productivity, these achievements signal a promising trajectoryforIndias sufficiencyand resilience in its agricultural future.AsIndiacontinuestostriveforself- sector, these accomplishments serve as a sign of inspiration for the nations journey towards prosperity and food security.

All India Demand Forecast For Fertilizer Nutrients for the Periods 2023-24 to 2025-26

[Lakh MT]

PERIOD	N	P	K	TOTAL	RATIO (NPK)
2023-24 (Estd)*	204.6	83.1	18.8	306.5	10.9:4.4:1
2024-25 (Estd)	221.5	84.0	23.8	329.3	9.3:3.5:1
2025-26 (Forecast)	226.0	85.7	24.3	336.0	9.3:3.5:1

* = DBT Pos sale.

All India Product-Wise Demand Forecast For 2023-24 To 2025-26

[Lakh MT]

PERIOD	UREA	DAP	SSP	MOP	COMPLEX FERTILIZERS
2023-24 (Estd)*	357.8	108.1	45.4	16.4	110.7
2024-25 (Estd)	387.7	92.8	49.3	22.0	142.1
2025-26 (Forecast)	395.5	94.7	50.3	22.4	144.9

* = DBT Pos sale.

The Demand forecast for nutrients and corresponding fertilizers are based on anticipating favorable onset of monsoon, availability of irrigation, production, imports, cropping pattern etc. And it is based on existing product nutrient ratio also. However, with Nutrient Based subsidy scheme and programs like soil health management and promotion of balanced fertilizer nutrients application, the demand for complex fertilizers will get rationalized in the coming years.

Nutrient Based Subsidy (NBS) for Phosphatic & Potassic Fertilizers

The Government of India introduced the Nutrient Based Subsidy Phase-I with effect from 1.4.2010. This scheme is applicable for DAP, MOP, MAP, SSP, TSP and for other twenty two grades of P & K fertilizers.

Under NBS Scheme, Subsidy for the product ‘Potash Derived from Molasses (PDM-0:0:14.5:0) was decreased to Rs 345/-MT from Rs 2304/MT to Manufacturers effective October2023 in line with reduction applicable for other P&K fertilizers. Any fortified fertilizers with secondary & micro-nutrients like Boron & Zinc will continue to be eligible for additional per MT subsidy of Rs 300/- & Rs 500/- respectively.

The per kg Nutrient Based Subsidy for Nutrients ‘N ‘P ‘K for the period 2022-23 to 2024-25 Season wise is given below: (Rs/Kg of Nutrient)

Sl. Nutrients		2022-23		2023-24		2024-25
Season	Kharif	Rabi		Kharif	Rabi	Kharif	Rabi
1 N	91.96	98.02	99.27	76.49	47.02	47.02	43.02
2 P	72.74	66.93	49.94	41.03	20.82	28.72	30.80
3 K	25.31	23.65	25.70	15.91	2.38	2.38	2.38
4 S	6.94	6.12	2.84	2.80	1.89	1.89	1.76

Internal Control System

The company has an Internal Control system designed to ensure security of the assets of the company and efficiency of operations. The internal Control systems include proper delegation of authority, supervision, SAP (MM/FI/SD) & Online Integration System (OLIS), both having checks & procedures through documented policy guidelines and manuals.

Ratio Analysis

Particulars	FY 2024-25
(i) Debtors Turnover	7.22
(ii) Inventory Turnover	1.85
(iii) Interest Coverage Ratio	2.45
(iv) Current Ratio	0.68
(v) Debt Equity Ratio	(49.36)
(vi) Operating Profit Margin (%)	5.98
(vii) Net Profit Margin (%)	2.53
(viii) Return on Net worth	NA

Prevention of Sexual Harassment

The Company has zero tolerance for sexual harassment at the work place and has been following the provisions of the Sexual Harassment of Women at Workplace (Prevention, prohibition and Redressal) Act 2014 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace.

Internal Complaints Committee (ICC) is in place at MFL to redress the complaints received regarding sexual harassment. All women associates (permanent, temporary, contractual and trainees) as well as any woman visiting the Companys premises are covered under this provision.

Summary of sexual harassment issues raised attended and disposed of during the financial year 2024-25:

No. of complaints received	Nil
No. of complaints disposed of	Nil
No. of cases pending for more than 90 days	Nil