Nagarjuna Fertilizers & Chemicals Ltd Management Discussions

The global economy in 2024-25 has been marked by moderate but uneven growth, shaped by inflationary pressures, geopolitical conflicts, energy crisis and impact on trade. While the long-term trajectory remains positive-driven by technological innovation, digitalization, and sustainability initiatives-the near-term outlook is clouded by inflation and persistent geopolitical risks.

Global GDP growth for 2024 was estimated at around 3% (IMF), reflecting a slowdown from pre-pandemic averages. Advanced economies experienced subdued growth due to tight monetary policies, high borrowing costs, and weak demand.

Inflation, though easing in several regions, remained above central bank targets in 2024, driven by energy price fluctuations, labour market rigidities, and supply chain adjustments. Major central banks-including the U.S. Federal Reserve, European Central Bank, and Bank of England-maintained high- er-for-longer interest rates, balancing inflation control against recession risks. Elevated borrowing costs weighed on consumer spending, housing markets, and private investments, slowing down overall demand.

The Russia-Ukraine conflict continued to disrupt global food and energy markets, pushing Europe further toward renewables, LNG, and diversified energy imports. The Israel-Pales- tine war strained global logistics networks, adding uncertainty to trade routes and supply costs. The transition to renewable energy accelerated, with governments and corporates investing in solar, wind, hydrogen, and storage technologies. Traditional fossil fuels remained volatile, with OPEC+ supply decisions, sanctions, and demand uncertainty shaping global oil and gas prices.

The global economic outlook for 2025 remains cautiously optimistic. Economies that can balance inflation control with growth, foster innovation, and embrace green energy transitions are likely to consolidate leadership in the coming decade. However, high debt levels, geopolitical uncertainties, and energy security concerns will continue to pose challenges.

India remained one of the fastest-growing major economies in 2024, with GDP growth estimated at ~6-6.5%. Growth driven by domestic demand, government capex, private investment, and a robust services sector (IT, finance, healthcare). Global headwinds exist, but Indias growth outlook for 2025 remains resilient and broad-based.

Inflation moderated compared to previous highs but remains a policy focus. The RBI maintained elevated interest rates-bal- ancing growth support with inflation management.

Policy push through Make in India and PLI schemes boosting sectors like electronics, pharmaceuticals, automotive, defense, and semiconductors. Rising FDI inflows and diversification of global supply chains positioning India as a competitive manufacturing hub.

Large-scale investments in roads, railways, ports, airports, and digital infrastructure continued as a key growth driver. Infrastructure expansion enhancing connectivity, logistics efficiency, and industrial growth.

Agriculture showed productivity gains via technology, irrigation, and crop diversification. Challenges persist: climate risks, erratic monsoons, farm income disparities.Rural development initiatives (infrastructure, digital access, financial inclusion) helping, but rural distress remains a concern.

Strong progress in renewables (solar, wind, green hydrogen); India emerging as a clean energy leader. Reliance on coal remains high, creating a challenge in balancing energy security and climate commitments amid rising demand.

Indias growing influence in trade, manufacturing, technology, and sustainability strengthens its position as a key global economic player. Strategic reforms and sustained growth reinforce Indias role as a driver of global economic momentum in the coming decade.

Agriculture contributes ~16% of GDP and employs nearly 50% of Indias workforce. While its GDP share is gradually declining with industrial and services growth, the sector remains critical for food security, rural livelihoods, and employment.

Sector growth remained moderate in 2024, supported by food demand and rural income programs. MSP continues for rice and wheat, though policy focus is shifting toward crop diversification and high-value crops. Direct support through PM-Kisan provides income stability for small and marginal farmers.

Adoption of precision agriculture (drones, satellite monitoring, IoT sensors) improving productivity and resource efficiency. Digital platforms and agri-tech apps expanding access to real-time weather, pricing, and market linkages, reducing intermediaries.

Rising adoption of organic farming, reduced chemical use, and climate-resilient practices, supported under the National Mission for Sustainable Agriculture (NMSA).

Strengthened supply chains with investments in cold storage, warehouses, logistics, and transportation, reducing post-harvest losses. e-NAM platform expanding market access for farmers, though adoption is still uneven, with reliance on traditional mandis persisting.

Agriculture is transitioning toward a more technology-driven, diversified, and climate-resilient sector. Long-term growth hinges on irrigation coverage, climate adaptation, digital adoption, and supply chain modernization.

India remains one of the largest global consumers of fertilizers, with urea, DAP, and MOP as key inputs. Fertilizer consumption continued to rise in 2024-25, despite volatile international prices for finished fertilizers and raw materials / intermediates resulted in fall in import of fertilizers. The sector contributes significantly to agricultural productivity, food security, and rural livelihoods.

Supply of domestic gas to fertilizer plants has been declining over the year, this made fertilizer plants more dependent on imported LNG.

Government-led campaigns promoting balanced fertilizer use to address over-dependence on urea and improve soil health.

Urea pricing remains regulated, while other fertilizers (e.g., DAP) operate under market-linked pricing with subsidies. The sector is highly regulated, with intense competition focused on supply reliability and efficiency.

India is expanding domestic fertilizer capacity under Atmanir- bhar Bharat by reviving defunct plants and modernizing existing units. Despite progress, dependency on imports for phosphate and potash remains high. India has pursued long-term supply agreements with resource-rich nations (Russia, Canada, Morocco) to mitigate global price volatility.

Russia-Ukraine conflict and global supply chain disruptions continued to impact fertilizer availability and pricing in 2024. Rising input costs (natural gas for urea, phosphoric acid for DAP) add to pricing and production challenges.

Strong policy push for organic and bio-fertilizers, integrated nutrient management, and reduced chemical fertilizer use. Launch of nano-urea and precision nutrient solutions expected to improve efficiency and reduce environmental footprint. Programs like the National Mission on Sustainable Agriculture (NMSA) encourage sustainable practices across farming communities.

India aims to achieve greater self-reliance in fertilizers and potentially emerge as a net exporter of urea in the medium term. The sectors future will hinge on: Diversifying raw material sources, Modernizing plants for efficiency, Scaling bio-fertilizer adoption, Balancing environmental sustainability with productivity needs

As the productive assets / cash generating assets, have been sold out by the secured Creditor and the Company has to discontinue business operations since June, 2024, and looking for new opportunities.

The Company recorded a Proft after tax for the year was Rs. 2,424.87 crores against the loss after tax Rs. 1,283.89 crores for the previous year. The profit before exceptional items for the period is 2434.76 is mainly due to sale of assets of the company by ACRE under SARFAESI Act.

Your Company during the financial year 2024-25 manufactured 2.173 LMT of urea as against 13.102 LMT in the previous year. The production for the year 2024-25 is less compared to the usual level, owing to the sale of assets by ACRE to A M Green Ammonia India private limited on 31.05.2024.

The Company achieved a sale of manufactured urea of 2.173 LMT compared to 13.102 LMT in the previous year The total urea sales for both manufactured and imported urea was 2.173 LMT compared to 13.102 LMT of previous year.

i.

Debtors Turnover Ratio: Reduced due to lower turnover and reduction in average receivables.

ii. Inventory Turnover Ratio: Lower in ratio due to lower inventory holdings.

iii. Interest coverage Ratio: Not Applicable.

iv. Current Ratio: Increased during year.

v. Debt Equity Ratio: Not Applicable.

vi. Operating Profit Margin: Not Applicable.

vii. Net Profit Margin: Not Applicable

The Company is incurring losses for the last few years therefore Net Worth of the Company became negative from March 31,2021.

The Company during the previous year continued to have good industrial relations with all its employees. Various initiatives have been taken to impart training and development activities so that employees are prepared to take up new challenges for their own development and also for the overall wellbeing of the Company. There are 62 employees on the rolls of the Company as on 31.03.2025.

The Company has a strong internal control system comprising various levels of authorization, supervision, checks and balances and procedures through documented policy guidelines and manuals. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. With a view to maintaining independence and objectivity in its working, the Internal Audit function reports directly to the Audit Committee.

The internal financial controls within the Company are also commensurate with the size, scale and complexity of its operations. The controls were tested during the year and no reportable material weaknesses either in their design or operations were observed.

The current liabilities exceed the current assets by Rs. 86,095.55 Lakhs. Consequent to the discontinuation of operations the going concern of the company is affected

The post assets sale of Urea and MI businesses, the company exploring new business opportunities.