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Directors Report of National Fertilizers Ltd.

Mar 31, 2023

On behalf of the Board of Directors of your Company, I have the pleasure in presenting the 49th Annual Report on the business and operations of the Company together with the Audited Financial Statements including Consolidated Audited Financial Statements of the Company for the Financial Year 2022-23 and the Auditors'' Reports and Comments of Comptroller & Auditor General of India (C&AG).

During the year, company achieved the Profit before Tax of '' 609.77 crore as against Profit before Tax of ''144.82 crore during CPLY. PBT has increased mainly due to increase in profit on Urea due to energy norms extension, higher production and sale of Urea, sales of Bentonite Sulphur and industrial products.

The energy consumption per MT of Urea at NFL plants during 2022-23 was as follows:

(Gcal/MT/Urea)

Units

Energy Norms for 2022-23 as per NUP-2015

Actual Energy

2022-23

2021-22

Nangal

6.500

6.274

6.523

Panipat

6.500

6.334

7.048

Bathinda

6.500

6.357

6.559

Vijaipur I

5.860*

5.620

5.817

Vijaipur II

5.500

5.426

5.736

* As per DoF OM dated 18.11.2022.

Energy consumption per MT of Urea at all Units was less than energy norms till FY 2022-23 fixed by GOI under New Urea Policy 2015 with extension with extended period upto March, 2023 for Nangal, Panipat, Bathinda and Vijaipur-I Units.

Financial Highlights | ?

Your Company''s key financial parameters during the year 2022-23 and important financial highlights are as under:-

(Rs. in Crore

Sr. No.

Particulars

2022-23

2021-22

01.

Sale of Urea quantity in (LMT)

39.96

34.58

02.

Sale quantity of traded Fertilizers (LMT)

26.76

20.02

03.

Sale of Urea own

2091.45

1807.11

04.

Subsidy on Urea

17023.48

8764.85

05.

Total Sales of Urea (3 4)

19114.93

10571.96

06.

Sale of other products including subsidy

10238.27

5032.00

07.

Sales Turnover (5 6)

29353.20

15603.96

08.

Sale of Services

28.94

18.96

09.

Other Operating Revenue

234.38

234.17

10.

Revenue from operations (7 8 9)

29616.52

15857.09

11.

Other Income

192.62

25.61

('' in crore

Sr. No.

Particulars

2022-23

2021-22

12.

Total Income (10 11)

29809.14

15882.70

13.

Total Expenses

28544.89

15270.37

14.

Earnings Before Interest, Depreciation and Taxes (EBIDTA)[12-13]

1264.25

612.33

15.

Interest

301.64

132.96

16.

Depreciation

352.84

334.55

17.

Profit Before Exceptional Item and Tax (14-15-16)

609.77

144.82

18.

Exceptional Item

-

-

19.

Profit Before Tax (PBT) (17-18)

609.77

144.82

20.

Provision for tax

153.67

36.62

21.

Profit After Tax (PAT) (19-20)

456.10

108.20

22.

Other Comprehensive Income (Net of Tax)

3.56

1.90

23.

Total Comprehensive Income (21 22)

459.66

110.10

RESERVES | ?

Capital Reserves | ?

The balance as at 31.03.2023 amounted to ''2.51 crore, which is at the same level as was in the previous year.

Corporate Social Responsibility | ?

Corporate Social Responsibility (CSR) fund stood at Nil as on 31.03.2023 as compared to Nil on 31.03.2022. Report on CSR is appended as Annexure- 5 forms part of this report.

General Reserves | ?

During the year, an amount of ^ 1.05 crore was adjusted from the General Reserve. The general reserve as on 31.03.2023 stood at ^ 331.84 crore.

Surplus | ?

The balance retained in the surplus as at 31.03.2023 is ^1948.90 crore as compared to ^1489.24 crore during the previous year.

Dividend | ?

The Board of Directors declared interim dividend for the year 2022-23 @ ^1.53 (15.30%) per share which has been paid by the Company in June, 2023. Further, the Board of Directors has recommended Final Dividend of ^1.26 (12.60%) per equity share of Rs.10 each on the paid up equity share capital of the Company for the Financial Year 2022-23 which shall be paid after approval of the Shareholders at the Annual General Meeting.

Major events during the year

State of Affairs of the Company and Change in the nature of Business | ?

During the FY 2022-23, Company has achieved sale of fertilizers to the tune of 66.72 LMT comprising of 39.96 LMT of own Urea, 5.36 LMT of imported Urea and 8.39 LMT of RFCL Urea and 13.01 LMT of non-Urea Fertilizers and against corresponding period last year (CPLY) of 54.60 LMT that comprised of 34.58 LMT of own Urea, 8.86 LMT of imported Urea and 3.69 LMT of RFCL Urea, 7.47 LMT of Non-Urea Fertilizers. NFL has achieved growth of more than 22% in total fertilizer sale during the year with respect to CPLY. Further, sales contribution from other than own

manufactured Urea of the company increased to around 35% during the year as compared to 32% of the CPLY.

Your Company has achieved the production & sale of certified seeds to the tune of 1.60 Lakh Quintals. The sale of Bio-Fertilizers & City Compost of 700 MT & 22071.25 MT respectively achieved during the year.

Your Company has achieved the ever highest production of Urea of 39.35 LMT, ever highest sale of all fertilizers of 66.72 LMT, ever highest sale of Agro-chemicals of 2213.758 KL/MT. Your company has achieved ever highest production & sale of Bentonite Sulphur to the tune of 22302 MT & 20910 MT respectively. Vijaipur Unit dispatched ever highest Bio-fertilizers to the tune of 756 MT. Your company has also sold 19,833 MT PDM (Potash Derived Molasses) during the year.

On the new investment front, your Company has commissioned its third Seed Processing Unit (SPU) at Indore in April 2023.

The settng up of an Agrochemicals plant at Bathinda is in advance stage and is likely to be commissioned shortly.

Your Company has also added some more products such as Potash derived from Molasses (PDM) in its basket during the year.

The revival of 2nd stream of Nitric Acid plant at Nangal completed during October 2022.

Your company has signed MoU for manufacture of Nano Fertilizers with IFFCO. TEFR has been finalized for manufacturing Nano Urea and EPMC consultants are being lined up. Public Hearing conducted on 27-04-2023 and revised EIA report is being submitted to MoEF & CC for grant of Environment Clearance.

Material changes and commitments !!?

No material changes and commitments have occurred between the date of the Balance Sheet and the date of the Board''s Report affecting the financial position of the Company.

Details of revision of Financial Statements or Board''s Report | ?

Company has not revised Financial Statements or Board''s Report in respect of any of the three preceding financial years. Company has re-casted/restated Financial Statement as on 31.03.2022 and as on 01.04.2021.

General Information | ?a) Brief history of the Company, overview of the industry and important changes in the industry during the last financial year

NFL was incorporated on 23rd August 1974 at New Delhi. It has an authorized share capital of ^ 1000 crore and paid up and subscribed share capital of ^ 490.58 crore out of which Government of India''s share is 74.71% and 25.29% share is held by financial institutions, public & others.

The Company has five gas based Urea plants viz. Nangal & Bathinda plants in Punjab, Panipat plant in Haryana and two plants at Vijaipur in Madhya Pradesh with a total annual revamped capacity of 35.68 LMT (Annual Re- assessed capacity - 32.31 LMT) of Urea. The company also has a Bio- Fertilizers Plant at Vijaipur with annual capacity of 700 tonnes and a Bentonite Sulphur plant of 25000 MT per annum at Panipat Unit. It also manufactures other allied Industrial products like Nitric Acid, Ammonium Nitrate, Sodium Nitrate & Nitrite from its Nangal Unit and undertakes import & sale of other fertilizers like DAP, MoP, NPKS along with domestic trading of various agro-inputs like certified seeds, agrochemicals, City Compost, SSP etc. through its existing vast dealer''s network under single window concept. The Company has also been producing and selling its own certified Seeds under company''s flagship Seed Multiplication Program (SMP).

The Company has three Seed Processing Units (SPUs) at Bathinda, Panipat and one at Indore commissioned on April''2023. The company also revived 2nd Stream of Nitric Acid plant at Nangal on October''2022. The Company is also settng up an Agrochemicals plant at Bathinda and doubling capacity of Bio-Fertilizers plant at Vijaipur, which are expected to be commissioned in the F.Y. 2023-24.

Overview of the industry and important changes thereof during the last financial year forms part of Management Discussion & Analysis Report.

b) Brief description of business segments and geographic segments; | ?

Business Segment | ?

In the light of present diversified business activities vis-a-vis IND AS 108 on Segment Reporting following operating segments have been considered for Segment Reporting for the Annual Accounts for the FY 2022-23:

i) Own Fertilizers (Urea, Bio Fertilizers and Bentonite Sulphur).

ii) Fertilizers Trading (Indigenous and Imported).

iii) Other Products & Services (Industrial Products, Agro Chemicals, Traded Seeds, Seeds under Seeds Multiplication Programme etc.).

Geographic segments | ?

The operation of the company is conducted within India and there is no separate reportable geographic segments.

c) External environment and economic outlook; | ?

Details of external environment and economic outlook are given in Management Discussion & Analysis Report.

d) Induction of strategic and financial partners during the last financial year | ?

No new strategic and financial partners have been inducted during the last financial year.

Capital Structure | ?Preference and Equity Shares | ?

Company has not issued any equity shares or preference shares during the year.

Equity Shares with Differential Rights | ?

During the financial year, Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

Employees Stock Option | ?

During the financial year, Company has not issued any employees stock option.

Shares to Trustees for benefit of employees | ?

Company has not introduced any scheme(s) for purchase/subscription of the Company''s shares to be held by trustees for the benefit of employees.

Other securities which carries right of conversion into equity shares | ?

During the financial year, Company has not issued any securities, which carries a right or option to convert such securities into equity shares.

Details of Deposits | ?

The Company has not accepted any deposits during the year.

Credit Rating | ?

During FY 2022-23, the credit rating of the Company was maintained with two credit rating agencies as under:

Rated Amount ('' in crore)

Instruments

ICRA

INDIA RATINGS

Credit Ratings

Limits

Credit Ratings

Limits

Credit Ratings

Limits

Credit Ratings

Limits

2021-22

2022-23

2021-22

2022-23

Long Term Fund Based Working Capital Facilities

Cash Credit

[ICRA]

AA-(Stable)

4000

[ICRA]

AA-(Stable)

9000

IND AA/ Stable

4000

IND AA/ Stable

9000

Term Loan

[ICRA]

AA-(Stable)

1044

[ICRA]

AA-(Stable)

1044

-

-

ECB

[ICRA]

AA-(Stable)

-

IND AA-/ Stable

-

Short Term Fund Based Working Capital Facilities

Commercial

Papers

[ICRA] A1

4000

[ICRA] A1

4000

[IND] A1

4000

[IND] A1

Short Term Non Fund Based Working Capital Facilities

LC/BG

[ICRA] A1

3000

[ICRA] A1

9600

[IND] A1

2000

[IND] A1

9600

During the year, the Credit Rating of the Company had been reviewed by both the agencies and it was upgraded as shown above in the table.

Buy-Back of Securities | ?

Company has not introduced Buy-Back of its securities during the year.

Sweat Equity | ?

Company has not issued any Sweat equity shares in terms of Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

Disinvestment of GOI Equity | ?

There was no disinvestment of Government of India Shareholding during the Financial Year 2022-23. However, Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, Government of India had appointed Legal Advisors, Merchant Bankers and Selling Brokers for the disinvestment of 20% paid up equity capital in National Fertilizers Limited (NFL) out of Government of India''s Shareholding through the "Offer for sale by promoters through the Stock Exchanges". In this regard, investor meet had been held from 12th December, 2022 to 15th December, 2022 in Singapore and from 16th January, 2023 to 17th January, 2023 in Mumbai.

Statement of deviation(s) or variation(s) | ?

Company has not offered public issue, rights issue, preferential issue etc. during the year and there is no requirement to submit statement of deviati''on(s) or variati''on(s).

Foreign Exchange Earnings/Outgo | ?

The Foreign Exchange earned in terms of actual inflows during the year were ^ 32.10 crore and the Foreign Exchange outgo during the year in terms of actual outflow amounted to ^ 8425.84 crore.

Borrowings | ?Long Term Loans

To meet the funding requirement for energy saving and capex schemes, Company has entered into a Rupee Term Loan Agreement with SBI on 24.12.2018 for ^ 1044 crore. Long term net borrowings as on 31.03.2023 were ^ 534.71 crore outstanding against Rupee Term Loan. Further, the said term loan has been fully repaid on 09.05.2023.

Short Term Loans !!?

Short Term borrowings of ^3456.22 crore (previous year ^2539.83 crore) were outstanding as on 31.03.2023.

Debt Equity Ratio !!?

Debt equity ratio as on 31.03.2023 has increased to 1.44:1 as compared to 1.37:1 of previous year due to increase in borrowings.

Revenue | ^

The Company has achieved Revenue from Operations of ^ 29616.52 crore during 2022-23 as against ^ 15857.09 crore during previous year and total income of ^ 29809.14 crore during 2022-23 as against ^ 15882.70 crore during previous year as detailed below:

('' in crore)

Particulars

2022-23

2021-22

Change

Sale of products (including subsidy)

29353.20

15603.96

13749.24

Sale of services

28.94

18.96

9.98

Other Operating revenue

234.38

234.17

0.21

Revenue from operations

29616.52

15857.09

13759.43

Other income

192.62

25.61

167.01

Total Revenue

29809.14

15882.70

13926.44

Urea and other fertilizers | ?

Your Company has registered ever highest Urea production of 39.35 LMT with an overall capacity utilization of 121.81% during 2022-23 against 35.23 LMT achieved during 2021-22 (CPLY).

Company achieved ever best Bentonite Sulphur production of 22302 MT against CPLY of 17076 MT achieving a growth of around 31%.

On the sales front, the Company has sale of Fertilizers of 66.72 LMT that includes sale of 39.96 LMT of own Urea, 5.36 LMT of Imported Urea, 8.89 LMT of RFCL Urea, 13.01 of Non-Urea Fertilizers including 0.22 LMT (22071 MT) of Compost during 2022-23 surpassing previous best of 54.60 LMT during 2021-22 which includes sale of 34.58 LMT of own Urea, 8.86 LMT of Imported Urea, 3.69 LMT of RFCL Urea, 7.47 LMT of Non-Urea Fertilizers including 0.27 LMT (26647 MT) of Compost.

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

(Lakh MT)

Product

2022-23

2021-22

Change

1.Manufactured

a) Urea

39.96

34.58

5.38

b) Bentonite Sulphur

0.21

0.17

0.04

c) Bio-Fertilizers

0.01

0.01

0.00

2.Traded Goods

a) Imported

12.17

6.41

5.76

b) Indigenous

14.37

13.43

0.94

Total Fertilizers

66.72

54.60

12.12

Industrial Products | ?

During the year 2022-23, the company produced & sold Industrial Products to the tune of 132271 MT & 139475 MT (comprising of Nitric Acid, Sodium Nitrite / Nitrate, Ammonium Nitrate and Ammonia) respectively against CPLY of 109973 MT & 146383 MT.

The Company registered sale of Nitric Acid of 81108 MT during 2022-23 as compared to previous sale of 64008 MT during 2021-22. The Company also recorded sale of Ammonium Nitrate to the tune of 26039 MT during 2022-23 as compared to sale of 24029 MT achieved during 2021-22.

In terms of revenue generation from production and sale of Industrial products, the Company achieved sale of Industrial-Products (IP) comprising of Nitric Acid, Sodium Nitrate, etc. to the tune of '' 748.71 crore during 2022-23 against CPLY of '' 569.15 crore during 2021-22.

Bio-Fertilizers | ?

The Company sold 700 MT of Bio-Fertilizers (Solid & Liquid) to the tune of '' 2.51 crore in F.Y. 2022-23 as against 745 MT of '' 2.53 crore during CPLY.

Import & sale of Fertilizers | ?

The Company sold 12.17 LMT of imported non-Urea Fertilizers including DAP, MoP, APS, NPK etc. worth '' 8224.01 crore during 2022-23 against 6.41 LMT worth '' 3265.85 crore during 2021-22.

Apart from the above, NFL also sold 5.36 LMT of Urea imported in Government Account in FY 2022-23 against 8.86 LMT during 2021-22 .

Domestic Trading of Agro Products | ?

The Company has registered total revenue of ^288.12 crore towards trading of various agro products such as seeds, pesticides & compost and RFCL ammonia during the year against ^ 219.57 crore during CPLY.

Gross Sale Composition | ?

Item

% of total Sale Composition

% Increase/(Decrease)

2022-23

2021-22

Urea (manufactured)

65.12

67.75

(2.63)

Other Products

34.88

32.25

2.63

Owing to progressive shift in strategy of the Company, the composition of gross sale of the Company has undergone visible change. Against the Urea (main product) contribution of 94.49% in the overall revenue of the Company during 2015-16, Urea contribution has reduced to 65.12% while contribution of non-Urea business has increased to 34.88 % during 2022-23.

Agriculture Extension Activities | ?

Agriculture is the main source of livelihood for the farmers, which include crops, animals and allied activities. Agriculture Extension Activities are being undertaken by your Company by educating farmers on efficient use of all agro-inputs along with total know-how on improved and scientific methods of cultivation.

Dealers/Retailers are important link between the Company and the farmers. They are key change agents in motivating farmers to use fertilizers in a balanced manner. During the year 2022-23, 49 Dealer''s/Retailer''s Orientation Programmes were conducted and more than 2100 dealers/ retailers were facilitated by upgrading their knowledge regarding fertilizers/ agro products and improved crop practices so that latest information can be disseminated at point of purchase to the farmers. Information on Bio-fertilizers and City Compost has also been given in each and every training programme.

Your Company has always laid emphasis on upliftment of farming community by educating them on various aspects of crop production, animal husbandry and other allied agriculture sectors. 41 Farmer Training programmes were organized during 2022-23 and more than 2400 farmers got benefited. Through these educational programmes, farmers were sensitized to issues related with soil fertility status including deficiency of various nutrients, their remedy to increase fertilizer use efficiency and maximize yields. The farmers have also been educated on benefits of long term usage of Bio-fertilizers and City Compost through these programmes.

Agriculture Universities, Research Stations, KVKs are the knowledge centres for latest farming techniques, new and high yielding crop varieties, innovative technologies in agriculture and allied agriculture sectors etc. During the year with the objective to promote balanced and sustainable use of fertilizers, soil analysis, methodology of application of different fertilizer, new technologies etc., an opportunity was given to the farmers to practically visit the above places by organizing farmers visit to nearby Agriculture University/Research Station/ KVKs. More than 800 farmers got benefitted through 12 programmes during the year 2022-23.

During the year 2022-23, total 230 demonstrations had been laid out at farmers'' fields to demonstrate benefits of use of new Bio-fertilizers (Zn/K solubilizing), City Compost, Bentonite Sulphur and water soluble NPK fertilizer on crop growth and yield as compared to farmer''s own practices. 240 Field days were organized in the demonstration fields and more than 12300 farmers got benefitted from such programmes.

Your Company is playing a vital role in supporting farmers by undertaking soil analysis for macro and micro nutrients through its 6 Static and 5 Mobile Soil Testing Labs (MSTLs) in various States. 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, around 30000 soil samples were collected & analysed for macro and micro nutrients and recommendations were given to the farmers.

During the year 2022-23, your Company continued its endeavour to render soil testing services at all the farmers'' doorstep by organizing soil testing campaigns. During these campaigns, services of our Mobile Soil Testing Vans and laboratory staff were suitably utilized for collecting soil samples by demonstrating the correct method of sampling to the farmers and by offering on the spot soil analysis and advisory on the basis of soil test results.

Other than this, 30 Jeep campaigns were organized in the States of Punjab, Haryana, Rajasthan, HP, UP, MP, AP and Telangana. Through these campaigns, farmers were given information on new products launched by the Company and its usage and benefits. More than 11,000 farmers got benefitted by these programmes.

Participation in agro exhibitions and university Kisan Melas is very effective way to communicate directly with the farmers and also to interact with scientists and experts from various agricultural fields. During the year 2022-23, your Company participated in 39 Krishi Melas/Agriculture Exhibitions organized by leading Agriculture Universities, Agriculture Departments etc. in the States of Punjab, Haryana, UP, Uttarakhand, Bihar, MP, Chhaffisgarh, Rajasthan, AP and Telangana which was attended by more than 77,000 farmers.

As per guidelines of Department of Fertilizers (DoF) dated 24.08.2022 and with the objective to provide all the agricultural inputs and services to the farmers under one roof along with soil testing and advisory services, 22253 fertilizer retailer shops were allocated to your Company all across its marketing territory to convert the same into Pradhanmantri Kisan Samridhi Kendras (PMKSKs). Total 8719 PMKSKs has been converted into PMKSKs so far by puffing up a fascia in the shops. However, installation of Fascia, Smart TVs and other facilities as per DoF guidelines dated 24.08.2022 in the remaining retailer''s shops is under progress.

Your company has also signed a Memorandum of Understanding (MoU) with CSK H.P. Agriculture University, Palampur, H.P. for establishing NFL professor chair in the department of soil science with an objective of developing technologies on precision agriculture, judicious use of fertilizers and improving scientific methods of cultivation to enhance soil health and productivity. The MoU also mandates to promote use of Artificial Intelligence (AI), Information and Communication Technologies (ICT) for nutrient and water management.

As per Government directions, five Nos. of agricultural Drones were procured by NFL in the month of January 2023. Since installation, NFL is organizing programs on regular basis in its Marketing territory to popularize the use of Agricultural Drone among the farmers and generate the awareness.

Projects | ?

The details of the projects including capital expenditure envisaged are given in the Management Discussion & Analysis Report.

Management Discussion & Analysis Report | ?

Management Discussion & Analysis Report covering business prospects including modernization, diversification, investments, marketing plans, raw materials, human resource, internal management controls including financial performance review, government policies and other factors having impact on the performance of the Company operations and future outlook of the Company is appended as Annexure-1 to this Report.

Business Responsibility and Sustainability Report !!?

SEBI vide circular no. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated 10.05.2021 had introduced the "Business responsibility and sustainability reporting by listed entities", which introduces new reporting requirements on Environment, Social and Governance parameters [ESG parameters] called the Business Responsibility and Sustainability Report (BRSR). The reporting as required under Regulation 34 of SEBI (LODR) Regulations, 2015 was amended for the listed entities and the same shall be mandatory for the top 1000 listed companies (by market capitalization) with effect from the financial year 2022-2023.

Your Company in adherence to the circular had prepared the Business Responsibility and Sustainability Report for the financial year ended March 31, 2023 and the same is appended as Annexure-2 to this Report. Business Responsibility and Sustainability Policy is available on the website of the Company at www.nafionalferfilizers.com.

Stakeholders'' relationship

Details of stakeholders'' relationship are given in the Business Responsibility and Sustainability Report annexed to this Report.

Customers'' relationship | ?

Details of customer relationship are given in the Business Responsibility and Sustainability Report annexed to this Report.

Corporate Governance | ?

The Company is committed to maintain the highest standards of Corporate Governance being the fountain head of value creation for all stakeholders especially shareholders. The Company has in place a well-defined "Corporate Governance Mechanism" which considers the interest of all stakeholders.

Pursuant to SEBI (LODR) Regulations, 2015 (as amended from time to time) and DPE Guidelines on Corporate Governance, a report on Corporate Governance is appended as Annexure-3 which forms part of this Report.

The Secretarial Auditor of the Company have examined and certified Company''s compliance with respect to conditions enumerated in SEBI (LODR) Regulations, 2015 and DPE guidelines on Corporate Governance. Secretarial Auditor''s Certificate on Corporate Governance and explanations of the Management to Secretarial Auditors'' observations during the year 2022-2023 is appended as Annexure-4 which forms part of this Report.

Parliamentary Committees during 2022-23: | ?

The following Parliamentary Committee interacted with the Company during the year 2022-23:

1. Study visit of the Standing Committee on Chemicals and Fertilizers to Srinagar, Pune, Mumbai and Ahmedabad from 10th June, 2022 to 15th June, 2022.

2. Study visit of Committee on Public Undertakings (COPU) to Chennai and Bhubaneshwar from 9th to 12th January, 2023 regarding Corporate Governance.

Material Orders of Regulators

Following regulatory orders issued for implementation may affect/ have affected the operations of the plants:

1.0 Amendment in import policy of Urea | ?

Directorate General of Foreign Trade, Department of Commerce, Ministry of Commerce & Industry, Government of India issued a notification on 3rd November, 2021 regarding amendment in import policy condition of Urea [Exim Code 31021OO0 ] in the ITC (HS) 2017, Schedule - I (Import Policy) with immediate effect.

According to the revised policy, import of urea was allowed through RCF and NFL subject to Para 2.20 of Foreign Trade Policy, 2015-2020. In addition, import of urea was also allowed through IPL for a period upto 31st March, 2022. However, import of Technical Grade Urea (TGU) meant for non-agricultural purpose/ industrial use/ NPK Manufacturing shall be "Free".

2.0 NBS rates for P & K fertilizers for Kharif 2022-23 | ?

In order to keep the P&K fertilizer prices affordable to the farmers, DoF issued a notification on 27th April, 2022 and enhanced the subsidy rates for P&K fertilizers under NBS policy for kharif 2022 (from 1st April, 2022 upto 30th September, 2022). The per kg NBS rates of N, P, K and S increased from Rs.18.789, Rs. 45.323, Rs. 10.116 and Rs. 2.374 during rabi 2021-22 to Rs. 91.96, Rs. 72.74, Rs. 25.31 and Rs. 6.94, respectively, for kharif 2022.

Accordingly, NBS rates per MT of DAP and MOP increased from Rs. 33,000 and Rs. 6,070 per MT during rabi 2021-22 to Rs. 50,013 and Rs. 15,186 per MT, respectively, for kharif 2022. NBS rates for NP/NPK grades of fertilizers ranged between Rs. 27,947 per MT and Rs. 46,116 per MT for kharif 2022. However, subsidy on SSP and Potash Derived from Molasses remained unchanged at Rs. 7,513 per MT and Rs. 1,467 per MT, respectively, for kharif 2022. The per tonne additional subsidy for fortified fertilizers with boron and zinc continued and remained unchanged at Rs. 300 and Rs. 500, respectively.

3.0 NBS rates for P & K fertilizers for Rabi 2022-23 | ?

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

Accordingly, NBS rates per MT of DAP and MOP reduced from Rs. 50,013 and Rs. 15,186 per MT during kharif 2022 to Rs. 48,433 and Rs. 14,188 per MT, respectively, for rabi 2022-23. NBS rates for NP/NPK grades of fertilizers ranged between Rs. 26,864 per MT and Rs. 46,188 per MT for rabi 2022-23. However, subsidy on SSP and Potash Derived from Molasses remained unchanged at Rs. 7,513 per MT and Rs. 1,467 per MT, respectively. The per tonne additional subsidy for fortified fertilizers with boron and zinc continued and remained unchanged at Rs. 300 and Rs. 500 respectively.

Summary of Changes in NBS Rates during FY 2022-23 and its impact on reduction of subsidy | ?

NBS ( Rs. Per Kg of Nutrient )

Nutrient

OM Dt 27.04.2022

OM Dt 02.11.2022

OM Dt 18.05.2023

OM Dt 18.05.2023

Kharif-2022

Rabi-2022-23

Revised for 01.01.2023 to 31.03.2023

Kharif-2023

N

91.96

98.02

99.27

76.49

P

72.74

66.93

49.94

41.03

K

25.31

23.65

25.70

15.91

S

6.94

6.12

2.84

2.80

4.0 Guidelines relating to Potash Derived from Molasses (0-0-14.5-0) under NBS scheme | ?

DoF issued an Office Memorandum on 12th July, 2022 regarding the guidelines relating to Potash Derived from Molasses (0-0-14.5-0) under NBS scheme. The main points in the guidelines as stated below:

a) Manufacturers of granulated Potash Derived from Molasses shall be provided subsidy under NBS Scheme.

b) Granulated Potash derived from Molasses with a minimum 14.5% of K20 content as per FCO 1985 as amended from time to time will be allowed for claiming subsidy.

c) The subsidy on Potash Derived from Molasses will be inclusive of the freight subsidy.

d) With regard to marketing arrangement, the manufacturer of Potash Derived from Molasses shall be eligible for sale by entering into marketing arrangement with marketers under intimation to DoF and the fertilizer manufacturers including importers which are registered under the subsidy scheme of DoF shall be considered as marketer of Potash Derived from Molasses.

e) Regarding quality, manufacturer/marketer/retailer/dealer will be jointly liable for ensuring/ maintaining quality of the fertilizer as per the extant rules/ guidelines issued by DoF. Quality testing will be done by the manufacturer in the NABL accredited labs/ State Government registered labs.

5.0 Implementation of One Nation One Fertilizer

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

The single brand name for Urea, DAP, MOP and NPKs, etc. would be Bharat Urea, Bharat DAP, Bharat MOP and Bharat NPK, etc., respectively, for all fertilizer companies, State Trading Entities and fertilizer Marketing Entities. A logo indicating Fertilizer Subsidy scheme namely Pradhanmantri Bhartiya Janurvarak Pariyojna will be used on the respective fertilizer bags.

As per OM, the print will be done on one side of fertilizer''s bag. Two-third of the Fertilizer''s bag will be used for new brand and logo with Pradhanmantri Bhartiya Janurvarak Pariyojna and one-third will be used for using Fertilizer companies'' name, logo and other information as required in different Rules & Regulations, etc.

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

Sr. No.

Type of fertilizer

Timeline

1.

Imported Urea

30th November, 2022

2.

Indigenous Urea

30th November, 2022

3.

Imported P&K

30th November, 2022

4.

Indigenous P&K

31st December, 2022

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

6.0 Implementation of NUP-2015 Energy Norms:

Department of Fertilizers (DoF) vide letter dated 28-03-2018 issued a Notification revising Energy Norms under NUP-2015 for years 2018-19 and 2019-20. Through this notification, the Target Energy Norms under NUP-2015 for NFL Bathinda, NFL Panipat, NFL Nangal and NFL Vijaipur-I were extended for further period of 2 years till 31st March, 2020 with a penalty of 2% & 5% for financial years 2018-19 and 2019-20 respectively. Subsequently it was further extended till 30th September, 2020 with a penalty of 10%. The token penalty was equivalent to percentage energy difference between existing NUP Energy norms and Target Energy norms of NUP-2015.

However after notification of DoF dated 31.03.2023, the target energy norm for Bathinda, Panipat and Nangal Units of 6.5 Gcal/MT of Urea has been implemented from 01.04.2022 whereas as per notification dated 18-11-2022 of DoF, target energy norms of 5.5 Gcal/MT of Urea for Vijaipur-I shall be implemented from 01.04.2023.

To achieve these energy targets, NFL installed of GTG-HRSGs at Bathinda, Panipat and Nangal Unit at a total project cost of Rs 690 crore whereas various energy saving schemes had been implemented at Vijaipur complex at a cost of Rs 235 crores.

The GTG-HRSG plants at Bathinda & Nangal units were put into continuous operation. Similarly, at Vijaipur-I & II all the schemes and sub schemes for energy savings got completed by March, 2022.

The implementation of energy savings schemes at all NFL units got severely delayed due to spread of Covid-19 w.e.f. March, 2022.

Although target norms for all the units have been enforced by DoF, but Vijaipur-I unit could not achieve the target energy norms of as 5.5 Gcal/per tonne of Urea as also envisaged in TEFR prepared by PDIL and its energy is expected to remain higher than norm. NFL has requested DoF that target energy norms for Vijaipur-I unit may kindly be reviewed.

7.0 Plastic Waste Management Rules 2016 | ?

The Ministry of Environment Forests and Climate Change (MoEF & CC), Government of India, vide Gazette Notification dated 18th March, 2016 has specified rules for Plastic Waste Management. The Rules fix the responsibility of local bodies, Gram Panchayat and Waste generators, as well as producers, importers and brand owners for collection and management of plastic waste. However, subsequent amendments have also come in 2018 and later on Plastic Waste Management Rules were amended as Plastic Waste management Rules 2022.

Fertilizer industry falls under the category of brand owners as the fertilizer products are sold in plastic bags that are multi-layered and composed of HDPE/HDPE lined with polypropylene. All the Brand Owners who introduce the products in the market have to establish a system or plan for collecting back the plastic waste generated due to their products. As per rules NFL has to register with Central Pollution Control Board (CPCB) and submit along with action plan to comply with Extended Producer Responsibility (EPR) obligation as mentioned in the rule.

Accordingly, NFL applied for the registration and after approval NFL got registration as a Brand Owner under PWM Rules on 21.06.2022 with 01 year validity. The same shall be renewed every year.

CPCB awarded the registration along with fixing an EPR target (collections & recycling of plastic waste) of 10914 MT (Cat-II)/flexible plastic in the FY 2022-23. To fulfil the EPR target, NFL engaged agencies to collect & recycle the plastic waste on behalf of NFL.

As of now NFL has completed its EPR obligation under the rule for FY 2022-23. For the current year i.e. FY 2023-24, renewal of registration shall be done shortly and according to the target fresh tender shall be floated to fulfil the statutory obligation for the year.

The Right to Information | ?

In consonance with the spirit of Right to Information Act, the Company has created necessary mechanism as required under the Act. The Public Information Officers and Appellate Authorities are effectively responding to the requests and appeals of the applicants. The names of all PIOs/ Appellate Authorities/ Transparency Officer are displayed on the Company''s website. During the year, 312 RTI applications were received and were dealt with as per provisions under Right to Information Act, 2005.

Vigil Mechanism | ^

Pursuant to the provisions of Sections 177(9) and (10) of the Companies Act, 2013, a Vigil Mechanism for employees and others to report genuine concerns has been established.

Whistle Blower Policy | ?

Company believes in transparency and propriety in all its business dealings, To take this object further Company has put in place a Whistle Blower Policy providing for a mechanism to the employees and other stakeholders to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimization of whistle blowers. The policy is reviewed periodically. No employee or other stakeholders were denied access to the Audit Committee. Whistle Blower Policy is available on the website of the Company at www.nationalfertilizers.com.

Integrity Pact | ?

With the commitment to maintain the highest standard of transparency and governance, your Company has entered into an integrity Pact with Transparency International and has also appointed Independent External Monitors (IEMs), as approved by CVC. Structured Meetings are held with IEMs on regular intervals and threshold value is Rs. 1 crore for signing of Integrity Pact for purchase/works contracts.

Vigilance | ?

Vigilance Division of the Company is headed by CVO. The CVO is assisted by a team of officers drawn from various functional departments. Vigilance set up is operational in Corporate Office, all Manufacturing Units as well as Zonal Marketing Offices.

Promotion of good governance remains the core area of vigilance. Awareness is an important cornerstone for good governance. An enlightened employee not only contributes in achieving the organizational goals but is also instrumental in system improvement.

As an effort towards promoting Preventive Vigilance, Workshops / Training Programs were conducted during the year in all Offices & Production units. These training programmes focused on various issues related to manuals and procedures. In line with the guidelines of CVC & DoF with respect to Preventive Vigilance Module, two days training programmes were conducted for in service officials working on sensitive posts and also new appointees were sensitized on this.

Special Seminars on vulnerable area are being organized in all manufacturing Units and Zonal Offices involving officials at all levels who are dealing with Tenders.

Regular preventive vigilance activities such as Scrutinies, Surprise checks, Vigilance clearance for administrative decisions, enforcement of Transfer Policy and Rotation of Officers on Sensitive Posts were also carried out in close coordination with the Management. At the same time, investigation of complaints received from various sources and follow up of pending departmental action on previous investigated cases were also done with due diligence.

Periodic Vigilance Reports preparation of Agreed List of Officers, List of Officers of Doubtful Integrity, and observance of Vigilance Awareness Week in Units, Zonal Offices and Corporate Office were the major activities conducted during the year.

The working of vigilance wing of NFL is based on a proactive, participative and focused approach. The roles and responsibilities of vigilance officers are regularly monitored and reviewed to bring the focus on systemic improvements.

MoU | ?

The Department of Public Enterprises, Government of India, in order to improve accountability and giving higher autonomy to Public Sector Enterprises, introduced the Concept of MoU during early nineties. NFL signed its first MoU with the Department of Fertilizers (DoF) for the year 1991-92.

Based on financial performance and achievement of other parameters laid down, your Company has been rated "Good" as per the Memorandum of Understanding (MoU), signed with the Government of India for the financial year 2021-22. From the year 2021-22 and onwards, DPE has started data entry module of digital MoU Dashboard for CPSEs for entering data. Accordingly, MoU for the year 2022-23 was generated through online MoU portal after entering requisite information. The Ministry and the CPSEs were requested to sign this system generated MoU. Further Company shall submit actual achievement against all the parameters for 2022-23 in the online MoU portal for evaluation.

Awards & Accolades received during 2022-23

• Bathinda Unit won award for Excellent Work in Hindi from Indian Language and Cultural Centre in Lonavala, Maharashtra.

• Vijaipur Unit received FAME NATIONAL AWARD 2021-22 (PLATINUM AWARD) towards Excellence in Occupational Health and Safety in fertilizer industry.

• Bathinda Unit has received 01 no. IV level award of "Prashansa Patra" for appreciable achievement in Occupational Health and Safety during assessment period of 2018-2020 by National Safety Council, Mumbai for Safety Award-2021.

• Nangal Unit received First prize for doing excellent work in Rajbhasha for the year 2021-22 from Town Official Language Implementation Committee (TOLIC).

• NFL received First Prize from Ministry of Chemicals and Fertilizers for Best Performance in Hindi. Shri Nirlep Singh Rai, CMD received this award from Shri Mansukh Mandaviya, Hon''ble Minister of Chemicals and Fertilizers and Health in Hindi Salahkar Samiti meeting held in Delhi.

• Bathinda Unit has received Gold Award in 12th Exceed Energy Efficiency by Sustainable Development Foundation (SDF) 2022 in July 2022.

• Vijaipur Unit received "Grow Care India Training Excellence Awards 2022 under HR Category Gold Award" (GROW CARE INDIA HR AWARD 2022) and Gold Award under Grow Care India OHS Award 2022 in Fertilizer Sector.

• NFL Bathinda Unit has been declared winner of 22nd Greentech Environment Award - 2022 for outstanding achievement in Environment Protection.

• Panipat Unit has secured the silver Award in the category of Environment Preservation in the 12th Exceed Environment Award & Conference 2022 organized by Sustainable Development Foundation.

• Nangal Unit has received "WINNER" award for outstanding achievement in Environment Protection category during 22nd Genentech Environment Award 2022 held at Guwahati.

• Nangal Unit has won the GOLD Award under Apex India Occupational Health and Safety, HR Business Excellence Award 2022 in Fertilizer Sector for "Outstanding achievement in Safety Management"

• NFL Panipat received Green Crest Awards-2022 under "PLATINUM" category.

• NFL Bathinda Unit has received 02 no. awards in November:-

? Rajbhasha Shiromani Prize from the Indian Language & Culture Centre, New Delhi and

? 1st Prize for Excellence in Hindi from TOLIC (Narakas), Bathinda

• NFL received Eight Excellence "Awards during 16th Global" Communication Conclave organized by PRCI in Kolkata. Company received six awards for its various collaterals. In the individual category, Sh. B V Vittal, CGM (HR) and Sh. Sanjeev Randeva, DGM (CC & HR) received the awards.

• NFL Nangal Unit has been selected for "Gold Award" under Apex India Green Leaf Award 2022 for Energy Efficiency category in Fertilizer Sector.

• NFL Vijaipur Unit has been selected for Gold Award in Fertilizer Sector for

? Grow Care India Environment Award 2022.

? Grow Care India Waste Management Award 2022.

Initiatives under Corporate Social Responsibility

Company is constantly working towards inclusive growth in society and is implementing various developmental activities under its Corporate Social Responsibility (CSR).

The company allocated a CSR budget of Rs.140.00 Lakh for the FY 2022-23 and incurred an expenditure of Rs.174.42 Lakh during the year. This included expenditure on schemes approved in previous years but carried forward in the year 2022-23.

In the year 2022-23, the focus of CSR activities of the Company was on the theme given by Department of Public Enterprises (DPE) i.e. Health & Nutrition. For promoting preventive Healthcare, the company undertook a project to run a Mobile Digital Health Clinic for preventive screening of the masses for the essential metabolic vitals in slums and rural areas of Delhi-NCR. Also, the Company provided Digital Programmable Hearing Aids to the hearing-impaired persons from weaker section of the society in Andhra Pradesh.

In addition, the Company undertook a project aimed at enhancing the Nutrition and Health of Government School Children through the "GiftMilk Program" in Aspirational District Guna. Under this initiative, a daily provision of 200ml of fortified, flavored, and sterilized milk is supplied to school children throughout the entire academic year.

The Company also distributed Long Lasting Insecticidal Nets (LLIN) of HIL in the rural areas of Punjab, Haryana, Madhya Pradesh & Telangana. These Mosquito nets would help in preventing vector-borne diseases and safeguarding public health.

Further, the company has also undertaken a number of projects to promote school education among students from underprivileged section of the society. The company has distributed Educational Material to the students from Government Primary Schools of remote villages near Delhi to promote regular attendance and increase interest in studies.

The Company has supported Government Schools in the vicinity of its plants with the provision of school desk & benches, IT enabled smart boards, RO Water facilities etc. In order to bring Divyangjan in mainstream of life, the Company has provided Braille Machines and special sports items to the blind students in Chandigarh.

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

RESEARCH & DEVELOPMENT | ?

NFL had sponsored a research project titled "Cow dung processing and its conversion to Bio- fortified fertilizer with enhanced functionality: A pilot study" undertaken by ICAR-NDRI was spread over a period of three years (2018-21). The pilot study was successfully completed in December, 2021 & final project report was submitted by ICAR-NDRI in January, 2022.

To further explore in R&D activities, NFL is settng up an R&D centre at Nangal along with settng up of a pilot plant for trial production of Nano fertilizers and other agriculture based products etc. Procurement action has been initiated for required laboratory apparatus and other setup of R&D lab at Nangal. In addition to above, NFL is exploring signing up MoU with reputed institutes like Institute of Nano Technology, Mohali and others in vicinity of NFL Nangal unit for R&D activities in Nano Fertilizers.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo | ?

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

Safety, Environment and Sustainable Development | ?

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

Particulars of Loans, Guarantees, Security and acquisition under Section 186 of the Companies Act, 2013 | ?

Particulars of loans given, guarantees provided, investments in securities and acquisitions made by the Company during the year under review are given in Form MBP-2 and the same is appended as Annexure-8 forms part of this Report.

Joint venture /Associates Companies | ?

Details of Joint Venture/Associates Companies pursuant to Section 129(3) of the Companies Act, 2013 the statement containing the salient features of the Financial Statement of the Associate Company/Joint Venture Company is, included in the Consolidated Financial Statements is appended as Annexure-9 forms part of this Report.

Companies which have become or ceased to be subsidiaries, associates and joint ventures

During the year 2022-23, Company has not acquired or formed any new subsidiary, associate or joint venture. Similarly, no subsidiary, associate or joint ventures have been ceased by way of sale of shares, amalgamation, winding up etc.

Related Party Disclosures

The particulars of contracts/arrangement entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 including arm''s length transactions under third proviso thereto are disclosed in Form AOC-2 and the same is appended as Annexure-10 forms part of this Report. Related Party Transaction Policy of the Company is available at www.nationalfertilizers.com.

Capital Expenditure (CAPEX)

The achievement in CAPEX is ^ 160 crore excluding capital work in progress (CWIP) in the year 2022-23.

Risk Management | ?

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

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

Under Risk Management policy, all the risks along with mitigation actions undertaken have been reviewed by Risk Assessment and Risk Management Committees. Some of the major risks having severe financial impact as identified by the company include disallowing of minimum fixed cost for Vijaipur-I Unit under MNPS - III w.e.f. 02.04.2014 and outstanding subsidiary due to delayed subsidiary payment.

Internal Financial Controls

Details in respect of adequacy of internal financial controls with reference to financial statements are given in Management Discussion & Analysis Report.

internal Financial Reporting/ and Control

The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31.03.2023.

Particulars of Employees | ?

As per provisions of section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed Company is required to disclose the ratio of the remuneration of each Director to the median employee''s remuneration and other prescribed details in the Board''s Report.

As per notification dated 05.06.2015 issued by Ministry of Corporate Affairs, these provisions are not applicable to the Government Company. Accordingly, these particulars are not included in the Board''s Report.

Public Procurement Policy of Micro and Small Enterprises (MSEs) Order, 2012

Public Procurement Policy for Micro and Small Enterprises (MSEs) was notified by the Government under the Micro, Small and Medium Enterprises Development Act, 2006 which stipulated that 20% of total annual procurement of goods and services shall be made by all Central Ministries /Departments /CPSUs from Micro & Small Enterprises (MSEs). Within this percentage, a sub total of 4% procurement is to be made from MSEs owned by SC/ST entrepreneurs. The requisite information for the year 2022-23 is appended as Annexure-11 forms part of this Report.

Procurement through GeM Portal | ?

The total procurement through GeM portal during 2022-23 was Rs. 151.15 Crore.

Human Resource Management | ?

The Company has manpower strength of 2964 regular employees as on 31.03.2023, which comprises 1454 Executives and 1510 Non- Executives. 197 women employees are on its roll, which is 6.65% of the total work force. The detailed analysis with regard to human resource including training and executive development programme have been made in the Management Discussion and Analysis Report.

• Employee Strength: The Company had 2964 employees as at the end of FY 2022-2023 of which 1268 were SC/ST/OBC employees and 50 divyangjans.

• Employee Benefits: The vision of the Company for its human resources is to create an enabling environment to enhance the efficiency of the organization. The aim is to encourage the employees to perform their best ability by a system of proper placements and incentives, while creating an atmosphere of trust and a feeling that the organization cares about the wellbeing and personal aspirations of the staff. This helps align personal aspirations with professional goals and enhances efficiency. The Company runs multiple benefit schemes for its employees like Provident Fund, gratuity, pension, medical benefits, contributory pension scheme, concessional interest rates on loans, scholarships to employees'' children, executive health check-up etc. The Company also shares part of its profit with employees under its Performance Related Pay scheme in compliance with DPE Guidelines.

• Human Rights: Recruitment policy of the Company does not permit any engagement of child labour, forced labour or involuntary labour, an independent Internal Complaint Committee has been constituted at Corporate Office and each Unit to promptly and appropriately handle complaints of sexual harassment at work places. The Company refrains from any discrimination on the basis of caste, creed, gender or religion and strives to ensure a healthy work-life balance for its employees.

• Employee Well Being: NFL believes that workforce is the greatest asset that propels the growth engine. Employees are considered as "Change Catalysts" and the Company nurtures and channelize the expertise and talent of employees for growth performance, feedback, motivation and training. The achievements and efforts are appreciated, acknowledged & rewarded.

On the health front also, Company looks after each & every employee along with his / her dependents for protection from unhygienic conditions and treatment of various illnesses.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention,Prohibition and Redressal) Act, 2013

Policy on Prevention, Prohibition and Redressal of Sexual harassment of women at work place is in line with the requirements of the Sexual Harassment of women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. No complaint of sexual harassment was received in the year 2022-23.

Details of proceedings pending under the Insolvency and Bankruptcy Code, 2016 | ?

During the year under review, no application was made and no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 during the financial year 2022-23.

One-time Settlement and Valuation | ^

During the financial year 2022-23, no event has taken place that gives rise to reporting of details with respect to difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions.

Implementation of Official Language Policy | ^

The Company is making efforts for the propagation and implementation of official language policy of the Government of India. The quarterly meeting of Official Language Implementation Committee (OLIC) is regularly held in all the Units/Offices of the Company under the Chairmanship of Head of respective Office/Unit to review the progress of use of Hindi in Official work. Total 36 meetings were held during the year 2022-23.

To promote the use of Hindi, 36 Hindi Workshops were organized during the year in which 997 employees actively participated. ''Hindi Pakhwara'' was organized in all the Units/Offices of the Company to commemorate ''Hindi Diwas''. During the year 57 programmes/competiti''ons were organized for promoting the use of Hindi and a total 1773

employees participated in them out of which 531 participants were awarded prizes. Besides, under ''Cash Incentive Scheme'' 85 employees were given cash prizes for doing their official work in Hindi.

Two half yearly meetings were successfully conducted in compliances of the conduct and heading of Town Official Language Committee (Undertaking), Noida on 22-07-2022 and 22-11-2022 by NFL, Corporate Office through video conferencing under the Chairmanship of Chairman & Managing Director of NFL in which 68/77 nos. of nominated heads of members offices and other Official Language Officer attended the meeting.

During the year 2022-23, the First Sub-committee of the Parliamentary Committee on Official Language successfully conducted the Inspection/Tour programme regarding the use of Official Language at Zonal Office, Lucknow on 19.05.2022, Area Office, Gorakhpur on 04.01.2023, Area Office, Agra on 11.01.2023, Area Office, Jodhpur on 13.01.2023 and Area Office, Patna on 27.02.2023 respectively.

NFL, Corporate Office, Noida was awarded First Prize for its excellent work in the field of official language implementation in the "Hindi Advisory Committee" meeting held in New Delhi on 23.06.2022 under the Chairmanship of the Hon''ble Minister of Chemicals and Fertilizers. Also, special honor was given to NFL Official Language Officer in the said meeting. All Units/ Offices of NFL participated in the "Rajbhasha Sammelan" at Surat (Gujrat) organized by Department of Official Language, GOI, from 14-15 September, 2022.

NFL''s Bathinda Unit was awarded "Rajbhasha Shield" - First Prize, under PSU category for its commendable work in the field of official language during the year 2020-21 by TOLIC, Bathinda in November, 2022 and TOLIC, Chandigarh on 24.11.2022 bestowed NFL''s Zonal Office, Chandigarh with "Rajbhasha Shield"- First Prize, under Board/ Corporation/Undertaking category for its commendable work in the field of official language during the year 202021.

The Ministry of External Affairs, Government of India organized 12th ''World Hindi Conference'' from February 15th to 17th, 2023 at Nadi City, Fiji. In this conference, Hindi scholars, litterateurs, journalists, linguists and Hindi lovers from all over the world gathered on one platform. NFL, Corporate Office, Noida was represented by senior officials.

Initiatives taken for development of employees belonging to Scheduled Caste /

Scheduled Tribes /Other Backward Classes (SC/ST/OBC categories).

Company is committed to the development of employees belonging to reserved categories. An Implementation Cell is functional in all Units/ Offices of the Company to oversee the implementation of Presidential Directives on Reservation Policy for SCs / STs. Liasion Officer has been appointed in each Unit / Office and Chief Liasion Officer at CO, NOIDA to ensure due compliance of orders and instructions pertaining to reservation for SCs and STs and other concessions admissible to them. Meetings were periodically held at Unit level as well as at corporate level with the SC /ST Employees'' Welfare Associations by the Management for redressal of grievances of SC /ST employees. A statement showing representation of employees belonging to Scheduled Caste/Scheduled Tribes/Other Backward Classes/ Persons is appended as Annexure-12 forms part of this Report.

Presidential Directives | ?

Schedule of Compliances with Presidential Directive issued during financial year 2022-23 and during last three year preceding the financial year 2022-23 is as below:

Financial Year

Content of Presidential Directives

Compliance

2022-23

NIL

NIL

2021-22

NIL

NIL

2020-21

NIL

NIL

2019-20

NIL

NIL

Information Technology | ?

Company has embarked on a journey to become an IT enabled organization to improve operational efficiencies and has made significant investments in digital assets and new technologies intending to address the company''s future needs.

Major digital initiatives include implementation of centralized Dispatch Management System, Marketing Management & Information System, Human Resource Management System, Employees Self Service portal and Online APAR system which are handled at Data Centre of Corporate Office, Noida. Recently PRMS (Post-Retirement Medical Scheme) portal has been made live for extending the medical benefits to the eligible ex-employees of NFL and their spouse.

In order to have secure access to business applications, SDWAN solution has been implemented. To reduce the downtime of internet access, redundant internet leased lines had been replaced at each Manufacturing Units, Zonal Offices and Corporate Office, Noida. To prevent cyber threats, UTM based security appliances have been installed.

E-Office application has been implemented across the organization. This initiative has given the twin benefit of being environment friendly (i.e. a step towards paperless office) and has resulted in reduction in file processing time, thus speeding up decision making.

To address the company''s future needs, implementation of ERP solution SAP S4/HANA is under progress which is an integrated business solution and will increase productivity, efficiency and will provide data on real time. The project is named as ''SANGAM'' - Software Aligned for NFL''s Growth and Modernization.

Material impact of CoVID-19 pandemic on operations and performance of the Company | ?

During the FY 2022-23, there was no material impact of CoVID-19 pandemic on the operations and performance of the Company.

AUDITORS | ?

Statutory Auditors | ^

The Statutory Audit of your Company was conducted by Chartered Accountants firms M/s. Arun K. Agarwal & Associates, Chartered Accountants and M/s Dhawan & Co., Chartered Accountants, Joint Auditors appointed by Comptroller & Auditor General of India (C&AG). Auditor''s Report on the Financial Statements including consolidated Financial Statements of the Company for the financial year 2022-23 is attached.

Proposal authorising Board of Directors to decide & fix remuneration of Statutory Auditors appointed/to be appointed by the Comptroller and Auditor General of India for the F.Y. 2023-24 is placed for your approval.

Explanation in response to Auditor''s Qualification | ?

Statutory Auditors of the Company have issued an Audit Report with Unmodified opinion on Audited Financial Results of the Company (Standalone & Consolidated) for the financial year ended 31.03.2023.

Comments of C&AG !!?

The Financial Statement (Standalone and consolidated) of the Company are subject to comments of C&AG of India under Section 143(6)(b) read with Section 129(4) of the Companies Act, 2013 which shall be sent to shareholders separately.

Cost Auditors | ?

As prescribed under Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules,

2014, the cost accounting records are being maintained by all the Units of the Company. Cost Audit for 2022-23 was carried out by Cost Auditors M/s K.G. Goyal & Associates, M/s Ravi Sahni & Co., M/s Ramanath Iyer & Co. and M/s R. K. Patel & Co., as prescribed under the Companies Act, 2013 and Rules framed thereunder. M/s Ramanath Iyer & Co. acted as the Lead Cost Auditor. Consolidated Cost Audit Report for the financial year 2021-22 was filed with Ministry of Corporate Affairs (MCA) on 07.09.2022.

Internal Auditors | ^

Company has an Internal Audit Department headed by Deputy General Manager. To carry out Non-technical Audit, your company had appointed nine Chartered Accountant firms namely M/s. S.K.Mehta & Co, M/s. G.S. Mathur & Co., M/s. Raj HarGopal & Co., M/s J.Singh & Associates, M/s. Goyal Parul & Co., M/s. Chaturvedi & Co., M/s.S.N. Kapur & Associates, M/s. Amit Ray & Co., and M/s J.K.S.S & Associates for the year 2022-23. Technical Audit and IT/ EDP Audit were carried out by in-house internal audit teams.

Secretarial Auditors | ?

M/s Kumar Naresh Sinha & Associates, Practicing Company Secretaries was appointed by the Board for undertaking the Secretarial Audit for the Financial Year 2022-23 in terms of Section 204 of Companies Act, 2013 and Rules made there under. Secretarial Audit Report for the year 2022-23 and Management''s explanation to Secretarial Auditor''s observations are appended as Annexure-13 which forms part of this Report.

Annual Secretarial Compliance Report for the Financial Year ended 31.03.2023 issued by M/s Kumar Naresh Sinha & Associates, Practicing Company Secretaries, under Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended as Annexure-14 which forms part of this Report.

Compliance with Secretarial Standards | ?

The Company complies with all applicable Secretarial Standards issued by The Institute of Company Secretaries of India.

Audit Committee | ^

The detailed disclosures have been made in the Corporate Governance Report annexed to this report.

Nomination & Remuneration Committee and Remuneration Policy | ?

Disclosures regarding Nomination & Remuneration Committee and Remuneration Policy are given in the Corporate Governance Report annexed to this report.

Stakeholders Relationship Committee | ?

Disclosures regarding Stakeholders Relationship Committee are given in the Corporate Governance Report annexed to this report.

Corporate Social Responsibility and Sustainable Development Committee | ^

Disclosures regarding Corporate Social Responsibility and Sustainable Development Committee are given in the Corporate Governance Report annexed to this report.

Company''s policy on Director''s appointment and remuneration | ?

Ministry of Corporate Affairs has granted exemption vide notification No. GSR463 (E) dated 05.06.2015 to the Government Companies from the provisions of Section 134(3)(p) of the Companies Act, 2013. Director''s

appointment and remuneration is decided by the Government of India. Keeping in view the exemption, no Remuneration Policy has been formulated.

Board & Committee Meetings | ?

The details of Board Meetings, Committee Meetings and Meetings of Independent Directors are given in the Corporate Governance Report annexed to this report.

Annual Return u/s 92(3) of the Companies Act, 2013 | ?

The Annual Return of the Company will be made available on the website of the Company at www.nationalfertilizers.com.

Investor Education and Protection Fund | ?

The Company has complied with all the provisions relating to the Investor Education and Protection Fund (IEPF) under the Companies Act, 2013 and The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, made there under. Company Secretary is the Nodal Officer to deal with IEPF Authority and compliances related thereto.

During the year 2022-23, an amount of ^ 99,366 of unpaid/unclaimed dividend amount was transferred to Investor Education and Protection Fund on account of unpaid/unclaimed dividend. Accordingly as per Section 124(6) of the Companies Act, 2013 and Rules notified thereunder, 13087 shares were transferred to demat account of IEPF. The details of the unpaid/unclaimed dividend and shares transferred to IEPF Account for the previous years are available at the website of the Company www.nationalfertilizers.com.

Listing | ?

Company''s equity Shares are listed at National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). Other disclosures regarding listing regulations have been made in Corporate Governance Report.

Listing Fee | ?

Company has paid requisite listing fee to the stock exchanges during the year 2022-23.

Service to Shareholders !!?

All matters relating to transfer/transmission of shares, issue of duplicate share certificates, payment of dividend, dematerialization and re-materialization of shares and redressal of investors grievances are carried out by the Company''s RTA i.e. M/s. MAS Services Limited, New Delhi.

Code of Conduct

Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31.03.2023. Code of Conduct has been uploaded on the website of the Company at www.nationalfertilizers.com.

Corporate Policies & Codes !!?

Details regarding various corporate policies & codes are given in the Corporate Governance Report and also available on the website of the Company at www.nationalfertilizers.com.

Disclosure pursuant to FEMA Regulation | ?

FEMA Regulations applicable to Companies owned or controlled by non-resident entity(s) are not applicable to NFL.

Key Business Development !!?

Overview of the Indian & Global fertilizer industry is given in the Management Discussion & Analysis Report annexed to this report.

Disclosure regarding Mis-appropriation of Funds

Statutory Auditors in its report emphasized regarding fraudulent misappropriation of seed stock amounting to '' 0.64 crore by a Wheat Seed Producer under Warehousing and Processing of Wheat Seed Agreement with the Company during the year. The Company has filed a police complaint in the matter.

Disclosure regarding frauds !!?

No fraud has been reported by the Auditor to the Audit Committee or to the Board, during the financial year 2022-23.

Details of the sickness of the Company | ?

Not applicable.

Management «?Key Managerial Personnel (KMP) | ^

In compliance with provisions of Section 203 of the Companies Act, 2013, Key Managerial Personnel (KMP) position as on 31.03.2023 is as follows:

Shri Atul Baburao Pati''l, had been appointed as Chairman & Managing Director (Addl. Charge) w.e.f. 01.09.2022. Shri Hira Nand had been appointed as Chief Financial Officer w.e.f. 24.05.2022.

Shri Ashok Jha, Company Secretary.

Further, Shri U. Saravanan has been appointed as Chairman & Managing Director w.e.f. 16.06.2023.

Board of Directors | ?Changes in Composition »?

Shri Nirlep Singh Rai ceased to be C&MD w.e.f. 31.08.2022.

Shri Atul Baburao Pati''l was appointed as Additional Director [Director (Marketing)] w.e.f. 07.04.2022 in terms of DoF order 82/1/2021-HR- PSU (part) dated 25.03.2022 and was entrusted with Additional Charge of C&MD w.e.f. 01.09.2022 in terms of DoF order FI. No. 82/1/2014-HR-I dated 24.08.2022 for a period of three months which was extended for a period of three months w.e.f. 01.12.2022 vide DoF order 82/1/2014-HR-I dated 02.12.2022 which was further extended upto 15.06.2023 vide DoF order 82/1/2014-HR-I dated 27.02.2023. Further, Members of the Company appointed him as Director (Marketing), liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Shri Hira Nand was appointed as Chief Financial Officer w.e.f. 24.05.2022 & Additional Director [Director (Finance)] w.e.f. 17.06.2022 in terms of DoF order 82/3/2013-HR-PSU dated 17.06.2022. Further, Members of the Company appointed him as Director (Finance), liable to retire by rotation through Postal Ballot resolution passed on 03.09. 2022.

Shri Rajan Kanwar was appointed as Additional Director [Director (Technical)] w.e.f. 21.10.2022 in terms of DoF order

82/1/2017-HR PSU-Part (1) dated 21.10.2022. Further, Members of the Company appointed him as Director (Technical), liable to retire by rotation through Postal Ballot resolution passed on 24.12.2022.

Shri Dharam Pal, Government Nominee Director absents himself from all the Meetings of Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board. Accordingly, he has ceased to be Government Nominee Director of the Company w.e.f. 10.06.2022.

Ms. Neeraja Adidam was appointed as Government Nominee Director (part time Government Nominee Director) on the Board of the Company w.e.f. 14.10.2021 vice Shri Partha Sarthi Sen Sharma in terms of Order No. 95/1/2019-HR-PSU dated 29.09.2021 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed her as Government Nominee Director, liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Dr. Prathibha A. was appointed as part time Government Nominee Director w.e.f. 03.08.2022 in terms of DoF order 95/1/2019-HR-PSU dated 20.07.2022. Further, Members of the Company appointed her as Government Nominee Director, liable to retire by rotation in 48th Annual General Meeting held on 29.09.2022.

Dr. Poonam Sharma, Shri Ritesh Tiwari and Shri Kashi Ram Godara were appointed as Non-official Independent Directors on the Board of the Company w.e.f. 12.11.2021 in terms of Order No. 78/2/2006-HR-PSU (pt II) dated

05.11.2021 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed them as Non-official Independent Directors, not liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Dr. Venkata Sarvarayudu Thota was appointed as Non-official Independent Director on the Board of the Company w.e.f. 30.11.2021 in terms of Order No. 78/2/2006-HR-PSU (pt II) dated 05.11.2021 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed him as Non-official Independent Directors, not liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Shri Jyoti Bhramar Tubid was appointed as Non-official Independent Director on the Board of the Company w.e.f.

21.04.2022 in terms of order 78/2/2006-HR-PSU (pt) dated 28.03.2022 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed him as Non-official Independent Director, not liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

In addition to above, Shri U. Saravanan was appointed as Additional Director (Chairman & Managing Director) w.e.f. 16.06.2023 in terms of DoF order F. No. 82/1/2014-HR-I dated 15.06.2023 for a period with effect from the date of his assumption of charge of the post till the date of his superannuation i.e. 31.01.2027 or until further orders, whichever is earlier.

Details of tenure of Directors are provided in the Corporate Governance Report.

Re-appointment of Directors at the AGM «?

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Hira Nand (DIN: 09476034) and Dr. Prathibha A. (DIN: 09692712), will retire by rotation at the ensuing AGM and being eligible have offered themselves for re-appointment.

Declaration by Independent Directors u/s 149(6) of the Companies Act, 2013 | ?

All Independent Directors have given declaration that they meet the criteria of Independence as laid down in Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. In the opinion of the Board, the Independent Directors posses integrity and necessary expertise & experience.

Re-appointment of Independent Directors | ?

As per Section 149(10) of the Companies Act, 2013, none of the Independent Directors have been reappointed on the Board of the Company during the FY 2022-2023.

Disqualifications of Directors | ?

None of the Directors have committed any disqualification as provided under Section 164 of the Companies Act, 2013.

Remuneration to Directors | ?

Details of Remuneration to Directors and Company Secretary are given in the Corporate Governance Report annexed to this Report.

Performance evaluation of Board of Directors | ?

The details regarding performance evaluation of Board of Directors have been given in the Corporate Governance Report.

Directors'' Responsibility Statement | ?

Pursuant to the requirement of Section 134(3) (c) of the Companies Act, 2013, your Directors confirm that:

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

b) 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 at the end of the financial year 2022-2023 and of the profit of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Acknowledgements | ?

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the various wings of Government of India, in particular Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory Auditors, Internal Auditors, Cost Auditors, Secretarial Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by the employees at all levels throughout the year. Board also place on record active support and cooperation received from Employees Trade Union and Officers Association for sustained improvements.

Registered Office: For and on behalf of the Board of Directors

Scope Complex, Core-III,

7, Institutional Area, Lodhi Road,

New Delhi-110003. (U. Saravanan)

Date: 29 August, 2023 Chairman & Managing Director

DIN: 07274628


Mar 31, 2018

Board’s Report

To,

Dear Members,

On behalf of the Board of Directors of your Company, I have the pleasure in presenting the 44th Annual Report on the business and operations of the Company together with the Audited Financial Statements including Consolidated Audited Financial Statements of the Company for the Financial Year 2017-18 and the Auditors'' Reports and comments on the accounts by the Comptroller & Auditor General of India (C&AG).

During the year 2017-18, Company achieved a turnover of Rs, 8928.29 crore as against Rs, 7643.36 crore achieved during the previous year. The turnover was higher by Rs, 1284.93 crore mainly due to higher sale of urea (by 1.58 LMT) and traded fertilizers (by 1.73 LMT) and rise in gas prices by 20.15%. Company has achieved Profit Before Tax of Rs, 334.83 crore as compared to Rs, 324.88 crore of the previous year.

Energy consumption at all units was within energy norms fixed by GOI under New Urea Policy 2015. Nangal, Panipat and Bathinda Units achieved ever lowest energy consumption during 2017-18.

The energy consumption per MT of Urea at NFL plants during 2017-18 was as follows : Gral/MT/Urea

Units

Pre-set Norms (w.e.f. 01.06.2015)

Actual Energy

2017-18

2016-17

Nangal

7.095

6.819

7.012

Panipat

7.614

6.761

7.112

Bathinda

7.479

6.859

6.924

Vijaipur I

5.904

5.753

5.784

Vijaipur II

5.569

5.372

5.364

Financial Highlights

Your Company''s key financial parameters during the year 2017-18 and important financial highlights are as under:-

Rs,in crore

S. No.

Particulars

2017-18

2016-17

1.

Sale of urea in (LMT)

39.16

37.58

2.

Sale quantity Other Fertilizers (LMT)

3.93

2.20

3.

Sale of urea

2096.60

2026.94

4.

Subsidy on urea

5528.63

4721.39

5.

Total Sales of urea (3 4)

7625.23

6748.33

6.

Sale of other products including subsidy

1303.06

895.03

7.

Sales Turnover (5 6)

8928.29

7643.36

8.

Other Income

96.34

44.59

9.

Total Revenue (7 8)

9024.63

7687.95

10.

Total Expenses

8426.61

7088.06

11.

Earnings Before Interest, Depreciation and Taxes (EBIDTA)

598.02

599.89

12.

Interest

189.89

189.84

13.

Depreciation

73.30

85.17

14.

Profit Before Tax (PBT) (11-12-13)

334.83

324.88

15.

Provision for tax

122.06

116.72

16.

Profit After Tax (PAT) (14-15)

212.77

208.16

17.

Other Comprehensive Income (Net of Tax)

(1.82)

(0.83)

18.

Total Comprehensive Income (16-17)

210.95

207.33

RESERVES Capital Reserve

The balance as at 31st March, 2018 amounted to Rs, 2.51 crore, which is at the same level as was in the previous year.

Corporate Social Responsibility

CSR Reserve stood at Rs, 3.88 crore as on 31.03.2018 as compared to Rs, 2.50 crore on 31.03.2017, an increase of Rs, 1.38 crore is on account of less amount utilized for CSR projects/activities.

General Reserve

No amount was transferred during the year to General Reserve from the surplus. The General Reserve as on 31.03.2018 stood at Rs, 332.89 crore at same level as was on 31.03.2017.

Surplus

The balance retained in the surplus as at 31st March, 2018 is Rs, 1157.54 crore as compared to Rs, 998.16 crore for the previous year. No provision has been made for dividend and Dividend Distribution Tax during the year.

Dividend

Board has not recommended payment of dividend for the year 2017-18 considering the various capex requirements in line with the guidelines on Capital Restructuring of CPSEs issued by Department of Investment and Public Asset Management (DIPAM).

Major events during the year

State of affairs of the Company and Change in the nature of business

FY 2017-18 has engaged as best ever period in the 44 years history of the Company. Be it best ever production, best ever sales, best ever energy consumption or best ever turnover. The profit is also best ever over previous 15 years. The Company is in its best form these days and ready to push ahead with more vigour to achieve greater heights. Company has recorded ever best urea production of 38.10 lakh MT with a capacity utilization of 117.9% that accounts for 15.9% share in overall urea production in the country, that was the culmination of consistent operation of plants and favourable urea policy of the GOI. Company has also achieved a record sale of 43.09 lakh MT of fertilizers during 2017-18.

The finest financial performance of the Company could be possible through energy efficient operation of the plants and several strategic initiatives undertaken in last two years such as import of fertilizers on large scale, commencement of seeds multiplication programme to produce and sale of certified seeds, trading of new molecules of agro chemicals, seeds and compost under Company''s own brand. The Company also commissioned Bentonite Sulphur Plant at Panipat Unit during 2017-18.

Company has steadily transformed from single product to a multi-product Company and is able to provide major agro-inputs through its marketing network. NFL now has a big basket of varied products like Urea, DAP, MoP, APS, NPK, Bio fertilizers, Bentonite Sulphur, City Compost, Seeds, Agro chemicals to offer to farmers under one roof.

Material changes and commitments

No material changes and commitments have occurred between the date of the Balance Sheet and the date of the Board Report affecting the financial position of the Company.

Details of revision of Financial Statements or Board’s Report

Company has not revised Financial Statements or Board''s Report in respect of any of the three preceding financial years.

General information

a) Brief history of the Company, overview of the industry and important changes in the industry during the last financial year

Brief history of the Company forms a part of Board Responsibility Report attached to this Report.

Overview of the industry and important changes thereof during the last financial year forms part of Management Discussion & Analysis Report.

b) Brief description of business segments and geographic segments;

Segment Results

In the light of present diversified business activities vis-a-vis IND AS 108 on Segment Reporting following operating segments have been considered for Segment Reporting for the Annual Accounts for the FY 2017-18:

i) Production and Sale of own Fertilizers (Urea, Bio-fertilizer and Bentonite Sulphur).

ii) Domestic Trading of Fertilizers (Indigenous and Imported).

iii) Production and sale / trading of other products (Industrial Products, Agro Chemicals, Certified Seeds and city compost).

c) External environment and economic outlook

Details of external environment and economic outlook are given in Management Discussion & Analysis Report.

d) Induction of strategic and financial partners during the last financial year

No new strategic and financial partners have been inducted during the last financial year.

Capital Structure Preference and Equity Shares

Company has not issued any equity shares or preference shares during the year.

Equity Shares with Differential Rights

During the financial year Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

Employees Stock Option

During the financial year Company has not issued any employees stock option.

Shares to Trustees for benefit of employees

Company has not introduced any scheme(s) for purchase / subscription of the company''s shares to be held by trustees for the benefit of employees.

Other securities which carries right of conversion into equity shares

During the financial year, Company has not issued any securities, which carries a right or option to convert such securities into equity shares. Details of Deposits

The Company has not accepted any deposits during the year.

Credit Rating

During FY 2017-18, the credit rating of the company was maintained with two credit agencies as under:

ICRA

India Ratings and Research

Instruments

Credit Rating

Credit Rating

Long Term Fund based working capital facilities:

Cash Credit

[ICRA] AA (Stable)

IND AA/Stable

Term Loan

[ICRA] AA (Stable)

IND AA/Stable

ECB

[ICRA] AA (Stable)

IND AA/Stable

Short Term Non-fund based working capital facilities:

LC/BG

[ICRA] A1

IND A1

Commercial Paper

[ICRA] A1

IND A1

There had not been any change in the Credit Rating of the company during the year.

Buy Back of Securities

Company has not introduced Buy-Back of its securities during the year.

Sweat Equity

Company has not issued any Sweat equity shares in terms of Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014. 12

Disinvestment of GOI Equity

To comply with SEBI norms disinvestment of 15% GoI equity was carried out on 26th & 27th July, 2017 through Offer for Sale route thereby reducing GOI shareholding to 74.91%.

Statement of deviation(s) or variation(s)

Company has not offered public issue, rights issue, preferential issue etc. during the year and there is no requirement to submit statement of deviation(s) or variation(s).

Foreign Exchange Earnings/Outgo

The foreign exchange earnings by way of trade margins during the year were Rs,NILRs,. The foreign exchange outgo by way of imports and other expenses amounted to Rs, 958.60 crore.

Borrowings

Long Term Loans

Long term borrowings as on 31st March, 2018 stood at Rs, 170.28 crore. The outstanding Rupee Term Loan was Rs,NILRs, and External Commercial Borrowings (ECBs) stood at USD 26.23 million.

Short Term Loans

Short Term borrowings of Rs, 2890.43 crore (previous year Rs, 3153.73 crore) as on 31st March, 2018 were outstanding.

Debt Equity Ratio

Debt equity ratio as on 31st March, 2018 has reduced to 1.54:1 as compared to 2.26:1 of previous year due to repayment of long term loans. Urea

The Company has achieved the ever highest Urea production of 3810250 MT with an overall capacity utilization of 117.9% during 2017-18 against previous best production of 3810054 MT achieved during 2016-17 (CPLY).

On the sales front, the company has achieved ever best sale of fertilizers of 43.09 LMT which includes sale of 39.16 LMT of Urea, 3.82 LMT of imported Fertilizers & 0.11 LMT of Compost surpassing previous best of 39.78 LMT during 2016-17 which includes sale of 37.58 LMT of Urea,

2.17 LMT of imported fertilizers & 0.03 LMT of compost.

Industrial Products

Company registered a record sale of Nitric Acid of 69403 MT during 2017-18 surpassing previous best of 67949 MT during 2016-17. The company also recorded ever best sale of Ammonium Nitrate to the tune of 11299 MT over the last five years surpassing 8969 MT during 2016-17.

In terms of revenue generation from production and sale of Industrial products, the company achieved sale of Industrial Products (IP) comprising of Nitric Acid, Sodium Nitrate & Sodium Nitrite, technical surplus ammonia etc. to the tune of Rs, 164 crore against CPLY of Rs, 188 crore.

Bio-fertilizers

The company sold 496 MT of Bio-Fertilizers (Solid & Liquid) to the tune of Rs, 1.43 crore as against 545 MT of Rs, 2.39 crore during CPLY Import & sale of Fertilizers

There has been a growth of over 76% in fertilizers import business of the company during 2017-18. The company sold 3.82 LMT of imported fertilizers including DAP, MoP, APS and Complex (NPK) worth Rs, 1102 crore during 2017-18 as against 2.17 LMT of imported fertilizers worth Rs, 659 crore during 2016-17.

Apart from the above, NFL also imported 4.01 LMT of Urea in government account from Iran during 2017-18 as State Trading Enterprise (STE). Domestic Trading of Agro Products

The company has earned a total revenue of Rs, 26.92 crore from the trading of various agro products such as seeds, pesticides & compost during the year against Rs, 16.51 crore during CPLY

Sale Composition

Item

% of total revenue

% Increase / (Decrease)

2017-18

2016-17

Urea

85

88

(3.41)

Non-Urea

15

12

25

Owing to shift in strategy of the company, the business composition of the company has undergone visible change. Urea (main product) contribution of 95% in the overall revenue of the company during 2015-16, has reduced to 85% while contribution of non-Urea business has increased to 15% during 2017-18.

Agriculture Extension Activities

Agriculture is the main source of livelihood for the farmers, which include crops, animals and allied activities. Agriculture Extension Activities are being undertaken by your Company by educating farmers on efficient use of all agro-inputs along with total know-how on improved and scientific methods of cultivation.

Dealers/Retailers are important link between the Company and the farmers. They are key change agents in motivating farmers to use fertilizers in a balanced manner. During the year 2017-18, 58 Dealer''s/Retailer''s Orientation Programmes were conducted and more than 5000 dealers/ retailers were facilitated by upgrading their knowledge regarding fertilizer/agro products and improved crop practices so that latest information can be disseminated to farmers at point of purchase. Information on Bio-fertilizers and City Compost has also been given in each and every training programme.

Your Company has always laid emphasis on upliftment of farming community by educating them on various aspects of crop production, animal husbandry and other allied agriculture sectors. 57 Farmer Training programmes were organized during 2017-18 and more than 3500 farmers got benefited. Through these educational programmes, farmers were sensitized to issues related to soil fertility status including deficiency of various nutrients, their remedy to increase fertilizer use efficiency and maximize yields. The farmers have also been educated on benefits of long term usage of Bio-fertilizers and City Compost through these programmes.

Agriculture Universities, Research Stations, Krishi Vigyan Kendras (KVKs) are the knowledge centers for latest farming techniques, new and high yielding crop varieties, innovative technologies in agriculture and allied agriculture sectors etc. During the year, an opportunity was given to the farmers to practically visit the above places by organizing farmers visit to nearby Agriculture University/Research Station/ KVK. More than 500 farmers got benefitted through 8 programmes during the year 2017-18.

During the year, 2017-18, 89 and 85 demonstrations had been laid out at farmers'' fields to demonstrate long term benefits of use of Bio-fertilizers and City Compost, respectively on crop growth and yield as compared to farmer''s own practices. The demonstrations are being continued on the same locations and the same pattern during the year 2018-19 so that long term benefits of use of Bio-fertilizers and City Compost can be shown to the farmers.

Your Company is playing a vital role in supporting farmers by undertaking soil analysis for macro and micro nutrients through its 6 Static and 4 Mobile Soil Testing Labs (MSTLs) in various states. 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 26,000 soil samples were collected analyzed for macro and micro nutrients and recommendations were given to the farmers. To strengthen the soil testing services, Company has plans to purchase 05 new Mobile Soil Testing Labs for the States of UP, MP, Haryana and Telangana.

During the year 2017-18, your Company continued its endeavour to render soil testing services at the farmers'' doorstep by organizing soil testing campaigns. During these campaigns, services of our Mobile Soil Testing Vans and laboratory staff were suitably utilized for collecting soil samples by demonstrating the correct method of sampling to the farmers and by offering on the spot soil analysis and advisory on the basis of soil test results. 26 such campaigns were organized in the States of Punjab, Haryana, Rajasthan, HP, J&K, UP, Bihar and Jharkhand and more than 19000 farmers got benefitted by these programmes.

Agricultural Exhibitions and Krishi Melas aim to bring stake holders from all disciplines of Agriculture like farming, livestock, dairy, import and export, poultry and horticulture sectors under one roof and provide opportunity to demonstrate their products, exchange their views and share ideas for the growth, sustainability and development of these vital sectors of our economy. Participation in agro exhibitions and University Kisan Melas is a very effective way to communicate directly with the farmers and also to interact with the scientists and experts from various agricultural fields. During the year 2017-18, your Company participated in 36 Krishi Melas/Agriculture Exhibitions organized by leading Agriculture Universities, Agriculture Departments etc. in the States of Punjab, Haryana, UP, Uttarakhand, Bihar, MP, Rajasthan and J&K.

As per guidelines of Department of Fertilizers (DoF) and with the objective to provide all the agricultural inputs and services to the farmers under one roof along with soil testing and advisory services, 100 Kisan Suvidha Kendras (KSKs) were opened by your Company all across its marketing territory. Through these KSKs more than 10 thousand soil samples were collected, analyzed through Company''s Static and Mobile Soil Testing Labs and reports were given to the farmers. More than 80000 leaflets on NFL products and various crops were also distributed to farmers through programmes organized in these KSKs.

Projects

The details of the projects including capital expenditure envisaged are given in the Management Discussion & Analysis Report.

Management Discussion & Analysis Report

Management Discussion & Analysis Report covering business prospects including modernization, diversification, investments, marketing plans, raw materials, human resource, internal management controls including financial performance review, government policies and other factors having impact on the performance of the Company operations and future outlook of the Company is appended as Annexure-1 to this Report.

Business Responsibility Report

As required under Regulation 34 of SEBI (LODR) Regulations, 2015, the Business Responsibility Report of the Company for the financial year ended March 31st, 2018 is appended as Annexure -2 to this Report. Business Responsibility Policy is available on the website of the company at www.nationalfertilizers.com.

Stakeholders’ relationship:

Details of stakeholders'' relationship are given in the Business Responsibility Report annexed to this report.

Customers’ relationship:

Details of customer relationship are given in the Business Responsibility Report annexed to this report.

Corporate Governance

The company is committed to maintain the highest standards of Corporate Governance being the fountain head of value creation for all stakeholders especially shareholders. The Company has in place a well-defined “Corporate Governance Mechanism” which considers the interest of all stakeholders. Pursuant to SEBI (LODR) Regulations, 2015 and DPE Guidelines on Corporate Governance, a report on Corporate Governance forms part of this report as Annexure-3.

The statutory auditors of the Company have examined and certified Company''s compliance with respect to conditions enumerated in SEBI (LODR) Regulations, 2015 (erstwhile Clause 49 of the Listing Agreement) and DPE guidelines on Corporate Governance. Statutory Auditors Certificate on Corporate Governance and explanations of the Management to Statutory Auditors'' observations forms part of this report as Annexure-4.

Visits of Parliamentary Committees during 2017-18

The following Parliamentary Committees visited and interacted with the Company during the year 2017-18:

1) Study visit of Parliamentary Committee on welfare of SC & ST in Mangalore on 17-05-2017.

2) Meeting of Consultative committee of Members of Parliament attached to the Ministry of Chemicals & Fertilizers (C&F) regarding Nutrients Based Subsidy Scheme and its impact at Parliament House Annexe, New Delhi on 17-05-2017.

3) Study visit of the Parliamentary Standing Committee on C&F regarding implementation of NUP-2015 in Manali on 10-06-2017.

4) Study visit of the Parliamentary Standing Committee on C&F regarding policy on Uniform Freight Subsidy in Shimla on 13-06-2017.

5) Study visit of the Committee on Subordinate Legislation on Development & Promotion of Clean Technology and Waste Reduction in Luck now on 01-09-2017.

6) Study visit of the Committee on Paper Laid on the Table (COPLOT), Rajya Sabha on laying of Annual Reports & Audited Accounts in Shirdi on 13-09-2017.

7) Meeting of the Standing Committee on C&F on Freight Subsidy Policy at Parliament House Annexe, New Delhi on 25-10-2017.

8) Meeting of the Standing Committee on C&F on Examination of Demand of Grants for the year 2018-19 (Demands of Fertilizers) at Parliament House Annexe, on 22-02-2018

Material Orders of Regulators

Nitric Acid Plant at Nangal was commissioned in 1961, which is based on old technology. For reduction of NOx emissions, Company has already installed NOx abatement plant in 1994. With installation of NOx abatement plant in 1994, NOx emissions have been significantly reduced to around 500-600 mg/Nm3.

MoEF&CC vide Notification dated 29.12.2017 regarding Prescribed Values amendment in the Environment (Protection) Act, 1986, emission standards (Oxides of Nitrogen as NO2) for Nitric Acid Plant has been reduced to 400 mg/Nm3 from earlier limit of 1820 mg/Nm3. Action has been initiated to implement necessary modification in the plants to meet the new emission norms.

The Right to Information

In consonance with the spirit of Right to Information Act, the Company has created necessary mechanism as required under the Act. The Public Information Officers and Appellate Authorities are effectively responding to the requests and appeals of the applicants. The names of all PIOs / Appellate Authorities/Nodal Officer/ Transparency Officer are displayed on the Company''s website. During the year, 431 applications were received and the information was provided to the applicants within the prescribed time frame of 30 days.

Vigil Mechanism

Pursuant to the provisions of Sections 177(9) and (10) of the Companies Act, 2013, a Vigil Mechanism for employees and others to report genuine concerns has been established.

Whistle Blower Policy

Your Company believes in transparency and propriety in all its business dealings to take this object further, Company has put in place a Whistle Blower Policy providing for a mechanism to the employees and other stakeholders to report concerns about unethical behaviour, actual or suspected fraud or violation of Code of Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimization of whistle blowers. The policy is reviewed periodically. No employee or other stakeholders were denied access to the Audit Committee. Whistle Blower Policy is available on the website of the company at www.nationalfertilizers.com.

Integrity Pact

With the commitment to maintain the highest standard of transparency and governance, your Company has entered into an integrity Pact with Transparency International and has also appointed Independent External Monitors (IEMs), as approved by CVC. Structured Meetings are being held with IEMs on regular intervals and threshold value is Rs, 1 crore for signing of Integrity Pact for purchase/works contracts

Vigilance

Vigilance Division of the Company is headed by CVO. The CVO is assisted by a team of officers drawn from various functional departments. Vigilance set up is operational in Corporate Office, all manufacturing Units as well as Zonal Marketing Offices.

Efforts have been made during 2017-18 to fulfil the pending compliances regarding earlier reported cases of irregularities in NFL and to pursue these cases towards logical conclusion.

Periodic vigilance reports, Agreed list of officers, List of officers of doubtful integrity, observance of Vigilance Week in Units, Zonal offices and Corporate Office have been complied with. Enforcement of transfer policy for rotation of officers on key and sensitive positions has been taken up with the Management. Vigilance scrutiny has been taken up for work orders and Purchase orders awarded by various departments in the four units and corporate office. Scrutiny is still in progress in certain cases.

The working of the Vigilance Wing of NFL is being changed from routine works approach to a proactive and focussed approach. The roles and responsibilities and delivery of Vigilance Officers at CO and in the field have been reviewed for the purpose of improving the quality and monthly output.

During the year 2017-18, three vigilance cases were disposed-off and there were four pending cases as on 31.03.2018. The pending cases relate to alleged irregularities in appointment of dealers, acceptance of sub-standard HDPE bags, execution of annual rate contract for electrical, maintenance at Panipat, etc.

MoU

The Department of Public Enterprises, Gol in order to improve accountability and giving higher autonomy to Public Sector Undertakings, introduced the Concept of MoU during early nineties. NFL signed the first MoU with the Department of Fertilizers (DoF) for the year 1991-92. The Company had been awarded “Excellent rating” consistently 12 times in a row from 2000-01 to 2011-12.

Based on financial performance and achievement of other parameters laid down, your Company is likely to be rated “Excellent’ as per the Memorandum of Understanding (MoU), signed with the Government of India for the financial year 2017-18. Company signed MoU for 2018-19 with DoF on 04.06.2018 which is the 28th year of the Company under MoU system.

Awards & Accolades received during 2017-18

1. “Golden Trophy-Sarvashreshtha Suraksha Puraskar” to Panipat Unit from National Safety Council (NSC), Mumbai for the year 2016 on 20-04-2017.

2. “Golden Peacock Award for Energy Efficiency” to Panipat Unit from Institute of Directors (IOD) during 19th World Congress on Environment Management at Hyderabad on 07-07-2017.

3. “Raj Bhasha Shield 2016-17 for Best Office” to Bathinda Unit from “Nagar Raj Bhasha Karyanvayan Samiti” Bathinda.

4. First prize (Shield) for outstanding work in Official Language to NFL, Corporate Office, Noida.

5. National Safety Award “First Prize” and “Second Prize” to Panipat Unit from Ministry of Labour & Employment, GoI for the year 2015 in the category of Chemicals & Chemical factories for Minimum average recurrence rate and accident free year 2015.

6. “Greentech Safety Silver award 2017” to Vijaipur Unit from Greentech foundation, New Delhi, in a function held in Goa on 14-15 December 2017.

7. “FAI Technical Innovation award-2017, Runner up trophy” to Vijaipur Unit. This is the fourth consecutive year, Vijaipur Unit received this award (Once winner & three times runner up).

8. “National Energy Conservation Award 2017 (First prize) in fertilizer sector’ to Panipat Unit for the third time (second time in a row) from Bureau of Energy Efficiency (BEE) under the Ministry of Power, Govt. of India. Panipat Unit also won award for “Highest achiever in energy savings” in PAT cycle-I.

9. “CA distinguished Achiever Award” to Shri Rajiv Kumar Chandiok, Director (Finance) for his exceptional performance and achievements in the area of Financial Management in NFL.

10. “Governance Now PSU award” to NFL for Pivotal Role in Nation Building.

11. First prize by Punjab State Safety council for the year 2016 to Bathinda Unit for largest reduction in accident frequency Rate in Chemical Industry for more than 5 Lakh man-hours.

12. Second prize by Punjab State Safety council for the year 2017 to Bathinda Unit for largest reduction in accident frequency Rate in Chemical Industry for more than 5 Lakh man-hours.

13. “Visionary Leadership” award to Shri Manoj Mishra, C&MD, by FORE Top Ranker for his visionary leadership provided to NFL that resulted in best ever results of the company in 2016-17.

Initiatives under Corporate Social Responsibility

The company is implementing various developmental activities under its Corporate Social Responsibility (CSR). The company has undertaken various projects in the areas of healthcare, Skill Development Training, sanitation, environment, education etc. During the year 2017-18, the company has spent '' 2.97 crore on CSR activities.

In the year, company also undertook a distinguished project of sponsoring para players through Paralympic Committee of Delhi (PCD). Under this programme, 15 para sportspersons were sponsored for one year which included coaching, kit, travel and diet for these players. The project has already started yielding favourable results as two of the sponsored NFL''s players Usman Devan & Ram Kumar made India proud by winning Gold medals in athletics in Asian Youth Para Games held at Dubai in 2017. Another para player Deepender Singh has won silver medal in 50 Mtrs. Backstroke and Bronze Medal in 50 Mtrs. Freestyle under National Para Swimming Championship 2017.

Company''s CSR programmes also included construction of conventional toilets and Bio-Toilets in government schools, installation of Solar roof top panels in schools, installation of solar lights in many districts, cancer awareness & screening camps, water harvesting, soil management and training programmes in stitching, tailoring, mobile repairing etc.

An Impact Assessment Study of CSR projects undertaken during the last three years from 2014-15 to 2016-17 has been conducted by M/s Human Development Society. As per report, Company has successfully undertaken CSR projects to attain the desired outcome which had supported beneficiaries to lead a quality life. A detailed report on the Corporate Social Responsibility is given in the Annexure-5 to the report.

Research and Development

Development of Urea Ammonium Nitrate (UAN) application system for enhancement of nutrient use efficiency under S&T project

NFL in association with Indian Agricultural Research Institute (IARI) undertook R&D project for development of applicator for UAN application. Design of UAN applicator for Basal, Foliar and Fertigation system had been developed by IARI. Field trials conducted on Paddy crop, Wheat crop and Vegetables were successful. Last trial for paddy crop had been conducted in June - Nov, 2017. For undertaking last wheat crop trial wheat sowing has been completed in the month of Dec, 2017. Draft report has been received from IARI in July, 2018 and final report will be received by August, 2018. Total cost of the R&D project is '' 89.66 lakh.

Cow dung processing and its conversion bio- fortified fertilizer with enhanced functionality - A Pilot Study

ICAR-National dairy Research institute (NDRI), Southern Regional Station, Bengaluru, in March, 2018 have submitted a research project proposal titled “Cow dung processing and its conversion to bio- fortified fertilizer with enhanced functionality. Pilot Study will evaluate conversion & bio fortification of cow dung for production of quality bio-fertilizer and optimize conversion process of bio-fertilizer to a suitable form for longer storage and distribution.

Company has accorded appro

approval for sponsoring the Pilot Study at ICAR - NDRI, southern regional station, Bengaluru for project titled “Cow dung processing” and its conversion to bio- fortified fertilizer with enhanced functionality with budget estimates of '' 129.74 Lakh spread over a period of three years

The benefits envisaged from this Pilot Study include (a) Bio-fertilizer with enhanced nutrient quality as an alternative to chemical fertilizer (b) The Biological manure shall help rejuvenate the soil health (c) Collateral benefits in the form of Environmental protection, savings on subsidy and sustainable agriculture (d) Dairy farmers to get better value for animal by-product thereby augmenting their income.

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

Disclosure in terms of the Companies (Account) Rules, 2014 in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Outgo are given in the Annexure-6.

Safety, Environment and Sustainable Development

Company has undertaken various initiatives for adopting best practices for health, safety environment management and sustainable developments as detailed in the Annexure-7.

Particulars of Loans, Guarantees, Security and acquisition under Section 186 of the Companies Act, 2013

Particulars of loans given, guarantees provided, investments in securities and acquisitions made by the Company during the year under review are given in MBP-2 as Annexure-8 to the Report

Joint Venture /Associates Companies

Details of Joint Venture / Associates Companies pursuant 129(3) of the Companies Act, 2013 the statement containing the salient features of the financial statement of the associate company/joint venture company is included the consolidated financial statements as Annexure-9 hereto.

Companies which have become or ceased to be subsidiaries, associates and joint Ventures

During the year 2017-18, Company has not acquired or formed any new subsidiary, associate or joint venture. Similarly no subsidiary, associate or joint ventures have been ceased by way of sale of shares, amalgamation, winding up etc.

Related Party Disclosures

The particulars of contracts / arrangement entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 including arm''s length transactions under third proviso thereto are disclosed on Form No. AOC-2 as Annexure-10 Related Party Transactions Policy of the Company is available at www.nationalfertilizers.com.

Capital Expenditure (CAPEX)

The achievement in CAPEX is '' 327 crore in the year 2017-18.

Risk Management

NFL is a chemical fertilizer industry that is operated in a hazardous environment and faces many risks including those related to health, safety and environment in addition to general business and financial risks. Company recognizes the importance of Risk Management and has a well-defined Risk Management Policy in place.

To mitigate various risks identified under Company''s comprehensive Risk Management Policy, a periodical review of the risks, procedures and strategies is undertaken on quarterly basis. Risks are analyzed at the highest level by a Board level Audit Committee and efforts are made in planned manner to obviate the risks either fully or to minimize their impact.

Internal financial controls

Details in respect of adequacy of internal financial controls with reference to financial statements are given in Management Discussion & Analysis Report. Particulars of Employees

During the year under review, none of employees of the Company had drawn remuneration in excess of the limits prescribed under section 134(3)

(c) of the Companies Act, 2013 read with Companies (Appointment of Managerial Personnel) Rules, 2014.

Public Procurement Policy of Micro and Small Enterprises (MSEs) Order, 2012

Public Procurement Policy for Micro and Small Enterprises (MSEs) was notified by the Government under the Micro, Small and Medium Enterprises Development Act, 2006 which stipulates that 20% of total annual procurement of goods and services shall be made by all Central Ministries / Departments /CPSUs from Micro & small Enterprises (MSEs). Within this percentage, a sub total of 4% procurement is to be made from MSEs owned by SC/ST entrepreneurs. The requisite information for the year 2017-18 is annexed as Annexure-11 to this report.

Human Resource Management

The Company has a manpower strength of 3430 employees as on 31.03.2018, which comprises of 1684 Executives and 1746 Non-Executives. Company promotes the employment of women and at present 200 women employees are on its roll, which is 5.83% of the total work force.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Policy on Prevention, Prohibition and Redressal of Sexual harassment of women at work place is in line with the requirements of the Sexual Harassment of women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

One complaint of sexual harassment was received in the year 2017-18 and the same has been disposed off. As on the date of this Report, no complaint is pending for disposal.

Four programmes with regard to gender sensitization and prevention of sexual harassment of women at workplace were organized at the Units and Corporate Office.

To make the woman employees aware of their rights, International Women''s day was celebrated on 8th March, 2018 in all Units and Corporate Office, Noida. Various programmes on the occasion were organized at Units & Head Office.

Implementation of Official Language Policy

Company is making all efforts for the propagation and implementation of Official Language policy of the Government of India. The quarterly meeting of Official Language Implementation Committee (OLIC) is regularly held in all the Units/Offices of the Company under the chairmanship of Head of the Unit/Office to review the progress of official language. In all, 32 Meetings of OLIC were held during the year.

To promote Official Language ''Hindi'' 32 Hindi workshops were organized during the year in which 776 employees have actively participated. Hindi Pakhwada was organized in all the Units/Offices of the Company to mark the Rajbhasha Diwas. During the year, 61 Programmes/Competitions were held in order to promote Hindi and 1282 employees participated in them. 77 employees were awarded cash prizes under the ''Cash Incentive Scheme'' for doing their official work in Hindi.

During the year 2017-18 Corporate Office, NOIDA has been awarded Third Prize, Rajbhasha Shield by Official Language Advisory Committee for doing excellent work in Hindi.

Initiatives taken for development of employees belonging to Scheduled Casts / Scheduled Tribes / Other Backward Classes (SC/ST/ OBC categories)

Company is committed to the development of employees belonging to reserved categories. An Implementation Cell is functional in all Units / Offices of the Company to oversee the implementation of Presidential Directives on Reservation Policy for SCs/STs. Liaison Officer has been appointed in each Unit/Office and Chief Liaison Officer at CO, Noida to ensure due compliance of orders and instructions pertaining to reservation for SCs and STs and other concessions admissible to them. Meetings were periodically held at Unit level as well as at Corporate level with the SC/ ST Employees Welfare Associations by the Management for redressal of grievances of SC/ST employees. The programmes on implementation of Presidential Directives were held at Units from time to time and SC/ST employees were deputed for such programmes conducted by external agencies. During 2017-18, 3262 man-days training (in-house as well as external training programmes) was imparted to SC/ST employees. A statement showing representation of employees belonging to Scheduled Caste / Scheduled Tribes / Other Backward Classes / Persons with disabilities is appended as Annexure-12 to this report.

Information Technology

Company realized the importance of Information Technology right at the beginning of Digital revolution and has been evolving to adopt the technology in all the spheres of working. Constant adoption of IT in its working has facilitated different business processes in the Company.

By hosting & implementing web-based Marketing Management & Information System module across the marketing network, company had brought all field level activities like rake receipt/disposal, warehousing, sales & all kinds of accounting activities on digital platform. This has brought in greater transparency in all kinds of marketing and accounting transactions & has cut down the lead time to a great extent thereby reducing delays in closing of accounts. All other business applications have also been implemented in on-line mode.

Company has also adopted initiatives taken by Deptt. of Fertilizers (DoF) for monitoring movement and sales of the fertilizers from fertilizer manufacturer/importers to fertilizer wholesalers and from wholesalers to retailers across the country. Recently as per DoF''s directive, company has procured POS (Point of Sale) machines for retailers & successfully deployed them. Several training programmes for retailers were organized in association with state agriculture departments for implementing POS machines and for starting system of retail sale to farmers through AADHAR authentication on these POS machines. This has brought fertilizer retailers & farmer community on the digital platform. This initiative would certainly facilitate Government''s vision of DBT (Direct benefit transfer) to farmer.

In order to achieve the vision of Digital India / Digital Payments India, a series of training programme were organized throughout various Units/ Offices of the company to familiarize and educate the employees, contract workers etc. with the concept of digital payments and demonstration were also given on usage of various payment apps and wallets. In addition, company has also encouraged digital payments at various shops in its townships and has undertaken steps to ensure that POS is installed in the shops, guest house & hospital of townships. At the company level all payments are being released / received through digital means. The company had already adopted e-procurement and e-tendering for procurement process. The company has also taken initiatives in inculcating e-payments in tendering procedures.

NFL had also implemented e-meetings software for paperless board meetings & Audit committee meetings whereby board agendas & relevant information is available to board of directors on their portable devices in digital form.

Company has state of the art Video Conferencing at all its Plants, Zonal Offices & Corporate Office. In order to have optimum utilization of WAN links & Internet leased lines, Link Load balancers are provided at all locations of the company. In order to mitigate cyber threats, intrusion prevention & ransom ware attacks UTM based security appliances are installed. Company has also revamped its data centre to provide multiple redundancies to maximize uptime of business applications.

AUDITORS

Statutory Auditors

The Statutory Audit of your Company was conducted by Chartered Accountants firms M/s. HDSG & Associates and M/s. Chandiok & Guliani, Joint Auditors appointed by Comptroller & Auditor General of India (C&AG). Auditors'' Report on the Financial Statements including consolidated financial statements of the Company for the financial year 2017-18 is attached.

Statutory Audit Fee for the financial year 2018-19 is proposed at '' 25 Lakh plus GST and reimbursement of actual TA and out of pocket expenses. Explanation in response to Auditor’s Qualification

Statutory Auditors of the Company have issued an Audit Report with Unmodified opinion on Audited Financial Results of the Company (Standalone

& Consolidated) for the quarter and year ended 31st March, 2018.

Comments of C&AG

The review of Financial Statements including consolidated Financial Statements for the year ended 31st March, 2018 had been carried out by the Comptroller and Auditor General of India (C&AG) under Section 143(5) of the Companies Act, 2013. Review of C&AG and Management Replies to C&AG comments forms part of this report.

Cost Auditors

As prescribed under Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, the cost accounting records are being maintained by all the Units of the Company. Cost Audit for 2017-18 was carried out by Cost Auditors M/s. K.G. Goyal & Associates, M/s. K.L. Jaisingh & Co., M/s. Subhadra Dutta & Associates & M/s. Ravi Sahni & Co. as prescribed under the Companies Act, 2013 and Rules framed thereunder. M/s. Ravi Sahni & Co. acted as the Lead Cost Auditor. Consolidated Cost Audit Report for the financial year

2016-17 was filed with MCA on 25.10.2017.

Internal Auditors

Company has an internal Audit Department headed by Executive Director. To carry out Non-Technical Audit, your Company has appointed eight Chartered Accountant firms: M/s. K K Soni & Co., M/s. Ajay Chawla & Associates, M/s. G. Deep & Co., M/s. Aaryaa & Associates, M/s. S. P. Chopra & Co., M/s. S. Goyal & Associates, M/s. Thakur Vaidyanath Aiyar & Co. and M/s. S. Tandon & Associates. Technical Audit was carried out in-House.

Secretarial Auditors

Tenure of M/s Agarwal S. & Associates, Practicing Company Secretaries was extended for undertaking Secretarial Audit for the year 2017-18 in terms of Section 204 of Companies Act, 2013 and Rules made there under. Secretarial Audit Report for the year 2017-18 and Management''s explanation to Secretarial Auditor''s observations are annexed as Annexure-13 to this Report.

Compliance with Secretarial Standards

The Company complies with all applicable Secretarial Standards issued by The Institute of Company Secretaries of India.

Audit Committee

The detailed disclosures have been made in the Corporate Governance Report.

Nomination & Remuneration Committee and Remuneration Policy

Disclosures regarding Nomination & Remuneration Committee and Remuneration Policy are given in the Corporate Governance report. Stakeholders Relationship Committee

Disclosures regarding Stakeholders Relationship Committee and Remuneration Policy are given in the Corporate Governance report.

Corporate Social Responsibility and Sustainable Development Committee

Disclosures regarding Corporate Social Responsibility Sustainable Development Committee are given in the Corporate Governance report. Company’s policy on Director’s appointment and remuneration

Ministry of Corporate Affairs has granted exemption vide notification No. GSR463(E) dated 05.06.2015 to the Government Companies from the provisions of Section 134(3)(p) of the Companies Act, 2013. Director''s appointment and remuneration is decided by the government. Keeping in view the exemption, no Remuneration Policy has been formulated.

Board & Committee Meetings

The details of Board Meetings, Committee Meetings and Meetings of Independent Directors are given in the Corporate Governance Report annexed to this report.

Extract of Annual Return u/s 92(3) of the Companies Act, 2013

The extract of Annual Return as provided under sub-section (3) of Section 92 in Form MGT-9 is annexed hereto as Annexure-14.

Investor Education and Protection Fund

The Company has complied with all the provisions relating to the Investor Education and Protection Fund (IEPF) under the Companies Act, 2013 and The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, made there under. Company Secretary is the Nodal Officer to deal with IEPF Authority and compliances related thereto.

During the year 2017-18, Rs, 97,258.00 have been transferred to Investor Education and Protection Fund on account of unpaid/unclaimed dividend on 31.10.2017. Further, pursuant to Section 124(6) of the Companies Act, 2013 and Rules notified thereunder, Company has transferred 11,887 shares, against which dividend remained unclaimed/unpaid for consecutive period of seven years, to the demat account of IEPF. The details of the dividend and shares transferred to IEPF Account are available at the website of the Company www.nationalfertilizers.com.

Listing

Company''s equity Shares are listed at National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). As required under SEBI (LODR) Regulations, 2015. Company has entered into new Listing Agreement with NSE and BSE. Other disclosures regarding listing regulations have been made in Corporate Governance Report.

Listing Fee

Company has paid requisite listing fee to the stock exchanges during the year 2017-18.

Service to Shareholders

All matters relating to transfer/transmission of shares, issue of duplicate share certificates, payment of dividend, de-materialization and re-materialization of shares and redressal of investors grievances are carried out by the Company''s RTA i.e. M/s. MAS Services Limited, New Delhi.

Code of Conduct

Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31st March, 2018. Code of Conduct has been uploaded on the website of the Company at www.nationalfertilizers.com.

Corporate Policies & Codes

Details regarding corporate policies & codes are given in the Corporate Governance Report and also available on the website of the Company at www.nationalfertilizers.com.

Disclosure pursuant to FEMA Regulation

FEMA Regulations applicable to Companies owned or controlled by non-resident entity(s) are not applicable to NFL.

Key Business Development

Details of key Business Development of the Company are given in the Management Discussion & Analysis Report annexed to this report. Disclosure regarding frauds

No fraud has been reported by the Auditor to the Audit Committee or to the Board, during the financial year 2017-18.

Details of the sickness of the Company

Not applicable

Implementation of Goods and Services Tax (GST)

As per the Govt. of India notification on GST law, the Company has migrated to Goods and Services Tax with effect from 1st July, 2017. Management

Key Managerial Personnel (KMP)

In compliance with provisions of Section 203 of the Companies Act, 2013, Board of Directors have appointed the following Key Managerial Personnel (KMP) :-

Shri Manoj Mishra, Chairman and Managing Director.

Shri Rajiv Kumar Chandiok, Director (Finance) and Chief Financial Officer.

Shri Devinder Singh Ahuja, Director (Technical).

Shri Raj Kumar, Company Secretary.

Board of Directors Changes in Composition

There has been no change in the Composition of Directors since last AGM. Details of tenure of directors are provided in the Corporate Governance Report.

Re-appointment of Directors at the AGM

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Rajiv Kumar Chandiok Director (Finance) and Ms. Meenakshi Gupta, Part-time Government Nominee Director will retire by rotation at the ensuing AGM and being eligible have offered themselves for re-appointment.

Declaration by Independent Directors u/s 149(6) of the Companies Act 2013

All Independent Directors have given declaration that they meet the criteria of Independence as laid down in Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Re-appointment of Independent Directors

As per Section 149(10) of the Companies Act, 2013, none of the Independent Directors has been reappointed on the Board of the Company. Disqualifications of Directors

None of the Directors have committed any disqualification as provided under Section 164 of the Companies Act, 2013.

Remuneration to Directors

Details of Remuneration to Directors and Company Secretary are given in the Corporate Governance Report annexed to this Report. Performance evaluation of Board and Directors

The Details regarding performance evaluation of Board of Director have been given in the Corporate Governance Report.

Directors’ Responsibility Statement

Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013, your Directors confirm that: -

a) i n the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departure has been made there from by the Company;

b) 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 at the end of the financial year 2017-18 and of the profit of the Company for that period;

c) 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 and with applicable powers for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) the Directors have prepared the Annual Accounts on a going concern basis;

e) 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;

f) 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.

Acknowledgements

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the various wings of Government of India, in particular Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory Auditors, Internal Auditors, Cost Auditors, Secretarial Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by the employees at all levels. Board also place on record active support and cooperation received from Employees Trade Union and Officers Association for sustained improvements.

Registered Office: For and on behalf of the Board of Directors

Scope Complex, Core-III,

7 Institutional Area, Lodhi Road, (Manoj Mishra)

New Delhi-110003. Chairman & Managing Director

Date : 3rd August, 2018 DIN: 06408953


Mar 31, 2017

Board’s Report

To,

Dear Members,

On behalf of the Board of Directors of your Company, I have the pleasure in presenting the 43rd Annual Report on the business and operations of the Company together with the Audited Financial Statements including Consolidated Audited Financial Statements of the Company for the Financial Year 2016-2017 and the Auditors'' Reports and comments on the accounts by the Comptroller & Auditor General of India (C&AG).

During the year 2016-17, Company achieved a turnover of Rs, 7663.22 crore as against Rs, 7793.91 crore achieved during the previous year. The turnover was lower by Rs, 130.69 crore mainly due to fall in gas price to USD 8.04/MMBTU during the year as compared to USD 9.96/MMBTU during Corresponding Period of Last Year (CPLY) i.e. decrease of 19.28%.

During 2016-17, Company has achieved highest Profit Before Tax of Rs, 324.88 crore and Profit After Tax of Rs, 207.33 crore during the previous ten years.

During the financial year 2016-17, the Company has achieved the ever best production of urea (38.10 LMT) with an overall capacity utilization of 118% surpassing the previous best performance of 37.99 LMT during financial year 2015-16. The urea production during 2016-17 includes ever best annual production of 5.68 lakh MT at Bathinda and 10.58 lakh MT at Vijaipur-I corresponding to a capacity utilization of 111.1% and 122.4% respectively.

Further, all the Units of the Company achieved ever lowest energy consumption except marginally higher at Vijaipur-I in 2016-17 due to consistent and optimum operation of the plants.

The energy consumption per MT of Urea at NFL plants during 2016-17 is as follows: Gcal/MT/Urea

Units

Pre-set Norms (w.e.f. 1.06.2015)

Actual Energy

2016-17

2015-16

Nangal

7.095

7.012

7.012

Panipat

7.614

7.112

7.259

Bathinda

7.479

6.925

7.003

Vijaipur I

5.904

5.783

5.750

Vijaipur II

5.569

5.364

5.410

Financial Highlights

Your Company''s key financial parameters during the year 2016-17 and important financial highlights are as under:Rs, Crore

Particulars

2016-17

2015-16

Sale of urea in (LMT)

37.58

36.41

Sale quantity of DAP (LMT)

2.14

0.51

Sale of urea (Net of Excise Duty)

2045.73

1983.21

Subsidy on urea

4721.39

5381.20

Net Sales of urea

6767.12

7364.41

Sale of other products including subsidy on imported DAP (Net of Excise Duty)

896.10

429.50

Net Sales

7663.22

7793.91

Other Income

44.59

46.53

Total Income

7707.81

7840.44

Total Expenses

7108.01

7236.94

Earnings Before Interest, Depreciation and Taxes (EBIDTA)

599.80

603.50

Interest

189.75

228.42

Depreciation

85.17

86.66

Profit Before Tax (PBT)

324.88

288.42

Provision for tax

116.72

89.80

Profit After Tax (PAT) (Total Comprehensive Income)

207.33

192.20

RESERVES Capital Reserve

The balance as at 31st March 2017 amounted to Rs, 2.51 crore, which is at the same level as was in the previous year.

Debenture Redemption Reserve

The debenture redemption reserve stood at Nil as on 31.03.2017 as compared to Rs, 10.04 crore as on 31.03.2016. The reduction of Rs, 10.04 crore during the year was on account of redemption of 3rd instalment of non-convertible bonds.

Corporate Social Responsibility Reserve

CSR Reserve stood at Rs, 2.50 crore as on 31.03.2017 as compared to Rs, 4.01 crore on 31.03.2016. The reduction of Rs, 1.51 crore (net) during the year is on account of amount utilized for CSR expenditure.

General Reserve

No amount was transferred during the year to General Reserve from the surplus. Further, an amount of Rs, 10.04 crore was transferred to General Reserve from the Debenture Redemption Reserve. The General Reserve as on 31.03.2017 stood at Rs, 332.89 crore as compared to Rs, 322.85 crore as on 31.03.2016.

Surplus

The balance retained in the surplus as at 31st March 2017 is Rs, 790.83 crore as compared to Rs, 668.56 crore for the previous year. No provision was made for dividend and Dividend Distribution Tax during the year.

Dividend

Board has not recommended payment of dividend for the year 2016-17 considering the various capex requirements in line with the guidelines on Capital Restructuring of CPSEs issued by Department of Investment and Public Asset Management (DIPAM).

Foreign Exchange Earnings/Outgo

The foreign exchange earnings by way of trade margins during the year was Rs,NILRs,. The foreign exchange outgo by way of imports and other expenses amounted to Rs, 519.12 crore.

BORROWINGS

Long Term Loans

Long term loan as on 31st March, 2017 was Rs, 980.88 crore. The outstanding Rupee Term Loan and External Commercial Borrowings stood at Rs, 769.85 crore, USD 32.15 million respectively.

Short Term Loans

Short Term borrowings of Rs, 3153.73 crore (previous year Rs, 4295.32 crore) as on 31st March, 2017 were outstanding.

Debt Equity Ratio

Debt equity ratio as on 31st March, 2017 has reduced to 2.26:1 as compared to 3.62:1 of previous year due to repayment of long term loans. State of affairs of the Company

Detailed analysis with regard to production & sales performance, thereof has been made in Management Discussion & Analysis Report. However, a brief on production & sales performance etc. is given below:-

Production

During the year, your Company achieved ever highest Urea production of 38.10 LMT with an overall capacity utilization of 118% surpassing the previous best production of 37.99 LMT achieved during 2015-16. The Urea production during 2016-17 included ever best production from Bathinda and Vijaipur-I.

Sales Performance

During the year, your Company achieved Urea sale of 37.58 LMT as compared to 36.41 LMT of the previous year, higher by 1.17 LMT (3%). Gross sale value of Urea including subsidy was Rs, 6767.12 crore as compared to Rs, 7364.41 crore of the previous year mainly due to fall in gas price during the year.

The company recorded ever best sale of Nitric Acid of 66783 MT during 2016-17 surpassing previous best of 55195 MT achieved during CPLY. Besides this, 9293 MT of Ammonium Nitrate was also produced and sold during 2016-17 after re-commencement of its production in April, 2016 at Nangal Unit after a gap of around 2 years. The turnover of industrial products increased to Rs, 190.67 crore during 2016-17 as compared to Rs, 145.32 crore during CPLY primarily due Ammonium Nitrate and increase in sale of Nitric Acid.

Trading of DAP and Agricultural Products (Pesticides, Seeds, Bentonite Sulphur, Compost, Bio-fertilizers, etc.)

Sale value of traded products during 2016-17 was Rs, 705.43 crore as against Rs, 284.18 crore achieved during CPLY The higher sale of traded products was mainly on account of higher purchase and sale of 2.14 LMT of imported DAP and Bentonite Sulphur (by Rs, 269.54 crore) as compared to 0.52 LMT. Sale of seeds during the year was Rs, 14.92 crore as against Rs, 16.80 crore achieved during CPLY. The Company also registered a turnover of Rs, 1.09 crore from sale of compost and Rs, 0.5 crore from sale of industrial chemicals during the year.

Agri-Extension Services

NFL is organizing Agriculture Extension Services with the objective to educate farmers on judicious use of fertilizers along with technical knowhow on improved and scientific methods of cultivation, enhancing farmers'' knowledge about latest developments in farming sector thus helping them to increase productivity.

Dealers/Retailers are important link between company and farmers and key change agents in motivating the farmers to use fertilizers in a balanced manner and adopting Integrated Nutrient management. 36 Dealers''/Retailers'' Orientation Programmes were conducted during the year and more than 2500 dealers/retailers were facilitated by upgrading their knowledge regarding fertilizer/Agro products and improved farm practices so that latest information can be disseminated to farmers at point of sale to the farmers.

It is essential to educate the farmers on issues related to soil testing, soil health, balanced fertilization etc. to optimize farmer''s crop yield and farm income. 84 farmer training programmes were organized during 2016-17 and more than 5000 farmers benefited. During these educational programmes, farmers were sensitized towards soil fertility status including deficiency of various nutrients their remedy to increase fertilizer use efficiency and maximize yields.

During the year 2016-17, 87 and 85 demonstrations of Biofertilizers and City Compost respectively, were carried out at farmers field to demonstrate the effect of Bio fertilizers and City Compost on crop growth and yield as compared to farmers'' own practices. These demonstrations are being carried out on long term basis.

During the year 2016-17, under the initiative of Government of India Company has opened 100 Kisan Suvidha Kendras (KSKs) at various locations in its marketing territory.

During the year 2016-17, Company has adopted 10 villages (5 each in Haryana and Madhya Pradesh) for promotion of city compost under CSR, 974 MT of city compost was supplied in these villages for conducting the demonstrations on wheat & mustard crops. These demonstrations on long term basis have been laid out in 10 adopted villages followed by Soil Testing, farmer education programmes and field days to educate the farmers on use and advantage of City Compost.

NFL is making all efforts in rendering advisory services to the farmers by conducting Soil testing. It helps to identify problematic soils, their nutritional status, texture and structure thus helps in identification of soil and crop specific solutions. 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 30,000 soil samples were analyzed for major and micro nutrients and recommendations given through six static and four mobile soil testing laboratories. NFL has also upgraded its Soil Testing Labs at Barabanki and Nangal by installation of Atomic Absorption Spectrophotometer (AAS) for micronutrient analysis.

Agricultural Exhibitions and Krishi Melas aim to bring stakeholders from all disciplines of Agriculture like farming, livestock, dairy, import and export, poultry and horticulture sectors under one roof and provide opportunity to demonstrate their products, exchange their views and share ideas for the growth, sustainability and development of these vital sectors of our economy. Participation in agro exhibitions and university Kisan melas is very effective way to communicate directly with the farmers and also to interact with scientists and experts from various agricultural fields. During the year 2016-17, NFL participated in 51 Krishi Melas/agriculture exhibitions organized by leading agriculture universities, agriculture department in Punjab, Haryana, UP, Uttarakhand, MP and Rajasthan wherein more than one lakh dealers/farmers participated.

During the year 2016-17, under farm forestry programme, 16,790 no. of saplings of fruit and commercially valuable plants like Neem, Eucalyptus etc. were planted nearby farmer fields and in common areas in the adopted villages.

Projects

The details of the projects including capital expenditure envisaged are given in the Management Discussion & Analysis Report.

Management Discussion & Analysis Report

Management Discussion & Analysis Report covering business prospects including modernization, diversification, investments, marketing plans, raw materials, human resource, internal management controls including financial performance review, government policies and other factors having impact on the performance of the Company operations and future outlook of the Company is appended as Annexure-1 to this report.

Business Responsibility Report

As required under Regulation 34 of SEBI (LODR) Regulations, 2015, the Business Responsibility Report of the Company for the Financial year ended March 31, 2017 is appended as Annexure-2 to this report. Business Responsibility Policy is available on the website of the company at www.nationalfertilizers.com.

Corporate Governance

The company is committed to maintain the highest standards of Corporate Governance being the fountain head of value creation for all stakeholders especially shareholders. The Company has in place a well defined “Corporate Governance Mechanism” which considers the interest of all stakeholders. Pursuant to SEBI (LODR) Regulations, 2015 and DPE Guidelines on Corporate Governance, a report on Corporate Governance forms part of this report as Annexure-3.

There are no significant and material orders passed by the regulators or Courts or tribunals impacting the going concern status and Company''s operation in future.

The statutory auditors of the Company have examined and certified your Company''s compliance with respect to conditions enumerated in SEBI (LODR) Regulations, 2015 (erstwhile Clause 49 of the Listing Agreement) and DPE guidelines on Corporate Governance. Statutory Auditors Certificate on Corporate Governance and explanations of the Management to Statutory Auditors'' observations forms part of this report as Annexure-4.

The Right to Information Act, 2005

In consonance with the spirit of Right to Information Act, 2005 the Company has created necessary mechanism as required under the Act. The Public Information Officers and the Appellate Authorities are effectively responding to the requests and appeals of the applicants. The names of all PIOs/Appellate Authorities/Transparency Officers are displayed on the Company''s website. During the year, 291 applications were received and the information was provided to the applicants within the prescribed time limit.

Vigil Mechanism

Pursuant to the provisions of Sections 177(9) and (10) of the Companies Act, 2013, a Vigil Mechanism for employees and others to report genuine concerns has been established.

Whistle Blower Policy

Your Company believes in transparency and propriety in all its business dealings to take this object further, Company has put in place a Whistle Blower Policy providing for a mechanism to the employees and other stakeholders to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimization of whistle blowers. The policy is reviewed periodically. No employee or other stakeholders were denied access to the Audit Committee.

Integrity Pact

With the commitment to maintain the highest standard of transparency and governance ,your Company has entered into an integrity Pact with

Transparency International and has also appointed Independent External Monitors, persons of impeccable integrity, to oversee the implementation and effectiveness of the integrity Pact to bring more transparency in the contracting and procurement operations.

Vigilance

Vigilance Division of the Company is headed by CVO. The CVO is assisted by a team of officers drawn from various functional departments. Vigilance set up is operational in Corporate Office, all manufacturing Units as well as Zonal Marketing Offices.

Promotion of good governance remains the core area of vigilance. Apart from streamlining the systems and providing flexibility to the units to perform better, efforts were made to build confidence across the organization to facilitate faster decision making. Awareness is an important cornerstone for good governance. An enlightened employee contributes in achieving the organizational goal as well as in system improvements.

Efforts have been initiated to shift the working of the Vigilance wing of NFL from routine works approach to a proactive, initiative taking approach. The roles and responsibilities and delivery of vigilance officers at CO and in the field have been reviewed for the purpose of improving the quality and focused output.

Quality of scrutiny of contracts and purchase orders needs to improve so as to help in suggesting and effecting required systematic improvements and enforcement in the company. Contracts and Purchase Orders awarded in 2016-17 by Limited Tender Enquiry approach and also through open tenders are being scrutinized to understand the trends and practices vis-a-vis provisions in the Purchase and Marketing manuals so as to suggest and effect improvements in quality of tenders in NFL.

Vigilance Awareness Week was observed during October, 2016 by giving special emphasis on theme of the year ''Preventive Vigilance as a tool of Good Governance'' given by CVC. As desired by CVC, debate competitions were organized involving youth and college students to ensure that vigilance becomes a point of discussion among the youth.

MoU

The Department of Public Enterprises, Gol in order to improve accountability and giving higher autonomy to Public Sector Undertakings, introduced the Concept of MoU during early nineties.NFL signed the first Mou with the Department of Fertilizers (DoF) for the year 1991-92. The Company had been awarded “Excellent rating “ for the 12th time in a row from 2000-01 to 2011-12.

NFL has received “Very Good” rating under MoU for the year 2015-16.Company signed MoU for 2016-17 with DoF on 30.06.2016 which is the 26th year of the Company under MoU system.

Awards & Accolades received during 2016-17

- First prize “National Safety Award for the year 2014” to Panipat Unit from Ministry of Labour & Employment for lowest average accident frequency rate.

- First prize “National Energy Conservation Award-2016” to Panipat Unit in Fertilizer sector from Bureau of Energy Efficiency (BEE), Ministry of Power (GoI).

- “Best Technical Innovation Award -2016” to Vijaipur Unit in fertilizer industry from FAI.

- “Environment Protection Award-2016” to Vijaipur Unit from FAI.

- “Good Performance Award for Excellence in Cost Management - 2015”to NFL under the category of Public-Manufacturing (Large) Sector from Institute of Cost Accountants of India (ICAI).

- First Prize in the category of Best House Journal for its magazine”VANI” by Standing Conference of Public Enterprises (SCOPE) in a ceremony held.

- Corporate Office, Noida received award (Shield & Certificate) for effective implementation of Official Language from Town Official Language Implementation Committee, Noida.

- National Safety Council of India has announced to award NFL Panipat Unit with Golden trophy- “Sarvashreshtha Suraksha Puraskar for the year 2016.”

- 4th“Governance Now PSU Award- 2016”for “Value Growth”.

Corporate Social Responsibility

The Company through its CSR initiatives continues to enhance value creation in the society and in the community in which it operates, through its services, conduct & initiatives, so as to promote sustained growth for the society and community, in fulfillment of its role as a Socially Responsible Corporate.

Company has formed a Committee of Directors to guide the CSR activities. The constitution of the committee is given in detail in the Corporate Governance Report. Company follows a well formulated CSR policy to ensure that CSR activities are undertaken in a systematic and methodological manner as per the DPE guidelines, Companies Act, 2013 and the Companies (CSR) Rules, 2014. CSR Policy is available on the website of the company at www.nationalfertilizers.com.

During the year 2016-17, the Company incurred an expenditure of '' 2.62 crore towards CSR initiatives. Company has undertaken various activities such as construction of toilets, AAS equipment for soil testing, installation of solar lights, cancer awareness, employment enhancing and vocational training programmes, distribution of limbs and aids to persons of special ability, training programme for women in beauty culture & cutting and stitching, etc. A detailed report on the Corporate Social Responsibility is given in the Annexure-5 to the report.

Research and Development

In Compliance with the guidelines on Research & Development (R&D) notified by the Department of Public Enterprises ,the Company has an R&D Policy and R&D Plan duly approved by its Board of Directors.

Further, in order to promote research in the field of fertilizers, Department of fertilizers, in assistance with Fertilizers PSUs has set up a research institution viz. Indian Council for Fertilizers and Nutrient Research (ICFNR) which would be exclusively devoted to promotion of research in fertilizers. The office of ICFNR has been housed in the premises of NFL''s corporate office at Noida. To start with NFL, RCF and FAGMIL would contribute ''5 crore towards seed money required for ICFNR.

ICFNR Shall be working on R&D in the areas of fertilizers manufacturing technology, use of raw materials and innovation in fertilizer products through partnership and collaboration with various research institutes, fertilizers industry and other stakeholders.

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

Disclosure in terms of the Companies (Account) Rules, 2014 in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Outgo are given in the Annexure-6.

Safety, Environment and Sustainable Development

Company has undertaken various initiatives for adopting best practices for health, safety environment management and sustainable developments as detailed in the Annexure-7.

Particulars of Loans, Guarantees, Security and acquisition under Section 186 of the Companies Act, 2013

Particulars of loans given ,guarantees provided, investments in securities and acquisitions made by the Company during the year under review are given in MBP-2 as Annexure-8 to the Report.

Joint Venture /Associates Companies

Details of Joint Venture / Associates Companies pursuant 129(3) of the Companies Act, 2013 the statement containing the salient features of the financial statement of the associate company/joint venture company is included the consolidated financial statements as Annexure-9 hereto.

Related Party Disclosures

The particulars of contracts / arrangement entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 including arm''s length transactions under third proviso thereto are disclosed on Form No.AOC-2 as Annexure-10. Related Party Trancations Policy of the Company is available at www.nationalfertilizers.com.

Risk Management

The Chemicals fertilizer industry is operated in a hazaradous environment and faces many risks including those related to health, safety and environment in addition to general business and financial risks. In order to mitigate them, the Company has a comprehensive Risk Management Policy which is regularly reviewed and a periodical review of the risks, procedures and strategies is undertaken. Risks are anaylsed at the highest level by a Board level Audit Committee and efforts are made in a planned way to obviate the risks either fully or to minimize their impact.

Adequacy of Internal Financial Controls

Details in respect of adequacy of internal financial controls with reference to financial statements are given in Management Discussion & Analysis Report.

Particulars of Employees

During the year under review, none of employees of the Company had drawn remuneration in excess of the limits prescribed under section 134(3)

(c) of the Companies Act,2013 read with Companies (Appointment of Managerial Personnel) Rules, 2014.

Public Procurement Policy of Micro and Small Enterprises (MSEs) Order, 2012

Public Procurement Policy of Micro and Small Enterprises (MSEs) was notified by the Government under the Micro, Small and Medium Enterprises Development Act, 2006 which stipulates that 20% of total annual procurement of goods and services shall be made by all Central Ministries/ Departments/CPSUs from Micro & Small Enterprises(MSEs.) Within this percentage, a subtotal of 4% procurement is to be made from MSEs owned by SC/ST entrepreneurs. This Policy has become mandatory w.e.f.01.04.2015. Requisite information for the year 2016-17 is annexed as Annexure-11 to this report.

Human Resource Management

The Company has a manpower strength of 3517 employees as on 31.3.2017, which comprises of 1659 Executives and 1858 Non-Executives. Company promotes the employment of women and at present 207 women employees are on its roll, which is 5.89% of the total work force. The detailed analysis with regard to human resource including training and executive development programme have been made in the Management Discussion and Analysis Report .

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, your Company confirms that no complaint/case has been filed/pending with the Company during the year 2016-17.

Internal Complaint Committees have been formed and functioning at Units and Corporate Office, Noida to assess complaints regarding Sexual Harassment at Work place. Training programmes / workshop to bring awareness among employees with regard to sexual harassment at work place, gender sensitization and women empowerment programmes are held in Units/ Offices.

International Women''s day was celebrated on 8th March 2017 in all Units and Corporate Office, Noida.

Official Language

The Company is making all efforts for the propagation and implementation of Official Language policy of the Government of India. The quarterly meeting of Official Language Implementation Committee (OLIC) is regularly held in all the Units/Offices of the Company under the chairmanship of Head of the Unit/Office to review the progress of official language. In all, 32 Meetings of OLIC were held during the year.

To promote Official Language ''Hindi'' 35 Hindi workshops were organized during the year in which 834 employees had actively participated. Hindi Pakhwada was organized in all the Units/Offices of the Company to mark the Rajbhasha Diwas. During the year, 47 Programmes/Competitions were held in order to promote Rajbhasha and 1119 employees participated in them. 36 employees were awarded cash prizes under the ''Cash Incentive Scheme'' for doing their official work in Hindi.

During the year 2016-17 Corporate Office, Noida has been awarded with Consolation Prize, Rajbhasha Shield and Citation Certificate by Town Official Language Implementation Committee, Noida for doing excellent work in Hindi. Zonal Office, Chandigarh has been awarded First Prize, Rajbhasha Shield and Citation Certificate by Official Language Implementation Committee, Chandigarh for exceptional work in Hindi.

Initiatives taken for development of employees belonging to Scheduled Casts / Scheduled Tribes / Other Backward Classes (SC/ST/ OBC categories) -

Company is committed to the development of employees belonging to reserved categories. An Implementation Cell is already functional in all Units / Offices of the Company to oversee the implementation of Presidential Directives on Reservation Policy for SCs/STs. A Liaison Officer of appropriate status has been appointed in each Unit/Office and Chief Liasion Officer at CO, Noida to ensure due compliance of orders and instructions pertaining to reservation for SCs and STs and other concessions admissible to them. Meetings were periodically held at Unit level as well as at Corporate level with the SC/ST Employees Welfare Associations by the Management for redressal of grievances of SC/ST employees. The programmes on implementation of Presidential Directives were held at Units from time to time and SC/ST employees were deputed for such programmes conducted by external agencies. During 2016-17, 1785 man-days training (in-house as well as external training programmes) was imparted to SC/ST employees. A statement showing representation of employees belonging to Scheduled Caste / Scheduled Tribes / Other Backward Classes / Persons with disabilities is appended as Annexure-12 to this report.

Information Technology

NFL has always tried to be in line with the latest digital technologies in its day-to-day activities. Almost all the business applications are running in on-line mode. By hosting & implementing web-based Marketing Management & Information System module across the marketing network, company had brought all field level activities like rake receipt/disposal, warehousing, sales & all kinds of accounting activities on digital platform. This has brought in greater transparency in all kinds of marketing and accounting transactions & has cut down the lead time to a great extent thereby reducing delays in closing of accounts.

Company has also adopted initiatives taken by Deptt. of Fertilizers (DoF) for monitoring movement and sales of the fertilizers from fertilizer manufacturer/importers to fertilizer wholesalers and from wholesalers to retailers across the country.

The company has adopted IT in various aspects of its working. The materials department of our organisation has adopted e-procurement and e-tendering for procurement process. The company has also taken initiatives in inculcating e-payments in tendering procedures and has adopted the system of Online test for recruitment wherever the recruitment is based on All India Test.

NFL has also setup Video Conferencing Facility at all its Plants, Zonal Offices & Corporate Office. Thereby we are conducting digital meetings at Plants & with vendors / stake holders which helps in cutting cost and time. It has also been planned to introduce video conferencing based seminars from single point for employees.

In order to have optimum utilization of MPLS VPN bandwidth & ILL bandwidth, Link Load balancers are under installation at all locations of the company. In order to mitigate cyber threats, intrusion prevention & ransom ware attacks UTM based security appliances are already under installation.

Central Data Center of the company is also being upgraded to a Tier-II data center to provide multiple redundancies for 99.98% uptime of business applications.

Statutory Auditors & Statutory Auditors Report

The Statutory Audit of your Company was conducted by Chartered Accountants firms M/s. HDSG & Associates and M/s. Chandiok & Guliani, Joint Auditors appointed by Comptroller & Auditor General of India (C&AG). Auditors'' Report on the Financial Statements including consolidated financial statements of the Company for the financial year 2016-17 is attached.

Comments of C&AG

The review of Financial Statements including consolidated financial statements for the year ended 31st March, 2017 carried out by the Comptroller and Auditor General of India (C&AG) under Section 143(5) of the Companies Act, 2013 forms part of this report. C&AG has not given any comments.

Cost Audit

As prescribed under Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, the cost accounting records are being maintained by all the Units of the Company. Cost Audit for 2016-17 was carried out by Cost Auditors as prescribed under the Companies Act, 2013 and Rules framed there under. Consolidated Cost Audit Report for the financial year 2015-16 was filed with MCA on 26.09.2016.

Internal Audit

Your Company has an in-house internal Audit Department, which is headed by General Manager. Company also engages professional Chartered Accountant Firms to carry out the Internal Audit.

Secretarial Audit

Your Company has appointed M/s. Agarwal S. & Associates as Secretarial Auditors for the year 2016-17. Secretarial Audit Report for the year 2016-17 and Management''s explanation to Secretarial Auditors observations are annexed as Annexure-13 to this Report.

Audit Committee

The detailed disclosures have been made in the Corporate Governance Report.

Nomination & Remuneration Committee and Remuneration Policy

Disclosures regarding Nomination & Remuneration Committee and Remuneration Policy are given in the Corporate Governance report.

Policy for determining Material Subsidiary

The Policy has been uploaded on the website of the Company at www.nationalfertilizers.com.

Board Meetings

The details of Board Meetings and Meetings of Independent Directors are given in the Corporate Governance Report annexed to this report. Extract of Annual Return u/s 92(3) of the Companies Act, 2013

The extract of Annual Return as provided under sub-section (3) of Section 92 in Form MGT-9 is annexed hereto as Annexure-14.

Financial Accounting

Vide notification dated February 16, 2015, the Ministry of Corporate Affairs notified the Indian Accounting Standards (“Ind AS”) to be applicable to certain class of companies including listed companies, for the accounting periods beginning on or after April 1, 2016, with comparatives to be provided for the period ending on March 31, 2016. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013. The standalone and consolidated financial statements for the financial year ended March 31, 2017, forming part of this Annual

Report, have been prepared in accordance with Ind AS with a transition date of April 1, 2015. Explanations capturing areas of differences and reconciliations from Indian GAAP to Ind AS have been provided in the notes to accounts to the standalone and consolidated financial statements.

Sweat Equity

Company has not issued any Sweat equity shares in terms of Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014. Disinvestment of GOI Equity

To comply with SEBI norms, disinvestment of 15 % Govt. of India equity was carried out on 26th & 27th July, 2017 through Offer for Sale route thereby reducing GoI shareholding to 74.71%.

Investor Education and Protection Fund

During the year 2016-17, Rs.80,085.00 have been transferred to Investor Education and Protection Fund on account of unpaid/unclaimed dividend on 02.11.2016.

Listing

Company''s equity Shares are listed at National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). As required under SEBI (LODR) Regulations, 2015. Company has entered into new Listing Agreement with NSE and BSE. Other disclosures regarding listing regulations have been made in Corporate Governance Report.

Listing Fee

Company has paid requisite listing fee to the stock exchanges during the year 2016-17.

Code of Conduct

Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31st March, 2017. Key Managerial Personnel (KMP)

In compliance with provisions of Section 203 of the Companies Act, 2013, Company has appointed KMPs. The details are as follows:-Shri Manoj Mishra, C&MD is acting as CEO and continuing as KMP.

Shri Rajiv Kumar Chandiok, Director (Finance) is acting as CFO and is continuing as KMP.

Shri Devinder Singh Ahuja, Director (Technical) has been appointed KMP w.e.f 14.02.2017.

Shri Raj Kumar, Company Secretary is acting as Compliance Officer and is continuing as KMP.

Shri M Sagar Mathews, Director (Tech.) remained KMP upto 30.12.2016.

Board of Directors Changes in composition

1. Ms. Bhavnaben Kardambhai Dave (DIN: 07557056) was appointed as Part-time Non-official Independent Director at the 42nd AGM held on 27.09.2016.

2. Shri Kuntal Sensarma (DIN:07626530),Economic Advisor, Department of Fertilizers, Ministry of Chemicals & Fertlizers, Government of India held the office of Government Nominee Director on the Board of the Company from 13.10.2016 to 08.12.2016.

3. Shri M. Sagar Mathews, Director (Technical), National Fertilizers Limited ceased to be Director with effect from 30.12.2016 on being relieved from the services of the Company on attaining the age of superannuation.

4. Ms. Meenakshi Gupta (DIN: 07686646), Additional Secretary & Financial Adviser, Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India has been appointed as a Part-time Government Nominee Additional Director with effect from 11.01.2017 and shall hold office till the ensuing AGM.

5. Shri Devinder Singh Ahuja (DIN: 07687173), has assumed the charge as Director (Technical) with effect from 06.02.2017 and shall hold office till the ensuing AGM.

6. Shri Anil Verma (DIN: 02544789), has been appointed as a Part-time Non-official Independent Additional Director on the Board of the Company with effect from 14.02.2017 and shall hold office till the ensuing AGM.

7. Dr. Ramesh Kumar Agarwal (DIN: 00601353) has been appointed as a part-time Non-official Independent Additional Director on the Board of the Company with effect from 14.02.2017and shall hold office till the ensuing AGM.

8. Shri Gurinderjit Singh Sandhu (DIN: 01790828) Part-time Non-official Independent Director ceased to be Director of the Company w.e.f. 20.02.2017 on completion of his tenure of directorship.

9. Dr. Kalpana Saini (DIN: 07820260) has been appointed as a Part-time Non-official Independent Additional Director on the Board of the Company with effect from 18.05.2017 and shall hold office till the ensuing AGM.

Details of tenure of directors are provided in the Corporate Governance Report.

Re-appointment and appointment of Directors at the AGM

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Dharam Pal, Government Nominee Director will retire by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

Notice has been received u/s 160 of the Companies Act, 2013 for appointment of Ms. Meenakshi Gupta, Shri Devinder Singh Ahuja, Shri Anil Verma, Dr. Ramesh Kumar Agarwal and Dr. Kalpana Saini as Directors at the ensuing Annual General Meeting. Brief resume of all directors is placed as Annexure-15 to the report.

Declaration by Independent Directors u/s 149(6) of the Companies Act 2013

All Independent Directors have given declaration that they meet the criteria of Independence as laid down in Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Re-appointment of Independent Directors

As per Section 149(10) of the Companies Act, 2013, none of the Independent Directors has been reappointed on the Board of Company Disqualifications of Directors

None of the Directors have committed any disqualification as provided under Section 164 of the Companies Act, 2013.

Performance evaluation of Board and Directors

As per provisions of Section 134(3)(p) of the Companies Act, 2013, a statement indicating 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 should form part of the Board’s Report of every listed Company.

However, as per notification dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, Government Companies are exempted from complying with provisions of Section 134(3)(p) of the Companies Act, 2013. Your Company is a Government Company and the appointment, tenure, performance evaluation, etc. of Directors is done by Government of India, therefore, such particulars have not been included as part of Directors'' Report. Remuneration of C&MD, Whole-time Directors and its employees is determined by Government of India.

NFL is a government company where the directors are appointed either by the Government of India or on the recommendation of the Government. The remuneration, etc. of Directors are decided as per DPE Guidelines. The tenure of the directors is also decided by the Government. In compliance of Section 178(1) of the Companies Act, 2013, Company has constituted a Nomination and Remuneration Committee. Section 134(3)(e) requires the Company to disclose the policy on directors'' appointment and remuneration including criteria for determining qualification, positive attributes, independence of a director and other matters provided under section 178(3) of the Act. Section 134(3)(p) of the Act read with 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. NFL being a government company, is exempted from the provisions of section 134(3)(e) & (p) and section 178(2) & (3) of the Companies Act. SEBI (LODR) Regulation, 2015.

Directors’ Responsibility Statement

Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013, your Directors confirm that: -

a) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departure has been made there from by the Company;

b) 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 at the end of the financial year 2016-17 and of the profit of the Company for that period;

c) 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 and with applicable powers for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) the Directors have prepared the Annual Accounts on a going concern basis.

e) 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.

f) 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.

Acknowledgements

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the various wings of Government of India, in particular Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory Auditors, Internal Auditors, Cost Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by the employees at all levels.

Registered Office: For and on behalf of the Board of Directors

Scope Complex, Core-3,

7 Institutional Area, Lodhi Road,

New Delhi. (Manoj Mishra)

Date : 10th August, 2017 Chairman & Managing Director

DIN: 06408953


Mar 31, 2016

To,

Dear Members,

On behalf of the Board of Directors of your Company, I have the pleasure in presenting the 42nd Annual Report on the business and operations of the Company together with the Audited Financial Statements including Consolidated Financial Statements of the Company for the Financial Year 2015-16 and the Auditors’ Reports and comments of the Comptroller & Auditor General of India (C&AG).

During the year 2015-16, Company achieved a turnover of Rs. 7765.88 crore as against Rs. 8519.69 crore achieved during the previous year. The turnover was lower by Rs. 753.81 crore mainly due to reduction in subsidy owing to cheaper gas price under gas pooling mechanism, lower sale quantity of urea, despite higher realizations from sale of neem coated urea.

During 2015-16, Company has achieved highest Profit Before Tax of Rs. 283.49 crore and Profit After Tax of Rs. 197.09 crore during the last ten years. During the financial year 2015-16, the Company has achieved the ever best production of urea 37.99 LMT with an overall capacity utilization of 118% surpassing the previous best performance of 36.39 LMT during financial year 2014-15. The urea production during 2015-16 includes ever best performance at Nangal, Panipat and Vijaipur-II plants. Further, all the Units of your Company except Vijaipur-I had achieved ever lowest energy consumption in 2015-16, which had helped in optimizing energy consumption in production of urea.

Energy consumption of urea at all the units as compared to pre-set energy norms and corresponding period last year are given below:-

Gcal/MT/Urea

Units

Pre-set Norms (up to 31.05.2015)

Pre-set Norms (w.e.f. 01.06.2015)*

Actual Energy

2015-16

2014-15

Nangal

7.095

7.095

7.012

7.017

Panipat

7.614

7.614

7.259

7.500

Bathinda

7.479

7.479

7.003

7.131

Vijaipur I

5.952

5.904

5.750

5.740

Vijaipur II

5.712

5.569

5.410

5.431

Financial Highlights

Your Company’s key financial parameters during the year 2015-16 and important financial highlights are as under:- (Rs. crore)

Particulars

2015-16

2014-15

Sale of urea (LMT)

36.41

36.79

Sale of urea (Net of Excise Duty)

1966.37

1938.25

Subsidy on urea

5384.14

6461.14

Net Sales of urea

7350.51

8399.39

Sale of other products including subsidy on imported DAP (Net of Excise Duty)

415.37

120.30

Net Sales

7765.88

8519.69

Other Income

46.33

37.13

Total Income

7812.21

8556.82

Total Expenses

7220.81

8138.18

Earnings Before Interest, Depreciation and Taxes (EBIDTA)

591.40

418.64

Interest

227.88

301.36

Depreciation

80.03

72.56

Profit Before Tax (PBT)

283.49

44.72

Provision for tax

86.40

18.48

Profit After Tax (PAT)

197.09

26.24

RESERVES Capital Reserve

The balance as at 31st March 2016 amounted to Rs. 2.51 crore, which was at the same level as was in the previous year.

Debenture Redemption Reserve

The debenture redemption reserve stood at Rs.10.04 crore as compared to Rs.17.57 crore as on 31.03.2016. The reduction of Rs.7.53 crore was on account of redemption of 2nd installment on Non-convertible Bonds.

Corporate Social Responsibility Reserve

CSR Reserve stood at Rs.4.01 crore as on 31.03.2016 as compared to Rs.5.26 crore on 31.03.2015. The reduction of Rs.1.25 crore (net) was on account of amount utilized for CSR expenditure.

General Reserve

An amount of Rs.12.57 crore was transferred to General Reserve from the surplus. Further, an amount of Rs. 7.53 crore was transferred to General Reserved from the Debenture Redemption Reserve. The General Reserve as on 31.03.2016 stood at Rs. 322.85 crore as compared to Rs. 302.75 crore as on 31.03.2015.

Surplus

The balance retained in the surplus as at 31st March, 2016 is Rs. 776.66 crore as compared to Rs. 662.33 crore for the previous year, after providing for dividend of Rs.59.36 crore and Dividend Tax of Rs.12.08 crore.

Dividend

Board has recommended a dividend of 12.10% (Rs.1.21 per equity share) for the year 2015-16 on equity share of Rs.10 each amounting to Rs. 59.36 crore on its paid-up share capital of Rs. 490.58 crore and Dividend Distribution Tax of Rs.12.08 crore. The total dividend pay-out including Corporate Dividend Tax accounts for 36.25% of Profit After Tax.

Foreign Exchange Earnings/Outgo

The foreign exchange earnings by way of trade margins during the year was ‘NIL’. The foreign exchange outgo by way of imports and other expenses amounted to Rs.128.30 crore.

BORROWINGS

Long Term Loans

Long term loan as on 31st March, 2016 was Rs.1827.36 crore. The outstanding Rupee Term Loan, External Commercial Borrowings and Bonds stood at Rs.1540 crore, USD 36.95 million and Rs.40.16 crore respectively.

Short Term Loans

Short Term borrowings were Rs.4292.23 crore (previous year Rs.5002.27 crore) as on 31st March, 2016 were outstanding.

Debt Equity Ratio

Debt equity ratio as on 31st March, 2016 has reduced to 2.88:1 as compared to 3.65:1 of previous year due to repayment of long term long term loans.

State of affairs of the Company

Detailed analysis with regard to production, sales targets and achievement thereof has been made in Management Discussion & Analysis Report. However, a brief of production, sales, etc. is given below:-

Production

During the year, your Company achieved ever highest urea production of 37.99 LMT with an overall capacity utilization of 118% surpassing the previous best production of 36.39 LMT achieved during 2014-15. The urea production during 2015-16 included ever best production from Nangal, Panipat and Vijaipur-II Units.

Sales Performance

During the year, your Company achieved urea sale of 36.41 LMT as compared to 36.79 LMT of the previous year, lower by 0.38 LMT (1.03%). Company achieved sales turnover of Rs.7765.88 crore compared to Rs. 8519.69 crore of the previous year. The turnover of industrial products increased to Rs.127.10 crore as compared to Rs.102.21 crore of the previous year primarily due to increase in sale of Nitric Acid.

Trading of Agricultural Products (Pesticides, Seeds, Bentonite Sulphur, Compost, Bio-fertilizers, etc.)

Sale value of other products was Rs. 288.27 crore during the year against Rs.18.09 crore achieved during CPLY. The turnover of traded goods was Rs.285 crore (including Rs.42 crore towards domestic trading of DAP) against CPLY of Rs.15 crore.

Agri Extension

NFL is organizing Agriculture Extension Services with the objective to educate farmers on judicious use of fertilizers along with total know how on improved and scientific methods of cultivation, enhancing farmers'' knowledge about latest techniques thus helping them to increase productivity.

Dealers/Retailers are important link between company and farmers and key change agents in motivating the farmers to use fertilizers in a balanced manner and adopting Integrated Nutrient management with the use of organic source of fertilizers. 40 Dealer’s/Retailer’s Orientation Programmes were conducted and more than 2000 dealers/ retailers were facilitated by upgrading their knowledge regarding fertilizer/Agro products and improved crop practices so that latest information can be disseminated to farmers at point of purchase to the farmers.

It is essential to educate the farmers on issues related to soil testing, soil health, balanced fertilization etc. to optimize farmer’s crop yield and farm income. 88 farmer training programmes were organized during 2015-16 and more than 6000 farmers benefited. During these educational programmes, farmers were sensitized to issues related to soil fertility status including deficiency of various nutrients their remedy to increase fertilizer use efficiency and maximize yields.

During the year, 2015-16, 86 demonstrations were also carried out at farmers field to demonstrate the effect of Biofertilizers and Bentonite Sulphar on crop growth and yield as compare to farmer’s own practices.

NFL is making all efforts in rendering advisory services to farmers by conducting Soil testing to optimize soil productivity. 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 36,000 soil samples were analyzed for major and micro nutrients and recommendations given through six static and four mobile soil testing laboratories. NFL has also upgraded its Soil Testing Labs at Barabanki and Nangal by installation of Atomic Absorption Spectrophotometer (AAS) for micronutrient analysis.

Agricultural exhibitions and krishi melas aims to bring stakeholders from all disciplines of Agriculture like farming, Livestock, dairy, import and export, poultry and Horticulture sectors under one roof and provides opportunity to demonstrate their products, exchange their views and share ideas for the growth, sustainability and development of these vital sectors of our economy. Participation in agro exhibitions and university Kisan melas is very effective way to communicate directly with the farmers and also to interact with scientists and experts from various agricultural fields. During the year 2015-16, NFL participated in 36 krishi melas/agriculture exhibitions organized by leading agriculture universities, agriculture department in Punjab, Haryana, UP, Uttarakhand, MP, Rajasthan.

A project on “Agronomic evaluation of Nitrification inhibitors and coated urea materials for improving productivity and nitrogen use efficiency of Rice and Sugarcane.” was carried out by NFL through Indian Agriculture Research Institute (IARI) New Delhi was started from 2014-15 and in order to validate the results of first year trial, repeated during 2015-16.

Soil Health Awareness Fortnight Celebrated by Marketing Division

The ‘World Soil Day’ on 05.12.2015, followed by the ‘Soil Health Awareness Fortnight’ from 05.12.2015 to 19.12.2015, was celebrated with much enthusiasm and fervor by marketing department in all the major states of NFL marketing territory. The following planned activities were undertaken during the fortnight:

- A pledge was taken at all 45 field offices with active participation of dealers and farmers.

- Banners promoting awareness on soil testing and balanced fertilization were displayed at all NFL offices and all prominent locations visible to farmers and other stake holders.

- An SMS and voice mail campaign was launched and messages were sent to 3 lakh farmers in Punjab, Haryana, UP, MP, Rajasthan & Bihar.

- 17 jeeps covered more than 500 villages over a period of 7 days and more than

15000 farmers benefitted. The states covered under this campaign are UP, Uttarakhand, Bihar, Jharkhand, Punjab, Haryana, Himachal Pradesh, Rajasthan and MP.

- 5134 soil samples were collected and tested in 9 villages in six states. 3317 soil health cards were distributed during this period. Based on this testing and analysis, soil fertility maps were prepared for and displayed in two of the villages (District Indore & Ratlam)

- Literature (package of packets), purchase from agriculture universities, was distributed to 1000 farmers in 9 villages

- Farmer education programmes were conducted on 05.12.2015 and thereafter in 9 identified villages of Punjab, Haryana, UP, MP, Bihar and Rajasthan.

- A special documentary film on soil health, soil testing and balanced fertilizer use named “Swastha Dharti, Khush-hali ka Aadhaar” was made. The film was shown to farmers in more than 200 villages.

Projects

The details of the projects including capital expenditure envisaged are given in the Management Discussion & Analysis Report.

Management Discussion & Analysis Report

Management Discussion & Analysis Report covering business prospects including modernization, diversification, investments, marketing plans, raw materials, human resource, internal management controls including financial performance review, government policies and other factors having impact on the performance of the Company. Operations and future outlook of the Company is appended as Annexure-A1 to this report.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance being the fountain head of value creation for all stakeholders especially shareholders. The Company has in place a well defined “Corporate Governance Mechanism” which considers the interests of all stakeholders. Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) and DPE Guidelines on Corporate Governance, a report on Corporate Governance forms part of this report as Annexure-A2.

There is no significant and material orders passed by the regulators or Courts or tribunals impacting the going concern status and Company’s operations in future.

The statutory auditors of the Company have examined and certified your Company’s compliance with respect to conditions enumerated in SEBI (LODR) Listing Regulations, 2015 (erstwhile Clause 49 of the Listing Agreement) and DPE Guidelines on Corporate Governance. Statutory Auditors Certificate on Corporate Governance and explanation of the Management to Statutory Auditors'' observations forms part of this report as annexure-A3.

The Right to Information Act 2005

In consonance with the spirit of Right to Information Act, the Company has created necessary mechanism as required under the Act. The Public Information Officers and an Appellate Authorities are effectively responding to the requests and appeals of the applicants. The names of all PIOs / Appellate Authorities/ Transparency Officer are displayed on the Company’s website. During the year, 251 applications were received and the information was provided to the applicants within the prescribed time limit.

Vigil Mechanism

Pursuant to the provisions of Section 177(9) and (10) of the Companies Act, 2013, a vigil mechanism for employees and others to report genuine concerns has been established.

Whistle blower Policy

Your Company believes in transparency and propriety in all its business dealings. To take this object further, Company has put in place a Whistle Blower Policy providing for a mechanism to the employees and other stakeholders to report concerns about unethical behaviour, actual or suspected fraud or violation of Code of Conduct or Ethics Policy. The policy provides for adequate safeguards against victimization of whistle blowers. The policy is reviewed periodically. No employee or other stakeholders were denied access to the Audit Committee.

Integrity Pact

With the commitment to maintain the highest standard of transparency and governance, your Company has entered into an Integrity Pact with Transparency International and has also appointed Independent External Monitors, persons of impeccable integrity, to oversee the implementation and effectiveness of the Integrity Pact to bring more transparency in the contracting and procurement operations.

Vigilance

Vigilance Division of the Company is headed by CVO. The CVO is assisted by a team of officers drawn from various functional departments. Vigilance set up is operational in Corporate Office, all manufacturing Units as well as Zonal Marketing Offices.

Promotion of good governance remains the core area of vigilance. Apart from streamlining the systems and providing flexibility to the units to perform better, efforts were made to build confidence across the organization to facilitate faster decision making. Awareness is an important cornerstone for good governance. An enlightened employee contributes in achieving the organizational goal as well as in system improvements. Preventive vigilance workshops/ training programs were conducted at all offices & production units. Involvement of all employees in these programs helps to create an environment of ethical growth in the Company.

Vigilance Awareness Week was observed from 26.10.2015 to 31.10.2015 by giving special emphasis on theme of the year ‘Preventive Vigilance as a tool of Good Governance’ given by CVC. As desired by CVC, debate competitions were organized involving youth and college students to ensure that vigilance becomes a point of discussion among the youth.

MoU

The Department of Public Enterprises, GoI in order to improve accountability and giving higher autonomy to Public Sector Undertakings, introduced the concept of MoU during early nineties. NFL signed the first MoU with Department of Fertilizers (DoF) for the year 1991-92. The Company has been awarded “Excellent rating” for the12th time in a row from 2000-01 to 2011-12.

NFL has received “Very Good” rating under MoU for the year 2014-15. Company signed MoU for 2015-16 with DoF on 30-03-2015 which is the 25th year of the Company under MoU system.

Awards & Accolades

i) Safety Award (First prize) from National Safety Council of India (NSCI) to Panipat Unit.

ii) “Chal-Vaijayanti Shield” (First Prize) for excellent work in Official language for the year 2014-15 from Town Official Language Implementation Committee, Noida.

iii) First Award towards best pavilion in Kisan Agri Expo held in Jaipur.

iv) Third Level Suraksha Puraskar (Bronze Trophy) for 2015 to Bathinda Unit under Group-B manufacturing sector by NSCI.

v) Sarvashreshtha Suraksha Puraskar (Golden Trophy) to Panipat Unit under Group B in manufacturing sector from NSCI.

vi) “Icon of the Year Award” to C&MD, NFL by The Institute of Cost Accountants of India for significant contribution to the profession as well as society.

Corporate Social Responsibility

The Company through its CSR initiatives continues to enhance value creation in the society and in the community in which it operates, through its services, conduct & initiatives, so as to promote sustained growth for the society and community, in fulfillment of its role as a Socially Responsible Corporate.

Company has formed a Committee of Directors to guide the CSR activities. The constitution of the committee is given in detail in the Corporate Governance Report. Company follows a well formulated CSR policy to enhance that CSR activities are undertaken in a systematic and methodological manner as per the DPE guidelines, Companies Act, 2013 and Company (CSR) Rules, 2014. CSR Policy is available on the website of the company at www.nationalfertilizers.com.

During the year, 2015-16, the Company incurred an expenditure of Rs.125 lakh towards CSR initiatives. Company has undertaken various activities such as construction of toilets in schools, relief work for Chennai flood victims, installation of Atomic Absorbtion Spectrometer (AAS) equipment for testing of micro nutrients in soil, skill development programmes for women etc. A detailed Report on Corporate Social Responsibility is given in the annexure-B1 to the report.

Research and Development

In compliance with the guidelines on Research & Development (R&D) notified by the Department of Public Enterprises, the Company has an R&D Policy and R&D Plan duly approved by its Board of Directors.

Conservation of energy, Technology Absorption and Foreign Exchange Earnings and outgo

Disclosures in terms of Companies (Accounts) Rules, 2014 in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Outgo are given in the Annexure-B2.

Safety, Environment and Sustainable Development

Company has undertaken various initiatives for in adopting best practices for health, safety, environment management and sustainable development as detailed in the Annexure-B3.

Particulars of Loans, Guarantees, Security and acquisition under Section 186 of Companies Act, 2013

Particulars of loans given, guarantees provided, investments in securities and acquisitions made by the Company during the year under review are given in MBP-2 as Annexure-B4 to the Report.

Joint Venture / Associate Companies

Details of Joint Venture /Associate Companies pursuant to Section 129(3) of Companies Act, 2013, the statement containing the salient features of the financial statement of associate company / joint venture company is included in the consolidated financial statements as Annexure-B5 hereto.

Related Party Disclosures

The particulars of contracts/arrangements entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 including arm’s length transactions under third proviso thereto are disclosed in Form No.AOC-2 as Annexure-B6. Related Party Transactions Policy of the Company is available at www.nationalfertilizers.com.

Risk Management

The chemical fertilizer industry is operated in a hazardous environment and faces many risks including those related to health, safety and environment in addition to general business & financial risks. In order to mitigate them, the company has a comprehensive Risk Management Policy which is regularly reviewed and a periodical review of the risks, procedures and strategies is undertaken. Risks are analyzed at the highest level by a Board level Audit Committee and efforts are made in a planned way to obviate the risks either fully or to minimize their impact.

Particulars of employees

During the year under review, none of employees of the Company had drawn remuneration in excess of the limits prescribed under section 134(3)(c) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Public Procurement Policy of Micro and Small Enterprises (MSEs) Order, 2012

Public Procurement Policy for Micro and Small Enterprises (MSEs) was notified by the Government under the Micro, Small and Medium Enterprises Development Act, 2006 which stipulates that 20% of total annual procurement of goods and services shall be made by all Central Ministries /Departments /CPSUs from Micro & small Enterprises (MSEs). Within this percentage, a sub total of 4% procurement is to made from MSEs owned by SC/ST entrepreneurs. This Policy has become mandatory w.e.f. 01.04.2015. Requisite information for 2015-16 is annexed as Annexure-B7 to this report.

Human Resource Management

the company has a manpower strength of 3595 employees as on 31.03.2016, which comprises of 1697 executives and 1898 non-executives. company promotes the employment of women and at present 202 women employees are on its rolls, which is 5.61% of the total work force. the detailed analysis with regard to human resource including training and executive development programmes have been made in the Management Discussion and Analysis Report.

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, your Company confirms that no complaint/case has been filed/pending with the Company during the year 2015-16.

Official Language

The Company is making all efforts for the propagation and implementation of Official Language policy of the Government of India. The quarterly meeting of Official Language Implementation Committee (OLIC) is regularly held in all the Units/ Offices of the Company under the chairmanship of Head of the Unit/Office to review the progress of official language. In all, 32 Meetings of OLIC were held during the year.

To promote Official Language ‘Hindi’ 30 Hindi workshops were organized during the year in which 695 employees had participated. Hindi Pakhwada was organized in all the Units/Offices of the Company to mark the Hindi Day. During the year, 53 Programmes/Competitions were held in order to promote Hindi and 1316 employees participated in them. 62 employees were awarded cash prizes under the ''Cash Incentive Scheme'' for doing their official work in Hindi.

During the year 2015-16 Corporate Office, Noida was awarded with First Prize "Chal Vaijayanti" Shield by Town Official Language Implementation Committee, Noida for doing exceptional work in Hindi.

Regional Implementation Office (Northern region), Ministry of Home, Government of India has awarded First Prize, Rajbhasha Shield to Panipat Unit under "A Category Undertaking" for year 2014-15 for doing excellent work in Hindi.

Initiatives taken for development of employees belonging to Scheduled Casts / Scheduled Tribes / Other Backward Classes (SC/ST/ OBC categories)

Company is committed to the development of employees belonging to reserved categories. An Implementation Cell is already functional in all Units / Offices of the Company to oversee the implementation of Presidential Directives on Reservation Policy for SCs/STs. A liaison Officer of appropriate status has been appointed in each Unit/Office to ensure due compliance of orders and instructions pertaining to reservation for SCs and STs and other concessions admissible to them. Meetings were periodically held at Unit level as well as at Corporate level with the SC/ST Welfare Associations by the Management for redressal of grievances of SC/ST employees. As a mark of respect to Bharat Ratna Dr. B. R. Ambedkar, his birth anniversary and Parinirvan Diwas were observed at all Units/Offices of the Company in befitting manner. One park at Nangal Unit, a stadium at Bathinda Unit, Multi-purpose Hall at Vijaipur Unit and one Bhawan at Panipat Unit are named after Dr. B.R. Ambedkar. The programmes on implementation of Presidential Directives were held at Units from time to time and SC/ST employees were deputed for such programmes conducted by external agencies. During 2015-16, 2785 man-days training (in-house as well as external training programmes) was imparted to SC/ST employees. A statement showing representation of employees belonging to Scheduled Casts / Scheduled Tribes / backward Classes / Persons with disabilities is appended as Annexure-B8 to this report.

Information Technology

Company has been making optimum use of information technology in various business functions. Web based Marketing Management & Information system is effectively being used by the entire marketing & Finance team for various day-to-day business functions. Many other on-line applications are also running across all plants & Corp. Office. Company is in the process of consolidating various distributed business applications. Mobile alerts to employees are also being incorporated in various applications.

Secured & redundant MPLS VPN interconnecting various plants, Zonal Offices & Corporate Office have been installed for un-interrupted online business applications, data sharing &messaging system amongst various offices of the company.

Company has already setup Video conferencing facility amongst Corporate Office & Plants for conducting video conferencing& knowledge sharing among plants & Corp. Office. The facility is also being set up at all the Zonal Offices.

Statutory Auditors & Statutory Auditors Report

The Statutory Audit of your Company was conducted by Chartered Accountants firms M/s. HDSG & Associates and M/s. Chandiok & Guliani, Joint Auditors appointed by Comptroller & Auditor General of India (C&AG). Auditors’ Report on the Financial Statements including Consolidated Financial Statements of the Company for the financial year 2015-16 is attached.

Comments of C&AG

The Review of Financial Statements including Consolidated Financial Statements for the year ended 31st March, 2016 carried out by the Comptroller and Auditor General of India (C&AG) under Section 143(5) of the Companies Act, 2013 forms part of this report. C&AG has not given any comments.

Cost Audit

As prescribed under Section 148 of the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014, the cost accounting records are being maintained by all the Units of the Company. Cost Audit for 2014-15 was carried out by Cost Auditors as prescribed under the Companies Act, 2013 and Rules framed there under. Consolidated Cost Audit Report for the financial year 2014-15 was filed with MCA on 28.09.2015.

Internal Audit

Your Company has an in-house internal Audit Department, which is headed by General Manager. Company also engages professional agencies to carry out the Internal Audit.

Secretarial Audit

Your Company has appointed M/s. Agarwal S. & Associates as Secretarial Auditors for 2015-16. Secretarial Audit Report for 2015-16 and Management''s explanation to Secretarial Auditors'' observations are annexed as Annexure-B9 to this Report.

Audit Committee

The detailed disclosures have been made in the Corporate Governance Report.

Nomination & Remuneration Committee and Remuneration Policy

Disclosures regarding Nomination & Remuneration Committee and Remuneration Policy are given in the Corporate Governance report.

Policy for determining Material Subsidiary

The Policy has been uploaded on the website of the Company at www.nationalfertilizers.com.

Board Meetings

The details of Board Meetings and Meetings of Independent Directors are given in the Corporate Governance Report annexed as Annexure to this report.

Extract of Annual Return u/s 92(3) of the Companies Act, 2013

The extract of Annual Return as provided under sub-section (3) of Section 92 in Form MGT-9 is annexed hereto as Annexure-B10.

Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act.

Sweat Equity

Company has not issued any Sweat equity shares in terms of Rule 8 of Companies (Share Capital and Debentures) Rules, 2014.

Investor Education and Protection Fund

During the year 2015-16, Rs.77309 have been transferred to Investor Education and Protection Fund on account of unpaid/unclaimed dividend. Listing

Company is listed at Nation Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE). As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Company entered into new Listing Agreement with NSE and BSE. Other disclosures regarding listing regulations have been made in Corporate Governance Report.

Listing Fee

Company has paid requisite listing fee to the stock exchanges during the year 2015-16.

Code of Conduct

Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31stMarch, 2016.

Key Managerial Personnel

In compliance with provisions of Section 203 of the Companies Act, 2013, Company has appointed KMPs. The details are as follows:-Shri Heera Lal Samariya, C&MD remained KMP up to 03.06.2015.

Shri Rajiv Kumar Chandiok, Director (Finance) has been acting as CFO and continuing as KMP Capt. Pavan Kumar Kaul, Ex-Director (Marketing) remained KMP up to 05.02.2016.

Shri M. Sagar Mathews, Director (Technical) is continuing as KMP.

Shri Manoj Mishra, C&MD who has been appointed KMP w.e.f. 04.07.2015.

Shri Raj Kumar, Company Secretary and Compliance Officer and is continuing as KMP.

Board of Directors Change in composition

Shri Manoj Mishra (DIN 06408953), has taken over as Chairman & Managing Director of the Company w.e.f. 03.06.2015.

Shri Heera lal Samariya (DIN 00054859), Jt. Secretary, DoF, ceased to be a Director & Chairman & Managing Director of the Company from 03.06.2015.

Shri Rajiv Yadav (DIN 00322778), Special Secretary and Financial Advisor, DoF, Ministry of Chemicals & Fertilizers, Government of India ceased to be a Director of the Company from 01.09.2015.

Shri Rakesh Kumar (DIN 06940386), Dy. Secretary, DoF, Ministry of Chemicals & Fertilizers, Government of India ceased to be a Director of the Company from 14.02.2016.

Shri Vinod Kumar Thakral (DIN 00402959), Special Secretary & Financial Advisor, Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India, was appointed as Additional Directors on the Board of the Company w.e.f. 09.02.2016 and ceased to be a Director on 31.07.2016 consequent upon his superannuation.

Shri Dharam Pal (DIN 02354549), Jt. Secretary, DoF, Ministry of Chemicals & Fertilizers, Government of India, has been appointed as Additional Directors on the Board of the Company on 09.02.2016 and will hold that position up to the ensuing AGM.

Capt. Pavan Kumar Kaul (DIN 03438497), ceased to be a Director of the Company from 05.02.2016 on completion of his tenure of directorship.

Shri Vikram Srivastava (DIN 06541689) and Shri M. Raman (DIN 01226770), Independent Directors ceased to be Directors of the Company from 05.05.2016 on completion of their tenure of directorship.

Smt. Bhavnaben Kardambhai Dave (DIN: 07557056), has been appointed as Part-time Independent Additional Director w.e.f. 01.07.2016 and shall hold office till the ensuing AGM.

Details of tenure of existing directors and those who ceased to be director on the Board during 2015-16 is also provided in the Corporate Governance Report.

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Rajiv Kumar Chandiok (DIN: 05146544), Director (Finance) will retire by rotation at the ensuing AGM and being eligible has offered himself for re-appointment. Notice has been received u/s 160 of Companies Act, 2013 for appointment of Shri Dharam Pal and Smt. Bhavnaben Kardambhai Dave as Directors at the ensuing Annual General Meeting.

Brief resume of Directors seeking appointment/reappointment is given as an annexure to Notice of Annual General Meeting.

Declaration by Independent Directors u/s 149(6)

All Independent Directors have given declaration that they meet the criteria of Independence as laid down in Section 149(6) under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Re-appointment of Independent Directors

As per |Section 149(10) of the Companies Act, 2013, none of the Independent Directors has been reappointed on the Board of Company Disqualifications of Directors

None of the Directors have committed any disqualification as provided under Section 164 of the Companies Act, 2013.

Performance evaluation of Board and Directors

As per provisions of Section 134(3)(p) of the Companies Act, 2013, every listed company, a statement indicating 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 should form part of the Directors’ Report.

The Independent Directors in their separate meeting met on 12.01.2016 inter-alia reviewed the performance of the Board as a whole. It is submitted that MCA vide notification dated 5th June, 2015 notified exemptions applicable to Government Companies from the provisions of the Companies Act, 2013 which inter-alia provides that Sub Sections (2), (3) & (4) of Section 178 regarding appointment, performance evaluation and remuneration shall not apply to Directors of the Government Companies.

The appointment of Chairperson, Functional Directors, Part-time Official Directors as well as Part-time non-Official Directors (Independent Directors) on the Board of NFL is made by Government of India (GOI). Further, terms & conditions of appointment as well as tenure of all directors are also decided by GOI and there is a well laid down procedure for evaluation of Chairperson and Functional Directors by Administrative Ministry. Upon request and representations received from CPSEs, the Department of Public Enterprises has also written to Department of Economic Affairs and Securities and Exchange Board of India to align the SEBI (LODR) Regulations, 2015 with the Companies Act, 2013 based on the Exemptions under Companies Act, 2013 as provided to the Government Companies. In view of the above exemption, the performance evaluation of the Chairperson, Functional Directors and Part-time Official Directors was not carried out.

Directors’ Responsibility Statement

Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013, your Directors confirm that: -

a) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departure has been made there from by the Company;

b) 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 at the end of the financial year 2015-16 and of the profit of the Company for that period;

c) 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 and with applicable powers for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) the Directors have prepared the Annual Accounts on a going concern basis.

e) 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.

f) 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.

Acknowledgements

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the various wings of Government of India, in particular Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory Auditors, Cost Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by the employees at all levels.

For and on behalf of the Board of Directors

Registered Office:

Scope Core3, (Manoj Mishra)

7 Institutional Lodhi New Delhi-110003 Chairman & Managing Director

Date: 22n August, 2016 DIN:06408953


Mar 31, 2013

To, Dear Members,

The behalf of the Board of Directors of your Company, I have the pleasure in presenting the 39th Annual Report on the business and operations of the Company together with the Audited Financial Statements for the Financial Year 2012- 2013.

Your Company was incorporated in the year 1974 for implementation of two fertilizer plants at Panipat and Bathinda with annual installed capacity of 5.11 lakh tonnes of urea each. The commercial production from these plants commenced in 1979. In April, 1978, the Nangal Group of Plants of Fertilizer Corporation of India Limited (FCIL) were transferred to NFL consequent upon reorganization of NFL-FCIL. The Government of India (GoI) in 1984 entrusted the Company to execute the country''s first inland gas based urea project at Vijaipur in Madhya Pradesh, which commenced commercial production w.e.f. 1st July, 1988. Expansion of Vijaipur Plant was taken up in the year 1993 for doubling its capacity. The commercial production from Vijaipur Expansion Plant commenced w.e.f. 31st March, 1997. Company successfully completed the revamping of urea plant at Nangal and commercial production commenced from 1st February, 2001.

Presently, the Company has five urea production plants, one each at Panipat, Bathinda and Nangal and two plants at Vijaipur with a total installed capacity of 35.68 lakh tonnes and has grown to the status of being the second largest producer of urea in the country. This financial year has been a happening year in terms of growth plans of the Company. Capacity Augmentation of Ammonia and Urea Plants undertaken at Vijaipur–I and II Units got completed during the year including installation of Carbon Dioxide Recovery Plant. Company has also implemented the feedstock conversion projects at Panipat, Bathinda and Nangal Units by changing over the feed-stock from fuel-oil to Natural Gas. Since all the five units took up shutdown during the financial year for hooking up and commissioning activities of the projects, urea production was adversely affected.

FINANCIAL HIGHLIGHTS

During the year under review, the Company achieved turnover of Rs. 6747 crore (previous year Rs. 7341 crore). The lower turnover was primarily due to lower urea production as all the Units were under shutdown for hooking up and commissioning activities of the projects. The earnings before interest, depreciation and tax (EBIDTA) at Rs. 74.19 crore were lower than Rs. 342 crore achieved in previous year. The loss before tax was Rs. 230.62 crore (previous year profit Rs. 184.20 crore) and loss after tax was Rs. 170.73 crore (previous year profit Rs. 126.73 crore). The main reasons for loss include: -

- Lower production / sale because of shut-downs taken for commissioning of Urea Capacity Enhancement Projects at Vijaipur and changeover of feedstock from Fuel-oil to Natural Gas at Nangal, Bathinda and Panipat Units;

- Decrease in sale and contribution of industrial products due to non-availability of cheaper ammonia; non- availability of gases; sulphur and argon gas at three Fuel-oil based Units post commissioning.

- Provision for Purchase Tax liability pertaining to previous years.

- Higher interest expenditure mainly due to delay in receipt of subsidy.

BORROWINGS

The short-term borrowings of the company as at 31st March, 2013, stood at Rs. 1703.29 crore including cash credit utilization, short-term loans, working capital demand loan, etc. (Rs. 1383.82 crore as at 31st March, 2012). Delay in receipt of urea subsidy lead to more borrowings for meeting working capital requirements.

For changeover of feed stock from LSHS/FO to Gas at Nangal, Panipat & Bathinda units, Rupee Term Loan of Rs. 3850crore has been arranged from Consortium of 13 Banks with SBI as lead bank. As on 31st March,2013 long term loan of Rs. 3451 crore was outstanding.

For Energy Saving and Urea Capacity Augmentation Project at Vijaipur-I, Urea capacity Augmentation Project at Vijaipur-II and installation of Carbon-Dioxide Recovery (CDR), long term loan was raised by way of 9.42% Secured Redeemable Non-Convertible Taxable Bonds of Rs.100.40 crore; Buyer''s Credit of USD 15.68 million and External Commercial Borrowing (ECB) of USD 50 million.

DIVIDEND

In view of the loss incurred by the Company and considering the fact that three plants at Nangal, Panipat and Bathinda converted to Gas shall get stabilized in next financial year only and future capital expenditure and requirement of contribution of equity in the proposed Joint Venture towards revival of Ramagundam Unit of FCIL, Board of Directors have not recommended any dividend for the financial year 2012-13.

CAPITAL & RESERVES

The Paid-up Capital & Reserves and Surplus as at 31st March, 2013 were Rs.491 crore and Rs.1093.12 crore respectively.

OPERATIONS

Production

The Company produced 32.11 lakh MT of Urea (91.94% of revised proportionate installed capacity of 34.92 lakh MT) against 34.01 lakh MT (105.27%) in CPLY.

Production during the year 2012-13 was lower than the CPLY primarily due to shut down taken at Nangal, Panipat and Bathinda units for hooking up and commissioning of Ammonia Feedstock Changeover Project (AFCP) and shutdown taken at Vijaipur I and II for hooking up and commissioning of Revamp Project.

Input availability

Availability of Administered Pricing Mechanism (APM)/ Non-APM and Panna Mukta Tapti (PMT) Gases got reduced during the 3rd quarter of 2012-13. To sustain production at the higher levels spot gas was procured continuously. Domestic gas is yet to be allocated for three Fuel-oil Units converted to gas. As an interim arrangement, Company is purchasing high cost spot RLNG for Bathinda, Panipat and Nangal Units. Allocation of indigenous gas supply to these Units is being followed up regularly with the Department of Fertilizers ( DoF).

SALES & MARKETING

Urea

Company''s prime business is production and sale of urea. It sold 31.62 lakh tonnes of Urea (including 10.92 lakh tonnes of Neem coated Urea) against 33.89 lakh tonnes (including Neem Coated Urea of 6.40 lakh tonnes) in the previous year. The sale was less due to lower production and limitation of dispatches from Vijaipur Unit owing to insufficient availability of rail wagons.

Industrial Products

The sale of Industrial Products was Rs. 95.63 crore against CPLY of Rs.170.91 crore. The lower sale was attributed to lower production and sale of ammonium nitrate at Nangal due to non-availability of surplus ammonia from Vijaipur Units post completion of revamp projects and increase in the market price of ammonia. Stoppage of generation and sale of industrial gases and sulphur at Nangal, Panipat and Bathinda Units and argon at Panipat post conversion to gas has also affected the sale of industrial products.

Bio-Fertilizers

During the year Bio-fertilizers (liquid & solid) worth Rs. 3.65 crore were sold against Rs. 2.60 crore in the previous year.

Agri-Business

The Company has been making regular forays into diverse agri-based business viz. Seeds, Compost, Bentonite Sulphur and Pesticides. During the year, turnover of Rs. 30.08 crore was achieved compared to Rs. 22.72 crore in the previous year.

Promotion of balanced use of fertilizers

The production and productivity at farm level are continuously deteriorating owing to imbalanced fertilizer usage, mono cropping etc. Further the micronutrients in soil are also depleting at a very alarming rate.

Your Company has been strongly advocating and promoting balanced and efficient use of fertilizers. It has identified soil testing as a primary diagnostic technique towards soil health management and balanced fertilizer use and is playing a pivotal role in educating farmers about benefits of soil test based application of chemical fertilizers, appropriate cropping pattern, the role of organic manure and bio- fertilizers in improving soil health. The programmes undertaken to achieve this objective include farmers in house training at Kisan Vikas Kendras, arranging farmers'' meets with eminent scientists to equip them with requisite knowledge.

Company has set up elaborate facilities for soil testing including 6 static and 4 mobile soil testing vans with capacity to test 50,000 samples annually. The soil samples are collected across Company''s marketing territory, analysed and soil test reports are provided free of cost to farmers in time with fertilizer application recommendations according to soil status and crops to be grown. During the year 2012-13, over 50,000 soil samples were collected and analyzed and reports were provided to the farmers.

Company also undertakes dealers training programmes, field demonstrations, distribution of crop literature, participated in kisan melas advising farmers on fertilizer dosages, use of bio-fertilizers, compost etc for holistic approach to cultivation.

MODERNIZATION AND EXPANSION PROJECTS

Revamp of fuel-oil based plants at Nangal, Bathinda & Panipat.

The Company has undertaken capital schemes for change over of feedstock from Fuel-oil to Natural Gas at Panipat, Bathinda and Nangal involving a total investment of Rs.4066 crore with a completion period of 36 months from the zero date i.e. 29th January, 2010. The revamp plants have been successfully commissioned at Panipat and Bathinda on 24th and 16th January, 2013 respectively. After stabilization of these plants, commercial production was declared w.e.f. 28th and 11th March, 2013 respectively. Nangal unit has been commissioned on 9th April, 2013 and commercial production has been declared on 18th July, 2013.

Capacity Augmentation & Energy Saving Project (ESP) at Vijaipur

The Company has successfully commissioned Capacity augmentation and Energy Savings Projects of Ammonia & Urea plants at Vijaipur-I & II units including installation of Carbon Dioxide Recovery (CDR) plant during 2012-13 at an investment of around Rs. 650 crore. The total urea capacity of Vijaipur Units after commissioning of these projects has been augmented to 20.66 lakh tonnes from 17.29 lakh tonnes per annum, an increase of 20%.

JOINT VENTURE

Joint Venture with KRIBHCO & RCF

Company has a Joint Venture “Urvarak Videsh Limited" with M/s. KRIBHCO and RCF as promoters. The main object of the joint venture company is to explore investment opportunity abroad and within the country in nitrogenous, phosphatic and potassic sectors and to render consultancy services for setting up projects in India and abroad.

Revival of closed units of FCIL

Consequent upon nomination of NFL and EIL, by Government of India, for the revival of Ramagundam plant of Fertilizer Corporation of India, it has been planned to set up a 2200 MTPD Ammonia and 3850 MTPD Urea plant. The project is envisaged to be undertaken at the existing Fertilizer Complex of Ramagundam unit at an estimated cost of INR 4700 crore.

Pre-project activities towards setting-up of Joint Venture between NFL/EIL/FCIL, lining-up of Process Licensor for Ammonia / Urea, finalization of Concessionaire Agreement & Financial Model are in progress.

HUMAN RESOURCE

Strategic HR planning is an important component of Human Resource Management. It links HR Management directly to the strategic plan of the Company in achieving organizational goals and supporting future direction to the organization. A study on Organizational Structure, Performance Management System, Recruitment and Promotion Policies of the Company was conducted by an Expert Committee. The report of the committee is under examination for implementation.

The manpower strength of the Company as on 31st March, 2013 was 4291 comprising 1802 Executives and 2489 Non- Executives. Total manpower includes 231 women employees, which is 5.38% of the total work force.

The Company undertakes several employee welfare schemes related to education, medical, benevolence, housing etc. As a measure towards employee social security, a defined Contribution Superannuation Pension Scheme has been implemented. Company has always supported the participative culture in the management through consultative approach. The efforts to promote employees'' participation in various activities like Suggestion Scheme, Welfare, Safety, interactions between Management and employees'' representatives on various issues continued during the year. Industrial relations in the Company continued to be harmonious during the year. Continuous interaction between the Management and Employees'' representatives contributed in maintaining the harmony.

Training initiatives

To develop the skills and instill behavioural and personality development traits in all supervisory staff and managerial cadre, Company organized a number of training programmes during the year. These training programmes were identified through Performance Management System by systemizing organizational needs with individual needs. In these diverse programmes, 12,574 man-days training was imparted to employees. Apart from in-house training programmes, employees were also nominated for attending external training programmes on contemporary subjects. To promote the efficient use of modern technology, 1288 man-days training was imparted to employees. 493 man- days of training programmes on Sustainable Development were organized. Six officers attended training programmes abroad. Company has undertaken Ammonia Plant Feedstock Changeover from Fuel-oil to Natural Gas at Panipat, Bathinda and Nangal. Training workshops were conducted by various equipment vendors at all the three sites.

Implementation of Official Language

The Company is making continuous efforts for propagation and implementation of Official Language Policy of the Government of India. The quarterly meeting of Official Language Implementation Committee (OLIC) is regularly held in all the Units/Offices of the Company to review the progress. 28 Meetings of OLIC were held, 33 Hindi Workshops were organized in which 789 employees participated. Hindi Pakhwara was organized in all the Units/Offices of the Company to mark Hindi Day. During the year 58 programmes/competitions were held for the promotion of Hindi in which 1132 employees participated. Information Technology is widely used to promote use of official language. Unicode Font has been installed on all the computers and training has been imparted to the employees. Bathinda Unit received Rajbhasha Shield from Town Official Language Implementation Committee. Corporate Office was awarded 2nd prize ''Rajbhasha Shield'' by the Department of Fertilizers.

REPRESENTATION OF SCs/STs, OBCs AND PHYSICALLY DISABLED

Your Company has been implementing reservation policies of Government of India for SCs/STs/OBCs/Persons with Disabilities. Representatives of SCs/STs categories are associated in Recruitment Departmental Promotion Committees. A statement showing representation of employees belonging to Scheduled Castes / Scheduled Tribes / Backward Classes / Physically Disabled categories is appended as Annexure-VIII to this report.

INFORMATION TECHNOLOGY

The Company is making use of information technology (IT) to improve efficiency and productivity to bring transparency in its business functions. Local Area Networks (LAN) are operational at all the Units/Offices. All the Units and Offices are also interconnected through secured MPLS based Virtual Private Network (Wide Area Network). Internet connectivity to the employees at Units and Offices has been provided through Leased Line / Broadband. High-speed data cards have been provided to the Marketing Personnel to upload sales data through internet. The Company is extensively making use of e-procurement, e-payment and e-receipt for bringing in efficiency and transparency. Implementation of Mobile based Fertilizer Monitoring System (mFMS) is under way for use in Marketing Division. mFMS has been introduced by Department of Fertilizers (DoF) to monitor and track the movement of fertilizers from the manufacturing unit to the farm gate and to facilitate implementation of “Direct Cash Transfer of Subsidy" to farmers. Under the system acknowledgement of receipt of fertilizers at wholesaler, retailer and end user, forms the basis for ensuring equitable distribution to the farm sector.

INDUSTRIAL SAFETY, ECOLOGY & POLLUTION CONTROL

Company accords highest priority to Industrial Safety, Ecology & Pollution Control. All manufacturing units are ISO 9001-2000 certified for Quality Management System, ISO-14001 certified for Environment Management System. All the Units have also received OHSAS-18001 Certification for Occupational Health Safety Management System.

Carbon Dioxide Recovery Plant of 450 MTPD capacity has been installed at Vijaipur-I for recovery of carbon dioxide from fuel gases of primary reformer. This has also resulted in reduction in discharge of Greenhouse Gases.

Silo System for collecting fly ash from ESP hoppers using dense phase pneumatic Conveying System have been installed at Panipat, Bathinda and Nangal Units for evacuation of ash. These systems have reduced quantity of ash slurry for disposal and ecological problems associated therewith. This has also helped in saving electrical energy used for pumping of ash slurry.

State of the art safety practices were adopted during the project construction and commissioning of revamp of plants. There was no reportable accident at any of the plant sites. To safeguard the plants from emergencies like fire, explosion, toxic gas release, own site emergency disaster plan is available at the Units.

Recognizing the need to balance human economic development with environment protection, Company has adopted the concept of sustainable development. A separate chapter at Annexure-VI in this report deals at length with your Company''s initiatives and commitment to environment conservation and sustainable development.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is an evolving concept and has moved away from being just philanthropic to becoming an integral part of strategy of the company. The Company is committed towards upliftment of under privileged sections of the society and has supported various social and community initiatives touching the lives of a large number of people. Under the umbrella of CSR, Company is engaged in undertaking farmer friendly activities that have helped in improving their socio economic status. The major focus of these programmes is on creating awareness about health and hygiene, children education, women empowerment, skill development for self-employment, water conservation, rain-water harvesting and ground water recharging.

During the year, Company has incurred an expenditure of Rs. 1.47 Crores on CSR initiatives. The expenditure pertained to the carry forward amount of schemes taken up for execution in the previous year. The major CSR initiatives undertaken by your Company are detailed in a separate Annexure-VII.

THE RIGHT TO INFORMATION ACT, 2005

In consonance with the provisions of the Right to Information Act, 2005, Company has taken requisite measures and appointed Appellate Authorities / Public Information Officers / Assistant Public Information Officers at all the Units / Offices of the Company to respond effectively to the requests of the applicants under the Act. The Act aims at bringing in transparency in the functioning of organizations and to meet the objective, your Company has created necessary mechanism. Further, in order to promote institutional transparency within the Company through proactive and effective implementation of the provisions of RTI Act 2005, a Transparency Officer has also been appointed in the Company. During the year, 200 applications were received and the information was provided to the applicants within the scheduled time.

WHISTLEBLOWER POLICY

Your Company relies on transparency and propriety in its business dealings. To take this object further, Company has put in place a Whistle Blower Policy providing for a mechanism to the employees and other stakeholders to report concerns about unethical behaviour, actual or suspected fraud or violation of Code of Conduct or Ethics Policy. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism. During the year, no disclosures have been received under the whistleblower mechanism. The policy is reviewed periodically. No employee has been denied access to the Audit Committee.

VIGILANCE

In Vigilance, focus continued to be given to preventive vigilance. Due thrust was given to maintaining high degree of awareness amongst the employees. Systems and procedures were streamlined to provide timely information. Efforts were undertaken to build confidence across the organization to enable faster decision making. To ensure transparency, emphasis was made on computerization of activities relating to award of contracts, purchases, etc. In line with instructions received from the Department of Fertilizers/Central Vigilance Commission, emphasis is being given on leveraging of technology e.g. e-payment / receipts / procurement / tendering, to facilitate transparency and avoid delays.

During the year, interactions were organized between the vigilance functionaries and the line managers on regular basis, with a view to understand the role of vigilance and to educate them about the policies, guidelines and procedures of the Company. In all the Units, Vigilance Awareness Week was also observed to create an environment of ethical growth in the Company.

AWARDS & ACCOLADES

MoU

Company received “Excellent" rating for the MoU 2011-12, which is 12th excellent rating in a row.

Awards

During the year, Company received following prestigious accolades and Awards.

a) “Shreshtha Suraksha Puraskar" for the year 2011 to the Panipat Unit from National Safety Council (India), Mumbai, amongst the manufacturing sector of Chemicals & Chemical products.

b) National Level Fertilizer Association of India ''Runner-up Award'' for excellence in Safety in Nitrogenous and Complex Fertilizer Plant to the Panipat Unit presented by Shri S.K. Jena, Hon''ble Minister of State for Chemicals & Fertilizers.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion & Analysis Report covering the operations and future prospects of the Company is appended as Annexure-I to this report.

STATUTORY AUDITORS & STATUTORY AUDITORS REPORT

The Statutory Audit of your Company was conducted by M/s. DSP & Associates and M/s. Thakur Vaidyanath Aiyar & Company, Chartered Accountants, who were appointed as Joint Statutory Auditors for the financial year 2012-13 by the Comptroller & Auditor General of India (C&AG). Auditors'' Report on the Accounts of the Company for the financial year ended 31st March, 2013 is at Annexure-II.

The review of Annual Accounts of your Company for the year ended 31st March, 2013 by the C&AG under Section 619(4) of the Companies Act, 1956 forms part of this report as Annexure-III and do not call for any reply as no comments as supplementary to Statutory Auditor Report have been made.

COST AUDIT

Pursuant to the directions of Central Government for audit of Cost Accounts, your company has appointed M/s. Sanjay Gupta & Associates for Nangal, M/s. Ravi Sahni & Co. for Bathinda, V.P. Gupta & Co. for Panipat and M/s. Shome & Bannerjee for Vijaipur-I & II as Cost Auditors for the year ended 31st March, 2013.

As prescribed under the Cost Accounting Records (Report) Rules, 2011, the cost accounting records are being maintained by all the Units of the Company. Consolidated Cost Audit Report and Compliance Replort for the financial year 2011-12 was filed on 20th December, 2012.

CORPORATE GOVERNANCE

The Company believes Corporate Governance is the fountain head of value creation for all stakeholders especially shareholders. The Company has in place a well defined “Corporate Governance Mechanism" which considers the interests of all stakeholders. A separate section on Corporate Governance forming part of this Directors'' Report alongwith the Auditors'' Certificate conforming to the Compliance of Corporate Governance Code as provided in Clause 49 of the Listing Agreement is at Annexure-IV.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Disclosures in terms of Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, in respect of conservation of Energy and Technology Absorption and Foreign Exchange earnings and outgo are at Annexure-V.

PARTICULARS OF EMPLOYEES

During the year under review, none of employees of the Company has drawn remuneration in excess of the limits prescribed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

Directors'' responsibility statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956, your Directors confirm that: -

i. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departure has been made therefrom by the Company;

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 at the end of the financial year 2012-13 and of the profit of the Company for that period;

iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. the Directors have prepared the Annual Accounts on a going concern basis.

DIRECTORS

Ms. Neeru Abrol, Director (Finance) was relieved from her duties on completion of her tenure on 31st December, 2012. Subsequently, Department of Fertilizers vide Orders dated 2nd May, 2013 reinstated Ms. Abrol as Director (Finance) with immediate effect and she rejoined on 10th May, 2013.

Shri Sham Lal Goyal, Joint Secretary, DoF, Director, has ceased to be a Director and Chairman & Managing Director on 5th January, 2013.

Shri R.G. Rajan, Chairman & Managing Director, Rashtriya Chemicals & Fertilizers Limited has taken over the additional charge as Chairman Managing Director of the Company w.e.f. 6th January, 2013.

Shri C.M.T. Britto, Director (Technical), Rashtriya Chemicals & Fertilizers Limited has taken over the additional charge as Director (Technical) of the Company w.e.f. 7th May, 2013.

Shri Vikram Srivastava, Ex-DG, Bureau of Police Research & Development (BPR&D), CRPF / ITBP and Shri M. Raman, Ex-Secretary to the Government of India, have been appointed as Part-time Non-official Independent Additional Directors w.e.f. 6th May, 2013 and shall be holding office as Directors till the ensuing Annual General Meeting. Further, notice has been received u/s 257(1) of Companies Act, 1956 for appointment of Shri Vikram Srivastava and Shri M. Raman as Directors at the Annual General Meeting.

In accordance with the provisions of Article 76(2) of the Articles of Association of the Company, Shri Satish Chandra shall retire by rotation at the Annual General Meeting and being eligible has offered himself for reappointment.

CODE OF CONDUCT

In line with the requirements of Clause 49 of Listing Agreement, the Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31st March, 2013.

ACKNOWLEDGEMENTS

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the various wings of Government of India, in particular Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory Auditors, Cost Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by the employees at all levels.

For and on behalf of the Board of Directors

Place: New Delhi (R. G. Rajan)

Date: 3rd August, 2013 Chairman & Managing Director


Mar 31, 2012

The behalf of the Board of Directors of your Company, I have the pleasure in presenting the 38th Annual Report on the business and operations of the Company together with the Audited Financial Statements for the Financial Year 2011-2012.

Your Company was incorporated in the year 1974 for implementation of two fertilizer plants at Panipat and Bathinda with annual installed capacity of 5.11 lakh tonnes of urea each. The commercial production from these plants commenced in 1979. In April, 1978, the Nangal Group of Plants of Fertilizer Corporation of India Limited (FCIL) were transferred to NFL consequent upon reorganization of NFL-FCIL. The Government of India (Gol) in 1984 entrusted the Company to execute the country's first inland gas based urea project at Vijaipur in Madhya Pradesh, which commenced commercial production w.e.f. 1st July, 1988. Expansion of Vijaipur Plant was taken up in the year 1993 for doubling its capacity.

Presently, the Company has five urea production plants, one each at Panipat, Bathinda and Nangal and two plants at Vijaipur with a total installed capacity of 32.31 lakh tonnes and has grown to the status of being the second largest producer of urea in the country. Your Company has undertaken revamp of fuel-oil based plants at Nangal, Bathinda and Panipat for changeover of feedstock from Fuel-oil to Natural Gas, which on scheduled completion during 2012-2013 will reduce the cost of production and the subsidy outgo from the Gol substantially. This would also contribute to clean environment. The revamp projects undertaken at Vijaipur-I & II would reduce energy consumption and augment the installed production capacity of the Company by 10.4% to 35.68 lakh tonnes.

FINANCIAL HIGHLIGHTS

During the year under review, your Company achieved a turnover of Rs.7341 crore (including subsidy of Rs.5363 crore) as compared to Rs.5804 crore (including subsidy of Rs.3918 crore) in the previous year, registering an increase of 26%. The increase in turnover is due to higher sales of urea and industrial products and increase in subsidy due to escalation in prices of inputs i.e. petroleum products and natural gas.

The earnings before interest, depreciation and tax (EBIDTA) at Rs.342 crore was higher than Rs.302 crore achieved in previous year inspite of higher salaries and wages, repairs & maintenance, etc. mainly due to higher production/sale of urea and industrial products. The profit before tax was Rs.184.20 crore (previous year Rs. 203.92 crore) and profit after tax was Rs.126.73 crore (previous year Rs.138.50 crore). The reduction in net profit was due to higher incidence of interest expenditure of Rs.66.24 crore (previous year Rs. 9.15 crore) mainly attributed to higher utilization of working capital and short term loans arising out of delay in receipt of subsidy and increase in input prices and interest rates. Interest amounting to Rs.75.09 crore was capitalized during the year.

BORROWINGS

For Ammonia Feedstock Changeover Projects (AFCP) at Panipat, Bathinda and Nangal, Rupee term loan of Rs.3850 crore has been arranged from consortium of 13 Banks with State Bank of India as lead Bank. As on 31st March, 2012, long term loans of Rs.1342 crore were outstanding for the AFCP capital scheme. In terms of Gol Policy notified on 6th March, 2009, the Company is entitled to capital subsidy after successful commissioning of AFCP projects over a period of five years towards project cost, interest on borrowed capital and return on own funds. For financing Urea Capacity Enhancement Projects at Vijaipur, Rs.80.96 crore of Buyers Credit, Rs.100.40 crore through Bonds and Rs.77.45 crore through External Commercial Borrowings (ECBs) have been utilized. The short-term borrowings of the Company as at 31st March, 2012, stood at Rs. 1383.82 crore, including cash credit utilization, short-term loans, working capital demand loan, etc. (Rs.421.84 crore as at 31st March, 2011). Delay in timely receipt of urea subsidy and hike in the prices of inputs (Gas/FO/LSHS) lead to higher working capital borrowings. For identifying and managing the foreign exchange and interest risks, Company has put in place Foreign Currency and Interest Rate Risk Management Policy.

DIVIDEND

Your Company has a consistent track record of dividend payment. So far, your Company has disbursed cumulative dividend of Rs.981.74 crore to the shareholders. The Board of Directors have recommended payment of dividend @ 7.8% (Rs.0.78 per share) for the year 2011-12. The total dividend pay out would be Rs.44.48 crore (including dividend tax of Rs.6.21 crore), and a sum of Rs.12.67 crore has been transferred to the General Reserves.

CAPITAL & RESERVES

The Paid-up Capital and Reserves and Surplus as at 31st March, 2012 were Rs.491 crore and Rs.1264 crore respectively.

OPERATIONS

Production

During the year, your Company produced 34.01 lakh tonnes of Urea compared to 33.80 lakh tonnes in the previous year. This included ever best neem coated urea production of 6.4 lakh tonnes compared to 1.2 lakh tonnes in the previous year. The overall urea capacity utilization was 105.3%. Vijaipur Plants registered ever-best production of 19.14 lakh tonnes surpassing previous best of 18.71 lakh tonnes achieved in 2004-05. Extra production from Vijaipur Plants over and above the installed capacity was 1.85 lakh tonnes. Vijaipur-I and Vijaipur-ll units achieved ever-best Ammonia production of 5.44 lakh tonnes and 5.86 lakh tonnes respectively, surpassing previous best of 5.29 lakh tonnes and 5.60 lakh tonnes in 2005-06 and 2006-07 respectively. Vijaipur-ll plant achieved ever-best urea production of 10.12 lakh tonnes surpassing previous best of 9.74 lakh tonnes in 2006-07.

Due to operational problems, there was a production shortfall of urea at Panipat and Bathinda against the rated capacity, which was partially compensated by additional production of 25.1 thousand tonnes from Nangal.

Company in its endeavour to optimally utilize surplus ammonia from Vijaipur Unit and to produce cost effective/competitive industrial products at Nangal, achieved ever-best production of industrial products during the year.

Input Availability

During the year, Company had to procure spot gas intermittently up to December, 2011 to meet additional requirement of gas at Vijaipur-ll after partial retrofitting in April, 2011 and shortfall arising out of reduced availability of Administered Pricing Mechanism (APM)/Panna Mukta Tapti (PMT) Gas. Supply of additional gas commenced from December, 2011 against allocation made by Gol for Vijaipur. Poor coal quality continues to be an area of serious concern, one of the factors responsible for higher energy consumption at Panipat, Bathinda and Nangal Units, for improvement of which continuous efforts are being made.

SALES & MARKETING

Urea

Company's prime business is production and sale of urea. It sold 33.89 lakh tonnes of Urea (including 6.4 lakh tonnes of Neem coated Urea) against 33.59 lakh tonnes (including Neem Coated Urea of 1.21 lakh tonnes) in the previous year.

Industrial Products

Sales performance in the Industrial Products segment, which include Nitric Acid, Ammonium Nitrate (Lumps & Melt) has been significant at Rs. 171 crore vis-a-vis Rs.122 crore in the previous year, registering a growth of 40%. This included, sales worth Rs.38 crore of Ammonium Nitrate (Melt), a new product marketed this year.

Bio-Fertilizers

During the year Bio-fertilizers (powder and liquid) worth Rs.2.59 crore were sold against Rs.0.87 crore in the previous year. Agri-Business

The Company has been making foray into diverse agri-based business viz. Seeds, Compost, Micorhizza and Bentonite Sulphur. During the year, turnover of Rs.22.72 crore was achieved compared to Rs.10.28 crore in the previous year primarily on account of sale of seeds.

Promotion of balanced use of fertilizers

During the last three decades, the Company has been working closely with farming community by ensuring supply of quality fertilizers and other agri-inputs. Company believes in marketing its products and services through extensive field demonstrations coupled with an effort to build relationships with the end users, the farmers. To promote Company's "Kisan Urea" as a household name, various promotional activities including 100 farmers education programmes, 40 dealers/retailers orientation programmes, 415 field days, 120 block and front line demonstrations were organized during the year. Company participated in 44 kisan melas in its marketing territory spread across 18 states.

Company has four Mobile Soil Testing units attached to Nangal and Vijaipur Units and Lucknow and Bhopal Zonal Offices. It also has five static Soil Testing Laboratories at Nangal, Panipat, Vijaipur, Bhopal and Barabanki. One more static Soil Testing Laboratory is being set up at Balasore in Odisha. Micro Nutrient's Labs at Nangal, Vijaipur and Panipat Units are also being set-up. During the year, 48276 Samples for macro nutrients and 766 samples for micro nutrients were analyzed. 15 Trials on non-pressure Urea Ammonium Nitrate solution have been laid out at Punjab Agriculture University, Ludhiana. 33 Trials on use of Liquid Bio-Fertilizers were conducted at Kisan Vikas Kendras in the marketing territory of the Company.

MODERNIZATION AND EXPANSION PROJECTS

Revamp of fuel-oil based plants at Nangal, Bathinda & Panipat

The Company has undertaken capital schemes for change over of feedstock from Fuel-oil to Natural Gas at Panipat, Bathinda and Nangal involving a total investment of Rs.4066 crore with a completion period of 36 months from the Zero date i.e. 29th January 2010. The commissioning of the project at Nangal is scheduled by the end of December, 2012 and that of Panipat and Bathinda by January, 2013. Capital expenditure of Rs.1546.17 crore towards these projects has been incurred upto 31st March, 2012.

These Projects are being implemented on Lumpsum Turnkey (LSTK) basis. Panipat and Bathinda projects are being implemented by M/s. Larsen & Toubro (L&T) with process licence from M/s. Haider Topsoe Associates. Nangal Project is being implemented by consortium of M/s. Tecnimont SPA Italy and M/s. Technimont ICB, Mumbai with process licence from M/s. KBR. M/s. Projects & Development India Limited (PDIL) has been engaged as Project Management Consultant for all the three projects.

Gas Pipeline

Firm allocation of gas from Gol is awaited to meet the gas requirement after completion of feedstock conversion projects. Company is following up for allocation of indigenous gas, alternatively RLNG shall be utilized for feed. The natural gas pipelines have already been laid and commissioned for Nangal and Bathinda units. Last mile connectivity to Panipat unit is in progress.

Capacity Augmentation & Energy Saving Project (ESP) at Vijaipur

The Company has undertaken Capacity Augmentation of Ammonia & Urea plants at its Vijaipur-I & II units, including installation of Carbon Dioxide Recovery (CDR) plant at an investment of around Rs.650 crore. Commissioning of capacity augmentation of Ammonia and Urea Plants was earlier planned for November, 2011, however, due to delay in supply of certain equipment, the same has been undertaken in April/July, 2012. Ammonia and Urea Revamp Projects of Vijaipur-I have been commissioned on 24th April, 2012. Carbon Dioxide Recovery (CDR) Plant was commissioned on 23rd May, 2012 and Ammonia and Urea Revamp Projects at Vijaipur-ll are likely to be commissioned in July, 2012. The capital expenditure of T426.26 crore has been incurred upto 31st March, 2012.

JOINT VENTURES

Joint Venture with M/s. KRIBHCO & M/s. RCF

Company has a Joint Venture "Urvarak Videsh Limited" with M/s. KRIBHCO and RCF as promoters. The main object of the joint venture company is to explore investment opportunity abroad and within the country in nitrogenous, phosphatic and potassic sectors and to render consultancy services for setting up projects in India and abroad.

Revival of closed units of M/s. FCIL

Government of India on nomination basis has allotted NFL & Engineers India Limited (EIL) and NFL & Steel Authority of India Limited (SAIL) for revival of closed units of FCIL at Ramagundam and Sindri respectively. Separate MoUs have been entered with EIL and SAIL and pre-project activities have been undertaken. First Stage clearance of BIFR for these projects is awaited.

HUMAN RESOURCE

Amongst the three Ms, management of human resource is most important for success of any organization. NFL continues to strive for development of its human resource for realization of its full potential. The total Manpower strength of the Company as on 31st March, 2012 was 4515 comprising of 1942 Executives and 2573 Non Executives. The total manpower includes 242 women employees of which 104 are in Executive cadre.

Various HR initiatives for the benefit of employees have been undertaken including implementation of Defined Contribution Superannuation Pension Scheme, Review of Performance Management System and implementation of Performance Related Pay.

Training Initiatives

During the year, to hone the skills and instill behavioral and personality development traits in all supervisory staff and managerial cadre, Company achieved 18,250 mandays training for employees with the aid of in-house and external training programmes. Training programmes were identified by systemizing organizational needs with individual needs through Performance Management System.

To give exposure to technology change in connection with Ammonia Feed Stock Change over Project being undertaken at Company's three Units, 41 personnel were sent to Copenhagen, Denmark for training principally on Haider Topsoe Technology, which is being put to use at Panipat and Bathinda Units. On site training at KRIBHCO, Hazirafor50 persons was arranged to expose them to the KBR technology being used for Nangal Revamp. Training on Distributive Control System/Emergency Shutdown System at Honeywell Works, Pune was also arranged.

Industrial Relations

Industrial relations in the Company continued to be harmonious during the year. Continuous interaction between the Management and Employees' representatives contributed in maintaining the harmony.

IMPLEMENTATION OF OFFICIAL LANGUAGE

Your Company is continuously making efforts for the propagation and successful implementation of the Official Language Policy of the Union of India. The Official Language Implementation Committees at Unit and Corporate Level regularly held their quarterly meetings to monitor and review the progress made in achieving the targets fixed as per the annual programme of Department of Fertilizers (DoF).

In order to increase the use of Hindi in office work, 32 Hindi workshops were organized during the year in which 710 employees participated. Hindi Pakhwara, on the occasion of Hindi Divas (14th September), was observed in all the Offices/Units of the Company. Various Hindi competitions/programmes were organized during the Hindi Pakhwara in which 325 employees participated. Winners of Hindi Competitions were suitably awarded. 59 Employees were awarded cash prize under the Cash Incentive Scheme for doing maximum work in Hindi. Panipat Unit and Zonal Office Bhopal have been awarded Raj Bhasha Shield by respective Town Official Language Implementation Committees for outstanding work in Hindi.

Information Technology (IT) is being widely used to promote the official language in the various offices of the Company. Bilingual software was provided across the Units to impart working knowledge of Hindi as well as computer training programmes were extensively held to enable employees to use the software.

REPRESENTATION OF SCs/STs, OBCs AND PHYSICALLY DISABLED

Your Company has been implementing reservation policies of Gol for SCs/STs/OBCs/Persons with Disabilities. Representatives of SCs/STs categories are associated in Recruitment of Departmental Promotion Committees. A statement showing representation of employees belonging to Scheduled Castes / Scheduled Tribes / Backward Classes/Physically Disabled categories is appended as Annexure-VIII to this report.

INFORMATION TECHNOLOGY

The Company is making use of information technology (IT) to improve efficiency & productivity in its various business functions. Presently home grown software applications are in use for various business functions. In its endeavour to bring about uniformity in implementation of IT Applications across the company, In-house common Financial Accounting & Payroll Systems based on Oracle were implemented across the company.

Company has implemented Local Area Network (LAN), Multi-protocol Label Switching (MPLS) based Virtual Private Network (Wide Area Network) for connectivity amongst Corporate Office, Units and Marketing Offices.

Internet connectivity to the employees at Units and Offices has been provided through Leased Line / Broadband. High-speed datacards have been provided to the field personnel of marketing to upload sales data through internet.

Company is extensively using the facility of e-procurement, e-payment and e-receipt for bringing efficiency and transparency in the business system. Implementation of Mobile based Fertilizer Monitoring System (MFMS) is under way, which will provide information on the movement of fertilizers from the manufacturers to the retailers.

ENVIRONMENT MANAGEMENT

Company accords highest priority to Industrial Safety, Ecology & Pollution Control. The safety and occupational health of its employees and external stake-holders are of paramount importance and all these attributes are embedded within the core values of the organization. Safety/Environment Audit is carried out at production units from time to time.

Silos for collecting fly ash from ESP hoppers using dense phase pneumatic Conveying System have been installed at Panipat, Bathinda and Nangal Units for evacuation of ash from the plants. All the Units are ISO 9001-2000 certified for Quality Management System, ISO-14001 certified for Environment Management System and have received OHSAS- 18001 certification for occupational health and safety management system.

Recognizing the need to balance human economic development with environment protection, Company has adopted the concept of sustainable development. A separate chapter at Annexure-VI in this report deals at length with your Company's initiatives and commitment to environment conservation and sustainable development.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is an evolving concept and has moved away from being just philanthropic to becoming an integral part of strategy of the company. The Company is committed towards upliftment of under privileged sections of the society and has supported various social and community initiatives touching the lives of a large number of people. Under the umbrella of CSR, Company is engaged in undertaking farmer friendly social activities that have helped in improving socio economic status of farming community. The major focus of these programmes is on creating awareness about health and hygiene, children education, women empowerment, skill development for self-employment, water conservation, rain-water harvesting and ground water recharging.

During the year 2010-11 and 2011-12, Company earmarked Rs.3 crore and Rs.3.25 crore respectively for CSR activities, against which till 31st March, 2012, an expenditure of Rs.1.90 crore has been incurred and Rs.3.19 crore stands committed towards activities under execution. The unspent amount has been carried over to 2012-13. The major CSR initiatives undertaken by your Company are detailed in a separate Annexure-VII.

THE RIGHT TO INFORMATION ACT, 2005

In consonance with the provisions of the Right to Information Act, 2005, Company has appointed Appellate Authorities/Public Information Officers/Assistant Public Information Officers at all the Units/Offices of the Company to respond effectively to the requests of the applicants under the Act.

In synchronization with the directions of Central Information Commission (CIC), for promotion of Institutional transparency within the Public Authority through proactive and effective implementation of Section 4 of the RTI Act, 2005, the Company has also appointed a Transparency Officer.

Company has created necessary mechanism to meet the objective to bring out transparency in the functioning of organization as envisaged by RTI Act.

WHISTLE BLOWER POLICY

Your Company relies in transparency and propriety in its business dealings. To take this object further, Company has put in place a Whistle Blower Policy providing for a mechanism to the employees and other stakeholders to report concerns about unethical behaviour, actual or suspected fraud or violation of Code of Conduct or Ethics Policy. The disclosures under the Policy are to be made to Ethics Committee Chaired by Director (Finance). In case of conflict of interest, the whistle blower can directly approach the Chairman of the Audit Committee. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism. During the year, no disclosures have been received under the whistle blower mechanism.

VIGILANCE

In Vigilance, focus continued to be given to preventive vigilance. Due thrust was given to maintaining high degree of awareness amongst the employees. Apart from streamlining the systems and providing flexibility to the Units to perform better, efforts were made to build confidence across the organization to facilitate faster decision making.

Emphasis was on for computerization of activities relating to award of contracts, purchases, etc. to ensure transparency. In line with instructions received from the Department of Fertilizers/Central Vigilance Commission, emphasis is being given on leveraging of technology e.g. e-payments/ receipts/procurement/tendering to facilitate transparency and avoid delays.

Regular interactions were organized between the vigilance functionaries and the line managers to understand the role of vigilance and to educate them on the policies, guidelines and procedures of the Company. In order to impart proper training to the employees, a detailed programme was prepared for organizing training programmes/workshops related to Vigilance activities at various offices/Units of the Company. Vigilance Awareness Week was observed at all the Units involving all employees to create an environment of ethical growth in the Company.

AWARDS & ACCOLADES MoU

Company has received "Excellent" rating for the MoU 2010-11, which is eleventh excellent rating in a row.

Awards

During the year, Company and its employees received number of prestigious Accolades and Awards.

a) First Award for excellence in 'Cost Management' in the category of Large Public Sector Enterprises (PSEs) for 2010 from the Institute of Cost Accountants of India.

b) Panipat Unit was conferred as the 'WINNER' for the year 2009 & 'RUNNERS-UP' for the year 2008 by the Government of Haryana for "Lowest Accident Frequency rate" for Panipat Unit.

c) Ms Neeru Abrol, Director (Finance) was awarded "Best Business Achiever" Award in Woman Category by the Institute of Chartered Accountants of India.

d) Scope Excellence Award 2009-10 was awarded to Ms. Neeru Abrol, Director (Finance) for "Outstanding Woman Manager" among all the CPSEs, which was presented by Hon'ble Prime Minister of India at Vigyan Bhawan, New Delhi.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion & Analysis Report covering the operations and future prospects of the Company is appended as Annexure-I to this report.

STATUTORY AUDITORS & STATUTORY AUDITORS REPORT

The Statutory Audit of your Company was conducted by M/s. DSP & Associates and M/s. Thakur, Vaidyanath Aiyar & Co., Chartered Accountants, who were appointed as Joint Statutory Auditors for the financial year 2011-12 by Comptroller & Auditor General of India (C&AG). Auditors' Report on the Accounts of the Company for the financial year ended 31st March, 2012 is at Annexure-ll.

The review of Annual Accounts of your Company for the year ended 31st March, 2012 by the C&AG under Section 619(4) of the Companies Act, 1956 forms part of this report as Annexure-lll and do not call for any reply as no comments as supplementary to Statutory Auditor Report have been made.

COST AUDIT

Pursuant to the directions of Central Government for audit of Cost Accounts, your company has appointed Shri S.D.M. Nagpal for Nangal, M/s. Sanjay Gupta & Associates for Bathinda, Shri Shome & Bannerjee for Panipat and M/s. Chandra Wadhwa & Co. for Vijaipur-I & II as Cost Auditors for the year ended 31st March, 2012.

As prescribed under the Cost Accounting Records (Report) Rules, 2001, the cost accounting records are being maintained by all the Units of the Company.

The Cost Audit Reports for the financial year 2010-11 were filed as follows:-

Unit Date of filing of Report

Nangal 05.09.2011

Bathinda 16.09.2011

Vijaipur I 05.09.2011

Vijaipur II 05.09.2011

Panipat 12.09.2011

CORPORATE GOVERNANCE

The Company believes Corporate Governance is the fountain head of shareholder's value creation. The Company has in place a well defined "Corporate Governance Mechanism" which considers the interests of all stakeholders. A separate section on Corporate Governance forming part of this Directors' Report alongwith the Auditors' Certificate conforming to the Compliance of Corporate Governance Code as provided in Clause 49 of the Listing Agreement is at Annexure-IV.

REPORT ON ENERGY CONSERVATION,TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Disclosures in terms of Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, in respect of conservation of Energy and Technology Absorption and Foreign Exchange earnings and outgo are at Annexure-V.

PARTICULARS OF EMPLOYEES

None of employees of the Company is drawing remuneration in excess of the limits prescribed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956, your Directors confirm that: -

i. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departure has been made there from by the Company;

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 at the end of the financial year 2011-12 and of the profit of the Company for that period;

iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. the Directors have prepared the Annual Accounts on a going concern basis.

DIRECTORS

Shri Satish Chandra, Joint Secretary, DoF, Director on the Board of the Company held the Additional Charge as Chairman & Managing Director from 31st March, 2011 to 23rd December, 2011.

Shri Munikoti Niranjan Rao, a practicing Chartered Accountant who was appointed as an Additional Director on the Board on 6th May, 2011, has been elected as Director at the previous AGM held on 12th September, 2011.

Shri Suresh Chandra Gupta, Joint Secretary, DoF has been appointed as Additional Director w.e.f. 12th September, 2011 and Shri Sham Lai Goyal, Joint Secretary, DoF has been appointed as Additional Director and assigned the additional charge as Chairman & Managing Director since 23rd December, 2011.

Notice has been received u/s 257(1) of Companies Act, 1956 for appointment of Shri Suresh Chandra Gupta and Shri Sham Lai Goyal as Directors at the Annual General Meeting.

In accordance with the provisions of Article 76(2) of the Articles of Association of the Company, Shri Munikoti Niranjan Rao shall retire by rotation at the Annual General Meeting and being eligible has offered himself for reappointment.

CODE OF CONDUCT

In line with the requirements of Clause 49 of Listing Agreement, the Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31st March, 2012.

ACKNOWLEDGEMENTS

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the Gol in particular DoF, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory Auditors, Cost Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by the employees at all levels.

For and on behalf of the Board of Directors

(Sham Lai Goyal)

Place: New Delhi Chairman & Managing Director

Date: 25th July,2012


Mar 31, 2011

Dear Members,

The Directors are pleased to present the 37th Annual Report on the business and operations of the company together with the audited accounts for the year ended March 31,2011.

Financial Highlights

During the year under review, the Company achieved turnover of Rs. 5791 crore (previous year Rs. 5091 crore). The profit before tax was X 203.92 crore (previous year Rs. 259.95 crore) and profit after tax was Rs. 138.50 crore (previous year Rs. 171.51 crore). The decrease in profit over previous year is mainly due to higher receipt of subsidy arrears during the previous year and decrease in interest income. This has been off set by higher production, lower energy consumption, and higher sale of Industrial Products. The total borrowings of the company as at 31st March, 2011, stood at Rs. 613.06 crore (Rs. 403.16 crore as at 31 * March, 2010). The borrowings include long term loan of Rs. 150 crore to finance the under implementation capital scheme of change over of feed stock from Fuel-oil to Natural Gas at Nangal, Bathinda and Panipat and buyers credit of Rs. 41.22 crore for Urea capacity enhancement projects at Vijaipur. The cash credit utilization was Rs. 343.84 crore and short term loan of Rs. 78 crore was outstanding as on that date.

Dividend

The Directors have recommended a dividend of Rs.0.85 per share (previous yearRs.1.05 per share) subject to approval of the members. The total dividend pay-out is Rs.48.46 crore (including dividend tax of Rs.6.76 crore) and accounts for 30% of profit after tax. A sum of Rs.13.85 crore has been transferred to the general reserve during the year (previous year 17.15 crore).

Operations

During the year, your company produced 33.80 lakh tonnes of Urea (104.06% of installed capacity), including 1.49 lakh tonnes of additional production from Vijaipur Plants, compared to 33.30 lakh tonnes in the previous year. Vijaipur units achieved ever-best yearly production of Urea and Ammonia at 18.78 lakh tonnes and 10.92 lakh tonnes respectively, which was 108.6% and 108.8 % of installed capacity. The three fuel oil based plants achieved 100% capacity utilization on cumulative basis. The production beyond 100% capacity utilization in fuel oil based plants is not economically viable in terms of Pricing Policy of Urea. The company achieved ever-best Bio-Fertilizers production of 231 tonnes during the year against earlier best production of 226 tonnes in 2009-10. Ever best lower energy consumption of 9.446 Gcal/tonne of urea was achieved at Nangal during 2010-11 surpassing the previous best lowest energy consumption of 9.505 Gcal/tonne of urea in 2008-09. The percentage share of NFL in urea production in the country has been estimated at 15.4%. Company has also started the production of foundation and certified seeds under a pilot project.

Sales & Marketing

Company sold 33.59 lakh tonnes of Urea (including Neem coated Urea of 1.20 lakh tonnes) against 33.78 lakh tonnes (including Neem Coated Urea of 0.38 lakh tonnes) in the previous year. Inspite of marginal drop in sales quantity mainly due to limitation of railway wagons, the sales turnover including subsidy for the year was Rs. 5791 crore, an increase of 14% overRs.5091 crore in the previous year. The increase in turnover is due to increase in subsidy resulting from increase in the prices of petroleum products and revision in the price of APM Gas from 1st July,2010, higher sales of industrial products, etc. Bio-fertilizers sales at 219 tonnes saw a growth of 11% over the previous year at 196 tonnes. Industrial Product sales were of the value of Rs.115 crore in 2010-11 recording a growth of 17% over previous year.

Company sold 0.50 lakh tonnes of imported Murate of Potash (MOP). It has also ventured into trading of certified seeds and sold 5502 tonnes of wheat, soyabean and paddy seeds with a turnover of Rs. 9.07 crore. Company also sold mycorrhiza and compost. In agro-chemicals, the Company saw a turnover of Rs. 1.03 crore and efforts are being made for trading of Zinc Sulphate and Ventonite Sulphur.

Company signed an MoU with M/s PT PUPUK SRIWIDJAJA, an Indonesian firm regarding procurement of around 3 lakh tonnes of Urea and 2.50 lakh tonnes of NPK per annum for a period of two years.

The Company undertook various Agriculture extension activities during the year. Krishi melas, exhibitions, Crop Seminars, Farmers' & Dealers' Training Programmes and study tours were organized to disseminate information regarding improved farm technology and establish direct communication with the farmers as also to educate the farmers on the balanced use of fertilizer and its timely application besides providing guidance on pesticides and fungicides. Under orientation programmes for dealers/retailers and farmers on balanced fertilization to optimize crop productivity, a total of 2045 dealers/retailers and 5351 farmers were covered during the year. The Company undertook 409 block and frontline demonstrations and 182 R&D trials on different crops in different areas. During the year, 17520 farmers were trained and 59,970 soil samples were tested, and analyzed. The Company participated in 42 Krishi Melas and Exhibitions. During the year, 15 'Krishi Sewa Kendras' were set-up and 27 solar lights distributed. Company is establishing a Soil Testing Laboratory at Balasore, Odisha at a cost of Rs. 70 lakhs under the National Project on Soil Health and Fertility of Govt, of India. The Company has 4 mobile and 5 static Soil Testing Laboratories. The Laboratories are used for Soil Testing and analysis to make balanced use of fertilizers by the farming community.

Modernization and Expansion Projects

With a view to consolidate its position as a market leader in Urea, projects of about Rs. 4700 crore are at various stages of implementation in Company's various plants. The major ongoing schemes are:

Revamp of fuel-oil based plants at Panipat, Bathinda & Nangal

The Company has undertaken revamp of fuel-oil based plants at Panipat, Bathinda & Nangal for change over of feedstock from Fuel-oil to Natural Gas. These projects involve a total investment of Rs. 4066 crore and a completion period of 36 months from the Zero date i.e. 29th January 2010. These projects are being implemented on lumpsum turn key (LSTK) basis. Panipat and Bathinda projects are being implemented by M/s. Larsen & Toubro (L&T) with process licence from M/s. Haider Topsoe. Nangal Project is being implemented by consortium of M/s. Tecnimont SPA Italy and M/s. Technimont ICB, Mumbai with process licence from KBR. M/s. Project & Development India Limited (PDIL) has been engaged as Project Management Consultant for all these three projects. The projects are on schedule.

Capacity Augmentation & Energy Saving Project (ESP) at Vijaipur

The Company has undertaken Capacity augmentation of Ammonia & Urea plants at Vijaipur-I & II units including installation of Carbon Dioxide Recovery (CDR) plant at an investment of around Rs.650 crore. The total urea capacity of Vijaipur units after commissioning of the project shall be 20.66 lakh tonnes per annum against 17.29 lakh tonnes per annum at present. Capacity Augmentation of Ammonia & Urea shall be completed by November, 2011 and the CDR Plant shall be commissioned by June, 2012.

Human Resource Management

The Company has always believed that human resource is its most important asset and continues to work for its development and realisation of its potential. To achieve growth and to foster motivational climate, several initiatives were taken up during the year. Modified Performance Related Pay Scheme for Executives and Non-Executives has been implemented and Group Productivity Allowance Scheme has also been introduced. The Company has introduced Employees Economic & Social Rehabilitation Scheme, which protects the welfare of the family in case of demise/permanent disablement of employee during service. A new Pension Scheme for the benefit of employees is also in the process of implementation.

During the year, to inculcate leadership qualities with high values, moral and ethics in all supervisory staff and managerial cadre, Company achieved 8781 and 11802 man days training for Executives and Non-Executives, respectively by deputing employees for external and in-house programmes. Manpower strength of the company as on 31.03.2011 was 4596 comprising of 1877 Executives and 2719 Non-executives.

The Employer-Employee relationship continued to be harmonious during the year. There was no loss of production due to any adverse IR situation. The schemes for employees' participation in Management continue to function successfully. There were continuous interactions between the Management and employees' representatives on various issues keeping in view the best interest of employees and the Company.

The Company continues to make efforts for improving employees' health, well-being and welfare and has taken steps for providing recreation, education and general welfare of employees.

Implementation of Official Language

The Company is making all efforts to ensure the implementation of Official Language policy of the Government of India. The targets fixed in the Annual Programme issued by the Department of Official Language, Government of India have been achieved. A number of workshops, competitions and pakhwaras were organized to encourage employees to work in Hindi. Information Technology is being widely used to promote the official language in the offices. The Company continued to win awards in implementing the National Language. Panipat Unit received Raj Bhasha Shield in Hindi Language from 'NagarRajbhashaKaarynvan Samiti' Panipat for 2009.

Awards & Accolades

Your Company excelled in performance in various areas, which got recognition from various quarters during the year. The company has received "Excellent" rating for the MoU 2009-10 which is tenth excellent rating in a row.

Company has won the following prestigious awards during 2010-11 :-

ICWAI Award 2009 for excellence in cost management for Bathinda Unit.

National Safety Award 2008 for accident free year and lowest average frequency rate from Ministry of Labour and Employment, New Delhi and Prashansa Patra National Safety Award 2009 from National Safety Council for VijaipurUnit.

Safety Award Suraksha Puraskarfrom National Safety Council of India for the year 2009 for Panipat Unit.

Environment Management

The Company accords highest priority to Industrial Safety, Ecology & Pollution Control and has adopted 3R's approach i.e. reduce, reuse, recycle in an effort to have zero effluent discharge plants. Company has adopted an extensive afforestation programme. All the statutory standards are met by respective units.

Silo system for collecting fly ash from ESP Hoppers using dense phase pneumatic conveying system has been installed at Panipat, Bathinda and Nangal Units for evacuation of ash from the plants. This has helped to contain the ecological concerns in fly ash disposal.

All the Units are ISO 9001-2000 certified for Quality Management System, ISO-14001 certified for Environment Management System and have received OHSAS-18001 certification for occupational health and safety management system.

Company is putting up a Carbon Dioxide Recovery Plant of 450 MTPD capacity for recovery of carbon dioxide from Flue Gases of primary reformer at Vijaipur. This will help in reduction of discharge of greenhouse gases.

Information Technology

The Company is making use of information technology in its business functions. A consultant has been appointed to provide advisory services on implementation of Enterprise Resource Planning. A preliminary report including ERP strategy, road map and cost benefit analysis on ERP implementation has already been received.

On IT infrastructure front, the Company has provided wide Local Area Network (LAN) at all the units and offices for integration of local computers and servers, a MPLS based Virtual Private Network (Wide Area Network) to provide a secured and scalable connectivity amongst Corporate Office, Units and Marketing Offices. IP enabled services like email, internet browsing, FTP Server, etc. has been provided to the employees. Field Staff of Marketing Division have been provided with high-speed data cards/broadband connections. The Company is extensively using the facility of e- procurement, e-payment and e-receipt for bringing efficiency and transparency in the business system. DSLAMs/ ADSL Routers have been provided at the Units for LAN connectivity to remote locations through internal exchanges.

Corporate Social Responsibility

The Company is committed towards up-liftment of under privileged Section of the Society and has supported various social and community initiatives touching the lives of large number of people. The Company has identified CSR activities in economic, environmental, health and social areas and had earmarked Rs.3 crores towards CSR activities during the financial year 2010-11. Separate budgets and achievement targets have been fixed for each CSR initiative. The unspent budget from 2010-2011 has been carried forward to the next financial year.

Roadmap was developed to undertake integrated development of 9 villages situated in the vicinity of our Plants/Offices. Baseline survey has been completed in all the Units/ Offices of the Company. Activities identified under CSR like digging of tube well for supplying of potable water, laying pipelines for distribution of water, Construction of concrete approach roads, Anganwadies, kitchen sheds, toilets, overhead water tanks, carrying out various civil jobs in nearby villages, construction of boundary wall, Preparation of Volley ball play ground, installation of submersible tube well, procurement of furniture for distribution in nearby schools etc. are under progress.

Action to line up a contract to construct a Multipurpose Women Empowerment Centre on Panchayat land of Nangal Unit, appointment of agencies for imparting vocational training / stitching training to women in nearby villages is also under process.

17 nos. Solar Street Lights have been installed in Village Sivian, Bathinda. Further, procurement of 35 nos. of solar lights for installation in nearby villages is under process.

100519 saplings have been planted during the year in the vicinity of Company's plants and units. Company's manufacturing units at Vijaipur, Panipat, Bathinda and Nangal also carried out various useful activities for the benefit of socially and economically weaker sections of the society in the surrounding areas of the respective unit. Health awareness Programmes/Medical Camps were organized. In addition, financial aid, ceiling fans, sewing machines etc. were also provided to the poor and needy persons of nearby villages.

In addition, Company extended financial assistance to Bitnoti College, Orissa for construction of one Auditorium-cum- Gallery Class Room. Mayurbhanj is a tribal dominated backward district of Odisha. The objective of construction of auditorium is to prepare students of backward tribal areas to face the competitive world by developing their presentation skills, public speaking and entrepreneurship.

Balasore is a tribal dominated backward district of Orissa and Utkal Bal Ashram is one of the oldest and reputed orphanage of Balasore. This Ashram was established in the year 1944 and has been rendering valuable services to about 250 orphan children. Company is extending a contribution for construction and renovation of Utkal Bal Ashram.

As in the past, the Company continued to facilitate the farming community in improving the crop productivity. The Company also continued its efforts to improve the living standard of socio-economically weaker sections of the society.

The Right to Information Act 2005

In consonance with the provisions of the Right to Information Act, 2005, Company has taken requisite measures and appointed Appellate Authorities/Public Information Officers/Asstt. Public Information Officers at all the Units/Offices of the Company in order to respond effectively to the requests of the applicants under the Act. The Act aims at bringing out transparency in the functioning of organizations and the Company has created necessary mechanism to meet the objective.

Vigilance

Vigilance Division endeavored for evolving and effectively implementing preventive techniques including transparency, accountability, fair play, objectivity and timely response in dealing with matters relating to public administration.

All systems and processes for deliverance of services are being synchronized through use of technology like effecting e-payments to vendors, e-receipts, publishing complete details of tenders on website, e-procurement, reverse auction, etc.

To impart proper training to the employees, yearly calendar was prepared for organizing training programmes/workshops. Special emphasis was laid by organizing workshops on leveraging technology and disciplinary matters through external faculties. Vigilance Awareness Week was observed at all Units/Offices involving all employees to create an environment of ethical growth in the organization.

Management Discussion & Analysis Report

Management Discussion and Analysis Report covering the operations and future prospects of the company is at Annexure-I.

Statutory Auditors & Statutory Auditors Report

M/s. S.P. Chopra & Co. and M/s. DSP & Associates, Chartered Accountants, were appointed as Joint Auditors for the financial year 2010-11 by the Comptroller & Auditor General of India. The Statutory Auditors' Report on the Accounts of the Company for the financial year ended 31 * March, 2011 is at Annexure-I I.

The Comptroller & Auditor General of India (CAG) has given Nil comments on the accounts of the Company for the year ended 31st March, 2011. under Section 619(4) of the Companies Act, 1956. A copy of the comments is at Annexure-lll.

Cost Audit

As prescribed under the Cost Accounting Records (Report) Rules, 2001, the cost accounting records are being maintained by all the Units of the Company. Cost Audit for 2010-11 has been completed.

The Cost Audit Reports for the financial year 2009-10 in respect of the units was filed as follows:-

Unit Date of filing of Report

Nangal 18.8.2010

Bathinda 18.8.2010

Vijaipurl 19.8.2010

Vijaipurll 19.8.2010

Panipat 25.8.2010

Corporate Governance

The Company believes Corporate Governance is the fountain head of shareholder's value creation. The Company has in place a well defined "Corporate Governance Mechanism" which considers the interests of all stakeholders. A separate section on Corporate Governance forming part of this Directors' Report alongwith the Auditors' Certificate conforming the Compliance of Corporate Governance Code as provided in Clause 49 of the Listing Agreement is at Annexure-IV.

Report on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo.

Disclosures in terms of Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, in respect of Conservation of Energy and Technology Absorption & Foreign Exchange Earnings and Outgo are at Annexure-V.

Statistical information on employees belonging to Scheduled Castes/Scheduled Tribes Categories

The information with regard to the employees belonging to Scheduled Castes / Scheduled Tribes is annexed at Annexure-VI.

Particulars of employees

None of employees of the company is drawing remuneration in excess of the limits prescribed under section 217(2A) of the Companies Act, 1956 read with companies (Particulars of Employees) Rules, 1975.

Directors' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956, your Directors confirm that: -

i. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no

material departure have been made therefrom by the Company;

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 at the end of the financial year 2010-11 and of the profit of the Company for that period;

iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. the Directors have prepared the Annual Accounts on a going concern basis.

Board of Directors

The position with regard to the Board of Directors since the last report is as follows:-

Shri Sudhir Bhargava ceased to be Director w.e.f. 3rd May, 2010.

Shri Deepak Singhal, Joint Secretary, Department of Fertilizers joined as a Director w.e.f. 27th May, 2010.

Shri Rajesh Kumar Aggarwal, joined as Director (Technical) on 2nd June, 2010.

Shri N.K. Goyal, Shri S.A.T. Rizvi and Dr. S.K. Bhattacharyya ceased to be Directors w.e.f. 29th January, 2011.

Capt. Pavan Kumar Kaul, ex-Executive Director, Container Corporation of India Ltd. has joined as Director (Marketing), w.e.f. 7th February, 2011.

Shri V.K. Sharma ceased to be Director and Chairman & Managing Director w.e.f. 23"1 February, 2011.

Shri Deepak Singhal, Joint Secretary, Department of Fertilizers and a Director on the Board of the Company held the additional charge of the position of Chairman & Managing Director from 25th February, 2011 to 17th March, 2011. He ceased to be a Director and Chairman & Managing Director of the Company w.e.f. 17th March, 2011.

Shri Satish Chandra, Joint Secretary, Department of Fertilizers and Director on the Board of the Company has been holding the additional Charge as Chairman & Managing Director since 31st March, 2011.

Shri Munikoti Niranjana Rao, a practicing Chartered Accountant has been appointed as an Independent Director on the Board w.e.f. 6.5.2011.

Board places on record its deep appreciation for the valuable services rendered by Shri Sudhir Bhargava, Shri N.K. Goyal, Shri S.A.T. Rizvi, Dr. S.K. Bhattacharyya, Shri V.K. Sharma and Shri Deepak Singhal during their association with the Company.

In accordance with the provisions of Article 76(2) of the Articles of Association of the Company, Shri Satish Chandra shall retire by rotation at the Annual General Meeting and being eligible has offered himself for reappointment.

In accordance with provisions of Section 257 of the Companies Act 1956, a notice has been received for appointment of Shri Munikoti Niranjana Rao as Director at the Annual General Meeting.

Acknowledgements

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the Government of India in particular Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by your Company's employees at all levels.

For and on behalf of the Board of Directors

(Satish Chandra) Chairman & Managing Director

Place: New Delhi Date: 29th July, 2011


Mar 31, 2010

The Directors are pleased to present the 36th Annual Report on the business and operations of the company together with the audited accounts for the year ended March 31,2010.

Financial Performance

(Rs. In crore)

Particulars 2009-10 2008-09

Turnover (Net) 5091.34 5127.10

EBIDTA 364.66 292.91

Interest 10.96 40.89

Depreciation 93.75 96.41

Profit Before Tax (PBT) 259.95 155.61

Provision for Taxation 88.44 58.15

ProfitAfterTax 171.51 97.46

Appropriations:

Proposed Dividend 51.51 29.43

Tax on Proposed Dividend 8.56 5.00

Amount transferred to General Reserve 17.15 9.75

Financial Ratios:

EBIDTA/Net sales (%) 7.17 5.71

Return (PAT) on Net worth (%) 10.87 6.59

Earning per share (Rupees 10/-each) 3.50 1.99

Debt-Equity ratio 0.25:1 0.18:1

Current ratio 2.16:1 1.72:1

During the year, the Company achieved turnover of Rs.5091.34 crore (previous year Rs. 5127.10 crore). The profit before tax is Rs. 259.95 crore (previous year Rs.155.61 crore) and profit after tax is Rs.171.51 crore (previous year Rs.97.46 crore). The increase in net profit by 76% over previous year is mainly due to improvement in the energy efficiency at Panipat unit and reduction in interest expenses. The total borrowings of the company as at 31st March, 2010, stood at Rs. 403.16 crore (Rs.264.87 crore as at 31st March, 2009). However, it had short term deposits with scheduled banks of Rs.678.28 crore as on 31st March, 2010 (Rs.90 crore as at 31st March, 2009), thus virtually a debt free company. During the year, fertilizer bonds issued in lieu of cash subsidy of face value of Rs.371.19 crore were

sold at a loss of Rs.33.17 crore. At the year end, bonds of the face value of Rs.125 crore were held.

Dividend

The Directors have recommended a dividend of Rs. 1.05 per share (previous year Rs.0.60 per share) subject to approval of the members. The total dividend pay-out is Rs.60.07 crore (including dividend tax of Rs. 8.56 crore) and accounts for 30% of profit after tax. A sum of Rs. 17.15 crore has been transferred to the general reserve during the year (previous year Rs. 9.75 crore)

Operations

During the year, your company produced 33.30 lakh tonnes of Urea (103.07% of installed capacity) compared to 33.44 lakh tonnes in the previous year. The marginal reduction in production is due to additional production of 0.39 lakh tonnes at fuel-based Nangal and Bathinda Units in previous year being economically viable considering the prevalent import parity price of urea. The production includes 0.99 lakh tonnes of additional production of urea from Vijaipur unit. Marginal shortfall of 0.04 lakh MT at Nangal unit was made ud bv Droducina additional I Jre>a at Paninat anH R=,thin achieved ever best production of 226 tonnes of Bio- fertilizers and 37648 tonnes of Neem-coated urea. The percentage share of NFL in urea production in the country has been estimated at 15.8. Company has also started the production of foundation and certified seeds under a pilot project.

During the year, with availability of additional 0.6 mmscmd (million metric standard cubic meter per day), RIL natural gas from 1st May, 2009, naphtha consumption has been substituted at Vijaipur unit with low cost gas.

Sales & Marketing

Company sold 33.78 lakh tonnes of Urea against 33.77 lakh tonnes in the previous year. The sales turnover

including subsidy for the year was Rs. 5091.34 crore against Rs.5127.10 crore in the previous year. The reduction in Sales turnover is due to decrease in the subsidy rate pursuant to decrease in prices of FO/LSHS and substitution of Naphtha with Natural Gas, which has been largely off-set by sale of imported Murate of Potash (MoP) of Rs 146.91 crore. Company achieved ever-best bio-fertilizer sales of 196 tonnes. It also sold 3468 tonnes of seeds during the year (previous year 1632 tonnes).

Company is also dealing in various industrial products including nitric acid, ammonium nitrate, sodium nitrate/nitrite, sulphur, liquid argon, methanol, etc. Company has also started the sale of ammonia from its Vijaipur Unit. During the year sales turnover for industrial products is Rs.98.35 crore. Company also sold Compost, Micorhizza and seeds of the value of Rs.7.31 crore.

Modernization and Expansion Projects

The year 2009-10 was a landmark year for the Company. Consequent upon notification of remunerative investment polices by Government of India in urea sector, the Company has undertaken a number of projects as follows:-

• Revamp of fuel-oil based plants at Panipat, Bathinda & Nangal

Company has undertaken revamp of fuel-oil based plants at Panipat, Bathinda & Nangal for change over of feedstock from FO/LSHS to NG/RLNG. Zero date of these projects has been fixed as 29lh January 2010. These projects involve a total investment of Rs.4066 crore and gestation period of 36 months from the zero date i.e. 29lh January 2010. Contract for revamp of Panipat and Bathinda units has been signed with M/s Larsen & Toubro (L&T) on 10th March 2010 and for Nangal unit with consortium of M/s Tecnimont ICB (TICB) on 12th May 2010. M/s. Project & Development India Limited (PDIL) has been engaged as Project Management Consultant for all the projects.

• Capacity Augmentation & Energy Saving Project (ESP) at Vijaipur

Company has undertaken Capacity augmentation of urea plants at Vijaipur-I & II by 16% and 23% respectively including installation of Carbon Dioxide Recovery plant at an investment of around Rs.900 crore. The total urea capacity after completion of Energy Saving project at Vijaipur-I and Capacity Enhancement Project at Vijaipur-ll is expected to be 6261 MTPD. Basic engineering for Ammonia-I, Ammonia-ll, Urea-I and Urea-ll has been completed. Procurement of equipment is in progress. The projects are expected to be commissioned by 2011 -2012.

Human Resource Management

To achieve sustainable growth and to foster motivational climate, several initiatives were taken up in Human Resources area during the year. This was accomplished through meeting training needs at various levels, providing opportunities for employees participation in Management and rewarding suitably for innovative ideas. Company achieved 2.98 mandays training per employee.

The total employee strength of the Company stands at 4760 as on 31st March, 2010 against 4868 as on 31s1 March, 2009. Of the total strength 1902 are executives and 2858 non-executives.

During the year, Company implemented the revised pay scales for employees w.e.f. 1st January, 2007. Keeping in view the welfare of the employees, Company has initiated the process to introduce a Contributory Pension Scheme for all the regular employees.

Industrial Relations remained congenial, harmonious and peaceful. Regular interactions were made between the Management and employees representatives on various subjects to improve the mutual trust and implement the decisions effectively. The Company continues to make efforts for improving employees health, well-being and welfare and has taken steps for providing recreation, education and general welfare of employees.

Implementation of Official Language

Your Company is making continuous and intensive efforts to ensure the implementation of Official Language policy of the Government of India. Necessary steps have been taken to achieve the targets fixed in the Annual Programme issued by the Department of Official Language, Government of India. Several workshops and competitions were organized to encourage employees to work in Hindi. Office orders, formats, circulars were issued in Hindi as well. All important advertisements and house journals were released in bi-lingual form in Hindi and English. Information Technology is being widely used to promote the use of official language.

Awards & Accolades

Your Company excelled in performance in various areas, which got recognition from various quarters during the year. The company has received the ninth consecutive "Excellent" MoU rating for the fiscal year 2008-09.

Vijaipur unit has received "Green Tech Safety Award 2009" in Fertilizer sector from Green Tech Foundation, New Delhi for best safety practices. Vijaipur Unit has also been awarded cash prize of Rs. One lakh & Certificate of Honour during the year by Department of Commercial Tax, Government of Madhya Pradesh for Best Tax Payer for 2007-08. Vijaipur Unit also received Second Award for Bio-Fertilizers in manufacturing sector for the year 2006-07 from National Productivity Council, New Delhi. Vijaipur unit and Panipat unit also received National Safety Awards. Bathinda unit received First prize for achieving largest reduction in Accident Frequency Rate in Chemical Industry for the year 2009 from Punjab Industrial safety Council, Chandigarh.

Environment Management

Your Company has in place a system for controlling and monitoring pollutants at all units complying with environmental standards and legislations. Resource conservation, waste management and pollution prevention are the driving forces for environmental excellence at your Company.

Silo system for collecting fly ash from ESP Hoppers using dense phase pneumatic conveying system has been installed at Panipat and Bathinda units for evacuation of ash from the plants.

All the Units are ISO 9001-2000 certified for Quality Management System, ISO-14001 certified for Environment Management System and have received OHSAS-18001 certification for occupational health and safety management system.

Company has finalized and submitted the project development document for installation of facilities for reducing Nitrous Oxide emissions from Nitric Oxide Plant at Nangal. The project shall enable the Company to earn Carbon Credits under Clean Development Mechanism.

Company is putting up a Carbon Dioxide Recovery Plant of 450 MTPD capacity for recovery of carbon dioxide from Flue Gases of primary reformer at Vijaipur. This will also help in reduction in discharge of green house gases.

Information Technology

The Company is using information technology in all of its business functions and now looking at integration of these functions through implementation of Enterprise Resource Planning (ERP). The Consultant is reviewing all the business processes and formulate the strategy and road map thereon.

On the IT infrastructure front, the Company has replaced its Leased Line based wide area network by setting up MPLS - Virtual Private Network, which is providing a secured & scalable connectivity amongst Corporate Office, Units and Marketing Offices. The Marketing mobile staff have been provided with high-speed data cards. DSLAMs/ADSL Routers have been provided at the Units for LAN connectivity to remote locations through internal exchanges.

Corporate Social Responsibility

Socio Economic Development of Weaker Sections in rural areas

Your Company is committed towards improving the crop productivity and living standard of socio-economically weaker sections of the society. Keeping with its strong commitment to rural development, your Company continued to facilitate the farming community in improving the crop productivity by educating farmers about the efficient use of fertilizers. In furtherance of this cause, during the year 424 field demonstrations and 161 R&D trials were undertaken on different crops in different areas. Around 60,000 soil samples were collected and tested for nutrient deficiency and analysis report provided to the farmers. Mass awareness campaign was undertaken through intensive farmers training to apply inputs including micronutrients as per soil test recommendations.

Krishi melas, exhibitions, crop seminars, farmers & dealers training programmes and study tours were organized to disseminate information regarding improved farm technology and establish direct communication with the farmers and also to educate the farmers of the balanced use of fertilizers and its timely application besides providing guidance on pesticides & fungicides. More than 2 lakh crop literature in the form of folders, leaflets, pamphlets in local languages were distributed during these programmes. Krishi diary, an annual publication for farmers and Kisan Sandesh, a season-wise crop advisory newsletter was addressed to the farmers. Anumber of health camps for women and children, animal health camps, vocational training programmes were organized. Water tank, water coolers, solar lights, tricycles, school furniture, books etc. were also distributed.

Vijaipur, Panipat, Bathinda and Nangal Units carried out various activities for the benefit of socially and economically weaker sections of the society in their peripheral areas. Health awareness programmes, medical camps were also organized. Financial aid, blankets, sewing machines, etc. were provided to the poor and needy persons of the nearby villages. Scholarship to meritorious students belonging to SC/ST categories, stationery items, sweaters, furniture items, etc. were also distributed to school children. Community works in the surrounding villages such as construction of boundary wall, flooring work and other civil works at nearby schools were also carried out to provide better environment for the students.

Implementation of Right to Information Act, 2005

Company has created necessary mechanism to provide information to citizens of the country. Public Information Officers/Asstt. Public Information Officers/Appellate Authorities have been appointed at all the Units/Offices of the Company to respond expeditiously to the requests of the applicants under the Act. During the year, 121 requests were received from the public and the information was made available within the prescribed time.

Vigilance

Vigilance Division endeavoured for evolving and effectively implementing preventive techniques including transparency, accountability, fair play, objectivity and timely response in dealing with matters relating to public administration.

All systems and processes for deliverance of services are being synchronized through use of technology like effecting e-payments to vendors, e-receipts, publishing complete details of tenders on website, e-procurement, reverse auction, etc.

To impart proper training to the employees, yearly calendar was prepared for organizing training programmes/ workshops. Special emphasis was laid by organizing workshops on leveraging technology and disciplinary matters through external faculties. Vigilance Awareness Week was also observed at all Units/Offices involving all employees to create an environment of ethical growth in the organization.

Management Discussion & Analysis Report

Management Discussion and Analysis Report covering the operations and future prospects of the company is at Annexure-I.

Statutory Auditors & Statutory Auditors Report

M/s. S.P. Chopra & Co. and M/s. KPMC & Associates, Chartered Accountants, were appointed as JointAuditorsforthe financial year 2009-10 by the Comptroller & Auditor General of India. The Statutory Auditors Report on the Accounts of the Company for the financial year ended 31st March, 2010 is at Annexure-ll.

The Comptroller & Auditor General of India (CAG) has given NIL comments on the Accounts of the Company for the year ended 31 st March, 2010. under Section 619(4) of the Companies Act, 1956. Acopyofthe comments is at Annexure-lll.

Cost Audit

As prescribed under the Cost Accounting Records (Report) Rules, 2001, the cost accounting records are being maintained by all the Units of the Company. Cost Audit for 2009-10 has been carried out.

Corporate Governance

Your company has in place a well defined "Corporate Governance Mechanism" which considers the interests of all stakeholders. A separate section on Corporate Governance forming part of this Directors Report alongwith the Auditors Certificate conforming the Compliance of Corporate Governance Code as provided in Clause 49 of the Listing Agreement and Managements replies to the observations of Auditors on Corporate Governance Report are at Annexure-IV.

Report on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

Disclosures in terms of Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, in respect of conservation of Energy and Technology Absorption & Foreign Exchange Earnings and Outgo are at Annexure-V.

Statistical information on employees belonging to Scheduled Castes/Scheduled Tribes categories

The information with regard to the employees belonging to Scheduled Castes/Scheduled Tribes is annexed as Annexure-VI.

Particulars of employees

The particulars of employees u/s 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975isatAnnexure-VII.

Directors Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956, your Directors confirm that: -

i. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departure have been made there from by the Company;

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 at the end of the financial year 2009-10 and of the profit of the Company for that period;

iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. the Directors have prepared the Annual Accounts on a going concern basis. Board of Directors

Shri V.K. Sharma, Director (Technical) was appointed as Chairman & Managing Director (C&MD) w.e.f. 27th August, 2009. He held additional charge as C&MD since 1sl December, 2008.

Shri K.B. Sachdev, Director (Marketing) retired on 30th September, 2009 consequent upon his superannuation. The Board places on record its deep appreciation for the valuable services rendered by him during association with NFL.

Shri Kanwal Malhotra, Independent Director, ceased to be a Director w.e.f. 21st February, 2010 on completion of his term. The Board places on record its deep appreciation for the valuable services rendered by him during association with NFL.

Shri Sudhir Bhargava, Government Director has ceased to be a Director w.e.f. 3rd May, 2010. The Board places on record its deep appreciation for the valuable services rendered by him during association with NFL.

Shri Deepak Singhal, Joint Secretary, Department of Fertilizers has been appointed as Director on the Board w.e.f. 27,h May, 2010.

Shri R.K. Aggarwal has joined as Director (Technical) on 2nd June, 2010.

In accordance with the provisions of Article 76(2) of the Articles of Association of the Company, two directors Shri N.K. Goyal and Dr. S.K. Bhattacharyya shall retire by rotation at the Annual General Meeting of your Company and being eligible, offer themselves for reappointment.

Acknowledgements

Your Directors acknowledge with deep sense of appreciation for continued assistance and cooperation that your Company received from the Government of India, Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company. The Directors also wish to place on record their sincere appreciation for the untiring efforts and contributions made by the employees at all levels to ensure that the Company continues to grow and excel.

Place: New Delhi (V. K. Sharma)

Date: 29th July, 2010 Chairman & Managing Director

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