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Directors Report of Rashtriya Chemicals & Fertilizers Ltd.

Mar 31, 2016

The Directors of your Company have pleasure in presenting this 38th Annual Report on the working of your Company together with the Audited Accounts for the year ended 31st March, 2016.

1.0.0 FINANCIAL PERFORMANCE

1.1.0 SUMMARY OF FINANCIAL PERFORMANCE

Rs, Crore

Particulars

2015-16

2014-15

Total Revenue

8761.64

7787.81

Total Operating Cost

8183.09

6903.11

Operational Profit

578.55

884.70

Depreciation/Impairment

145.13

258.12

Finance Cost

142.32

116.95

Profit/ (Loss) before tax

291.10

509.63

Provision for Tax

99.87

187.57

(including deferred Tax

-

-

liability/ Asset)

-

-

Net Profit / (Loss)

191.23

322.06

Appropriations:

Dividend

60.69

99.30

Tax and Educational cess

12.35

20.22

on Dividend

-

-

Balance Transferred to

118.19

202.54

General Reserve

-

-

1.2.0 HIGHLIGHTS OF PERFORMANCE FOR THE YEAR 2015-2016

- Revenue for the year increased by 12.50% to Rs, 8761.64 Crore as compared to Rs, 7787.81 Crore in the previous year.

- Gross profit for the year decreased by 34.61% to Rs, 578.55 Crore as against Rs, 884.70 Crore of previous year.

- Profit before tax decreased by 42.88% to Rs, 291.10 Crore as compared to Rs, 509.63 Crore in the previous year.

- Profit after tax decreased by 40.62% to Rs, 191.23 Crore as compared to Rs, 322.06 Crore in the previous year.

The major factors contributing for reduction of the Company’s profitability are as under:

i) Depressed sales of fertilizers both traded and manufactured owing to poor agro-climatic conditions, glut of fertilizers in the market and lower urea sales due to lower allotment of imported urea.

ii) Provision made during the year towards pooled price differential for gas used in its non-Urea operations.

iii) Reduction in preset norms of Urea w.e.f. 1st June 2015 under the New Urea Policy 2015 which were partially off-set by the increase in the savings rate at pooled price of gas.

iv) Owing to depressed sales realizations of IPD products and higher cost of operations on account of increase in gas prices, production of some products like Methanol, Sodium Nitrate/ Nitrite and Methylamines at Trombay and DMF & Formic Acid at Thal were suspended.

v) Steep depreciation in rupee vis-a-vis US$, Gas Pool Differential payments and delays in receipt of subsidy resulted in higher finance costs as compared to previous year.

vi) Falling IPP of Urea has impacted the operating margins of production of Urea beyond Reassessed capacity.

1.3.0 MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA

As in the past several years, your Company received ‘MoU Excellent’ rating for 2014-15 from Ministry of Heavy Industries and Public Enterprises

1.4.0 DIVIDEND

Although your Company has lined up a number of capex programmes which will entail substantial expenditure, considering the consistent profits being made by the Company, your Directors have recommended a dividend of Rs, 1.10 (i.e. 11%) per equity share (Previous year Rs,1.80 per equity share) for the financial year 2015-16. The total outgo on this accounts works out to Rs, 73.04 Crore (Rs,119.52 Crore in the previous year) including dividend distribution tax and education cess. The dividend payout is subject to the approval of members at the ensuing Annual General Meeting.

1.5.0 APPROPRIATION TO GENERAL RESERVES

Your Company earned a net Profit after Tax of Rs, 191.23 Crore (Rs, 322.06 Crore in the previous year). The dividend payout along with Tax and education cess is Rs, 73.04 Crore (Rs, 119.52 Crore in the previous year). The balance amount of Rs,118.19 Crore (Rs,202.54 Crore in the previous year) is transferred to General Reserves.

1.6.0 AWARDS WON

As in the past, your Company won many awards during the year 2015-16 some of which are as under:

- 13th National Award by Institute of Cost Accountants of India for excellence in Cost Management;

- 2nd prize in National Energy Conservation Award-2015 from Ministry of Power;

- The Fertiliser Association of India Award for “Best Production performance of an operating fertilizer unit for nitrogen (Ammonia and Urea) for the year 2014-15;

- “Best Safety Practices-2015” Runner’s up award from National Safety Council Maharashtra Chapter;

- Indian Chemical Council Certificate of Merit for excellence in Energy Conservation and Management for the year 2014;

- First Prize for State Level Excellence in Energy Conservation & Management for the year 2014-15 from Maharashtra Energy Development Agency (MEDA), Government of Maharashtra;

- 2nd Prize in Rs,10th State level Energy Conservation Award 2014-15’ in Fertilizer sector instituted by MEDA;

- Award for best production performance of an Operating Fertilizer Unit for Complex Fertilizer’ for the year 2014-15 from The Fertiliser Association of India;

- Golden Peacock Innovation Management Award” for excellence in “Innovation Management’’ for the year 2015.

- 16th Annual Greentech Environment Award for the year 2015 in Platinum category, instituted by Greentech Foundation for outstanding performance in environment management in Fertilizer Sector;

- “Product Innovation Award for 2014-15” from Federation of Indian Council of Chambers of Commerce and Industries (FICCI) for Gypsum Sona (GEOLA) developed by R & D - Bioresearch;

- Performance Excellence Award for Innovative Industrial Engineering Practices from Indian Institution of Industrial Engineering (IIIE) for

2014-15;

- Organizational Excellence Award by Quality Circle Forum of India;

- Excellence in Suggestion Scheme Award by Indian National Suggestions’ Schemes Association;

- National Vigilance Excellence Award 2016 from Vigilance Study Circle, Hyderabad;

- Vigilance Excellence Award from Institute of Public Enterprise, Hyderabad;

- Award for best case study from Central Vigilance Commissioner at the Annual function of Vigilance Study Circle, Mumbai.

2.0.0 OPERATIONAL RESULTS:

2.1.0 Production:

2.1.1 Fertilizers:

Your Company produced 31.83 lakh MT of fertilizers (25.46 lakh MT of Urea, 4.62 lakh MT of Suphala 15:15:15 and 1.75 lakh MT of Suphala 20:20:0) during the year as against 32.59 lakh MT of fertilizers (26.01 lakh MT of Urea, 3.97 lakh MT of Suphala15:15:15 and 2.61 lakh MT of Suphala 20:20:0) produced during the previous year. In terms of nutrients, your Company produced 12.75 lakh MT of Nitrogen (N), 1.04 lakh MT of Phosphate (P2O5) and 0.69 lakh M T of Potassium (K2O) during the year as compared to 13.08 lakh MT ofNitrogen (N), 1.12 lakh MT of Phosphate (P2O5) and 0.60 lakh MT of Potassium (K2O) during the previous year.

2.2.0 MARKETING PERFORMANCE

2.2.1 Fertilizer Division:

Your Company achieved sales volume of 33.75 lakh MT during 2015-16 as compared to 36.89 lakh MT in the previous year. Your Company sold 26.52 lakh MT of Urea, 4.36 lakh MT of Suphala 15:15:15, 1.86 lakh MT of Suphala 20:20:0 and 1.01 lakh MT of other bought out products such as DAP, MOP, SSP, Rajphos, NPK etc., compared to 28.58 lakh MT of Urea, 3.89 lakh MT of Suphala 15:15:15, 2.55 lakh MT of Suphala 20:20:0 and 1.87 lakh MT of other bought out products during the previous year. The total sale of manufactured fertilizers during 2015-16 was 30.88 lakh MT as against 32.62 lakh MT in the previous year.

Sales of fertilizers registered reduction of 8.52% over previous year owing to poor agro-climatic conditions and glut of fertilizers in the market.

2.2.2 Industrial Products Division:

Industrial Products Division achieved sales turnover of Rs,1063 Crore as against Rs,1125 Crore during the previous year. Owing to depressed sales realizations of IPD products and higher cost of operations on account of increase in gas prices, production of some products like Methanol, Sodium Nitrate/Nitrite and Methylamines at Trombay and DMF and Formic Acid at Thal were suspended, which had an adverse impact on the profitability of IPD products.

2.2.3 Exports:

Considering the nature of products manufactured by your Company and indigenous demand, the scope for export is very limited. High cost of production is the main restraining factor for venturing in the international market, as it renders our products unviable compared to lower cost of imports of similar products. However, your Company has been successful in popularizing our ABC brand in the overseas market through third party export. During F.Y.2015-16, your Company has done third party export of ABC to the tune of Rs, 50.59 lakh as against Rs, 62.29 lakh during the previous year.

2.3.0 RISK MANAGEMENT

Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed Risk Management Policy for the risk assessment and minimization procedures. The Risk Management Policy developed with the objective of having a balanced approach towards business plan and mitigating the associated risks, is in place. The system identifies better management practices to ensure greater degree of confidence amongst various stakeholders and facilitates good Corporate Governance practice. All risks associated with Operations, Environment, Finance, Marketing, Human Resource, Legal, Information Technology security, Projects etc., are continuously monitored. The degree of impact of the perceived risks financially, their likely effect on the assets, facilities and third parties are assessed regularly. In order to mitigate losses arising out of such perceived risks, appropriate procedures are being adopted to contain the risks. Also the practices adopted during emergencies, including the communication system and mode of disseminating information are periodically reviewed and updated to minimize the impact on the Company. Quarterly report in respect of the same is presented to the Board.

2.4.0 MAJOR EXPANSION AND DIVERSIFICATIONS:

Your Company is planning to undertake major projects as under:

2.4.1 Additional Ammonia Urea project at Thal

Your Company has planned to expand the capacity of Urea at Thal by setting up one single stream Ammonia plant of capacity 2200 MTPD and one single stream Urea plant of capacity 3850 MTPD at the existing site at approximate cost of Rs, 5530 Crore. The project is awaiting approval from Government of India.

2.4.2 Coal Based Fertilizer Plant at Talcher

Your Company, along with Coal India Limited (CIL), GAIL (India) Limited (GAIL) and Fertilizer Corporation of India Limited (FCIL), is contemplating to set up a fertilizer complex, comprising of 2200 MTPD ammonia plant, 3850 MTPD Urea plant, at Talcher, Odisha through coal gasification route as feed stock. Coal will be made available by CIL from nearby coalfields. Land and certain facilities needed for the project will be provided by FCIL. The project will utilize state-of-the-art Coal Gasification Technology. A joint venture company “Talcher Fertilizers Limited” has been incorporated to execute the project.

The Ammonia Synthesis and Urea, plants will be built on lump sum turnkey basis for which prequalification bids have been invited and prequalified parties have been shortlisted. Project capital cost is estimated to be approx. Rs, 8000 crore. Tender has been issued to pre-qualified Lump Sum Turn Key (LSTK) vendors. Selection of Coal Gasification Technology and Coal Block allocation is underway.

The project is of strategic importance for the country as it aims to make breakthrough for an alternative source of feedstock in the form of abundantly available coal from domestic sources in place of natural gas. It will also aid much needed urea production capacity for the eastern part of the Country.

2.4.3 Sewage Treatment Plant (STP) at Trombay

Water situation is getting more and more difficult day by day. Ensuring water availability has become critical for the smooth functioning of the Trombay unit given the competing demand for water in the city. Recognizing this, your Company is setting up additional Sewage Treatment Plant (STP) adjacent to the existing STP plant with a capacity to treat 22.75 Million Liters’ per Day (MLD) of Municipal Sewage to produce about

15 MLD of treated water. A portion of the treated process water will be supplied to Bharat Petroleum Corporation Ltd., on mutually agreed terms. Work order has been placed on LSTK contractor at a cost of ''198 Crore and work is underway.

2.4.4 Solar Power Plant (PV Grid Connected) at Trombay

Your Company has set up 2 MWp Grid connected Photovoltaic Solar power plant within the factory premises at Trombay, Mumbai. The power generated is used for captive consumption at Trombay unit.

This venture is in line with the Solar mission of Government of India and leads RCF’s foray into generation of renewable energy resulting in to reduction in the overall carbon footprint of the company.

2.4.5 Iran Project

Your company has been nominated by the Government along with Gujarat State Fertilisers Corporation (GSFC) for the proposed 1.3 million tonne Urea plant in Iran for import of Urea to India. M/s Faradast Energy Falat Company (FALAT), Iran has been shortlisted as prospective Iranian partner. The consortium is planning to set up an ammonia and Urea plant in Chahbahar in Iran, using natural gas as feedstock which is abundant in that country, with an estimated investment of USD 903 Million.

2.5.0 SUBSIDIARY AND OTHER JOINT VENTURE COMPANIES

A separate statement containing the salient features of financial statements of all subsidiary/ joint ventures of your Company forms part of consolidated financial statements in compliance with Section 129 and other applicable provisions, if any, of the Companies Act, 2013. The financial statements of the subsidiary/joint ventures and related information are available for inspection by the members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays upto the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of your Company. The financial statements including the consolidated financial statements, financial statements of subsidiary/joint ventures and all other documents required to be attached to this report have been uploaded on the website of your Company (www.rcfltd.com).

2.5.1 Subsidiary Company

Rajasthan Rashtriya Chemicals and Fertilizers Limited, Jaipur

Rajasthan Rashtriya Chemicals and Fertilizers Limited (RRCFL) was a subsidiary of the Company. Since, the Company did not start its activities since inception, the Board of Directors of RRCFL took a decision to close down the Company. Accordingly, the name of RRCFL has been struck off from the Register of Registrar of Companies on 24th November, 2015 and said company is dissolved.

2.5.2 Joint Venture Company

2.5.2.1 FACT-RCF Building Products Ltd., Kochi

Your Company has formed a Joint Venture Company with Fertilizers and Chemicals Travancore Limited (FACT) by incorporating FACT-RCF Building Products Ltd to set up a Rapidwall project at Kochi. Both RCF and FACT have 50:50 equity holding in the Company. The plant is in operation. The Company is building up its customer base and is in the process of stabilizing its operations by making special effort on marketing of the product. This project has very good potential and therefore RCF would continue to support it in the coming years.

FRBL’s performance has marginally improved during the year and its operations are expected to improve in future. Being a very novel concept acceptance of FRBL’s product in lieu of conventional items is taking time for sales to pick up and for operations to completely turn around.

During the year, FRBL earned a total income of Rs, 20.06 Crore as against Rs, 4.52 Crore during the previous year. FRBL reported a Loss after Tax of Rs, 16.88 Crore during the year as against Rs, 21.94 Crore in the previous year.

2.5.2.2 Urvarak Videsh Limited (UVL)

Urvarak Videsh Limited (UVL) was incorporated on 18th July, 2008 as a Special Purpose Vehicle (SPV) with equity participation of Rashtriya Chemicals and Fertilizers Limited(RCF), National Fertilizers Limited (NFL) and Krishak Bharti Co-operative Limited (KRIBHCO) with the object of setting up joint venture in India and abroad for manufacturing, mining, long term tie ups for Nitrogenous, Phosphatic and Potassic Fertilizers and fertilizer raw materials including exploring the possibility of making investments and rendering Consultancy services, etc. The company explored many alternatives to take up various projects but the same did not fructify due to want of funds as UVL business objective requires heavy capital investment. As the company could not take up any business and at the same time keeping the status of the company as active was not serving any purpose, the Board of UVL has decided to declare the company as a Dormant company for the time being in terms of the provision of section 455 of the Companies Act, 2013. As and when the proper opportunity arises in future, business activities can be started by the company by reverting its status as active company.

2.5.2.3 Talcher Fertilizers Limited (Erstwhile Rashtriya Coal Gas Fertilizers Limited)

Your Company has formed a Joint Venture company, with Coal India Limited (CIL), GAIL (India) Limited (GAIL) and Fertilizer

Corporation of India Limited (FCIL), with the name Talcher Fertilizers Limited on 13th November, 2015 for revival of FCIL’s fertilizer unit at Talcher by establishing and operating coal gasification based fertilizer complex. The equity participation by RCF, CIL and GAIL is 29.67% each and FCIL is 10.99%. The company is yet to start its operations.

2.5.3 Consolidated Financial Statements

The Consolidated Financial Statements of your Company has been prepared by taking into consideration Joint Venture Companies i.e. FACT-RCF Buildings Products Limited, Urvarak Videsh Limited and Talcher Fertilizers Limited (erstwhile Rashtriya Coal Gas Fertilizers Limited).

The Consolidated financial statements have been prepared under proportionate consolidated method along with Company’s standalone financial statements.

Summary of Financial Performance

Rs, Crore

Particulars

2015-16

2014-15

Total Revenue

8771.68

7790.06

Total Operating Cost

8189.64

6871.83

Operational Profit

582.04

918.23

Depreciation/Impairment

150.22

263.32

Finance Cost

146.74

121.59

Profit/ (Loss) before tax

285.08

533.32

Provision for Tax (including deferred Tax liability/ Asset)

99.87

187.57

Net Profit / (loss)

185.21

345.75

2.6.0 RESEARCH AND DEVELOPMENT

Your Company has taken up several Research and Development projects, some of which are for commercial scale design and engineering. They are as under:

2.6.1 Lab scale development of microbial biopesticide “Trichoderma viride”

Bio-pesticides are biological or biologically-derived agents that are usually applied in a manner similar to chemical pesticides, but achieve pest management in an environmentally friendly way. Bio-pesticides, for use against crop diseases, have already established themselves on a variety of crops.

Pesticides based on microorganisms and their products have proven to be highly effective, species specific and eco-friendly in nature, leading to their adoption in pest management strategies around the world.

Microbial pesticides used are bacteria, viruses, fungi, nematodes etc. The fungi used for pest control are Trichoderma hazranium, Trichoderma viride, Tricoderma reseii and many more. Trichoderma spp. is fungi from the Hypocreaceae family that are present in nearly all soils. Laboratory scale development of this fungi as biopesticide was carried out successfully. The product will be field tested during the years 2016

17 and 17-18 and commercialized thereafter.

2.6.2 Development of Phosphogypsum based value added Soil Conditioner for increasing nutrient use efficiency.

Recent studies have suggested that the world will need to produce 60 to 100% more food when the global population will reach 9 billion by 2050. This requires a radical change in the way food is produced, stored, distributed and accessed.

Land degradation in the form of deletion of soil fertility, erosion and water logging has increased. With a view to make agriculture sustainable, enhance the nutrient use efficiency, an attempt was made to formulate recipe for blending organic matter and soil conditioner “gypsum” components together and standardise the combinations to maximize the crop yield and nutrient use efficiency. Field trials in-house and in Agriculture Universities were conducted for evaluating nutrient use efficiency. An increase of 17% yield and increase of nutrient use efficiency to the extent 50% was reported.

A product patent was applied and published for examination on 18th September 2015 (Indian patent application No. 3248/Mum/2015- Plant Nutrient Composition).

The product was also bestowed with the prestigious FICCI “Innovators Award” for the year 2015.

2.6.3 Development of best nutrient package for pomegranate through specialty fertilizers for enhancing fruit yield and quality

Pomegranate (Punica granatum L.) is grown in tropical and subtropical regions of the world. It is one of the commercially important fruit crops of India. The fruits are known for their sweetness and fine blend of acidity. Maharashtra alone has around 99,000 hectare area under this crop. Hence, work on development and recommendation of the micronutrient management for pomegranate was undertaken in association with Mahatma Phule Krishi Vidyapeeth, Rahuri, Maharashtra in the year 2015-16 as an MOU item.

The yield increase was recorded to be around 20% through utilization of Biola, Microla and Sujala products. The recommendation of the nutrient package by Agriculture University, will now be disseminated among the farmers.

2.6.4 Development of Zinc solubilizing bacteria as biofertilizer

Zinc is one of the most important micronutrients required relatively in small concentrations in tissues for healthy growth & reproduction of plants. Plants must be provided with essential nutrients in available form & in sufficient quantity not only for their proper growth and development but also for their accumulation of essential elements in proper amount in various parts of the plants.

With a view to provide the farming community with cheaper sources of zinc, the development of Zinc solubilising bacteria as biofertilizer was undertaken. The bacteria obtained through natural sources like zinc mines were successfully formulated as biofertilizer. The product will be tested with Agriculture Universities and commercialized during the year 2016-17. With the present scenario of zinc deficiencies in India, the application of zinc solubilizing bacteria with cheap sources of zinc ores will reduce the cost of agri -inputs and provide sustainable solution to mitigate Zn deficiency.

2.6.5 Lab scale study for development of Nanotechnology based fertilizers

The world agriculture is facing problems like climate change, soil degradation, desertification, high energy cost and depleting natural resources.

Despite sizable increase in the use of chemical fertilizers over the years, the gap between the nutrient removal and replenishment is significantly high in India. In order to address the National and Global needs, the application of Nanotechnology in agriculture has great potential.

Research and Development - Bioresearch has ventured into the area of Nano particles and its application in agriculture for increasing crop productivity and nutrient use efficiency. A research centre “Sarjana” dedicated to Nanotechnology research was inaugurated in the Company. It is one of its kind among the Public sector enterprises in India.

A paper in the field of Nanotechnology regarding its applicability to biofertilizer was presented by our Scientist at an International conference at Florida, USA in October 2015. The paper was bestowed with the Best oral presentation award.

2.6.6 Commercialization of Micronutrient grade for Paddy Basel for Tamilnadu state

Micronutrients are essential for plant growth and play an important role in balanced crop nutrition. They include Boron (B), Copper (Cu), Iron (Fe), Manganese (Mn), Molybdenum (Mo) and Zinc (Zn). They are as important to plant as primary and secondary nutrients, though plants don’t require much of them. Lack of any micronutrient in soil can limit the crop growth even if other nutrients are present in adequate amount. These micronutrients are state specific.

The R & D department of your Company has developed micronutrient grade (No.XI) for Paddy crop basal application in solid form for Tamilnadu state. The product has been commercialized successfully. During the year 2015-16, a quantity of 38.5MT was manufactured and marketed.

2.6.7 Feasibility study for new Biofertilizer plant

It is a need of the hour to adopt the Integrated Plant Nutrient Supply (IPNS) system for sustaining crop productivity. Integration of chemical, organic and biological sources of plant nutrients, and their efficient management have shown promising results in sustaining productivity and soil health. Bio-fertilizers are living cells of different types of micro-organisms which have an ability to mobilize nutritionally important elements from non-usable to usable form from the soil. Company has a bio-fertilizers plant with current installed capacity of 150 KL per annum. With positive outlook from government for the promotion of biofertilizer in a big way, the demand for these will increase. It is projected that the coming years may see the growth @ 21.12% annually.

In the above context, the feasibility study (techno-economic) for 150 Kl capacity biofertilizer facility was initiated. It is envisaged that the capital subsidy provided by state government to the tune of Rs, 40 lakh will be utilized for the project. IRR & payback period for the project are 18.65% and 2.93 years respectively. This project was also included in the MOU for the year 201516.

3.0.0 ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL

Your Company is committed to ensuring clean environment, beyond satisfying all stipulated requirements laid down by the statutory authorities, around its operating units.

Your Company has established ISO 14001 compliant Environment Management System (EMS) at its two manufacturing units. The Systems are constantly upgraded and regular internal audits and Management Reviews are carried out to ensure compliance and continuously improve the system. Apart from Stack monitors, which continuously monitor the emissions, four fixed ambient air quality monitoring stations are in place, at both Trombay and Thal, to monitor ammonia, NOx, SO2, Particulate matter (PM10

& PM2.5) & metrological parameters.

The Effluent Treatment plants at Trombay and Thal have ensured that the environment in and around the Units are fully protected. Various schemes with state of the art technologies and modernization schemes are implemented to reduce energy consumption and wastages of the scarce natural resources. The waste streams from the plants are recycled/ reused for useful purpose.

Sludge generated in Effluent Treatment Plant, Sulphur Sludge Generated in Sulphuric Acid plant, waste streams of effluents from complex fertilizer plants are recycled back in the processes. 3- R strategy (Reduce, Reuse and Recycle) is employed by way of recycling the sludge generated in ETP, Sulphur sludge generated in Sulphuric Acid Plant to Suphala plant for recovery of nutrients. Phosphogypsum from Phosphoric Acid Plant is used in-house in the manufacture of value added building materials viz. rapid wall panels, and wall plaster.

The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board. Trombay unit of the Company has taken up a massive plantation drive in factory premises, in residential colony and surrounding areas and planted app. 4000 numbers of trees in the year 2015-16. In the Thal factory premises & in residential area during the year 2015-16, plantation of 2500 number of Fruit bearing trees, Teak wood and other species has been under taken .

For increasing awareness regarding environment, public awareness campaign programmes are arranged by Trombay and Thal units.

4.0.0 CORPORATE SOCIAL RESPONSIBILITY (CSR)

4.1.0 As part of its initiatives under “Corporate Social ResponsibilitiesRs,, the Company has undertaken several projects in the areas of rural development, promoting health care and education aimed for the benefit of needy and for general good of the society. These projects are in accordance with Schedule VII of the Companies Act, 2013 and the company’s CSR policy. The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure -I and forms an integral part of this report. During the year, the company has spent Rs, 9.65 Crore on CSR activities. The activities, in brief, are as under:

4.1.1 Education:

4.1.1.1 Schools:

Your Company supports schools, at its two units, which impart education in Marathi, Hindi and English mediums to students from Nursery to 10th Standard. Your Company undertakes the upkeep, maintenance and bears the deficit expenditure incurred by the schools, located in Company’s residential colonies, which are run by reputed Educational Institutions.

4.1.1.2 Scholarship to meritorious students:

Your Company offers a number of scholarships to students of SC/ ST/ OBC communities for pursuing higher studies. Company’s scholarship project for sending every year 10 students to 6th Standard in Shivaji Military school in Pune and supporting the earlier batches in their march to higher standards thereafter has received goodwill from all.

4.1.1.3 Supply of Mid-Day Meal:

Your Company is funding Mid-Day Meal Scheme for providing nutritious food to children studying in twenty five unaided schools, providing education to poor children, in and around Tomboy area. The scheme is operated through an NGO, ‘ISKCON Food Relief Foundation’ which supplies good and healthy meal to the children on behalf of RCF. In all, 6,600 students have availed the benefit of this nutritious midday meal.

4.1.1.4 Programme for underprivileged Children

Your Company has adopted the “Khel Khel Mein” programme of Wockhardt Foundation for under privileged children of age group of 5 to 10 years, by setting up six centres of edu-recreation with parallel learning in slums of Vashi Naka area, near Trombay unit.

4.1.1.5 RCF SUPER- 30 programme

Your Company, in association with Centre for Social Responsibility and Leadership (CSRL), has established a unit of Abhayanand Super 30 in Mumbai where about 30 underprivileged talented students of Maharashtra state are provided 11 months of free residential coaching to enable them to get admission in IIT/NIT and other premier engineering colleges. This year 28 of these students were successful in the JEE mains examination.

4.1.1.6 Farmers’ Education:

Company has two farmers training institutes located in Thal and Nagpur. During the year, 6352 farmers attended & benefited from the training programmes conducted at these two Farmers Training Centres. During the programmes, training was imparted to upgrade their farm practices, reduce their overheads and increase their wealth. Special programmes designed for women farmers and the scheduled caste and scheduled tribes are also organized on a regular basis so that they can join the bandwagon of the country’s agricultural renaissance.

Your Company’s efforts in rendering advisory services to farmers by conducting Soil diagnostics to optimize soil productivity are well appreciated.

Based on the analysis, farmers are advised on soil fertility management through rational use of manure, fertilizers and other inputs to make agriculture more productive and sustainable. During the year, more than 1,40,417 soil samples were analyzed and recommendations given through the twelve static and six mobile soil testing laboratories.

4.1.2 Supply of drinking water to the villages:

Your Company has been providing drinking water for more than 21 years to seven villages around Thal unit through pipelines laid down from the water reservoir in the unit and spent about Rs,69.59 lakh on this account during the year. More than 15,700 residents of the villages got benefited of the scheme.

4.1.3 Community Medical Facility

4.1.3.1 Running of Mobile Medical Van

Your Company has engaged Lockhart Foundation and administered free primary health care through mobile Medical Vans. A total of four Mobile medical vans are running in slums of Trombay and villages of Thal and patients are benefited from free medical services including supply of medicines. Through this facility, ailments like Blood pressure, low Haemoglobin Levels, Oxygen saturation, Malaria, Hepatitis, Dengue, Typhoid, Diabetes, etc., are treated on regular basis, through qualified Doctors. One medical van attends to approx. 25000 patients per annum.

4.1.3.2 Running of pathology lab

M/s Wockhardt Foundation is also engaged in the running of Pathology lab in Chembur near RCF township. Near about 28,000 diagnostic tests were performed for needy patients.

4.1.3.3 Distribution of sanitary napkins (Moksha)

Your Company has engaged Wockhardt Foundation for extending the medical services for enhancement of female hygiene by free distribution of sanitary napkins (Moksha) through mobile Medical Vans. Under this scheme during the year about 5,29,000 sanitary napkins were distributed.

4.1.4 Chembur Green Project

Your Company continued to support the Chembur Green project, launched to establish greenery in the eastern suburb of Mumbai, by joining hands with Chembur Citizens’ Forum, an NGO to develop, beautify and maintain N G Acharya Garden (Diamond Garden), at Chembur for a period of 6 years. Your Company continued distribution of free saplings and rendering advice to various co-op. societies and also to individuals.

4.1.5 Contribution to “Jalyukta Shivar”

Under the national campaign of clean and green India, your Company has contributed Rs, 75 lakh to the “Jalyukta Shivar” scheme in response to the appeal from Govt. of Maharashtra.

4.1.6 Rural Sports

Your Company has supplied sports material and organised sports for tribals of Thal Villages.

4.1.7 Livelihood enhancement projects

Your company has also supplied paddy, fruits sapling and free fertilizers to nearby needy villagers.

4.1.8 Your company has constructed Bio toilets at gate No.2, Trombay for Truck Drivers and cleaners through Wockhardt Foundation. Also constructed five toilets in the school where Mid Day Meal is provided. In association with, World Confederation of Warriers and Heal Foundation, Free Medical Check Up and Eye Check Up camps have been organized in the school where RCF is providing Mid Day Meal.

5.0.0 MICRO, SMALL AND MEDIUM ENTERPRISES

Government of India, Ministry of Micro, Small and Medium Enterprises, vide order dated 23rd March, 2012, notified the public procurement policy in respect of procurement of goods and services produced and provided by Micro, Small and Medium Enterprises. As per this directive, every Central Ministry or Department or Public Sector Undertaking shall set an annual goal of procurement from Micro, Small and Medium Enterprises from the Financial Year 2012-13 and onwards with the objective of achieving an overall procurement of products produced and services rendered by Micro, Small and Medium Enterprises to the extent of minimum 20% of total annual purchases during the period of three years. The directive also provides that the goals set with respect to procurement to be met from Micro, Small and Medium Enterprises and achievement made thereto be incorporated in their respective Annual Reports. Your Company has achieved the set target under specific areas.

6.0.0 SUSTAINABLE DEVELOPMENT

6.1 Your Company has taken up several Sustainable development activities including the following:

[i] Improvement of Road infrastructure-construction and repairs.

[ii] Building of Check Dams.

[iii] Prevention of soil erosion and watershed management.

6.1.1 Rapid wall Project

The Rapid wall project is an example of Company’s faith in sustainable development wherein a waste product generated from Phosphoric Acid Plant is converted into useful building material by adopting a novel technology.

6.1.2 New Sewage Treatment plant

Your Company and Bharat Petroleum Corporation Limited (BPCL), have signed an MOU for setting up a new Sewage Treatment Plant (STP) at RCF, Trombay at approx. cost of Rs,198 Crore. This Plant will be based on latest Membrane Bio-Reactor Technology with design capacity to treat 22.75 Million Litres per Day (MLD) of Municipal Sewage to produce about 15 MLD of treated water. The treated water shall be shared by RCF and BPCL. The project is being set up with active support from Municipal Corporation of Greater Mumbai (MCGM). This project is a Sustainability Development Project as it will treat waste sewage generated in the city and convert it in to treated water. The said project when operational will also reduce the load on MCGM Sewage Treatment facility to the extent of 22.75 MLD.

The said project when it goes on-stream will generate 15 MLD of treated water for usage in plant operation in RCF and BPCL thereby saving fresh water intake to that extent which will benefit about 30,000 families in the city of Mumbai. Being sustainable development project, this project from your Company will be of great value to residents of Mumbai and Society at large.

6.1.3 Solar Power Plant

In its bid towards India’s vision of achieving ecologically sustainable growth, your Company has already forayed into solar power generation.

Your Company has set up a 2 MWp ground mounted Photovoltaic Solar power plant within the factory premises in Trombay Unit. The project has been successfully commissioned on 6th January 2016. Based on the average intensity of solar radiation, the project is likely to generate around 3 million units of power on annual basis. The power generated is used for captive consumption of the Trombay unit, thereby reducing your Company’s power import to the equivalent extent.

Your Company has also installed 6 rooftop solar power generation facilities, with an aggregate capacity of 84 KWp atop at its offices of Trombay, Thal and marketing offices.

The totally green power generated by solar plant replaces the conventional power generated through burning of fossil fuels leading to reduction in overall Greenhouse gas emissions of the surroundings.

In addition to above, your Company is in the process of setting up solar rooftop facilities atop

5 locations at Thal and 1 at Trombay with an aggregate capacity of 1.29 MWp.

Your Company is targeting to take up many more sustainable development activities in the near future.

6.2 ANNUAL SUSTAINABILITY REPORT

Company has published, during the year, its Sustainability Report for the year 2014-15 based on Global Reporting Initiative (GRI) guidelines and National Voluntary Guidelines (NVG) on ‘Social, Environmental and Economic Responsibilities of Business’ issued by Ministry of Corporate Affairs, Govt. of India. The Report has been hosted on the Company’s website.

The report provides Company’s economic, environmental and social performance. Sustainability reporting is about organization’s progress vis-a-vis performance goals, not only for economic achievements, but for environmental protection and social well-being. The report for

2015-16 would also be published soon.

6.3 WATER CONSERVATION

During the year, your Company has consumed 83,89,070 m3 of raw water as against 93,78,330 m3 during the previous year, resulting in saving of 9,89,260 m3 water at Trombay Unit.

BMC water consumption in this year has come down by 2,76,400 m3, resulting in saving to the tune of Rs, 2.20 Crore.

Your Company has reduced discharge of effluent in to sea by 84, 621 m3 by adopting additional recycling methods . It has also saved the precious BMC water equivalent to Rs, 67.36 Lakh.

Your Company has increased the greenery (Horticulture Area) around the Trombay Unit for which reject water is used. Water from this network is also utilized for toilet/urinal flushing in Trombay Unit.

Your Company has strengthened and extended STP reject water network for scrubbers in ANP and Suphala Plant. It is also utilized in cleaning and washing of equipment and tanks in these plants. This network also provides reject water for different purposes to ETP, PAP, SAP/CNA plants.

Your Company has optimized the following process parameter which has saved equivalent energy and water in Ammonia & Urea Plants:

i. Strengthened the operation of MP Stripper in Ammonia- I Plant which is saving equivalent DM water.

ii. Job of CT fan adjustment and drift eliminator carried out in Ammonia V plant.

iii. Strengthened the operation of water scrubber in Urea Plant with recycle of water for scrubbing etc., helped in reducing water consumption.

7.0.0 VIGILANCE

Dr. A.K. Padhee, Joint Secretary (DOF), is holding the additional charge of Chief Vigilance Officer of the Company . The position of CVO in the company is at par with the Functional Directors. CVO is assisted by a team of Officers drawn from various functional departments and is supported by a Deputy CVO in the rank of General Manager (Vigilance). The activities of Vigilance department cover Corporate Office,

Trombay Unit, Thal Unit and all the Marketing area offices situated accorss the country. In line with the CVC guidelines, the thrust of the Vigilance in your Company is to bring greater transparency, integrity and efficiency. The focus of Vigilance Department is on Preventive and Participative Vigilance.

This is done by keeping a careful watch on various activities through regular inspections and surprise checks. System improvements and corrective actions are taken, wherever necessary. The theme that “All officers are Vigilance Officers” is implemented in your company and alertness and support of all officers is taken in the implementation of Vigilance. Vigilance has focused on spreading awareness on rules/ regulations, procedures and solicited information/ complaints from all regarding malpractices/ corruption.

During the year, Vigilance Department has actively contributed towards Good Management in leveraging technology in all operations that helps in implementing robust e-governance in RCF, in making the tender documents more transparent and relevant, enhanced transparency in existing system of dealing with our Dealers/ Vendors and accrued savings by implementing e-procurement in your company thereby ensuring transparency in all procurements. Vigilance Department has also ushered in an era of E Vigilance clearance for NOC for various issues to the employees.

8.0.0 MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis report highlighting the industry structure and developments, opportunities and threats, future outlook, risk and concerns etc. is annexed as Annexure II and form an integral part of this report.

9.0.0 PUBLIC DEPOSIT

Your Company has not accepted any deposits within the meaning of section 73 ofthe Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014.

10.0.0 OFFICIAL LANGUAGE POLICY

Your Company has fully endeavored to implement the provisions of Official Language Act, 1963 and the policy of the Government. Publicity material and literature for employees and farmers are made available in Hindi and other regional languages.

11.0.0 AUDITORS

11.1.1 STATUTORY AUDITOR

The Comptroller and Auditor General of India (CAG) has appointed, M/s Kalyaniwalla & Mistry ( Firm Registration Number 104607W) and M/s N.B.S & Co. (Firm Registration Number 110100W) as Joint Statutory Auditors of your Company for the Financial Year 2015-16. The Auditors would be retiring at the conclusion of the Thirty Eight Annual General Meeting.

There is no Audit qualification for the year under review.

The Statutory Auditors for the Financial Year 2016-17 will be appointed by the CAG. However, their remuneration is required to be fixed at the AGM by the members.

11.1.2 COST AUDITOR

Your Directors, on the recommendation of Audit Committee, has appointed Shri Rohit J. Vora (M5740) and M/s. Musib & Co.(F/15026), Cost Accountants, as Cost Auditors to audit the cost accounts of the Company for the year 2016-17 on a remuneration of Rs, 3.68 lakh. As required under the Companies Act, 2013, the remuneration payable to cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Member’s approval for the remuneration payable to Shri Rohit J. Vora, and M/s. Musib & Co., Cost Auditors forms part of the notice convening the Annual General Meeting for their ratification.

11.1.3 SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Bhandari and Associates, a firm of Company Secretaries in Practice (C.P. No. 366) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure III and forms an integral part of this Report.

EXPLANATION OR COMMENTS BY THE BOARD ON SECRETARIAL AUDIT REPORT

M/s. Bhandari and Associates, Practicing Company Secretaries, Secretarial Auditor of the Company has made certain observations in their Secretarial Audit Report. The Board Comments in respect of the same is annexed as Annexure IV and forms an integral part of this Report.

12.0 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the Regulators/courts/tribunals that would impact the going concern status of the company and its future operations.

13.0.0 DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of section 134(3) (c) of the Companies Act, 2013:

i] that in the preparation of the annual accounts for the year ended March 31, 2016 the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii] 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, 2016 and of the profit of the Company for the year ended on that date;

iii] that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv] the annual accounts have been prepared on a going concern basis;

v] that the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

vi] that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

14.0.0 CORPORATE GOVERNANCE

14.1.0 As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company, together with a certificate of Compliance from the Practicing Company Secretary forms an integral part of this report.

14.2.0 COMPLIANCE OF CORPORATE GOVERNANCE GUIDELINES ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISES

Government of India, Department of Public Enterprises (DPE), has laid down certain parameters for the purpose of grading the Central Public Sector Enterprises on the basis of their compliance of guidelines on Corporate Governance and this report needs to be submitted to the Government on quarterly/annual basis. Your Company has been largely complying with the Guidelines on Corporate Governance for Central Public Sector Enterprises laid down by DPE and regularly submits reports to the Government.

15.0.0 INTERNAL FINANCIAL CONTROL OVER FINANCIAL REPORTING

Your Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Your Company’s internal financial control over financial reporting includes those policies and procedures that:

(i) pertains to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of Management and Directors of the Company; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

16.0.0 DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year, Shri Dharam Pal (DIN 02354549) has been appointed as Government Nominee Director in place of Shri Sham Lal Goyal (DIN 03342782) w.e.f.28th January, 2016.

Shri Manoj Mishra (DIN 06408953) has been appointed as Chairman and Managing Director of the Company w.e.f. 15th June, 2016.

Shri R. G. Rajan (DIN 01253189), ceased to be Chairman and Managing Director of the Company w.e.f. 14th June, 2016. The contribution of Shri R. G. Rajan to your Company has been immense. His guidance, suggestions and advice has greatly benefited the Company. The Board places on record its appreciation for the valuable contribution of Shri R. G. Rajan during his tenure as CMD of the Company.

Shri Ashok B. Ghasghase (DIN 06378677) ceases to be Director(Marketing) of the Company on his superannuation w.e.f.1st July, 2016.

The contribution of Shri Ashok B. Ghasghase to your Company has been immense. His guidance, suggestions and advice has greatly benefited the Company. The Board places on record its appreciation for the valuable contribution of Shri Ashok B. Ghasghase during his tenure as Director (Marketing) of the Company.

The Board of Directors at their meeting held on 8th July, 2016 has appointed Shri Harin Pathak (DIN07552994), Shri Bharatkumar Barot (DIN 07552993) and Shri G. M. Inamdar (DIN 07552999) as an Independent Directors of the Company.

As per Section 152 of the Companies Act, 2013, Shri Sushil Kumar Lohani (DIN 06912948) and

Shri Suresh Warior (DIN 06920261), Directors retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

All independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1) (b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

17.0.0 COMMITTEES OF THE BOARD

The Board of Directors has the following committees:

i. Audit Committee

ii. Stakeholders Relations Committee

iii. Share Transfer Committee

iv. Nomination and Remuneration Committee

v. Committee on Corporate Social Responsibility (CSR)

vi. Empowered Committee for Procurement.

The details of the committee along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance Report.

18.0.0 REMUNERATION POLICY

Department of Public Enterprises vide OM No. 2(70)/08- DPE(WC) dated 26th November 2008 has fixed pay scales of Board Level and below Board Level executives and non-unionized supervisors.

19.0.0 MEETINGS OF THE BOARD

Thirteen (13) Board Meetings were held during the year. The details of the number of meetings of the Board held during the financial year 2015-16 forms part of the Corporate Governance Report.

20.0.0 BOARD EVALUATION

Section 134(3) (e) of the Companies Act, 2013 requires the Company to disclose its policy on director’s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matter provided under sub-section (3) of section 178. Section 134(3) (p) of the Companies Act, 2013, also requires the company to disclose the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors.

RCF is a government company where directors are appointed by the government of India or on the recommendation of the government. The remuneration etc. of Directors are decided as per the DPE guidelines. The tenure of the Directors are also decided by the government.

RCF, being a government company, has been exempted from the provisions of section 134(3) (e) & p and section 178(2) & (3) of the companies Act, 2013.

21.0.0 PARTICULARS OF LOANS GIVEN, INVESTMENT MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of Loans given, Investments made, Guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the financial statements.

22.0.0 VIGIL MECHANISM/WHISTLE BLOWER POLICY

The details of Vigil Mechanism/Whistle Blower Policy are provided in Corporate Governance Report.

23.0.0 RELATED PARTY TRANSACTIONS

All contracts/arrangement/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arm’s length basis. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

The details of the investment in equity made by the Company as on 31st March, 2016 is as under:

Rs,Crore

1

FACT-RCF Building Products Limited

*32.87

2

Urvarak Videsh Limited

*0.18

3

Talcher Fertilizers Limited

0.02

Total

33.07

* Company has made full provision towards the value of investment.

The details of the advance given by the Company against equity pending for allotment as on 31st March, 2016 is as under:

Rs,Crore

1

FACT-RCF Building Products Limited

**2.36

** Company has made full provision towards the said amount.

The details of transactions with related parties are provided in the accompanying financial statements. There are no transactions to be reported in Form AOC-2.

24.0.0 DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14 of the Rules issued there under, internal complaint committee formed by your Company has received one complaint of sexual harassment at work place, which was disposed off as per procedure laid down under the Act during the year 201516.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed to this Report as “Annexure V”.

26.0.0 EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT- 9, as required under section 92 of the Companies Act, 2013, is annexed as “Annexure VI” and forms an integral part of this report..

27.0 ACKNOWLEDGMENT

Your Directors wish to gratefully acknowledge the valuable guidance and continued support extended by Government of India and in particular, the Department of Fertilizers and the Office of Fertilizer Industry Co-ordination Committee (FICC), Railways, DPE, members of MOU Task force, and other Central Government departments and Agencies.

The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the Government of Maharashtra and other State Governments, MSEB, MIDC, various Media, Municipal Authorities, Maharashtra Pollution Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

Your Board wishes to acknowledge gratefully, the confidence posed, unstinted support and suggestions made to the Board by the esteemed share Owners of the Company. The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory Auditors, Cost Auditors and the Office of the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep appreciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance.

By order of the Board of Directors

[Manoj Mishra]

Chairman and Managing Director

Place: Mumbai

Date : 8th August, 2016


Mar 31, 2015

Dear Members,

The Directors of your Company have pleasure in presenting this 37th Annual Report on the working of your Company together with the Audited Accounts for the year ended 31st March, 2015.

1.0.0 FINANCIAL PERFORMANCE

1.1.0 SUMMARY OF FINANCIAL PERFORMANCE

Rs. Crore

Particulars 2014-15 2013-14

Total Income 7787.81 6661.64

Cost of Sales 6903.11 6021.28

Operational Profit 884.70 640.36

Depreciation/Impairment 258.12 141.75

Finance Cost 116.95 131.29

Profit/ (Loss) before tax 509.63 367.32

Provision for Tax 187.57 117.43

(including deferred Tax liability/ Asset)

Net Profit / (loss) 322.06 249.89 Appropriations:

Dividend 99.30 82.75

Tax and Educational cess on 20.22 14.06 Dividend

Balance Transferred to General 202.54 153.08 Reserve

1.2.0 HIGHLIGHT OF PERFORMANCE FOR THE YEAR 2014-2015

* Income for the year increased by 16.91% to Rs. 7787.81 Crore as compared to Rs. 6661.64 Crore.

* Gross profit for the year increased by 38.16% to Rs. 884.70 Crore as against Rs. 640.36 Crore of previous year.

* Profit before tax increased by 38.74% to Rs. 509.63 Crore as compared to Rs. 367.32 Crore.

* Highest ever profit after tax of Rs. 322.06 Crore as compared to Rs. 249.89 Crore, registering an increase of 28.88%.

The Company's Performance during the year has been bolstered by higher volumes of manufactured and traded fertilizers and higher energy efficiencies at both Trombay and Thal units, despite various challenges encountered on gas availability and delayed disbursement of subsidy.

As in the past several years, your Company received 'MOU Excellent' rating for 2013-14 from Ministry of Heavy Industries and Public Enterprises.

1.3.0 DIVIDEND

Although your Company has lined up a number of capex programmes which will entail substantial expenditure, considering the consistent profits being made by the Company, your Directors have recommended a dividend of Rs. 1.80 (i.e. 18%) per equity share (Previous year Rs.1.50 per equity share) for the financial year 2014-15, which is highest payout in the history of RCF. The total out go on this account works out to Rs. 119.52 (Rs. 96.81 Crore in the previous year) including dividend distribution tax and education cess. The dividend payout is subject to the approval of members at the ensuing Annual General Meeting.

1.4.0 APPROPRIATION TO GENERAL RESERVES

Your Company earned a net Profit after Tax of Rs. 322.06 Crore (Rs. 249.89 Crore in the previous year). The dividend payout along with Tax/cess is Rs. 119.52 Crore (Rs. 96.81 Crore in the previous year). The balance amount of Rs. 202.54 Crore (Rs.153.08 Crore in the previous year) is transferred to General Reserves.

1.5.0 AWARDS WON

As in the past, your Company won many awards during the year 2014-15 some of which are as under:

* Golden Peacock Environmental Management Award for the year 2014 for Thal Unit;

* First Prize for State Level Excellence in Energy Conservation & Management for the year 2012- 13 from MEDA, Government of Maharashtra for Thal Unit;

* Environmental Excellence Award 2014-15 in Gold Category instituted by Greentech Foundation for outstanding performance in environment management for Trombay Unit;

* Paryavaran Gaurav Puraskar from Maharashtra Pollution Control Board, Pune region and Environmental Club of India for Thal Unit;

* 11th National award for excellence in Cost Management-2013 from The Institute of Cost Accountants of India.

* Vigilance Excellence Award from Vigilance Study Circle, Hyderabad;

* Vigilance Excellence Award at Corporate level and also individual award for case studies from Institute of Public Enterprises, Hyderabad;

3.0.0 ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL

Your Company is committed to ensuring clean environment, beyond satisfying all stipulated requirements laid down by the statutory authorities, around its operating units.

Your Company has established ISO 14001 compliant Environment Management System (EMS) at its two manufacturing units. The Systems are constantly upgraded and regular internal audits and Management Reviews are carried out to ensure compliance and continually improve the system. Apart from Stack monitors, which continuously monitor the emissions, four fixed ambient air quality monitoring stations are in place, at both Trombay and Thal, to monitor ammonia, NOx, SO2, Particulate matter (PM 10 & PM2.5) & metrological parameters.

The Effluent Treatment plants at Trombay and Thal have ensured that the environment in and around the Units are fully protected. Various schemes with state of the art technologies and modernisation schemes are implemented to reduce energy consumption and wastages of the scarce natural resources. The waste streams from the plants are recycled/ reused for useful purpose, wherever possible.

The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board.

RCF, Trombay has taken up a massive plantation drive in factory premises, in residential colony and surrounding areas and planted 15,000 numbers of trees in the year 2014-15. Similarly 2650 trees have been planted in Thal.

For increasing awareness regarding environment, public awareness campaign programmes are arranged by Trombay and Thal units.

4.0.0 CORPORATE SOCIAL RESPONSIBILITIES (CSR) INITIATIVES

4.1.0 As part of its initiatives under "Corporate Social Responsibilities', your Company has undertaken several activities, aimed for the benefit of needy and for general good of the society. These activities are in accordance with Schedule VII of the Companies Act, 2013. The activities, in brief, are as under:

4.1.1 Education:

4.1.1.1 Schools:

Your Company supports schools, at the two units, which impart education in Marathi, Hindi and English mediums to students from Nursery to 10th Standard. Your Company undertakes the upkeep, maintenance and bears the deficit expenditure incurred by the schools, located in Company's residential colonies, which are run by reputed Educational Institutions.

4.1.1.2 Scholarship to meritorious students:

Your Company offers a number of scholarships to students of SC/ ST/ OBC communities for pursuing higher studies. Your Company's scholarship project for sending every year 10 students to 6th Standard in Shivaji Military school in Pune and supporting the earlier batches in their march to higher standards thereafter has received goodwill from all.

4.1.1.3 Supply of Mid-Day Meal:

Your Company is funding Mid-Day Meal Scheme for providing nutritious food to children studying in twenty five unaided schools, providing education to poor children, in and around Trombay area. The scheme is operated through an NGO, 'ISKCON Food Relief Foundation' which supplies good and healthy meal to the children on behalf of RCF. In all, 6,000 students have availed the benefit of this nutritious mid- day meal.

4.1.1.4 Programme for underprivileged Children:

Your Company has adopted the "Khel Khel Mein" programme of Wockhardt Foundation for under privileged children of age group of 5 to 10 years, by setting up six centres of edu-recreation with parallel learning in slums of Vashi Naka area, near Trombay unit.

4.1.1.5 RCF SUPER- 30 programme:

Your Company, in association with Centre for Social Responsibility and Leadership (CSRL), has established a unit of Abhayanand Super 30 in Mumbai where about 30 underprivileged talented students of Maharashtra state are provided 11 months of free residential coaching to enable them to get admission in IIT/NIT and other premier engineering colleges. This year 26 of these students were successful in the JEE mains examination.

4.1.1.6 Farmers' Education:

More than 30000 farmers attended & benefited from the training programmes conducted at the two Farmers Training Centres in the last half decade and have used the knowledge to upgrade their farm practices and have succeeded in reducing their overheads and increase in their wealth. Special programmes designed for women farmers and the scheduled caste and scheduled tribes are also organized on a regular basis so that they too join the bandwagon of the country's agricultural renaissance.

Your Company's efforts in rendering advisory services to farmers by conducting Soil diagnostics to optimize soil productivity are well appreciated.

Based on the analysis, farmers are advised on soil fertility management through rational use of manure, fertilizers and other inputs to make agriculture more productive and sustainable. During the year, more than 143000 soil samples were analyzed and recommendations given through the twelve static and six mobile soil testing laboratories.

4.1.2 Supply of drinking water to the villages:

Your Company has been providing drinking water for more than 20 years to seven villages around Thal unit through pipelines laid down from the water reservoir in the unit and spent about Rs. 114 lakh on this account during the year. About 16000 residents of the villages got benefit of the scheme.

4.1.3 Community Medical Facility:

4.1.3.1 Running of Mobile Medical Van:

Your Company has engaged Wockhardt Foundation and administered free primary health care through mobile Medical Vans. Total of four Mobile medical vans are running in slums of Trombay and villages of Thal and patients are benefited from free medical services including supply of medicines. Through this facility, ailments like Blood pressure, low Haemoglobin Levels, Oxygen saturation, Malaria, Hepatitis, Dengue, Typhoid, Diabetes, etc., are treated on regular basis, through qualified Doctors. One medical van attends to approx. 25000 patients per annum.

4.1.3.2 Running of pathology lab:

M/s Wockhardt Foundation is also engaged in the running of Pathology lab in Chembur near RCF township. Nearly 3000 patients have benefited from this scheme.

4.1.3.3 Assistance to differently abled persons:

Your Company with assistance of ALIMCO (PSU) has extended services of providing Aids and Appliances to nearly 75 differently abled persons belonging to the under privileged section of the society.

4.1.3.4 Distribution of sanitary napkins (Moksha):

Your Company has engaged Wockhardt Foundation for extending the medical services for enhancement of female hygiene by free distribution of sanitary napkins (Moksha) through mobile Medical Vans. The efforts in rendering novel services to the women in slum areas.

4.1.4 Chembur Green Project:

Your Company continued to support the Chembur Green project, launched to establish greenery in the eastern suburb of Mumbai, by joining hands with Chembur Citizens' Forum, an NGO to develop, beautify and maintain N. G. Acharya Garden (Diamond Garden), at Chembur for a period of 5 years. Your Company continued distribution of free saplings and rendering advice to various co-op. societies and also to individuals.

4.1.5 Conservation of Natural Resources(Solar System):

Your Company has continued to focus on conservation of Natural Resources by installation of solar power system at Deaf & Dumb school at Patiala.

In addition 10 Bio Toilets inside factory premises were installed for Truck drivers, loaders and cleaners etc. The . bio toilet coverts the human waste into treated effluent and bio gas which is free from Pathogens.

4.1.6 Contribution to "SWACHH BHARAT KOSH":

Your Company has contributed Rs. 1 Crore in the national campaign of clean and green India.

4.1.7 Rural Sports

Your Company has supplied sports material and organised sports for tribal of Thal Villages.

4.1.8 Livelihood enhancement projects

Your Company has also supplied paddy, fruits sapling and free fertilizers to nearby villagers.

During the year, your Company has spent Rs. 8.30 Crore on CSR activities. The Annual Report on CSR activities is annexed to this report as Annexure I.

5.0. 0 MICRO, SMALL AND MEDIUM ENTERPRISES

Government of India, Ministry of Micro, Small and Medium Enterprises, vide order dated 23rd March, 2012, notified the public procurement policy in respect of procurement of goods and services produced and provided by Micro, Small and Medium Enterprises. As per this directive, every Central Ministry or Department or Public Sector Undertaking shall set an annual goal of procurement from Micro, Small and Medium Enterprises from the Financial Year 2012- 13 and onwards with the objective of achieving an overall procurement of products produced and services rendered by Micro, Small and Medium Enterprises to the extent of minimum 20% of total annual purchases in a period of three years. The directive also provides that the goals set with respect to procurement to be made from Micro, Small and Medium Enterprises and achievement made in that direction be incorporated in their respective Annual Reports. Your Company has already achieved the set target of 20%.

6.0. 0 SUSTAINABLE DEVELOPMENT

6.1 Your Company has taken up several Sustainable development activities including the following:

[i] Improvement of Road infrastructure- construction and repairs.

[ii] Building of Check Dams.

[iii] Prevention of soil erosion and watershed management.

6.1.1 Rapid wall Project:

The Rapid wall project, which has been implemented, is an example of Company's faith in sustainable development wherein a waste product generated from Phosphoric Acid Plant is converted into useful building material by adopting a novel technology.

6.1.2 New Sewage Treatmentplant:

Your Company and Bharat Petroleum Corporation Limited (BPCL), have signed an MOU for setting up a Sewage Treatment Plant (STP) at RCF, Trombay at approx. cost of Rs. 198 Crore. The Sewage Treatment Plant shall be named as RCF-BPCL Sewage Treatment Plant. The RCF-BPCL Sewage Treatment Plant will be based on latest Membrane Bio-Reactor Technology with design capacity to treat 22.75 Million Litres per Day (MLD) of Municipal Sewage to produce about 15 MLD of treated water. The treated water shall be shared by RCF and BPCL. The project is being set up with active support from Municipal Corporation of Greater Mumbai (MCGM). This project is a Sustainability Development Project as it will treat waste sewage generated in the city and convert it in to treated water. The said project when operational will also reduce the load on MCGM Sewage Treatment facility to the extent of 22.75 MLD.

The said project when it goes on-stream will generate 15 MLD of treated water for usage in plant operation in RCF and BPCL thereby saving fresh water intake to that extent which will benefit about 30,000 families in the city of Mumbai. Being sustainable development project, this project from your Company will be of great value to residents of Mumbai and Society at large.

6.1.3 Solar Power Plant:

In its bid towards India's vision of achieving ecologically sustainable growth, Your company has already forayed in solar power generation. The company have installed 5 rooftop solar power generation facilities atop our offices. Your company has already lined up a contract for setting up a 2 MWp Photovoltaic Solar power plant within our factory premises at Trombay, Mumbai at a cost Rs. 14.20 Crore. Based on the average intensity of solar radiation, the project on commissioning is likely to generate around 3 million units of power on annual basis. The power generated shall be used for captive consumption of the Trombay unit and reduce your Company's power import to the equivalent extent.

The power generated by solar plant shall replace the conventional power generated through burning of fossil fuels with a totally green power leading to reduction in overall Greenhouse gas emissions of the surroundings.

Your Company is also considering several major activities connected with Green House Gas, sustainable electricity distribution based on solar energy etc. Your Company is targeting to take up many more sustainable development activities in the near future.

6.2 ANNUAL SUSTAINABILITY REPORT

RCF has published, during the year, its Sustainability Report for the year 2013-14 based on Global Reporting Initiative (GRI) guidelines and National Voluntary Guidelines (NVG) on 'Social, Environmental and Economic Responsibilities of Business' issued by Ministry of Corporate Affairs, Govt. of India. The Report has been posted on the Company's website.

The report provides Company's economic, environmental and social performance. Sustainability reporting is about organization's progress vis- a-vis performance goals, not only for economic achievements, but for environmental protection and social well-being. The report for 2014-15 would also be published soon.

7.0.0 VIGILANCE

Vigilance department is headed by a full time Chief Vigilance Officer (CVO), deputed from the All India Services by the Government of India. The position of CVO is at par with the Functional Directors. CVO is assisted by a team of Officers drawn from various functional departments. The activities of Vigilance department cover Corporate office, Trombay unit, Thal unit and all the marketing offices situated throughout the country. In line with the CVC guidelines, the thrust of Vigilance in your Company is to bring greater transparency, integrity and efficiency. The focus of Vigilance department is on Preventive and Participative Vigilance.

This is done by keeping careful watch on various activities through regular inspections and surprise checks. System improvements and corrective actions are taken wherever necessary. The concept that "All Officers are Vigilance Officers" is implemented in your Company and alertness and support of all officers is taken in the management of Vigilance. Vigilance has focused on spreading awareness on rules / regulations, procedures and soliciting information / complaints from all regarding malpractices / corruption.

During the year, Vigilance Department has actively contributed towards leveraging technology in all operations that helps in implementing robust e-governance in RCF, in making the tender documents more transparent and relevant, enhanced transparency in existing system of dealing with our Dealers/Vendors and accrued savings to your company by implementing e-procurement thereby ensuring transparency in all procurements.

8.0.0 HUMAN RESOURCES

8.1.0 TRAINING ANDDEVELOPMENT

One of the strengths of your Company lies in its skilled and professional manpower. This could be achieved by adopting good HR policies and undertaking training and development of all employees. Training imparted includes enhancing General Management skills of the employees in various functions viz. Marketing, Finance, Commercial and Health Services disciplines.

Quality Management Systems, Environment Management Systems, Occupational Health and Safety Systems and 5 S Systems are given focused attention. The work culture of your Company has been enhanced by introducing the Six Sigma and Lean Quality Circles. System of Mentorship for newly recruited Executives is in place.

Your Company is the first Public Sector Undertaking to have formally introduced Quality Systems in various HR and HRD processes by being successfully rated at People Capability Maturity Model (PCMM) Level 2. Time Bound efforts are planned to achieve Level 3 rating of PCMM.

The Company has been conferred with the 'Best PSU Public Sector Training Program' Award by ASSOCHAM in January, 2015.

Institute of Directors has also awarded the Company with the 'Golden Peacock National Training Award' for the year 2014-15.

8.2.0 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 had 3957 employees comprising of 1546 Officers and 2411 workmen, as on 31st March, 2015 compared to 3967 employees (1508 officers and 2459 workmen) as on the corresponding date of the previous year.

8.3.0 MATHADI CONTRACT LABOUR MANAGEMENT

Due to cordial relations with Mathadi Labour, Trombay and Thal Units could achieve the targets and recorded production and dispatch milestones.

Management strongly believes in continuous dialogues and meetings with Unions of Contract Labours. Mutual Trust and Transparency are the key factors in cordial industrial relations. From November 2014 onwards, retirement age of contract workers was enhanced from 58 years to 60 years. All the gratuity claims of the retired/expired contract workers have been settled.

8.4.0 GRIEVANCE REDRESSAL

There is a "three tier system" in existence through which the employees' grievances are resolved. It helps in achieving the objectives of employees' satisfaction enhancement within guidelines and it also develops faith and confidence in the system and department.

8.5.0 WELFARE AND SPORTS

Your Company undertakes several welfare schemes like education, medical, transport, housing etc., according to the needs of the employees. In regards to sports, your Company is a prominent patron and sponsored various sports events. Your Company's Football, Cricket, Hockey, Kabaddi and other teams continue to show excellent performance at District, State and National levels.

8.6.0 WELFARE / EMPLOYMENT OPPORTUNITY TO WEAKER SECTION

The guidelines in respect of reservation in recruitment and promotion of SC/ST, OBC, Ex-servicemen and Persons with Disabilities are followed by your Company. As on 31st March 2015, your Company has on its rolls, 552 employees belonging to Scheduled Caste, 261 Scheduled Tribe and 437 Other backward castes.

Your Company is committed to the welfare of the backward classes in general and SC/ST employees in particular. Regular meetings are held with SC/ST Employees Welfare Association to address grievances, if any, and for providing guidance for development.

Your Company has adopted 38 SC/ST students under SC/ST Adoption Scheme.

Medical Camp is organized every year at Chaitya Bhoomi, Dadar on 6th December, on the occasion of 'Mahaparinirvan Day'. Financial assistance for making arrangement for medical camp and for medicines along with the vehicles and Doctors is made available by the Company.

Your Company's Thal Unit provides various amenities like water, road for the nearby villages e.g. Thal, Navgaon, Boris, Gunjis etc., where the majority of the population belongs to the SC/ST categories. The facility continued during the year. Scholarships were given to meritorious students of SC/ST community in the nearby villages of Thal.

Large number of SC/ST farmers have been trained in the programmes conducted at the Company's Farmers' Training Centres at Nagpur and Thal.

9.0. 0 OFFICIAL LANGUAGE POLICY

Your Company has fully endeavoured to implement the provisions of Official Language Act, 1963 and the policy of the Government. Publicity material and literature for employees and farmers are made available in Hindi and other regional languages.

10.0. 0 INTERNAL CONTROL SYSTEM 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 of an in-house Audit Department, which conducts internal audit of various operational and financial matters on on-going basis. Internal Audit group consists of adequate number of financial and technical personnel and is headed by a Cost Accountant in the rank of Dy. General Manager. The recommendation and observations of the Internal Audit Department are reviewed regularly by the Audit Committee constituted by the Board of Directors. The performance of your Company is regularly monitored by the Audit Committee.

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.

11.0. 0 COST AUDIT

Your Directors had, on the recommendation of Audit Committee, appointed Shri Suresh D. Shenoy, Cost Accountant and M/s V.J.Talati & Co., Cost Accountants to audit the cost accounts of the Company for the financial year 2014-15. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Member's ratification for the remuneration payable to Shri Suresh D. Shenoy and M/s V.J. Talati & Co., Cost Auditors was approved by the members in 36th Annual General Meeting.

Shri Suresh D. Shenoy and M/s. V. J. Talati & Co.,cost Accountants, have been appointed, by the Board, on the recommendation of Audit Committee, as Cost Auditors for the year 2015-16 on a remuneration of Rs. 3.35 lakh. As required under the Companies Act, 2013, the remuneration payable to cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Members ratification for the remuneration payable to M/s V. J. Talati & Co., and Shri Suresh D. Shenoy, Cost Auditors is included in the notice convening the Annual General Meeting.

12.0.0 DIRECTORS' RESPONSIBILITY STATEMENT

In terms of section 134(3) (c) of the Companies Act, 2013, your Directors state that:

i] in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii] such accounting policies have been selected and applied consistently and judgments and estimates made 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 the profit of the Company for the year ended on that date;

iii] proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv] the annual accounts have been prepared on a going concern basis;

v] the proper internal financial controls were in place and that such internal financial controls were adequate and were operating effectively; and

vi] systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

13.0. 0 CORPORATE GOVERNANCE

13.1.0 As per Clause 49 of the listing Agreement with the Stock Exchanges, a separate section on Corporate Governance practices followed by the Company, together with a certificate of Compliance from the Company's Auditor forms an integral part of this report.

13.2.0 COMPLIANCE OF CORPORATE GOVERNANCE GUIDELINES ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISES

Government of India, Department of Public Enterprises (DPE), has laid down certain parameters for the purpose of grading the Central Public Sector Enterprises on the basis of their compliance of guidelines on Corporate Governance and this report needs to be submitted to the Government on quarterly/annual basis. Your Company has been complying with the Guidelines on Corporate Governance for Central Public Sector Enterprises laid down by DPE and regularly submits reports to the Government.

14.0. 0 CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' and actual results may or may not be in accordance therewith. The Company's performance is dependent on several external factors such as performance of monsoon, significant changes in economic environment, 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.

15.0. 0 AUDITORS

The Comptroller and Auditor General of India (CAG) has appointed, M/s. M. M. Nissim & Co. and M/s NBS & Co., as Joint Statutory Auditors of your Company for the Financial Year 2014-15. The Auditors would be retiring at the conclusion of the Thirty Seventh Annual General Meeting.

The Statutory Auditors for the Financial Year 2015- 16 will be appointed by the CAG. However, their remuneration is to be fixed at the AGM by the members.

16.0. 0 DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year, Shri Sushil Kumar Lohani has been appointed as Government Nominee Director in place of Shri S. C. Gupta w.e.f. 2nd July, 2014, Shri Suresh Warior has been appointed as Director (Finance) and Chief Financial Officer w.e.f. 18th July, 2014 and Shri D. M. Sati has been appointed as Company Secretary and Compliance Officer in place of Shri K. C. Prakash w.e.f. 1st August, 2014.

As per Section 152 of the Companies Act, Shri Sham Lal Goyal and Shri C. M. T. Britto, Directors retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Independent Director has given declaration that he meets the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreements.

17.0 REMUNERATION POLICY

Department of Public Enterprises vide OM No. 2(70)/08- DPE(WC) dated 26th November 2008 has fixed pay scales of Board Level and below Board Level executives and non-unionised supervisors.

18.0 MEETINGS OF THE BOARD

Eleven (11) Board Meetings were held during the year. The details are given in the Corporate Governance Report.

19.0 NOMINATION AND REMUNERATION COMMITTEE:

The details of Nomination and Remuneration Committee are given in Corporate Governance Report.

20.0 PARTICULARS OF LOANS GIVEN, INVESTMENT MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of Loans given, Investments made, Guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the financial statements.

21.0 VIGIL MECHANISM/WHISTLE BLOWER POLICY

The details of Vigil Mechanism/Whistle Blower Policy are provided in Corporate Governance Report.

22.0 RELATED PARTY TRANSACTIONS

All contracts/arrangement/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

23.0 DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14 of the Rules issued thereunder, your Company confirms that no complaint /case has been filed/pending with the Company during the year 2014-15.

24.0 SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Bhandari and Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed to this Report as Annexure II.

25.0 EXPLANATION OR COMMENTS BY THE BOARD ON SECRETARIAL AUDIT REPORT

M/s. Bhandari and Associates, Practising Company Secretaries, Secretarial Auditor of the Company has made certain observations in their Secretarial Audit Report. The Board Comments in respect of the same are as under:

25.01.01 In respect of observation made at Sr. no Al,

A2&A3:

"The Company is a Central Public Sector Undertaking and its Directors on the Board are appointed by the President of India. The present Board of the Company consists of 7 Directors comprising of 4 Whole-time Directors (including CMD), 2 Government Nominee Directors and 1 Independent Director. Company has taken up with Government for appointing balance Independent Directors including one woman director.

25.01.02 In respect of observation made at Sr. no A4:

A Separate meeting of Independent Directors could not be held during the said period as the Company has only one Independent Director on its board.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed to this Report as Annexure III.

27.0 EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 are annexed to this report as Annexure IV.

28.0 ACKNOWLEDGMENT

Your Directors wish to gratefully acknowledge the valuable guidance and continued support extended by Government of India and in particular, the Department of Fertilizers and the Office of Fertilizer Industry Co-ordination Committee (FICC), Railways, DPE, members of MOU Task force, and other Central Government departments and Agencies.

The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the Government of Maharashtra and other state Governments, MSEB, MIDC, various media, Municipal authorities, Maharashtra Pollution Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

Your Board wishes to acknowledge gratefully, the confidence posed, unstinted support and suggestions made to the Board by the esteemed share Owners of the Company. The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory Auditors, Cost Auditors and the Office of the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep appreciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance.

By order of the Board of Directors

[R. G. Rajan] Chairman and Managing Director

Place: Mumbai Date : 14th July, 2015


Mar 31, 2014

To the members,

Rashtriya Chemicals and Fertilizers Ltd,

Mumbai

The Directors of your Company have pleasure in presenting this 36th Annual Report on the working of your Company together with the Audited Accounts for the year ended 31st March, 2014.

1.0.0 FINANCIAL PERFORMANCE:

Summary of financial performance:

Rs. Crore

Particulars 2013-14 2012-13

Total Income 6661.64 6866.83

Cost of Sales 6021.28 6186.39

Operational Profit 640.36 680.44

Depreciation/Impairment 141.75 173.15

Finance Cost 131.29 127.17

Proflt/(Loss) before tax 367.32 380.12

Provision for Tax 117.43 99.22

(including deferred Tax liability/Asset)

Net Proflt/(loss) 249.89 280.90

Appropriations:

Dividend 82.75 82.75

Tax and Educational cess on Dividend 14.06 14.06

Balance Transferred to General Reserve 153.08 184.09

1.1.0 Highlights for the year 2013-2014:

Your Company earned a total income of Rs. 6661.64 crore as against Rs. 6866.83 crore during the previous year. Your Company achieved a gross profit of Rs. 640.36 crore as against Rs. 680.44 crore of previous year. The net Profit before Tax was Rs. 367.32 crore as against Rs. 380.12 crore in the previous year. The Net Profit after Tax during the year was lower at Rs. 249.89 crore as against Rs. 280.90 crore in the previous year registering a reduction of 11.04 % over previous year. Performance for the year 2013-14 was lower as compared to previous year due to substantial depreciation in Indian Rupee against USD, reduction in MRP of P&K fertilizers, non-receipt of timely subsidy resulting in higher fnancing costs, lower complex fertilizer production because of lower operating load of Suphala owing to ongoing structural rehabilitation, lower sales of v imported fertilizers, higher tax payout, etc.

As in the past several years, your Company received MOU Excellent'' rating-for 20.12-13 from Ministry of Heavy Industries and Public Enterprises and has achieved excellent performance during 2013-14 as well.

1.2.0 -Dividend:

Although your Company has lined up a number - of'' capex programmes which will entail substantial '', ''.expenditure, considering the consistent profits being made by the Company, your Directors propose to pay dividend at Rs. 1.50 per each equity share of Rs. 10, same as paid in the previous year. The total out go works out to Rs. 96.81 (Rs. 96.81 crore in the previous year) including dividend distribution tax and education cess.

1.3.0 Appropriation to General Reserves:

Your Company earned a net Profit after Tax of Rs. 249.89 crore (Rs. 280.90 crore in the previous year). The dividend payout along with Tax/cess is Rs. 96.81 crore (J 96.81 crore in the previous year). The balance amount ofRs. 153.08 crore (Rs. 184.09 crore in the previous year) is transferred to General Reserves.

1.4.0 Awards Won:

As in the past, your company achieved many awards during the year 2013-14 some of which are as under:

11th National Award for excellence in Cost Management for 2013, from Institute of Cost Accountants of India under the category, Public Manufacturing Organisations (Large).

- Sustainability Award 2013 for excellence in Safety, Health & Environment in Chemical & Petrochemical Sector was conferred upon RCF, Trombay Unit by FICCI.

- Greentech Safety Award - 2013 in Silver category for excellence in safety management among fertilizer industries, instituted by Greentech Foundation

- FAI runner up award for the best technical innovation in Suphala plant (15:15:15) for 2012- 13.

- Golden Peacock Occupational Safety & Health Award 2012-13 from Institute of Directors at World Congress on Environment Management.

- Special Commendation Golden Peacock National Training Award.

- National Award for innovative Training practices, ''from . Society for Training and Development.

2.8. RESEARCH AND DEVELOPMENT:

Your Company has taken up several Research and Development projects, some of which taken up for commercial scale design and engineering, are as under:

2.8.1 Lab scale development of Potassium (K) mobilizers as Bio fertilizer Microorganisms play a key role in the natural K cycle and are capable of mobilizing available K in the soils. They are functionally more useful and environmentally more feasible than soluble K. The special focus on K mobilizers/solubilizers is due to the fact that K is one of the major nutrients required by all crops. The biofertilizer with K mobilizing bacteria is developed in laboratory and is sent to Madurai University for feld trials. Your Company will take further steps to commercialise the product after successfully completing the feld trials.

2.8.2 Pilot scale production of value added Gypsum (Gypsum Sona) The R & D department of your Company has developed a new product for enhancing organic matter in sodiac and saline soils by using Phosphogypsum. The product, named as ''Gypsum-Sona" is found to have soil rejuvenating characteristics and also increases crop yield manifold. Pilot scale production is completed and is sent for feld trials. The feld trials have shown promising results and the product is expected to be commercialized in the coming year.

2.8.3 Micro propagation of Stevia through Tissue Culture Technique Micro propagation requires relatively shorter time as compared to conventional practice of propagation.

Therefore tissue "culture offers tremendous potential for the large scale production of Stevia. The protocol -for'' micro-propagation (multiplication) of Stevia through, tissue* culture techniques has been successfully- developed by" R''&D. The manufacturing and sale of uniform, and f disease" free Stevia saplings will be done. after field testing experiments. The technique will make available. the uniform and disease free Stevia sapling to the farming community for large scale cultivation.

2.8.4 New formulations for manufacturing specialized products using Calcined Gypsum:

The R & D department of your Company has developed, in consultation with Institute of Chemical Technology, a formulation for manufacturing an ecofriendly "External wall plaster" from Calcined Gypsum. The product is undergoing further tests and after successful trials, would be taken up for commercial production. Your Company has also developed another formulation using the Calcined Gypsum, for manufacturing a ''Cement Bonding Material, similar to Cement mortar, which can be used on roads etc., to fll potholes.

2.9.0 CONSERVATION OF ENERGY:

In order to save and conserve energy, your Company undertook various steps during the year 2013-14. Several modifications in the plants have resulted in significant reduction in the energy consumption. A few of the measures undertaken are as follows:

At Trombay unit, air preheater coil of new design was installed to recover the waste energy from fue gas of reformer in Ammonia V plant. Similarly, a new MP stripper was installed in place of LP stripper thus saving significant amount of steam in Ammonia I. Besides, several equipment such as new MP stripper, improved energy efficient motors, unloading compressors at ammonia storage, semi- lean MDEA solution pump, etc., have been installed which have helped the unit in reducing the energy consumption.

Some of the energy conservation measures undertaken at Thal unit include replacement of 6 no. of MP turbines with LP turbines, resulting into MP steam saving of 25 MT/Hr, replacement of old S-200 converter basket with new S-300 basket which improved conservation of energy to the extent of 0.02 Gcal/MT of ammonia, retubing of water cooler in Ammonia stream -I with resultant benefit in energy saving of 0.03 Gcal/MT of ammonia, installation of roof top grid synchronised Solar Power Generation facility of 10 KWp on Administration Building, etc.

The particulars with regard to Conservation of Energy, Technology Absorption, Foreign Exchange outgo as required under Section 217 (i) (e) of the Companies Act, 1956 are enclosed as Annexure I.

3.0.0 ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL:

Your Company is committed to ensuring clean environment, beyond satisfying all stipulated requirements laid down by the statutory authorities, around its operating units.

Your Company has established ISO 14001 compliant Environment Management System (EMS) at its two manufacturing units. The Systems are constantly upgraded and regular internal audits and Management Reviews are carried out to ensure compliance and continually improve the system. Apart from Stack monitors, which continuously monitor the emissions, four fixed ambient air quality monitoring stations are in place, at both Trombay and Thal, to monitor ammonia, NOx, SO2, Particulate matter (PM10 & PM2.5) & metrological parameters.

The Effluent Treatment plants at Trombay and Thal have ensured that the environment in and around the Units are fully protected. Various schemes are implanted to reduce wastages of the scarce natural resources. The waste streams from the plants are recycled/reused for useful purpose.

Sludge generated in Effluent Treatment Plant, Sulphur Sludge Generated in Sulphuric Acid plant, waste streams of effluents from complex fertilizer plants are recycled back in the processes. The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board.

For increasing awareness regarding environment, public awareness campaign programmes are arranged by Trombay and Thal units.

4.0.0 CSR Activities:

4.1.0 In line with the CSR philosophy adopted, your Company undertook several activities, aimed for the benefit of needy and for general good of the society, during the financial year 2013-14. Your Company carried out many activities under CSR policy and spent/committed about Rs. 15.28 crore which are briefly stated as under:

4.1.1 Education:

4.1.1.1 Schools:

Your Company supports schools, at the two units, which impart education in Marathi, Hindi and English mediums to students from Nursery to 10th Standard. Your Company undertakes the upkeep, maintenance and bears the deficit expenditure incurred by the schools, located in Company''s residential colonies, which are run by reputed Educational Institutions.

4.1.1.2 Scholarship to meritorious students:

Your Company offers a number of scholarships to . students of SC/ST/OBC communities for pursuing higher studies. Your Company''s scholarship project for sending every year, 10 students to 6th Standard in Shivaji Military school in Pune and supporting the earlier batches in their march to higher standards thereafter has received goodwill from all.

4.1.1.3 Supply of Mid-Day Meal:

Your Company started Mid-Day Meal Scheme for providing nutritious food to children studying in seven unaided schools, providing education to poor children, in and around Trombay area. The scheme is operated through an NGO,''ISKCON Food Relief Foundation'' which supplies good and healthy meal to the children on behalf of RCF In all 10,000 students have availed the benefit of this nutritious meal.

4.1.1.4 Programme for underprivileged Children

Your Company has adopted the "Khel Khel Main" programme of Wockhardt Foundation for under privileged children of age group of 5 to 10 years, by setting up six centres of edu-recreation with parallel learning in slums of Vashi Naka area near Trombay unit.

4.1.1.5 RCF SUPER- 30 programme

Your Company, in association with Centre for Social Responsibility and Leadership (CSRL), has established a unit of Abhayanand Super 30 in Mumbai where about 30 underprivileged talented students of Maharashtra state are provided 11 months of free residential coaching to enable them get admission in IIT/NIT and other premier engineering colleges. 29 of these students were successful in the entrance examination.

4.1.1.6 Farmers'' Education:

More than 30000 farmers attended & benefited from the training programmes conducted at the two Farmers Training Centre in the last half decade and have used the knowledge to upgrade their farm practices and, have- succeeded in reducing their overheads. and increase their wealth. Special programmes designed ''for, -women farmers and the scheduled *cas"te, and scheduled tribes are also organized on a regular basis so that they too join the bandwagon of the country''s agricultural renaissance.

.Your Company''s efforts in rendering advisory services to farmers by conducting Soil diagnostics to optimize soil productivity, are well appreciated.

Based on the analysis, farmers are advised on soil fertility management through rational use of manure. fertilizers and other inputs to make agriculture more productive and sustainable. During the year, more than 95,000 soil samples were analyzed and recommendations given through the twelve static and six mobile soil testing laboratories.

4.1.2 Supply of drinking water to the villages:

Your Company has been providing drinking water since more than 20 years to seven villages around Thal unit through pipelines laid down from the water reservoir in the unit and spent about Rs. 80 lakh on this account during the year. About 16000 residents of the villages got benefit of the scheme.

4.1.3 Community Medical Facility

Your Company has engaged Wockhardt Foundation and administered free primary health care through mobile Medical Vans. On an average 7 Villages are covered in weekly cycles by a mobile van and patients are benefited from free medical services including supply of medicines. Through this facility, ailments like Blood pressure, low Haemoglobin Levels, Oxygen saturation, Malaria, Hepatitis, Dengue, Typhoid, Diabetes, etc., are treated on regular basis, through qualified Doctors. One medical van attends to approx. 25000 patients per annum. Total of four such vans are operating in Thal and Trombay areas.

4.1.4 Chembur Green Project:

Your Company continued to support the Chembur Green project, launched to establish greenery in the eastern suburb of Mumbai, by joining hands with Chembur Citizens'' Forum an NGO to develop, beautify and maintain Diamond Garden, at Chembur for a period of 5 years. Your Company continued distribution of free saplings and rendering advice to various co-op. societies and also to individuals.

5.0.0 Micro, Small- and Medium Enterprises.

Government -of. India,* Ministry of Micro, Small and Medium. Enterprises, vide order dated 23 rd March, 2012, * notified ''the public procurement policy in respect of procurement of goods and services produced and provided by Micro, Small and Medium Enterprises. As per this directive, every Central Ministry or Department* or- Public Sector Undertaking shall set*an annual''goal *of procurement from Micro, Small and Medium Enterprises from the Financial Year 2012-13 and onwards with the objective of achieving an overall procurement of products produced and services rendered by Micro, Small and Medium Enterprises to the extent -of. minimum 20% of total annual purchases in a period of three years. There are about 358 items/services stated in the directive. After a period of three years,.'' i.e. from 1st April, 2015, overall procurement goal of minimum 20% shall be made mandatory. The directive also provides that the goals set with respect to procurement to be met from Micro, Small and Medium Enterprises and achievement made thereto be incorporated in their respective Annual Reports. To comply with the directive, your Company, for the year 2013-14, has set a goal of 15% and has achieved a higher level of 19.53% excluding natural gas, bulk raw materials and proprietary items. The Company is sure to achieve 20% during 2014-15.

6.0.0 Sustainable Development

Your Company has taken up several Sustainable development activities including the following:

[i] Improvement of Road infrastructure- construction and repairs.

[ii] Building of Check Dams.

[iii] Prevention of soil erosion and watershed management.

The Rapidwall project, which has been implemented, is an example of Company''s faith in sustainable development wherein a waste product generated from Phosphoric Acid Plant is converted into useful building material by adopting a novel technology.

As already stated, Your Company is planning to put up a new Sewage treatment plant of similar capacity as that of the existing one at Trombay unit as a part of sustainable development plan to enable Mumbai city to have additional potable water for its citizens as your Company would be recycling the sewage water supplied by BMC and would be using that water in place of clean water supplied by BMC.

In its bid towards India''s vision of achieving ecologically sustainable growth your Company plans to venture into setting up Solar based power generation facilities. The Company has already set up rooftop solar power generation facilities to the tune of 34 KW atop of its offices at five locations in Maharashtra. It has plans for setting up 2 MW Solar Power generation facility at its Trombay Unit.

Your Company is also considering several major activities connected with Green House Gas, sustainable electricity distribution based on solar energy etc. Your Company is targeting to take up many more sustainable development activities in the near future.

6.1.0 Annual Sustainability Report :

RCF has published, during the year, its maiden Sustainability Report for the year 2012-13 based on Global Reporting Initiative (GRI) guidelines and National Voluntary Guidelines (NVG) on ''Social, Environmental and Economic Responsibilities of Business'' issued by Ministry of Corporate Affairs, Govt. of India. The Report has been posted on the Company''s website.

The report provides Company''s economic, environmental, and social performance. Sustainability reporting is about organization''s progress vis-a-vis performance goals, not only for economic achievements, but for environmental protection and social well being. The report for 2013-14 would also be published soon.

7.0.0 Vigilance

Vigilance department is headed by a full time Chief Vigilance Officer (CVO), deputed from the All India Services by the Government of India. The position of CVO is at par with the Functional Directors. CVO is assisted by a team of Officers drawn from various functional departments. The activities of Vigilance department cover Corporate office, Trombay unit, Thal unit and all the marketing offices situated throughout the country. In line with the CVC guidelines, the thrust of Vigilance in your Company is to bring greater transparency, integrity and efficiency. The focus of Vigilance department is on Preventive and Participative Vigilance.

This is done by keeping careful watch on various activities through regular inspections and surprise checks. System improvements and corrective actions are taken wherever necessary. The theme that "All Officers are Vigilance Officers" is implemented in your Company and alertness and support of all officers is taken in the management of Vigilance. Vigilance has focused on spreading awareness on rules/ regulations, procedures and soliciting information/complaints from all regarding malpractices/corruption.

During the year, Vigilance department has actively contributed towards implementing e-governance in RCF, in making the tender documents more transparent and relevant, enhanced transparency in the existing system of dealing with our dealers/ vendors and accrued savings to your Company by implementing systems for reduction in wastages in handling bulk raw material. With persistent efforts from Vigilance department, your Company has implemented the system of e-procurement for ensuring more transparency in procurements."

8.0.0 HUMAN RESOURCES:

8.1.0 Training and Development:

One of the strengths of your Company is its skilled and professional man power. This could be achieved by adopting good HR policies and undertaking training and development of all employees. Training imparted includes enhancing General Management skills of the employees in various functions viz. Marketing, Finance, Commercial and Health Services disciplines.

Quality Management Systems, Environment Management Systems, Occupational Health and Safety Systems and 5 S Systems are given focused attention. The work culture of your Company has been enhanced by introducing the Six Sigma and Lean Quality Circles. System of Mentorship for newly recruited Management Trainees is in place.

Training and Development programmes were conducted, in-house for the employees of your Company at various levels. Besides this, comprehensive Safety Management Programmes were carried out for officers in Technical disciplines. Special emphasis has been laid on Process Safety Management. The following awards have been won by employees of your Company for the year under report:

¦ OSH India 2013 Safety Hero Gold Medal awarded to Shri Kishan Singh Kathayat, Sr. Engg (Safety) for accomplishment in making Hkl safe workplace.

¦ Shri Shantanu Shinde, Sr. Grade Operator,Urea V has been conferred with''. Prestigious Prime Minister''s Shram-Vir Award for the year 2012.

8.2.0 Industrial Relations:

Your COrnpany maintained cordial Industrial

Relations with all its employees. All the issues are settled "through"regular discussions, meetings and dialogues'', with the employees. Your Company had "396.7 employees comprising of 1508 Officers and 2459 workmen, as on 31st March, 2014 compared to "4.048 employees (1548 officers and 2500 workmen) as on the corresponding date of the previous year.

8.3.0. Welfare and Sports

Your Company undertakes several welfare schemes like education, medical, transport, housing etc., according to the needs of the employees. In regards to sports, your Company is a prominent patron and sponsored various sports events. Your Company''s Football, Cricket, Hockey, Kabaddi and other teams continue to show excellent performance at District, State and National levels and have brought laurels to your Company by winning several prizes.

8.4.0. Welfare/Employment opportunity to weaker section:

The guidelines in respect of reservation in recruitment and promotion of SC/ST, OBC, Ex- servicemen and Persons with Disabilities are followed by your Company. As on 31st March 2014, your Company had on its rolls, 542 employees belonging to Scheduled Caste, 257 Scheduled Tribe and 396 Other backward castes.

Your Company is committed to the welfare of the backward classes in general and SC/ST employees in particular. Regular meetings are held with SC/ST Employees Welfare Association to address grievances, if any, and for providing guidance for development.

Medical Camp is organized every year at Chaitya Bhoomi, Dadar on 6th December, on the occasion of ''Mahaparinirvan Day''. Financial assistance for making arrangement for medical camp and for medicines along with the vehicles and Doctors are made available by the Company.

Your Company''s Thal Unit provides various amenities like water, road etc, for the nearby villages e.g. Thal, Navgaon, Boris, Gunjis etc., where the majority of the population belongs to the SC/ST categories. The facility continued during the year. Scholarships were given to meritorious students of SC/ST community in the nearby villages of Thal.

Large number of SC/ST farmers have been trained in the programmes conducted at the Company''s Farmers'' Training-Centres at Nagpur and Thal.

9.0.0 PARTICULARS OF EMPLOYEES:

A statement providing, the information as required under section 217 (2A) of the Companies Act, 1956 is attached to this report as Annexure II.

10.0.0 OFFICIAL LANGUAGE POLICY:

Your Company has fully endeavoured to implement the provisions of Official Language Act, 1963 and the policy of the Government. Publicity material and literature for employees and farmers are made available in Hindi and other regional languages.

11.0.0 INTERNAL CONTROL SYSTEM:

The Company has a well-defined Internal Control System that is adequate and commensurate with the size and nature of its business comprising of an in-house Audit Department, which conducts internal audit of various operational and financial matters on on-going basis. Internal Audit group consists of adequate number of financial and technical personnel and is headed by a Chartered Accountant in the rank of General Manager. The recommendation and observations of the Internal Audit Department are reviewed regularly by the Audit Committee constituted by the Board of Directors. The performance of the corporation 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.

12.0.0 COST AUDIT

Your Company has appointed Shri S.D.Shenoy, Cost Accountant and M/s VJ.Talati & Co, Cost Accountants for conducting Audit of the Cost Records for the financial year 2013-14. The Cost Audit Reports for 2012-13 were fled in XBRL form, within due date, with the Ministry of Company Affairs on 26.9.2013 and even for 2013-14 also, the Report will be fled within the due date.

13.0.0 DIRECTORS'' RESPONSIBILITY STATEMENT:

In terms of section 217 (2AA) of the Companies Act, 1956, your Directors state that: i] in preparing the annual accounts, the applicable accounting standards have been followed;

ii] the accounting policies adopted have been consistently applied and, wherever necessary, judgements and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit or loss of the Company for the year;

iii] proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safe guarding the assets of your Company and for preventing and detecting fraud and other irregularities; and

iv] the annual accounts have been prepared on a going concern basis.

14.0.0 CORPORATE GOVERNANCE:

14.1.0 As per Clause 49 of the listing Agreement with the Stock Exchanges, a separate section on Corporate Governance along with a certificate of Compliance is annexed and forms part of this report.

14.2.0 COMPLIANCE OF CORPORATE

GOVERNANCE GUIDELINES ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISES

Government of India, Department of Public Enterprises, has laid down certain parameters for the purpose of grading the Central Public Sector Enterprises on the basis of their compliance of guidelines on Corporate Governance and this report needs to be submitted to the Government on quarterly/annual basis. Your Company has been complying with the Guidelines on Corporate Governance for Central Public Sector Enterprises laid down by DPE and regularly submits reports to the Government.

15.0.0 CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may be ''forward looking statements'' and actual results may or may not be in accordance therewith. The Company''s performance is dependent on several external factors such as performance of monsoon, significant changes in economic environment, Government Policies, fuctuations in prices of raw material and fnished products and also their availability etc., which could adversely affect the operations of your Company.

16.0.0 AUDITORS:

The Comptroller and Auditor General of India (CAG) has appointed, M/s M.M. Nissim & Co. and M/s NBS & Co as Joint Statutory Auditors of your Company for the Financial Year 2013-14. The Auditors would be retiring at the conclusion of the Thirty sixth Annual General Meeting.

The Statutory Auditors for the Financial Year 2014- 15 will be appointed by the CAG. However, their remuneration is to be fixed at the AGM by the members.

Shri S. D. Shenoy and M/s. V. J. Talati & Co., have"_ been appointed, by the Board, as Cost Auditors for the year 2014-15 and the remuneration payable is ''to. be approved at the AGM by the members.

17.0.0 DIRECTORS:

President of India appointed Prof. Damodar Acharya as Director of your Company w.e.f 30.01.2014. Shri S.K. Lohani I.A.S, has been appointed as an Additional Director on 02.07.2014. Shri Suresh Warior has been appointed as an Additional Director on 18.07.2014, Shri Gautam Sen, Director (Finance) has demitted his Office on 31.01.2014 on attaining the age of superannuation. The contribution of Shri Gautam Sen to your Company has been immense. His guidance, suggestions and advice have greatly benefited the Company. Your Directors place on record their appreciation of the contribution of Shri Sen to your Company. Notice under section 160 of the Companies Act has been received proposing the candidature of Prof. Damodar Acharya, Shri S.K. Lohani and Shri Suresh Warior as Directors of the Company.

As per Section 152 of the Companies Act, Shri Ashok Ghasghase, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

18.0.0 ACKNOWLEDGMENT:

Your Directors wish *to ''gratefully .acknowledge the valuable guidance.and''continued support extended by Government *of", India" and- in particular, the Department of Fertilizers and the Office of Fertilizer Industry. Co-ordi''nation Committee (FICC), Railways, DPE, members of MOU Task force, and other Central Government''.departmfents and Agencies.

"The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the State Governments, MSEB, MIDC, various media, Municipal authorities, Maharashtra Pollution * Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

Your Board wishes to acknowledge gratefully, the confidence posed, unstinted support and suggestions made to the Board by the esteemed share Owners of the Company. The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory Auditors, Cost Auditors and the Office of .the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep appreciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance.

By order of the Board of Directors

[RG. Rajan] Chairman and Managing Director.

Place : Mumbai Date : 19.07.2014


Mar 31, 2013

To the members of Rashtriya Chemicals and Fertilizers Ltd.,

Mumbai

The Directors of your Company have pleasure in presenting this 35th Annual Report on the working of your Company together with the Audited Accounts for the year ended 31st March, 2013.

1.0.0 FINANCIAL PERFORMANCE:

Summary of financial performance:

Rs. Crore

Particulars 2012-2013 2011-2012

Total Income 6987.48 6600.43

Cost of Sales 6345.96 6034.20

Operational Profit 641.52 566.23

Depreciation / Impairment 173.15 142.44

Finance Cost 88.25 49.33

Profit/(Loss) before tax 380.12 374.46

Provision for Tax (including deferred Tax liability/ Asset) 99.22 125.22

Net Profit / (loss) 280.90 249.24

Appropriations:

Dividend 82.75 77.24

Tax and Educational cess on Dividend 14.06 12.53

Balance Transferred to General Reserve 184.09 159.47

1.1.0 Highlights for the year 2012-2013:

Your Company achieved a total income of Rs. 6987.48 crore as against Rs. 6600.43 crore during the previous year. Your Company achieved a gross profit of Rs. 641.52 crore as against Rs. 566.23 crore. The net Profit before Tax was Rs. 380.12 crore as against Rs. 374.46 crore in the previous year. The Net Profit after Tax during the year was higher at Rs. 280.90 crore as against Rs. 249.24 crore in the previous year registering an increase of 12.70% over previous year. Performance for the year 2012-13 was better as compared to previous year which was due to higher realizations, as well as increased volume of manufactured Complex fertilizers and Industrial products.

As in the past several years, your Company received ''MOU Excellent'' rating for 2011-12 from Ministry of Heavy Industries and Public Enterprises.

1.2.0 Dividend:

Although your Company has lined up a number of capex programmes which will entail substantial expenditure, considering the consistent profits being made by the Company, your Directors propose to pay dividend at Rs. 1.50 per each equity share of Rs. 10, as against Rs. 1.40 paid in the previous year. The total out go works out to Rs. 96.81 crore (Rs. 89.77 crore in the previous year) including dividend distribution tax and education cess.

1.3.0 Appropriation to General Reserves:

Your Company earned a net Profit after Tax of Rs. 280.90 crore C 249.24 crore in the previous year). The dividend payout along with Tax/cess is Rs. 96.81crore (Rs. 89.77 crore in the previous year). The balance amount of Rs. 184.09 crore (Rs. 159.47 crore in the previous year) is transferred to General Reserves.

1.4.0 Awards Won:

Your company achieved many awards during the year 2012-13 as under:

- National award for Excellence in Cost Management awarded by the Institute of Cost Accountants of India.

- ''PSE Excellence Award'' from the Indian Chamber of Commerce for Environment Excellence and Sustainable Development under Miniratna Category.

- Golden Peacock award for excellence in Environmental Management 2012 by the Institute of Directors.

- The Aqua Excellence award 2011 (PSU category) from Aqua Foundation for outstanding contribution towards cause of water.

- Best HR Strategy award 2011 and outstanding contribution of HR for organizational development by Indian Human Capital Summit 2011.

Apart from the above awards, the two units of your company received awards for their individual performance as under:

The Trombay unit was bestowed with the following awards:

- Fertilizer Association of India (FAI) Award for ''Production, Promotion and Marketing of Bio- fertilizers'' for the year 2011-12.

- Annual Environment Excellence Award 2011 by Greentech Foundation for outstanding performance in environment management in Gold category.

Thal unit of your Company was bestowed with ''Gold Award in Fertilizer Sector'' by Greentech Foundation, New Delhi for outstanding achievements in Safety Management for the year 2012.

2.0.0 ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL:

Your Company is dedicated to improve environmental performance through continual improvement and is going beyond satisfying all stipulated requirements laid down by the statutory authorities for environment management and pollution control.

With an aim to sustaining the operations in an environment friendly manner, your Company established, ISO 14001 compliant, Environment Management System (EMS) at its two manufacturing units. The Systems are constantly upgraded and the three separate systems, namely Quality Management System (ISO 9001:2008), Environment Management System (ISO 14001:2004) & Occupational Health and Safety Assessment Series (OHSAS 18001:2007), are all brought under Integrated Management System. Regular internal audits and Management Reviews are being carried out to ensure compliance and continually improve the system.

Measures taken to conserve water have yielded not only savings but also have further improved the environmental management. The state of art Effluent Treatment plants and the Sewage Treatment plants at Trombay have ensured that the environment in and around the Unit is fully protected. Your Company''s Sewage treatment plant is highly acclaimed by all. Your company is contemplating to install another plant. Various schemes are implanted to reduce wastages of the scarce natural resources. The waste streams from the plants are recycled / reused for useful purpose.

After successful study by R&D department to recover approx. 50% of the present R.O. reject water of Sewage Treatment Plant as process water, the project has been completed to recover approx. 3000 m3/day of process water. Apart from savings, water is being conserved every day to that extent.

Sludge generated in Effluent Treatment Plant, Sulphur Sludge generated in Sulphuric Acid plant, waste streams of effluents from complex fertilizer plants are recycled back in the processes. The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board.

During the process of converting raw materials into finished products, certain residual chemicals are formed, which are either recycled or converted into harmless chemicals as far as possible, before discharging them into the atmosphere, giving due importance to cleaner environment.

To check the effectiveness of the environmental management system and ensure compliance with emission regulations, monitoring network has been incorporated. Apart from Stack monitors, which continuously monitor the emissions, four fixed ambient air quality monitoring stations are in place to monitor ammonia, NO , SO, Particulate matter '' x 2'' (PM10 & PM2.5) & metrological parameters.

Your Company has taken up the exercise of Greenhouse Gas (GHG) Accounting, which is the process of estimating the company''s total GHG emissions in terms of equivalent tonnes of Carbon di oxide. This is popularly known as Carbon Foot printing. Carbon Foot printing is typically regarded as a primary step for undertaking structured approach to managing company''s carbon risks. Total GHG emission in Trombay unit has reduced by 7.1% during the year under report, over the emission during previous year. The reduction was mainly due to reduction in specific consumption of energy in urea and reduction in N2O emission from nitric acid plant. Total GHG emission at Thal unit reduced by 1.3% during the year over that during previous year, mainly due to the steps taken to reduce energy consumption of urea.

For increasing awareness regarding environment, public awareness campaign programmes are arranged by Trombay unit.

3.0.0 PRINCIPLES OF GLOBAL COMPACT.

Your Company is a member of United Nations Global Compact and fully supports the Ten Principles in the areas of human rights, labour and environment which are derived from the earlier declarations by United Nations, ILO and other international organisations. Your Company has posted a detailed write-up on its website www.rcfltd. com in this respect.

4.0.0 CSR Activities:

4.1.0 In line with the CSR philosophy adopted, your Company undertook several activities, aimed for the benefit of needy and for general good of the society, during the financial year 2012-13. Your Company carried out many activities under CSR policy and spent/committed about Rs. 12.86 crore which are briefly stated as under:

4.1.1 Education:

4.1.1.1 Schools:

Education is fundamental to Society. Your Company supports schools, at the two units, which impart education in Marathi, Hindi and English mediums to students from Nursery to 10th Standard. Schools are located in the Company''s residential colonies at the Units. Your Company undertakes their upkeep, maintenance and bears the deficit expenditure incurred by the schools which are run by reputed Educational Institutions. During the year your Company spent an amount of Rs. 2.11 crore under this activity. About 2000 students attend the schools.

4.1.1.2 Scholarship to meritorious students:

Your Company encourages students from SC / ST / OBC communities by offering them scholarship for pursuing higher studies. Your company''s scholarship project for sending every year, 10 students to 6th Standard in Shivaji Military school and Raigadh Military school and supporting the earlier batches in their march to higher standards thereafter has received goodwill from all. Your Company spent Rs. 16 lakh for this purpose.

4.1.1.3 Supply of Mid-Day Meal:

Your Company started Mid Day Meal Scheme for providing nutritious food to children studying in seven unaided schools, providing education to poor children, in and around Trombay area. The scheme is operated through a NGO,''ISKCON Food Relief Foundation'' which supplies good and healthy meal to the children on behalf of RCF. In all 6000 students are availing the benefit of this nutritious meal and your Company has spent about Rs. 1 crore against this scheme over a year.

4.1.1.4 Programme for underprivileged Children

Your Company has adopted the "Khel Khel Main" programme of WOCKHARDT Foundation for under privileged children of age group of 5 to 7 years. Your Company has setup six centres of edu- recreation with parallel learning in slums of Vashi Naka area. 1200 children in the age group of 5 to 10 years participate in the programme.

The Programme provide the children with fun and educational toys like blocks, puzzles, clay, cars, story books, colouring books, drawing books, stationery etc. Children are taught social interactions, sharing, caring and child bonding. Prominent speakers in the field are invited to give talk to the children on any civic topic like environment, nature, hygiene, good manners, social conduct etc. which will help them in future.

4.1.1.5 Farmers'' Education:

The adoption of Agricultural technology for increasing crop yield and land productivity is greatly facilitated by training and adequate dissemination of knowledge. RCF sought to bridge the gap between Research Scientist and the farmer by setting up its State of the Art Farmers'' Training Centre (FTC) in 1988 at Nagpur and in 1998 at Thal. These early steps have paid rich dividend since then. More than 30000 farmers have attended & benefitted from these training programmes conducted at the two Farmers Training Centre in the last half decade and have used the knowledge to upgrade their farm practices and have succeeded in reducing their overheads and increase their wealth.

The Training Centres are equipped with the latest audio-visual aids, classrooms and also hostels providing residential accommodation to the farmers The Company''s dedicated training facilities are manned by in-house professionally qualified faculty, eminent Research Scientists from agricultural institutions, Agro experts, progressive farmers & senior agriculture departmental officials are invited on regular interval as visiting faculty members.

The curriculum covers aspects of farm management and specifies of farm technology, with special reference to regional needs. The programmes are designed to cover both general aspects as well as region specific aspects of farming technology. These are supplemented by training with regard to moonlighting in subsidiary occupations and the lucrative, futuristic option of food processing. The regional agricultural universities take an active part in the farmers'' training process and case studies with regard to geological situations, cropping pattern, socio-economic problems etc. are discussed regularly. Field visits to research centres, agricultural institutes and subsidiary occupation centres are also organized.

Special programmes designed for women farmers and the scheduled caste and scheduled tribes are also organized on a regular basis so that they too join the bandwagon of the country''s agricultural renaissance. This is a unique way to disseminate information and educate farmers as regards the various services available to them to enhance their crop yield and soil fertility.

Approximately 3000 farmers are trained every year at both the institutes and total annual expenditure is about Rs. 40 lakh.

4.1.2 Supply of drinking water to the villages:

Your Company has been providing drinking water since more than 20 years to seven villages around Thal unit through pipelines laid down from the water reservoir in the unit and spent Rs. 84 lakh on this account during the year. 15758 residents of the villages got benefit of the scheme.

4.1.3 Village Adoption:

As a part of IRDP activities, 5 to 10 tribal and backward villages are adopted each year from different states. These programmes are carried out in association with Agricultural department, Zilla Parishads, District Rural Development Financial Institutions and NGOs.

The major activities conducted include, providing basic needs of the community like construction of community hall, drinking water facility, lift irrigation facility, shelter for small and marginal farmers, water shed development programmes, financial help to self help groups, conducting Medical camps, veterinary camps, vaccination camps, providing appropriate sanitation facilities, encouragement of use of Bio-gas etc.

Agricultural Need Development Programmes are also conducted to support the farmers to increase their productivity by providing them the latest development in agriculture. If necessary inputs like quality hybrid seeds, fertilizers, agricultural implements etc. are also provided. In addition to this fertilizer/crop demonstrations are conducted to show the effectiveness of scientific practices to the farmers.

Training and support is given to the farmers to develop subsidiary occupation to augment their income. Some of the areas where training has been imparted are Weaving, Bee keeping, Tailoring, Dairy, Poultry, Goat keeping, etc.

Along with economic development, your company encourages organization of social / cultural activities in the adopted villages.

Your company spent about Rs. 28 lakh on this account.

During last five years your company has adopted 27 villages in the states of Maharashtra, Karnataka & Andhra Pradesh.

4.1.4 Advice on Soil nutrients:

Your Company''s efforts in rendering advisory services to farmers by conducting Soil diagnostics to optimize soil productivity, are well appreciated.

Soil testing helps diagnose soil health and evolve soil specific and crop specific solutions. It helps to identify problematic soils, their nutritional status, texture and structure. Based on the analysis, farmers are advised on soil fertility management through rational use of manure, fertilizers and other inputs to make agriculture more productive and sustainable. During the year, more than 95,000 soil samples were analyzed and recommendations given through the twelve static and six mobile soil testing laboratories.

4.1.5 Community Medical Facility

In the baseline survey undertaken, for your company, by Tata Institute of Social Science (TISS) in Thal area, it was highlighted that major problem in the that area is lack of primary health facility for common ailments like cough, cold and most of times villagers have to travel long distance to get the treatment for such minor ailments. Keeping this in view, your company has engaged Wockhardt Foundation and administered free primary health care to more than 7.50 lakh patients till date over a period of about 5 years. On an average 25 Villages are covered in weekly cycles and around 25000 patients are benefitted from free medical services including supply of medicines. Through this facility ailments like Blood pressure, Hemoglobin Levels, Oxygen saturation, Malaria hepatitis, Dengue, Typhoid and Diabetes, etc are treated on regular basis, through qualified Doctors.

During the year 2012-13, your company extended the service in Chembur as well covering the need in the slum areas. Your company spent about Rs. 54 Lakhs.

4.1.6 Chembur Green Project:

Your Company continued to support the Chembur Green project, launched to establish greenery in the eastern suburb of Mumbai. Your Company''s efforts has brought back the green forestry amidst concrete jungle in the area. The development of traffic islands, kitchen gardens, exhibitions, Rose shows and other activities in schools and colleges have increased the environment consciousness among the citizens. Your Company continues distribution of free saplings and rendering advice to various co-op. societies and also to individuals.

Your Company joined hands with Chembur Citizens'' Forum a NGO to develop, beautify and maintain Diamond Garden, at Chembur for a period of 5 years at a cost of Rs. 75 lakh. The park attracts about 2000 people every day and about 4000 people during the week ends.

5.0 Micro, Small and Medium Enterprises.

Government of India, Ministry of Micro, Small and Medium Enterprises, vide order dated 23rd March, 2012, notified the public procurement policy in respect of procurement of goods and services produced and provided by Micro, Small and Medium Enterprises. As per the directives, every Central Ministry or Department or Public Sector Undertakings shall set an annual goal of procurement from Micro, Small and Medium Enterprises from the Financial Year 2012-13 and onwards with the objective of achieving an overall procurement of minimum of 20% of total annual purchases of products produced and services rendered by Micro, Small and Medium Enterprises in a period of three years. There are about 358 items/services stated in the directive. After a period of three years, i.e. from 1st April, 2015, overall procurement goal of minimum 20% shall be made mandatory. The directive also provides that the goals set with respect to procurement to be met from Micro, Small and Medium Enterprises and achievement made thereto be incorporated in their respective Annual Reports. To comply with the directive, your Company, for the year 2012-13, has set a goal of 4% and has achieved the same.

6.0.0 Sustainable Development

Your Company has taken up several Sustainable development activities including the following:

[i] Improvement of Road infrastructure - construction and repairs.

[ii] Building of Check Dams.

[iii] Prevention of soil erosion and watershed management.

The Rapidwall project, which has been implemented, is an example of Company''s faith in sustainable development wherein a waste product generated from Phosphoric Acid Plant is converted into useful building material by adopting a novel technology.

As already stated, Your Company is planning to put up a new Sewage treatment plant of similar capacity as that of the existing one at Trombay unit as a part of sustainable development plan to enable Mumbai city to have additional potable water for its citizens as your Company would be recycling the sewage water supplied by BMC and would be using that water for its use.

In its bid towards India''s vision of achieving ecologically sustainable growth, RCF plans to venture into setting up Solar based power generation facilities. RCF has plans for setting up 2 MW Solar Power generation facility at its Trombay Unit. In addition to above, RCF is setting up to the tune 30 KW rooftop solar power generation facilities atop its various offices in Maharashtra.

Your Company is also considering several major activities connected with Green House Gas, sustainable electricity distribution based on solar energy etc. Your Company is targeting to take up many more sustainable development activities in the near future.

Sustainability Report status for Annual Report:

RCF is in process of preparing its maiden Sustainability Report for the year 2012-13 based on Global Reporting Initiative (GRI) guidelines and National Voluntary Guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business'' issued by Ministry of Corporate Affairs, Govt. of India.

This report shall provide company''s economic, environmental, and social performance. Sustainability reporting is about organizations progress against performance goals, not only for economic achievements, but for environmental protection and social wellbeing. This is also termed as ''Triple Bottom Line'' approach.

RCF''s Sustainability Report is likely to be ready and published by mid of August 2013.

In order to give more thrust to sustainable development, a Committee of the Board has been formed to approve Sustainable Development plans and to oversee Sustainable Development performance.

7.0.0 Vigilance

Vigilance department is headed by a full time Chief Vigilance Officer (CVO), deputed from the All India Services by the Government of India. The position of CVO is at par with the Functional Directors. CVO is assisted by a team of Officers drawn from various functional departments. The activities of Vigilance department cover Corporate office, Trombay unit, Thal unit and all the marketing offices situated throughout the country. In line with the CVC guidelines, the thrust of the vigilance in your company is to bring greater transparency, integrity and efficiency. The focus of Vigilance department is on Preventive and Participative Vigilance.

This is done by keeping careful watch on various activities through regular inspections and surprise checks. System improvements and corrective actions are taken wherever necessary. The theme that "All Officers are Vigilance Officers" is implemented in your company and alertness and support of all officers is taken in the management of Vigilance. Vigilance has focused on spreading awareness on rules / regulations, procedures and solicited information / complaints from all regarding malpractices / corruption.

During the year, Vigilance department has actively contributed towards implementing e-governance in RCF, in making the tender documents more transparent and relevant, enhanced transparency in the existing system of dealing with our dealers/ vendors and accrued savings to your company by implementing systems for reduction in wastages in handling bulk raw material. With consistent efforts from Vigilance department, your company is in the final stages of implementing e-procurement for ensuring more transparency in procurements.

8.0.0 HUMAN RESOURCES:

8.1.0 Training and Development:

One of the strengths of your Company is its skilled and professional man power. This could be achieved by adopting good HR policies and undertaking training and development of all employees. Training imparted includes enhancing General Management skills of the employees in various functions viz. Marketing, Finance, Commercial and Health Services disciplines.

Quality Management Systems, Environment Management Systems, Occupational Health and Safety Systems and 5 S Systems are given focused attention. The work culture of your Company has been enhanced by introducing the Six Sigma and Lean Quality Circles. System of Mentorship for newly recruited Management Trainees has been instituted.

Training and Development programmes were conducted, in-house for the employees of your Company at various levels. Besides this, comprehensive Safety Management Programmes were carried out for officers in Technical disciplines.

8.2.0 Industrial Relations:

Your Company maintained cordial Industrial Relations with all its employees. All the issues are settled through regular discussions, meetings and dialogues with the employees. Your company had 4048 employees comprising of 1548 Officers and 2500 workmen, as on 31st March, 2013 compared to 4104 employees (1517 officers and 2587 workmen) as on the corresponding date of the previous year.

8.3.0. Welfare and Sports

Your Company undertakes several welfare schemes like education, medical, transport, housing etc., according to the needs of the employees. In regards to sports, your Company is a prominent patron and sponsored various sports events. Your company''s Football, Cricket, Hockey, Kabbaddi and other teams continue to show excellent performance at District, State and National levels and have brought laurels to your Company by winning several prizes.

8.4.0. Welfare / Employment opportunity to weaker section: The guidelines in respect of reservation in recruitment and promotion of SC/ST, OBC, Ex- servicemen and Persons with Disabilities are followed by your company.

Your Company is committed to the welfare of the backward classes in general and SC/ST employees in particular. Regular meetings are held with SC/ ST Employees Welfare Association to address grievances, if any, and for providing guidance for development.

Medical Camp is organized every year at Chaitya Bhoomi, Dadar on 6th December, on the occasion of ''Mahaparinirvan Day''. Financial assistance for making arrangement for medical camp and for medicines along with the vehicles and Doctors are made available by the Company.

Your Company''s Thal Unit provides various amenities like water, road for the nearby villages e.g. Thal, Navgaon, Boris, Gunjis etc. where the majority of the population belongs to the SC/ST categories. The facility continued during the year. Scholarships were given to meritorious students of SC/ST community in the nearby villages of Thal.

Large number of SC/ST farmers have been trained in the programmes conducted at the Company''s Farmers'' Training Centres at Nagpur and Thal.

9.0.0 PARTICULARS OF EMPLOYEES:

A statement providing the information as required under section 217 (2A) of the Companies Act, 1956 is attached to this report as Annexure II.

10.0.0 OFFICIAL LANGUAGE POLICY:

Your Company has fully endeavoured to implement the provisions of Official Language Act 1963 and the policy of the Government. Publicity material and literature for employees and farmers is made available in Hindi and other regional languages.

11.0.0 INTERNAL CONTROL SYSTEM:

The Company has a well defined Internal Control System i.e. adequate and commensurate with the size and nature of its business comprising of an in- house Audit Department, which conducts internal audit of various operational and financial matters on on-going basis. Internal Audit group consists of adequate number of financial and technical personnel. The recommendation and observations of the Internal Audit Department are reviewed regularly by the Audit Committee constituted by the Board of Directors. The performance of the corporation is regularly monitored by the Board of Directors.

The Company has an effective budgetary control mechanism in place to take care the detailed capex and operational budget. Appropriate monitoring mechanism to compare the actual performance with the budget ensures that necessary review is periodically undertaken.

12.0.0 COST AUDIT

Your Company has appointed the following Cost Auditors for conducting Audit of the Cost Records for the financial year 2012-13:

1. Shri S.D. Shenoy, for conducting the cost audit of Trombay Unit, Compliance Reporting, Consolidation, Report filing.

2. M/s V.J. Talati & Co., for conducting the Cost audit of all the products of Thal unit and Training activities.

The Cost Audit Reports for 2011-12 were filed in XBRL form, within due date, with the Ministry of Coorporate Affairs on 22.1.2013 and even for 2012-13 also, the Report will be filed within the due date.

13.0.0 DIRECTORS'' RESPONSIBILITY STATEMENT:

In terms of section 217 (2 A A) of the Companies Act, 1956, your Directors state that:

i] in preparing the annual accounts, the applicable accounting standards have been followed,

ii] the accounting policies adopted have been consistently applied and wherever necessary, made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit or loss of the Company for the year,

iii] proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; and

iv] the annual accounts have been prepared on a going concern basis.

14.0.0 CORPORATE GOVERNANCE:

14.0.1 As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance along with a certificate of Compliance is annexed and forms part of this report.

14.0.2 COMPLIANCE OF CORPORATE GOVERNNANCE GUIDELINES ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISES

Government of India, Department of Public Enterprises, has laid down certain parameters for the purpose of grading of Central Public Sector Enterprises on the basis of their compliance of guidelines on Corporate Governance and this report needs to be submitted to the Government on quarterly / annual basis. Your Company has been complying with the Guidelines on Corporate Governance for Central Public Sector Enterprises laid down by DPE and regularly submits reports to the Government.

15.0.0 OFFER FOR SALE OF SHARES [OFS].

Government of India, Department of Disinvestment, has disinvested 6,89,61,012 equity shares of your Company [12.5%], through OFS to the public on 8th March, 2013at a price of Rs. 45 per share. With this, Government has totally disinvested (i.e. 11,03,34,212 equity shares) 20% of the paid up capital. Your Company has complied with the provisions of Listing Agreements with Stock Exchanges in respect of minimum shareholding by public.

16.0.0 CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may be ''forward looking statements'' and actual results may or may not be in accordance therewith. The Company''s performance is dependent on several external factors such as performance of monsoon, significant changes in economic environment, 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.

17.0.0 AUDITORS:

The Comptroller and Auditor General of India (CAG) has appointed, M/s. Nissim & Co, and M/s. N.B.S & Co as Joint Statutory Auditors of your Company for the Financial Year 2012-13. The Auditors would be retiring at the conclusion of the Thirty fifth Annual General Meeting.

The Statutory Auditors for the Financial Year 2013-14 will be appointed by the CAG. However, their remuneration is to be fixed at the AGM by the members.

18.0.0 DIRECTORS:

President of India appointed Shri S.C. Gupta I.A.S. as Director of your Company w.e.f. 4th April, 2013 in place of Dr. V Rajagopalan, IAS. The contribution of Dr. V. Rajagoplan to your Company has been immense. His guidance, suggestions and advice has greatly benefitted the Company. Your Directors place on record their appreciation of the contribution of Dr. V. Rajagopalan to your Company. Notice under section 257 of the Companies Act has been received proposing the candidature of Shri S.C. Gupta, as Director of the Company.

As per Section 256 of the Companies Act, Shri Sham Lal Goyal and Shri C.M.T. Britto, Directors retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

19.0.0 ACKNOWLEDGMENT:

Your Directors wish to gratefully acknowledge the valuable guidance and continued support extended by Government of India and in particular, the Department of Fertilizers and the Office of Fertilizer Industry Co-ordination Committee (FICC), Railways, DPE, members of MOU Task force, and other Central Government departments and Agencies.

The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the State Governments, MSEB, MIDC, various media, Municipal authorities, Maharashtra Pollution Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

Your Board wishes to acknowledge gratefully, the confidence posed, unstinted support and suggestions made to the Board by the esteemed share owners of the Company.

The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory Auditors, Cost Auditors and the Office of the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep appreciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance.

By order of the Board of Directors

R.G. Rajan

Chairman and Managing Director

Place : Mumbai

Date : 30.05.2013


Mar 31, 2012

To the Members of Rashtriya Chemicals and Fertilizers Ltd,

The Directors of your Company have pleasure in presenting this 34th Annual Report on the working of your Company together with the Audited Accounts for the year ended 31st March, 2012.

1.0.0 FINANCIAL PERFORMANCE: Summary of financial performance: Rs. Crore

Particulars 2011-2012 2010-2011

Sales including Subsidy 6499.22 5574.10

Other Income 129.42 103.15

Total Income 6628.64 5677.25

Cost of Sales 6099.01 5200.25

Operational Profit 529.63 477.00

Depreciation 142.44 112.66

Interest (Net) 12.74 9.65

Profit/ (Loss) before tax 374.45 354.69

Provision for Tax (including deferred Tax liability/ Asset) 125.22 109.57

Net Profit / (loss) 249.23 245.12

Appropriations:

Dividend 77.24 60.69

Tax and Educational cess on 12.53 9.84

Dividend Balance Transferred to General 159.46 174.59

Reserve

1.1.0 Highlights for the year 2011-2012:

Your Company achieved a turnover of Rs. 6499.22 crore compared to Rs. 5574.10 crore in the previous year. The turnover was higher by Rs. 925.12 crore during the year compared to previous year. The total income from operations was Rs. 6628.64 crore as against Rs. 5677.25 crore during the previous year. Your Company achieved a gross profit of Rs. 529.63 crore as against Rs. 477 crore in the previous year. The net Profit before Tax at Rs. 3 74.45 crore as against Rs.354.69 crore registered an increase of 5.57%. The Net Profit after Tax during the year was higher at Rs. 249.23 crore as against Rs. 245.12 crore in the previous year registering an increase of 1.68% over previous year. Performance for the year 2011-12 was better as compared to previous year which was due to higher realizations, as well as increased volume of manufactured Complex fertilizers and Industrial products like Ammonia. This increase is despite having a net foreign exchange variance loss ofRs. 14.84 crore, higher operating and repairs & maintenance expenditure.

Your Company received 'MOU Excellent' rating for 2010-2011 and is likely to get the same for 2011 -12 from Ministry of Heavy Industries and Public Enterprises.

1.2.0 Dividend:

Although your Company has lined up a number of capex programmes which will entail substantial expenditure, considering the consistent profits being made by the Company, your Directors propose to pay higher dividend at Rs. 1.40 per each equity share of Rs.10/-, as against Rs. 1.10 paid in the previous year. The total out go works out to X 89.77'crore (Rs. 70.53 crore in the previous year) including dividend distribution tax and education cess.

1.3.0 Appropriation to General Reserves:

Your Company earned a net Profit after Tax of Rs. 249.23 crore (Rs. 245.12 crore in the previous year). The dividend pay out along with Tax/cess is Rs. 89.77 crore (Rs. 70.53 crore in the previous year). The balance amount of Rs. 159.46 crore (Rs. 174.59 crore in the previous year) is transferred to General Reserves.

3.0.0 ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL:

Your Company is dedicated to improve environmental performance through continual improvement and is going beyond satisfying all stipulated requirements laid down by the statutory authorities for environment management and pollution control.

With an aim to sustaining the operations in an environment friendly manner, your Company established, ISO 14001 compliant, Environment Management System (EMS) at its two manufacturing units. The Systems are constantly upgraded and the three separate systems, namely Quality Management System (ISO 9001:2000), Environment Management System (ISO 14001:2004) & Occupational Health and Safety Assessment Series (OHSAS 18001:2007), are all brought under Integrated Management System. Regular internal audits and Management Reviews are being carried out to ensure compliance and continually improve the system.

Measures taken to conserve water have yielded not only savings but also have further improved the environmental management. The state of art Effluent Treatment plants and the Sewage Treatment plants at Trombay have ensured that the environment in and around the Unit is fully protected. Your Company's Sewage treatment plant is highly acclaimed by all.. Your Company is contemplating to install another plant. Various schemes are implanted to reduce wastages of the scarce natural resources. The waste streams from the plants are recycled/ reused for useful purpose. Sludge generated in Effluent Treatment Plant, Sulphur Sludge Generated in Sulphuric Acid plant, waste streams of effluents from complex fertilizer plants are recycled back in the processes. The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board.

In Trombay Unit of your Company, New granulation technology is adopted in Ammonium Nitro phosphate plant to reduce dust emission. Capacity of Sewage treatment plant is increased with installation of 5th RO. Your Company has adopted the most effective system of environmental management at its Trombay complex by process up- gradation, adoption of cleaner technologies in new plants, suitable treatment of effluent & continuous monitoring of emission & ambient air quality & by adoption of reduce, recycle & reuse methodology. A scheme is under implementation, to recover Ammonia from the condensate and further improve quality of emission.

To check the effectiveness of the environmental management system and ensure compliance with emission regulations, monitoring network has been incorporated. Apart from Stack monitors, which continuously monitor the emissions, four fixed ambient air quality monitoring stations are in place to monitor ammonia, NOx, S02, Particulate matter (PM10 & PM25) & metrological parameters.

During the process of converting raw materials into finished products, certain residual chemicals are formed, which are either recycled or converted into harmless chemicals as far as possible, before discharging them into the atmosphere, giving due importance to cleaner environment.

Your Company has taken up the exercise of Greenhouse Gas (GHG) Accounting, which is the process of estimating the Company's total GHG emissions in terms of equivalent tonnes of Carbon dioxide. This is popularly known as Carbon Foot printing. Carbon Foot printing is typically regarded as a primary step for undertaking structured approach to managing company's carbon risks. Total GHG emission in Trombay unit has reduced by 7.1 % during the year under report, over the emission during previous year. The reduction was mainly due to reduction in specific consumption of energy in urea and reduction in N2G emission from nitric acid plant. Total GHG emission at Thai unit reduced by 1.3% during the year over that during previous year, mainly due to the steps taken to reduce energy consumption of urea. The specific energy reduced from 6.366 to 6.359 Gcal/MT of urea.

For increasing awareness regarding environment, public awareness campaign programmes are arranged by Trombay unit.

4.0.0 PRINCIPLES OF GLOBAL COMPACT.

Your Company is a member of United Nations Global Compact and fully supports the Ten Principles in the areas of human rights, lab our and environment which are derived from the earlier declarations by United Nations, ILO and other international organizations. Your Company has posted a detailed write-up on its website www.rcfltd.com in this respect.

5.0.0 CSR Activities:

5.1.0 in line with the CSR philosophy adopted, your Company undertook several activities, aimed for the benefit of needy and for general good of the society, during the financial year 2011 -12. Your Company carried out many activities under CSR policy, and spent/committed about Rs. 12.48 crore, which are briefly stated as under:

5.1.1 Education:

5.1.1.1 Schools:

Your Company attaches utmost importance to Education of children and to this end, supports schools, both at its Thai and Trombay units, to cater to students from Nursery to 10th Standard. The schools admit children from communities nearer to its two operating units. Instructions are imparted in Marathi, Hindi and English medium. Your Company has provided school buildings in the Company's residential colonies at Thai and Trombay and undertakes its upkeep, maintenance and bears the deficit expenditure incurred by the schools. The schools are entrusted to reputed Educational Institutions. Your Company also supports the cause of education in the marketing areas. During the year your Company spent an amount of Rs.3.14 crore under this activity.

5.1.1.2 Scholarship to meritorious students:

Your Company encourages students from SC/ ST/ OBC communities by offering them scholarship for pursuing higher studies. During the year, your Company spent Rs. 30 lakh.

5.1.1.3 Supply of Mid-Day Meal:

Your Company, through 'ISCKON Food Relief Foundation' provided nutritious mid-day meals to about 5000 children, studying in seven unaided schools imparting education to the poor children, in Trombay area at a cost of Rs. 80 lakh and proposes to cater to more students in financial year 2012-13.

5.1.1.4 Farmers' Education:

Your Company imparts farming education to increase productivity through intensive and integrated extension activities in the field of Agriculture, recommending balanced use of fertilizers and simultaneously to extend the services as promoter, activator and organizer of various socio- economic and educational activities to improve the quality of life of various rural masses particularly small, marginal and SC/ST families.

5.1.2 Supply of drinking water to the villages:

Your Company has been providing drinking water since more than 20 years to seven villages around Thai unit through pipelines laid down from the water reservoir in the unit and spent Rs. 64 lakh on this account during the year.

5.1.3 Village Adoption:

Your Company provides support to needy people by providing tools, tackles and training to enable them learn self-sustaining vocations and improve their economic capabilities. An Expenditure of Rs. 10 lakh is spent on the training imparted for improving their skills during the financial year. Your Company sponsored games and sports such as Kabaddi, KhoKho etc.

5.1.4 Chembur Green Project:

Your Company continued to support the Chembur Green project, launched to establish greenery in the eastern suburb of Mumbai. Your Company's efforts since more than 30 years has brought back the green forestry amidst concrete jungle in the area. The development of traffic islands, kitchen gardens, exhibitions, Rose shows and

other activities in schools and colleges have increased the environment consciousness among the citizens. Your Company continues distribution of free saplings and rendering advice to various co-op. societies and also to individuals.

5.1.5. Service to Farmers:

5.1.5.1 Advice on Soil nutrients:

The services of your Company in respect of rendering Soil diagnostics, as a means of advising farmers about use of proper dosage of fertilizers in order to optimize soil productivity, are well recognized. During the year, more than 70,000 soil samples were analyzed and recommendations given through the five static and six mobile soil testing laboratories. Your Company is taking steps to supplement the sendee by adding six additional static and six mobile testing laboratories to its existing infrastructure as a service to the nation.

5.1.6 Farm practices:

Your Company continues to have grass root contact with farmers to disseminate knowledge of proper farm practices to enhance their farm income. In this regard, your Company undertook crop specific development programs depending on the State/area. Your Company has established several Farmers Service Centres for providing services such as soil sample collection, arranging farmers meeting, film shows, and exhibitions and for providing general guidance in the fields of farming. Several farmers' / dealers' training programmes were conducted during the year at the Company's two Farmers Training Institutes.

5.1.7 Other activities:

Your Company has constructed a mini sports stadium along with accessories and facilities in Jaleshwar, Balasore district to encourage sports and culture of the area.

6.0.0 Sustainable Development

Your Company has taken up several Sustainable development activities including the following:

[i] Improvement of Road infrastructure- construction and repairs.

[ii] Building of Check Dams.

[iii] Prevention of soil erosion and watershed management.

The Rapid wall project, which has been implemented, is an example of Company's faith in sustainable development wherein a waste product generated from Phosphoric Acid Plant is converted into useful building material by adopting a novel technology.

Your Company is also considering several major activities connected with Green House Gas, sustainable electricity distribution based on solar energy etc. Your Company has signed an agreement of Financial Aid for rehabilitation of the existing Bio-gas plant in Shatabdi hospital which is being coordinated through Rotary Club Chembur. Your Company is targeting to take up many more sustainable development activities in the near future.

In order to give more thrust to sustainable development, a Committee of the Board has been formed to approve Sustainable Development plans and to oversee Sustainable Development performance.

Your Company is planning to put up a new Sewage Treatment Plant of similar capacity as that existing at Trombay unit as a part of sustainable development plan to enable Mumbai city to have additional potable water for its citizens as your Company would the recycling the sewage water supplied by BMC and would be using that water for its use.

7.0.0 Vigilance

Vigilance Department is headed by a full time Chief Vigilance Officer (CVO) deputed, from the All India Service, by Government of India. The position of CVO is at par with the functional directors. CVO is assisted by a team of senior officers drawn from various functional departments. Vigilance Department is engaged in Vigilance activities at Corporate Office, Trombay Unit, Thai Unit and also at the Marketing Offices situated through out the country. The thrust of vigilance in your Company is to bring out greater transparency, integrity and efficiency in the functioning of various departments. Vigilance Department emphasises on Preventive and Participative Vigilance. Careful watch is kept on various activities through regular and surprise inspections. System improvements and corrective action are taken wherever necessary. All officials of the organization are considered to be part of vigilance set up and their alertness and support are taken in the management of vigilance. One of the prime functions of vigilance is to spread awareness with reference to vigilance issues and solicit information/complaints regarding any malpractice/corruption.

During the year, the department had actively contributed in adoption of Fraud Prevention Policy, Integrity Pact, and revision of manuals relating to marketing, procurement and works contracts. As a result of vigorous follow up, good progress has been achieved by your company in E- conveyance by implementing E-tendering, E-reverse auction, E-Payments and E-Receipts.

8.0.0.HUMAN RESOURCES:

8.1.0 Training and Development:

One of the strengths of your Company is its skilled and professional man-power. This could be achieved by adopting good HR policies and undertaking training and development of all employees. Training imparted includes enhancing General Management skills of the employees in various functions viz. Marketing, Finance, Commercial and Health Services disciplines.

Quality Management Systems, Environment Management Systems, Occupational Health and Safety Systems and 5 S Systems are given focused attention. The work culture of your Company has been enhanced by introducing the Six Sigma and Lean Quality Circles. System of Mentorship for newly recruited Management Trainees has been instituted.

Training and Development programmes were conducted, in-house for the employees of your Company at various levels. Besides this, comprehensive Safety Management Programmes were carried out for officers in Technical disciplines.

Your Company has been awarded, by World HRD Congress, with Global HR Excellence Award, for "Excellence in Training”. Your Company has also been accorded the award for "Best HR Strategic Plan” and "Outstanding Contribution of HR to Organization Development” in the Indian Human Capital Summit 2011.

8.2.0 Industrial Relations:

Your Company maintained cordial Industrial Relations with all its employees. All the issues are settled through regular discussions, meetings and dialogues with the employees. Your Company has 4104 employees comprising of 1517 officers and 2587 workmen as on 31st March, 2012 compared to 4238 employees (1541 officers and 2697 workmen) as on the corresponding date of the previous year.

8.3.0. Welfare and Sports

Your Company undertakes several welfare schemes like education, medical, transport, housing etc., according to the needs of the employees. In regard to sports, your company is a prominent patron and sponsored various sports events. Your company's Football, Cricket, Hockey, Kabbaddi and other teams continue to show excellent performance at District, State and National levels and have brought laurels to your company by winning several prizes.

8.4.0. Welfare / Employment opportunity to weaker section: The guidelines in respect of reservation in recruitment and

promotion of SC/ST, OBC, Ex-servicemen and Persons with Disabilities are followed by your Company. Your Company has 572 Scheduled Caste (SC), 259 Scheduled Tribe (ST) and 341 OBC employees on its rolls.

During the year, your Company recruited 40 persons, including 2 persons with physical disability, on regular employment. Due representation to SC/ST/OBC was given in recruitments.

Your Company is committed to the welfare of the backward classes in general and SC/ST employees in particular. Regular meetings are held with SC/ST Employees Welfare Association to address grievances, if any, and providing guidance for development.

Medical Camp is organized every year at Chaitya Bhoomi, Dadar on 6th December, on the occasion of 'Mahaparinirvan Day'. Financial assistance for making arrangement for medical camp and for medicines along with the vehicles and Doctors are made available by your Company.

Your Company's Thai Unit provides various amenities like water, road for the nearby villages e.g. Thai, Navgaon, Boris, Gunjis etc. where the majority of the population belongs to the SC/ST categories. The facility continued during the year. Scholarships were given to meritorious students of SC/ST community in the nearby villages of Thai.

Large number of SC/ST farmers have been trained in the programmes conducted at the Company's Farmers' Training Centres at Nagpur and Thai.

9.0.0 PARTICULARS OF EMPLOYEES:

A statement providing the information as required under section 217 (2 A) of the Companies Act, 1956 is attached to this report as Annexure II.

10.0.0 OFFICIAL LANGUAGE POLICY:

Your Company has fully endeavored to implement the provisions of Official Language Act 1963 and the policy of the Government. Publicity material and literature for employees and farmers is made available in Hindi and other regional languages.

Your Company was awarded the First prize by Mumbai Town Official Language implementation Committee for excellence in implementation of Official Language Policy. Your Company's House Magazine, "Darpan” was also awarded first Prize in House Magazine competition organized by Mumbai Town Official Language implementation Committee for the year 2011-12

11.0.0 INTERNAL CONTROL SYSTEM:

Your Company has a well defined Internal Control System

i.e. adequate and commensurate with the size and nature of its business comprising of an in-house Audit Department, which conducts internal audit of various operational and financial matters on on-going basis. Internal Audit group consists of adequate number of financial and technical personnel. The recommendations and observations of the Internal Audit Department are reviewed regularly by the Audit Committee constituted by the Board of Directors. The performance of the committee is regularly monitored by the Board of Directors.

Your Company has an effective budgetary control mechanism in place to take care the detailed capex and operational budget. Appropriate monitoring mechanism to compare the actual performance with the budget ensures that necessary review is periodically undertaken.

12.0.0 COSTAUDIT

As per the Government's directive, your Company's Cost Records in respect of manufacture of Fertilizers and Sulphuric Acid for the year ended 31st March, 2012 are being audited by M/s Rohit Vora & Co. and M/s C.R.Musib & Associates, firms of Cost Auditors. The Cost Auditors are likely to complete the audit by 31” July, 2012. The Cost Audit Reports for 2010-11 were filed with the Ministry of Company Affairs on 29111 September,2011 for Trombay Urea and on 27th September,2011 in respect of Sulphuric acid and Thai Urea as against the due date of 30th September,2011.

13.0.0 DIRECTORS' RESPONSIBILITY STATEMENT:

In terms of section 217 (2AA) of the Companies Act, 1956, your Directors state that:

i] in preparing the annual accounts, the applicable accounting standards have been followed,

ii] the accounting policies adopted have been consistently applied and wherever necessary, made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit or loss of the Company for the year,

iii] proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safe guarding the assets of your Company and for preventing and detecting fraud and other irregularities; and

iv] the annual accounts have been prepared on a going concern basis.

14.0.0 CORPORATE GOVERNANCE:

As per Clause 49 of the listing Agreement with the Stock Exchanges, a separate section on Corporate Governance along with a certificate of Compliance is annexed and forms part of this report.

15.0.0 CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' and actual results may or may not be in accordance therewith. Your Company's performance is dependent on several external factors such as effective monsoon, significant changes in economic environment, 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.

16.0.0 DIRECTORS:

Shri Manoj Priya demitted his Office as Director (Technical) on 30.09.2011 on attaining the age of superannuation. The contribution of Shri Manoj Priya to your Company has been immense. His guidance, suggestions and advice has greatly benefited the Company. Your Directors place on record their appreciation of the contribution of Shri Manoj Priya to your Company. President of India appointed Shri C.M.T.Britto as Director (Technical), who assumed the office on 11.04.2012. Notice under section 257 of the Companies Act has been received proposing the candidature of Shri C.M.T.Britto as Director of your Company.

As per Section 256 of the Companies Act, Dr V. Rajagopalan and Shri Gautam Sen, Directors retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

17.0.0 AUDITORS:

The Comptroller and Auditor General of India (CAG) has appointed, M/s. JCR & Company and M/s Nissim & Co, as Joint Statutory Auditors of your Company for the Financial Year 2011-12. The Auditors would be retiring at the conclusion of the Thirty fourth Annual General Meeting.

The Statutory Auditors for the Financial Year 2012-13 will be appointed by the CAG. However, their remuneration is to be fixed at the AGM by the members.

18.0.0 ACKNOWLEDGMENT:

Your Directors wish to gratefully acknowledge the valuable guidance and continued support extended by Government of India and in particular, the Department of Fertilizers and the Office of Fertilizer Industry Co- ordination Committee (FICC), Railways, DPE, members of MOU Task force, and other Central Government departments and Agencies. '

The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the State Governments, MSEB, MIDC, various media, Municipal authorities, Maharashtra Pollution Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory

Auditors, Cost Auditors and the Office of the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep appreciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance. '

By order of the Board of Directors

R.G.Rajan

Chairman and Managing Director.

Place: Mumbai

Date : 30th May 2012


Mar 31, 2011

To the members

Rashtriya Chemicals and Fertilizers Ltd,

Mumbai

The Directors of your Company have pleasure in presenting this 33rd Annual Report on the working of your Company together with the Audited Accounts for the year ended 31 st March, 2011.

1.0.0 FINANCIAL PERFORMANCE:

Summary of financial performance :

Rs. Crore

Particulars 2010-2011 2009-2010

Sales including Subsidy 5574.10 5697.18

Other Income 103.15 129.07

Total Income 5677.25 5826.25

Cost of Sales 5200.51 5386.55

Operational Profit 476.74 439.70

Depreciation 112.62 75.60

Interest (Net) 9.65 19.87

Prior year adjustment 0.22 (0.02)

Profit/(Loss) before tax 354.69 344.21

Provision for Tax (including deferred Tax liability/Asset) 109.57 109.34

Net Profit/(loss) 245.12 234.87

Appropriations:

Dividend 60.69 60.69

Tax and Educational cess on 9.84 10.08

Dividend

Balance Transferred to General 174.59 164.10

Reserve

1.1.0 Highlights for the year 2010-2011:

Your Company achieved a turnover of Rs.5574.10 crore compared to Rs.5697.18 crore in the previous year. The turnover is lower by Rs. 123.08 crore during the year compared to previous year mainly due to lower subsidy received from Government of India. The total income from operations was Rs. 5677.25 crore as against Rs.5826.25 crore during the previous year. Your Company achieved a gross profit of Rs.476.74 crore as against Rs.439.70 crore. The net Profit before Tax at Rs.354.69 crore as against Rs.344.21 crore registered an increase of 3.04%. The Net Profit after Tax during the current year, is higher at Rs.245.12 crore as against Rs.234.87 crore in the previous year registering an increase of 4.36% over previous year. The net Interest cost during the year has been Rs.9.65 crore compared to Rs.19.87 crore during the previous year due to good treasury and foreign currency management. Your Company received 'MOU Excellent' rating for 2009-2010 and is likely to get the same for 2010-11 from Ministry of Heavy Industries and Public Enterprises.

1.2.0 Dividend:

Your Company has lined up a number of capex programmes which will entail substantial expenditure and, in order to fund these programmes, it is necessary to plough back its profits. In view of this, your Directors propose to pay dividend at Rs.1.10 per each equity share of Rs.10/-, same as that in the previous year. The total out go works out to Rs. 70.53 crore (Rs. 70.77 crore in the previous year) including dividend distribution tax and education cess.

1.3.0 Appropriation to General Reserves:

Your Company earned a net Profit after Tax of Rs. 245.12 crore (Rs. 234.87 crore in the previous year). The dividend pay out along with Tax/cess is Rs. 70.53 crore (Rs. 70.77 crore in the previous year). The balance amount of ^ 174.59 crore (Rs.164.10 crore in the previous year) is transferred to General Reserves.

2.0.0 MANAGEMENT DISCUSSION AND ANALYSIS:

2.1.0 OPERATIONAL RESULTS:

2.1.1 PRODUCTION:

2.1.2 Fertilizers:

Your Company produced 27.29 lakh MT of fertilizers (21.24 lakh MT of Urea, 4.47 lakh MT of Suphalal 5:15:15 and 1.58 lakh MT of Suphala 20:20) during the year as against 25.96 lakh MT (20.89 lakh MT of Urea, 4.90 lakh MT of Suphala 15:15:15 and 0.17 lakh MT of Suphala 20:20) produced in the previous year and achieved overall installed capacity utilisation of 100.08% as against 96.23% during the previous year. The capacity utilisation of the Urea plants was to the extent of 104.28%. As regards complex fertilizers, Suphala [15:15:15] plant produced to the extent of 106.43% and Suphala 20:20 (ANP) produced 58.52% as the plant got stabilised in second half of the year. In terms of nutrients, your Company produced 10.76 lakh MT of Nitrogen (N), 0.99 lakh MT of Phosphate (P205) and 0.67 lakh MT of Potash (K20) during the year as compared to 10.38 lakh MT of N, 0.77 lakh MT of P205 and 0.74 lakh MT of K20 during the previous year.

The details of performances of the units are given below:

2.1.2.1 Thai Unit:

Thai unit produced 17.83 lakh MT of Urea during the year compared to 17.82 lakh MT produced in the previous year. The unit achieved a capacity utilisation of 104.49% as compared to 104.41% during the previous year. The unit produced 11.35 lakh MT of Ammonia compared to 11.28

lakh MT during previous year. The energy consumption per MT of Urea was 6.37 Gcal/ MT (6.30 Gcal MT in the previous year). In terms of nutrients in the fertilizers, the unit produced 8.20 lakh MT of N during the year, same as in previous year.

Thai unit of your Company was bestowed with following awards during the year:

i. Certificate of Merit for Excellence in Energy Conservation and Management from Indian Chemical Council for 2009.

ii. "Runner up Award" for "Best Technical Innovation" from Fertilizers Association of India for the year 2009-10.

iii: "Green Tech Environment Excellence Award jn Gold Category" for the year 2010.

2.1.2,2 Trombay Unit:

The Trombay Unit produced 3.41 lakh MT of Urea, 4.47 lakh MT of Suphala 15:15:15 and 1.58 lakh MT of ANP during the year under report compared to 3.07 lakh MT of Urea, 4.90 lakh MT of Suphala 15:15:15 and 0.17 lakh MT of ANP produced during the previous year.

The unit achieved an overall capacity utilization of 92.75% compared to 82.14% during the previous year. In terms of Nutrient values, the unit produced 2.56 lakh MT of N, 0.99 lakh MT of P205 and 0.67 lakh MT of K20 during the year compared to 2.18 lakh MT, 0.77 lakh MT and 0.74 lakh MT respectively in the previous year.

The unit was bestowed with the following awards:

i. Green Tech Environment Excellence Award for "Environmental Excellence in Fertilizer Sector" for 2009-10

ii. Second best "National Energy Conservation Award" in Fertilizer Sector for Energy Conservation.

2.1.3 Industrial Products:

Your Company is one of the prime chemicals manufacturers in the country producing several Industrial Chemicals at its two units. During the year, your Company produced 1.51 lakh MT of various major Industrial Chemical products compared to 1.19 lakh MT during the previous year. Your Company produces, amongst others, Methanol, Methylamines and derivatives, Ammonium Nitrate, Sodium Nitrate/Nitrite, Ammonium Bi-Carbonate, Formic Acid etc.

2.2.0 MARKETING PERFORMANCE:

2.2.1 Fertilizer Division:

Your Company achieved sales volume of 40.14 lakh MT during 2010-11 as compared to 40.73 lakh MT in the previous year. Your Company sold 29.86 lakh MT of Urea, 4.50 lakh MT of Suphala 15:15:15; 1.52 lakh MT of Suphala 20:20 and 4.26 lakh MT of other bought out products such as DAP, MOP, etc. compared to 28.62 lakh MT of Urea, 4.87 lakh MT of Suphala 15:15:15, and 0.16 lakh MT of Suphala 20:20 and 7.08 lakh MT of other bought out products respectively during the previous year. The total sale of manufactured fertilizers during 2010-11 was 27.56 lakh MT as against 25.99 lakh MT in 2009- 10 registering a nominal increase of 6.07%. the total sales value, excluding subsidy, of manufactured fertilizers during the period 2010-11 was Rs.1503.33 crore compared to Rs.1267.71 crore in the previous year.

Though, the sale of own manufactured fertilizers was higher by 1.58 lakh MT, since the total sale of bought out fertilizers during 2010-11 was 12.58 lakh MT as against 14.74 lakhJVIT in 2009-10, the total sale during the year was marginally lower by 0.59 lakh MT.

2.2.2 Industrial Products Division:

Despite various constraints due to global recession during the second half of the financial year, Industrial Products Division achieved turnover of Rs. 726.25 Crore as against the sales turnover of Rs. 717.28 Crore during the previous year. Ammonium Nitrate (Melt), Methanol, Methylamines and Cone. Nitric Acid, etc contributed significantly to the turnover.

2.2.3 Exports :

During the year Under report, your Company exported 384 MT of Suphala 15:15:15 worth Rs. 0.74 crore as against 1220 MT of Rs. 2.58 crore during the previous year. Considering the products manufactured by your Company, scope for exporting and earning foreign exchange is very limited.

2.2.4 FUTURE PLANS OF FERTILIZER MARKETING:

Your Company has plans to increase the sales of all fertilizers from 40.14 lakh MT in 2010-11 to about 45 lakh MT in 2011-12. Your Company is tying up with SSP Units for manufacturing and marketing 6 lakh MT of SSP to increase turnover and profitability. Your Company also intends to import and market complex fertilizers, water soluble fertilizers, SOP, Aluminium Sulphate, Zinc Sulphate and develop customised/fortified fertilizers like Boronated Suphala and Zincated urea.

2.3.0 The Fertilizer Industry:

The Nutrient Based Subsidy (NBS) scheme for decontrolled phosphatic and potassic fertilizers has come into effect from 1.4.2010 as was informed in the previous report. The scheme has been revised w.e.f 1.4.2011. The main features of the NBS scheme are as under:

i. Revised NBS would be applicable for DAP, DAP-lite, MOP, MAP, TSP, AS, 15 grades of complex fertilizers and SSP.

ii. Inclusion of'S' as a nutrient.

iii. Fixed subsidy per kg for each nutrient for the year.

iv. Any variant of fertilizer specified above, with secondary and micro nutrients would also be covered under NBS. Secondary and micro nutrients would be eligible for separate subsidy.

v. Fortified fertilizers with Boron will be eligible for Rs. 300/MT additional subsidy and fertilizers with fortified zinc would be eligible for Rs. 500/MT.-

vi. MRP can be fixed by the Company.

vii. 20% of the price decontrolled fertilizers produced/ imported will be under movement control under ECA. DOF will regulate the movements to bridge gaps in supply to underserved areas.

viii. All subsidised fertilizers, except Urea, are brought under Open General Licence.

ix. Freight reimbursement for fertilizers under NBS is limited to rail freight at actuals and road freight at normated levels for direct despatches from plant/ports to districts upto a maximum lead of 700 km. In case of SSP, a lumpsum reimbursement of Rs. 200/MT will be paid.

Your Company welcomes the policy and the modifications made as it affords a challenge ,to improve the market share and enables your Company to market the products in a dynamic scenario.

2.4.0 Strength and Weakness:

2.4.1 Strengths:

Your Company's strength lies in its skilled manpower, high Brand Equity for the Products manufactured such as Ujjwala, Suphala, Microla, Biola, and Sujala. The wide spread marketing network ensures that your Company - reaches the products to all parts of the country. The Farmers' Training Institute and R&D Centre ensure that quality services are provided to the farmers/ dealers by educating them and providing inputs for better crop realisation. Your Company has a wide portfolio of chemical products and can withstand difficult economic situations by adopting optimal mix of production. The well maintained plants and equipment ensure uninterrupted production and distribution of goods,

2.4.2 Weaknesses:

The Plants have been in operation for a very long time, some of them since 1965 by carrying out regular upkeep, maintenance and up-gradation. The complex fertilizers are based on imported raw materials which can face severe volatility in raw material prices and foreign currency exchange rate affecting the profitability of the company.

2.4.3 Opportunities:

Due to your Company's good reputation, several opportunities exist, abroad, for Collaborations / Diversification in manufacturing and, mining of raw materials and marketing of varieties of products. The increased availability of feedstock gas would permit for undertaking major expansion at Thai. Alternate feedstock like Coal gasification gives an opportunity for undertaking Fertilizer Projects in other parts of the country. All these opportunities would lead to substantial increase in the turnover of your Company by marketing varieties of fertilizers. Clean Development Mechanism (CDM) activities enable realization of Carbon Credits. Experienced and Skilled Manpower of your Company has been in demand for rendering O&M service in India and abroad.

2.4.4 Threats:

Manufacturing and marketing of Fertilizers is the core business of your Company. Agro-climatic conditions have a large effect on the performance of your Company. In the recent years, there has been high volatility in the prices of raw material and creation of scarcity impeding production and marketing plans. The chemicals business is highly susceptible to cut throat global market competition.

2.5.0 Risk Management:

Your Company has put in place Risk Management System, with the objective of having a balanced approach towards business plan and to mitigate the associated risks through better management practices, resulting in greater degree of confidence amongst various stakeholders. Risks associated with operations, Environment, Finance, Human Resource, legal, Information security etc and the degree of impact financially, its likely effect on the assets, facilities and third parties are assessed regularly. In order to mitigate losses arising out of perceived risks, the procedures being adopted to contain the risks, as also the practices adopted during emergencies, including the communication system and mode of disseminating information are periodically reviewed and updated to minimise the impact on the Company.

The profitability is, susceptible to the input costs of major raw materials, such as Rock Phosphate, Sulphur, DAP, MOP, MAP etc. and hence your Company has been developing alternate source of raw materials to reduce the risk of dependency. To safeguard against major breakdown at the data centre, your Company has installed another server at a separate site, which replicates the data on production server and can be available to ERP users.

2.6.0 MAJOR EXPANSION AND DIVERSIFICATIONS:

In line with its Mission, your Company has taken up several ambitious projects for growth. Besides these large capital outlay projects, your Company has also taken up projects for enhancing energy efficiency, increasing production and improving reliability in its existing plants. The projects which have been implemented, being implemented and are under active considerations are listed below:

2.6.1 Projects implemented:

2.6.1.1 Revamp of Methanol Plant:

The existing Methanol plant was revamped for increasing the capacity from 180 MTPD to 242 MTPD and to bring down the energy consumption from 9.094 to 7.9632 Gcal /MT of Methanol at a cost of Rs. 137 Crore. The plant is running on sustained basis and has been achieving desired results.

2.6.1.2. Ammonium Nitro Phosphate (ANP) Granulation Project:

Your Company has taken up ANP Granulation Project of 900 MTPD capacity at a cost of Rs. 80.49 crore by using the slurry prepared in the wet section (front end) of ANP. Subsequent to trial production, and after overcoming initial problems, plant was stabilized and is running on consistent load. It is envisaged to revamp wet section of the plant to improve nutrient & and energy efficiency.

2.6.1.3 Clean Development Mechanism (CDM):

Your Company has successfully implemented Nitrous Oxide abatement project, which is a green house gas, in its HP and MP Nitric Acid Plants leading to generation of Carbons Credits. This project has been registered with UNFCCC and your Company has received the first tranche of 1,55,115 CERs (Certified Emission. Reduction) for MP Nitric Acid plant in January 2011 after due verification of the project.

2.6.1.4 Rapidwall Project at Trombay:

Rapidwall Project has been set up at a cost of Rs. 81.10 crore, to utilize Phospho Gypsum produced as by-product in Trombay, with Australian technology from M/s. Rapidwall Building Systems Pty. Ltd. Australia (RBS). Rapidwall is a revolutionary and environmental friendly, load-bearing, prefabricated glass fiber reinforced walling system with broad construction applications. More than 500 wall panels have been manufactured at Trombay. As required, sample panels have been successfully tested at NT Madras and the product has also received 'in principle' approval from Building Material Technology Promotion Council (BMTPC) under the Ministry of Housing and Urban Poverty Alleviation. Apart from Wall panels, the plant also manufactures Plaster which is being marketed vigorously. Your Company is taking various steps for marketing of all products by entering into Memorandum of Intent with large project developers and also gaining foothold in retail market. This has given the company, confidence regarding sustained demand in near future.

2.6.2 On going Projects:

2.6.2.1 De-bottlenecking of Thai Plants:

Thai Ammonia Revamp Project is being implemented to enhance capacity of existing Thai Ammonia Plants from 2 x 1500 MTPD to 2 x 1750 MTPD and reduce specific energy consumption to 8.15 Gcal/MT of ammonia. Simultaneously Thai urea plant is also being revamped, wherein the capacity of one of the urea streams will be increased to 2300 MTPD so as to convert the entire ammonia into urea and achieve urea production of 6015 MTPD. The total project cost is Rs. 488.75 Crore. The revamped ammonia plant will be commissioned by December 2011 and the Urea plant by 2012.

2.6.3 Projects on the Anvil:

2.6.3.1 Additional Ammonia Urea project at Thai

Your Company has plans to expand the capacity of urea at Thai by setting up one single stream ammonia plant of capacity 2200 MTPD and one single stream urea plant of capacity 3500 MTPD at the existing site, at an estimated project cost of Rs. 4400 crore. The selection process for lumpsum turnkey contractors (LSTK) for main plants has been started and your Company has received four bids from international parties/consortium for the project. Draft EIA report has been prepared and further action is being undertaken for obtaining environment clearance. Other pre-project activities, including preparation of detailed feasibility report, are underway. The project when commissioned will be a significant step towards bridging the increasing demand supply gap of urea in the country.

2.6.3.2 Single Super Phosphate project at Thai

Your Company has envisaged to set up Single Super Phosphate (SSP) plant at Thai to manufacture 5 lakh MT/ year SSP. The project cost would be Rs. 278 crore. Feasibility of the project is being examined and the project is likely to take 24 months to complete from the zero date.

2.6.3.3 Coal Based Fertilizer Plant at Talcher:

Under the scheme of revival of sick Fertilizer Units, your Company has been nominated by the government to be the lead partnertto revive FCI Unit at Talcher, Orissa through Coal Gasification route as the feedstock.

Your Company, along with Coal India Limited (CIL) and GAIL is contemplating to set up a fertilizer complex, comprising of 2500 MTPD ammonia plant, 3500 MTPD Urea plant, 800 MTPD Nitric Acid and 1000 MTPD ammonium nitrate plant. Coal for this will be made available by CIL through its subsidiary Mahanadi Coal Fields which is. located nearby. The front end Coal Gasification will be set up on "Build, Own, Operate" (BOO) basis. The ammonia synthesis, urea, nitric acid and ammonium nitrate plants will be built on lumpsum turnkey basis for which prequalification bids have been invited. Project capital cost involved is approx. Rs. 8000 Crore.

2.6.3.4 Gas based urea plant in Ghana:

Ghana has recently discovered oil and gas in its offshore Jubilee Fields. Ghana Government intends to go for value addition to this natural resource through setting up of downstream processing facilities including a fertilizer plant. Governments of Ghana and India have signed a Memorandum of Understanding (MoU) for setting up the fertilizer project to produce about 1 million metric tons of Urea fertilizer.

Your Company has been nominated by Government of India to take a lead role for development of the fertilizer project. The proposed grass-root project would consist of an ammonia plant of 2000 MTPD capacity and a Urea plant of 3500 MTPD capacity. The site for the project has been identified and pre-feasibility report has been submitted for consideration by the respective governments. The project is likely to be commissioned in 2016-17. Discussions are being held to finalise pricing and quantity of gas to be supplied to the project.

2.6.3.5 Phosphatic Fertilizer Project in Saudi Arabia

Your Company is exploring the opportunity of participating in Phosphatic Fertilizers project in Saudi Arabia, being undertaken by Ma'aden at Al Khabra mines at a project cost of US$3.0 billion. Ma'aden is willing to offer equity shares upto 30% to Indian Companies. If the project fructifies it would help in tying up for Phosphatic supply, apart from the benefit of being a shareholder of the venture.

2.6.3.6 Coal Based Fertilizer Plant In Indonesia:

As per the Memorandum of Understanding signed between governments of India and Indonesia a study is to be conducted for setting up a coal based fertilizer plant in Indonesia. Your Company has been nominated to conduct the study from Indian side and action has been initiated in this direction.

Apart from the above, your Company is working on development of several other projects including development of Port based infrastructure.

2.7 Subsidiary and other Joint Venture Companies:

2.7.1 FACT-RCF Building Products Ltd., Kochi

Your Company has formed a Joint Venture Company with Fertilizers and Chemicals Travancore Limited (FACT) by incorporating FACT-RCF Building Products Ltd to set up a Rapidwall project at Kochi. Both your Company and FACT haye 50:50 equity holding in the Company. The plant will use gypsum available with FACT to produce load bearing wall panels, wall plaster and wall putty through Rapidwall technology. The plant has been mechanically completed and will be soon commissioned in the current financial year.

2.7.2 Urvarak Videsh Limited

The JV Company is exploring the possibility of revival of old unit of HFCL at Barauni and has engaged PDIL for consultancy work for EIA and technology selection. The JV Company would decide further course of action based on feasibility of the project. The Company has been incorporated with an authorised capital of Rs. 5 crore and has a paid up capital ofRs.15 lakh of which your Company's contribution is Rs. 5 lakh. If the promoters do not find that the objectives for which the Company was incorporated can not be achieved, action would be taken to wind up the Company.

2.7.3 Rajasthan Rashtriya Chemicals & Fertilizers Ltd, Jaipur

The Joint Venture Company incorporated to undertake the project for manufacturing 850 MTPD of DAP has not been functional as the promoters are yet to take decision on investment in the project. As it is unlikely that the promoters would go ahead with the project, the promoters are likely to take steps to wind up the JVC.

2.7.4 RCF HM Construction Solutions Pvt Ltd.

Your Company has incorporated a 50:50 Joint Venture Company with First Future Properties Pvt. Ltd for marketing the Rapidwall products with an authorised . capital of Rs. 5 crore and paid up capital of Rs. 10 lakh. Considering the nature of products and technical skills available, your Company is confident of marketing the products by entering into MOUs/long term supply contracts with the builders/developers. Your Company is therefore contemplating to wind up the JVC.

2.7.5 Consolidated Statement

Consolidated financial statement of your company with subsidiary company and other Joint venture companies and statement under section 212' in respect of the subsidiary company are attached to the accounts.

2.8.0. RESEARCH AND DEVELOPMENT:

Your Company has taken up several Research and Development projects, some of which taken up for commercial scale design and engineering, are as under:

2.8.1 CHEMICAL DIVISION

2.8.1.1 Study to recover Process water from present R.O. reject water in Sewage Treatment Plant (STP).

R&D division of your Company carried out experiment to recover process water from R.O. reject water of STP and has successfully recovered usable process water. The scheme suggested by R&D is in the process of implementation and your Company would recover about 3000 m3/day of Process water from RO reject water.

2.8.1.2. Fortified fertiliser NPK 15:15:15 with Boron (0.2% )

Boronated Suphala (NPKB 15:15:15:0.2), a new range of NPK Fortified Fertilizer, has been successfully developed on laboratory scale. Field Trials on certain crops are being carried out at Agriculture Universities such as Mahatma Phule Krishi Vidyapeeth* Rahuri & Dr. Punjabrao Deshmukh Krishi Vidyapeeth, Akola.

This product will give value addition to the existing NPK fertilizer and it will be beneficial, especially, in the boron deficient" regions. Production on commercial scale is being undertaken shortly in the existing Suphala production plant to produce (15:15:15:0.2) Boronated Suphala.

2.8.1.3. Study undertaken to find cost effective substitute for proprietary anti-precipitating agent "Kemfert" in Sujala 19:19:19.

Anti-precipitating agent is being used in Sujala 19:19:19 (drip grade) to overcome clogging of drippers during drip application. R&D division of your Company has undertaken a study to find suitable cheaper substitute for the anti-precipitating agent. Mono Sodium salt of Hydroxy Ethelene Di-phosphonic Acid (HEDP) which is readily available in market, is found to be suitable, cheaper and is giving having satisfactory performance.

2.8.2 AGRICULTURE DIVISION

2.8.2.1 Customized fertilizers

Your Company is developing certain Customised Fertilizer grades for usage in Satara, Sangli, Pune, Solapur and Kolhapur Districts of Maharashtra. These formulations are crop and region specific customized formulations, developed in two formats viz. 100% water soluble fertilizer for drip and foliar application and Granular product for soil application. The agronomic efficacy studies on these grades are in progress at Mahatma Phule Krishi Vidyapeeth, Rahuri Agriculture University.

2.8.2.2. Liquid Bio-fertilizer

Liquid Bio-fertilizers (phosphate solubilizers) are formulations, without any carrier, with increased shelf life. The liquid bio-fertilizer has several advantages, over carrier (lignite) based product, such as application through seed, soil, drip irrigation, flood irrigation, sprinklers, spray against only seed and soil application for lignite based biofertilizers.

The product has shelf life of 2 years in lab conditions (1.5 yrs in field condition), in comparison to 6 months of lignite based bio-fertilizer.

Laboratory studies as well as field trials have been successfully completed and this product will soon be commercialised.

2.9.0 CONSERVATION OF ENERGY:

Your Company undertook several steps for conserving energy. These included several modifications in the plants which have resulted in significant reduction in the energy consumption. Some of the measures undertaken are as follows:

In Thai unit several measures undertaken such as Replacement of Synthesis gas compressor turbine rotor for Ammonia Line I, Relocation of HP section pressure control valve outlet gas to Medium Pressure decomposer, conversion of existing radar type level transmitter to purge type for Hydrolyser, conversion of unit -11 & 31 condenser cooling water side from double pass to single pass, installation of gas cooler, resulted in considerable saving in energy.

In Trombay unit, Methanol plant has been revamped to reduce energy consumption. Apart from this, several other measures such as installation of vapour absorption machine in Ammonia I, replacement of old motors with energy efficient LT motors, installation of variable frequency Drives for slurry pumps, installation of high capacity reject water pumps in ETP and several other measures have been undertaken which resulted in saving of energy.

The particulars with regard to Conservation of Energy, Technology Absorption, Foreign Exchange outgo as required under Section 217 (i) (e) of the Companies Act, 1956 are enclosed as Annexure I.

3.0.0 ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL:

Your Company is dedicated to improve environmental performance through continual improvement and is going beyond satisfying all stipulated requirements laid down by the statutory authorities for environment management and pollution control.

With an aim to sustain the operations in an environment friendly manner, your Company established ISO 14001 compliant Environment Management System (EMS) at its two manufacturing units. The Systems are constantly upgraded and the three separate systems, namely Quality Management System (ISO 9001:2000), Environment Management System (ISO 14001:2004) & Occupational Health and Safety Assessment Series (OHSAS 18001:2007), are all brought under Integrated Management System. Regular internal audits and Management Reviews are being carried out to ensure compliance and continually improve the system.

Measures taken to conserve water have yielded not only savings but also have further improved the environmental management. The state of art Effluent Treatment plants and the Sewage Treatment plants at Trombay have ensured that the environment in and around the Units is fully protected. Various schemes are implemented to reduce wastage of the scarce natural resources. The waste streams from the plants are recycled/reused for useful purpose. Sludge generated in Effluent Treatment Plant, Sulphur Sludge Generated in Sulphuric Acid plant, waste streams of effluents from complex fertilizer plants are recycled back in the processes. The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board.

In Trombay Unit of your Company, New granulation technology is adopted in Ammonium Nitro phosphate plant to reduce dust emission. Capacity of Sewage treatment plant is increased with installation of 5th RO. Your Company has adopted the most effective system of environmental management at its Trombay complex by process up-gradation, adoption of cleaner technologies in new plants, suitable treatment of effluent and continuous monitoring of emission & ambient air quality.

To check the effectiveness and compliance to emission regulations, monitoring network has been incorporated. Apart from Stack monitors, which continuously monitor the emissions, four fixed ambient air quality monitoring stations monitor ammonia, NOx, S02, Particulate matter (PM10 & PM2.5)& metrological parameters.

During the process of converting raw materials into finished products, certain residual chemicals are formed, which are either recycled or converted into harmless chemicals as far as possible, before discharging them into the atmosphere, giving due importance to cleaner environment.

4.0.0 PRINCIPLES OF GLOBAL COMPACT:

Your Company is a member of United Nations Global Compact and fully supports the Ten Principles in the areas of human rights, labour and environment which are derived from the earlier declarations by United Nations,

ILO and other international organisations. Your Company has. posted a detailed write-up on its website www.rcfltd. com in this respect.

5.0.0 CORPORATE SOCIAL RESPONSIBILETY (CSR) ACTIVITIES:

5.1.1 Being a conscientious corporate citizen, your Company has developed its corporate philosophy imbibing self regulating mechanism to ensure that it's operations benefit all stake holders. Public Interest is a deliberate inclusion honouring Triple bottom line approach - people, planet and profit.

As stated in para 4.0.0, your Company is a member of United Nations Global Compact and supports the ten Principles of human rights, labour and environment.

As a responsibility to the society around its business areas, your Company undertakes several activities aimed for the benefit of needy and also for general good. During the financial year 2010-11, your Company carried out the following activities under CSR policy and spent about Rs. 7 crore:

5.1.2 Education:

5.1.2.1 Running of Schools:

Your Company runs schools, both at its Thai and Trombay units to impart quality education from Nursery to 10th Standard. The schools admit children from nearby community. Instructions are imparted in Marathi, Hindi and English medium. Your Company has provided school building in the Company's residential colonies at Thai and Trombay and undertakes its upkeep, maintenance and bears the deficit expenditure incurred by the schools. The schools are entrusted to reputed Educational Institutions. During the year, your Company spent about Rs. 307 lakh on this activity.

5.1.2.2 Scholarship to meritorious students:

Your Company encourages students from SC/ ST/ OBC communities by offering them scholarship for pursuing higher studies. During the year your Company spent Rs. 2.30 lakh towards scholarship.

5.1.2.3 Farmers' Education:

Your Company imparts farming education to increase productivity through intensive and integrated extension activities in the field of Agriculture, recommending balanced use of fertilizers and simultaneously to extend the services as promoter, activator and organiser of various socio-economic and educational activities to improve the quality of life of various, rural masses particularly small, marginal and SC/ST families.

5.1.3 Supply of drinking water to the villages:

Your Company has been providing drinking water since more than 20 years to seven villages around Thai unit through pipelines laid down from the water reservoir in the unit. During the year your Company spent about Rs. 78 lakh towards the same.

5.1.4 Village Adoption:

Your Company provides support to needy people by providing tools, tackles and training to enable them learn self sustaining vocations and improve their economic capabilities. An amount of Rs. 10 lakh is spent, on imparting training for improving their skills, during the financial year. Your Company sponsored games and sports such as - Kabaddi, Kho Kho etc by spending an amount of Rs. 37 lakh.

5.1.5 . Chembur Green Project:

Launched to establish greenery in the eastern suburb of Mumbai, your Company has grown and brought back the green forestry amidst concrete jungle. The development of traffic islands, kitchen gardens, exhibitions, Rose shows and other activities in schools and colleges have increased the environment consciousness among the citizens. Your Company continues distribution of free saplings and rendering advice to various co-op. societies and also to individuals. Your Company also introduced organic manure from urban waste in the year so as to protect environmental degradation of soil.

5.1.6. Service to Farmers:

5.1.6.1 Advice on Soil nutrients:

Your Company attaches special importance to undertaking Soil diagnostics to advise farmers about use of proper dosage of fertilizers in order to optimize soil productivity. Over 70,000 soil samples were analyzed and recommendations given through the five static and six mobile soil testing laboratories.

5.1.7 Farm practices:

Your Company continues to have grass root contact with farmers to disseminate knowledge of proper farm practices to enhance their farm income. In this regard, your Company undertook crop specific development programs depending on the State/area. Your Company has established several Farmers' Services Centres for providing services such as soil sample collection, arranging farmers meeting, film shows, and exhibitions and for providing general guidance in the fields of farming. Several farmers'/dealers' training programmes were conducted during the year at the Company's two Farmers Training Institutes.

5.1.7 Other activities:

5.1.7.1 Your Company is constructing at a cost of Rs. 93 lakh a mini sports stadium, alongwith accessories and facilities, in Jaleshwar, Balasore district to encourage sports and culture of the area. The construction would be completed by December 2011. The total amount spent during the year isRs.61.70 lakh.

5.1.7.2 Your Company has also undertaken construction of 15 Number of Bus shelters, at Madurai city and 30 Nos. in Madurai Rural Area at a cost of Rs.152.40 lakh for the benefit of general public.

6.0.0 HUMAN RESOURCES:

6.1.0 Training and Development:

Human Resource Development has always been the cornerstone of your Company and this year's activities have also been special and focussed.

Exclusive Training & Development initiatives were successfully carried out to enhance General Management Skills of the employees in Marketing, Finance, Commercial and Health Services disciplines. Besides this, comprehensive Safety Management Programmes were carried out for officers in Technical disciplines.

Activities were also focused on strengthening and effective implementation of Quality Management Systems, Environment Management Systems, Occupational Health & Safety Systems and 5-S systems.

Training & Development programmes were conducted, in-house, for the employees of your Company at various levels.

The Training department contributed to the development of other Organisations by accepting special assignments to train employees/students of industrial and academic institutions. HRD has been contributing in selection and grooming of young talents, imparting domain knowledge, developing skills and mind set towards achieving professional excellence.

6.2.0 Industrial Relations:

Your Company maintained cordial Industrial Relations with all its employees. All the issues are settled through regular discussions, meetings and. dialogues with the employees. Your Company has 4238 employees comprising of 1541 officers and 2697 workmen as on 31st March, 2011 compared to 4334 employees (1589 officers and 2745 workmen) as on the corresponding date of the previous year.

6.2.1. Welfare and Sports

Your Company undertakes several welfare schemes like education, medical, transport, housing etc., according to the needs of the employees. In regards to sports, your Company is a prominent patron and sponsored various sports events. Your Company's Football, Cricket, Hockey, Kabaddi and other teams continue to show excellent performance at District, State and National levels and have brought laurels to your Company by winning several prizes.

6.2.2. Welfare / Employment opportunity to weaker section:

The guidelines in respect of reservation in recruitment and promotion of SC/ST, OBC, Ex-servicemen and Persons with Disabilities are followed by your Company. Your Company has 593 Scheduled Caste (SC), 261 Scheduled Tribe (ST) and 339 OBC employees on its rolls.

During the year, your Company recruited 70 persons, including 2 persons with physical disability, on regular employment. Your Company also recruited 4 Operator Trainees, 9 Steno Trainees and 16 Technical Trainees. Due representation to SC/ST/OBC was given in recruitments.

Your Company is committed to the welfare of the backward classes in general and SC/ST employees in particular. Regular meetings are held with SC/ST Employees Welfare Association to address grievances, if any, and providing guidance for development.

Medical Camp is organized every year at Chaitya Bhoomi, Dadar on 6th December, on the occasion of 'Mahaparinirvan Day'. Financial assistance for making, arrangement for medical camp and for medicines along with the vehicles and Doctors was made available by the Company.

Your Company's Thai Unit continued to provide various amenities like water, road for the nearby villages e.g. Thai, Navgaon, Boris, Gunjis etc. where the majority of the population belongs to the SC/ST categories. Scholarships were given to meritorious students of SC/ST community in the nearby village of Thai.

The following activities were also taken up by your Company:-

a) Training programmes were conducted for farmers at Company's Institute at Nagpur and Thai. Large number of SC/ST farmers have undergone training in these programmes.

b) Your Company's Marketing Department gives special consideration in enrolment of dealers belonging to SC/ ST category. A large number of dealers belonging to SC/ ST have already been appointed.

7.0.0 OFFICIAL LANGUAGE POLICY:

Your Company has fully endeavoured to implement the provisions of Official Language Act 1963 and the policy of the Government. Publicity material and literature for employees and farmers is made available in Hindi and other regional languages.

Your Company was awarded the First prize by Mumbai Town Official Language implementation. Committee for excellence in implementation of Official Language Policy. Your Company's House Magazine, "Darpan" was also awarded first Prize in House Magazine competition organised by Mumbai Town Official Language Implementation Committee for the year 2010-11.

9.0.0 INTERNAL CONTROL SYSTEM:

Your Company has a well defined Internal Control System, adequate and commensurate with the size and nature of its business, comprising of an in-house Audit Department, which conducts internal audit of various operational and financial matters on on-going basis. Internal Audit group consists of adequate number of financial and technical personnel. The recommendations and observations of the Internal Audit Department are reviewed regularly by the Audit Committee constituted by the Board of Directors. The performance of your Company is regularly monitored by the Board of Directors.

Your Company has an effective budgetary control mechanism in place both in respect of capex and revex 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.

10.0.0 COST AUDIT

As per the Government's directive, your Company's Cost Records in respect of manufacture of Fertilizers and Sulphuric Acid for the year ended 31st March, 2011 are being audited by Rohit Vora & Co. and OR. Musib & Associates, firms of Cost Auditors. The Cost Auditors are likely to complete the audit by 31st July, 2011.

11.0.0 DIRECTORS' RESPONSIBILITY STATEMENT:

The Companies Act, 1956 requires the Board of Directors of your Company to prepare accounts for each financial year giving a true and fair view of the state of affairs of the Company and the profit or loss of the Company for that period.

Your Directors state that:

i] in preparing the annual accounts, the applicable accounting standards have been followed,

ii] the accounting policies adopted have been consistently applied and wherever necessary, made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit or loss of the Company for the year,

iii] proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; and

iv] the annual accounts have been prepared on going concern basis.

12,0.0 CORPORATE GOVERNANCE:

As per Clause 49 of the listing Agreement with the Stock Exchanges, a separate section on Corporate Governance along with a certificate of Compliance is annexed and forms part of this report.

13.0.0 CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' and actual results may or may not be in accordance therewith. Your Company's performance is dependent on several external factors such as downtrend in the agriculture, below normal monsoon, significant changes in economic environment, Government Policies, fluctuations in prices of raw material and finished products and also their availability, etc. which could adversely affeGt the operations of your Company.

14.0.0 DIRECTORS:

Government of India appointed Shri Sham Lai Goyal, IAS, Joint Secretary Department of Fertilizers, Ministry of Chemicals and Fertilizers as additional Director in place of Shri Deepak Singhal. The contribution of Shri Deepak Singhal to your Company has been immense. His guidance, suggestions and advice has greatly benefited the. Company. Your Directors place on record their appreciation of the contribution of Shri Deepak Singhal to your Company. Notice under Section 257 of the Companies Act has been received proposing the candidature of Shri Sham Lai Goyal as

Director of the Company.

As per Section 256 of the Companies Act, Shri Manoj Priya, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

15.0.0 AUDITORS:

The Comptroller and Auditor General of India (CAG) has appointed, M/s. JCR & Company and M/s GD Apte & Co., as Joint Statutory Auditors of your Company for the Financial Year 2010-11. The Auditors would be retiring at the conclusion of the Thirty third Annual General Meeting.

The Statutory Auditors for the Financial Year 2011 -12 will be appointed by the CAG. However, their remuneration is to be fixed at the AGM by the members.

16.0.0 ACKNOWLEDGMENT:

Your Directors wish to gratefully acknowledge the valuable guidance and continued support extended by Government of India and in particular, the Department of Fertilizers and the Office of Fertilizer Industry Co- ordination Committee (FICC), Railways, members of MOU Task force, and other Central Government departments and Agencies.

The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the State Governments, MSEB, MIDC, various media, Municipal authorities, Maharashtra Pollution Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory Auditors, Cost Auditors and the Office of the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep appreciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance.

By order of the Board of Directors

Place: Mumbai R.G. Rajan

Date : 10.05.2011 Chairman and Managing Director


Mar 31, 2010

The Directors of your Company have pleasure in presenting this 32nd Annua! Report on the working of your Company together with the Audited Accounts for the year ended 31 st March, 2010.

1.0.0 FINANCIAL PERFORMANCE:

Summary of financial performance :

Rs, Crore

Particulars 2009-2010 2008-2009

Sales including Subsidy 5697.18 8455.32

Other Income 129.07 83.11

Total Income 5826.25 8538.43

Cost of Sales 5386.57 8051.23

Operational Profit 439.66 487.20

Depreciation 75.60 86.58

Interest (Net) 19.87 74.93

Prior year adjustment (0.02) (0.01)

Profit/ (Loss) before tax 344.21 325.70

Provision for Tax (including 109.34 114.12 deferred Tax liability/ Asset)

Net Profit / (loss) 234.87 211.58

Appropriations:

Dividend 60.69 66.20

Tax and Educational cess on 10.08 11.25

Dividend

Balance Transferred to General 164.10 134.13

Reserve

1.1.0 Highlights for the year 2009-2010:

Your Company achieved a turn over of Rs.5697.18 crore compared to Rs.8455.32 Crore in the previous year. The turnover is lower by Rs 2758.14 crore during the year compared to previous year mainly due to lower imports of urea by Government of India and discontinuance of costly feed stock of Naptha leading to less subsidy realisation. The total income from operations was Rs. 5826.25 crore as against Rs. 8538.43 crore during the previous year. Your Company achieved a gross profit of Rs.439.66 crore as against Rs. 487.20 crore. The net Profit before Tax at Rs. 344.21 crore as against Rs. 325.70 crore registered an increase of 5.68 % despite lower gross profit mainly due to substantial reduction in the net interest. The Net Profit after Tax during the current year, is higher at Rs.234.87 crore as against Rs.211.58 crore in the previous year registering an increase of 11% over previous year. The net Interest cost during the year has been Rs. 19.87 crore compared to Rs.74.93 crore during the previous year due to good treasury and foreign currency management which ensured reduction in interest cost and gain in foreign exchange transactions. Your Company received MOU Excellent rating for 2008-2009 and is likely to get the same for 2009-10 from Ministry of Heavy Industries and Public Enterprises.

120 Dividend:

Your Company has lined up a number of capex programmes which will entail substantial expenditure and, in order to fund these programmes, it is necessary to plough back its profits. In view of this, your Directors propose to pay dividend at Re.1.10 per each equity share of Rs.10/-, compared to previous year devidend of Re.1.20 per each share. The dividend for the current year works out to 11 % compared to 12% last year. The total out go works out to Rs.70.77 crore (Rs77.45crore in the previous year) including dividend distribution tax and education cess. This amounts to 30.13% of the net profit

1-3.0 Appropriation to General Reserves:

Your Company earned a net Profit after Tax of Rs 234.87 crore(Rs 211.58 crore in the previous year). The dividend pay out along with Tax/cess is Rs 70.77 crore ( Rs.77.45 crore in the previous year). The balance amount of Rs. 164.09 crore (Rs.134.13 crore in the previous year) is transferred to General Reserves.

2.9.0 CONSERVATION OF ENERGY:

Your Company undertook several steps for conserving energy. These include several modifications in the plants which have resulted in significant reduction in the energy consumption. Some of the measures undertaken are as follows:

In Thai unit several measures .undertaken such as Replacement of Synthesis gas compressor turbine rotor has enabled saving 18.47 MT/Hr HP Steam corresponding to 0.11 MKcal/MT of Ammonia. Zirconium coating of primary Reformer line II and Super heater II furnaces, re-routing of off-gas generated in urea plant to steam generation plant as fuel, providing sparger to recover ammonia loss through vent stack, replacement of conventional spacer in cooling water tower fan with light weight carbon composite fibre spacer, are some of the measures under taken in Thai unit which resulted in considerable saving in energy. In Trombay unit also several such measures as: provision of capacitor banks on 11 KV system fed from Ammonia-I, high capacity C.W pump for Methyl Ammine Plant, installation of new surface condenser for Ammonium Nitrate in ANP plant, replacing 3 no. of 37 KW motors with energy efficient motors in Water Treatment Plant and several other measures resulted in energy saving.

The particulars with regard to Conservation of Energy, Technology Absorption, Foreign Exchange outgo as required under Section 217 (i) (e) of the Companies Act, 1956 are enclosed as Annexure I.

3.0.0 HEALTH, SAFETY, ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL:

Your Company has strong Health, Safety and Environmental policies. The policies ensure that the plants are operated with utmost care and no hazards or mishaps take place and are carried out complying with applicable Laws and Rules. Your Company is going beyond satisfying all stipulated requirements laid down by the statutory authorities for environment management and pollution control. The Environment Management Systems at both the units have been re certified under ISO14001. Internal Audits and management reviews are undertaken regularly to identify if any improvements are required to be undertaken. Measures taken to conserve water have yielded not only in savings but also have further improved the environmental management. The state of art Effluent Treatment plants and the Sewage Treatment plants at Trombay have ensured that the environment in and around the Units is fully protected. Various schemes are implanted to reduce wastages of the scarce natural resources. The waste streams from the plants are recycled/ reused for useful purpose. Sludge generated in Effluent Treatment Plant, Sulphur Sludge Generated in Sulphuric Acid plant, waste streams of effluents from complex fertilizer plants are recycled back in the processes. The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board.

4.0.0 PRINCIPLES OF GLOBAL COMPACT :

Your Company is a member of United Nations Global Compact and fully supports the Ten Principles in the areas of human rights, labour and environment which are derived from the earlier declarations by United Nations, ILO and other international organisations. Your Company has posted a detailed write-up on its website www.rcfltd. com in this respect.

5.0.0 CSR Activities:

5.1.1 Recognising the responsibilities to tne Society, your company undertakes several activities directly and indirectly helping the community in bettering the life and environs in which they live. Some of the activities undertaken are as follows:

5.1.2 Chembur Green Project:

Launched to establish greenery in the eastern suburb, over a period of 29 years, your company has grown and brought back the green forestry amidst concrete jungle. The development of traffic islands, kitchen gardens, exhibitions, Rose shows and other activities in schools and colleges have increased the environment consciousness among the citizens. Your Company continues distribution of free saplings and rendering advice to various co-op. societies and also to individuals. Your Company also introduced organic manure from urban waste in the year so as to protect environmental degradation of soil.

5.1.3 Advise on Soil nutrients:

Your Company continued to give special importance to Soil diagnostics as a means of advising farmers about use of proper dosage of fertilizers in order to optimize soil productivity. Over 70,000 soil samples were analyzed and recommendations given through the five static and five mobile soil testing laboratories. Soil samples are also collected through using the facilities of ITCs e-choupal. Micronutrient analysis of soil had also been undertaken where sought- around 1500 samples were analyzed during the year.

5.1.4 FarmersEducation:

Your Companys Marketing Strategy includes the fertilizer promotion, farmers education and rural development programmes. Its aim is to increase productivity through intensive and integrated extension activities in the field of Agriculture, recommending balanced use of fertilizers and simultaneously to extend the services as promoter, activator and organiser of various socio- economic and educational activities to improve the quality of life of various rural masses particularly small, marginal and SC/ ST families.

5.1.5 Practical training to Agricultural students:

Your Company initiated a novel programme called "Earn- while-you-learn" to impart practical training to students from agricultural colleges and enable them to earn during their graduation. This was implemented successfully in Maharashtra particularly while promoting the use of solid soluble fertilizers.

5.1.6 Farm practices:

Your Company continues to have grass root contract with farmers, disseminate knowledge of proper farm practices to enhance their farm income. In this regard, your Company undertook crop specific development programs depending on the State/area. Your Company has established several Farmers Services Centres for providing services such as soil sample collection, arranging farmers meeting, film shows, and exhibitions and for providing general guidance in the fields of farming. Severai farmers / dealers training programmes were conducted during the year at the Companys two Farmers Training Institutes.

5.1.7 Dealerstraining

More than 1600 dealers/farmers were trained during the year. Your Company has 2 well equipped Farmer Training Institutes at Thai and Nagpur where programmes are conducted year round for the benefit of farmers/dealers. Faculty is drawn from within the Company and also from agricultural universities, State/Central Government institutions. Special hi-tech programmes were also organized in collaboration with Agro-Won.

5.1.8 Other activities:

Your Company undertakes several activities related to the weaker section of society, which are enumerated separately in para 6.2.2. Companys publicity programme focuses oh bringing your Companys theme message to the masses in easily understandable manner and also for enhancing brand image. Press, TV and Radio were extensively used to spread your Companys messages to its customers. Your Company has also undertaken field publicity like wall paintings; Village Indication Boards etc. were extensively used. Calendars in different regional languages were published, which had wide appeal to the customers. Your Company also participated in different State level exhibitions during the year. Literature and posters, appropriate to the themes, were distributed at different Krishimelas/crop seminars organised by your Company.

6.0.0 HUMAN RESOURCES:

6.1.0 Training and Development:

Human Resource Development has always been the corner stone of your company and this years activities have also been special and focussed.

Exclusive Training & Development initiatives were successfully carried out to enhance General Management Skills of the employees in Marketing, Finance, Commercial and Health Services Disciplines. Besides this comprehensive Safety Management Programmes were carried out for officers in Technical Disciplines.

Activities were also focused on strengthening and effective implementation of Quality Management Systems, EnvironmentManagement Systems, Occupational Health & Safety Systems and 5-S systems.

Over 300 Training & Development programmes were conducted in-house for the employees of your company at various levels.

The Training department contributed to the development of other Organisations by accepting special assignments to train empioyees/students of industrial and academic institutions. HRD has been contributing in selection and grooming of young talents, imparting domain knowledge, developing skills and mind set towards achieving professional excellence.

6.2.0 Industrial Relations:

Your company maintained cordial Industrial Relations with all its employees. All the issues are settled through regular discussions, meetings and dialogues with the employees. Your company has 4334 employees comprising of 1589 officers and 2745 workmen as on 31st March. 2010 compared to 4278 employees (1563 officers and 2715 workmen) as on the corresponding date of the previous year. The increase in the strength is essentially on account of recruitment in Technical areas during the year.

6.2.1. Welfare and Sports

Your company undertakes several welfare schemes like education, medical, transport, housing etc., according to the needs of the employees. In regards to sports, your company is a prominent patron and sponsored various sports events Your companys Football, Cricket, Hockey. Kabbaddi and other teams continue to show excellent performance at District, State and National levels and have brought laurels to your company by winning several prizes.

6.2.2. Welfare / Employment opportunity to weaker section:

The guidelines in respect of reservation in recruitment and promotion of SC/ST, OBC, Ex-servicemen and Persons with Disabilities are followed by your company. Your company has 605 Scheduled Caste (SC), 263 Scheduled Tribe (ST) and 324 OBC employees on its rolls.

During the year your Company has recruited 177 persons on regular employment. 9 Management Trainees and 56 OperatorTrainees were also recruited. Due representation to SC/ST/OBC was given in recruitments.

Your Company is committed to the welfare of the backward classes in general and SC/ST employees in particular. Regular meetings are held with SC/ST Employees Welfare Association to address grievances, if any, and providing guidance for development.

Medical Camp is organized every year at Chaitya Bhoomi, Dadaron 6th December, on the occasion ofMahaparinirvan Day. Financial assistance for making arrangement for medical camp and for medicines along with the vehicles and Doctors was made available by your Company. Your Company provides financial assistance every year to Dr Babasaheb Ambedkar Samaj Kalyan Mandal for celebration of Dr. Babasaheb Ambedkar Jayanti. The same was provided this year also.

Your Companys Thai Unit provides various amenities like water, road for the nearby villages e.g. Thai, Navgaon, Boris, Gunjis etc. where the majority of the population belongs to the SC/ST categories. The facility continued during the year. Scholarships were given to meritorious students of SC/ST community in the nearby village of Thai.

The following activities were also taken up by your company: -

a) Training programmes were conducted for farmers at Companys Institute at Nagpur and Thai. Large number of SC/ST farmers have undergone training in these programmes.

b) Your Companys Marketing Department also gives special consideration in enrolment of dealers belonging to SC/ST category. A large number of dealers belonging to SC/ST have already been appointed.

List of employees of your Company who received remuneration in excess of reportable amount as laid down under section 217[2] [A] of the Companies Act is attached as Annexure to this Report.

Your Company has fully endeavored to implement the provisions of Official Language Act 1963 and the policy of the Government. Publicity material and literature for employees and farmers is made available in Hindi and other regional languages.

Your Company was awarded the First prize for the year 2009-1 Oby MumbaiTown Official Language implementation Committee for excellence in implementation of Official Language Policy. Your Companys House Magazine, - "Darpan" was also awarded first Prize in House Magazine competition organised by MumbaiTown Official Language implementation Committee for the year 2009-10. Your Company carried out a special drive for training in Hindi Stenography, wherein Sr. Officers of Rajbhasha Vibhag were invited for guidance and training. During the year, 7 employees passed the Hindi Stenography examination. Senior officers of Ministry of Home Affairs, connected with implementation of Hindi Language Policy visited your Company and appreciated the efforts taken in the regard.

Your Company has a well defined Internal Control System i.e. adequate and commensurate with the size and nature of its business comprising of an in-house Audit Department, which conducts internal audit of various operational and financial matters on on-going basis. Internal Audit group consists of adequate number of financial and technical personnel. The present internal Audit system is commensurate with the size and the nature of business. However, your Company desires to extend the coverage at Corporate Office to certain new areas, including on the aspect of deduction and payment of Income Tax. The recommendation and observations of the Internal Audit Department are reviewed regularly by the Audit Committee constituted by the Board of Directors. The performance of the corporation is regularly monitored by the Board of Directors.

Your 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.

As per the Governments directive, your Companys Cost Records in respect of manufacture of Fertilizers and Sulphuric Acid for the year ended 31st March, 2010 are being audited by the Cost Auditors by Rohit Vora & Co. and C.R.Musib & Associates.

The Companies Act, 1956 requires the Board of Directors of your Company to prepare accounts for each financial year giving a true and fair view of the state of affairs of the Company and the profit or loss of the Company for that period.

The Directors state that:

i] in preparing the annual accounts, the applicable accounting standards have been followed.

ii] the accounting policies adopted have been consistently applied and wherever necessary, made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit or loss of the Company for the year.

iii] proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safe guarding the assets of your Company and for preventing and detecting fraud and other irregularities; and

iv] the annual accounts have been prepared on going concern basis.

As per Clause 49 of the listing Agreement with the Stock Exchanges, a separate section on Corporate Governance along with a certificate of Compliance is annexed and forms part of this report.

Statements in the Management Discussion and Analysis describing your Companys objectives, projections, estimates and expectations may be forward looking statements and actual results may or may not be in accordance therewith. Your Companys performance is dependent on several external factors such as downtrend in the agriculture, below/normal monsoon, significant changes in economic environment, Government Policies etc which could adversely affect the operations of your Company.

Government of India appointed Dr. V. Rajagopalan, Additional Secretary & Financial Advisor, Department of Fertilizers, Ministry of Chemicals and Fertilizers as additional Director in place of Shri Mathew C. Kunnumkal w.e.f. 03.05.2010. The term of office of Prof. Ashok Misra, Shri I. C. Srivastava and Shri Anil Agrawal, Independent Directors has a|so concluded on 06.05.2010, and Governement is yet to nominate Directors in their place. The contribution of all the four Directors to your Company have been immense. Their guidance, suggestions and advices has greatly benefited the Company. Your Directors place on record their appreciation of the contribution of the Directors to your Company. Notice under section 257 of the Companies Act has been received proposing the candidature of Shri V.Rajagopalan as Director of the Company.

As per Section 256 of the Companies Act, Shri Deepak Singhal and Shri Gautam Sen Directors retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The Comptroller and Auditor General of India (CAG) has appointed, M/S JCR & Company and M/s G D Apte & Co., as Joint Statutory Auditors of your Company for the Financial Year 2009-10. The Auditors would be retiring at the conclusion of the Thirty second Annual General Meeting.

The Statutory Auditors for the Financial Year 2010-11 will be appointed by the CAG. However, their remuneration is to be fixed at the AGM by the members.

Your Directors wish to gratefully acknowledge the valuable guidance and continued support extended by the Government of India and in particular, the Department of Fertilizers and the Office of Fertilizer Industry Co- ordination Committee (FICC), Railways etc.

The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the State Governments, MSEB, MIDC, various media, Municipal authorities, Director-Industrial Health and Safety, and other Statutory authorities, Maharashtra Pollution Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory Auditors, Cost Auditors and the Office of the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep appreciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance.

By order of the Board of Directors Place: Mumbai U.S.Jha

Date : 06.05.2010 Chairman and Managing Director