| The Directors have pleasure in presenting the 35th Annual Report
together with the Audited Accounts of your Company for the year ended
March 31, 2011.
The Financial Results and the Consolidated Financial Results of the
Company for the year ended March 31, 2011 are as under:
FINANCIAL RESULTS
Rs. in Crores
Particulars 2010 - 2011 2009 - 2010
current year previous year
Net Sales / Income from Operations 3087.11 1987.91
Other Income 13.17 21.77
Total Expenditure
a. (Increase) / decrease in Stock (10.62) 13.45
b. Consumption of Raw Materials 564.92 406.72
c. Staff Cost 143.22 77.34
d. Purchases-Traded Products 1199.02 533.66
e. PowerandFuel 388.14 311.91
f. Marketing, Operating, Administrative 380.18 285.43
and other Expenses
Total 2664.86 1628.51
Interest 142.39 141.57
Depreciation 94.98 128.18
Profit before tax 198.05 111.42
Provision for tax 88.71 45.11
Deferred Tax (8.01) (0 06)
Profit after Tax 117.35 66.37
Dividend - Preference Shares * * 0.0019 0.0037
Equity Shares * * 42.82 21.41
Balance C/d to Balance Sheet 233.50 184.52
Paid Up Equity Share Capital (Face 428.18 428.18
Value of Rs.10/- per share)
Reserves excluding revaluation 591.99 524.40
reserve
Earning per share (annualised) - in Rs. 2.74 1.55
- Basic & Diluted
*Proposed
CONSOLIDATED FINANCIAL RESULTS
Rs. in Crores
Particulars 2010-2011 2009-2010
Current year previous year
Net Sales / Income from Operations 3087.11 1987.91
Other Income 14.01 21.77
Total Expenditure
a. (Increase) / decrease in Stock (10.62) 13.45
b. Consumption of Raw Materials 564.92 406.72
c. Staff Cost 143.25 77.34
d. Purchases-Traded Products 1199.02 533.66
e. Power and Fuel 388.14 311.91
f. Marketing, Operating, Administrative 380.23 285.48
and other Expenses
Total 2664.94 1628.56
Interest 142.40 141.57
Depreciation 94.98 126.18
Profit before tax 198.80 111.37
Provision for tax 88.73 45.11
Deferred Tax (8.01) (0.07)
Profit/(loss) after Tax 118.08 66.33
Dividend - Preference Shares * * 0.0019 0.0037
Equity Shares * * 42.82 21.41
Balance C/d to Balance Sheet 229.70 180.00
Paid Up Equity Share Capital (Face 428.18 428.18
Value of Rs.10/-per share)
Reserves excluding revaluation reserve 589.47 519.92
Earning per share (annualised) - in Rs.
- Basic & Diluted 2.76 1.55
* Proposed
Consolidated financial statements are also attached along with the
financial statements of the Company.
DIVIDEND
Your Directors recommend 0.01% dividend on the outstanding preference
shares to the preference shareholders of the Company for the year ended
March 31, 2011 amounting to Rs. 18,602/-. Your Directors after careful
consideration of the accounts of the Company recommend a dividend of
Re.1/- (previous year- Rs.0.50 ps.) per equity share to the equity
shareholders of the Company for the year ended March 31, 2011.
PARTIAL REDEMPTION OF ZERO COUPON DEBENTURES / PREPAYMENT OF FUNDED
INTEREST TERM LOAN
The Board of Directors of the Company had in the year 2004 allotted
334,936,238 Zero Coupon Debentures (ZCDs) of the face value of Re. 1/-
each aggregating Rs.334,936,238/- to banks and financial institutions
in lieu of the sacrifice of interest made by them pursuant to the debt
restructuring then carried out.
Certain Banks and Financial Institutions had converted the ZCDs into
Funded Interest Term Loan (FITL). The above ZCDs / FITL were to be
redeemed / repaid after the entire debt liabilities are fully repaid in
March 2016.
During the year under review, pursuant to the directions of the CDR
Empowered Group, of the CDR Cell of IDBI, Mumbai. your Company had
redeemed 13,40,89.881 ZCDs and prepaid Rs.8,12,43,293/- FITL As of
March 31. 2011. 2,64,78,014 ZCDs are outstanding amounting to
Rs.2,64,78,014/-.
SHARE CAPITAL
The Board of Directors of the Company had in the year 2004 allotted
37,20,372 0.01% Ordinary Redeemable Preference Shares (ORPS) of
Rs.100/- each to banks and financial institutions in lieu of the
sacrifice of interest made by them pursuant to the debt restructuring
then carried out. The said Preference Shares were to be redeemed /
repaid after the entire debt liabilities are fully repaid in March
2016.
During the year under review, as per the directions of the CDR
Monitoring Committee, the Company redeemed 18,60,185 ORPS of Rs.100/-
each aggregating Rs.18.60 crores.
As of March 31, 2011, 18,60,187 ORPS are outstanding aggregating to
Rs.18,60,18,700/-.
RESTRUCTURING
Your Board of Directors in order to continue to maintain market
leadership position, expand the fertilizer business as well as oil
business and give focused attention to the respective businesses,
consider it advantageous to implement a Composite Scheme of Arrangement
and Amalgamation (Scheme) for the company subject to the Company
obtaining requisite approvals of the shareholders, banks and financial
institutions and jurisdictional High Courts.
The Scheme envisages the merger of fertilizer business and demerger of
unlike business resulting in synergies in businesses, inorganic growth
and capturing the untapped market share by enhancing the product
portfolio, service offerings, customer base, market positioning apart
from attracting fresh investment in the respective sectors, The
implementation of the Scheme would ensure enhancement in the market
perception and enable your Company to emerge as a stronger market
player both in the Fertilizer and Micro Irrigation sector and enable
the shareholders to enjoy the benefits of both the Fertilizer and Oil
sector by being shareholders in two listed companies namely Kakinada
Fertilizers Limited (KFL) and Nagarjuna Oil Refinery Limited (NORL).
In consideration of the transfer and vesting of the Oil Business
Undertaking of NFCL into NORL, NORL shall issue
a) 1 (one) equity share of Re.1/- each fully paid up of NORL for every
1 (one) equity share of Rs.10/- each fully paid up. held by the equity
shareholders in NFCL and
b) 1 (One) preference share of Rs.10/- each fully paid up of NORL tor
every 1 (One) preference shares of Rs.100/- each fully paid up, held by
the preference shareholders in NFCL.
Pursuant to the merger of residual NFCL and Ikisan into KFL,: KFL shall
issue
a) 11 (eleven) equity shares of Re.1/- each fully paid up of KFL for
every 10 (ten) equity shares of Rs.10/- each fully paid up, held by the
equity shareholders in NFCL and
b) 43 (forty three) equity shares of Re.1/- each fully paid up of KFL
for every 10 (ten) equity shares of Rs. 10/- each fully paid up, held
by the equity shareholders in iKisan and
c) 1 (one) preference share of Rs.90/- each fully paid up of KFL for
every 1 (one) preference shares of Rs.100/- each fully paid up, held by
the preference shareholders in NFCL
Your directors have to inform that pursuant to the application of the
company made before the High Court of Andhra Pradesh, Hyderabad, a
meeting of the Members of the Company had been convened on April 15,
2011 which approved the Composite Scheme of Arrangement and
Amalgamation by a majority of 99.83% and 89.45% in value, which
involves merger of your Company with Kakinada Fertilizers Limited along
with Ikisan Limited and demerger of the Oil Business of the company
into an independent company named as Nagarjuna Oil Refinery Limited.
Your Company has pursuant to the approval of its Members filed the
requisite petition in the High Court of Andhra Pradesh.
PLANT OPERATIONS
Urea
Your Company during the year manufactured 16.55 LMT of Urea as against
14.82 LMT in the previous year.
Your Company during the year undertook various initiatives for
improving energy efficiency, safety, health environment, reliability
and cost reduction.
Micro Irrigation
Your Company achieved a production of 1135 Lakh Mtrs against of 801
Lakh Mtrs during the previous year.
MARKETING
Urea
Your Company achieved a sale of manufactured urea of 16.48 LMT compared
to 15.05 LMT in the previous year.
The total urea sales both manufactured and imported was 22.03 LMT
compared to 21.19 LMT of previous year.
Specialty Fertilizers
Your Company sold 9226 MTS during the year, in comparison with sales of
8263 MTS during the previous year.
Micro irrigation
Your Company during the year achieved 21.92% growth in sales
aggregating Rs.110.94 crores as compared with that of the previous year
(Rs.90.99 crores).
Operations in Africa
Your Company after a detailed analysis and market research consider it
necessary to explore the opportunities available in Africa. Your
Company to begin with has set-up a branch office in Nairobi, Kenya, to
start its International Sales and Marketing operations in Africa. In
the initial stage, it is proposed to market plant nutrients and
thereafter foray into Micro Irrigation systems at a later stage.
Your Company also in view of the rapidly growing demand for
fertilizers, micro nutrients and Micro Irrigation systems in Kenya,
Burundi, Rwanda, Tanzania, Uganda and other African countries, proposes
to explore these countries also in a phased manner.
Government Policy
During the year under review the fertilizer industry has seen the
implementation of the nutrient based subsidy (NBS) scheme for
phosphatic and potasic fertilizers with the Government fixing the
subsidy upfront and allowing the producers to fix the farm gate prices.
The NBS policy is aimed at lowering the subsidy outflow and promote
balanced use of fertilizers. Despite price hikes as a result of NBS,
there has been an encouraging demand for these fertilizers.
On the Urea front the country has seen a hike of 10% in MRP and subsidy
is still computed as per the New Pricing scheme.. In the recent budget
proposals the government is considering extension of NBS scheme to
cover Urea. Direct cash transfer of subsidies is being envisaged and a
Task force has been set up to work out the modalities of the system.
The implementation of the NBS for the Urea sector may be a welcome step
for the industry in the long run as a market driven system will improve
efficiencies. The Government needs to address key issues like gas
availability and pricing and urgently draw up a comprehensive long term
policy to attract investments in this vital sector.
ENVIRONMENT, SAFETY AND AWARDS
Environment
Your Company continues its mission of protecting the environment and
has inculcated the concept right down the organization.
Your Company in its quest to continue to protect the environment
undertook rain harvesting projects at various locations in the Plant.
The statutory compliance of the Company on environmental matters are
being complied from time to time.
Safety
Your Company on March 11, 2011 completed 11 million accident free man
hours for the first time since inception.
Your Company also completed the Process Safety Management System and
undertook actions for obtaining accredition RC 14001 towards
responsible care management.
Awards
Your Company during the year bagged various prestigious awards, such
as:
Best Management Award from the Government of Andhra Pradesh, FE - EVI
Green Business Leadership Best Performer Award for 2009 -10 from M/s.
Financial Express & Emergent Ventures India Limited, ICC Award - 2010
from Best Water Resource Management for the year 2009, Award for
Excellence in Safety for the year 2009 and Platinum Award by the Jury
of Economic Times and India Manufacturing Excellence Award for the year
2010.
RESEARCH AND DEVELOPMENT
Your Company has undertaken technology development in Research &
Development in areas of Plant Nutrition Solutions Technology Platforms
and Fuels and Feedstocks.
In the area of Plant Nutrition Solutions Technology Platforms, your
company has initiated programmes in the areas of plant nutrition use
efficiency with reference to macro, micro and supplements. After a
thorough technology gap analysis on a need base; some of the programme
identified are for in-house development, some through sponsored
research and some licensing technology at early stage to do the pilot
plant and scale up.
In areas of Fuels and Feedstocks, your company with the support of DBT
in the first phase of Process Development Unit (PDU 1) implementation
has developed infrastructure such as instruments, equipments, manpower
to undertake necessary experiments and also draw-up project milestones.
EMPLOYEE WELFARE ACTIVITIES
Your directors in order to ensure high employee morale, commitment,
good working environment and differentiate the company from others,
intends to provide best employee welfare measures so as to ensure
retention of the scarce talented manpower.
Your directors in this direction, have set-up NFCL Employee Welfare
Trust, which will provide welfare benefits to the employees and their
families through the returns received from the investments made in
various securities.
The promoters and their families will not be eligible to receive any
benefits from the Trust.
POLICY MATTERS
Your companys endeavor has always been to maintain high levels of
transparency and accountability to its stakeholders. In this direction,
various policies mentioned in the Corporate Governance Report have been
put in place to enable the stakeholders to appreciate the various
interventions the company has taken in areas connected with the
stakeholders of the company.
The implementation of these policies are reviewed periodically by the
Board of Directors and updated from time to time.
The Company has set up a Grievance Redressal Mechanism for all its
associates. The Grievance Redressal Mechanism is aimed to redress the
grievances of associates expeditiously to ensure good working
atmosphere and culture in the organization.
CORPORATE GOVERNANCE
Your company driven by a desire to be more competitive and recognized
globally had inculcated more than a decade ago, the rules that define
ethical business, much before it was introduced as statutory compliance
through Clause 49 of the Listing Agreement.
Your company firmly believes that building a culture of compliance is
more than meeting regulations and standards. Your company is always
proactive in meeting mandated standards and practicing corporate
governance in spirit and not just the letter of the law.
A report on Corporate Governance along with the Practicing Company
Secretarys Certificate on its compliance is annexed hereto. Your
Company is happy to inform you that there were no adverse remarks /
qualifications/ reservations raised in the Corporate Governance Report.
DISCLOSURE IN TERMS OF SECURITIES AND EXCHANGE BOARD OF INDIA
(SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997
The list of persons constituting Group of your company (within the
meaning as defined in the Monopolies and Restrictive Trade Practices
Act, 1969) for the purpose of availing exemption from applicability of
the provisions of Regulation 10 to 12 of Securities and Exchange Board
of India (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 ("the said Regulations"), as provided in Clause 3(1)(e) of the
said Regulations:
Mr. K S Raju, Mr. K Rahul Raju, Mrs. K Lakshmi Raju, Mrs. K Renuka
Raju; Nagarjuna Management Services Private Limited, Nagarjuna Holdings
Private Limited, Fireseed Limited, Nagarjuna Corporation Limited, Baron
Properties Private Limited, White Stream Properties Private Limited,
Growth Stream Properties Private Limited and NCL Enterprise LLP.
DIRECTORS
In accordance with the Articles of Association of the company, Shri
Ashok Chopra, Shri S R Ramakrishnan and Shri Chandra Pal Singh Yadav,
retire at the forthcoming Annual General Meeting and being eligible,
offer themselves for re-appointment.
Shri A Dayakar Reddy, Joint Secretary to Government, Industries &
Commerce Department, Govt, of Andhra Pradesh, was nominated with effect
from August 26, 2010 by Government of Andhra Pradesh as Nominee
Director in place of Shri B Sam Bob, IAS. Shri Sunil Sharma, IAS, has
been nominated by Government of Andhra Pradesh as Nominee Director with
effect from January 10, 2011 in place of Shri A Dayakar Reddy.
IFCI Limited has nominated Shri S P Arora to the Board of Directors of
the Company in place of Shri B B Tandon with effect from January
10,2011.
ICICI Bank Limited has nominated Shri Yogesh Rastogi as their Nominee
Director on the Board of your company with effect from March 4, 2011.
Shri P P Singh, Director (Technical) of the company ceased to hold
office as Director with effect from February 24, 2011.
The Board of Directors had placed on record their appreciation of the
services rendered by Shri B Sam Bob, Shri A Dayakar Reddy, Shri B B
Tandon and Shri P P Singh, during their term as Directors of the
company.
AUDITORS AND AUDIT REPORT
M/s. M Bhaskara Rao & Co., Chartered Accountants, Hyderabad, the
companys auditors retire at the conclusion of the ensuing Annual
General Meeting. They have signified their willingness to accept re-
appointment and have further confirmed their eligibility under Section
224 (1B) of the Companies Act, 1956.
The companys Statutory Auditors have also furnished us a certificate
from the Peer Review Board of the ICAI confirming that they have
undergone the process of peer review.
The company has a well established system of Internal Audit which
carries out audit on Risk Management framework which covers the entire
gamut of financial, marketing, plant operations and other service
functions.
The companys Internal Audit function has obtained Quality Management
System (ISO 9001 : 2000) certificate in December 2006 and the same has
been confirmed.
COST AUDITOR
Pursuant to Section 233 B of the Companies Act, 1956 the Central
Government has directed that the cost accounts maintained by the
company be audited by a cost auditor. Subject to the approval of the
Central Government, the company has appointed Shri Dantu Mitra, Cost
Accountant, as the Cost Auditor of the company for the financial year
2011 -2012.
SUBSIDIARY COMPANIES
During the year under review, your company incorporated a wholly- owned
subsidiary in Mauritius on April 20, 2010, under the name and style of
Nagarjuna Mauritius Private Limited (NMPL) to enable the company
undertake its various overseas operations.
NMPL incorporated a wholly-owned subsidiary in Kenya under the name and
style of Nagarjuna East Africa Limited (NEAL) on October 15, 2010 to
undertake operations in Kenya. NMPL is yet to make any investment in
the equity of NEAL.
The Ministry of Corporate Affairs, New Delhi, vide Circular
No.5/12/2007- CL-III dated February 8,2011 granted general exemption
under Section 212(8) of the Companies Act, 1956 in relation to
providing information on the subsidiary companies provided certain
conditions are fulfilled.
Pursuant to the said circular, the Board of Directors of the company
gave their consent for not attaching the Balance Sheets of the
subsidiary companies to the Annual Accounts of your company.
Accordingly, the Balance Sheets and other financial statements relating
to the following companies are not attached to the Annual Accounts of
the company.
1. Jaiprakash Engineering and Steel Company Limited (JESCO)
2. Nagarjuna Oil Corporation Limited (NOCL)
3. Kakinada Fertilizers Limited (KFL)
4. Nagarjuna Mauritius Private Limited (NMPL)
5. Nagarjuna East Africa Limited (NEAL)
Any member seeking information on any of the subsidiary companies may
write to the company to enable the same to be forwarded.
Jaiprakash Engineering and Steel Company Limited (JESCO) Your company
is considering implementing various Infrastructure projects to utilize
the available land appropriately and gainfully.
Nagarjuna Oil Corporation Limited (NOCL)
Nagarjuna Oil Corporation Limited, your companys subsidiary, is
setting- up 6 million metric tons per annum refinery project at
Cuddalore, Tamil Nadu. NOCL has made substantial progress.
During the previous year, the project cost of the Refinery Project was
revised to Rs.6960 crores. An amount of Rs.4158 crores (provisional)
has been spent by NOCL on the Refinery Project as of March 31,2011.
The financial institutions have approved the increased project cost and
the tie-up for the additional equity is in advanced stage with
prospective investors.
NOCL has made substantial progress on various fronts such as
engineering activities for all the relocated units, civil work,
offsites and utilities, infrastructure and marine facilities.
Kakinada Fertilizers Limited (KFL)
KFL was set-up to carry out activities relating to manufacturing /
trading of urea and other fertilizers. Your company shall be merged
with KFL during the current year and KFL shall carry on the fertilizer
business of your company. KFL will be renamed as Nagarjuna Fertilizers
and Chemicals Limited after the scheme of merger is approved.
Nagarjuna Mauritius Private Limited
Nagarjuna Mauritius Private Limited (NMPL) is a wholly owned subsidiary
of NFCL with a paid up capital of Euro 5 Million with an object of
investing in stocks, funds, shares, securities, foreign currencies or
other investments. The Company has invested Euro 5 Million which has
been reinvested in Nagarjuna Spawnt GmbH, Germany, in the form of
equity (24%) and balance as loan.
Nagarjuna Spawnt GmBH, Germany, is in the process of setting-up a plant
for manufacture of silane chemicals of 15 tons per annum capacity in
two stages of 7.5 ton capacity each. The erection of the plant is
expected to be completed by the second half of the financial year and
pre-commission activity shall be completed thereafter.
Nagarjuna East Africa Limited
Nagarjuna East Africa Limited, a wholly owned subsidiary of Nagarjuna
Mauritius Private Limited was incorporated in Kenya on October 15,2010
to market plant nutrients in the initial stages followed by Micro
Irrigation systems at later stage in Kenya.
DISCLOSURES
Disclosure in terms of Companies (Particulars of Employees) Rules, 1975
and Companies (Disclosure of particulars in the Report of the Board of
Directors) Rules, 1988 in respect of conservation of energy, technology
absorption, earnings and outgo of foreign exchange are attached and
forms part of this Report.
AUDIT COMMITTEE CONSTITUTION
In compliance with the provisions of the Section 292A of the Companies
Act, 1956 and the listing agreement entered into with the stock
exchanges, the Company had constituted an Audit Committee consisting of
highly qualified and experienced members from various fields. The
committee consists of four independent Directors and one Whole-time
Director.The Chairman of the committee Dr. N C B Nath, is an
Independent Director and the committee meets periodically to review the
quarterly financial statements and recommends its findings to the Board
apart from taking action independently whenever required. The Statutory
Auditors, Secretary and the Internal and Cost Auditors attend and
participate in the Audit Committee Meetings.
The Audit Committee comprises of
Dr. N C B Nath Chairman, Independent Director
Shri B K Batra Member & Independent Director
Shri S R Ramakrishnan Member & Independent Director
Shri M P Radhakrishnan Member & Independent Director
Shri K S Raju Member & CMD
CORPORATE SOCIAL RESPONSIBILITY
"A Journey of thousand miles starts with a single step".
The Nagarjuna Group always has the desire to play a proactive role in
the development of society. With an idea of taking a long journey to
bring positive change in the lives of many, we at the Nagarjuna Group
under the aegis of Nagarjuna Foundation started two years ago several
CSR activities.
An initiative started in the year 2009 with the spirit of making a
difference, has today deepened its roots and given the enthusiasm of
making a bigger impact and changing many more lives tomorrow.
The dedicated support, strength, initiative and encouragement from the
associates of the Group to be part of this initiative with their
contribution gave impetus to the movement.
Your company made significant contributions of around Rs.70 lakhs
towards education, sports, health care and community welfare under the
aegis of Nagarjuna Foundation during the year and collaborated with
various leading organizations in this regard.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956,
Your Directors hereby report:
a. that in the preparation of Annual Accounts for the year ended March
31, 2011, the applicable accounting standards have been followed.
b. that the Directors have selected such accounting policies and
applied them consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as at March 31. 2011 and of profit and loss
account for the period ended March 31, 2011.
c. that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
d. that the Directors have prepared the Annual Accounts on a going
concern basis.
ACKNOWLEDGEMENT
Your Directors place on record their gratitude to the Government of
India, Government of Andhra Pradesh and Government of Tamil Nadu and
the financial institutions and companys bankers for their assistance
and co-operation.
Further, the company places on record its sincere appreciation for the
continuing support and unstinting efforts of investors, dealers and
associates in ensuring an excellent all round operational performance.
On behalf of the Board
K S Raju
Chairman & Managing Director
Hyderabad
April 28, 2011
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