National Fertilizer Ltd Management Discussions

India Fertilizer Market

Fertilizer Production, Import & Sales during FY 2024-25:

Production of NPKs in the country achieved a year-on-year increase of about 18.87% in the FY 2024-25, however, production of Urea and DAP declined of about 2.36% and 12.2% respectively. The total production of Urea, DAP, and NPKs amounted to 30.67 million tons, 3.77 million tons and 12.11 million tons, respectively, during this period.

The total urea production in the country has declined by 0.74 million MT in 2024-25. The Union government has set 2025-26 as the deadline by which the country will end all urea imports. India mainly imports urea from Oman, Qatar, Saudi Arabia and the United Arab Emirates. Lower imports of urea also came on the back of higher local production of Nano-Urea, a liquid form of the farm chemical, as well as a move towards eco-friendly alternatives by farmers.

Production of DAP was down from 4.30 million MT to 3.77 million MT whereas production of complex fertilizers was increased from 10.19 million MT to 12.11 million MT during the year. Their import has also decreased in 2024-25. The imports of DAP have declined by around 12.37% from 5.67 million MT to 4.97 million MT mainly due to increase in global price and lack of supply from China. Similarly import of complex fertilizers also decreased by around 9.88% from 2.43 million mT to 2.19 million MT.

The lower imports of urea and DAP were offset by higher inbound shipments of Muriate of Potash (MOP), which rose to 2.64 million tonne from 2.02 million tonne, i.e. up by 30.69%.

Due to non-availability of sufficient quantities of raw materials, high input costs, production of these fertilizers is highly vulnerable. Further, there is unfair competition from imports of finished fertilizers. Taxation is also having adverse impact on viability of domestic production. Due to unattractive returns on investment and other constraints investment in this sector has been stagnating for more than a decade.

With above normal monsoon prediction for 2025 bodes well for a good harvest, hence, the demand for fertilizers is expected to grow further.

Consumption (DBT sale) of urea from April 2024 to March 2025 was 36.65 million MT which is marginally lower by 2.93% with respect to 37.76 million MT of corresponding period of previous year. However, consumption of NP/NPKs and MOP at 14.50 million MT and 2.41 million MT during 2024-25 showed an increase of 13.90% and 28.08%, respectively over the 12.73 million MT and 1.88 million MT of corresponding period of previous year. However, consumption of DAP at 8.88 million MT during 2024-25 showed decline of 15.99% compared to 10.58 million MT during previous year. In case of SSP, it has come down to 2.82 million MT during 2024-25 showing a decline of more than 35% during the period.

Comparing season-wise consumption of fertilizer products in 2024-25, it has been observed that Urea, MOP & Complex have shown higher consumption of around 1.6%, 17.02% & 11.84% and DAP has shown lower consumption by around 34.2% during kharif 2024 compared to kharif 2023. However, in rabi 202425, consumption of all fertilizers have increased compared to rabi 2023-24 except Urea. DAP consumption was 11.81% higher in rabi 2024-25 as compared to rabi 2023-24. NP/NPK and MOP consumption was 16.30% and 37.77% higher during rabi 2024-25 over rabi 2023-24, however, Urea consumption was 6.72% lower.

Overall fertilizer consumption in the country marginally declined by around 3% to 65.27 million tonne during FY 2024-25 against 67.35 million tonne during previous year.

India fertilizer Industry will continue to make efforts to maximize production and minimize imports, however, risks and challenges remain. The fertilizer industry has always been the backbone of Indian agriculture and will continue to make efforts in making the country Atma Nirbhar in production and supply of essential fertilizers.

Crisis of the past years due to conflicts around the world has once again brought food security to the forefront of global development agenda, including India. Use of chemical fertilizers will continue to play a crucial role in meeting ever-growing demand of food grains with shrinking land availability for agriculture.

Fertilizer security is absolutely necessary for global as well as Indian food security. However, it should be ensured to make fertilizers use in agriculture sustainable and for this innovation in fertilizer and agriculture sectors involving development and use of more efficient fertilizer products, balanced and integrated use of fertilizers with organic manures, bio-fertilizers and secondary and micronutrients are necessary. Further, assessment of soil fertility status and better methods of fertilizer applications are also required.

Segment Analysis:

Based on use of fertilizer products, Urea sub-segment is the most dominant, followed by Complex fertilizers & DAP. Urea is the most commonly used fertilizer since it is less expensive than the other fertilizers. Excessive Urea use degrades soil fertility, resulting in increased sales of DAP and other complex fertilizers.

Growth of fertilizer industry in India:

Government New Investment Policy - 2012 in order to facilitate fresh investments in Urea sector stimulated investment in the public and private sectors. Currently, the country has 36 large-scale gas based urea manufacturing plants, 21 units producing DAP and complex fertilizers and 2 units producing Ammonium Sulphate as a by-product.

India now relies on imports for about 15% of its Urea requirements, 56% of its DAP requirements, 15% of complex requirement and 100% of its Potash requirements. The government has encouraged Indian firms to establish joint ventures in nations with substantial fertilizer resources for production facilities with buyback arrangements that help for long-term agreements for the supply of fertilizers input to India.

Subsidy expenditure on fertilizers:

Government of India has been providing sufficient funds for fertilizer subsidy for last couple of years. The Government had budgeted Rs.1,75,100 crore for fertilizer subsidy during the year 2023-24. However, unusual spike in international prices of raw materials and finished fertilizers caused disruption in the availability of fertilizers resulting in huge increase in subsidy requirement to insulate the farmers and agriculture from skyrocketing fertilizer prices. Accordingly, the total subsidy on fertilizers was increased to Rs. 1,88,291 crore (Urea subsidy was Rs. 1,23,092 Crore and P&K subsidy was Rs. 65,199 Crore) for 2023-24. Similarly, the budget allocation for fertilizer subsidy was Rs. 1,64,000 crores (Urea subsidy was Rs. 1,19,000 Crore and P&K subsidy was Rs. 45,000 Crore) during 2024-25 which has been revised to Rs. 1,71,299 crore (Urea subsidy was Rs. 1,18,989 Crore and P&K subsidy was Rs. 52,310 Crore) due to price volatility of fertilizers and raw materials in the international market during the year. The budget allocation for fertilizer subsidy has been kept at Rs. 1,67,887 crore for the year 2025-26, out of which urea and P&K subsidy is at Rs. 1,18,887 crore and Rs. 49,000 crore respectively. Sufficiency of allocation will depend on the international prices of energy, fertilizers and raw materials to remain during the year and Government has been concerned about the same as happened in the last few years.

The revised budget allocation for fertilizer subsidy for FY 2024-25 is about 9% less than the actual subsidy for 2023-24. Similarly, revised budget for urea subsidy is about 3% less and the same for P&K fertilizers is reduced by around 19% from the subsidy for 2023-24. The industry has no reason to worry on this count since the government has been prompt in making additional funds available when situation demanded during last three years.

The fertilizer subsidy made a positive impact on the availability and affordability of fertilizers for farmers. As a result, farmers are able to access fertilizers more easily and at reasonable prices, contributing to the growth of the agriculture sector and contributing food grain self-sufficiency in the country.

The industry on its part, has continuously strived to ensure timely availability of fertilizers through domestic production and imports even at times with negative margins. The increased price in international market of fertilizers ironically have posed another challenge to the industry. P&K sector is almost entirely dependent on import of raw materials due to lack of natural resources of phosphate and potash.

Timely announcement of subsidy rates under NBS policy plus additional financial support from Government during 2024-25 one-time special package on DAP @ Rs. 3500 per MT over and above the NBS subsidy rates on actual PoS sale for the period from 1st April, 2024 to 31st December, 2024 enables the industry to respond quickly to market conditions and to maintain production and import schedules and enabling the industry to earn reasonable return on the investment are a few measures which help the industry ensure availability of quality fertilizers on time. Number of countries of the world has become vulnerable regarding food security during geopolitical crisis severely impacting availability and affordability of food.

Indian Fertilizer Market Dynamics:

Food demand is expected to rise sharply over the next five years, owing to the countrys rapid population increase. Conversely, as urbanization levels rise, accessible arable land is anticipated to decline. Fertilizers are expected to play a significant influence in raising average agricultural yields per hectare. Despite great historical growth, Indias fertilizer use is still extremely imbalanced. There are now a handful of states in India with very low fertilizer penetration. This offers plenty of room for planned growth. Rising rural incomes, combined with easy financing availability, are also expected to have a favourable impact on fertilizer usage in the country. Contract farming, in which the food processor (contractor) is supposed to give inputs in the form of technology and training to the farmer, is also projected to have a good impact on fertilizer usage.

Fate of fertilizer industry is intimately related to agriculture sector of the country. The performance of the agriculture sector has been very promising so far. The latest budget has measures to make it future-ready. It is very essential that in addition to ensuring food security of this vast nation, agriculture sector becomes sustainable and more remunerative to our farmers. Fertilizer industry will continue to play its role and help in greening the Indian agriculture.

Rating agencies maintained a neutral outlook for the fertilizer sector for FY 25, driven by the Government of Indias (GoI) continued policy-level support to the industry by way of the healthy subsidy budget of Rs. 1,64,000 crores. This is backed by a moderation in the raw material prices across urea coupled with the likelihood of a continued healthy demand in view of the GoIs focus to increase farmer income.

Future of Indian Fertilizer Market:

First the pandemic due to Covid19 and then geopolitical conflict i.e. the conflict between Russia and Ukraine posed serious challenges to supply of adequate quantity of fertilizers to the farmers. India remains heavily dependent on import of fertilizers and fertilizer raw materials. The central government acted very proactively to facilitate both production and import of fertilizers. Government facilitated various agreements with foreign companies to supply of raw materials and fertilizers both for Phosphatic and Potassic fertilizers. But more importantly, allocation for fertilizers subsidy to insulate the farmers from high prices. Allocation of fertilizer subsidy and hence practically no increase in farmers prices, ensured that fertilizer consumption and hence agriculture production were not affected in spite of all round negative impact on other sectors of the economy.

The focus should now shift to make Indian agriculture more productive, reducing its impact on environment and also reducing carbon footprint of fertilizer production. Nitrogen is the primary nutrient most used in agriculture. But its use efficiency remains poor in India which is in the range of 30-40%. The rest escapes to environment (water and air) contributing to greenhouse gases in atmosphere. Efforts to be made to increase Nitrogen efficiency in coming years by use of better fertilizer products like Nano urea, Sulphur Coated Urea and other high efficiency products. It is important that integrated nutrient management which includes use of sufficient micronutrients and organics, is adopted. Adoption of better agriculture systems like precision and protected farming can also help to improve fertilizer use efficiency. This will reduce the nitrogen requirement in the soil significantly. Further, there is need for increase in use of bio-fertilizers which will help to fix more nitrogen per annum from atmosphere. On the production front, at least part of nitrogenous fertilizers can be produced with green hydrogen/ ammonia, thus reducing use of fossil fuels.

Improvement in nitrogen use efficiency will reduce cost of cultivation, reduce fertilizer subsidy and increase income of farmers. These measures will also reduce our dependence on imported natural gas.

Efficiency level of present fertilizer plants in the country is very high and comparable to best plants in the world. Therefore, there is little scope for further improvement of energy efficiency of existing fertilizer plants and hence reduction in carbon dioxide emission. Further, improvement through plant modifications will be very small.

In phosphate and potash, India is almost completely dependent on imports. India imports basic raw materials like sulphur and phosphate rock, intermediates like phosphoric acid, ammonia and sulphuric acid and finished products like DAP, Complex fertilizers, Muriate of Potash (MOP) and Sulphate of Potash (SOP). There are challenges both on availability and price fronts. Events of last few years have increased these challenges. To address these challenges India has adopted multi-pronged strategy like opening of joint ventures abroad for production of phosphoric acid. Government also facilitated for several agreements between Indian and foreign companies for supply of fertilizers and fertilizer raw materials. But the capacity of phosphoric acid plants in India is not fully utilized due to lack of availability of sufficient quantity of phosphate rock and unfair competition from imports. There is need for investment in phosphate rock mines abroad.

In case of potash, we face even more serious challenge in recent times due to non-availability of sufficient quantities of MOP in world markets. Investment in potash mines to increase potash-mining capacity and secure supplies is required.

Global Fertilizer Outlook

Fertilizers remain at the intersection of unsettled food and energy markets, and are increasingly exposed to global risks spanning geopolitics, conflict, economics and climate. Supply has been resilient despite existing and fresh disruptions continued during 2024-25, while macroeconomic drivers have grown in influence. Instability in Red Sea, Gulf of Aden and low water level in the Panama Canal put continuous pressure on the global supply chain and increase freight costs.

The combination of these complex and interconnected factors has implications for commodity markets. The last year has seen intensified competition, greater economic fragmentation and supply chain reorganization. Furthermore, the higher cost of borrowing, access to credit and depreciating currencies have placed continued affordability challenges in many importing and fragile markets.

Impact on fertilizer supply

During 2024-25 the four significant and actively developing circumstances which impacted fertilizer supply.

Middle East: The situation in Gaza has impacted exports from neighbouring fertilizer exporters. There were rising freight risks in the Red Sea which has the potential to impact trade flows. Indirect impacts such as temporary shortages in gas supply to Egypts nitrogen industry also occurred. Middle East is the shipping transit hub with the Strait of Hormuz, the Red Sea and the Suez Canal all being major potential chokepoints for fertilizer trade. Situation there has highlighted the global importance of the place.

Ukraine: Conflict in Ukraine continues, with Black Sea coastal ports as a focal point of the conflict. However, exports of finished fertilizer from Russian Baltic Sea ports continue at record levels in line with recovering global demand. Ammonia exports remain heavily impacted due to the pipeline connecting Russia and Ukraine being out of operation. However, some new infrastructure is under construction for ammonia export terminals at the Baltic Sea and the other ports. Feedstock costs to European nitrogen producers remained high, although lower than the unprecedented 2022 levels, because of Europes dependence on Russian natural gas. The impending introduction of the Carbon Border Adjustment Mechanism (CBAM) and other national carbon taxes has put further pressure on the European industry.

Belarus: The flow of potash exports from the country through EU territory to the Baltic Sea has been restricted due to sanctions on Belarus. However, China has imported record potash by a significant rerouting of Belarusian potash exports in 2023. Further, Belarus has exported potash to other international markets also using Russia as a transit, also by rail. Belarus has also signed a number of potash supply agreements with friendly countries.

China: China continues to curb exports of urea and DAP in order to prioritise the supply of fertilizers to the domestic market. Chinas role in global trade of these fertilizers is smaller today with respect to 2012-2016 when the country had large volumes of overcapacity, but the restrictions still have the potential to impact regional supply and price sentiment in seasonal demand periods.

Further, for the last few years, starting from covid19 lockdowns, the fertilizer industry has encountered successive crises. Fertilizer availability and affordability is much improved from the significant uncertainty of 2022, although disruptions remain. Going into 2025, macroeconomic risks are at the forefront of industry drivers and will impact the markets across the supply chain and at the farm level. In the short-term N and P fertilizer consumption is forecast to recover, but the K recovery is expected to take longer to play out. Weather conditions present large risks to the demand outlook. Across supply, demand and trade dynamics, government policies are forecasted to remain key drivers as measures are implemented to support food security and sustainability goals.

Fertilizer Industry Structure & Developments in India

Fertilizer industry in India operates in public, private and co-operative sector, with the private sector occupying a larger share in the manufacturing capacity. Fertilizers sector being highly energy & capital intensive, cost of fertilizers is unavoidably high. In order to ensure availability of fertilizers to the majority of the small & marginal farmers at affordable prices, this sector is highly regulated and controlled by GoI for pricing and distribution of fertilizers. At present, Urea prices are highly subsidized and administered under New Urea Policy (NUP) - 2015 whereas P & K Fertilizers are partially decontrolled and subsidy is disbursed based on the nutrient content available in the particular fertilizer under Nutrient Based Subsidy introduced by GoI w.e.f. 01-04-2010.

In case of Urea, MRP is fixed by GoI and currently fixed at Rs. 5,360 per MT which is highly inadequate in respect of current cost of production / imported price.

The introduction of pooling of gas mechanism in the year 2015-16 has been consistently helping ensuring delivery of gas at uniform and lower price to Fertilizer companies to enable them to make Urea production beyond re-assessed capacity and helping to contain the requirement of working capital to some extent.

Government of India increased fixed cost by Rs. 350 per tonne of Urea. However, Government is yet to consider the issue of minimum fixed cost of Rs. 2,300 per tonne of Urea as very low fixed cost for some of the Urea Units including Vijaipur-I Unit of the company is affecting their viability.

Tightening of energy norms under New Urea Policy (NUP) - 2015 has also affected the profitability of Urea manufacturing units.

The imbalanced use of fertilizers due to highly subsidized Urea continues to be a big challenge and needs to be addressed on priority. On this front, Gol has been distributing Soil health cards to all the farmers to enable them to get information about nutrients level in the soil to make judicious use of fertilizers through soil and seed testing facilities at retail outlets of fertilizer companies. Fertilizer companies have been marketing city compost and organizing awareness programs for the farmers to boost the use of city compost to improve soil quality and increase yield of crop in line with a policy of the government on city compost under the Swachh Bharat Abhiyan.

Implementation of DBT which has aggravated the problem of working capital due to change of subsidy payment from supply to sale and lack of availability of domestic gas, increasing trend in the price of RLNG etc. adversely impacting the profitability of the Urea manufacturers.

The response of fertilizer use to food grain productivity has been declining over the years due to multinutrient deficiencies cropping up in the soil. Apart from deficiencies of primary nutrients, widespread deficiencies of secondary and micro-nutrients are affecting the soil health. To restore soil health for desired growth in agriculture, balanced and integrated use of various nutrients is required. To address the issue, there is ample opportunity to the industry to introduce many new products containing combination of various nutrients including primary, secondary and micro-nutrients.

The use of Water Soluble Fertilizers, Potash Derived from Molasses (PDM) and Fermented Organic Manure (FOM) in the country is also on the rise to improve fertilizer use efficiency of soil health.

Country is also manufacturing Nano Urea. There are currently three Nano Urea plants operating in the country. Nano Urea is a nanotechnology based revolutionary Agri-input which provides nitrogen to plants. Application of 1 bottle of Nano Urea can effectively replace at least 1 bag of Urea. Nano Urea, in the coming times will ensure the progress of the farmers, increase their income. In this way it will change the future of farmers. It is the best green technology and provides solution of pollution. It saves the soil and also increases the production and hence is the best for the farmers. Further, Government has also given approval to Nano DAP and it will also come to replace DAP shortly. Nano-DAP will immensely benefit farmers.

The fertilizer industry is highly vulnerable to the adverse climatic conditions which badly impact the fertilizer industry.

Strength and Weakness

Strengths:

• Large player in domestic Urea Production (around 12% share in total production of the country).

• A multi-product Company with well established “Kisan” Brand except for subsidized fertilizers.

• Majority equity held by GoI.

• Pan India distribution and sales network.

• Three plants located in the most intensive fertilizers consuming States i.e. Punjab and Haryana.

• Manufacturing Facilities for Industrial Products.

• Skilled & Experienced workforce.

• Adequate Infrastructure for future expansion/sharing.

• Well established eco-system for Seed Production & Sale.

• Strong presence in the Southern market after commissioning of RFCL.

Weaknesses:

• Low operating margins in Urea due to regulatory environment.

• Increase in working capital requirement after implementation of DBT.

• Bathinda, Nangal and Panipat being old & smaller capacity plants consuming higher energy than new & large capacity plants.

• Dependence on subsidy.

• Huge attrition of manpower in next couple of years due to retirement.

Opportunities & Threats

Opportunities:

• Leverage of existing Pan India marketing network for undertaking trading and other businesses.

• Increased capacity utilization of Nitric Acid & Ammonium Nitrate Plants at Nangal.

• Customized, Fortified, Water Soluble & Liquid Fertilizers for balanced fertilization.

• Manufacturing of Agro Chemicals.

• Marketing of Urea produced by RFCL.

• Increase in trading of other Agri Products (PDM, FOM, Seaweed Granules etc.).

• Providing O & M services to other Fertilizers Companies.

Threats:

• Increased Government regulations & procedures.

• Tightening of energy norms of urea plants under New Urea Policy (NUP) - 2015.

• Adverse demand supply scenario of Fertilizers due to adverse agro Climatic condition.

• Volatility in prices of imported fertilizers and industrial products.

• Decontrol of Urea.

Revenue

The Company has achieved Revenue from Operations of Rs. 19,794.50 crore during 2024-25 as against Rs. 23,560.31 crore during previous year and total income of Rs. 19,889.52 crore during 2024-25 as against Rs. 23,670.62 crore during previous year as detailed below:

(Rs. in crore)

Particulars	2024-25	2023-24	Change
Sale of products (including subsidy)	19532.86	23241.43	(3708.57)
Sale of services	48.46	40.80	7.66
Other Operating revenue	213.18	278.08	(64.90)
Revenue from operations	19794.50	23560.31	(3765.81)
Other income	95.02	110.31	(15.29)
Total Revenue	19889.52	23670.62	(3781.10)

Segment wise or product wise performance

Urea and other fertilizers:

Your Company has registered Urea production of 37.14 LMT with an overall capacity utilization of 114.95 % during 2024-25 against 36.89 LMT achieved during 2023-24 (CPLY).

Company achieved Bentonite Sulphur production of 18,051 MT against CPLY of 20,237 MT having a decline of around 10.8 ?%.

On the sales front, the Company has sale of Fertilizers of 63.37 LMT that includes sale of 37.32 LMT of own Urea, 4.18 LMT of Imported Urea, 11.99 LMT of RFCL Urea, 9.88 LMT of Non-Urea Fertilizers including 0.26 LMT (26466 MT) of Compost during 2024-25 as compared to 69.74 LMT during 2023-24 which includes sale of 36.66 LMT of own Urea, 5.46 LMT of Imported Urea, 11.09 LMT of RFCL Urea, 16.53 LMT of Non-Urea Fertilizers including 0.19 lMt (19129 MT) of Compost.

The detailed quantity of break-up of sale of urea and other Fertilizers is as under:

(in LMT)

Product	2024-25	2023-24	Change
1.Manufactured
a) Urea	37.32	36.66	0.66
b) Bentonite Sulphur & Bio-Fertilizers	0.20	0.22	(0.02)
2.Traded Goods
a) Imported	8.51	15.82	(7.31)
b) Indigenous	17.34	17.04	0.30
Total Fertilizers	63.37	69.74	(6.37)

Industrial Products:

The Company registered sale of Nitric Acid of 99,745 MT during 2024-25 as compared to previous sale of 87,249 MT during 2023-24. The Company also recorded sale of Ammonium Nitrate to the tune of 55,502 mT during 2024-25 as compared to sale of 40,510 MT achieved during 2023-24.

In terms of revenue generation from production and sale of Industrial products, the Company achieved sale of Industrial-Products (IP) comprising of Nitric Acid, Sodium Nitrate etc. to the tune of Rs. 673.48 crore during 2024-25 against CPLY of Rs. 470.87 crore during 2023-24.

Bio-Fertilizers

The Company sold 554 MT of Bio-Fertilizers (Solid & Liquid) to the tune of Rs. 2.08 crore in F.Y. 2024-25 as against 568 MT of Rs. 1.97 crore during CPLY.

Import & sale of Fertilizers

The Company sold 8.51 LMT of imported Non-Urea Fertilizers including DAP, MoP, APS, NPK, etc. worth Rs. 4,524.64 crore during 2024-25 against 15.82 LMT worth Rs. 8,089.55 crore during 2023-24.

Apart from the above, NFL also sold 4.18 LMT of Urea imported in Government Account in FY 2024-25 against 5.46 LMT during 2023-24.

Domestic Trading of Agro Products

The Company has registered total revenue of Rs. 144.89 crore towards trading of various agro products such as seeds, pesticides & compost and RFCL ammonia during the year against Rs. 174.71 crore during CPLY.

Gross Sale Composition

Item	% of total Sale Composition		% Increase/ (Decrease)
	2024-25	2023-24
a) Urea (manufactured)	66.98	57.66	16.16
b) Other Products	33.02	42.34	(22.01)

Owing to progressive shift in strategy of the Company, the composition of gross sale of the Company has undergone visible change. Against the Urea (main product) contribution of 94.49% in the overall revenue of the Company during 2015-16, Urea contribution has reduced to 66.98% while contribution of Non-Urea business has increased to 33.02% during 2024-25. Percentage of total sale composition of other products during the year has reduced to 33.02% as compared to 42.34% during 2023-24 mainly due to lower import due to increase in global prices of imported fertilizer.

Projects completed/underway

The status of the NFLs ongoing projects is as under:

Setting up of manufacturing facilities for Agrochemicals at Bathinda

NFL is setting up manufacturing facilities of Agro-chemicals at its Bathinda unit with the total CAPEX of approx. Rs 13 crore.

Consent to establish (CTE) & Consent to operate (CTO) for manufacturing facility have been obtained from Punjab Pollution Control Board (PPCB). Manufacturing license has also been received from Deptt. of Agriculture, Punjab. Out of five trains, production has been started from four trains. Remaining one train is under completion by contractor and expected to be completed shortly.

Setting up of Diesel Exhaust Fluid (DEF) production plant at NFL, Panipat

NFL is in the process of setting up a production plant for Diesel Exhaust Fluid (DEF) having annual capacity of 20,000 KL at NFL, Panipat. Engineering, Procurement and Construction Management (EPCM) consultant is being lined up.

Setting up of Roof Top grid connected Solar PV power plant at NFL, Units

Roof top Solar PV power plant of approximately 1500 KWp is being set up at NFL, Panipat. It is likely to be completed by the end of F.Y. 2025-26.

NFL is also planning to set up Roof top Solar PV power plants at different units at Nangal, Bathinda and Vijaipur. Tentative capacities of plants are 1735 KWp, 600KWp and 1220 KWp respectively.

Setting up of Sulphur Coated Urea (Urea Gold) pilot plants at Panipat and Nangal Unit

NFL is setting up Sulphur Coated Urea (Urea Gold) plant having annual capacity of 5000 MT at its Panipat and Nangal Unit under R&D Project.

Panipat - Plant has been commissioned at Panipat Unit and PGTR of plant is being carried out.

Nangal - Construction jobs have been completed. Plant is expected to be commissioned shortly.

Setting up of Nano Urea (Liquid) plant at NFL, Nangal

Based on the Detailed Feasibility Report (DFR), NFL Board in its 481st Meeting held on 25th October, 2024 has accorded approval for closure of the proposed Nano Urea project (with 4% nitrogen content) in Nangal. The Company is in the process of implementing Hi Tech Nano Urea project (with more Nitrogen content, which will give more benefit to the farmers) in Nangal Unit at the earliest.

Integrated Energy Saving Projects

GoI has notified NUP-2015 norms in 2015 setting the Target Energy Norms (TEN) for different fertilizer units. Initially, TEN for Nangal, Bathinda and Panipat was set at 6.5 Gcal/MT of Urea while for Vijaipur-I &II it was set at 5.5 Gcal/MT.

Although these norms were implemented from April 2018, but owing to delayed execution of energy saving schemes at various units across industry, the GoI revised the TEN multiple times in response to representations from industry players for some of the companies. Accordingly, Vijaipur-II TEN of 5.5 Gcal/MT of Urea was implemented from April 2018 whereas for other units of NFL same were extended with certain penalty until March 31,2023 or until the TEN was achieved, whichever is earlier. Although TEN of 6.5 Gcal/MT of Urea for Bathinda, Panipat and Nangal was implemented from 1st Oct, 2022 whereas same was extended for Vijaipur-I with penalty. Later, through a letter dated April 15, 2024, the norm for Vijaipur-I was further extended until December 31,2024, with a 35% penalty. The new energy norms post 2025 are under review by the Department of Fertilizers.

In order to meet target energy norms designated for Bathinda, Nangal and Panipat, Gas Turbine Generators (GTGs) along with Heat Recovery Steam Generation (HRSGs) were installed at each unit. These installations commenced commercial operation at Bathinda and Nangal in May 2021 and at Panipat in January 2022.

Likewise, various energy saving schemes for Vijaipur I&II were carried out and got completed in March 2022.

Furthermore, M/s Topsoe was engaged to explore additional schemes for reducing energy consumption at Nangal, Bathinda and Panipat. Topsoe proposed the implementation of phased energy reduction schemes in the backend section of each units ammonia plant. Upon execution, these schemes are expected to collectively decrease energy usage by 0.15-0.25 Gcal/MT of urea at each unit.

In initial phase, steam turbine drives of syngas compressor are being replaced at Nangal, Bathinda and Panipat units.

Likewise above, M/s Topsoe is being lined up to review study energy reduction schemes at Vijaipur I&II units.

Industrial Safety, Ecology & Pollution Control

The Company is committed to achieving excellence in safeguarding the occupational and personal health of its employees by minimizing health hazards and providing state-of-the-art healthcare facilities. All units are equipped with modern hospitals and employees have access to specialized medical services as required. Regular periodic medical examinations are also conducted to ensure continuous health monitoring.

The Company maintains a strong focus on achieving sustained energy-efficient operations across its manufacturing units while ensuring a pollution-free environment and adherence to process safety standards. All manufacturing units are certified for ISO 9001 (Quality Management), ISO 14001 (Environmental Management) and OHSAS 18001 (Occupational Health and Safety), underscoring its steadfast commitment to quality, environment and employee safety.

To ensure compliance with environmental standards, all units are having online monitoring systems for effluent and emission discharges, which are integrated with the Central and State Pollution Control Boards.

Health and Safety Committees have been constituted at each unit, and quarterly review meetings are regularly conducted to address the related issues. Initiatives such as Total Quality Management (TQM) and Hazard and Operability Studies (HAZOP) have been implemented to enhance process safety.

To effectively handle emergencies such as fire, explosion, or toxic gas releases, comprehensive On-site Emergency Disaster Plans and Off-site Emergency Plans are in place. These plans are designed to train employees to respond efficiently and confidently during emergencies, thereby minimizing damage to personnel and assets. The effectiveness of these plans is ensured through surprise mock drills, the performance of which is thoroughly evaluated and improved upon. Regular inspections and visits by local authorities and national agencies, including the National Disaster Management Authority, help to ensure continued alignment with the best safety practices.

Each unit also has a Disaster Management Quick Response Team, to address the off-site emergencies, particularly those involving the transportation of hazardous substances like liquid ammonia and chlorine gas.

As part of its commitment to ecological sustainability, the Company has actively pursued afforestation across all units. A total of 10120 tree saplings were planted in and around various units during FY 2024-25 for cleaner and greener earth for future generation. The cumulative plantation since commencement is about 8.95 lakhs for all the units.

To increase the sub soil water level, all the units have installed Rain Water Harvesting system. This measure has helped in conservation of water, increase in underground water table and increase greenery in the surroundings.

A 1.5 MW capacity solar power plant is under installation at our Panipat unit. Once commissioned, it will contribute in providing greener power along with reduction in the units carbon footprint.

Furthermore, to minimize ecological impact, especially plastic pollution, the organization undertakes several initiatives. These include banning of single-use plastics within its premises, promoting minimal plastic usage and managing approximately 16,000 metric tons of plastic waste annually to fulfill organization EPR (Extended Producer Responsibility) obligation under Plastic Waste Management Rule, 2016 (as amended from time to time). This waste is collected and either recycled or properly disposed of through authorized waste management agencies.

Outlook

The company is envisaging the growth in its top & bottom line by adopting various business strategies as under:

• Maximization of Urea production in energy efficient manner.

• Maximization of production of Bentonite Sulphur & Bio-fertilizers.

• Maximization of production of Industrial Products including Ammonium Nitrate / Nitric Acid.

• Production of new products like Agro Chemicals, Water Soluble Fertilizer, Micronutrients, Zinc Solubilizing Bio-Fertilizer, Adblue etc.

• Import and sale of fertilizers like Urea, DAP, MoP, Complex fertilizers, Water Soluble Fertilizer including Calcium Nitrate.

• Marketing of Urea manufactured by RFCL.

• Domestic trading of Agro products (Pesticides, Weedicides etc.), Compost, Water Soluble Fertilizers, Calcium Nitrate, SSP, PDM, FOM etc.

• Dividend from RFCL.

• Establishment of an office abroad for trading of different type of fertilizers.

• Equity participation in the fertilizer companies abroad.

• Rationalization of manpower.

• Recruitment of manpower to meet the short fall arising out of massive retirements and future growth of the company.

Risk & Concerns

The major risk & concerns of company are outlined below:

• Low operating margins in Urea due to tight regulations.

• Strict Energy Norms for all the plants under New Urea policy (NUP)-2015 and further review of energy norms.

• Deletion of provision of minimum fixed cost retrospectively w.e.f. 02-04-2014 for Vijaipur I.

• Dependence on subsidy. Delay in receipt of subsidy leads to higher interest cost.

• Lack of Internal resources (funds) for future investment.

• Bathinda, Nangal and Panipat being old plants consuming higher energy than new and large capacity plants.

Environmental Protection and Conservation, Technological conservation,

Renewable energy developments, Foreign Exchange Conservation

Disclosure in terms of the Companies (Account) Rules, 2014 in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Outgo is appended as Annexure-6 forms part of the Board Report.

Company has undertaken various initiatives for adopting best practices for health, safety environment management and sustainable developments and the details of the same is appended as Annexure-7 forms part of the Board Report.

Corporate Social Responsibility

A detailed report on the Corporate Social Responsibility is appended as Annexure-5 forms part of the Board Report.

Risk Management Policy

The chemical fertilizer industry is operated in a hazardous environment and faces many risks including those related to health, safety and environment in addition to general business & financial risks. In order to mitigate them, the company has a comprehensive Risk Management Policy which is regularly reviewed and a periodical review of the risks, procedures and strategies is undertaken.

To review the new risks evolved during the quarter along with mitigation action undertaken as well as anticipated risks along with mitigation actions planned in future, the company has a two tier system where quarterly risks report is first reviewed by the Risk Assessment Committee (RAC) and thereafter final report is submitted to Risk Management Committee (RMC) for its recommendations before submission to Audit Committee and the Board of Directors. Efforts are made in a planned way to obviate the risks either fully or to minimize their impact.

Under Risk Management policy, all the risks along with mitigation actions undertaken have been reviewed by Risk Assessment and Risk Management Committees. Some of the major risk having severe financial impact as identified by the company include Implementation of Target Energy Norms under NUP-2015 which resulted reduction in profit margin mainly at Vijaipur I unit.

Internal Control Systems and their adequacy

The Company has a sound system of internal controls that ensures compliance with statutory requirements, regulations and implementation of various policies and guidelines. Besides Statutory Audit by C&AG, regular and exhaustive internal audits are conducted by independent chartered accountant firms in close co-ordination with NFLs Internal Audit Division to examine, evaluate, monitor and report on adequacy and effectiveness of the system of checks and balances is in place, compliance with policies, plans and statutory requirements, to protect its resources against waste, fraud and in-efficiency and to ensure accuracy and reliability in accounting and operating data.

The policies and guidelines are in the form of various codes, manuals and procedures, issued by the management, covering all critical and important activities viz. Budget, Purchase, Material, Stores, Works, Finance, Human Resources etc. Internal Audit Program is approved by Audit Committee of Directors and is conducted as per Accounting Standards and these codes, manuals, procedures, etc. that are updated from time to time. The observations/recommendations made by the auditing agencies are reported to the Audit Committee of Directors along with a report of compliance of directions issued in the past. The quarterly financial statements are reviewed by the Audit Committee of Directors before they are submitted to Board of Directors.

The Company has a well-defined Delegation of Powers in place, which lays down the powers for different managerial levels to facilitate faster decision making. The various policies, procedures and guidelines are continuously reviewed to improve effectiveness of the systems.

The Company has a full-fledged Vigilance Division to oversee that the guidelines of the Government and the rules/procedures of the company are strictly adhered/implemented in all matters. The Vigilance Division conducts regular inspection of various activities in Manufacturing Units, Zonal Offices and other Offices for taking corrective/preventive action.

Internal Financial Controls and its effectiveness

The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31.03.2025.

Financial Performance

During the year, Company achieved revenue from operations of Rs. 19,794.50 crore (including subsidy of Rs. 13,685.10 crore) compared to Rs. 23,560.31 crore of CPLY (including subsidy of Rs. 15,734.12 crore). The sales turnover is mainly lower due to decrease in average gas price from CPLY Rs. 5,619/Gcal (US$ 17.10/MMBTU) to Rs. 5501/Gcal (US$ 16.39/MMBTU) during the year ended March, 2025 and decrease in sale of fertilizers by 6.37 LMT.

During the year, company achieved the Profit before Tax of Rs. 104.08 crore as against Profit before Tax of Rs. 88.52 crore during CPLY. PBT has increased mainly due to increase in contribution from sale of Urea, Industrial products & Bio-Fertilizers and Decrease in employee remuneration.

Short term borrowings of the Company as at 31.03.2025 stood at Rs. 1,995.77 crore, including cash credit utilization, short term loans and working capital demand loan etc. as compared to Rs. 4,088.33 crore as at 31.03.2024. The short term borrowings have decreased by Rs. 2,092.56 crore as on 31.03.2025 as compared to CPLY mainly due to lower import of goods.

Analysis of the Financial Performance of the Company:

a) Revenue from Operations

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Revenue from Operations	19794.50	23560.31	(16)

Reason for variation:

The sales turnover was decreased mainly due to decrease in average gas price from US$ 17.10/MMBTU during the CPLY to US$ 16.39/MMBTU during the year ended 31.03.2025 and decrease in sale of fertilizers by 6.37 LMT.

b) Materials Consumed

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Materials Consumed	7236.29	7648.99	(5)

Reason for variation:

The decrease in materials consumed is mainly due to decrease in average price of gas to US $16.39/MMBTU during current year as compared to US $ 17.10/MMBTU during CPLY.

c) Finance Cost

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Finance Cost	225.68	267.30	(16)

Reason for variation:

Finance Cost decreased mainly due to decrease in Interest on Long Term Loans by Rs. 2.96 crore during the period and due to lower average borrowings.

d) Repairs & Maintenance

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Repairs and Maintenance	118.70	113.65	4

Reason for variation:

Repair and Maintenance has increased by 4% during 2024-25 as compared to CPLY.

e) Employees Benefits

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Employee Remuneration & Benefits	610.00	635.50	(4)

Reason for variation:

Employee Benefit Expenses has decreased by 4% during 2024-25 as compared to CPLY mainly due to superannuation of employees.

f) Power and Fuel

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Power and Fuel	4872.24	4732.54	3

Reason for variation:

Power and Fuel expenses have increased by 3%.

g) Freight and Handling

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Freight and Handling	935.25	1152.03	(19)

Reason for variation:

Freight & Handling expenses have decreased mainly due to Lower dispatches by 6.37 LMT.

h) Other Expenses

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Other Expenses	291.10	306.09	(5)

Reason for variation:

Other expenses have decreased mainly due to decrease in Advertisement, Publicity and Sales Promotion by Rs. 25.24 crore during 2024-25 and decrease in Exchange rate variation (net) by Rs. 9.75 crore and increase in Insurance expense by Rs. 13.99 crore.

i) Other Income

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Other income comprising of interest income and other non-operating income.	95.02	110.31	(14)

Reason for variation:

Mainly on account of decrease in interest income on financial assets.

Financial Status

a) Fixed Assets

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Tangible Assets	3646.15	3829.57	(5)
Intangible Assets	47.67	1.35	3431
Capital work in progress	171.53	207.50	(17)
Intangible Assets under development	-	34.37	(100)
Total	3865.35	4072.79	(5)

Reason for variation:

The decrease was mainly on account of decrease in Tangible assets by Rs. 183.42 crore which was partially offset by increased Intangible assets by Rs. 46.32 crore and decrease in intangible assets under development by Rs. 34.37 crore.

b) Non-current Investment

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Investments (Net of Provisions)	491.48	491.48	-

Reason for variation:

No change in Non-current investment.

c) Inventories

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Raw Materials	11.27	4.61	144
Stores and Spares (Incl. packing material)	269.65	252.84	7
Semi-finished/finished products (incl. traded)	606.11	1467.60	(59)
Others (carbon slurry)	23.50	24.62	(5)
Total	910.53	1749.67	(48)

Reason for variation:

Inventories Decreased mainly due to decrease in closing stock of P&K fertilizers.

d) Trade Receivables

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Gross Debtors - FICC	3001.52	3592.02	(16)
Others	319.13	488.45	(35)
Less: Provision for Doubtful Debts	(47.35)	(43.38)	9
Net Debtors	3273.30	4037.09	(19)

Reason for variation:

Trade Receivables have decreased during 2024-25 mainly due to lower sale of traded fertilizers.

e) Current Assets - Other Financial Assets

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Other Financial Assets	109.32	147.80	(26)

Reason for variation:

Other Financial Assets decreased mainly due to lower Claim receivables during the year 2024-25.

f) Current Liabilities

(Rs. in crore)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Short Term Borrowings	1995.77	4088.33	(51)
Trade Payables	1537.27	1348.39	14
Other Financial Liabilities	841.50	854.96	(2)
Provisions	147.88	126.75	17
Other Current Liabilities	174.62	163.25	7
Total	4697.04	6581.68	(29)

Reason for variation:

The current liabilities have decreased during 2024-25 due to decrease in short term Borrowings.

Human Resource Management

The Company considers its Human Resource as its most important asset and makes sustained efforts for the development of its manpower. Company has a well-established Human Resource Department to cater the training needs of employees, keeping in view the changing technology and overall business environment.

The Company has manpower strength of 2511 regular employees as on 31.03.2025, which comprises 1277 Executives and 1234 Non- Executives. 184 women employees are on its roll, which is 7.33% of the total work force.

To improve skills and instill behavioral and personality development traits in all supervisory staff and managerial cadre, NFL organized number of training programmes (in-house as well as external) on contemporary subjects during the year. The training programmes were identified through Performance Management System by synchronizing organizational needs with individual needs. The Company also organized specially designed training programmes for developing women employees in various areas of expertise. In these diverse programmes, 9200 man-days training were imparted to employees and 1100 man-days training to women employees.

Employees participation in Management is an essential ingredient of industrial democracy, which implies mental and emotional involvement of employees in the management of enterprise. NFL always supported the participative culture in the management through consultative approach. The efforts to promote employees participation in various activities like Suggestion Scheme, Welfare, Safety, interactions between Management and employees representatives on various issues continued during the year. Industrial relations remained cordial during the year.

The industrial relations at all Units/ Offices of NFL during 2024-25 remained cordial.

Details of Significant changes in Key Financial Ratios

Details of Significant changes in Key Financial Ratios have been detailed in Note 64 of Financial Statement for FY 2024-25.

Cautionary Statement

Statements in the Management Discussions and Analysis describing the Companys focal objectives, expectations or anticipations may be forward looking statements within the meaning of applicable securities, laws and regulations that describe our objectives, plans or goals. All these forward looking statements are subject to certain risks and un-certainties, including but not limited to, Government action, economic development and risks.

Registered Office:	For and on behalf of the Board of Directors
Scope Complex, Core-III, 7,
Institutional Area, Lodhi Road,
New Delhi-110003.	(Dr. U. Saravanan)
	Chairman & Managing Director
Date: 29th August, 2025	DIN:07274628