To the Members,
The Directors are happy to present the 68th Annual Report and Audited
Accounts of the Company for the year ended 31st March 2012.
Your Directors are pleased to report that your company has achieved
highest ever turn over of Rs.2937 crore and earned a profit of Rs.19.80
crore in the financial year 2011-12.
All time High Sales Turnover
All time Record Sales of Gypsum
Profit of Rs.19.80 crores
Increase in networth
Reduction in interest and finance charges
Improvement in working capital position
Increase in sales of Urea and Organic Fertilizers
Awards and Recognition from National Safety Council
PERFORMANCE - FINANCIAL, PRODUCTION AND SALES
A. FINANCIAL / Rs. lakh
1 Revenue from operations 287604.83 246072.63
2 Other Income 3670.17 3059.91
3 Total Revenue 291275.00 249132.54
4 Total Expenses 289295.19 253244.06
5 Profit Before Tax 1979.81 (-) 4932.67
6 Tax Expenses Nil Nil
7 Profit After Tax 1979.81 (-) 4932.67
Due to the accumulated loss, your Directors are not recommending any
dividend for the year 2011-2012.
B. PRODUCTION / In Tonnes
1 Factamfos 20:20 622256 644454
2 Ammonium Sulphate 163468 200311
3 Caprolactam 37854 44345
C. SALES / In Tonnes
1 Fertilisers 834580 932670
2 Caprolactam 40963 44136
The performance of the company during the year 2011- 12 was
satisfactory. The company was able to maintain the production and sales
at a reasonable level and earn a marginal profit. Financial results of
the company for the year 2011-12 shows a Profit of Rs.19.80 crore as
against the loss of Rs.49.32 crore during the year 2010-11.
During the financial year 2011-12, the company has faced several
constraints in the production and marketing front.
The production of finished products has come down during the year under
review as compared to the previous year. The main reason for adverse
variation in production is constraint in the availability of Phosphoric
Acid and the unexpected shutdown of ammonia plant on account of Carbon
Di-oxide absorption section failure. The lower production has resulted
in lower sales volume.
Low production and sales volume have affected the financial performance
of the company. Steep increase in the prices of raw materials and
intermediates has also affected the financial performance of the
company adversely. Due to aging of plants, the company continues to
incur considerable amount towards repairs and maintenance. The adverse
impact of the exchange rate variation has also affected the
profitability of the company. The adverse effect of exchange rate
variation in the financial year 2011-12 is Rs.12.38 crore as against a
favourable effect of Rs.11.32 crore during the year 2010-11.
However, marginal reduction in the interest and finance charges,
improvement in the working capital position and net-worth are the
silver lines in the performance of the company in the financial front.
As compared to the previous year, the company is able to achieve a
reduction of Rs.6.63 crore in the interest and finance charges. This is
due to the lower utilization of bank limit and the reduction in
interest rates. The net-worth of the company has also increased to
Rs.161.48 crore as against a net-worth of Rs.141.69 crore as on 31.3.2011.
In order to improve the turnover and profitability, the company is
concentrating also on marketing of traded products. During the year
2011-12, FACT has handled 56696 MT of imported Urea and 39430 MT of MOP
at Cochin Port.
Prior to the financial year 2007-08, in the absence of viable market
for Gypsum, the company did not value Gypsum stock in the books of
accounts. Based on the qualification of the statutory auditors during
2007-08, the company started valuing Gypsum stock at net realizable
value considering the estimated sales quantity of 5 years, out of the
total stock available with the company. Based on the qualification of
statutory auditors with regard to valuation of Gypsum on the accounts
of 2010-11, opinion of Expert Advisory Committee of the Institute of
Chartered Accountants of India was obtained as advised by the Principal
Director of Commercial Audit and Ex-Officio Member Audit Board.
Accordingly, the company has valued the entire saleable quantity of
Gypsum as against the 5 years sales quantity.
To promote Integrated Plant Nutrient Management, FACT is expanding the
sale of organic manure to the States of Kerala and Tamil Nadu. During
the year 2011- 12, FACT has sold 5150 MT of organic manure. The company
has sold 36772 MT Bagged Gypsum in the year 2011-12 compared to 38051
MT during the year 2010-2011. The company has plans to sell 50,000 MT
of bagged Gypsum during the year 2012-2013.
The performance of the company during the first quarter of the
financial year 2012-13 is not encouraging. The shut down of plants
during April and May 2012 for Annual Maintenance has affected the
production of finished products. Constraints in the availability of
Phosphoric Acid continue to affect the production performance of the
company for the year 2012-13. However, during the first quarter the
production of Factamfos in Cochin Division was higher compared to the
corresponding quarter of the previous year.
The company expects some improvement in performance in the coming
months and expects to end the financial year 2012-13 with positive
The additional compensation for use of Naphtha in the production of
Ammonia has been allowed by the Government only upto 31.3.2012. The
company expects Government notification on additional compensation for
use of Naphtha in the year 2012-13 also.
Your Directors are pleased to inform you that the Joint Venture Company
- FACT-RCF Building Products Limited – has started commercial
production with effect from 1st June 2012.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A Management Discussion and Analysis Report covering the operational
aspects during the year 2011-2012 is enclosed.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Sec.217(2AA) of the Companies Act, 1956, your Directors
that in the preparation of annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
that the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2012 and of the profit of the company
for the period from 1st April 2011 to 31st March 2012.
that the directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act, for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
that the annual accounts have been prepared on a going concern basis.
REPORT ON CORPORATE GOVERNANCE
Your Directors are pleased to state that your Company has been
practicing the principles of good Corporate Governance. The Board lays
emphasis on transparency and accountability for the benefit of all
stake-holders of the Company. Report on Corporate Governance in
accordance with the listing agreement is annexed to this report.
STATUTORY AUDITORS, COST AUDITORS
M/s. Babu A.Kallivayalil and Co., Chartered Accountants, Kochi, was
re-appointed as Statutory Auditors of the Company for the year 2011-12
by the Comptroller and Auditor General of India. M/s. R.Sadasivan and
Co, Chartered Accountants, Chennai was appointed as Branch Auditors for
Tamilnadu and Kerala area and M/s. Ramanatham and Rao, Chartered
Accountants, Hyderabad was re-appointed as Branch Auditors for
Karnataka and Andhra Pradesh area of the Company for the year 2011-12
by the Comptroller and Auditor General of India.
M/s. Sukumaran & Co., Cost Accountants, Thiruvananthapuram has been
appointed as Cost Auditors of the Company for the year 2011-12.
Comments of Statutory Auditors
The Statutory Auditors in their report has made certain comments on the
Accounts of the Company for the year 2011-12. The replies to the
comments of Statutory Auditors are annexed to this report.
DIRECTORS RETIREMENTS & APPOINTMENTS
Government of India, Ministry of Chemicals and Fertilisers, Department
of Fertilisers, vide Order No.130/ 8/2003-HR-1 dated 8th August 2011
notified the appointment of Dr.V.Rajagopalan, Additional Secretary &
Financial Adviser, Department of Fertilisers and Shri S.C.Gupta, Joint
Secretary (F&P), Department of Fertilisers, as Part-time Official
Directors on the Board of FACT.
Government of India, Ministry of Chemicals and Fertilisers, Department
of Fertilisers, vide Order No.86/ 3/2009-HR-1 dated 29th November 2011
notified the appointment of Shri P.K.Chandrasekharan as Director
(Marketing) on the Board of FACT.
Pursuant to Government of India, Ministry of Chemicals and Fertilizers,
Department of Fertilizers Order No.130/ 8/2003-HR-I dated 8th August
2011, Shri Satish Chandra, Director, ceased to be a Director on the
Board of Directors of FACT.
On completion of the 3 years term, Ms.Pratibha Karan, Shri
T.M.Jeyachandran, Shri.Khan Masood Ahmad, Prof. R.K.Mishra and
Dr.B.S.Ghuman, Non-official Part-time Directors of the company were
retired from the Board of FACT on 03.10.2011.
Dr.B.Bodeiah and Shri S.Balan, Non-official Part-time Directors were
retired from the Board of FACT with effect from 04.03.2012 on
completion of three years.
The Board place on record its appreciation of the valuable services
rendered by Shri Satish Chandra, Ms.Pratibha Karan, Shri
T.M.Jeyachandran, Shri.Khan Masood Ahmad, Prof. R.K.Mishra,
Dr.B.S.Ghuman Dr.B.Bodeiah and Shri S.Balan.
In line with the Provision of Section 292(A) of the Companies
(Amendment) Act 2000 and Clause 49 of the listing agreement with Stock
Exchange, an Audit Committee of the Board has been constituted.
The total amount of Fixed Deposits as on 31st March 2012 was Rs. 4073.13
lakh. As on 31-03-2012, 27 depositors have not claimed their deposits
amounting to Rs. 24.76 lakh.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information regarding the conservation of energy, technology
absorption, adaptation & innovation and foreign exchange earnings
and-outgo required as per Section 217(1) (e) of the Companies Act, 1956
is set out in a separate statement attached to this report and forms
part of it.
EMPLOYEES PARTICULARS, REMUNERATION ETC.
During the year no employee had received remuneration within the
purview of Section 217(2A) of the Companies Act, 1956.
Your Directors gratefully acknowledge the valuable guidance and support
extended by the Government of India, Department of Fertilisers and the
State Governments of Kerala, Tamilnadu, Karnataka and Andhra Pradesh.
The Directors deeply appreciate the committed efforts put in by the
employees and look forward to their dedicated services and endeavour in
the years ahead to enable the Company to scale greater heights.
The Directors also acknowledge the continued support extended by the
Shareholders, Depositors, Dealers, Suppliers and Customers of the
Company, the Press and Electronic Media.
For and on behalf of the Board of Directors.
Sham Lal Goyal
Chairman and Managing Director
Date: August 23, 2012