The Directors have pleasure in presenting the 27th Annual Report on
the business and operations of the Company together with audited
accounts for the financial year ended March 31, 2012.
1. Financial Results and Appropriations
(Rs. in crore)
Particulars 2011-12 2010-11
(a) Turnover (excluding excise duty) 6455.13 4647.43
(b) Gross Profit after Finance Cost
but before Exceptional Items,
Depreciation and Tax 821.71 704.38
(c) Depreciation / Amortization 262.08 267.95
(d) Profit before Exceptional
Items and Tax 559.63 436.43
(e) Exceptional items - 4.37
(f) Profit before Tax 559.63 440.80
(g) Provision for Current Tax 127.48 159.93
(h) Provision for Deferred Tax 184.86 (44.31)
(i) Profit after Tax 247.29 325.18
(j) Balance of Profit Brought Forward 960.54 759.65
(k) Transferred from Debenture
Redemption Reserve - 3.12
(l) Profit available for Appropriation 1207.83 1087.95
- Tonnage Tax Reserve - 0.50
- General Reserve 50.00 35.00
- Proposed Dividend on Equity Shares 79.08 79.08
- Tax on Dividend 12.83 12.83
(n) Balance Carried Forward to
Balance Sheet 1065.92 960.54
The financial year under review was a year of opportunities coupled
with challenges. The performance of the Fertiliser Division of the
Company was commendable both in terms of profitability and revenue.
However, the Shipping and Textile Divisions have suffered due to
overall dismal market scenario.
The Company has achieved highest ever production and sales of Urea.
Similar uptrend was observed in volumes and profitability from the
trading activity. The Company has expanded its market reach by setting
up its marketing office at Aurangabad which will cater to Maharashtra
The Shipping Business has seen one of the worst years with bunker rates
increasing sharply and asset and freight rates falling substantially.
The time charter activity has also remained sluggish due to downturn in
the market. This has severely impacted the performance of the Shipping
business. The Company has six vessels (5 double hull and one single
hull aframax tankers). The Company plans to dispose off the single hull
vessel which is more than 23 year old.
During the year, the Shipping Division of the Company has opted out of
Tonnage Tax Scheme under the Income Tax Act, 1961 and will be assessed
under the normal tax regime w.e.f. April 01, 2011. Consequently, the
Company has ascertained deferred tax liability on the difference
between the written down value of the fixed assets pertaining to the
Shipping Division as per books of accounts and the Income Tax Act, 1961
as on April 1, 2011 amounting to Rs.184.21crore which has been
accounted for during the year. This non cash accounting charge has
impacted the net profit of the Company during the Financial Year
The Textile Division has faced high volatility in prices of raw
material and yarn, movement of both the prices not being in tandem. The
export markets have also remained sluggish during the year under
review. All these factors have affected the performance of the Textile
The detailed information on all the three business segments of the
Company and the respective industries are given in the Management
Discussion and Analysis Report attached as Annexure G to this report.
The Board recommends dividend @ Rs. 1.90 per equity share of Rs. 10
each (Previous Year - Rs. 1.90 per equity share). The total outgo on
this account will be Rs. 91.91 crore including dividend distribution
4. ''Corporate Governance Report'' and Code of Conduct Your Directors
confirm their ongoing commitment for adhering good corporate governance
practices. Corporate Governance Report is attached as Annexure E.
Auditors'' Certificate confirming compliance with the conditions of
Corporate Governance is enclosed as Annexure D and Declaration of the
Managing Director confirming compliance with the ''Code of Conduct and
Ethics'' is enclosed as Annexure F.
5. Joint Venture
Indo Maroc Phosphore S. A., Morocco (IMACID)
IMACID is a joint-venture of your Company established in Morocco. The
Company has a 33.33% shareholding, together with two other equal
partners - Tata Chemicals Limited and OCP, Morocco. IMACID is engaged
in the manufacture of phosphoric acid (P2O5) which it exports to India
primarily to Tata Chemicals Ltd and Zuari Industries Ltd for
manufacture of granulated DAP and NPK fertilizers.
During 2011, the Company witnessed the highest ever production of
429,622 MT of P2O5 against a design capacity of 430,000 MT P2O5 . Sales
during the year 2011 were 4,12,950 Mt of P2O5 against the previous year
sales of 355,977 MT. During the year 2011, IMACID achieved revenue of
MAD 3325 million (Rs. 2096.33 crore) against revenue of MAD 2284.07
million (Rs. 1246.69crore) achieved during the year 2010. IMACID earned
profit after tax of MAD 366.49million (Rs. 231.06 Crore) during the
year 2011 as against MAD 181.86 million (Rs. 99.26 crore) in the year
Strong financial performance and cash reserves facilitated payout of
MAD 450 million (Rs.277.70 crore) as a special Dividend to its
shareholders in March 2012 apart from dividend of MAD 62 million (Rs.
38.26 crore) paid during the Year 2011.
However, the plant has been shutdown from January 2012 onwards (except
operations for some period in February 2012) due to adverse market
conditions for its product. This opportunity was utilized to carry out
crucial repairs to plant and equipment. The plant operations continue
to remain suspended and shall start once the market conditions improve.
(i) Chambal Infrastructure Ventures Limited and its Subsidiaries
Chambal Infrastructure Ventures Limited (CIVL) was incorporated by
your Company to venture into Power business. CIVL had established two
down stream wholly owned subsidiaries viz. Chambal Energy
(Chhattisgarh) Limited and Chambal Energy (Orissa) Limited for setting
up power projects in the states of Chhattisgarh and Odisha,
respectively. CIVL is in the process of identifying suitable land
parcels for its project in Odisha and matter is being pursued with the
concerned authorities. There was not much progress in its power project
endeavors in the state of Chhattisgarh.
(ii) CFCL Overseas Limited, Cayman Islands and its Subsidiaries
CFCL Overseas Limited is a wholly owned subsidiary of your Company and
a holding entity for software business. CFCL Technologies Limited, a
main entity which controls the entire software business, is a
subsidiary of CFCL Overseas Limited. CFCL Technologies controls its
software business through down stream subsidiaries mainly in USA and
The year 2011 was a year of consolidation for software business in
achieving a significant stabilization of the operating margin and
profitability. Software business made significant interventions and has
successfully contained losses in the business from first three quarters
of the year 2011. Revenue of Software business dropped from USD 128.65
million in 2010 to USD 92.85 million in 2011, primarily attributed to
the decision to consciously terminate pure onshore accounts that had
significantly depressed operating margins. The Software Business
continued to make significant strides with continued focus on
operational efficiency, cost cutting, organization building and
consolidation which have enabled the Company to turn EBITDA positive
from July - September quarter of 2011 onwards.
CFCL Technologies and its subsidiaries follow the January to December
Financial Year. The software business as a whole incurred a net loss of
USD 19.98 million during the year 2011 as against net loss of USD 26.28
million incurred in the year 2010.
(iii) India Steamship Pte. Limited, Singapore and its Subsidiary
India Steamship, Singapore does not own any vessel and operates through
in-chartered vessels. During the year, the international shipping
markets remained subdued forcing India Steamship, Singapore to contain
its operations. The company operated an in-chartered vessel during
first few months of the year 2011-12 and did not hire any vessel
thereafter. India Steamship International FZE, UAE was incorporated
during the year as a 100% subsidiary of India Steamship, Singapore at
Hamriyah, Sharjah, UAE where tax regulation is liberal. The new entity
has not yet commenced its operation.
During the year 2011-12, India Steamship, Singapore have earned a
revenue of USD 2.89 million and incurred a loss (after tax) of USD 0.24
(iv) India Steamship Limited, India (ISL)
ISL has been incorporated on April 01, 2011 as subsidiary of your
Company. During the year, there was not much activity in ISL.
Exemption: The Government of India vide its circular dated February 08,
2011 granted general exemption to the companies from attaching with
Annual Report, the copies of the Balance Sheet, Profit and Loss
Account, Board of Directors'' Report and Auditor''s Report of its
subsidiaries. The Consolidated Financial Statements presented by the
Company include the financial information of its subsidiaries, as
applicable. The Company will make available the Annual Accounts of its
subsidiaries along with relative detailed information upon request by
investors of the Company or its subsidiaries. The Annual Accounts of
the subsidiaries will be available for inspection by any shareholder at
the corporate office of your Company and respective subsidiaries.
7. Health, Safety and Environmental Protection
Health, Safety and Environmental protection has been given utmost
priority since inception of your Company. With the objective of
maintaining the highest Health, Safety, Environmental & Quality (HSEQ)
standards, your Company has established and is maintaining an
Integrated Management System (for Occupational HSEQ) based on OHSAS-
18001:2007, ISO-14001:2004, ISO-9001:2008 and Process Safety Management
system. The year 2011-12 was an accident free year. Your Company has
achieved 9.03 million man hours (654 days) accident free working.
(a) Health & Hygiene
Your Company accords highest priority to health & hygiene of its
employees and associates. Health assessment and occupational disease
monitoring of employees and associates is done through periodic medical
examinations. The Company''s medical officer who is additionally
trained in Occupational Health conducts a survey to properly assess the
needs and appropriate proactive actions are taken.
A well equipped medical centre in the campus at Gadepan works round the
clock to provide Health Services to employees, associated contractor
work force, their families and villagers in the vicinity of the plants.
New equipment and services are added to continuously upgrade the health
care. The plant and processes are continuously upgraded to improve work
place and health standards.
Necessary training was imparted to the employees and workers to enhance
their awareness towards health related matters. Some of our employees
are certified first-aiders. Many officers of the Company have been
imparted fast track emergency response training on first aid and
(b) Safety Management
A strong occupational-health and safety management system
OHSAS-18001:2007 is in place in your Company to ensure safety of
employees, contractor workforce as well as equipment and machinery. The
township at Gadepan is also OHSAS-18001:2007 certified. Your Company
has implemented Process Safety Management System (PSM) developed by
Occupational Safety & Health Administration,
USA (OSHA) in its operation for proactive identification, assessment &
control of hazards. PSM is not mandatory but was adopted by your
Company to fulfill its quest for highest safety standards in its
operations. Process incidents were reviewed as per PSM guidelines and
trainings and audits were conducted for overall improvement.
In order to keep its safety system agile and updated, extensive
trainings were conducted by internal & external expert faculties on
rescue, fire fighting & emergency handling, electrical safety, material
handling, road safety, etc.
The scheme of Near- Miss & Make-to-Good reporting is in place in
your Company which not only creates awareness among the workforce but
also gives an opportunity to identify and correct possible safety
concerns. The safety reward system has been reviewed and widened
during the year to further strengthen the safety culture in the
Company. To improve safety work culture and bring reduction in injuries
more and more workers of associated contractors were involved in safety
promotional activities & trainings.
As a special drive, a safety improvement project has been undertaken by
your Company for bagging plant in association with a consultant. The
concept of Behavior Based Safety (BBS) has been introduced and is
working satisfactorily through selected BBS Champions. During shutdown
maintenance, extensive safety trainings and supervisions were conducted
by associating experts. Personal Protective Equipments (handgloves,
dust mask, ear plugs, etc) were provided free to all contract workers.
Various initiatives were taken by your Company towards overall safety
improvement, such as adding new safety & emergency handling equipments,
additional safety procedures, visitors'' safety film, screening of
Environment, Health and Safety (EHS) documentary for township
residents, pictorial booklet depicting dos & don''t for bagging plant,
fire alarm system upgradation, etc.
Your Company has a well-defined Onsite Disaster Management Plan. The
flip chart defining roles & responsibilities of key personnel was
reviewed, revised & updated during the year. Regular mock drills & fire
drills were conducted to check the emergency preparedness. The Company
executives regularly visit near-by companies and consultations are held
with them to share information and learn from each other''s experience
(c) Environment Management
Environment protection is a top priority for the Company management.
The urea & ammonia production activities and the township at Gadepan is
ISO-14001:2004 certified. Extensive environmental monitoring is
carried out to ensure effective environment management. The endeavors
of the Company for environment protection are as under:
(i) Sustainable Development - Your Company is totally committed to
sustainable development and has completed various environment related
programmes like Rain Water Harvesting, Ground Water Recharging, Energy
Conservation measures, Pollution Control, Use of Solar Energy, etc.
(ii) Waste Management - Your Company continues to follow the 3R concept
(Reduce, Re-use and Re-cycle) for waste management. Almost 100%
condensates are recycled back to system. Treated waste water is used
for maintaining green belt through a 65 kilometer long irrigation
network spread all over the complex.
Your Company has adopted best practices to manage solid/ hazardous
waste disposal after proper categorization. Segregation of waste is
ensured at source and separate bins have been created for collection of
various categories of waste. Horticulture & domestic waste is converted
to manure & used in the green belt. Recyclable waste is disposed to
recyclers and all saleable items are sold to approved recyclers. Use of
polythene bags is strictly prohibited in the Gadepan campus for many
(iii) Green belt- The area surrounding Gadepan complex is experiencing
a positive change in Ecology due to development of a dense green belt /
forest inclusive of around 2.0 lac trees in an area of about 212
hectares. This has provided habitat to more than 100 species of birds
which includes more than 700 peacocks.
(iv) Water conservation-Your Company continuously works on various
water optimization measures as our area is water scarce. Water audits
and studies have been conducted through experts to explore more avenues
of water conservation. Special efforts have been made in optimization
of cooling water, fire water network, drinking water & de-mineralised
water. The trend of consumption shows a continual improvement with the
specific consumption of water at 4.82 cubic meters per MT of urea this
year, as against 4.92 cubic meters per MT of urea during 2010-11, which
is one of the best in the fertiliser industry. Water consumption norms
for fertiliser industry is 8.0 cubic meters per MT of urea.
(d) Quality Management
Your Company is ISO 9001:2008 certified and adequate attention is
accorded by your Company to maintain quality of end product and
processes. Stringent monitoring of defined parameters of quality is
(e) Health, Safety, Environment & Quality (HSEQ) Audits Teams of
trained internal auditors regularly conduct HSEQ audits with special
emphasis on health & hygiene, house keeping, safety, environment and
quality. HSEQ systems are periodically audited by various external
agencies of repute in line with your management approach of continual
improvement. Surprise visits are conducted to plant and canteen to
ensure highest standard of housekeeping & hygiene. Ammonia Storage
safety systems have been upgraded based on review by the designer and
Risk based Inspection is under progress. To extend and improve safety
culture among our marketing team, all our Regional Marketing Offices
have been audited during the year and staff has been trained on safety.
Your Company regularly participates in awards and national &
international benchmarking surveys for independent assessment which in
turn provides an opportunity for improvement. Your Company has received
following prestigious awards during the year under review:
- Environment Protection award for the year 2010-11 and 2009-10
from Fertiliser Association of India (FAI).
- National Award for Excellence in Water Management 2011 from
Confederation of Indian Industries (CII) under the category Beyond the
- National Award for Excellence in Energy Management-2011 from CII.
- Rajasthan Energy Conservation Award 2011.
- Special commendation, Golden Peacock Award for Sustainability-2011.
8. Corporate Social Responsibility (CSR)
Your Company is committed towards the development of neighboring areas
for improving the quality of life. To initiate and sustain meaningful
actions in this regard, your Company has formed KK Birla Memorial
Society to consolidate all Corporate Social Responsibility (CSR)
activities. The Company has taken number of initiatives for the
community development in consultation with local administration at the
village, block and district levels.
The Company''s CSR program is designed as per participatory planning
process to involve stakeholders for sustainable development of the
area. The focus of the Program is on formation and livelihood trainings
of SHGs (Self Help Groups), Health & Hygiene, Human Health Care,
Sanitation, Farmers education on Agriculture & animal husbandry,
Livestock vaccination & breed improvement etc. Your Company has taken
following initiative under the program:
Your Company has initiated a project to improve sanitary practices
through awareness campaigns and construction of toilets. Your Company
has constructed 313 individual toilets for Below the Poverty Line
families last year and another 402 toilets were constructed this year.
Your Company has also constructed 1 0 girls'' toilets in 1 0 Government
(b) Community Health Care
The Company operates a mobile Health Care Unit manned by a doctor and
nursing assistant in 14 surrounding villages. Ambulance facilities are
also provided to community round the clock for taking patients to Kota
hospitals in emergency situations. During this year, 222 such cases
were attended through ambulance facility.
During the year, 34,741 people were treated for different diseases. The
Medical Center in Gadepan campus provides free service to people from
surrounding areas. The Company regularly organizes free medical camps
by inviting specialists for attending various ailments and 2862
patients benefited during the year under this program.
The Company is extending quality education to children from contiguous
villages through Chambal Fertilisers DAV School (CFDAV). Over 47%
students in this school are from such villages. During the year, CFDAV
was upgraded to class 10th standard and got affiliated with Central
Board of Secondary Education (CBSE).
Your Company has recently adopted 24 primary & upper primary government
schools of nearby 22 villages under Public Private Partnership Scheme
of Government of Rajasthan. This initiative shall extend quality
education to more children and shall endeavour to check drop out rates
especially among girls.
Your Company adopted Government Industrial Training Institutes (ITI) at
Sangod during 2010-11. The Management of the ITI is run by the Company
and nearly 100 students were placed with the corporates after
completion of their ITI course. The company is upgrading the
infrastructure of the ITI and it is planning to start 4 new courses
from the academic year 2012-13.
(d) Rural Infrastructure
The Company has developed rural infrastructure by constructing pavement
roads, drains, school boundary walls, community centers, crematoriums
in Karadia, Simliya, Ballabhpura Gadepan, Ballabhpura, Bambhori and
(e) Reporting on triple bottom line performance
With the aim to assess its Corporate Sustainability performance and
initiatives, the Company had commenced reporting, annually, on its
triple bottom line performance from Financial Year 2009-10. The Company
has published A sustainability report for the financial year 2010- 11
in accordance with Global Reporting Initiative (GRI) guidelines. The
sustainability report is externally assured by Ernst & Young Private
Limited. The report gives a bird''s eye view on Sustainability
performance of the Company and also offers an opportunity to assess and
improve its sustainability initiatives.
9. Disclosure of Particulars
Your Company believes that improvement is a journey with new milestones
to be achieved on continuous basis. The Company makes continuous
efforts to make the plants as energy efficient as possible and reviews
various schemes to conserve energy on regular basis. The requisite
information with regard to conservation of energy, technology
absorption and foreign exchange earnings and outgo in terms of the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is set out in Annexure A attached hereto.
Information required to be furnished in Form A is not applicable to
shipping industry. However, it is ensured that every measure is taken
to save and conserve energy at all stages of operation of the vessels
as well as in shore office. The Company has 6 Aframax Tankers out of
which 5 are double hull and these ships are more energy efficient as
compared to the old vessels. The Shipping Division has no information
to furnish in Form B regarding technology absorption.
10. Investor Service Centre
The In-house Investor Service Centre of your Company located at New
Delhi, continues to provide prompt investor service through quick
resolution of investor grievances. The motto of ''high investor
satisfaction'' is being pursued through pro-active actions like reaching
out to investors regularly, timely reminders to investors about new
corporate benefits, undelivered shares, unclaimed benefits, etc.
The equity shares of your Company are listed at National Stock
Exchange of India Limited and BSE Limited. The Company has paid annual
listing fees to these Stock Exchanges for the year 2012-13.
The members are requested to refer to general shareholders'' information
given in Corporate Governance Report appended to this report.
11. Fixed Deposits
Your Company has discontinued accepting new deposits with effect from
July 1, 2008. As on March 31, 2012, your Company had 21 depositors with
fixed deposits of Rs. 5.73 lac, who have not claimed their Fixed
Deposit amount despite being reminded regularly.
12. Employee Stock Option Scheme
The members of the Company had approved Employee Stock Option Scheme
2010 (ESOS 2010) on August 27, 2010 for issue and allotment of
options exercisable into not more than 41,62,000 equity shares of face
value of Rs. 10/- each to eligible employees and Managing Director of
the Company. Each option when exercised would be converted into one
fully paid up equity share of Rs. 10 of the Company. The ESOS 2010 is
administered by the Compensation Committee of the Board of Directors of
the Company. Disclosure pursuant to the provisions of the Securities
and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 is given in Annexure - B.
Information in accordance with Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
forms part of this Report and is attached hereto as Annexure C.
The Board has eight non-executive directors and a Managing Director.
Two directors namely M/s. Dipankar Basu and C.S. Nopany are due for
retirement by rotation at the forthcoming Annual General Meeting. M/s.
Dipankar Basu and C.S. Nopany are eligible and have offered themselves
for re-appointment. Ms. Radha Singh is also retiring at the
forthcoming Annual General Meeting of the Company. These directors are
not related to any other directors of the Company.
The Company has received a notice in writing together with requisite
deposit from a member proposing the appointment of Ms. Radha Singh as a
Director of the Company, liable to retire by rotation.
Other information on the directors is provided in Corporate Governance
Report annexed to this Report as Annexure E.
The Notes on Accounts read with the Auditors'' Reports are self
explanatory and therefore, do not call for any further comments or
M/s. S. R. Batliboi & Co., Statutory Auditors and M/s. Singhi & Co.,
Branch Auditors of Shipping Business of the Company, are retiring at
the conclusion of the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment. The above
re-appointments, if made, will be in accordance with the provisions of
Section 224 (1B) of the Companies Act, 1956.
The Board of Directors of the Company appointed M/s. K.G. Goyal &
Associates, Cost Accountants for conducting audit of cost accounts of
the Fertiliser Division of the Company for the financial year 2010-11
and 2011-12. The Company has filed the Cost Audit Report for the
financial year 2010-11 with the Ministry of Corporate Affairs,
Government of India on September 1, 2011 as against the last date of
filing on September 27, 2011.
16. Directors Responsibility Statement Your Directors hereby report:
a) that in the preparation of the annual accounts, the applicable
accounting standards have been followed alongwith proper explanation
relative to material departures;
b) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as at March 31, 2012 and of the profit of the
Company for the year ended March 31, 2012;
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
d) that the Directors have prepared the annual accounts on a going
concern basis; and
e) that the Company has adequate internal systems and controls in place
to ensure compliance of laws applicable to the Company.
17. Consolidated Financial Statements
In accordance with ''Accounting Standard 21 - Consolidated Financial
Statements'', the consolidated financial statements form part of this
Report & Accounts. These consolidated financial statements also
incorporate the ''Accounting Standard 27 - Financial Reporting of
interest in Joint Ventures'' issued by the Institute of Chartered
Accountants of India. The consolidated financial statements have been
prepared on the basis of audited financial statements received from
subsidiaries and joint venture entity.
Your Directors wish to place on record their appreciation of the
assistance and co-operation received from the Department of
Fertilisers, Government of India, State Governments, domestic and
International Financial Institutions & Banks and other stakeholders,
whose continued support and co-operation has been instrumental in
enabling the Company to achieve its goals. Your Directors also wish to
place on record their sincere appreciation of the unstinted devotion,
hard work and commitment of every employee of the Company.
By order of the Board
Place : New Delhi S. K. Poddar
Date : May 12, 2012 Chairman