Over the last three years since 2015-16, NFL has tried to reinvent itself in terms of its priorities with twin objective of helping the farmers getting all products and services under one roof and creating increased value for our shareholders with these efforts.
During a Corporate Introspection in the year 2015, it was realised that to thrive, even to survive, company must be able to rapidly transform itself or to be contended with a linear growth with its traditional approach. Accordingly, the business priorities were carefully chosen and executed through a combination of core renewals. As a result of this paradigm shift, your company successfully increased its non-urea business from 1 % in 2014-15 to 15 % in 2017-18 with an expanded product line which includes Urea, DAP, MoP, NPK, APS, Bentonite Sulphur, Compost, Bio Fertilizers, Seeds and Agro Chemicals besides increased sale of various types of Industrial products.
Your Company performed commendably against the backdrop of a challenging fertilizer industry scenario. The primary fertilizers sale in country saw a growth of around 2% in 2017-18, due to low systemic inventory maintained by the fertilizer companies in view of pan-India implementation of Direct Benefit Transfer (DBT). The overall sales for Urea and Non-urea fertilizers have grown at a rate of 2%, after a 7% decline witnessed in 2016-17. With nationwide implementation of Direct Benefit Transfer (DBT), the working capital cycle of the industry was also disturbed due to the shift in subsidy payment from point of dispatch to point of sale to farmers. The build-up of input tax credits under GST also lead to increase in working capital requirement of the industry owing to different rate of taxation on fertilizers and taxation on inputs. The innovative effort of the Government to pack the urea in 45 Kg. bag in place of earlier 50 Kg. bag in the light of increased effectiveness of Neem Coated Urea is likely to bring down urea consumption. The consumption of organic fertilizers like compost will take off with inclination of the Government to promote its use.
Though the year gone by was marked by challenges on several fronts, your company has maintained its best-ever performance even in 2017-18, the third successive year in a row. The company recorded its best-ever production by prilling more than 38 Lakh MT Urea with 118% capacity utilization. Other than best production, your company crossed 43 Lakh MT fertilizer sale figure for the first time this year.
To increase its market share in fertilizers with the aim of strengthening top and bottom line, your company imported significant volume of fertilizers like DAP, MoP, NPK, APS, Bentonite Sulphur to the tune of 4.59 Lakh MT, an increase of more than 100% over the previous year. Your company also imported 4.01 Lakh MT of urea on Govt, account during 2017-18. With the starting of own production of Bentonite Sulphur plant at our Panipat Unit, your company has added another product in its basket in 2017-18. These efforts finally paid off as growth in the overall business was well supported by the robust growth witnessed in the new segments and your company recorded its best-ever turnover of Rs. 8,928 crore in 2017-18, an increase of 16.8% over the previous year.
Riding on the highest-ever sale of urea and traded fertilizers, your company witnessed improved profitability and PBT went up to Rs. 335 crore in 2017-18, the best-ever in last fifteen years. This is after keeping the provisions of Rs. 246 crore for pay revision and increase in the gratuity ceiling. The non-urea segment has significantly helped the company in increasing the profitability as the income from this segment has risen tenfold from just 1.5% in 2014-15 to 15 % in 2017-18.
Your company is focusing on segments other than fertilizers considering them as future growth catalysts. The Company is scaling up its seed production under Seed Multiplication Programme (SMP) to provide certified quality seeds to farmers under its brand name. The company has increased its seed sowing area tenfold to 2100 hectares in 2017-18 from 198 hectares in 2015-16. The company has also developed a 16 acre dedicated R&D farm at Nangal Unit which exclusively produces best quality foundation seeds from breeder seeds by ensuring best isolation techniques to avoid any varietal impurities. Your company also sees potential in its Agro chemicals Business as sale of Rs. 10 crore was recorded in this segment in 2017-18 against Rs. 50 Lakh in 2016-17.
Our strategy is to maintain our strengths in Urea production and marketing while growing the Imports and Agri Business. We are investing in some of the projects for growth and sustainability. To meet the strict energy norms applicable from 2020-21, your company is already in the process of implementing energy saving schemes at all its plants with a total investment of Rs. 1000 crore.
As you are aware, your company is setting up a new urea plant at Ramagundam through a JV Company, RFCL. The unique feature of this project is that it is being set up with the lowest project cost in the country for similar capacity. The project has picked up pace and hectic construction activities are going on. Though there would be delay of few months due to delay in procurement of few critical equipment’s and a major delay in commissioning of gas pipeline. Your company has, however, started strengthening its marketing network in southern states with an objective to prepare itself to market
Ramagundam urea. Your company is also extending its HR expertise to RFCL by supplying experienced technical manpower from NFL in addition to recruitment and training of fresh manpower of RFCL under a Manpower Management Agreement, which will also generate revenue for the company in next five years for these services. Your company is also earning revenue by leveraging its HRD infrastructure in plants for long term technical training to the manpower of leading fertilizer companies from outside India. To bring improvement and transparency in various business processes, your company is implementing ERP based Integrated Software Solution.
Your company is also re-aligning its working and priorities to achieve rapid socio-economic transformation of the country in line with the Country''s “Vision 2022”. The company has undertaken an elaborate exercise for redefining its role and functioning and has finalized an action plan for the same. Your Company is aspiring to be amongst Top 100 Companies of India by the year 2022 based on its growth projections.
In this eventful journey of your company in the midst of volatile business environment, I express my gratitude for your continued support and unshaken faith in our endeavours.
I would like to place on record my sincere appreciation to the Board of Directors for their guidance. I would also take the opportunity to acknowledge the support of Deptt. of Fertilizers, Statutory Authorities, Vendors and other stakeholders for their invaluable contribution in shaping the growth of your company.
I would also like to thank all my colleagues in company for their unflinching dedication, commitment and contribution to take NFL forward. The team strived tirelessly to deliver the best-ever results for three years in a row.
With the confidence reposed by all of you, we are looking forward to continue on our vision in a manner that develops trust and enhances the long term value for all stakeholders.
With best regards,
Registered Offfice : (Manoj Mishra)
Scope Complex, Core-Ill, Chairman & Managing Director
7, Institutional Area, Lodhi Road,
New Delhi-110003 DIN : 06408953
Date : 3rd August, 2018