Annual Report 2019 - 20

65TH ANNUAL REPORT 2019 - 20 REGISTERED OFFICE : 1st FLOOR, SEETHAKATHI BUSINESS CENTRE, 684 - 690, ANNA SALAI, CHENNAI - 600 006. TELEPHONE : 044 -28297855 FAX : 044 -28297407 BOARD OF DIRECTORS SHRI. SUNDEEP KUMAR NAYAK, IAS SHRI. B.S. NAKAI DR. U.S. AWASTHI Chairman SHRI. ARVIND AGARWAL, IAS SHRI. DILEEP SANGHANI SHRI. AMARJIT SINGH SAMRA Ms. SWATI MEENA NAIK, IAS SHRI. DEVINDER KUMAR SHRI. P.C. MUNSHI Ms. REENA KAISHING SHRI. SANTOSH KUMAR DASH, OAS (S) SHRI. S.C.MUDGERIKAR SHRI. M.MURUGAN SHRI. SHIVAKUMAR GOUDA PATIL DR. P.S.GAHLAUT Managing Director 3 BANKERS STATE BANK OF INDIA HDFC BANK LTD BANK OF BARODA PUNJAB NATIONAL BANK IDBI BANK LTD ICICI BANK LIMITED CANARA BANK AXIS BANK LTD INDIAN BANK INDUSIND BANK LTD DBS BANK LTD DEUTSCHE BANK AG AUDITORS Messrs. Price Waterhouse Chartered Accountants LLP 4 DIRECTORS’ REPORT (SBA) towards mid March 2020 which enabled reduction in interest outgo to a marginal extent The Directors have pleasure in presenting their and essentially deferred the subsidy to the next 65th Annual Report along with audited accounts fiscal year . of the Company for the year ended 31st March, 2020. SALES GENERAL The sales through point of sales (POS) is now a real indicator of actual fertilizer consumption. The onset of south-west monsoon was delayed and was weak in most parts of India in the The All India sales of Urea during the year initial period of current fiscal. Most of the states 2019/20 have shown a growth of 5.3% despite experienced deficit in the rainfall to the extent steps like neem coating and reduction of bag of 30 – 40% and this resulted in delay in sowing size from 50 Kg. to 45 Kg. which were expected and low consumption of fertilisers. to limit the excessive use of urea in some parts of the country. The sales of DAP, MOP and However, with a late surge in rains happened Complexes were also up by 15.6%, 1.9% and 9% around September 2019 and the distribution of respectively as compared to the previous year. such rainfall being uneven with considerable geographical and temporal disparities, the While urea sales of IPL are dependent on total situation has led to flooding in many regions imports by Department of Fertilisers (DOF), it is which considerably impacted kharif output, the sale of DAP and MOP which are decontrolled agricultural growth, damage to standing crops, fertilisers which is more relevant for bench rural sentiment and farmer’s income. The marking the performance of the Company. encouraging factor around that time was rise in The sales through point of sales (POS) for the reservoir levels which supported a brisk pace of company during April-March 20 for Urea is rabi sowing. higher by 69% , for DAP by 4% and lower for Rabi sowing was higher in 2nd Half of fiscal MOP by 8% and complex by 22% as compared to year due to healthy reservoir levels and high the previous year. excess rainfall in the North-East monsoon. The The main reason for decline in MOP retail sales government has increased minimum support from 16.73 Lakhs MT to 15.41 Lakhs MT is price (MSP) for six Rabi crops for 2019-20 season due to continuous priority for Urea movement following the Government’s aim to have MSP from ports and railway restrictions from ports at 150% of cost of production. This with the on Eastern coast for destinations of Eastern Department of Agriculture’s forecasted increase Railway, North- East Frontier Railway etc. and for of acreage from 590.60 lakh hectares to 641.30 throughout in December 2019 , the company had lakh hectares during Rabi 2019-20 and as a very negligible stocks at Bihar, West Bengal and result both production and imports increased. Assam. The demand outlook for the fertilizer sector FINANCIAL RESULTS FOR THE YEAR 2019-20 remained positive for the rabi season as the volume for the current rabi season remained Your Company’s total volume sales of all products healthy and the fertilizer offtake was well at 6.2 million tonnes is showing 11% (approx..) supported by healthy growth in the rabi sowing. growth over 5.6 million tonnes clocked during On P&K front, the profitability witnessed a the previous year. positive trend driven by softer import material prices. With the subsidy budget almost The total income of the Company at Rs.14,687.34 exhausted by Nov – Dec 2019 , the Government crores is decrease of about 6.65% vis-à-vis of India brought in Special Banking Arrangement 2018/19 turnover of Rs.15,734.13 crores. 5 The major reason for decline in turnover of the sugar and per unit realization of sugar as company is the absence of Urea imports as State well as molasses. Trading Enterprise (STE) which had accounted for Rs 1,658 crores in the previous year . Also, Through careful monitoring and judicious decrease in volume sales of MOP and lower per control, the expenditure on operational costs, MT average realization of DAP are the other selling expenses and administrative overheads reasons for decline in total income . It is, however, was aligned to the sales and interest outgo was to be noted that despite decrease in the total controlled. income, the Profit Before Tax at Rs.531.11 crores is higher by 3% as compared to Profit Before DIVIDEND Tax of Rs.513.59 crores in the previous Fiscal. Considering the current performance of your Similarly, the Net Profit at Rs.350.55 crores also company during the year and prospects for 2020 - shows a marginal increase over Net Profit of 21, your Directors recommend a Dividend of Rs. Rs.346.02 crores for the previous Fiscal. 2.5 per Equity Share of Rs.10/- each. This dividend The profit for the year would have been much is subject to the approval of shareholders. higher but for the following reasons: EXTENSION & PROMOTION ACTIVITIES 1. Volatility in Foreign Exchange CONDUCTED DURING 2019-20 The dollar was fairly stable during the The company has always been making strenuous period April 2019 to January 2020. But from efforts for promoting balanced fertilization and last week of February 2020 to March 31, correcting the imbalance in use of fertilizers 2020, it weakened from USD 1 = Rs.71.38 to achieve the ideal NPK use ratio of 4:2:1. To to Rs.75.34 due to Covid-19 Pandemic. In achieve that, the company has conducted a large fact, the forex rate was USD 1 = Rs.76.15 number of field oriented activities and intensive on 24.3.20 and gained some strength only promotional campaigns to educate the farmers in last couple of days in March 2020. As a to increase fertilizer use efficiency and crop result, the Company had to suffer forex loss productivity under IPL and collaborative projects. of Rs.307.16 crores during 2019/20. Under IPL Extension and Promotion budget, 2. Delays in Subsidy Reimbursement we have laid out 173 Crops demonstrations, conducted 34 numbers of Field days. We have As in the past, there was no fertilizer subsidy organized 64 Sales campaigns, 124 Farmers receipt in January-March 2019 quarter and meetings, 13 Crop seminars and 28 numbers major part of the subsidy against dues from of Dealer’s training programs. We have also November 2019 onwards were received in participated in 19 Agri fair/ Exhibitions. We have last week of April 2020 only. To fertilizer done 96,227 sq. ft. of Wall/Trolley paintings in rural subsidy this year, Sugar Export Subsidy of areas. Apart from this, we have also done 1130 about Rs.40 crores has also got added which Audio visual programs through which we have is yet to be received for the year 2018/19. educated farmers about balanced fertilization with special reference to role of potash in crop 3. Cattle Feed/Dairy Division working production. We have also distributed promotional literatures like Cattle feed booklet, Potash The Cattle Feed/Dairy Division working booklet, Wheat, Paddy, Mustard, Sugarcane, was interrupted by ad-hoc Orders of NGT Groundnut, Vegetable, Cotton, Chilli, Fruits crop against exploitation of ground water. On folders, Posters and literatures on Potash, DAP, the positive side, (1) the performance of the City Compost and SOP Products in vernacular Sugar Division improved in all parameters language to the farmers during Agri Exhibitions, namely capacity utilization, recovery of 6 A.V. Show, Farmers Meeting and Crop Seminars. PROSPECTS FOR 2020-21 These promotional measures are an integral part of the Company’s initiative to reach out to farmer With a late surge in the monsoon, the soil community at large. moisture and healthy reservoir levels, the sowing levels in the rabi season have witnessed healthy COLLABORATIVE PROJECTS: SOP growth . We expect a reasonable growth for fertiliser sales Similarly, under SOP, the Company has laid in the current rabi season with DAP/NPK offtake out 16 Demonstrations, conducted 7 Field expected to grow at a robust pace as there has Days, organized 47 Farmers meetings, 5 Sales been significant moderation in the retail prices campaigns, 4 Crop seminars, 6 Dealers Training year-on-year driven by a fall in the import prices. Programme and participated in 2 Agri exhibitions. Urea demand is expected to remain stable as the ICPPP: (INDO CANADIAN POTASH PROMOTION offtake by farmers remain more or less uniform, PROJECT) given the current price levels. This project has been continuing since 2015-16 While retail price of P&K segment has reduced, and is being implemented in 5 states: Odisha, we expect a slight expansion in the contribution Haryana, Rajasthan, Gujarat, and Tamil Nadu.

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