Nagarjuna Fertilizers & Chemicals Ltd Merged Directors Report

Your Directors have pleasure in presenting the 6th Annual Report together with the Audited Accounts of your Company for the year ended March 31, 2012.

The financial results and the consolidated financial results of the Company for the year ended March 31, 2012 are as under:

FINANCIAL RESULTS		Rs. in Crores
Particulars	2011 – 2012	2010 – 2011
	current year	previous year
Net sales/income from Operations	4992.28	–
Other Income	29.43	–
Total Expenditure
a. 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 (Face value of Rs.1/- per share)	59.81	0.005
Reserves excluding revaluation reserve	2238.91	–
Earning per share (annualized) – in Rs.
Basic and Diluted	2.27
*Proposed

 

CONSOLIDATED FINANCIAL RESULTS		Rs. in Crores
Particulars	2011 – 2012	2010 – 2011
	current year	previous year
Net sales/income from operations	4992.28	–
Other income	31.52	–
Total expenditure
a. 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 (Face value of Rs.1/- per share)	59.81	0.005
Reserves excluding revaluation reserve	2245.47	–
Earning per share (annualized) – in Rs.
Basic and Diluted	2.31
* Proposed

The 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 NFCL and iKisan Limited were transferred to and vested in your Company and recorded at their respective fair values as determined by a reputed valuer appointed by the Company.

Your Company has drawn up the financial statements for the year 2011-12 as per the revised Schedule VI of the Companies Act, 1956 which provides for a new presentation of the information compared to the earlier format.

Consolidated financial statements are also attached along with the financial statements of the Company.

DIVIDEND

Your Directors after careful consideration of the accounts of the Company recommend a dividend of Rs.1/- (previous year–Nil) per equity share to the equity shareholders of the Company for the year ended March 31, 2012.

RESERVES

Your Directors propose to transfer an amount of Rs. 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 Rs. 2298.72 Crores (pre-scheme in Erstwhile NFCL Rs. 1549.28 Crores).

RESTRUCTURING

The Composite Scheme of Arrangement and Amalgamation between Kakinada Fertilizers Limited, iKisan Limited, Nagarjuna Fertilizers and Chemicals Limited and Nagarjuna Oil Refinery Limited (Scheme) was approved by the Hon’ble High Court of Bombay at Mumbai on June 17, 2011 and by the Hon’ble High Court of Andhra Pradesh at Hyderabad on June 27, 2011.

Consequent to the Approval of the Jurisdictional High Courts the Composite Scheme was made effective on July 30, 2011 i.e., ‘Effective Date’ but operative from ‘Appointed Date’ i.e., April 1, 2011. With effect from July 30, 2011, the ‘Oil Business Undertaking’ of Erstwhile NFCL was demerged into NORL and the residual NFCL along with iKisan were merged into your Company.

The name of your Company was changed from Kakinada Fertilizers Limited to Nagarjuna Fertilizers and Chemicals Limited with effect from August 19, 2011 and the registered office was shifted from Maharashtra to Andhra Pradesh.

Your Company had filed applications for listing of equity shares with Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on October 7, 2011. BSE approved application of the Company for listing of 59,80,65,003 equity shares on December 14, 2011 and NSE provided in-principle approval for listing of 59,80,65,003 equity shares on January 13, 2012. The Company awaits relaxation from SEBI under Rule 19(2) (b) of Securities Contracts (Regulation) Rules, 1957 to commence trading of the equity shares of the Company.

PARTIAL REDEMPTION OF ZERO COUPON DEBENTURES/PREPAYMENT OF FUNDED INTEREST TERM LOAN

The Board of Directors of the Erstwhile NFCL had in the year 2004 allotted 334,936,238 Zero Coupon Debentures (ZCDs) of the face value of Rs.1/- each aggregating Rs. 334,936,238/- to banks and financial institutions in lieu of the sacrifice of interest made by them pursuant to the debt restructuring then carried out.

Certain Banks and Financial Institutions had converted the ZCDs into Funded Interest Term Loan (FITL). The above ZCDs/FITL were to be redeemed/repaid after the entire debt liabilities are fully repaid in March 2016.

During the year under review, pursuant to the directions of the CDR Empowered Group, of the CDR Cell of IDBI, Mumbai, your Company had redeemed 2,64,78,014 ZCDs with no outstanding ZCDs as on date.

SHARE CAPITAL

Preference Share Capital

The Board of Directors of Erstwhile NFCL had in the year 2004 allotted 37,20,372 0.1% Ordinary Redeemable Preference Shares (ORPS) of Rs. 100/- each to banks and financial institutions in lieu of the sacrifice of interest made by them pursuant to the debt restructuring then carried out.

The said Preference Shares were to be redeemed/repaid after the entire debt liabilities are fully repaid in March 2016.

During the month of June, 2011, as per the directions of the CDR Monitoring Committee, Erstwhile NFCL redeemed 18,60,187 ORPS of Rs. 100/- each aggregating Rs. 18.60 crores and there are no outstanding ORPS as on date.

Equity Share Capital

During the year the following changes were effected to the equity share capital of your Company:\

a) One equity share of Rs. 10/- each was subdivided into ten equity shares of Rs.1/-each

b) Pursuant to the Composite Scheme 59,80,65,003 equity shares of Rs.1/- each were issued to the shareholders of Erstwhile NFCL and iKisan Limited on October 1, 2011

c) The pre-scheme equity paid-up capital of Rs. 5 Lakhs consisting of 5,00,000 equity shares of Rs.1/- each held by promoters was cancelled.

d) The paid-up equity capital of the Company as on March 31, 2012 is Rs. 59,80,65,003/-

PLANT OPERATIONS

Urea

Your Company during the year manufactured 15.62 LMT of urea as against 16.55 LMT in the previous year.

Your Company during the year undertook various initiatives for improving energy efficiency, safety, health, environment, reliability and cost reduction.

Your Company during the year also obtained certification of ISO 14001: 2004 RC 14001: 2008 and recertification of ISO 9001: 2008, OHSAS 18001: 2007 and ISO 14001: 2004.

Your Company in its quest to continue to protect the environment undertook rain harvesting projects at various locations in the plant.

Micro-Irrigation

Your Company achieved a production of 1373.51 Lakh Mtrs against of 1135 Lakh Mtrs during the previous year.

MARKETING

Urea

Your Company achieved a sale of manufactured urea of 1562556 MT compared to 1645289 MT in the previous year.

The total urea sales both manufactured and imported was 2288011 MT compared to 2200179 MT of previous year.

Other Traded Products

Bulk Products

Your Company sold 802246 MTS during the year, in comparison with sales of 407872 MTS during the previous year.

Seeds

Your Company sold 4765 MTS during the year, in comparison with sales of 3365 MTS during the previous year.

Customized Fertilizers

Your Company sold 16536 MTS during the year, in comparison with sales of 12879 MTS during the previous year.

Specialty Fertilizers

Your Company sold 12211 MTS during the year, in comparison with sales of 9226 MTS during the previous year.

Micro-nutrients

Your Company sold 5949 MTS during the year, in comparison with sales of 4506MTS during the previous year.

Bio-Products

Your Company sold 245 KL during the year, in comparison with sales of 194 KL during the previous year.

Micro-Irrigation

Your Company during the year achieved 37.56% growth in sales aggregating Rs. 152.61 crores as compared with that of the previous year (Rs. 110.94crores).

Please note that reference to previous years figures on plant operation pertains to erstwhile NFCL.

Operations in Africa

Your Company after a detailed analysis and market research considers it advantageous to explore the opportunities available in Africa. Your Company to begin with has set up a branch office in Nairobi, Kenya, to start its International Sales and Marketing operations in East Africa. In the initial stage, it is proposed to market plant nutrients and thereafter foray into Micro-Irrigation systems at a later stage.

Your Company is also looking at various options to commence business activity to cater to the markets in West Africa.

Your Company in view of the rapidly growing demand for fertilizers, micro-nutrients and Micro-Irrigation systems, proposes to explore various other countries in Africa in a phased manner.

Government Policy

In the year under review the fertilizer industry was into second year of the implementation of the Nutrient Based Subsidy (NBS) scheme for phosphatic and potassic fertilizers. The prices of these fertilizers witnessed significant increase in view of reduction in the subsidy component under NBS policy.

On the urea front, the subsidy is still computed as per the stage III New Pricing Scheme which was extended from April 1, 2010 onwards till further orders. In view to speed up the mechanism to set up a route to directly transfer subsidies to end users the Government of India in the recent Union Budget has announced the set up of a mobile based Fertilizer Management System (mFMS). This system would help 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 out this system nation-wide during the current year and directly transfer subsidy to the retailer, and eventually to the farmer which will be implemented in subsequent phases.

The need of the hour is a new investment policy for urea which shall encourage setting up new facilities to increase domestic production and reduce dependence on costly imports. The government needs to address key issues like gas availability, pricing and urgently draw up a comprehensive long-term policy to attract investments in this vital sector.

ENVIRONMENT, SAFETY AND AWARDS

Environment

Your Company continues its mission of protecting the environment and has inculcated the concept right down the organization.

The statutory compliance of the Company on environmental matters is being complied from time to time.

Safety

Your Company on March 31, 2012 completed 3.16 million accident-free man-hours for the first time since inception.

Awards

Your Company during the year bagged various prestigious awards such as:

• NFCL won the prestigious ‘Prashansa Patra’ award from National Safety Council of India for the year 2010.

• NFCL received the ‘FAI Award for Excellence in Safety for the year 2010-11’ under Nitrogenous 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 DEVELOPMENT

Your Company has undertaken technology development in Research and Development in areas of Plant Nutrition Solutions Technology Platforms and fuels and feedstocks.

In the area of Plant Nutrition Solutions Technology Platforms, your Company has initiated programmes in the areas of efficient plant nutrition with reference to macro, micro and supplements. After a thorough technology gap analysis on a need base; some of the programmes identified are for, in-house development, some through sponsored research and some through licensing technology at early stage to do the pilot plant and scale up.

In areas of Fuels and Feedstocks, your company along with active support from Department of Biotechnology (DBT), Government of India has successfully completed the 1st phase of the Pilot Plant and actively engaged in completing the 2nd phase of next generation renewable and sustainable fuel and feedback.

EMPLOYEE WELFARE ACTIVITIES

Your directors in order to ensure high employee morale, commitment, good working environment which differentiates the Company from others, intend to provide the best employee welfare measures, ensuring retention of the scarce skilled manpower available.

Your directors in this regard, have set up ‘NFCL Employee Welfare Trust’, which will provide welfare benefits to the employees and their families through the returns received from the investments made in various securities.

The promoters and their families will not be eligible to receive any benefits from the Trust.

POLICY MATTERS

Your Company’s endeavour has always been to maintain transparency and accountability to its stakeholders. In this direction, various policies mentioned in the Corporate Governance Report have been implemented to enable the stakeholders to appreciate the various interventions the Company has taken which involve them. The implementation of these policies are reviewed periodically by the Board of Directors and updated regularly.

The Company has set up a Grievance Redressal Mechanism for all its associates. The Grievance Redressal Mechanism is aimed to redress the grievances of associates expeditiously to ensure good working atmosphere and culture in the organisation.

CORPORATE GOVERNANCE

Your Company driven by a desire to be more competitive and recognized globally, had inculcated more than a decade ago rules defining ethical business, much before it was introduced as statutory compliance through Clause 49 of the Listing Agreement.

Your Company firmly believes that building a culture of compliance is more than meeting regulations and standards. Your Company has always proactively met mandated standards and practiced Corporate Governance in spirit and not just as letter of the law.

A report on Corporate Governance along with the Practicing Company Secretary’s Certificate on its compliance is annexed hereto. Your Company is happy to inform you that there were no adverse remarks/qualifications/reservations raised in the Corporate Governance Report.

SUSTAINABILITY REPORT

The Company, as a good governance practice, has compiled a Sustainability Report.

A detailed report on the sustainability initiatives taken up by the Company is published in the Nagarjuna Sustainability Report 2008-11. The report is available on the Company’s website www.nagarjunafertilizers.com

Shareholders interested to have a copy of the report may write to us.

DIRECTORS

Dr NCB Nath, Shri S R Ramakrishnan and Shri Chandra Pal Singh Yadav were appointed as Additional Directors and hold office up to the date of this Annual General Meeting and being eligible, offer themselves for appointment as Directors liable to retire by rotation.

The following are the changes in the Board of Directors for the year 2011-2012:

Name of Director	Date of Appointment	Remarks	Date of Cessation	Remarks
K Soma Raju	December 15, 2009	Nominees of Erstwhile NFCL	August 18, 2011	Resignation
A Vyasa Maheswara Rao	March 24,2010	Nominees of Erstwhile NFCL	July 27, 2011	Resignation
T V Dwarakanath	March 24, 2010	Nominees of Erstwhile NFCL	July 27, 2011	Resignation
K S Raju	June 17, 2011	Broad base the Board	–	Appointment
K Rahul Raju	June 17, 2011	Broad base the Board	–	Appointment
Dr N C B Nath	July 27, 2011	Broad base the Board	–	Appointment
S R Ramakrishnan	July 27,2011	Broad base the Board	–	Appointment
S P Arora	August 18, 2011	Nominee - IFCI	–	Appointment
Chandra Pal Singh Yadav	August 18, 2011	Nominee - KRIBHCO	–	Appointment
Yogesh Rastogi	August 18, 2011	Nominee – ICICI	–	Appointment
B K Batra	August 18, 2011	Nominee – IDBI	January 13, 2012	Withdrawal of nomination by IDBI
M P Radhakrishnan	August 18, 2011	Nominee - SBI	–	Appointment
Medha Joshi	February 21, 2012	Nominee - IDBI	–	Appointment

The Board of Directors had placed on record their appreciation of the services rendered by Shri B K Batra, Shri K Soma Raju, Shri A Vyas Maheswar Rao and Shri T V Dwarakanath during their term as Directors of the Company.

AUDITORS AND AUDIT REPORT

M/s. M Bhaskara Rao & Co., Chartered Accountants, Hyderabad, the Company’s auditors retire at the conclusion of the ensuing Annual General Meeting. They have signified their willingness to accept reappointment and have further confirmed their eligibility under Section 224 (1B) of the Companies Act, 1956. The Company’s Statutory Auditors have also furnished us with a certificate from the Peer Review Board of the ICAI confirming that they have undergone the process of peer review.

The Company has a well established system of Internal Audit which carries out audit on Risk Management framework covering the gamut of financial, marketing, plant operations and other service functions.

The Company’s Internal Audit function has obtained Quality Management System (ISO 9001: 2000) certificate in December 2006 and the same has been confirmed.

COST AUDITOR

Pursuant to Section 233 B of the Companies Act, 1956 the Central Government has directed that the cost accounts maintained by the Company be audited by a cost auditor. Subject to the approval of the Central Government, the Company has appointed Shri Dantu Mitra, Cost Accountant, as the Cost Auditor of the Company for the financial year 2012 – 13.

SUBSIDIARY COMPANIES

During the year upon making the Composite Scheme effective, Nagarjuna Oil Corporation Limited (NOCL) ceased to be subsidiary of the Company with effect from July 30, 2011 as all the assets and liabilities of the Oil Business Undertaking were transferred to Nagarjuna Oil Refinery Limited.

The Ministry of Corporate Affairs, New Delhi, vide Circular No.5/12/2007-CL-III dated February 8, 2011 granted general exemption under Section 212(8) of the Companies Act, 1956 in relation to providing information on the subsidiary companies provided certain conditions are fulfilled.

Pursuant to the said circular, the Board of Directors of the Company gave their consent for not attaching the Balance Sheets of the subsidiary companies to the Annual Accounts of your Company. Accordingly, the balance sheets and other financial statements relating to the following companies are not attached to the Annual Accounts of the Company.

1. Jaiprakash Engineering and Steel Company Limited (JESCO)

2. Nagarjuna Mauritius Private Limited (NMPL)

3. Nagarjuna East Africa Limited (NEAL)

Any member seeking information on any of the subsidiary companies may write to the Company to enable the same to be forwarded.

Jaiprakash Engineering and Steel Company Limited (JESCO)

JESCO is considering implementing various Infrastructure projects to utilize the available land appropriately and gainfully.

Nagarjuna Mauritius Private Limited

Nagarjuna Mauritius Private Limited (NMPL) is a wholly owned subsidiary of NFCL with a paid up capital of Euro 5 Million. The Company has invested Euro 5 Million in the form of equity and Euro 2,500,000 as loan which has been reinvested in Nagarjuna Spawnt GmbH, Germany

Nagarjuna Spawnt GmbH, Germany, has set-up a plant for manufacture of silane chemicals and has commissioned production from December 5, 2011

Nagarjuna East Africa Limited

Nagarjuna East Africa Limited, a wholly owned subsidiary of Nagarjuna Mauritius Private Limited was incorporated in Kenya on October 15, 2010 to market plant nutrients in the initial stages followed by micro-irrigation systems at later stage in Kenya.

PERSONNEL

There are no employees as on date on the rolls of the Company who are in receipt of remuneration which requires disclosures under Sec 217 (2A) of Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1957.

DISCLOSURES

Disclosure in terms of Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 in respect of conservation of energy, technology absorption, earnings and outgo of foreign exchange are attached and forms part of this Report.

AUDIT COMMITTEE CONSTITUTION

In compliance with the provisions of the Section 292A of the Companies Act, 1956 and the listing agreement entered into with the stock exchanges, the Company had constituted an Audit Committee consisting of highly qualified and experienced members from various fields. The committee consists of four Independent Directors and two Wholetime Directors. The Chairman of the committee Dr. N C B Nath is an Independent Director and the committee meets periodically to review the quarterly financial statements and recommends its findings to the Board apart from taking action independently whenever required. The Statutory Auditors, Secretary and the Internal and Cost Auditors attend and participate in the Audit Committee Meetings.

The Audit Committee comprises of

Dr. N C B Nath	Chairman, Independent Director
Smt Medha Joshi	Member and Independent Director
Shri S R Ramakrishnan	Member and Independent Director
Shri M P Radhakrishnan	Member and Independent Director
Shri K S Raju	Member and Chairman
Shri K Rahul Raju	Member and Managing Director

CORPORATE SOCIAL RESPONSIBILITY

"A journey of thousand miles starts with a single step." - Laozi.

The Nagarjuna Group always desired to play a proactive role in societal development. With an intention to bring positive change in the lives of many, we at the Nagarjuna Group under the aegis of Nagarjuna Foundation started several CSR activities three years ago.

An initiative started in 2009 with the spirit of making a difference, has today deepened its roots and is making a bigger impact and changing many more lives.

The dedicated support, strength, initiative and encouragement from the associates of the Group to be part of this initiative gave impetus to the movement.

Your Company made contribution of Rs. 25 Lakhs post-merger during the previous Financial Year 2011-12 towards education, sports, healthcare and community welfare under the aegis of Nagarjuna Foundation and during the year proposes to collaborate with various leading organizations, charitable and other funds or trusts.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956,

Your Directors hereby report:

a. that in the preparation of Annual Accounts for the year ended March 31, 2012; the applicable accounting standards have been followed.

b. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of profit and loss account for the period ended March 31, 2012.

c. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. that the Directors have prepared the Annual Accounts on a going concern basis.

ACKNOWLEDGEMENT

Your Directors place on record their gratitude to the Government of India, Government of Andhra Pradesh and the financial institutions and Company’s bankers for their assistance and cooperation.

Further, the Company places on record its sincere appreciation for the continuing support and unstinting efforts of investors, dealers and associates and all stakeholders in ensuring an excellent all round operational performance.

	On behalf of the Board
Hyderabad	K S Raju
June 12, 2012	Chairman

FORM - A : Form for disclosure of particulars with respect to conservation of energy

1. Urea
Particulars	Unit	Year ended
		March 31,2012	March 31,2011#
Power and Fuel Consumption
1. Electricity
a) Purchased
Unit	1000 KWH	3072.4	2805.2
Total amount *	Rs. Lakhs	254.65	243.78
Rate/ KWH	Rs./MT	8.29	8.69
b) Own generation
Through gas turbine units	1000 KWH	245373.2	247670
KWH per SM3 of gas		5.62	5.32
Cost of gas per unit of power generated	Rs./KWH	1.63	1.51
2. Fuel (Including ammonia-fuel, steam and power)
Quantity - natural gas	1000 SM3	428322.122	477853.347
Natural gas lower heating value	Kcal/SM3	8743.237	8273.725
Total cost	Rs. Lakhs	39173.273	38343.33
Rate per unit of natural gas	Rs./1000 SM3	9145.75	8024.08
Quantity - naphtha	MT	–	–
Naphtha lower heating value	Kcal/kg	–	–
Total cost	Rs. Lakhs	–	–
Rate per unit of naphtha	Rs./MT	–	–
Quantity – low sulphur heavy stock	MT	–	–
Low sulphur heavy stock lower heating value	Kcal/kg	–	–
Total cost	Rs. Lakhs	–	–
Rate per unit of low sulphur heavy stock	Rs./MT	–	–

3. Consumption per MT of Urea Production (including ammonia - fuel, steam and power)

Particulars	Unit	Standard	Year ended
			March 31, 2012	March 31, 2011#
Electricity (Including internal generation) **	KWH	132.8	158.98	151.34
Naphtha at 10500 kcal/kg	Kg	64.5	–	–
Low sulphur heavy stock (At actual calorific value)	Kg	Nil	–	–
Furnace oil (At actual calorific value)	Kg	Nil	–	–
Natural gas (Fuel)*** at 8168 Kcal/SM3	SM3	251	293.394	292.463

* This amount is paid towards purchased power to APTRANSCO.

** Against the design intention of running the units in steam intensive mode, the units are being run in electric power intensive mode to optimize these networks and lower the specific energy. This is reflected in high specific power consumption and lower specific steam consumption.

*** 8168 KCal per SM³ is as per design norms. Actual consumption is higher than standard as there is no naphtha usage in present case.

# - Data pertains to Erstwhile NFCL as Kakinada Fertilizers Limited (now NFCL) was not undertaking any operations during the Previous Year.

I. Micro-irrigation - I (Nacharam)

Particulars	Unit	Year ended March 31,2012	Year ended March 31,2011#
Electricity
a) Purchased	1000 KWH	2546.01	2764.99
Total amount	Rs. in Lakhs	117.01	123.20
Rate/KWH	Rs./KWH	4.60	4.46
b) Own generation
Diesel	1000 KWH	527.44	425.16
Total cost	Rs. In Lakhs	69.46	50.83
Rate per unit	Cost of diesel per unit of power generation	13.17	11.96

II.Micro-irrigation - II (Sadashivpet)

Particulars	Unit	Year ended March 31,2012	Year ended March 31,2011#
Electricity
a) Purchased	1000 KWH	921.88	820.11
Total amount	Rs. in Lakh	46.1	38.39
Rate/KWH	Rs./KWH	5.00	4.68
b) Own generation
Diesel	1000 KWH	128.93	121.23
Total cost	Rs. In Lakh	17.94	14.74
Rate per unit	Cost of diesel per unit of power generation	13.91	12.16

III.Micro-irrigation - III (Halol)

Particulars	Unit	Year ended March 31,2012	Year ended March 31,2011#
Electricity
a) Purchased	1000 KWH	739.3
Total amount	Rs. in Lakh	45.46
Rate/KWH	Rs./KWH	6.15	NA
b) Own generation
Diesel	1000 KWH	4.176
Total cost	Rs. In Lakh	0.63
Rate per unit	Cost of diesel per unit of power generation	15.09

 

Particulars	Unit	Year ended March 31,2012	Year ended March 31,2011#
Consumption per metre of Lateral – Micro- irrigation - I (Nacharam)
Electricity (Including internal generation)	KWH	0.0255	0.0229
Consumption per metre of PVC Pipes – Micro-irrigation - II (Sadashivpet)
Electricity (Including internal generation)	KWH	0.2800	0.2200
Consumption per metre of Lateral – Micro-irrigation - III (Halol)
Electricity (Including internal generation)	KWH	0.0204	NA

# - Data pertains to Erstwhile NFCL as Kakinada Fertilizers Limited (now NFCL) was not undertaking any operations during the Previous Year.

FORM-B (2011-12)

Form for disclosure of particulars with respect to technology absorption

A. Research and Development (R & D):

1. Specific areas in which R & D was carried out by the Company:

1.a Production facility at Kakinada:

There is no separate R & D department at the plant in Kakinada. However, the engineers engaged in technical services, production, general engineering and maintenance departments undertake activities which are aimed at improvements in the following areas:

i. Energy conservation.

ii. Capacity enhancement.

iii. Environmental protection.

iv. Process and personnel safety.

v. Enhancement of plant reliability.

vi. Rain water harvesting for conserving raw water intake.

vii. Exploration for usage of renewable energy sources like solar among others

1.b Production facility at MI and PVC plants:

i. Started manufacturing of state-of-the-art technology based Pressure Compensated Flat type Integral Drip Laterals in 16mm and 20mm at Halol Manufacturing facility.

ii. Installed Automation Micro Irrigation System in Tamil Nadu for the first time

iii. Introduced Rain Guns in Tamil Nadu for the first time.

iv. Explored the possibilities of process improvement to control various costs like packing, capacity enhancement, better equipment utilization, indigenization of critical spare parts, transportation, packing, space management among others.

v. Introduced new sources of raw materials like IOCL, SASOL and different grades to reduce the dependency on a single supplier.

vi. Doubled the capacity of HDPE pipes by refurbishing the existing line and achieved ever highest production of 13.7 Lakh metres with 50% growth (previous best was 9.13 Lakh metres in 2010-11).

vii. Developed Semi-Automation system for HDPE welding machine and improved the productivity.

viii. Increased the output of Easy Drip and achieved ever highest production of Easy Drip 16.6 Lakh metres in a single month.

2. Benefits derived as a result of the above efforts :

2.a Production facility at Kakinada:

The improvements achieved in the areas of production performance, treated effluent generation, environmental protection, process and personnel safety are given below:

i. During 2011-12, individual plants surpassed previous monthly production records.

ii. Complex achieved lowest Specific Effluent Generation of 0.67 m / MT of urea, surpassing the previous best of 0.68 m / MT of urea achieved during 2010-11.

iii. With respect to accident free man-hours for associates, achieved 1.5 million (equivalent to 319 days) during 2011-12.

AWARDS RECEIVED:

1) ‘International Safety Award for Best Safety Performance’ from British Safety Council, UK.

2) ‘Prashansa Patra’ award for the year 2010, from National Safety Council of India.

3) ‘Excellence in Safety for the year 2010 – 11’ from FAI, Delhi.

4) Certificate of Appreciation for implementation of ‘Energy Conservation Measures’ from NREDCAP, Hyderabad.

5) CII Environmental Best Practices Award 2012, under ‘Most Innovative Environmental Project’ category in the Fertilizer Sector for ‘Installation of Dry De-dusting System for improving the dust Control in Urea Plants’ from CII - Godrej GBC, Hyderabad.

6) ‘EHS Excellence Award – 2011’ from CII, Chennai.

7) ICC has granted permission for use of the Responsible Care Logo with effect from June 2011.

2.b Production Facility at MI and PVC plants:

i. Increased the productivity of HDPE line from 3000 metres to 6000 metres per day.

ii. Increased the production capacity of Easy Drip and maintained continuously.

iii. Achieved highest gross revenue of Rs. 153 Cr

iv. Achieved highest production of 1374 Lakh Meters

v. Utilized more than 100% capacity of all prime lines.

vi. Saving in packing cost on Cylindrical Drip Laterals by developing new PP strapping. vii. Expansion / Developments:

• Organized PC attachments from M/s Metzerplas and commissioned successfully by Internal Team.

• Manufactured and Launched ‘Pressure Compensated Flat Type Integral Drip laterals’ 16mm and 20mm successfully.

• Developed new product i.e., Easy Drip 12mm ECO (0.50mm wall thickness)\

• Arranged injection molding machine to manufacture HDPE couplers in-house to comply with BIS requirements.

• Developed and Obtained BIS license for new product Superline 20mm Cl-1 (1.2, 2.2, 4.2 LPH).

3. Future Plan of Action:

3.a Production facility at Kakinada:

The following action plans have been made to improve production, plant reliability, specific energy consumption and in the EHS areas as mentioned below:

• Upgradation of Urea-I and Urea-II Carbamate condensers with latest technology.

• Replacement of Urea-II Stripper.

• Replacement of Tube Bundle in CO2 Compressor 3rd stage Inter-cooler (EE- 127) in Urea-II

• Replacement of Ammonia-I Backend Boiler.

• Replacement of Tube Bundle in GV Re-boiler (EE-301 A/B) in Ammonia-II Upgradation of Ammonia-II Secondary Reformer Air Gun.

• Construction of two CT cells in plant 1 and 2.

• End to end survey of Ammonia Plants for ensuring their adequacy for higher load operation.

• Phase-III Ammonia Urea Complex:

• EIA Report was submitted to MoEF in consultation with M/s NEERI.

• Public hearing was conducted on August 17, 2011.

• Presentation was given at MoEF, New Delhi on November 17, 2011 for obtaining Environmental Clearance.

• For resolving the additional clarifications sought by MoEF, presentation was made to MoEF on February 16, 2012 and the response from them was positive.

• For design, engineering, procurement, construction and commissioning of plant, technical bids were received from vendors (on lump sum turn key basis) have been opened and discussions are being held to resolve the pending issues.

3.b Production Facility at MI and PVC plants:

• To set up Injection Moulding Facility to manufacture drippers in-house at Nacharam by end of 2012-13.

• To organize new PVC line at Halol to obtain logistical advantage.

• To start manufacturing HDPE Pipes at Halol to save logistics cost.

• To set up Filter Manufacturing Facility at Halol.

4. Research and Development (R&D)

a. Specific areas in which R & D was carried out by the Company

Development of Plant Nutrition Business

The company has initiated a number of programmes to increase the plant nutrition use efficiency of NPK and plant nutrition supplements to bring out next generation sustainable products. A number of products are at different stages of testing.

Alternate Fuels and Feedstock

Your company along with active support from Department of Biotechnology (DBT), Government of India has successfully completed the 1st phase of the Pilot Plant and actively engaged in completing the 2nd phase of next generation renewable and sustainable fuel and feedback.

b. Benefits derived as a result of the above efforts

Plant Nutrition Business

The new products and processes developed will provide a sustainable competitive advantage and better market share thereby propelling the business growth.

Alternate Fuels and Feedstock

Development of economical, renewable and sustainable fuels and feedstock will give independence from Hydrocarbon based fuels and feedstock. This will also be carbon negative and environmentally safe.

c. Future Plan of Action

In the areas of Plant Nutrition as well as Green fuels and feedstock areas, company has planned to bring some of the products from Proof of Concept (POC) to Proof of Value (POV) stage as well as it will continue its efforts to establish further Proof of Concept in other emerging areas.

d. Expenditure on R & D

A separate record of the expenditure incurred in R & D is maintained for the R & D division.

B. Technology Absorption, Adaptation and Innovation:

B.1 Efforts, in brief, made towards technology absorption, adaptation and innovation:

Production facility at Kakinada:

• In Ammonia-I Primary Reformer, all 190 tubes were replaced with improved material for construction.

• In Ammonia-I Secondary Reformer, Air Gun was upgraded with improved design.

• In Urea-II Reactor, existing trays were replaced with improved technology and improved design Casale Trays.

• Urea-I DCS Operating System was converted from UNIX base to Windows base.

• In line with Companys interest towards cleaner environment and renewable energy usage, a solar steam cooker for preparation of meal for 500 people was installed near canteen area.

Production Facility at MI and PVC plants:

• Improved finished goods packaging, indigenization of spare parts and development of components.

• Implemented the process of re-granulation and consumed 100% process scrap.

• Reduced down-time with improved preventive maintenance practices and achieved 100 % utilization of prime lines.

• Organized uninterrupted power supply for IDL 03 and air compressor and reduced down time considerably.

• Installed new in-house Feeder Conveyor for PVC_01.

• Installed new in-house Jetting Stand.

• Developed Socket Fusion Welding Machine for fittings.

• Replaced GI Line with HDPE Line to control rust formation in chiller

• Developed Storage space at HDPE Welding area with available resources

B.2 Benefits derived as a result of the above efforts example Product Improvement, Cost Reduction, Product Development, Import Substitution among others

Production facility at Kakinada:

• By replacing the reformer tubes of Ammonia-I with improved material construction, additional volume of catalyst was accommodated, which resulted in performance improvement.

• By upgrading the Ammonia-I Secondary Reformer Air Gun, the reliability and performance of Reforming Section improved further.

• With respect to replacement of Urea-II Reactor Trays, the conversion improved and resulted in Specific consumption/Specific Energy reduction.

• By adopting measures for utilizing renewable energy resource through installation of Solar Steam Cooker Greenhouse Gas emissions was minimized and thus contributed towards improvement of environment.

Production Facility at MI and PVC plants:

• Inventory of raw materials has been controlled within the norm of 15 days.

• Reduced the short shipments due to shortage of bought out goods by better planning.

• Rated as top class ‘Quality Product’ supplier

B.3 In case of import technology (imported during the last five years, reckoned from the beginning of the financial year), following information may be furnished:

Production facility at Kakinada:

• NFCL had installed 450 MTPD CDR (Carbon Dioxide Recovery) Plant in March 2009 under the License of M/s Mitsubishi Heavy Industries (MHI), Japan. M/s Mitsubishi Heavy Industries (MHI) had been the Technology Supplier and Basic Engineering Contractor for this Project. The plant performance is satisfactory.

Production Facility at MI and PVC plants:

• Not applicable

FORM-C

Particulars of foreign exchange earnings and outgoings for the year 2011-12

A. Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services, export plans -

B. 1. Foreign Exchange Outgo	Rs. in Lakhs
a. Technical know-how (net of Tax)	Nil
b. Interest	2208.82
c. Dividend (net of taxes)
i. Equity	121.27
ii. Preference	Nil
d. Others	1131.31
2. Foreign Exchange Earnings	1136.46

Particulars of Subsidiaries as at March 31, 2012 in terms of Circular No:5/12/2007-CL-III dated February 8, 2011, General Circular 2/2011 issued by the Government of India, Ministry of Corporate Affairs Section 212 (8) of the Companies Act, 1956

		Rs. Lakhs
		Name of the Subsidiary Company
S.No.	Particulars	Jaiprakash Engineering and Steel Company Limited	Nagarjuna Mauritius Pvt Ltd *
a.	Capital	2,259.72	3,037.50
	Share application money	–	–
b.	Reserves	2.85	656.21
c.	Total assets
	Fixed assets (including capital works in progress)	28.83	–
	Expenditure pending allocation	–	–
	Current assets, loans and advances	1,858.89	5,402.68
	Miscellaneous expenditure (to the extent not written off or adjusted)	–	–
	Profit and loss account - debit balance	453.63	–
d.	Total liabilities
	Loans secured/Unsecured	42.56	1,708.51
	Current liabilities and provisions	36.12	4.25
e.	Details of investment (except in case of investment in subsidiaries)	–	3.79
f.	Turnover/Other Income	–	208.93
g.	Profit/(Loss) before taxation	(2.33)	202.95
h.	Provision for taxation (on prior years)	0.02	6.08
i.	Profit/(Loss) after taxation	(2.35)	196.87
j.	Proposed dividend	–	–

* Exchange rate as on 31.03.2012 - Euro = Rs. 68.3403

	for NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED
Hyderabad	M. Ramakanth
May 28, 2012	Secretary

Statement pursuant to Section 212 of the Companies Act, 1956 relating to Company’s interest in Subsidiary Companies as at March 31, 2012

		Name of the Subsidiary Company
S.No.	Particulars	Jaiprakash Engineering and Steel Company Limited	Nagarjuna Mauritius
1	The financial year of the subsidiary companies ended on	March 31, 2012	March 31, 2012
2	a) Number of shares held by Nagarjuna Fertilizers and Chemicals Ltd. with its nominees in the subsidiaries at the end of financial year of the subsidiary companies	225,61,693 Equity Shares of face Value of Rs. 10/- each fully paid-up	50000 Equity Shares of face Value of Euro 100/- each fully paid-up
	b) Extent of interest of holding Company at the end of the financial year of the subsidiary companies	99.84%	100.00%
3	The net aggregate amount of the subsidiary companies profit/loss so far as it concerns the members of the holding Company.
	a) Not dealt with in the holding Companys accounts
	i) For the financial year ended March 31, 2012	Rs. Lakhs (2.35)	Rs. Lakhs 196.87
	ii) For the previous financial years of the subsidiary companies since they became the holding Companys subsidiaries	–	–
	b) Dealt with in the holding Companys accounts
	i) For the financial year ended March 31, 2012	–	–
	ii) For the previous financial years of the subsidiary companies since they became the holding Companys subsidiaries	–	–

 

	For and on behalf of the Board
	K S Raju	S P Arora
	Chairman	Chandra Pal Singh Yadav
		Medha Joshi
		N C B Nath
		M P Radhakrishnan
		Directors
Hyderabad	M Ramakanth	K Rahul Raju
May 28, 2012	Secretary	Managing Director