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Directors Report of Fertilisers and Chemicals Travancore Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 71st Annual Report and audited Financial Statements of the Company and the report of the Auditors for the financial year 2014-15.

Your directors are happy to inform you that the company could sustain its operations at a reasonable level during the financial year 2014-15 despite the constraints and adversities.

Highlights/Achievements-2014-15

* FAI Awardfor Best Production Performance

* Skoch Renaissance Award 2014 in recognition of the successful implementation of the innovative project of transportation of liquid ammonia by barge fitted with bullet tanks.

* India Sea Trade Awards for Cargo Owner/User.

* "Most Valuable PSU'award in the India Today Group PSUAwards, 2014

* Award for the 'Organization with innovative HR practices" at the Asia Pacific HRM Congress 2014.

* Winner for the outstanding safety performance for the year 2014 by M/s National Safety Council, Kerala Chapter * Highest production of Bio-fertflizers in the last 5 years.

PERFORMANCE - FINANCIAL, PRODUCTION AND SALES

The Company's performance for the year ended March 31,2015 is summarized below.

A. FINANCIAL Rs in Lakh

2014-2015 2013-2014

Turnover 203236.00 227622.18

Revenue from operations 197879.00 220938.13

Other Income 1855.00 1401.00

Total Revenue 199734,00 222339.00

Total Expenses 237318.00 259241.00

Profit/Loss (-) Before Tax & Exceptional -37585.00 -36903.00 items

Exceptional items -2406.00 10407.00

Profit / Loss (-) Aftertax -39991.00 -26496.00

B. PRODUCTION in Tonnes

2014-2015 2013-2014

Factamfos20:20 614004 663787

Ammonium Sulphate 120360 178792

Caprolactam 0 0

C. SALES in Tonnes

2014-2015 2013-2014

Fertilisers 776858 853442

Caprolactam 0 0

Financial Results

Despite reasonable production and marketing performance of the company, the financial results for the year 2014-15 shows a loss of Rs.39990.79 lakh as against a loss of Rs.26495.63 lakh during the year 2013-14,

Working capital constraints, High interest and finance charges, low level of operation, decrease in total revenue and non- operation of Caprolactam Plant through out the year, etc. are the main reasonsforthe negative working results.

Total revenue earned by the Company during the financial year 2014-15 is Rs 1997 crore as against Rs 2223 crore during the financial year 2013-14, Total interest and finance charges incurred during the year is Rs 196.28 crore. The Company has provided interest on GDI loan and penal interest totalling Rs 57.87 crore during the year 2014,15. Considering the poor financial performance of FRBL and as a prudent measure, during the financial year 2014-15, the entire investment made in FRBL and the amount due from FRBL totalling Rs 40.84 crore was written off.

Due to accumulated loss, your directors are not recommending any dividend for the financial year 2014-15, The Company has not transferred any amount to Reserve during the financial year 2014-15.

Operations

The fertilizer production and sales performance of the company during the year 2014-15 was affected by the dependency on import Ammonia for fertilizer production during the first ten months and severe working capital crisis. There were constraints in Ammonia import infrastructure and logistics limiting the production levels to about 70% - 80%.

With the favourable international price situation, the Company has re-started LNG. operations with effect from 10thFebruary 2015 based on a letter of comfort facility issued by the Department of Fertilizers in favour of MMTC. Inspite of this, during the fourth quarter of the aforesaid year 2014-15, Company was not in a position to ensure other raw-materials due to severe financial crunch. However with all out efforts, Company could achieve Factamfos production of 6.14 lakh MT and Ammonium Sulphate production of 1.2 lakh MT. Due to economic reasons, the Capraolactam plant remained shutdown through out the financial year 2014-15. However, in-house modification has been carried out in the plants to maintain production of Ammonium Sulphate at 100% capacity through direct neutralization.

The sales performance during the year include sale of 6.22 lakh MT of Factamfos, 1.1 lakh MT of Ammonium Sulphate, 0.3 lakh MT of Traded MOP and 5.2 lakh MT of Gypsum. The sale of 66.235 MT of Bio-fertilizers is the highest sale in the Iast 4 years.

FEDO completed its first year as a profit center in an excellent way. The turnover increased from Rs11.05 crore in 2013-14 to Rs 18.48 crore in 2014-15. The loss of FEDO also came down from Rs 187.77 lakh in 2013-14 to Rs 36.55 lakh in 2014-15. During the financial year, FEDO has bagged orders worth Rs.860 lakh. The value of jobs on hand as on 31.3.2015 is Rs 220 crore.

Performance-2015-16

Your Directors are pleased to inform you that the annual maintenance work could be completed in time and the plants are restarted as per schedule to cater to the increasing fertilizer demand of the monsoon season. The production and marketing performance during the first quarter of the financial year 2015-16 is encouraging. The Company could produce 124550 tonnes of Factamfos and 24079 tones of Ammonium Sulphate during the 1st quarter of the financial year 2015-16.

FACT has been exploring avenues to strengthen the organic nutrient source of the soil. FACT has entered into an MOU with Kerala Agricultural University for marketing of Bio-fertilizers being produced by the University.

FACThas fixed an ambitious targets for production and marketing of fertilizers for the financial year 2015-16 and entered into a performance MOU with the Department of Fertilizers. As per the MOU, the Company envisage a sales turnover of Rs 2614 crore for the year 2015-16. The major physical targets for the year include production and marketing of 6.80 lakh tones of Factamfos, 1.89 lakh tones of Ammonium Sulphate and 150 tonnes of Bio- fertilizers. The company intends to augment its core competency sectors with a projected turn over of Rs 66 crore for FEDO and Rs 22crore for FEW, the Consultancy and Fabrication divisions.

The financial relief package submitted by the company and cleared by the Board for Restructuring of Public Sector Enterprises (BRPSE) is still under the consideration of the Government of India. The sanctioning of the updated financial relief package is vital for the long term sustenance of the Company.

Management Discussion and Analysis Report

A Management Discussion and Analysis Report covering the operational aspects for the year under review, as stipulated under clause 49 of the listing agreement with the Stock Exchange is presented in a separate section forming part of the Directors Report.

Directors and Key Managerial Personnel

Appointments

Governments of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers vide Order No. 130/8/2003-HR-l dated 01st May 2014 notified the appointment of Shri K.M.Gupta, Economic Adviser, Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India as a part time Government nominee Director on the Board of FACT in place of

ShriV.K.Subburaj, Director.

Government of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers, vide Order No.130/8/2003-HR-l dated 19th June 2014 notified the appointment of Shri S.K.Lohani, Joint Secretary, Department of Fertilizers, Ministry of Chemicals & Fertilizers as Part-time Government nominee Director, in place of Shri S.C.Gupta, Director on the Board of FACT.

Government of India, Ministry of Chemicals & Fertilizers, Department of Fertilizers, vide Order No. 130/8/2003-HR-1 dated 27th April 2015 notified the appointment of Shri Sham Lai Goyal, Joint Secretary (SLG), Department of Fertilizers, Ministry of Chemicals & Fertilizers as Part-time Government Nominee Director, in place of Shri K.M.Gupta, Ex-EconomicAdvisor.

The Board at its meeting held on 12.2.2015 appointed Shri Jaiveer Srivastava, C&MD, Shri P. Muthusamy, Director (Finance), Shri V.K, Anil, Director (Technical), Shri V.Subramanian, Director (Marketing) and Shri K.V, Balakrishnan, Company Secretary as Key Managerial personnel of the company.

Retirements and resignations

Consequent to the appointment of Shri Sham Lai Goyal as Government of India nominee Director of FACT, Shri K.M.Gupta, Director retired from the Board of FACT with effect from 6.5.2015.

Shri V.Subramanian, Director (Marketing) resigned from the Board of FACT and Government of India vide Order NO.82/3/2006-HR-I dated 9th June 2015, accepted the resignation of Shri V.Subramanian with effect from 9.6.2015.

The Board place on record its appreciation of the valuable services rendered by Shri K.M.Gupta, Director and Shri V.Subramanian, Director (Marketing).

Annual Evaluation of Board.

FACT being a Government Compay, all appointments in the Board is made by the Government of India, Ministry of Chemicals and Fertilizers, Department of Fertilizers. The performance of Directors are evaluated by the Ministry of Chemicals & Fertilizers, Department of Fertilizers, Government of India. As per Government of India, Ministry of Corporate Affairs notification dated 5th June 2015, clause (e) and (p) of sub-section 3 of Section 134 of the Companies Act 2013 relating to appointment, remuneration and Annual evaluation of Board on its performance are not applicable to FACT.

Meetings of the Board

During the financial year 2014-15, ten meetings of the Board were convened and held. The details of the meetings of the Board of Directors are given in the report on Corporate Governance, which is a part of this report. The intervening gap between the meetings was within the period prescribed under the Companies Act 2013.

Director's Responsibility Statement

Pursuant to Sec.134(3)©of the Companies Act, 2013, your Directors hereby state that:

(a) in the preparation of annual accounts for the year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures.

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of profit and loss statement for the year ended March 31,2015.

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) the directors have prepared the annual accounts on a going concern basis.

(e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Corporate Governance

The Company is committed to maintain the highest standard of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Board lays emphasis on transparency and accountability for the benefit of all stake- holders of the Company. The Report on Corporate Governance as stipulated under the listing agreement annexed to this report forms an integral part of this report.

AUDITORS

(1) Statutory Auditors.

M/s. K.Varghese & Co., Chartered Accountants, Kochi, was appointed as Statutory Auditors of the Company for the year 2014-2015 by the Comptroller and Auditor General of India. M/s.Rraturi & Sriram, Chartered Accountants, Hyderabad, and M/s. R. Sadasivan & Co, Chartered Accountants, Chennai, were re-appointed as

Branch Auditors for the year 2014-2015, by the Comptroller and Auditor General of India.

The Statutory Auditors in their report has emphasized certain issues which are being addressed by the Company.

(2) Cost Auditors

M/s. BBS & Associates, Cost Accountants, Kochi has been re-appointed as Cost Auditors of the Company for the year 2014-2015.

(3) Secretarial Auditors

M/s.SVJS & Associates, Company Secretaries, Kochi, has been appointed as Secretarial Auditors of the Company for the year 2014-15. The report of the Secretarial Auditor is annexed to this report as Annexure-1 Clarification/reply to the remarks of Secretarial Auditor is annexed as Annexure.2.

Audit Committee

In line with the provision of Section 177 ofthe Companies Act 2013 and Clause 49 of the listing agreement with Stock Exchange, an Audit Committee of the Board has been constituted, Details of Members/ Meetings of the Audit Committee is elaborated in the report on Corporate Governance.

Associate Company

FACT-RCF Building Products Limited (FRBL) is the only associate company of FACT. During the financial year 2014-15 no Company has become/ ceased to become subsidiaries/ Joint Ventures and Associate Company of FACT.

Public Deposit

During the financial year 2014-15, the company has not accepted any deposit from public. However, as on 31.3.2015, Rs 0.49 lakh is lying in unclaimed matured fixed deposit account.

Contract or arrangement with related parties During the financial year 2014-15, FACT has not entered into any contracts or arrangements with related parties referred to in sub- section(1) of section 188 of the Companies Act 2013.

Corporate Social Responsibility

FACT continues to give priority on various Social Responsibility measures during the financial year 2014-15. The Company has constituted a Board level Committee as per the provisions of Companies (Corporate Social Responsibility Policy) Rules 2014. Annual Report on CSR as per the provisions of Companies (Corporate Social Responsibility Policy) Rules 2014 is annexed to this report as Annexure.3

Material changes and commitments

There were no material changes and commitments affecting the financial position of the company between the end of financial year (31st March 2015) and the date ofthe report (19th August 2015).

In the Audit Report for the Financial Year 2012-13, the Statutory Auditors have made certain qualification on valuation of closing stock of Gypsum having an impact of Rs 53,64 crore on the financial results. The Securities and Exchange Board of India (SEBI) vide letter dt. 27.04.2015 advised the Company to restate the financial results for the financial year 2012-13 and 2013-14 (if the same qualification is repeated in 2013-14 also), and the effect of these restated adjustment may be carried out in the annual accounts of the financial year 2014-15 as a prior period item.

Without prejudice to the right of the company to challenge the advice of SEBI in the appropriate forum, the Company has given effect to the restatement adjustment on valuation of gypsum as a prior period item in the financial statement of 2014-15. Subsequently, FACT has approached Hon'ble High Court of Kerala by way of Writ Petition, requesting to quash the Order 4 issued by SEBI directing FACT to restate the financial year statement for the financial year 2012-13. The Hon'ble High Court of Kerala has set aside the Order issued by SEBI. The Hon'ble High Court of Kerala has also directed that the order of QARC, if any, shall be communicated to the petitioner and the petitioner shall be heard by the SEBI and orders passed clearly showing the reasons for ordering a restatement of accounts.

Risk Management

FACT has formulated a risk management policy for identification of potential area of risk and mitigation of the same. FACT is having adequate risk management infrastructure in place capable of addressing all potential risks.

Internal Financial Control

FACT is having an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit wing of FACT headed by a General Manager monitors and evaluate the efficacy and adequacy of Internal Control System in the Company. The observation of internal audit and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. Based on the recommendation of Internal Audit, the functional heads take necessary corrective actions in their functional area thereby strengthen internal control.

Vigil Mechanism

FACT has finalized a vigil mechanism for directors and employees to report their concerns. The Directors and employees can approach Chairman Audit Committee of the Board directly and report their concern in appropriate case. The vigil mechanism and whistle blower policy is published in the web site of the Company www.fact.co.in.

Code of Conduct

FACT is having a code of conduct known as FACT Code of Business Conduct and Ethics applicable to the members of the Board and all senior executives of the Company. The code has been posted on the Company website www.fact.co.in The code lays down the standard procedure of business conduct which is expected to be followed by the Directors and senior executives of the Company. The functional Directors and senior management personnel have confirmed compliance with the code of conduct.

Prevention of Insider Trading

No instances of insider trading have been reported on FACT shares till date. None of the Directors and key managerial personnel is holding any shares in FACT. A code of conduct for prevention of insider trading and code for corporate disclosure is published in the website ofthe company.

Particulars of Loan given, Investment made, Guarantees given and securities provided

Particulars of Investment made and guarantees given along with the purpose for which the guarantee is given are provided in the financial statement fortheyear 2014-15 (Note No.11 &29(1)(b)) During the financial year 2014-15, FACT has not provided any loan/guarantee or made any investment within the purview of Section 186 ofthe Companeis Act 2013. However, the Board of FACT has decided to convert Rs 752.33 lakh due from FACT-RCF Building Products Limited (FRBL), the 50:50 Joint Venture of FACT and RCF, as equity of FRBL, subject to the approval ofthe Department of Fertilizers, Government of India. Approval is awaited from the Department of Fertilizers.

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review.

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differentiate rights as to dividend, votingor otherwise.

3. Issue of shares (including sweat equity shares) to employees ofthe company under any scheme.

4. Neither the Managing Director nor the whole time Directors of the Company receive any remuneration or commission from its Associate Company.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Resressal) Act 2013.

Extract of Annual Return

Extract of Annual Return of the Company in Form MGT9 is annexed asAnnexure.4 to this report

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Information regarding the conservation of energy, technology absorption, and foreign exchange earnings and-outgo as required to be dislosed under the Act is set out in a separate statement annexed to this report.

Acknowledgement

Your Directors gratefully acknowledge the valuable guidance and support extended by the Department of Fertilisers, Department of Public Enterprises and other Departments of Government of India, and the State Governments of Kerala, Tamilnadu, Karnataka, Puducherry, Andhra Pradesh andTelangana.

The Directors deeply appreciate the committed efforts putin by the employees and look forward to their dedicated services and endeavor in the years ahead to enable the Company to scale greater heights.

The Directors also acknowledge the continued support extended by the Shareholders, Dealers, Suppliers, Bankers and Customers ofthe Company, the Press and Electronic Media.

For and on behalf of the Board of Directors.

Sd /- JAIVEER SRIVASTAVA CHAIRMAN AND MANAGING DIRECTOR DIN:01858412

Udyogamandal Date: 19-08-2015




Mar 31, 2013

To the Members,

The Directors have pleasure in presenting the 69th Annual Report and audited accounts of the Company and the report of the Auditors for the year 2012 2013.

Your Directors are happy to inform you that FACT has successfully completed the online change over of Ammonia Plant to Re gasified Natural Gas(RLNG). The commissioning and guarantee test run of CPP boilers in Petrochemical Plant with RLNG has also been completed. Change over from liquid feed stock and fuel to cleaner RLNG is a milestone in the history of FACT and this will help in gearing the operations of the company by reducing the CO2 emission level.

The year 2012 13 was a challenging year for your company. The unprecedented adverse situation in all its core functional areas production, finance and marketing has affected adversely the performance of the company for the year 2012 13. During the year under report, the Company had to face problems ranging from increase in the prices of raw materials to shut down of various plants of the company. However, we are happy to inform you that FACT has been able to tide over the adverse situation and to maintain a reasonable performance level and sustain its operations during the financial year 2012 2013.

PERFORMANCE FINANCIAL, PRODUCTION AND SALES

A. FINANCIAL Rs.in lakh

2012 13 2011 12

1. Turnover 239380.00 293657.00

2. Revenue from operations 231576.68 287604.83

3. Other Income 1823.31 3670.17

4. Total Revenue 233399.99 291275.00

5. Total Expenses 268835.46 289295.19

6. Profit / Loss ( ) Before Tax 35435.47 1979.81

7. Exceptional item 39.29 Nil

8. Profit / Loss ( ) After tax 35396.18 1979.81

Due to accumulated loss, your Directors are not recommending any dividend for the year 2012 13.

B. PRODUCTION In Tonnes 2012 13 2011 12

1. Factamfos 20 : 20 537081 622256

2. Ammonium Sulphate 126286 163468

3. Caprolactam 15544 37854

C. SALES In Tonnes

2012 13 2011 12

1. Fertilisers 740111 834580

2. Capraolactam 17695 40963

Financial results of the company for the year 2012 2013 shows a loss of Rs.35396 lakh as against the Profit of Rs.1980 lakh during the year 2011 2012.

The increase in price of Benzene, the main raw material for Caprolactam production and unremunerative realization has resulted in shut down of Caprolactam plant from 11.10.2012. As a result of lower production of Caprolactam, there was under absorption of fixed cost to the tune of Rs.48 crore. The shut down of Caprolactam Plant has affected the production of Ammonium Sulphate also.

Due to non availability of Phosphoric acid, Factamfos production was lower. The adverse climatic conditions and stock build up of fertilizers, forced the company to give additional discount on fertilizers to the tune of Rs.40 crore. Continuous losses, accumulated stock and delay in receipt of subsidy has adversely affected the working capital position. Due to severe constraint in working capital and stock built up, Factamfos and Ammonium Sulphate production was stopped from 9.2.2013 to 31.3.2013. As a result of lower production under absorption of fixed cost with regard to fertilizers was to the tune of Rs.89 crore.

On adoption of the Accounts for the year 2012 13, the net worth of the company will decrease to Rs. 192.47 crore as against a net worth of Rs.161.49 crore as on 31.3.2012.

The company has submitted a comprehensive Financial Re structuring package to the Government of India for sustainable operation of the Company which is under the consideration of the BRPSE/Government of India. Your board is hopeful of an early sanction of the financial relief package by the BRPSE/GoI. On approval of the financial relief package, the networth of the Company will be positive and the company shall remain out of the purview of BIFR.

FACT has drawn up an ambitious plan for expansion and diversification of the company which envisages complete turnaround of the company ensuring sustainable operation and continuous profit.

FACT''s immediate focus is on maximizing production of Ammonium Sulphate and Complex fertilizers. FACT is focusing on long term arrangement for supply of raw materials and capacity enhancement of NP plant by adding 1000 TPD stream at Cochin Division. Trading of imported fertilizers is one area with high growth potentials. The Company is focusing on import of complex fertilizers and potash to supplement own , production and thereby to enhance FACT''s presence in the market. FEDO and FEW, the engineering and fabrication divisions of FACT are gearing up to diversity their activities with entry into new areas and strengthening the core sector which are projected to generate extra revenue. FACT RCF Building Products Ltd (FRBL) the joint venture with RCF for making load bearing Gypsum Panels, is focusing on its efforts to enter in to the building construction field in urban as well as in rural areas.

The production and marketing performance of the company for the 1st half of the financial year 2013 14 is encouraging. The Company is hopeful of achieving the targeted level of production and marketing of Fertilisers during the financial year 2013 14. However high cost of RLNG as compared to Natural Gas pose a threat to profitability of FACT. FACT has requested adequate compensation for high cost RLNG to have a level playing field as compared to other players, which is under the consideration of the Government.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A Management Discussion and Analysis Report covering the operational aspects during the year 2012 2013 is enclosed.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Sec.217(2AA) of the Companies Act, 1956, your Directors hereby state:

that in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of profit and loss statement for the year ended March 31, 2013.

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

that the directors had prepared the annual accounts on a going concern basis.

REPORT ON CORPORATE GOVERNANCE

Your Directors are pleased to state that your Company has been practicing the principles of good Corporate overnance. The Board lays emphasis on transparency and accountability for the benefit of all stake holders of the Company. Report on Corporate Governance in accordance with the listing agreement is annexed to this report.

STATUTORY AUDITORS,

COST AUDITORS

M/s. Babu A.Kallivayalil and Co., Chartered Accountants, Kochi, was re appointed as Statutory Auditors of the Company for the year 2012 2013 by the Comptroller and Auditor General of India. M/s. R. Sadasivan and Co, Chartered Accountants, Chennai, and M/s. Ramanatham and Rao, Chartered Accountants, Hyderabad, were appointed as Branch Auditors of the Company for the year 2012 2013 by the Comptroller and Auditor General of India.

M/s. BBS & Associates, Cost Accountants, Kochi has been appointed as Cost Auditors of the Company for the year 2012 2013.

Comments of Statutory Auditors

The Statutory Auditors in their report has made certain comments on the Accounts of the Company for the year 2012 2013. The reply to the comments of Statutory Auditors are annexed to this report.

DIRECTORS

RETIREMENT & APPOINTMENTS

Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers vide Order No. 86/ 5/2008 HR I dated 12th February 2013 notified the appointment of Shri Jaiveer Srivastava, Chairman & Managing Director, Hindustan Prefab Limited, Jangpura, New Delhi 110 014, as Chairman and Managing Director of FACT. Shri Jaiveer Srivastava assumed charge of the post of Chairman & Managing Director with effect from 01.04.2013.

Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers, vide Order No.130/ 8/2003 HR 1 dated 2nd May 2013 notified the appointment of Shri V.K.Subburaj, Additional Secretary & Financial Adviser (AS & FA), Department of Fertilisers, Ministry of Chemicals and Fertilisers as Part time Official Director, in place of Dr.V. Rajagopalan.

On superannuation, Shri P.K. Chandrasekharan, Director (Marketing) retired from the service of FACT on 30.9.2013.

The Board place on record its appreciation of the valuable services rendered by Shri Sham Lal Goyal, Chairman and Managing Director, Dr. V. Rajagopalan, Director and Shri P.K. Chandrasekharan, Director (Marketing).

AUDIT COMMITTEE

In line with the Provision of Section 292(A) of the Companies (Amendment) Act 2000 and Clause 49 of the listing agreement with Stock Exchange, an Audit Committee of the Board has been constituted.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information regarding the conservation of energy, technology absorption, adaptation & innovation and foreign exchange earnings and outgo required as per Section 217(1) (e) of the Companies Act, 1956 is set out in a separate statement attached to this report and forms part of it.

EMPLOYEES PARTICULARS, REMUNERATION ETC.

During the year no employee had received remuneration within the purview of Section 217(2A) of the Companies Act, 1956.

ACKNOWLEDGEMENT

Your Directors gratefully acknowledge the valuable guidance and support extended by the Government of India, Department of Fertilisers and the State Governments of Kerala, Tamilnadu, Karnataka and Andhra Pradesh.

The Directors deeply appreciate the committed efforts put in by the employees and look forward to their dedicated services and endeavor in the years ahead to enable the Company to scale greater heights.

The Directors also acknowledge the continued support extended by the Shareholders, Depositors, Dealers, Suppliers and Customers of the Company, the Press and Electronic Media.

For and on behalf of the Board of Directors.

Sd/

JAIVEER SRIVASTAVA

Chairman and Managing Director

Udyogamandal

Date: 22 11 2013


Mar 31, 2011

To the Members,

The Directors have pleasure in presenting the 67th Annual Report of your Company together with the Audited Accounts and the report of the Auditors for the year 2010-2011.

We are happy to inform you that FACT has been able to maintain an impressive level in the overall performance during the financial year 2010-11. Turn over of the company touched an all time record of Rs. 2512 crore.

HIGHLIGHTS

- All time high sales turnover

- All time record sale of Gypsum

- Impressive sale of Caprolactam

- New record in production and sale of Bio-Fertilisers

- Award and Laurels in Safety and Pollution Control

PERFORMANCE - PRODUCTION, SALES AND PROFITABILITY

2010-2011 2009-2010

1 Production / In Tonnes

Factamfos 20:20 644454 753744

Ammonium Sulphate 200311 179546

Caprolactam 44345 42006

2 Sales / In Tonnes

Fertilisers 932670 1044893

Caprolactam 44136 38253

3 Financial / Rs. lakh

Turnover 251183 214161

Profit before interest, depreciation & taxes 13438.72 3654.11

Profit/Loss (-) after tax (-)4932.67 (-)10383.51

During the year 2010-11, the company has achieved considerable improvement in the production of Ammonium Sulphate and Caprolactam.

The main reason for shortfall in the production of Factamfos as compared to previous year is the shortage of phosphoric acid.

The reason for the reduction in the sale of Factamfos as compared to 2009-10 is attributable to lower production.

Financial results of the company for the year 2010-11 shows a loss of Rs.49.33 crore as against the loss of Rs.103.84 crore during the year 2009-10.

Due to the accumulated loss, your Directors are not recommending any dividend for the year 2010-2011.

The loss incurred for the year under review is mainly due to the

provision for gratuity, loss on sales of Fertilisers bonds provided in the accounts and huge burden on interest and financing charges.

Consequent to the increase in gratuity limit from Rs.3.5 lakh to Rs.10 lakh, the liability towards Gratuity provision and leave encashment debited in the profit and loss account for the year 2010-11 is Rs.85.04 crore as against Rs.20.64 crore during the previous year. Under a buy-back scheme announced by the Government of India, the Fertiliser bonds amounting to Rs.265.76 crore have been sold by the Company to RBI on 31.3.2011 and 26.7.2011. Government of India agreed to compensate not less than 50% loss suffered on account of buy-back arrangement. Loss of Rs.18.48 crore being 50% of loss on reduction in face value of bonds has been provided in the Annual Accounts for the year 2010-11. The company has incurred additional expenditure of Rs.25.11 crore on account of interest and financing charges for the year 2010-11 as compared to last year and the total interest and financing charges provided in the accounts for the year 2010-11 is Rs.141 crore. The production and the financial performance of the company during the first quarter of the financial year 2011-12 is also not encouraging. Due to shortage of raw materials the production fell much below the targeted levels.

The Company has taken steps to ensure availability of raw materials to optimize production in the remaining months of the financial year 2011-12. The Company has laid down plans to maximize the production of captive phosphoric acid. The availability of imported phosphoric acid is also showing some improvement. FACT has entered into a long term arrangement for supply of phosphoric acid with indigenous supplier. The Company is also proposing to enter into long term arrangement for supply of Rock phosphate. To facilitate procurement of bulk consignment of Sulphuric acid, the company has hired a Sulphuric acid storage facility at Willingdon Island.

In order to improve the turnover and profitability, the company is concentrating in marketing of traded products. During the year 2011-12, FACT has already handled a Urea ship of 32996 MT at Cochin Port. FACT is anticipating another Urea ship during the second quarter of the financial year 2011-12. Offers have already been received for import of MOP through MMTC and FACT plans to import 50000 to 75000 MT of MOP during the financial year 2011-12. To promote Integrated Plant Nutrient Management, FACT is expanding the sale of organic manure to the State of Tamil Nadu. During the year 2011-12, FACT has considerably increased the sale of bulk Gypsum and plans to sell 50,000 MT of bagged Gypsum. The sale of bulk Gypsum is set to touch an all time record of 6 to 7 lakh MT during the year 2011-12.

On materializing the above, the Company hopes to improve its physical and financial performance and to show a positive result for the financial year 2011-12.

The Joint Venture project with RCF for manufacturing gypsum- based building material is nearing completion and the project is expected to be commissioned shortly.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A Management Discussion and Analysis Report covering the operational aspects during the year 2010-2011 is enclosed.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Sec.217(2AA) of the Companies Act, 1956, your Directors hereby state :

that in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of profit and loss account for the year ended March 31, 2011. that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. that the directors had prepared the annual accounts on a going concern basis.

REPORT ON CORPORATE GOVERNANCE

Your Directors are pleased to state that your Company has been practicing the principles of good Corporate Governance. The Board lays emphasis on transparency and accountability for the benefit of all stake-holders of the Company. Report on Corporate Governance in accordance with the listing agreement is annexed to this report.

STATUTORY AUDITORS, COST AUDITORS

M/s. Babu A.Kallivayalil & Co., Chartered Accountants, Kochi, was re-appointed as Statutory Auditors of the Company for the year 2010-11 by the Comptroller and Auditor General of India. M/s. A.John Moris & Co, Chartered Accountants, Chennai was re- appointed as Branch Auditors for Tamilnadu and Kerala area and M/s.Ramanatham & Rao, Chartered Accountants, Hyderabad was re-appointed as Branch Auditors for Karnataka and Andhra Pradesh area of the Company for the year 2010-11 by the Comptroller and Auditor General of India.

M/s. Sukumaran & Co., Cost Accountants, Thiruvananthapuram has been appointed as Cost Auditors of the Company for the year 2010-11.

Comments of Statutory Auditors

The Statutory Auditors in their report has made certain comments on the Accounts of the Company for the year 2010-11. The reply to the comments of Statutory Auditors are annexed to this report.

DIRECTORS RETIREMENT & APPOINTMENTS

Shri A.Asokan, Director (Marketing) who was holding additional charge of Chairman and Managing Director, has retired from the services of FACT on superannuation on 30.06.2010. Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers vide Order No.86/5/2008-HR-I dated 30th June 2010 entrusted additional charge of the post of Chairman and Managing Director to Shri K.Mathevan Pillai, Director (Finance), and Shri K.Mathevan Pillai had assumed charge of Chairman and Managing Director with effect from 01.07.2010. Shri K.Mathevan Pillai, superannuated from the service of FACT on 31.08.2010. Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers vide Order No. 86/5/2008-HR-I dated 6th September 2010 entrusted additional charge of the post of Chairman and Managing Director to Shri V.G.Sankaranarayanan, Director (Technical). Shri V.G.Sankaranarayanan had assumed charge of Chairman and Managing Director with effect from 01.09.2010 and held the additional charge upto 28.2.2011. Shri V.G.Sankaranarayanan, Director (Technical) superannuated from the service of FACT on 30.4.2011.

Department of Fertilisers, Ministry of Chemicals and Fertilisers, Government of India, vide Order No.130/8/2003-HR-1 dated 3rd May 2010 notified the appointment of Shri Satish Chandra, Joint Secretary, Department of Fertilisers and Shri Deepak Singhal, Joint Secretary, Department of Fertilisers, on the Board of Directors of FACT in place of Shri Mathew C,Kunnumkal, Director and Shri Sudhir Bhargava, Director, respectively. Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers, vide Order No.130/8/2003-HR-I dated 3rd November 2010 notified the appointment of Shri Sham Lal Goyal, Joint Secretary (P&P), Department of Fertilisers as a Director on the Board of FACT in place of Shri Deepak Singhal, Director. Government of India, Ministry of Chemicals and Fertilisers,

Department of Fertilisers vide Order No. 86/5/2008-HR-I dated 28th February 2011 entrusted additional charge of the post of Chairman and Managing Director to Shri. Sham Lal Goyal, Joint Secretary (P&P), Department of Fertilisers, Ministry of Chemicals and Fertilisers. Shri Sham Lal Goyal has assumed charge of Chairman and Managing Director with effect from 01.03.2011. Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers, vide Order No.86/4/2009-HR-I dated 20th December 2010 notified the appointment of Shri P.Muthusamy, as Director (Finance). Shri P.Muthusamy has assumed charge with effect from 18.03.2011.

Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers, vide Order No.86/1/2010-HR-I dated 28th June 2011 notified the appointment of Shri V.K.Anil, as Director (Technical). Shri V.K.Anil has assumed charge with effect from 28.06.2011.

Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers, vide Order No.130/8/2003-HR-1 dated 8th August 2011 notified the appointment of Dr.V.Rajagopalan, Additional Secretary & Financial Adviser, Department of Fertilisers and Shri S.C.Gupta, Joint Secretary (F&P), Department of Fertilisers, as Part-time Official Directors on the Board of FACT in place of Shri Satish Chandra and Shri Sham Lal Goyal respectively. The Board place on record its appreciation of the valuable services rendered by Shri A. Asokan, Director (Marketing), Shri K.Mathevan Pillai, Director (Finance), Shri V.G.Sankaranarayanan, Director (Technical), Shri Mathew C. Kunnumkal, Director, Shri Sudhir Bhargava, Director, Shri Deepak Singal, Director and Shri Satish Chandra, Director.

AUDIT COMMITTEE

In line with the Provision of Section 292(A) of the Companies (Amendment) Act, 2000 and Clause 49 of the listing agreement with Stock Exchange, an Audit Committee of the Board has been constituted.

PUBLIC DEPOSITS

The total amount of Fixed Deposits as on 31st March 2011 was Rs.4873.24 lakh. As on 31-03-2011, 10 depositors have not claimed their deposits amounting to Rs. 90.35 lakh.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information regarding the conservation of energy, technology absorption, adaptation & innovation and foreign exchange earnings and-outgo required as per Section 217(1) (e) of the Companies Act, 1956 is set out in a separate statement attached to this report and forms part of it.

EMPLOYEES PARTICULARS, REMUNERATION ETC.

During the year no employee had received remuneration within the purview of Section 217(2A) of the Companies Act, 1956.

ACKNOWLEDGEMENT

Your Directors gratefully acknowledge the valuable guidance and support extended by the Government of India, Department of Fertilisers and the State Governments of Kerala, Tamilnadu, Karnataka and Andhra Pradesh.

The Directors deeply appreciate the committed efforts put in by the employees and look forward to their dedicated services and endeavour in the years ahead to enable the Company to scale greater heights.

The Directors also acknowledge the continued support extended by the Shareholders, Depositors, Dealers, Suppliers and Customers of the Company, the Press and Electronic Media. For and on behalf of the Board of Directors.

Sd/-

Udyogamandal Sham Lal Goyal

Date: August 30, 2011 Chairman and Managing Director




Mar 31, 2010

The Directors have pleasure in presenting the 66th Annual Report of your Company together with the Audited Accounts and the report of the Auditors for the year 2009-10.

Your Directors are happy to inform you that the Companys overall performance in the production and marketing front during the financial year 2009-10 was betterthan the previous year.

PERFORMANCE - PRODUCTION, SALES AND PROFITABILITY

2009-2010 2008-2009

1 Production / In Tonnes Factamfos 20:20 753744 605047

Ammonium Sulphate 179546 128845

Caprolactam 42006 13548

2 Sales / In lakh Tonnes

Fertilisers 10.45 8.33

Caprolactam 0.38 0.12

3 Financial/Rs. lakh

Turnover 214161 214748

Profit/Loss (-) before tax(-) 10370.34 4311.44

Provision for taxation - earlier years 35.38 -

Provision for Fringe benefit tax (-)22.21 16.00

Profit/Loss (-) after tax (-)10383.51 4295.44

Profit/Loss (-) b/f from previous year (-)35221.85 (-)39517.29

Net deficit carried to Balance Sheet (-)45605.36 (-)35221.85

Due to the accumulated loss, your Directors are not recommending any dividend forthe year2009-10.

The production performance of the company during the year registered very good improvement compared to previous year with 7.54 lakh MT of Factamfos, 1.80 lakh MT of Ammonium Sulphate and 42006 MT of Caprolactam with an increase of 25%, 39% and 310% respectively.

During the year, the complex fertilizer plants at Udyogamandal and Cochin Division operated at 119% capacity compared to 78% and 101 % respectively in the previous year.

During the year 2009-10, the company has made some modifications in NP plant at Udyogamandal for obtaining optimum production. Due to this modification, the production of NP plant at Udyogamandal has increased upto 800 - 820 TPD in place of 650 - 700 TPD.

Total fertilizer sales showed an increase of 25% at 10.45 lakh MT compared to 8.33 lakh MT during the year 2008-09. The financial results for the year 2009-10 shows a loss of Rs. 103.83 crore against a profit of Rs. 42.95 crore during the year 2008-09. Previous year working results include profit on sale of land to NHAI and valuation of gypsum amounting to Rs. 199.50 crore into stock with corresponding credit to Profit & Loss account as extraordinary items.

The company could register substantial reduction in operating loss compared to last year. The operating loss has come down from Rs. 178.05 crore to Rs. 103.70 crore. The loss of Rs. 103.70 crore include arrears on account of wage revision amounting to Rs. 46.33 crore for which cash out go will be in 2010-11 and subsequent year in 8 quarterly installments starting from August 2010. Government of India vide Order No.96/4/2009-HR-l dated 03.08.2010 has approved revision of salaries and wages of Board level and below Board level executives and employees of the company notionally with effect from 01.01.2007 and payment to be made effective from 01.08.2010. Even though the arrears from 01.08.2008 is payable on 8 equal instalments, to comply with the provisions of relevantaccounting standard, the arrears upto 31.03.2010 amounting to Rs. 46.33 crore has been provided in the profit and loss account for the year 2009-10. During the year, working capital position remained very tight due to increased operations and company had to utilize a limit of Rs. 850 crore against Rs. 681 crore availed in the previous year. Consequently the interest cost has increased from Rs. 64 crore to Rs. 116 crore during the year 2009-10. Huge burden of interest and the accounting of the arrears on pay revision are the main reasons for the negative working result for the year 2009-10.

During the year, the company was able to enter into a Memorandum of Understanding with three customers for sale of Caprolactam on import parity price. With this, about 2500 MT of Caprolactam has been committed for domestic sale per month. During the year 2009-10, a new ERP system SAP was introduced at a total cost of Rs.13crore. Thesystem is under stabilization.

During the year 2009-10, the company has introduced a new product Zincated Factamfos. Under the nutrient based subsidy scheme fertilisers with micro nutrients with zinc is provided with additional subsidy of Rs. 500 per MT. With continued research company could develop a product with suitable colouring agent using carbon black which is economical compared to other colouring agent in the market. The commercial production of the new product started in July 2010 in the fourth stage NP plant at Udyogamandal complex. Average production is around 200 TPD and this will improve the profitability in the year 2010-11. As per the directions issued by the Government of India and with the concurrence of Securities and Exchange Board of India, during the year 2009-10, the company has allotted 2923 lakh equity shares of X 10 each to the Government of India as conversion of loan into equity.

FACT-RCF Building Products Limited (FRBL), the Joint Venture company with Rashtriya Chemicals & Fertilisers Limited for manufacturing load bearing panels and other building products using phospho gypsum is expected to achieve mechanical completion during August 2010. The project is expected to be commissioned shortly.

Performance of the company during the first quarter of the financial year 2010-11 was encouraging. Production and sales of almost all products for the quarter ended 30" June 2010 has increased compared to the corresponding quarter in.the previous year. Working results during the quarter ended 30.6.2010 shows a profit of Rs. 368 lakh as against a loss of Rs. 3451 lakh during the corresponding period of the previous year. The Company was able to generate a profit of Rs. 9.91 crore for the month of July,201Q.

Government of India has announced Nutrient Based Subsidy (NBS) with effect from 01.04.2010. Under the NBS scheme, subsidy is based on actual nitrogen, phosphorus and potasic contents of different fertilizer formulation. Ammonium sulphate is also recognized for subsidy under NBS. In order to support the companies operating on costly feed stock and fuels like Naphtha, Government of India is announcing additional subsidy for these companies. With the implementation of Nutrient based subsidy and the expected additional support to Naphtha based industries, financial performance of FACT is expected to improve during the year2010-11.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A Management Discussion and Analysis Report covering the operational aspects during the year 2009-10 is enclosed.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Sec.217(2AA) of the Companies Act, 1956, your Directors hereby state:

a. that in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

b. that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 313)10 and of profit and loss account for the year ended March 31,2010.

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

d.that the directors had prepared the annual accounts on a going concern basis.

REPORT ON CORPORATE GOVERNANCE

Your Directors are pleased to state that your Company has been practicing the principles of good Corporate Governance. The Board lays emphasis on transparency and accountability for the benefit of all stake-holders of the Company. Report on Corporate Governance in accordance with the listing agreement is annexed to this report.

STATUTORY AUDITORS, COST AUDITORS

M/s. Babu A.Kallivayalil & Co., Chartered Accountants, Kochi, was appointed as Statutory Auditors of the Company for the year 2009- 10 by the Comptroller and Auditor General of India. M/s. A.John Morris & Co, Chartered Accountants, Chennai was re-appointed as Branch Auditors for Tamilnadu and Kerala area and M/s.Ramanatham & Rao, Chartered Accountants, Hyderabad was appointed as Branch Auditors for Karnataka and Andhra Pradesh area of the Company for the year 2009-10 by the Comptroller and Auditor General of India.

M/s. Sukumaran & Co., Cost Accountants, Thiruvananthapuram has been appointed as Cost Auditors of the Company for the year 2009-10 with the approval of the Government of India.

Comments of Statutory Auditors

The Statutory Auditors in their report has made certain comments on the Accounts of the Company for the year 2009-10. The reply to the comments of Statutory Auditors are annexed to this report.

DIRECTORS RETIREMENT & APPOINTMENTS

Dr.George Sleeba, Chairman and Managing Director, has retired from the services of FACT on superannuation on 30.11.2009.

Government of India, Ministry of Chemicals and Fertilisers, Department of Fertilisers vide Order No. 86/3/2007-HR-l dated 30th November 2009 entrusted additional charge of the post of Chairman and Managing Director to Shri. A.Asokan, Director (Marketing) in addition to his duties. Shri. A.Asokan has assumed charge of Chairman and Managing Director with effect from 01.12.2009.

On superannuation of Shri A.Asokan on 2ft June 2010, Shri K.Mathevan Pillai (Director-Finance) has assumed charge of the post of the Chairman and Managing Director with effect from 01.07.2010.

Department of Fertilisers, Ministry of Chemicals and Fertilisers, Government of India, vide order No.130/8/2003-HR-l dated 3rd May 2010 notified the appointment of Shri Satish Chandra, IAS, Joint Secretary, Department of Fertilisers and Shri Deepak SinghalJAS, Joint Secretary, Department of Fertilisers, on the Board of Directors of FACT in place of Shri Mathew C.Kunnumkal, IAS, Director, and Shri SudhirBhargava, IAS, Director, respectively.

The Board place on record its appreciation of the valuable services rendered by Dr. George Sleeba, Chairman & Managing Director, Shri A.Asokan, Director (Marketing), Shri Mathew C.Kunnumkal, Director and ShriSudhirBhargava, Director.

AUDIT COMMITTEE

In line with the Provisions of Section 292(A) of the Companies (Amendment) Act 2000 and Clause 49 of the listing agreement with Stock Exchange, an Audit Committee of the Board has been constituted.

PUBLIC DEPOSITS

The total amount of Fixed Deposits as on 31s March 2010 was Rs.. 62.28 Crore. As on 31 -03-2010,8 depositors have not claimed their deposits amounting to Rs.. 2.60 lakh.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information regarding the conservation of energy, technology absorption, adaptation & innovation and foreign exchange earnings and-outgo required as per Section 217(1) (e) of the Companies Act, 1956 is set out in a separate statement attached to this report and forms part of it.

EMPLOYEES PARTICULARS, REMUNERATION, ETC.

During the year no employee had received remuneration within the purview of Section 217(2A) of the Companies Act, 1956.

ACKNOWLEDGEMENT

Your Directors gratefully acknowledge the valuable guidance and support extended by the Government of India, Department of Fertilisers and the State Governments of Kerala, Tamilnadu, Kamataka and Andhra Pradesh.

The Directors deeply appreciate the committed efforts put in by the employees and look forward to their dedicated services and endeavour in the years ahead to enable the Company to scale greater heights.

The Directors also acknowledge the continued support extended by the Shareholders, Depositors, Suppliers and Customers of the Company, the Press, AIR and Visual Media. For and on behalf of the Board of Directors.

Sd/- Udyogamandal K.Mathevan Pillai

Date: 26.08.2010 Chairman and Managing Director



 
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