rashtriya chemicals & fertilizers ltd share price Management discussions


Indias GDP growth accelerated to 6.1% in the January to March 2023 quarter, lifting the economys uptick in 2022-23 to 7.2% from the 7% estimated earlier, according to the provisional national income data released by the National Statistical Office (NSO).

The outlook for Indian macroeconomic and corporate performance remains positive, with stronger GDP growth and a notable moderation in inflation. This puts us in a favourable position compared to many struggling global economies facing low economic growth and high inflation. This year, weak El Nino conditions emerged in May and the intensity is expected to gradually strengthen, as per the India Meteorological Department. Normal rainfall at 96% of the long-term average is forecasted.

The perceived risk of a global economic slowdown year 2021- also poses challenges for India. India witnessing weakening operating performance in export-oriented sectors like textiles and gems & jewellery. However, the negative impact at an overall economic level is likely to be mitigated by declining imports, primarily due to lower oil prices that have decreased by 37% over the last 12 months. The ongoing Russia- Ukraine conflict presents the most challenging variable. Serious attempts tode-escalate have year 2022-23 against not yet been seen, and offensives and counter offensives persist. While 2022-23 saw sharp rises in commodity prices due to disruptions in energy supply chains, a new order seems to have settled in 2023-24, supported by mild winters in Europe and slowing Western economies. However, the risk lies in any unexpected escalation, which could have severe economic and strategic disruptions. Indias GDP 2023-24 projected at 6.5% for 2023-24, driven by domestic consumption, government capex, and to some extent, private capex. downward trend in

INDUSTRY STRUCTURE AND DEVELOPMENT

Overall fertilizers production has increased by 11.23% during financial year 2022-23 as against financial year 2021-22 due to increase in production of Urea, NPK, DAP & SSP. Imports have increased by 3.03% due to the increase in DAP & NPK imports.

Production of urea has increased by 13.63% during the financial year 2022-23 as against 2021-22 due favourable weather and market conditions. Urea is largely sourced domestically & with revival of urea plants, imports have decreased by 17.03% during the year 2022-23. DAP production increased by 2.96% during financial year 2022-23 as against financial year 2021-22. Imports also have risen by 20.52% in financial year 2022-23 as against financial year 2021-22.

MOP imports have decreased substantially by 24.15% during financial year 2022-23 as against financial year 2021-22. India meets its Potassium chloride (commonly referred to as Muriate of Potash or MOP) requirements majorly through imports from Canada, Russia, CIS+ Belarus, Israel, Germany, Jordan and Lithuania. Production of NPK in the country have decreased by 11.91% during the financial year 2022-23 against financial year 2021-22. NPK imports have decreased substantially by 135.21% during financial year 2022-23 as against financial year 2021-22.

The production of SSP which is an indigenous phosphatic multi-nutrient fertilizer increased by 5.48 % during financial year 2022-23 as against financial. SSP is a cheaper alternative to DAP.

Overall sales of fertilizers have decreased by 0.16% during financial year 2022-23 as against financial year 2021-22. Sales of MOP , NPK & SSP have decreased by 33.83%, 12.25% & 11.69% respectively during financial year 2022-23 as against financial year 2021-22. The sales of Urea & DAP have increased by 4.52% & 13.58% respectively duringthefinancial the financial year 2021-22.

The Budget 2023-24 has the vision of future-ready agriculture sector. Healthy agriculture sector will help in economic growth making the country a developed nation as envisaged by our Honble Prime Minister. The budget allocation for fertilizer subsidy is 1,75,103 crores for FY24. Budget for urea subsidy is 1,31,100 crores which is lower by 22,998 crores than the revised BE for 2022-23. Similarly, the subsidy for P&K fertilizers has also been reduced by 27,122 crores. The reason behind this reduction compared toRE 2022-23 is significant prices of fertilizer related commodities. However, adequacy of allocation will depend on actual international prices of energy, fertilizers and raw materials during the year.

STRENGTHS, WEAKNESSES, OPPORTUNITIES & THREATS

Strengths i) Your Companys strength lies in its skilled manpower, high Brand Equity of its products such as Ujjwala, Suphala, Microla, Biola, Sujala & Vipula and diversified product portfolio of fertilizers and chemicals. ii) The wide reach of marketing network ensures that your Company can take its products to the farthest corner of the country.

iii) Increased usage of digital technology to reach-out to farmers through Mobile App, Facebook page, Twitter handle, Instagram handle and YouTube Channel under the name of "RCF Kisan Manch". iv) The Farmers Training Institutes at Thal and Nagpur are helping in a big way to educate farmers on latest farming techniques. Also Company has been operating toll free help line number called "Kisan Care" through which farmers can approach agriculture experts and get their queries addressed. v) Larger farmer reach through various farm extension patrika, activities like field celebrating soil testing days etc. vi) Your Company has a wide portfolio of Industrial chemical products which has applications across several sectors like pharmaceuticals, dyes etc. vii) The well maintained plants and equipment ensure that production remains uninterrupted. viii) Continuous technology upgradation, revamping, modernization and implementation of energy & production improvement schemes in the plants. ix) Well established infrastructure and R&D facility.

Weaknesses i) The Plants have been in operation for a very long and time and need significant upgradation. ii) As the ultimate customers of the Company are farmers, agro-climatic condition has a large effect on the performance of the Company. iii) Raw materials such as Rock Phosphate, MAP, DAP and Muriate of Potash (MOP) etc. required in the manufacturing of the complex fertilizers, have to be imported. Their procurement cost is subject to high volatility in global raw material prices and variation in the foreign currency exchange rates affecting the profitability of the Company. iv) Volatile Natural gas price for non-Urea operations is impacting bottom line of the Company. v) Reduction in supply of Domestic gas leads to increase in consumption of imported RLNG at higher cost.

Opportunities i) Several opportunities exist overseas, for Collaborations / Diversificationin the field of manufacturing and mining of raw materials as well as fertilizers thereby presenting an opportunity for marketing of variety of products. ii) Huge demand and import dependency in case of NPK fertilizers in the Country provides an opportunity to Company for expanding its NPK fertilizer base.

iii) Alternate feedstock such as Coal gives an opportunity for undertaking Fertilizer Projects in other parts of the country closer to coal mines based on latest coal gasification technology. iv) Experienced and Skilled Manpower of your Company has been in demand for rendering O&M services in India and abroad. In view of your Companys training facilities, as well as the available skilled Engineers and Technicians, your Company is in a position to impart training to many foreign and Indian Companies. v) Energy and environment improvement projects planned will give positive impact onprofitability the and sustainability of your Company.

All these opportunities would enable your Company to improve profitability in the coming years.

Threats i) Manufacturing and marketing of Fertilizers is the core business of your Company. In recent years, there has been high volatility in the prices of raw material resulting in an adverse impact on production and marketing plans. The profitability is susceptible to the input costs of major raw materials, such as Rock Phosphate, Sulphur, DAP, MOP, MAP etc. ii) Production of Urea, Complex Fertilizers and chemicals is dependent on the availability of feedstock gas and its economic pricing. iii) The industrial chemicals business is also exposed to cut-throat global market competition.

OUTLOOK

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 falling prices of fertilizers ironically have posed another challenge to the industry due to inventory of high cost raw materials and finished products. sector is almost entirely dependent on import of raw materials due to lack of natural resources of phosphate and potash.

Under-recovery under all heads of fixed cost in urea pricing policy has also been a cause of anxiety for the industry. Government is now seriously considering reforms in the urea pricing and subsidy policy. Industry is fully engaged to help bring the desirable changes in the interest of supply security of fertilizers and sustainable agriculture. Fate of fertilizer industry is ultimately related to agriculture sector of the country and the performance of the agriculture sector has been very promising so far. 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

RISK AND CONCERNS

The major risks and concerns of your Company are as under:

1. Imbalanced use of fertilizers

2. Skewed pattern of fertilizer use

3. Inadequate use of secondary and micro nutrients

4. Deterioration in soil health

5. Decline in fertilizer use efficiency

6. Higher dependence on subsidy. Delay in receipt of subsidy leads to higher interest cost.

7. Low operating margin due to tight regulations.

8. Strict Energy norms for all the plants under New Urea Policy (NUP 2015).

9. New challenges faced by the Industry due to COVID 19 Pandemic

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a well-defined Internal Control System that is adequate and commensurate with the size and nature of its business comprising Internal Auditors which conducts internal audit of various operational and financial matters on on-going basis. The Technical function of Internal Audit is conducted through in-house technical personnel. The Non-technical function of Internal audit is now outsourced for 3 years i.e. FY 2020-21, 2021-22 and 2022-23 and the entire audit area of RCF is divided between two Audit firms of Chartered Accountants: M/s. Pipara & Co LLP & 2) M/s. AMAA & Associates. Internal Audit Department is headed by technical person having wide experience in technical field with good administration and interpersonal skill in the rank of General Manager having adequate number of financial and technical personnel. The recommendation and observations of the Internal Auditors are reviewed regularly by the Audit Committee constituted by the Board of Directors. As required by the Companies Act, 2013, the Audit Committee has formulated the Scope, Functioning, Periodicity and Methodology for conducting the Internal Audit and informed to the Board of Directors. The adequacy and operational effectiveness of Internal Financial Controls over Financial Reporting has been reviewed by the Audit Committee. The performance of the Company is regularly monitored by the Board of Directors. The Company has an effective budgetary control mechanism in place to take care of the detailed capex and operational budget. Appropriate monitoring mechanism to compare the actual performance with the budget ensures that necessary review is periodically undertaken.

SEGMENT – WISE PERFORMANCE

The segment wise performance of the Company has been as under:

Fertilizers

Your Company produces fertilizers such as Urea (Nitrogenous Fertilizer) at both Trombay and Thal Units, and Suphala 15:15:15 (NPK Fertilizer), Biola (Bio fertilizers), Microla (micronutrient fertilizer) and Sujala (100% water soluble fertilizer) etc. at its Trombay unit.

During the year, your Company has produced 21.96 LMT of Urea compared to 21.85 LMT produced during the previous year. Your Company has also produced 6.43 LMT of Suphala 15:15:15 as compared to 5.71 LMT produced during the previous year. In terms of Nutrients, your Company has produced 11.07 LMT of "N", 0.96 LMT

O

of "P2 5" and 0.96 LMT of "K2O" as compared to 10.91

O

LMT of "N", 0.86 LMT of "P2 5" and 0.86 LMT of "K2O"

respectively during the previous year.

In addition to above, your Company has produced 152.01 KL of Biola, 406.69 KL of Microla and 6350 MT of Sujala as compared to 155.00 KL of Biola, 359.71 KL of Microla and 4355 MT of Sujala respectively during the previous year. During the year, your Company has produced 8.48 KL of Organic Growth Stimulant and 32.88 KL of Water pH balancer.

Industrial Products

Your Company produces industrial chemicals at its both units. During the year, your Company produced approx. 5.79 lakh MT of various major industrial chemical products as against approx. 6.52 lakh MT during the previous year. Your Company produces, amongst others, Ammonium Nitrate Melt, Ammonia, Ammonium Bicarbonate, Dilute Nitric Acid 58%, Conc. Nitric Acid 98%, Strong Nitric Acid,( 72% & 68%), Methyl Amines (Mono, Di, Tri), Sulphuric Acid, Argon, Nitrogen, Dimethyl Acetamide, Phosphoric Acid 27%, Sodium Nitrate / Nitrite, Refrigerant Ammonia, Water, Methanol, Gypsum, Chalk etc.

PRICING POLICY

Urea:

In case of urea, the farm-gate price is notified by the Government from time to time, so also the dealers margins are indicated. The concessions to the units are given under various policies from time to time. Effective from 1st June, 2015, Urea is governed by New Urea Policy 2015 (NUP 2015) under which units are divided into three groups based on preset energy norms. As per NUP 2015, energy norms have been tightened focusing on energy reduction being achieved by Urea units and further tightened from 1st April, 2018 in respect of Thal unit and from 1st October, 2020 in respect of Trombay Unit For production beyond the Re-assessed capacity (RAC) i.e. 100% of capacity, the unit will be entitled for the respective variable cost and uniform Per MT incentive equal to the lowest of Per MT fixed cost of all the indigenous Urea units subject to maximum of import parity price (IPP) plus weighted average of other incidental charges which the Government incurs on imported urea.

To address the issue relating to availability and pricing of gas for Urea sector, Government of India has announced Pooling of Gas in Fertilizer (Urea) Sector, effective from 1st June, 2015 wherein all Urea manufacturers are entitled to gas for Urea production at the weighted averaged pooled price of Domestic gas and Imported RLNG. This has encouraged Urea units to operate at full capacity during the year in sync with the Government policy of "Make of India".

P&K fertilizers:

P&K fertilizers are covered under Nutrient Based Subsidy (NBS) scheme. Under the NBS, the subsidy rates for nutrients ‘N, ‘P ‘K and ‘S are notified by the Government on an annual basis. Selling prices are determined by the Company depending on costs of production, seasonal conditions, demand in field, competitors pricing, etc. In addition to NBS, units are also entitled for compensation towards freight expenses based on uniform freight policy.

Direct Benefit Subsidy (DBT):

Effective from February, 2018, settlement of subsidy under DBT has been rolled out on PAN India basis. DBT based subsidy is certainly contributing to rationalisation of subsidy bill of Government of India and also enable targeted disbursement of subsidy. However, since availability of stock all over the year needs to be ensured, this is straining the working capital of fertilizer companies as erstwhile they were being compensated based on receipt dispatches. Further DBT subsidy settlement has been delayed due to exhaustion of Government Budget allocated towards Fertilizer Subsidy leading to higher Working Capital requirement and increased finance costs.

Impact of Government policies on IPD marketing

Government policy on pricing and prioritizing allocation of domestic gas may severely affect production fertilizers with boronand sale of domestic units manufacturing fertilizers and chemicals. Free Trade Agreement with other nations may result in lowering of the existing duty structure, thus encouraging cheaper imports which in turn can affect sale of domestic extension of the manufacturers like RCF.

Government has liberalized import of chemicals to meet the ever increasing consumption level of chemicals in almost all sectors of the economy. International manufacturers, apart from cheaper energy sources, are having huge production capacities thusbenefitingfrom the economies of scale, making available their products at cheaper rate compared to domestic manufacturers. This has put strain on the margins of domestic manufacturers producing products viz. Ammonia, ABC, DMAc etc.

Implementation of One Nation One Fertilizer

Department of Fertilizers (DoF) issued an O.M. on 24th August, 2022 to implement One Nation One Fertilizer by introducing Single Brand for Fertilizers and Logo under Fertilizer subsidy scheme namely "Pradhanmantri Bhartiya Janurvarak Pariyojna (PMBJP).

Further on 1st November, 2022 DoF informed all fertilizer companies that the design of bags and logo forwarded earlier must be adopted by fertilizer manufacturers/ importers within the following timelines:

Type of Fertilizer

Timeline
1 Imported Urea 30th November, 2022
2 Indigenous Urea 30th November, 2022
3 Imported P&K 30th November, 2022
4 Indigenous P&K 30th November, 2022

The release of fertilizer subsidy to companies will be considered only for fertilizers dispatched in the new bags after the aforesaid cut-off dates.

NBS Rates for P & K Fertilizers for Rabi 2022-23

As per O.M. dated 2nd November, 2022, DoF revised the subsidy rates for P&K fertilizers under NBS policy for Rabi 2022-23 effective from 1st October, 2022 up to 31st March, 2023. The per kg NBS rates for N has been increased while P, K and S reduced. The per kg NBS rates of N, P, K and S revised from 91.96, 72.74, 25.31 and 6.94 during Kharif 2022 to 98.02, 66.93, 23.65 and 6.12, respectively, for Rabi 2022-23.

Accordingly, NBS rates per MT of DAP and MOP reduced from 50,013 and 15,186 per MT during kharif 2022 to 48,433 and 14,188 per MT, respectively, for Rabi 2022-23. NBS rates for NP/NPK grades of fertilizers ranged between 26,864 per MT and 46,188 per MT for Rabi 2022-23. However, subsidy on SSP and Potash Derived from Molasses remained unchanged at 7,513 per MT and

1,467 per MT, respectively. The per tonne additional subsidyforfortified zinc continued and remained unchanged at 300 and 500, respectively. Extension of the Revised Energy Norms of NUP-2015 for 14 Urea Manufacturing Units revised DoF,on 18th November, 2022, notified energy norms of NUP-2015 for 14 urea manufacturing units have been extended for further period till 31st March, 2023.

DISCUSSON ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Review of the financial performance

During the year, your Company achieved highest ever Revenue from Operations of 21451.54 crore as against

12812.17 crore in previous year (PY). Profit Before Tax (PBT) during the year, stood at 1273.98 crore as against

943.91 Crore due to improved energy efficiencies at Unit, better margins of Industrial Chemicals and complex fertilizers. Profit After Tax (PAT) stood at 967.15 crore as against 704.36 Crore.

Your Company achieved fertilizer sales volume of 33.14 lakh MT during 2022-23 as compared to 30.80 lakh MT during the previous year. The total sale of manufactured fertilizers during 2022-23 was 28.23 lakh MT as against 27.95 lakh MT during the previous year. Sales of manufactured fertilizers registered decrease of 1.00 % over previous year owing to lower sales of Urea.

Your Company produced 28.39 lakh MT of fertilizers (21.96 lakh MT of Urea & 6.43 lakh MT of Suphala 15:15:15) during the year as against 27.56 lakh MT of (21.85 lakh MT of Urea & 5.71 lakh MT of Suphala 15:15:15) produced during the previous year.

Energy Consumption

The energy consumption achieved during the year ended March 31, 2023 as compared to the previous year ending March 31, 2022 is given below:

Plant

For the year 2022-23 For the year 2021-22
Ammonia Trombay-V 8.736 8.710
Ammonia Thal 8.207 8.344
Urea Thal 5.700 5.845
Urea Trombay 6.606 6.510

Energy efficiencies to previous year owing to planned and unplanned shutdowns.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS

TRAINING AND DEVELOPMENT

Human Resource Development (HRD) at RCF focuses on building a Learning Ethos of Proficient Human Capital attaining Organizational Excellence which harness a Learning Culture among employees for their Growth & Well-being. It adopts innovative Learning & Development techniques aligned to business objective for enhancing employee competencies, skills sets, engagement & empowering them to achieve excellence. HRD at RCF focuses on development of Functional, Managerial and Behavioural Competencies of employees along with expertise sharing for other organizational and institutional progression.

Continuous grooming of employees provides them with empowerment and motivation to achieve excellence Effective training and development activities at RCF helps achieve; Organizational Goals, Increase Productivity, Motivate Employees, Maintain Smooth Team integration, Enhance Workforce empowerment, Employee Retention & improve overall organizational culture.

The Strategic Role of HRD at RCF

A) To Build & Strengthen a Value Based Learning Culture Organisation

The key to success is establishing the expected behaviours, and then design a system to reinforce and support those behaviours. The expected behaviours are in line with RCF values. Hence in order to indicate a common understanding of the values amongst employees, value based training programs are conducted to help employees understand how to integrate them into the daily performance of their roles and to sensitize towards sense of community. Few programmes conducted with this objective are:

Yoga Day Celebrations which included practical training along with meditation techniques a step towards spirituality and sharing the importance in day to day working.

Vigilance Awareness Week celebration included a Hybrid session for employees on "Corruption free India for developed Nation".

Ethical Work Culture which emphasises integrity, in line with organisational value system.

B) Learning and Development strategies for different positions of the workforce

Every position in the organisation is of immense importance. The learning and development strategy understands the role they are expected to perform and this defines knowledge and attitude to ensure a sustainable and successful organisation. At RCF, we execute learning intiatives based on the position.

Modular Training :

Every Officer a 5 days of Modular Training which provides different functional inputs. The sole objective is to let the employee get an overview of all the department functioning.

Building various competencies of personal effectiveness: to scale the performance to higher heights.

Management Development Program for new Managers to build in traits to handle new challenges.

Leadership Development Program for employees who have taken Head of Department positions (Chief Managers) to perform leadership roles.

Personal Effectiveness and Productivity for the Medical Team

C) Develop People Capabilities

RCF believes in on-going investment in its Human capital by supplementing with new learning.

Specialized Programmes

- Records Management: Preservation of vital records as part of compliance with set retention procedures as per rules.

- NABL Accredition Program for R & D and CC lab Team

- Awareness Programme for PRP 2021-2022

- Cyber Securty Awareness

- Rights, Duties and Welfare measures adopted by Govt. of India for OBC employees

- LQC- Tools & techniques

Cross-functional Learning opportunity: It improves communication and transparency within the organization as employees are aware and engaged. It leverages the diverse skills and specialized knowledge of each team member to brainstorm better ideas, solve difficult problems, and achieve better outcomes in an organization.

- "Tendering and Procurement Guidelines" session for Medical Team.

- Bag Sampling Procedures and roster duty session are organised to share the roles and repsonsibilities.

- "Preventive Vigilance & Vigilance Aspects in Commercial procedures"

- "Preventive Vigilance" for mid-career developments for acquiring competencies required.

HRD Aapke Dwar Connect with employees

Learning at their doorstep which is time effective & cost effective without disturbance to their work schedules are conducted.

External Programs

Employees functional needs are attended by nominating them for attending specialised programmes organized by nomination. externalagencies.Certainrolespecific and skill specific needs

Need For Paradigm Shift In Fertilizer Policy

Gender Sensitization & Women Empowerment
First Leadership Development Programme Leadership Development For Professionalism
Refractories & Insulation (Inspection & Maintenance Fai-Annual Seminar-2022
Atmanirbhar Bharat-Atanirbhar Suraksha Procurement By CPSES From MSE
Certificate Course In Labor Law India HSE Summit & Awards 2022

Rotating Centrifugal Equipment for Excellence In Operation & Maintenance

Project Management Competence Development
Preventive Vigilance Management Development Program
Key Facts of Fertilizer Sector Fertilizer & Food Security: Challenges
Annual International Fertilizer Conference Vienna Leadership In Contractor Safety Management
Residential Workshop on Preventive Vigilance Chemical Engineering for Plant Personnel
New Trends In Process Automation Human Resources Conclave 2023
Aatmanirbhar Bharat-She Challenges & Opportunities Operation & Maintenance & Advances

Residential Workshop on Management of Training For Training Managers

Vendor Development Program

Fertilizer Logistic-Port Handling Operations & Coastal Shipping

Fertilizer Policy, Plant Nutrition Techno
Fertilizer Orientation Program & Soil Health Dynamics Of Fertilizer Business
Management Through Integrated Nutrient
Management-Role of Cultivation
Improving Professional & Personal Effectiveness CPSE Vendor Development Cum Conference
Latest Amendments & Implications on HR & Business Operation & Maintenance Problem of Urea Plants
Project Management Competence Development Contract Management Dispute Resolution &
Arbitration
Gold Care India Occupational Health & Safety Managing The Invisible Monsters-Electrical Safety
Dynamics of Soil Health Governance Public Procurement with E-Procurement

 

Need For Paradigm Shift In Fertilizer Policy

Gender Sensitization & Women Empowerment
Workshop on New Labor Codes Incidence Investigation Workshop
Visioneering Personal Power Breakthrough Public Procurement with E-Procurement (GEM & CPP)
Fertilizer Business Management Bureau of Indian Standards
Fertilizer Policy In India- Challenges Improving Professional & Personal Effectiveness
Gender Equality & Women Empowerment Fertilizer Policy & Provisions Of Fertilizer Control Order
With Latest Amendments-Way Forward
Capital Market Reforms-DPE Procurement of Goods & Services & Related GFR Rules
E-Procurement (CPP & Gem ) Anti-Bribery Management System
New Labor Codes For Employers & Professionals A New Paradigm of Holistic Health
Building Competencies for Personal -DPE 13th National Conference on Safety & Health
Preventive Vigilance for Vigilance Officers Leadership Program for Professionalizing Below Board

Officials Level

Procurement, Tendering & General Financial Testing & Examination of Lifting Machines, Pressure
Vessels & Lift & Hoists
Process Safety for Oil & Gas Installation Seminar on Safety, Health & Environment
Wips-WR1 Day Regional Meet on The Theme Wow- Effectiveness of Compliance Mgmt. Focusing
Wisdom of Women- Born to Lead
Employers Of Exempted Establishments 13th Edition Gasification India 2022

D) Implementation of On-Boarding journey for New Hires to align with company culture

Wellness Program: Mental Health & Financial Wellness for the new hires

Soft Skills Inputs on Self- Awareness and Behavioural and Managerial inputs.

On-Line Gender Sensitization certification

Induction training including organisational and Functional inputs.

Basic SAP Module Awareness

Mentor Mentee Programmes

Mentoring initiative at RCF helps New Joiners to grow, develop and learn new skills under the direction and advice of a senior expert. Mentorship program assigns a newly joined person to an experienced employee who helps the newly joined person to become a part of the organization. It helps the new joiners with the initial teething problem, settling in their work area and get accustomed to the organization culture. The Mentorship Program is monitored for a period of one year with compulsory meeting of the Mentor and Mentee on quarterly basis (i.e. 4 meetings in a year) with an action plan being put down by the Mentor for the Mentee growth and development, in consultation with the Mentors HOD. The Mentors and Mentees are trained before the Mentoring process begins

E) Motivate and Engage Employees

Engage employees by providing them with opportunities to learn and develop new competencies.

Motivational Talk series for employees & their family members.

To bring a positive mind-set among all employees and their family members, inspirational talks, on success mantra, Mental & Health Well-being sessions are organised by inviting eminent speakers.

Life Skills Programme: The development of life skills helps employees to find new ways of thinking and problem solving.

Retirement Planning program for employees and their spouse help them in the transition from one phase of life to another with positive mind-set.

Financial Planning for superannuating employees provides them diretion to invest in proper manner along with interaction with various Annuity Service Providers for best investments. NPS Awareness and Help Desk, Superannuation (Pension) Scheme Awareness.

Orientation program for Retiring Employees by ASP (Annuity Service Provider)

Tax Saving Scheme Under Income Tax Act.

Competitive Exam Awareness Session to provide guidance to employees chidren about various professional entries and knowlegde for young aspirants.

F) Expertise sharing for other organizational and institutional progression along with Knowledge Exchange with Academic Institutes.

Internship Training & On-the Job training Students are provided exposure to various function which is a requirement of their academic curriculum

Entrepreneurship Development Program especially for SC/ST Graduate (Any Discipline/ Diploma (Engineer aspirant) To nurture their talent by enlightening them on various aspects of Industrial Activity required for setting up MSME.

ERP Workshop on Material Module, Production Planning and Sales & Distribution module for Management Students.

G) Women Empowerment Intiatives

- Womens Health: Buds to Blossom: Provide insights on womens mental & Physical health and challenges faced by women of all age group for Trombay and Thal Unit Women Employees.

- Womens Day Celebration through empowerment programmes and cultural activities where women employees participate.

- Yoga Session for RCF Women Employees after office managing health and stress relieving techniques through meditation.

H) On-Line/ E- Learning Courses

To provide the necessary learning in time with expert inputs and E-Learning courses are faster and effective mode to reach our employees

General Instructions on Procurement for Marketing Team

Cyber Security Awareness for Marketing Team

EPS Awareness Session

I) Kisan Care Link

Up-grade Life Skills of our Dealers & Farmers s, as on 31 CMDC uploads write-ups on "Kisan Care" link on RCF

Internet wwwrcfltd and to impart knowledge sharing all aspects of Life skills which help them in effectively dealing with the challenges of life i.e. their well-being, health related information, various important days.

J) Digital Skilling: To enable a future-ready digital workforce,

- SAP Plant Maintenance Module (Advanced

& Basic): Includes inspection, notifications, corrective and preventive maintenance to maintain an ideal technical system.

- Computer Awareness program for employees

- Quality Circle 12 steps for Power Point Presentation to prepare effective presentations.

- SAP Materials Management, SAP Finance, SAP Sales & Distribution. SAP Production Planning for the Corporate Technical Team to understand the functionality.

K) Pre Recruitment Awareness Program:

Programme aims to motivate and provide guidance to the applicants shortlisted for RCF Recruitment Online test for various post in different disciplines regarding how the online written test will be conducted. Awareness sessions are conducted giving overview of RCF, complete Guidelines of Online test, interaction with experienced and expert employees of the specific disciplines. This also includes giving them inputs regarding Logical Reasoning pattern, General Knowledge, Quantitative Aptitude, General English. Sample question videos are also uploaded on RCF

Website

L) International Participants

Indian Technical Economic Cooperation (ITEC) Programmes Allotted by Ministry of External Affairs hours which helped to learn techniques in RCF Ltd. has been identifiedas one of the Centres of Excellence in India, since March 2017 for imparting training to the foreign participants from Developing Countries like Malawi, Tanzania, Nigeria, Seychelles, Afghanistan, Sri Lanka, Sudan, Zimbabwe, Egypt, Ethiopia, Madagascar, Nigeria, Panama, Uzbekistan, Vietnam etc. The Training is for 2 weeks duration in Fertilizer Technology.

INDUSTRIAL RELATIONS

Your Company maintained cordial and harmonious Industrial Relations with all its employees. All the issues are settled amicably through regular discussions, meetings and dialogues with the employees. There was no occurrence of any untoward incident during the year. Your Company has 2655 employees comprising 1332 Officers and 1323 non- st March, 2023 compared to 2635 employees (1298 officers and 1337 non-officers) as on the corresponding date of the previous year.

During the year, 256 employees of various streams have joined your Company.

Your Company has undertaken "Swachha Bharat Abhiyan" in various plants, Hospital, School, RCF Cooperative Credit Society, RCF Township etc.

Your Company has conducted medical checkup for employees.

MATHADI CONTRACT LABOUR MANAGEMENT

Management strongly believes in continuous dialogues and meetings with Unions of Contract Labours. Mutual Trust & Transparency are the key-factors in cordial Industrial relations.

We adhere to all relevant statutory requirements and abide by all applicable laws to contract labour. We work towards ensuring safe working conditions and fair wages to all including contract labour employed with Contractors of RCF. Meetings with the Railway Labour Board regarding issues pertaining to Directly Registered Mathadis of Trombay Unit were held number of times to resolve the same. Issues/problems raised by the Mathadi Unions were discussed on platform of Railway Labour Board from time to time and efforts were made to resolve the issues. Also Mathadi Unions have been taken into confidence to resolve issues/problems.

GRIEVANCE REDRESSAL

Grievance Mechanism system including online grievances was strengthened through various forums and with the SC/ST/OBC/ StatutoryAppointmentsasLiaison PWBD separately including Grievance Officer for PWBD.

WELFARE AND SPORTS

Your company is one of the few companies who takes a lot of care of its employees not only at working place, but extends its relation beyond working place with the families of employees, by organizing various programmes like Annual Day, Family Day out, Womens Day etc.

During the year 2022-23, process for deciding recognition of Union amongst registered Unions under check off system was held in August 2022 and decided recognition. Thereafter, Industrial Relations remains cordial at workplace. HR stay connected with the employees through HR Apke Dwar both at factory locations and throughout Marketing locations having in person regular dialogues throughout the year.

Employee centric wellness and wellbeing activities was also strengthened during the period by way of preventive medical check-ups, camps and wellness sessions like Yoga, indoor games etc. Employees and their family members engagement was also encouraged through Annual Events and Cultural Programs.

On the Social Security Front, EPFO Mumbai Office recognised RCF for speedily completing online processes related to Provident Fund and Pension in the manufacturing larger unit sector.

Every active member of RCF has KYC compliance, UAN activated and linked with EPFO portal and the entire online exercise on implementation of Section 142 of Social Security

Code in a record time, resulting Pension claim settlement within the same month of Retirement @ 58 years. E-Nomination, E-life certificate been provided through help desk to all active and retired employees.

RCF extended generously the online facility for filling of higher Pension option on actual salary to active and retired employees and as a result, almost more than 2000 employees have opted the option of higher Pension as mandated by the Supreme Court and EPFO.

Overall Industrial relations appears to be normal and brought under manageable dimensions after overcoming some issues of inter Unions, inter groups conflicts without affecting day to day productivity.

WELFARE / EMPLOYMENT OPPORTUNITY TO WEAKER SECTION

The guidelines in respect of reservation in recruitment and promotion of SC/ST, OBC, EWS, Ex- Servicemen and Person with Benchmark Disability are followed by your company. As on 31st March, 2023, your company has on its rolls, 424 employees belonging to Scheduled Caste, 193 belonging to Scheduled Tribe and 622 Other Backward Classes, 26 EWS, 3 Ex-servicemen & 39 PWBD.

Your company is committed to the welfare of SC/ ST employees. Regular meetings are held with SC/ST Employees Welfare Association to address grievances, if any, and for providing guidance for development and organized Training programme on Reservation Policy. Your company has celebrated every year Birth Anniversary of Dr. Babasaheb Ambedkar in both Buddha Vihar, Chembur and Thal, Alibag, Kurul Colony. The programmes such as puja and lunch were organized.

Medical camp was organized like every year at Chaitya Bhoomi, Dadar on 6th December, on the occasion of ‘Mahaparinirvan Day. Financial assistance for distribution of food packets and making arrangement for medical camp including medicines along with the vehicles and Doctors was made available by the company on this occasion. On February 25, 2023, the ceremony of awarding academic fees to total of 15 SC/ST students at RCF Thal Units nearby schools for the year 2021-22 was completed.

RCF organized a one-year sewing training program in association with CFTI (Centre for Transforming India) to empower women of villages near Alibaug under CSR. 360 women were trained in the year.

WOMEN ORIENTED PROGRAMME INITIATIVES

As per the directions of the Ministry, RCF WIPS (Women in Public Sector) CELL is formed in your Company which caters to the needs of female employees and meets on Quarterly basis to discuss the issues/initiatives like programme on mentoring, welfare measures like starting the creche facility, procuring sanitary napkins vending machine etc. Recommendations of the cell duly considered for implementation of the Management.

Two nos. of Vending Machines of Sanitary napkins along with Incinerators have been procured for the female employees at Trombay. A half day workshop on ‘Women Health & Hygiene" was organized for Women in different age categories by inviting a Gynaecologist along with briefing about usage of Sanitary Napkin vending machines wherein Contract Women Workers also attended this programme. Self- Defense programme for the Trainees was also conducted.

Your Company has also framed its own ‘Gender Equality Policy. With an objective to create awareness amongst all the employees about Gender Equality E- Learning Module on Gender Sensitization has been launched on RCF Intranet and On- Line Gender Sensitization programme for Dy. Managers. Laminated copies of Gender Equality Policy and Zero Tolerance to Sexual Harassment policy are displayed in the offices of GMs and above level. The Creche facilities started for Women employees at Trombay are now extended that of Male Employees.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Particulars

2022-23 2021-22 % Change Reasons

1 Debtors Turnover (Days)

47.95 63.73 (24.76) High rate of gas which is a pass through in Urea subsidy impacted overall revenue and receivables.
2 Inventory Turnover 18.47 22.28 (17.12) Lower year-end inventory
3 Interest Coverage Ratio 7.22 8.94 (19.25) High interest rates with increase in profits

4 Current Ratio

1.58 1.34 17.86 Increase in Trade Receivables and Subsidy Receivables from GOI
5 Debt Equity Ratio (Long 0.25 0.35 (28.57) Increase in Profitability
Term Borrowings incl
Current Maturities)

6 Operating Profit Margin (%)

6.87 7.72 (11.06) Increase in Cost of Sales on account of high pool gas rate
7 Net Profit Margin (%)4.51 5.50 (17.99) Increase in Finance Cost

8 Change in return on Net Worth

21.03 18.11 16.14 Increase in Profitability on account of Better Energy Efficiency and margins of IPD products

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statement for the year ended March 31, 2022 are prepared in compliance with IND AS as prescribed under section 133 of the Companies Act, 2103 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 changes in economic and Companies (Indian Accounting Standards) Amendment Rules, 2016.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements and actual results may or may not be in accordance therewith. The Companys performance is dependent on several external factors such as performance ofmonsoon, significant Government Policies, fluctuations in prices of raw material and finished products and also their availability, etc., which could adversely affect the operations of your Company.