Dear Members,
 
 The Directors are pleased to present your Company''s Forty Fourth Annual
 Report together with the audited statement of accounts for the year
 ended March 31, 2011.
 
 FINANCIAL HIGHLIGHTS
 
                                                     (Rs. Crores)
 
                                                2010-11      2009-10
 
 Sales (including other income)                 2523.83      2081.73
 
 EBITDA                                          159.06       130.61
 
 interest                                          18.14        23.44
 
 Depreciation                                     28.88        18.37
 
 Profit before Tax before exceptional items       112.04        88.80
 
 Loss on sale / diminution in value
 of Fertilizer Companies GOI Special Bonds            -         4.27
 
 Profit before Tax                                112.04        84.53
 
 Provision for Tax                                34.50        28.04
 
 Profit after Tax                                  77.54        56.49
 
 Net Worth                                       485.10*      429.61*
 
 * includes Revaluation Reserve of Rs. 86.12 Crores and Rs. 88.35 Crores
 respectively.
 
 DIVIDEND
 
 The Board of Directors recommended a dividend of Rs. 1.20 per equity
 share ofRs. 10/- each.
 
 PERFORMANCE
 
 2010-11 was a yet another year of growth and improved performance, with
 your Company registering the highest ever turnover and Profit Before
 Tax (PBT). Your Company achieved a record sale of One Million Metric
 Tonnes of fertilizers for the second year in a row. Sales (including
 other income) of your Company for the year 2010-2011 was Rs. 2523.83
 Crores compared to Rs. 2081.73 Crores in the previous year, registering
 a growth of 21%. The PBT at Rs. 112.04 Crores was higher compared to
 Rs. 84.53 Crores during the previous year, representing an increase of
 33%.
 
 PRODUCTION
 
 Urea
 
 Your Company achieved production of the full re-assessed capacity of
 3,79,500 MTs.
 
 Di-Ammonium Phosphate (DAP) and Complex Fertilisers
 
 Your Company achieved production of 2,23,552 MTs of Phosphatic
 Fertilizers during the year compared to 2,82,173 MTs in the previous
 year. The lower production is on account of erratic and inadequate
 supplies of phosphoric acid.
 
 Ammonium Bi-carbonate (ABC)
 
 Your Company achieved full capacity production of 15,330 MTs of ABC.
 
 SALES
 
 During the year, your Company sold 3,79,442 MTs of Urea compared to
 3,83,338 MTs in the previous year. Sales of manufactured Phosphatic
 Fertilizers was 2,24,938 MTs compared to 2,80,413 MTs in the previous
 year. Sales of imported products registered significant growth, with
 imported Phosphatics at 2,07,320 MTs compared to 1,74,670 MTs in the
 previous year. Sales of Muriate of Potash was 88,052 MTs compared to
 57,435 MTs in the previous year.
 
 SULPHONATED NAPHTHALENE FORMALDEHYDE (SNF)
 
 In line with the Company''s growth objective, a state-of-the-art plant
 with an annual production capacity of 21,450 MTs of liquid SNF was
 commissioned in August 2010. SNF is predominantly used in the
 construction chemical industry for manufacture of super plasticizer.
 The product samples were sent to leading customers for field trials and
 were well accepted. The liquid and powder forms of SNF were released to
 the market with the trade names ChemCF NL and ChemCF NP respectively.
 During the year, 4400 MTs of liquid SNF were produced.
 
 INTEGRATED NUTRIENT MANAGEMENT (INM)
 
 The country is facing a serious problem of deterioration in soil
 productivity. Indiscriminate and unbalanced use of N.P.K fertilizers
 over the years and inadequate use of other nutrients essential for
 plant growth are amongst the main reasons for the loss in soil
 productivity.
 
 Improvement in soil productivity and maintenance of the soil fertility
 can be achieved by the adoption of an Integrated Nutrient Management
 (INM) approach. Having been actively associated with the farming
 community for over 3 decades, your Company believes it has a key role
 to play in helping the farmers to achieve higher productivity as well
 as superior quality of farm produce.
 
 NM encompasses soil health management, water management, plant
 nutrition and plant protection. Your Company has been engaged in
 imparting extensive and continuous education to farmers and channel
 partners on the need to practice INM techniques, so that all the
 essential nutrients are made available in time at every stage of crop
 growth.
 
 To help the farmer achieve this objective, over the last few years, MCF
 has been developing and introducing Plant Nutrition (PN) products that
 are required for achieving root and shoot growth, more fowering, higher
 fruit and seed setting, improved quality and extended shelf-life of the
 produce.
 
 Some of the crop specific PN products developed at the Company''s R&D
 unit in Hassan and introduced during the year include Mangala Tur
 Special and Mangala GT Booster for Tur, and Ginger & Turmeric crops,
 respectively. Mangala Cotton Special and Mangala Chilli Special for
 
 Bt. Cotton and Chilli crops are ready for introduction. These products,
 in addition to improving tolerance to crop specific diseases also lead
 to better quality and higher productivity. The response from the crop
 growers on the effectiveness of these products has been very positive
 and there is a growing demand for development of similar products for
 other crops.
 
 In order to increase the coverage under its Integrated Nutrient
 Management program, your Company introduced two unique concepts viz.
 Mangala Mitra and Mangala Saathi. Under Mangala Mitra, opinion leaders
 in the villages are identifed and enrolled to educate fellow farmers on
 various aspects of crop cultivation. Under the Mangala Saathi, the
 
 key channel partners are identifed and are given special attention for
 promoting INM awareness.
 
 All these efforts have led to the Company achieving a turnover of
 Rs.100 Crores during the year compared to about Rs. 62 Lakhs achieved
 during the year 2002-2003 when the INM concept was frst introduced.
 
 In order to meet the increasing demand for PN products, your Company
 has set up a Specialty Fertilizer manufacturing facility at its factory
 in Mangalore, to produce Water Soluble Fertilizers and Micronutrient
 Mixtures. The plant with an annual capacity of 12,000 MTs was
 commissioned in April 2011. Another facility to produce 10,000 MTs per
 annum of soil conditioners is under construction and will be
 commissioned during the current financial year.
 
 PLANT PROTECTION CHEMICALS
 
 As part of its diversification and growth strategy and in order to offer
 a wider range of agri inputs, your Company introduced Plant Protection
 (PP) Chemicals in July 2010. As an entry strategy, a collaborative
 approach was adopted, with your Company marketing the products of
 reputed pesticide companies through its channel partner network.
 During the first 9 months of operations, the business registered an
 impressive turnover of Rs. 12 crores. In the current financial year
 2011-2012, in addition to the above arrangement, your Company also
 plans to launch its own brand of PP products for a few select
 molecules.
 
 WORKING CAPITAL
 
 During the year, the domestic production of fertilizers and import of
 fertilizers were almost at the same level as in the previous year. In
 order to meet its working capital needs, your Company also availed of
 short term loans from banks that carried lower rate of interest
 compared to normal cash credit limits. Settlement of subsidy claims was
 also relatively better during the year. All these factors and efficient
 working capital management contributed to reduction of interest costs.
 
 FERTILIZER POLICY
 
 Stage -III of the New Pricing Scheme (NPS) for Urea announced by the
 Government of India in March 2007 lapsed on March 31, 2010. As the new
 policy is yet to be finalized and announced, the existing scheme has
 been extended provisionally until further orders.
 
 As per the existing policy, all Naphtha/Furnace Oil/LSHS based units
 were to convert to gas by March 31, 2010. However, this time limit is
 expected to be extended upto 31.03.2013 by Government of India, for
 which an official communication is awaited. A Gas Sale Agreement has
 been entered into with Indian Oil Corporation for supply of RLNG from
 Kochi Terminal of Petronet LNG Limited and a Gas Transmission Agreement
 has been signed with Gail (India) Limited. Based on latest indications,
 supply of gas to Mangalore is expected to commence by end 2012. Leading
 consultants have been engaged for the basic engineering study for gas
 conversion and for the power plant conversion from furnace oil to gas.
 Your Company has already placed orders with Wartsila, Finland for
 supply of Dual Feed/NG DG sets to be commissioned in two phases in
 April 2012 and in April 2013 without affecting the normal production of
 Urea.
 
 With effect from April 1, 2010, the government introduced a Nutrient
 Based Subsidy (NBS) policy for Phosphatic and Potassic fertilizers.  In
 terms of this policy, each nutrient content in fertilizer, is assigned
 a value and the aggregate of these values is considered to arrive at
 the concession rates. Under NBS, the government announces the rate of
 subsidy in advance for the full year thereby enabling higher import and
 sale of fertilizers to meet the market needs.
 
 SUBSIDIARY COMPANY
 
 MCF International Limited, the wholly owned subsidiary of the Company
 had filed a Scheme, for its amalgamation with the Company, before the
 Hon''ble High Court of Karnataka, with the effective date of April 1,
 2010.  This scheme of amalgamation has been sanctioned by the Hon''ble
 High Court on July 8, 2011.
 
 SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL
 
 Safety and Health
 
 The Company has obtained Occupational Health and Safety Management
 System Certification OHSAS 18001 as a part of its commitment to
 continual improvement. In addition to the periodic audits carried out
 under the integrated management system, a statutory safety audit was
 also carried out by cross functional internal auditors. DNV, the
 certification agency has recertified your Company''s OHSAS 18001 system,
 conforming to the latest 2007 version.
 
 Extensive training programs including rescue operations, usage of
 personal protective equipment, emergency management, safe handling of
 LPG at home, awareness training on near miss incident reporting, S,H&E
 management system, were organized for employees and regular mock drills
 were conducted to check the emergency preparedness. In addition, fre
 fghting training was conducted periodically to train the employees as
 well as contractors'' workman. Your Company received the Second Best
 Safe Industry award in the large sector, which was instituted by the
 Directorate of Factories and Boilers, Govt. of Karnataka.
 
 Environment & Pollution Control
 
 As an ISO 14001 certifed Company, many environmental management
 programs have been implemented. During the year, your Company installed
 waste water recovery facility to treat, recycle and reuse the entire
 quantity of sewage and process effuents, thereby achieving zero liquid
 effuent discharge.
 
 Your Company has also implemented a rain water harvesting system and
 sewage treatment plant at its township. The treated sewage water is
 used for gardening purpose. Continuing with its green initiative, the
 Company planted an additional 5000 saplings in the green belt area in
 its factory in Mangalore.
 
 In recognition of these efforts, your Company received the
 Environmental protection award for NP/NPK fertilizer plants for the
 year 2009-10 instituted by the Fertilizer Association of India.
 
 SOCIAL RESPONSIBILITY
 
 Your Company undertakes its Social Responsibility obligation in its
 true spirit and has always been actively engaged in the up-liftment/
 development of the communities in its operating territory. Your Company
 has formulated a comprehensive Corporate Social Responsibility (CSR)
 policy under which Rural Health and Rural Education have been the areas
 of specific focus during the year.
 
 In line with this philosophy, your Company formulated two schemes viz.
 Project Eye Care intended to prevent/eradicate eye related ailments
 in identifed rural areas and Mangala Akshara Mitra intended to
 provide basic facilities and infrastructure to rural schools to promote
 education and to make schooling a pleasant experience. These schemes
 were implemented in rural and remote locations in the Company''s
 operating territory for the benefit of the poor and needy.
 
 Under Project Eye Care two free eye camps each were conducted in
 collaboration with Justice K S Hegde Charitable Hospital at Sacharipete
 in Udupi district and Vogga village in Dakshina Kannada district during
 the year. Over 1000 people attended these eye camps of which about 150
 were recommended surgery, to be carried out free of cost by the
 hospital and about 650 people received free spectacles from your
 Company.
 
 A free diabetes detection and cardiac check-up camp was held in
 January, 2011 at the staff club of the Company''s colony for the benefit
 of poor and needy residing nearby. Over 100 persons benefited by the
 camp where ECG and ECHO tests were conducted free of cost.
 
 Under its Mangala Akshara Mitra program, the basic infrastructure
 that is required, but is lacking in identifed schools in remote
 locations, was provided by your Company. Those include, desks, tables,
 chairs, green boards, racks, cupboards, school bags, lunch plates,
 water glasses and computers. Ten government primary & higher primary
 schools located in the districts of Bellary, Bijapur, Chamaraja Nagara,
 Chickkaballapur, Dharwar and Gadag and about 4000 poor students were
 the beneficiaries under this project.
 
 In addition to the above, your Company organized various cultural
 activities, felicitated young sports persons, sponsored community
 development programmes, health awareness camps, sports events, and
 provided financial assistance, uniforms, computers and sanitation
 facilities to the neighborhood schools. During the year, your Company
 conducted several training programs, field demonstrations, crop seminars
 and krishi melas and organized rural sports and health camps for
 farmers/ channel partners.
 
 Representatives from the public, government and other public
 administrative bodies actively supported and participated in all the
 programs of the Company.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.
 
 A report in respect of conservation of energy, technology absorption,
 foreign exchange earnings and outgo as required under Section 217(1)
 (e) read with the Companies (Disclosure of Particulars in the Report of
 the Board of Directors) Rules, 1988, is set out as Annexure-1 to this
 report.
 
 PARTICULARS OF EMPLOYEES
 
 There were no employees, in respect of whom information in accordance
 with sub-section (2A) of Section 217 of the Companies Act, 1956, read
 with the Companies (Particulars of Employees) Rules, 1975, is to be
 provided.
 
 CORPORATE GOVERNANCE
 
 The Company has fully complied with the requirements relating to
 Corporate Governance as mandated by the Listing Agreements with the
 Stock Exchanges. A detailed report on Corporate Governance is contained
 in Annexure-2 to this report.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis report is annexed to this report
 (Annexure-3).
 
 DIRECTORS'' RESPONSIBILITY
 
 Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
 Directors confrm that:
 
 - the applicable accounting standards have been followed in the
 preparation of the annual accounts and there are no material
 departures.
 
 - the accounting policies are in conformity with those generally
 accepted and have consistently been followed and the judgements and
 estimates made 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 and of the Profit for the year under review.
 
 - proper and sufficient care has been taken 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.
 
 - the annual accounts have been prepared on a going concern basis.
 
 BOARD OF DIRECTORS
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Company''s Articles of Association, Mr. S R Gupte and Mr. N Sunder Rajan
 retire by rotation at the ensuing Annual General Meeting and being
 eligible, offer themselves for re-appointment.
 
 AUDITORS
 
 M/s.K.P.Rao & Company, Chartered Accountants, retire as Statutory
 Auditors of the Company at the conclusion of the ensuing forty fourth
 annual general meeting, and being eligible offer themselves for
 re-appointment.
 
 COST AUDITORS
 
 Mr. PR.Tantri, Cost Auditor has submitted the cost audit report for the
 financial year 2010-2011 which has been considered by your Directors.
 
 The Cost Audit Report for the financial year ended March 31, 2010 which
 was due for filing on September 30, 2010 was filed with The Ministry of
 Corporate Affairs on September 24, 2010.
 
 ACKNOWLEDGEMENT
 
 Your Directors wish to place on record their appreciation for the
 excellent performance of the employees of the Company during the year.
 
 Your Directors also express their gratitude to the bankers, government
 agencies, customers, business associates and shareholders for their
 co-operation and look forward to their continued support in the future.
 
                                   On behalf of the Board of Directors
 
 New Delhi                                                Vijay Mallya
 
 August 2, 2011                                               Chairman