The Directors have pleasure in presenting this 36th Annual Report
together with Audited Statements of Accounts of the Company for the
year ended 31 st March, 2012.
Summary of financial results: (Rs. in Crore)
Particulars 2011-12 2010-11
Income from Operations 3,862.01 2,845.89
Other Income 30.09 143.56
Total Income 3,892.10 2,989.45
Total Expenditure 3,310.58 2,466.84
Profit before Depreciation, Finance Cost and Tax 581.52 522.61
Depreciation 130.53 121.11
Finance Cost 33.59 20.26
Profit Before Tax (PBT) 417.40 381.24
Provision for Taxes (Net) 133.56 114.71
Net Profit for the year 283.84 266.53
Balance brought forward
from previous year 564.41 456.58
Amount available for Appropriation 848.24 723.11
Proposed Dividend 54.40 50.51
Tax on Dividend 8.82 8.19
Transferred to General Reserve 300.00 100.00
Balance carried to Balance Sheet 485.02 564.41
YEAR IN RETROSPECT
Your company achieved a sales turn-over of Rs.3,862.01 Crore compared
to Rs.2,845.89 Crore in the previous Financial Year, registering an
increase of 35.70%. The turnover was higher mainly on account of
increased volume of production and increased sales realization. Profit
Before Tax was higher at Rs.417.40 Crore as against Rs.381.24 Crore of
the previous financial year, registering an increase of 9.48%. Profit
After Tax was also higher at Rs.283.84 Crore as against Rs.266.53 Crore
of the previous financial year, registering an increase of 6.49%.
The Company is presently implementing CAPEX programmes under its
Corporate Plan which will entail substantial expenditure. In order to
part finance the CAPEX programmes, it is necessary to retain some
profits for generating internal accruals. Keeping in view the
Company''s performance, need for capital for its Growth Plan and to
ensure that the shareholders of the Company get sustained return on
their investments, your Directors have recommended a higher dividend @
35%, for the financial year ended 31st March, 2012 as against 32.5% for
the previous financial year ended 31st March, 2011. On its approval,
the dividend payout will work out to Rs.63.22 Crore, including tax on
dividend of Rs.8.82 Crore. This amounts to 22.27% of the Net Profit.
Your company earned Net Profit of Rs.283.84 Crore for the year 2011-12.
After adding thereto Rs.564.41 Crore being the balance of Profit & Loss
Account brought forward from the previous year, amount available for
appropriation is Rs.848.24 Crore. Directors have recommended a Dividend
@ 35% for the financial year 2011-12, which will entail payout of
Rs.63.22 Crore, including tax on Dividend. The Company proposes to
transfer Rs.300 Crore to General Reserve. An amount of Rs.485.02 Crore
is proposed to be retained in the Statement of Profit & Loss.
The Company has achieved all-round satisfactory performance during the
year. Members will be happy to know that during the year under review,
three new plants viz. 300 MTD WNA-II, 150 MTD CNA-III and 33 MW CPSU
Plants have been commissioned.
The Company achieved impressive production performance during 2011-12.
Most plants of the Company were operated at over 100% capacity
utilization. Ammonia Plant produced 5,49,502 MTs of Ammonia with
capacity utilization of 123.35%, Urea Plant produced 7,01,572 MTs of
Urea with capacity utilization of 110.15%, Formic Acid Plant produced
19,656 MTs of Formic Acid with capacity utilization of 196.56%, Acetic
Acid Plant produced 1 ,56,023 MTs of Acetic Acid with capacity
utilization of 156.02%, Weak Nitric Acid (WNA)-I Plant produced
2,83,504 MTs of WNA with capacity utilization of 114.55%, Ammonium
Nitrophosphate Plant (ANP) produced 1,96,394 MTs of ANP with capacity
utilization of 137.82%, Aniline Plant produced 39,597 MTs of Aniline
with capacity utilization of 113.13%, Toulene Di-Isocyanate (TDI) Plant
produced 17,727 MTs of TDI with capacity utilization of 126.62%.
Production of Acetic Acid, Formic Acid, Methyl Formate and TDI was
adjusted to maximize contribution based on availability of Carbon
Monoxide. Production of WNA and CNA was planned as per the market
condition. Methanol- I & II Plants were not operated at their full
capacity and Methanol Synthesis Unit (MSU) was not operated in view of
high cost of production of Methanol coupled with its lower sales
realization. Production of Calcium Ammonium Nitrate (CAN) was contained
to suit the requirement of ANP production / sale of AN Melt. AN Melt
being more remunerative, it was sold directly to the extent possible
rather than using the same for producing CAN.
The Company achieved a commendable performance in the sale of
Fertilizers and Industrial Chemicals. The Company sold in aggregate
10.85 Lacs MTs of Fertilizers, (both manufactured and traded) during
the year. 7.43 Lacs MTs of Fertilizers constituting 69% of the total
sales were sold in the primary marketing zone comprising the Home State
Gujarat and the adjoining States - Maharashtra, Madhya Pradesh and
Rajasthan. The Company continued the trading activities in imported
Urea, imported MOP and SSP. In addition to the manufactured
Fertilizers, the Company sold 37,021 MTs of imported Urea, 30,873 MTs
of imported MOP and 30,456 MTs of SSP.
The chemical market continued its recovery from the Global meltdown.
Almost all the Industrial Products performed well in terms of
realization during the year. The Company sold in aggregate 8,49,761 MTs
of Industrial Products during financial year 2011-12 vis-a-vis 7,84,592
MTs of Industrial Products sold during financial year 2010-11,
registering an increase of 8.31%. The Company during financial year
2011-12 exported in aggregate 1 31 0 MTs of Industrial Products
registering an increase of 22.19% over the previous year.
78 new records were established during the year in terms of production,
marketing and despatch.
(a) Projects under Corporate Plan
As informed to you last year, of the total 14 projects taken- up for
implementation by the Company under its Growth Plan, 8 projects were
completed by 2010-11 at a total cost of Rs.432.05 Crore. During the
year, three more projects viz. WNA-II, CNA-III and CPSU Projects were
completed and commissioned, at a cost of around Rs.596.25 Crore. Wet
Sulphuric Acid Project has been abandoned. Remaining two projects viz.
TDI Project and Ethyl Acetate Project are under implementation. An
action plan was chalked out last year for the speedy implementation of
these projects. With the committed and concerted efforts, the TDI
project is expected to be mechanically complete by March, 2013 and
Ethyl Acetate Project is expected to be mechanically complete by
As per the policy of Government of India, the Company is also
implementing Ammonia Plant Feed Stock Conversion Project. This project
is scheduled to be commissioned by September, 2012.
(b) New Initiatives :
With a view to accelerating its growth momentum going forward, the
Company is continuously looking for opportunities of business avenues
in India and abroad.
Formulation of a new Urea Investment Policy by Government of India is
in the offing aimed at boosting the production of Urea - India''s most
widely used Fertilizer. The Company is actively considering setting-up
a world scale Ammonia ~ Urea facility.
Major raw materials for Methylene Diphenyl Di-isocyanate (MDI) are
Aniline, Formaldehyde, Carbon Monoxide and Chlorine. The Company has
the required infrastructure for setting up MDI Project. As such, as a
forward integration, the Company is considering putting-up MDI Project.
The Company has approached the technology suppliers for tie- up. The
Company has also initiated actions for sourcing the technology to take
care of the higher requirement of Aniline, which is the main raw
material for MDI.
The Company has joined hands with a renowned Engineering Company of
India for providing the Project Management Services for relocation of
Ammonia ~ Urea Plant from Alaska to Nigeria. The Company has signed an
Agreement with M/s Chematur AB, (CEAB) Sweden, to provide commissioning
assistance / technical services for CEAB''s projects world-wide.
Considering the Company''s experience of successfully absorbing
technology from variety of sources, its technical personnel are
providing commissioning services for TDI, Methanol and other plants in
China, Iraq, Myanmar, Iceland, Iran, etc.
The Company is considering to have overseas offices in Middle East,
Africa and South East Asia.
(n) Code Solutions - IT Division :
(n) Code Solutions, the IT Division of the Company issued 7,51,194
Digital Signature Certificates during the financial year 2011-12,
registering a growth of over 300% over the previous year and completed
23,502 tenders, registering a growth of around 59% over the previous
year. (n) Code recorded highest ever sales of Rs.73.10 Crore during
2011-12 registering a growth of 43% over the previous year.
(n) Code won four prestigious awards for its project on Mineral
Administration implemented for Commissionerate of Geology and Mining,
Government of Gujarat and Department of Mining and Geology, Government
The primary nutrients viz. Nitrogen (N) Phosphatic (P) Potash (K) and
Secondary Nutrient, Sulphur (S) in NPK Fertilizers covered under NBS
Policy introduced by the Government of India (GoI) effective 1st April,
2010 shall be eligible for the NBS during 2012-13. GoI has vide its
Office Memorandum dated 29.3.2012 announced per kg NBS for nutrients,
N, P, K & S for the year 2012-13 with effect from 1st April, 2012. In
terms of the said NBS Policy applicable to the Company''s product, the
Company was free to decide selling price of ANP in the market.
Considering the market scenario, the prices of ANP were increased
gradually. With the de-regulation of prices of all the Fertilizers,
excepting Urea, the market has become very competitive. The Company has
been able to benefit from such de-regulation of prices. The Company
increased prices of ANP and CAN during the year by taking advantage of
its brand equity.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions of sub section (2AA) of Section 217 of the
Companies Act, 1956, your Directors hereby confirm that -
- in the preparation of the Annual Accounts for the year 2011-12, the
applicable Accounting Standards have been followed and there are no
- they 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 31 st March, 2012 and of the profit of the Company
for the financial year;
- they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956.
They confirm that there are adequate systems and controls for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities; and
- they have prepared the Annual Accounts on a going concern basis.
As per the requirement of Clause 49 of the Listing Agreement, a Report
on Corporate Governance together with the following are attached
herewith and form part of this Annual Report:
- Declaration on the Code of Conduct.
- Certificate from the Practising Company Secretary with regard to
company''s compliance with the conditions of Corporate Governance.
MANAGEMENT DISCUSSION & ANALYSIS
Management Discussion & Analysis on the business and operations of the
Company is attached herewith and forms part of this Annual Report.
DEMERGER OF V-SAT / ISP GATEWAY BUSINESS
Hon''ble High Court of Gujarat has vide its order dated 15th June,
2012 approved the Scheme of Arrangement and Demerger for transfer of
V-SAT / ISP Gateway Business of the Company to ING Satcom Ltd., an
unlisted Company. The Scheme of Arrangement and Demerger will become
finally effective upon the transfer of Licenses for V-SAT / ISP Gateway
Business by the competent authority to the name of ING Satcom Ltd.
The Company has not accepted any Fixed Deposit during the year. No
amount on account of principal or interest on Fixed Deposits was
outstanding as on the date of Balance Sheet.
The properties and insurable assets and interest of your Company such
as buildings, plant & machinery and stocks amongst others, are
adequately insured. As required under Public Liability Insurance Act,
1991, your Company has also taken necessary insurance cover.
The position with respect to Board of Directors since the last Annual
Report is as follows:
- Shri Atanu Chakraborty, IAS, Director of the Company was appointed
to hold the additional charge of Managing Director of the Company
during the absence of Shri AM Tiwari, IAS, Managing Director of the
Company, on election duty from 11th January, 2012 to 9th March, 2012.
- In terms of the provisions of the Companies Act, 1956, Shri GC
Murmu, IAS, holds office up to the date of forthcoming AGM of the
Company. The Company has received a Notice in writing from a Member
under Section 257 of the Act, along with requisite deposit proposing
appointment of Shri GC Murmu as Director of the Company at the
- In pursuance of the provisions of Articles of Association of the
Company as also of the provisions of the Companies Act, 1956, S/Shri
Dr. Ashok Shah and Dr. TT Ram Mohan retire by rotation at the
forthcoming AGM and they are eligible for reappointment.
- Shri MM Srivastava, IAS on reaching superannuation, has retired
from the services of Government of Gujarat effective 31st July, 2012.
He has tendered his resignation as Director of the Company w.e.f. 31st
INFORMATION REGARDING CONSERVATION OF ENERGY, ETC., AND PARTICULARS OF
Information required under Section 217(1) (e) of the Companies Act,
1956, read with Rule (2) of the Companies (Disclosure of particulars in
the Report of Board of Directors) Rules, 1988 and information as per
Section 217 (2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, as amended from time to time,
are given in Annexure - ''A'' & ''B'' respectively forming part of
AUDITORS AND AUDITORS'' REPORT
In pursuance of the provisions of the Companies Act, 1956, M/s Deloitte
Haskins & Sells, Chartered Accountants, Ahmedabad, who are the
Statutory Auditors of the Company, hold office up to the conclusion of
the forthcoming Annual General Meeting and they are eligible for
Notes to Accounts forming part of the Audited Financial Statements are
self explanatory and need no further explanation. There are no
qualifications or adverse remarks in the Auditors'' Report, which
require any clarification / explanation.
The Board of Directors has appointed Shri Shirish V Diwanji, Cost
Accountant of M/s Diwanji & Associates, Vadodara, as the Cost Auditor
of the Company to conduct the Audit of the Cost Accounts in respect of
the manufacturing of fertilizers and other related manufacturing
activities carried out by the Company, for financial year 2012-13 under
the Cost Accounting Records (Fertilizer Industry) Rules, 2011.
The Company has e-filed the Cost Audit Report for the financial year
2010-11 with the Ministry of Corporate Affairs, (Cost Audit Branch) on
24th September, 2011. The due date of filing the said report was 27th
Industrial relations during the year under review have remained
extremely cordial and harmonious. Your Directors convey their high
sense of appreciation for the contribution made by the employees at all
levels. A fresh Long Term Wage Settlement has been entered into with
the Employees'' Union for the period from 1st July, 2010 to 30th June,
2014 on the expiry of previous settlement.
The Directors wish to place on record their deep sense of gratitude for
the support received from the Government of India and the Government of
Gujarat. We take this opportunity of extending our wholehearted thanks
to all our Consumers, Dealers, Customers, Banks, Business Associates,
SEBI, NSDL, CDSL, Stock Exchanges and other Agencies for their
continued support and co-operation. The Directors are also thankful to
the valued Investors for strengthening their bond with the Company.
For and on behalf of the Board of Directors,
Place: Gandhinagar A K Joti
Date : 08-08-2012 Chairman