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National Fertilizers Ltd.

Directors Report

NSE: NFLEQ BSE: 523630ISIN: INE870D01012INDUSTRY: Fertilisers

BSE   Rs 87.62   Open: 89.49   Today's Range 87.12
90.68
 
NSE
Rs 87.60
-1.40 ( -1.60 %)
-1.51 ( -1.72 %) Prev Close: 89.13 52 Week Range 65.08
130.45
You can view full text of the latest Director's Report for the company.
Market Cap. (Rs.) 4297.47 Cr. P/BV 1.69 Book Value (Rs.) 51.81
52 Week High/Low (Rs.) 131/65 FV/ML 10/1 P/E(X) 9.38
Bookclosure 22/09/2023 EPS (Rs.) 9.34 Div Yield (%) 0.00
Year End :2023-03 

On behalf of the Board of Directors of your Company, I have the pleasure in presenting the 49th Annual Report on the business and operations of the Company together with the Audited Financial Statements including Consolidated Audited Financial Statements of the Company for the Financial Year 2022-23 and the Auditors' Reports and Comments of Comptroller & Auditor General of India (C&AG).

During the year, company achieved the Profit before Tax of ' 609.77 crore as against Profit before Tax of '144.82 crore during CPLY. PBT has increased mainly due to increase in profit on Urea due to energy norms extension, higher production and sale of Urea, sales of Bentonite Sulphur and industrial products.

The energy consumption per MT of Urea at NFL plants during 2022-23 was as follows:

(Gcal/MT/Urea)

Units

Energy Norms for 2022-23 as per NUP-2015

Actual Energy

2022-23

2021-22

Nangal

6.500

6.274

6.523

Panipat

6.500

6.334

7.048

Bathinda

6.500

6.357

6.559

Vijaipur I

5.860*

5.620

5.817

Vijaipur II

5.500

5.426

5.736

* As per DoF OM dated 18.11.2022.

Energy consumption per MT of Urea at all Units was less than energy norms till FY 2022-23 fixed by GOI under New Urea Policy 2015 with extension with extended period upto March, 2023 for Nangal, Panipat, Bathinda and Vijaipur-I Units.

Financial Highlights | ?

Your Company's key financial parameters during the year 2022-23 and important financial highlights are as under:-

(Rs. in Crore

Sr. No.

Particulars

2022-23

2021-22

01.

Sale of Urea quantity in (LMT)

39.96

34.58

02.

Sale quantity of traded Fertilizers (LMT)

26.76

20.02

03.

Sale of Urea own

2091.45

1807.11

04.

Subsidy on Urea

17023.48

8764.85

05.

Total Sales of Urea (3 4)

19114.93

10571.96

06.

Sale of other products including subsidy

10238.27

5032.00

07.

Sales Turnover (5 6)

29353.20

15603.96

08.

Sale of Services

28.94

18.96

09.

Other Operating Revenue

234.38

234.17

10.

Revenue from operations (7 8 9)

29616.52

15857.09

11.

Other Income

192.62

25.61

(' in crore

Sr. No.

Particulars

2022-23

2021-22

12.

Total Income (10 11)

29809.14

15882.70

13.

Total Expenses

28544.89

15270.37

14.

Earnings Before Interest, Depreciation and Taxes (EBIDTA)[12-13]

1264.25

612.33

15.

Interest

301.64

132.96

16.

Depreciation

352.84

334.55

17.

Profit Before Exceptional Item and Tax (14-15-16)

609.77

144.82

18.

Exceptional Item

-

-

19.

Profit Before Tax (PBT) (17-18)

609.77

144.82

20.

Provision for tax

153.67

36.62

21.

Profit After Tax (PAT) (19-20)

456.10

108.20

22.

Other Comprehensive Income (Net of Tax)

3.56

1.90

23.

Total Comprehensive Income (21 22)

459.66

110.10

RESERVES | ?

Capital Reserves | ?

The balance as at 31.03.2023 amounted to '2.51 crore, which is at the same level as was in the previous year.

Corporate Social Responsibility | ?

Corporate Social Responsibility (CSR) fund stood at Nil as on 31.03.2023 as compared to Nil on 31.03.2022. Report on CSR is appended as Annexure- 5 forms part of this report.

General Reserves | ?

During the year, an amount of ^ 1.05 crore was adjusted from the General Reserve. The general reserve as on 31.03.2023 stood at ^ 331.84 crore.

Surplus | ?

The balance retained in the surplus as at 31.03.2023 is ^1948.90 crore as compared to ^1489.24 crore during the previous year.

Dividend | ?

The Board of Directors declared interim dividend for the year 2022-23 @ ^1.53 (15.30%) per share which has been paid by the Company in June, 2023. Further, the Board of Directors has recommended Final Dividend of ^1.26 (12.60%) per equity share of Rs.10 each on the paid up equity share capital of the Company for the Financial Year 2022-23 which shall be paid after approval of the Shareholders at the Annual General Meeting.

Major events during the year

State of Affairs of the Company and Change in the nature of Business | ?

During the FY 2022-23, Company has achieved sale of fertilizers to the tune of 66.72 LMT comprising of 39.96 LMT of own Urea, 5.36 LMT of imported Urea and 8.39 LMT of RFCL Urea and 13.01 LMT of non-Urea Fertilizers and against corresponding period last year (CPLY) of 54.60 LMT that comprised of 34.58 LMT of own Urea, 8.86 LMT of imported Urea and 3.69 LMT of RFCL Urea, 7.47 LMT of Non-Urea Fertilizers. NFL has achieved growth of more than 22% in total fertilizer sale during the year with respect to CPLY. Further, sales contribution from other than own

manufactured Urea of the company increased to around 35% during the year as compared to 32% of the CPLY.

Your Company has achieved the production & sale of certified seeds to the tune of 1.60 Lakh Quintals. The sale of Bio-Fertilizers & City Compost of 700 MT & 22071.25 MT respectively achieved during the year.

Your Company has achieved the ever highest production of Urea of 39.35 LMT, ever highest sale of all fertilizers of 66.72 LMT, ever highest sale of Agro-chemicals of 2213.758 KL/MT. Your company has achieved ever highest production & sale of Bentonite Sulphur to the tune of 22302 MT & 20910 MT respectively. Vijaipur Unit dispatched ever highest Bio-fertilizers to the tune of 756 MT. Your company has also sold 19,833 MT PDM (Potash Derived Molasses) during the year.

On the new investment front, your Company has commissioned its third Seed Processing Unit (SPU) at Indore in April 2023.

The settng up of an Agrochemicals plant at Bathinda is in advance stage and is likely to be commissioned shortly.

Your Company has also added some more products such as Potash derived from Molasses (PDM) in its basket during the year.

The revival of 2nd stream of Nitric Acid plant at Nangal completed during October 2022.

Your company has signed MoU for manufacture of Nano Fertilizers with IFFCO. TEFR has been finalized for manufacturing Nano Urea and EPMC consultants are being lined up. Public Hearing conducted on 27-04-2023 and revised EIA report is being submitted to MoEF & CC for grant of Environment Clearance.

Material changes and commitments !!?

No material changes and commitments have occurred between the date of the Balance Sheet and the date of the Board's Report affecting the financial position of the Company.

Details of revision of Financial Statements or Board's Report | ?

Company has not revised Financial Statements or Board's Report in respect of any of the three preceding financial years. Company has re-casted/restated Financial Statement as on 31.03.2022 and as on 01.04.2021.

General Information | ?a) Brief history of the Company, overview of the industry and important changes in the industry during the last financial year

NFL was incorporated on 23rd August 1974 at New Delhi. It has an authorized share capital of ^ 1000 crore and paid up and subscribed share capital of ^ 490.58 crore out of which Government of India's share is 74.71% and 25.29% share is held by financial institutions, public & others.

The Company has five gas based Urea plants viz. Nangal & Bathinda plants in Punjab, Panipat plant in Haryana and two plants at Vijaipur in Madhya Pradesh with a total annual revamped capacity of 35.68 LMT (Annual Re- assessed capacity - 32.31 LMT) of Urea. The company also has a Bio- Fertilizers Plant at Vijaipur with annual capacity of 700 tonnes and a Bentonite Sulphur plant of 25000 MT per annum at Panipat Unit. It also manufactures other allied Industrial products like Nitric Acid, Ammonium Nitrate, Sodium Nitrate & Nitrite from its Nangal Unit and undertakes import & sale of other fertilizers like DAP, MoP, NPKS along with domestic trading of various agro-inputs like certified seeds, agrochemicals, City Compost, SSP etc. through its existing vast dealer's network under single window concept. The Company has also been producing and selling its own certified Seeds under company's flagship Seed Multiplication Program (SMP).

The Company has three Seed Processing Units (SPUs) at Bathinda, Panipat and one at Indore commissioned on April'2023. The company also revived 2nd Stream of Nitric Acid plant at Nangal on October'2022. The Company is also settng up an Agrochemicals plant at Bathinda and doubling capacity of Bio-Fertilizers plant at Vijaipur, which are expected to be commissioned in the F.Y. 2023-24.

Overview of the industry and important changes thereof during the last financial year forms part of Management Discussion & Analysis Report.

b) Brief description of business segments and geographic segments; | ?

Business Segment | ?

In the light of present diversified business activities vis-a-vis IND AS 108 on Segment Reporting following operating segments have been considered for Segment Reporting for the Annual Accounts for the FY 2022-23:

i) Own Fertilizers (Urea, Bio Fertilizers and Bentonite Sulphur).

ii) Fertilizers Trading (Indigenous and Imported).

iii) Other Products & Services (Industrial Products, Agro Chemicals, Traded Seeds, Seeds under Seeds Multiplication Programme etc.).

Geographic segments | ?

The operation of the company is conducted within India and there is no separate reportable geographic segments.

c) External environment and economic outlook; | ?

Details of external environment and economic outlook are given in Management Discussion & Analysis Report.

d) Induction of strategic and financial partners during the last financial year | ?

No new strategic and financial partners have been inducted during the last financial year.

Capital Structure | ?Preference and Equity Shares | ?

Company has not issued any equity shares or preference shares during the year.

Equity Shares with Differential Rights | ?

During the financial year, Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

Employees Stock Option | ?

During the financial year, Company has not issued any employees stock option.

Shares to Trustees for benefit of employees | ?

Company has not introduced any scheme(s) for purchase/subscription of the Company's shares to be held by trustees for the benefit of employees.

Other securities which carries right of conversion into equity shares | ?

During the financial year, Company has not issued any securities, which carries a right or option to convert such securities into equity shares.

Details of Deposits | ?

The Company has not accepted any deposits during the year.

Credit Rating | ?

During FY 2022-23, the credit rating of the Company was maintained with two credit rating agencies as under:

Rated Amount (' in crore)

Instruments

ICRA

INDIA RATINGS

Credit Ratings

Limits

Credit Ratings

Limits

Credit Ratings

Limits

Credit Ratings

Limits

2021-22

2022-23

2021-22

2022-23

Long Term Fund Based Working Capital Facilities

Cash Credit

[ICRA]

AA-(Stable)

4000

[ICRA]

AA-(Stable)

9000

IND AA/ Stable

4000

IND AA/ Stable

9000

Term Loan

[ICRA]

AA-(Stable)

1044

[ICRA]

AA-(Stable)

1044

-

-

ECB

[ICRA]

AA-(Stable)

-

IND AA-/ Stable

-

Short Term Fund Based Working Capital Facilities

Commercial

Papers

[ICRA] A1

4000

[ICRA] A1

4000

[IND] A1

4000

[IND] A1

Short Term Non Fund Based Working Capital Facilities

LC/BG

[ICRA] A1

3000

[ICRA] A1

9600

[IND] A1

2000

[IND] A1

9600

During the year, the Credit Rating of the Company had been reviewed by both the agencies and it was upgraded as shown above in the table.

Buy-Back of Securities | ?

Company has not introduced Buy-Back of its securities during the year.

Sweat Equity | ?

Company has not issued any Sweat equity shares in terms of Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

Disinvestment of GOI Equity | ?

There was no disinvestment of Government of India Shareholding during the Financial Year 2022-23. However, Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, Government of India had appointed Legal Advisors, Merchant Bankers and Selling Brokers for the disinvestment of 20% paid up equity capital in National Fertilizers Limited (NFL) out of Government of India's Shareholding through the "Offer for sale by promoters through the Stock Exchanges". In this regard, investor meet had been held from 12th December, 2022 to 15th December, 2022 in Singapore and from 16th January, 2023 to 17th January, 2023 in Mumbai.

Statement of deviation(s) or variation(s) | ?

Company has not offered public issue, rights issue, preferential issue etc. during the year and there is no requirement to submit statement of deviati'on(s) or variati'on(s).

Foreign Exchange Earnings/Outgo | ?

The Foreign Exchange earned in terms of actual inflows during the year were ^ 32.10 crore and the Foreign Exchange outgo during the year in terms of actual outflow amounted to ^ 8425.84 crore.

Borrowings | ?Long Term Loans

To meet the funding requirement for energy saving and capex schemes, Company has entered into a Rupee Term Loan Agreement with SBI on 24.12.2018 for ^ 1044 crore. Long term net borrowings as on 31.03.2023 were ^ 534.71 crore outstanding against Rupee Term Loan. Further, the said term loan has been fully repaid on 09.05.2023.

Short Term Loans !!?

Short Term borrowings of ^3456.22 crore (previous year ^2539.83 crore) were outstanding as on 31.03.2023.

Debt Equity Ratio !!?

Debt equity ratio as on 31.03.2023 has increased to 1.44:1 as compared to 1.37:1 of previous year due to increase in borrowings.

Revenue | ^

The Company has achieved Revenue from Operations of ^ 29616.52 crore during 2022-23 as against ^ 15857.09 crore during previous year and total income of ^ 29809.14 crore during 2022-23 as against ^ 15882.70 crore during previous year as detailed below:

(' in crore)

Particulars

2022-23

2021-22

Change

Sale of products (including subsidy)

29353.20

15603.96

13749.24

Sale of services

28.94

18.96

9.98

Other Operating revenue

234.38

234.17

0.21

Revenue from operations

29616.52

15857.09

13759.43

Other income

192.62

25.61

167.01

Total Revenue

29809.14

15882.70

13926.44

Urea and other fertilizers | ?

Your Company has registered ever highest Urea production of 39.35 LMT with an overall capacity utilization of 121.81% during 2022-23 against 35.23 LMT achieved during 2021-22 (CPLY).

Company achieved ever best Bentonite Sulphur production of 22302 MT against CPLY of 17076 MT achieving a growth of around 31%.

On the sales front, the Company has sale of Fertilizers of 66.72 LMT that includes sale of 39.96 LMT of own Urea, 5.36 LMT of Imported Urea, 8.89 LMT of RFCL Urea, 13.01 of Non-Urea Fertilizers including 0.22 LMT (22071 MT) of Compost during 2022-23 surpassing previous best of 54.60 LMT during 2021-22 which includes sale of 34.58 LMT of own Urea, 8.86 LMT of Imported Urea, 3.69 LMT of RFCL Urea, 7.47 LMT of Non-Urea Fertilizers including 0.27 LMT (26647 MT) of Compost.

The detailed quantity of break-up of sale of urea and other fertilizers is as under:

(Lakh MT)

Product

2022-23

2021-22

Change

1.Manufactured

a) Urea

39.96

34.58

5.38

b) Bentonite Sulphur

0.21

0.17

0.04

c) Bio-Fertilizers

0.01

0.01

0.00

2.Traded Goods

a) Imported

12.17

6.41

5.76

b) Indigenous

14.37

13.43

0.94

Total Fertilizers

66.72

54.60

12.12

Industrial Products | ?

During the year 2022-23, the company produced & sold Industrial Products to the tune of 132271 MT & 139475 MT (comprising of Nitric Acid, Sodium Nitrite / Nitrate, Ammonium Nitrate and Ammonia) respectively against CPLY of 109973 MT & 146383 MT.

The Company registered sale of Nitric Acid of 81108 MT during 2022-23 as compared to previous sale of 64008 MT during 2021-22. The Company also recorded sale of Ammonium Nitrate to the tune of 26039 MT during 2022-23 as compared to sale of 24029 MT achieved during 2021-22.

In terms of revenue generation from production and sale of Industrial products, the Company achieved sale of Industrial-Products (IP) comprising of Nitric Acid, Sodium Nitrate, etc. to the tune of ' 748.71 crore during 2022-23 against CPLY of ' 569.15 crore during 2021-22.

Bio-Fertilizers | ?

The Company sold 700 MT of Bio-Fertilizers (Solid & Liquid) to the tune of ' 2.51 crore in F.Y. 2022-23 as against 745 MT of ' 2.53 crore during CPLY.

Import & sale of Fertilizers | ?

The Company sold 12.17 LMT of imported non-Urea Fertilizers including DAP, MoP, APS, NPK etc. worth ' 8224.01 crore during 2022-23 against 6.41 LMT worth ' 3265.85 crore during 2021-22.

Apart from the above, NFL also sold 5.36 LMT of Urea imported in Government Account in FY 2022-23 against 8.86 LMT during 2021-22 .

Domestic Trading of Agro Products | ?

The Company has registered total revenue of ^288.12 crore towards trading of various agro products such as seeds, pesticides & compost and RFCL ammonia during the year against ^ 219.57 crore during CPLY.

Gross Sale Composition | ?

Item

% of total Sale Composition

% Increase/(Decrease)

2022-23

2021-22

Urea (manufactured)

65.12

67.75

(2.63)

Other Products

34.88

32.25

2.63

Owing to progressive shift in strategy of the Company, the composition of gross sale of the Company has undergone visible change. Against the Urea (main product) contribution of 94.49% in the overall revenue of the Company during 2015-16, Urea contribution has reduced to 65.12% while contribution of non-Urea business has increased to 34.88 % during 2022-23.

Agriculture Extension Activities | ?

Agriculture is the main source of livelihood for the farmers, which include crops, animals and allied activities. Agriculture Extension Activities are being undertaken by your Company by educating farmers on efficient use of all agro-inputs along with total know-how on improved and scientific methods of cultivation.

Dealers/Retailers are important link between the Company and the farmers. They are key change agents in motivating farmers to use fertilizers in a balanced manner. During the year 2022-23, 49 Dealer's/Retailer's Orientation Programmes were conducted and more than 2100 dealers/ retailers were facilitated by upgrading their knowledge regarding fertilizers/ agro products and improved crop practices so that latest information can be disseminated at point of purchase to the farmers. Information on Bio-fertilizers and City Compost has also been given in each and every training programme.

Your Company has always laid emphasis on upliftment of farming community by educating them on various aspects of crop production, animal husbandry and other allied agriculture sectors. 41 Farmer Training programmes were organized during 2022-23 and more than 2400 farmers got benefited. Through these educational programmes, farmers were sensitized to issues related with soil fertility status including deficiency of various nutrients, their remedy to increase fertilizer use efficiency and maximize yields. The farmers have also been educated on benefits of long term usage of Bio-fertilizers and City Compost through these programmes.

Agriculture Universities, Research Stations, KVKs are the knowledge centres for latest farming techniques, new and high yielding crop varieties, innovative technologies in agriculture and allied agriculture sectors etc. During the year with the objective to promote balanced and sustainable use of fertilizers, soil analysis, methodology of application of different fertilizer, new technologies etc., an opportunity was given to the farmers to practically visit the above places by organizing farmers visit to nearby Agriculture University/Research Station/ KVKs. More than 800 farmers got benefitted through 12 programmes during the year 2022-23.

During the year 2022-23, total 230 demonstrations had been laid out at farmers' fields to demonstrate benefits of use of new Bio-fertilizers (Zn/K solubilizing), City Compost, Bentonite Sulphur and water soluble NPK fertilizer on crop growth and yield as compared to farmer's own practices. 240 Field days were organized in the demonstration fields and more than 12300 farmers got benefitted from such programmes.

Your Company is playing a vital role in supporting farmers by undertaking soil analysis for macro and micro nutrients through its 6 Static and 5 Mobile Soil Testing Labs (MSTLs) in various States. Based on the analysis, farmers are advised on soil fertility management through rational use of manure, fertilizers and other inputs to make agriculture more productive and sustainable. During the year, around 30000 soil samples were collected & analysed for macro and micro nutrients and recommendations were given to the farmers.

During the year 2022-23, your Company continued its endeavour to render soil testing services at all the farmers' doorstep by organizing soil testing campaigns. During these campaigns, services of our Mobile Soil Testing Vans and laboratory staff were suitably utilized for collecting soil samples by demonstrating the correct method of sampling to the farmers and by offering on the spot soil analysis and advisory on the basis of soil test results.

Other than this, 30 Jeep campaigns were organized in the States of Punjab, Haryana, Rajasthan, HP, UP, MP, AP and Telangana. Through these campaigns, farmers were given information on new products launched by the Company and its usage and benefits. More than 11,000 farmers got benefitted by these programmes.

Participation in agro exhibitions and university Kisan Melas is very effective way to communicate directly with the farmers and also to interact with scientists and experts from various agricultural fields. During the year 2022-23, your Company participated in 39 Krishi Melas/Agriculture Exhibitions organized by leading Agriculture Universities, Agriculture Departments etc. in the States of Punjab, Haryana, UP, Uttarakhand, Bihar, MP, Chhaffisgarh, Rajasthan, AP and Telangana which was attended by more than 77,000 farmers.

As per guidelines of Department of Fertilizers (DoF) dated 24.08.2022 and with the objective to provide all the agricultural inputs and services to the farmers under one roof along with soil testing and advisory services, 22253 fertilizer retailer shops were allocated to your Company all across its marketing territory to convert the same into Pradhanmantri Kisan Samridhi Kendras (PMKSKs). Total 8719 PMKSKs has been converted into PMKSKs so far by puffing up a fascia in the shops. However, installation of Fascia, Smart TVs and other facilities as per DoF guidelines dated 24.08.2022 in the remaining retailer's shops is under progress.

Your company has also signed a Memorandum of Understanding (MoU) with CSK H.P. Agriculture University, Palampur, H.P. for establishing NFL professor chair in the department of soil science with an objective of developing technologies on precision agriculture, judicious use of fertilizers and improving scientific methods of cultivation to enhance soil health and productivity. The MoU also mandates to promote use of Artificial Intelligence (AI), Information and Communication Technologies (ICT) for nutrient and water management.

As per Government directions, five Nos. of agricultural Drones were procured by NFL in the month of January 2023. Since installation, NFL is organizing programs on regular basis in its Marketing territory to popularize the use of Agricultural Drone among the farmers and generate the awareness.

Projects | ?

The details of the projects including capital expenditure envisaged are given in the Management Discussion & Analysis Report.

Management Discussion & Analysis Report | ?

Management Discussion & Analysis Report covering business prospects including modernization, diversification, investments, marketing plans, raw materials, human resource, internal management controls including financial performance review, government policies and other factors having impact on the performance of the Company operations and future outlook of the Company is appended as Annexure-1 to this Report.

Business Responsibility and Sustainability Report !!?

SEBI vide circular no. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated 10.05.2021 had introduced the "Business responsibility and sustainability reporting by listed entities", which introduces new reporting requirements on Environment, Social and Governance parameters [ESG parameters] called the Business Responsibility and Sustainability Report (BRSR). The reporting as required under Regulation 34 of SEBI (LODR) Regulations, 2015 was amended for the listed entities and the same shall be mandatory for the top 1000 listed companies (by market capitalization) with effect from the financial year 2022-2023.

Your Company in adherence to the circular had prepared the Business Responsibility and Sustainability Report for the financial year ended March 31, 2023 and the same is appended as Annexure-2 to this Report. Business Responsibility and Sustainability Policy is available on the website of the Company at www.nafionalferfilizers.com.

Stakeholders' relationship

Details of stakeholders' relationship are given in the Business Responsibility and Sustainability Report annexed to this Report.

Customers' relationship | ?

Details of customer relationship are given in the Business Responsibility and Sustainability Report annexed to this Report.

Corporate Governance | ?

The Company is committed to maintain the highest standards of Corporate Governance being the fountain head of value creation for all stakeholders especially shareholders. The Company has in place a well-defined "Corporate Governance Mechanism" which considers the interest of all stakeholders.

Pursuant to SEBI (LODR) Regulations, 2015 (as amended from time to time) and DPE Guidelines on Corporate Governance, a report on Corporate Governance is appended as Annexure-3 which forms part of this Report.

The Secretarial Auditor of the Company have examined and certified Company's compliance with respect to conditions enumerated in SEBI (LODR) Regulations, 2015 and DPE guidelines on Corporate Governance. Secretarial Auditor's Certificate on Corporate Governance and explanations of the Management to Secretarial Auditors' observations during the year 2022-2023 is appended as Annexure-4 which forms part of this Report.

Parliamentary Committees during 2022-23: | ?

The following Parliamentary Committee interacted with the Company during the year 2022-23:

1. Study visit of the Standing Committee on Chemicals and Fertilizers to Srinagar, Pune, Mumbai and Ahmedabad from 10th June, 2022 to 15th June, 2022.

2. Study visit of Committee on Public Undertakings (COPU) to Chennai and Bhubaneshwar from 9th to 12th January, 2023 regarding Corporate Governance.

Material Orders of Regulators

Following regulatory orders issued for implementation may affect/ have affected the operations of the plants:

1.0 Amendment in import policy of Urea | ?

Directorate General of Foreign Trade, Department of Commerce, Ministry of Commerce & Industry, Government of India issued a notification on 3rd November, 2021 regarding amendment in import policy condition of Urea [Exim Code 31021OO0 ] in the ITC (HS) 2017, Schedule - I (Import Policy) with immediate effect.

According to the revised policy, import of urea was allowed through RCF and NFL subject to Para 2.20 of Foreign Trade Policy, 2015-2020. In addition, import of urea was also allowed through IPL for a period upto 31st March, 2022. However, import of Technical Grade Urea (TGU) meant for non-agricultural purpose/ industrial use/ NPK Manufacturing shall be "Free".

2.0 NBS rates for P & K fertilizers for Kharif 2022-23 | ?

In order to keep the P&K fertilizer prices affordable to the farmers, DoF issued a notification on 27th April, 2022 and enhanced the subsidy rates for P&K fertilizers under NBS policy for kharif 2022 (from 1st April, 2022 upto 30th September, 2022). The per kg NBS rates of N, P, K and S increased from Rs.18.789, Rs. 45.323, Rs. 10.116 and Rs. 2.374 during rabi 2021-22 to Rs. 91.96, Rs. 72.74, Rs. 25.31 and Rs. 6.94, respectively, for kharif 2022.

Accordingly, NBS rates per MT of DAP and MOP increased from Rs. 33,000 and Rs. 6,070 per MT during rabi 2021-22 to Rs. 50,013 and Rs. 15,186 per MT, respectively, for kharif 2022. NBS rates for NP/NPK grades of fertilizers ranged between Rs. 27,947 per MT and Rs. 46,116 per MT for kharif 2022. However, subsidy on SSP and Potash Derived from Molasses remained unchanged at Rs. 7,513 per MT and Rs. 1,467 per MT, respectively, for kharif 2022. The per tonne additional subsidy for fortified fertilizers with boron and zinc continued and remained unchanged at Rs. 300 and Rs. 500, respectively.

3.0 NBS rates for P & K fertilizers for Rabi 2022-23 | ?

As per OM dated 2nd November, 2022, DoF revised the subsidy rates for P&K fertilizers under NBS policy for rabi 2022-23 effective from 1st October, 2022 upto 31st March, 2023. The per kg NBS rates for N has been increased while P, K and S reduced. The per kg NBS rates of N, P, K and S revised from Rs. 91.96, Rs. 72.74, Rs. 25.31 and Rs. 6.94 during kharif 2022 to Rs. 98.02, Rs. 66.93, Rs. 23.65 and Rs. 6.12, respectively, for rabi 2022-23.

Accordingly, NBS rates per MT of DAP and MOP reduced from Rs. 50,013 and Rs. 15,186 per MT during kharif 2022 to Rs. 48,433 and Rs. 14,188 per MT, respectively, for rabi 2022-23. NBS rates for NP/NPK grades of fertilizers ranged between Rs. 26,864 per MT and Rs. 46,188 per MT for rabi 2022-23. However, subsidy on SSP and Potash Derived from Molasses remained unchanged at Rs. 7,513 per MT and Rs. 1,467 per MT, respectively. The per tonne additional subsidy for fortified fertilizers with boron and zinc continued and remained unchanged at Rs. 300 and Rs. 500 respectively.

Summary of Changes in NBS Rates during FY 2022-23 and its impact on reduction of subsidy | ?

NBS ( Rs. Per Kg of Nutrient )

Nutrient

OM Dt 27.04.2022

OM Dt 02.11.2022

OM Dt 18.05.2023

OM Dt 18.05.2023

Kharif-2022

Rabi-2022-23

Revised for 01.01.2023 to 31.03.2023

Kharif-2023

N

91.96

98.02

99.27

76.49

P

72.74

66.93

49.94

41.03

K

25.31

23.65

25.70

15.91

S

6.94

6.12

2.84

2.80

4.0 Guidelines relating to Potash Derived from Molasses (0-0-14.5-0) under NBS scheme | ?

DoF issued an Office Memorandum on 12th July, 2022 regarding the guidelines relating to Potash Derived from Molasses (0-0-14.5-0) under NBS scheme. The main points in the guidelines as stated below:

a) Manufacturers of granulated Potash Derived from Molasses shall be provided subsidy under NBS Scheme.

b) Granulated Potash derived from Molasses with a minimum 14.5% of K20 content as per FCO 1985 as amended from time to time will be allowed for claiming subsidy.

c) The subsidy on Potash Derived from Molasses will be inclusive of the freight subsidy.

d) With regard to marketing arrangement, the manufacturer of Potash Derived from Molasses shall be eligible for sale by entering into marketing arrangement with marketers under intimation to DoF and the fertilizer manufacturers including importers which are registered under the subsidy scheme of DoF shall be considered as marketer of Potash Derived from Molasses.

e) Regarding quality, manufacturer/marketer/retailer/dealer will be jointly liable for ensuring/ maintaining quality of the fertilizer as per the extant rules/ guidelines issued by DoF. Quality testing will be done by the manufacturer in the NABL accredited labs/ State Government registered labs.

5.0 Implementation of One Nation One Fertilizer

DoF issued an OM on 24th August, 2022 to implement One Nation One Fertilizer by introducing Single Brand for Fertilizers and Logo under Fertilizer subsidy scheme namely "Pradhanmantri Bhartiya Janurvarak Pariyojna (PMBJP).

The single brand name for Urea, DAP, MOP and NPKs, etc. would be Bharat Urea, Bharat DAP, Bharat MOP and Bharat NPK, etc., respectively, for all fertilizer companies, State Trading Entities and fertilizer Marketing Entities. A logo indicating Fertilizer Subsidy scheme namely Pradhanmantri Bhartiya Janurvarak Pariyojna will be used on the respective fertilizer bags.

As per OM, the print will be done on one side of fertilizer's bag. Two-third of the Fertilizer's bag will be used for new brand and logo with Pradhanmantri Bhartiya Janurvarak Pariyojna and one-third will be used for using Fertilizer companies' name, logo and other information as required in different Rules & Regulations, etc.

Further, on 1st November, 2022 DoF informed all fertilizer companies that the design of urea bag and logo forwarded earlier must be adopted by fertilizer manufacturers /importers within the following timelines:

Sr. No.

Type of fertilizer

Timeline

1.

Imported Urea

30th November, 2022

2.

Indigenous Urea

30th November, 2022

3.

Imported P&K

30th November, 2022

4.

Indigenous P&K

31st December, 2022

The release of fertilizer subsidy to companies will be considered only for fertilizers dispatched in the new bags after the aforesaid cut-off dates.

6.0 Implementation of NUP-2015 Energy Norms:

Department of Fertilizers (DoF) vide letter dated 28-03-2018 issued a Notification revising Energy Norms under NUP-2015 for years 2018-19 and 2019-20. Through this notification, the Target Energy Norms under NUP-2015 for NFL Bathinda, NFL Panipat, NFL Nangal and NFL Vijaipur-I were extended for further period of 2 years till 31st March, 2020 with a penalty of 2% & 5% for financial years 2018-19 and 2019-20 respectively. Subsequently it was further extended till 30th September, 2020 with a penalty of 10%. The token penalty was equivalent to percentage energy difference between existing NUP Energy norms and Target Energy norms of NUP-2015.

However after notification of DoF dated 31.03.2023, the target energy norm for Bathinda, Panipat and Nangal Units of 6.5 Gcal/MT of Urea has been implemented from 01.04.2022 whereas as per notification dated 18-11-2022 of DoF, target energy norms of 5.5 Gcal/MT of Urea for Vijaipur-I shall be implemented from 01.04.2023.

To achieve these energy targets, NFL installed of GTG-HRSGs at Bathinda, Panipat and Nangal Unit at a total project cost of Rs 690 crore whereas various energy saving schemes had been implemented at Vijaipur complex at a cost of Rs 235 crores.

The GTG-HRSG plants at Bathinda & Nangal units were put into continuous operation. Similarly, at Vijaipur-I & II all the schemes and sub schemes for energy savings got completed by March, 2022.

The implementation of energy savings schemes at all NFL units got severely delayed due to spread of Covid-19 w.e.f. March, 2022.

Although target norms for all the units have been enforced by DoF, but Vijaipur-I unit could not achieve the target energy norms of as 5.5 Gcal/per tonne of Urea as also envisaged in TEFR prepared by PDIL and its energy is expected to remain higher than norm. NFL has requested DoF that target energy norms for Vijaipur-I unit may kindly be reviewed.

7.0 Plastic Waste Management Rules 2016 | ?

The Ministry of Environment Forests and Climate Change (MoEF & CC), Government of India, vide Gazette Notification dated 18th March, 2016 has specified rules for Plastic Waste Management. The Rules fix the responsibility of local bodies, Gram Panchayat and Waste generators, as well as producers, importers and brand owners for collection and management of plastic waste. However, subsequent amendments have also come in 2018 and later on Plastic Waste Management Rules were amended as Plastic Waste management Rules 2022.

Fertilizer industry falls under the category of brand owners as the fertilizer products are sold in plastic bags that are multi-layered and composed of HDPE/HDPE lined with polypropylene. All the Brand Owners who introduce the products in the market have to establish a system or plan for collecting back the plastic waste generated due to their products. As per rules NFL has to register with Central Pollution Control Board (CPCB) and submit along with action plan to comply with Extended Producer Responsibility (EPR) obligation as mentioned in the rule.

Accordingly, NFL applied for the registration and after approval NFL got registration as a Brand Owner under PWM Rules on 21.06.2022 with 01 year validity. The same shall be renewed every year.

CPCB awarded the registration along with fixing an EPR target (collections & recycling of plastic waste) of 10914 MT (Cat-II)/flexible plastic in the FY 2022-23. To fulfil the EPR target, NFL engaged agencies to collect & recycle the plastic waste on behalf of NFL.

As of now NFL has completed its EPR obligation under the rule for FY 2022-23. For the current year i.e. FY 2023-24, renewal of registration shall be done shortly and according to the target fresh tender shall be floated to fulfil the statutory obligation for the year.

The Right to Information | ?

In consonance with the spirit of Right to Information Act, the Company has created necessary mechanism as required under the Act. The Public Information Officers and Appellate Authorities are effectively responding to the requests and appeals of the applicants. The names of all PIOs/ Appellate Authorities/ Transparency Officer are displayed on the Company's website. During the year, 312 RTI applications were received and were dealt with as per provisions under Right to Information Act, 2005.

Vigil Mechanism | ^

Pursuant to the provisions of Sections 177(9) and (10) of the Companies Act, 2013, a Vigil Mechanism for employees and others to report genuine concerns has been established.

Whistle Blower Policy | ?

Company believes in transparency and propriety in all its business dealings, To take this object further Company has put in place a Whistle Blower Policy providing for a mechanism to the employees and other stakeholders to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimization of whistle blowers. The policy is reviewed periodically. No employee or other stakeholders were denied access to the Audit Committee. Whistle Blower Policy is available on the website of the Company at www.nationalfertilizers.com.

Integrity Pact | ?

With the commitment to maintain the highest standard of transparency and governance, your Company has entered into an integrity Pact with Transparency International and has also appointed Independent External Monitors (IEMs), as approved by CVC. Structured Meetings are held with IEMs on regular intervals and threshold value is Rs. 1 crore for signing of Integrity Pact for purchase/works contracts.

Vigilance | ?

Vigilance Division of the Company is headed by CVO. The CVO is assisted by a team of officers drawn from various functional departments. Vigilance set up is operational in Corporate Office, all Manufacturing Units as well as Zonal Marketing Offices.

Promotion of good governance remains the core area of vigilance. Awareness is an important cornerstone for good governance. An enlightened employee not only contributes in achieving the organizational goals but is also instrumental in system improvement.

As an effort towards promoting Preventive Vigilance, Workshops / Training Programs were conducted during the year in all Offices & Production units. These training programmes focused on various issues related to manuals and procedures. In line with the guidelines of CVC & DoF with respect to Preventive Vigilance Module, two days training programmes were conducted for in service officials working on sensitive posts and also new appointees were sensitized on this.

Special Seminars on vulnerable area are being organized in all manufacturing Units and Zonal Offices involving officials at all levels who are dealing with Tenders.

Regular preventive vigilance activities such as Scrutinies, Surprise checks, Vigilance clearance for administrative decisions, enforcement of Transfer Policy and Rotation of Officers on Sensitive Posts were also carried out in close coordination with the Management. At the same time, investigation of complaints received from various sources and follow up of pending departmental action on previous investigated cases were also done with due diligence.

Periodic Vigilance Reports preparation of Agreed List of Officers, List of Officers of Doubtful Integrity, and observance of Vigilance Awareness Week in Units, Zonal Offices and Corporate Office were the major activities conducted during the year.

The working of vigilance wing of NFL is based on a proactive, participative and focused approach. The roles and responsibilities of vigilance officers are regularly monitored and reviewed to bring the focus on systemic improvements.

MoU | ?

The Department of Public Enterprises, Government of India, in order to improve accountability and giving higher autonomy to Public Sector Enterprises, introduced the Concept of MoU during early nineties. NFL signed its first MoU with the Department of Fertilizers (DoF) for the year 1991-92.

Based on financial performance and achievement of other parameters laid down, your Company has been rated "Good" as per the Memorandum of Understanding (MoU), signed with the Government of India for the financial year 2021-22. From the year 2021-22 and onwards, DPE has started data entry module of digital MoU Dashboard for CPSEs for entering data. Accordingly, MoU for the year 2022-23 was generated through online MoU portal after entering requisite information. The Ministry and the CPSEs were requested to sign this system generated MoU. Further Company shall submit actual achievement against all the parameters for 2022-23 in the online MoU portal for evaluation.

Awards & Accolades received during 2022-23

• Bathinda Unit won award for Excellent Work in Hindi from Indian Language and Cultural Centre in Lonavala, Maharashtra.

• Vijaipur Unit received FAME NATIONAL AWARD 2021-22 (PLATINUM AWARD) towards Excellence in Occupational Health and Safety in fertilizer industry.

• Bathinda Unit has received 01 no. IV level award of "Prashansa Patra" for appreciable achievement in Occupational Health and Safety during assessment period of 2018-2020 by National Safety Council, Mumbai for Safety Award-2021.

• Nangal Unit received First prize for doing excellent work in Rajbhasha for the year 2021-22 from Town Official Language Implementation Committee (TOLIC).

• NFL received First Prize from Ministry of Chemicals and Fertilizers for Best Performance in Hindi. Shri Nirlep Singh Rai, CMD received this award from Shri Mansukh Mandaviya, Hon'ble Minister of Chemicals and Fertilizers and Health in Hindi Salahkar Samiti meeting held in Delhi.

• Bathinda Unit has received Gold Award in 12th Exceed Energy Efficiency by Sustainable Development Foundation (SDF) 2022 in July 2022.

• Vijaipur Unit received "Grow Care India Training Excellence Awards 2022 under HR Category Gold Award" (GROW CARE INDIA HR AWARD 2022) and Gold Award under Grow Care India OHS Award 2022 in Fertilizer Sector.

• NFL Bathinda Unit has been declared winner of 22nd Greentech Environment Award - 2022 for outstanding achievement in Environment Protection.

• Panipat Unit has secured the silver Award in the category of Environment Preservation in the 12th Exceed Environment Award & Conference 2022 organized by Sustainable Development Foundation.

• Nangal Unit has received "WINNER" award for outstanding achievement in Environment Protection category during 22nd Genentech Environment Award 2022 held at Guwahati.

• Nangal Unit has won the GOLD Award under Apex India Occupational Health and Safety, HR Business Excellence Award 2022 in Fertilizer Sector for "Outstanding achievement in Safety Management"

• NFL Panipat received Green Crest Awards-2022 under "PLATINUM" category.

• NFL Bathinda Unit has received 02 no. awards in November:-

? Rajbhasha Shiromani Prize from the Indian Language & Culture Centre, New Delhi and

? 1st Prize for Excellence in Hindi from TOLIC (Narakas), Bathinda

• NFL received Eight Excellence "Awards during 16th Global" Communication Conclave organized by PRCI in Kolkata. Company received six awards for its various collaterals. In the individual category, Sh. B V Vittal, CGM (HR) and Sh. Sanjeev Randeva, DGM (CC & HR) received the awards.

• NFL Nangal Unit has been selected for "Gold Award" under Apex India Green Leaf Award 2022 for Energy Efficiency category in Fertilizer Sector.

• NFL Vijaipur Unit has been selected for Gold Award in Fertilizer Sector for

? Grow Care India Environment Award 2022.

? Grow Care India Waste Management Award 2022.

Initiatives under Corporate Social Responsibility

Company is constantly working towards inclusive growth in society and is implementing various developmental activities under its Corporate Social Responsibility (CSR).

The company allocated a CSR budget of Rs.140.00 Lakh for the FY 2022-23 and incurred an expenditure of Rs.174.42 Lakh during the year. This included expenditure on schemes approved in previous years but carried forward in the year 2022-23.

In the year 2022-23, the focus of CSR activities of the Company was on the theme given by Department of Public Enterprises (DPE) i.e. Health & Nutrition. For promoting preventive Healthcare, the company undertook a project to run a Mobile Digital Health Clinic for preventive screening of the masses for the essential metabolic vitals in slums and rural areas of Delhi-NCR. Also, the Company provided Digital Programmable Hearing Aids to the hearing-impaired persons from weaker section of the society in Andhra Pradesh.

In addition, the Company undertook a project aimed at enhancing the Nutrition and Health of Government School Children through the "GiftMilk Program" in Aspirational District Guna. Under this initiative, a daily provision of 200ml of fortified, flavored, and sterilized milk is supplied to school children throughout the entire academic year.

The Company also distributed Long Lasting Insecticidal Nets (LLIN) of HIL in the rural areas of Punjab, Haryana, Madhya Pradesh & Telangana. These Mosquito nets would help in preventing vector-borne diseases and safeguarding public health.

Further, the company has also undertaken a number of projects to promote school education among students from underprivileged section of the society. The company has distributed Educational Material to the students from Government Primary Schools of remote villages near Delhi to promote regular attendance and increase interest in studies.

The Company has supported Government Schools in the vicinity of its plants with the provision of school desk & benches, IT enabled smart boards, RO Water facilities etc. In order to bring Divyangjan in mainstream of life, the Company has provided Braille Machines and special sports items to the blind students in Chandigarh.

A detailed report on the Corporate Social Responsibility is appended as Annexure-5 forms part of this Report.

RESEARCH & DEVELOPMENT | ?

NFL had sponsored a research project titled "Cow dung processing and its conversion to Bio- fortified fertilizer with enhanced functionality: A pilot study" undertaken by ICAR-NDRI was spread over a period of three years (2018-21). The pilot study was successfully completed in December, 2021 & final project report was submitted by ICAR-NDRI in January, 2022.

To further explore in R&D activities, NFL is settng up an R&D centre at Nangal along with settng up of a pilot plant for trial production of Nano fertilizers and other agriculture based products etc. Procurement action has been initiated for required laboratory apparatus and other setup of R&D lab at Nangal. In addition to above, NFL is exploring signing up MoU with reputed institutes like Institute of Nano Technology, Mohali and others in vicinity of NFL Nangal unit for R&D activities in Nano Fertilizers.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo | ?

Disclosure in terms of the Companies (Account) Rules, 2014 in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is appended as Annexure-6 forms part of this Report.

Safety, Environment and Sustainable Development | ?

Company has undertaken various initiatives for adopting best practices for health, safety environment management and sustainable developments and the details of the same is appended as Annexure-7 forms part of this Report.

Particulars of Loans, Guarantees, Security and acquisition under Section 186 of the Companies Act, 2013 | ?

Particulars of loans given, guarantees provided, investments in securities and acquisitions made by the Company during the year under review are given in Form MBP-2 and the same is appended as Annexure-8 forms part of this Report.

Joint venture /Associates Companies | ?

Details of Joint Venture/Associates Companies pursuant to Section 129(3) of the Companies Act, 2013 the statement containing the salient features of the Financial Statement of the Associate Company/Joint Venture Company is, included in the Consolidated Financial Statements is appended as Annexure-9 forms part of this Report.

Companies which have become or ceased to be subsidiaries, associates and joint ventures

During the year 2022-23, Company has not acquired or formed any new subsidiary, associate or joint venture. Similarly, no subsidiary, associate or joint ventures have been ceased by way of sale of shares, amalgamation, winding up etc.

Related Party Disclosures

The particulars of contracts/arrangement entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 including arm's length transactions under third proviso thereto are disclosed in Form AOC-2 and the same is appended as Annexure-10 forms part of this Report. Related Party Transaction Policy of the Company is available at www.nationalfertilizers.com.

Capital Expenditure (CAPEX)

The achievement in CAPEX is ^ 160 crore excluding capital work in progress (CWIP) in the year 2022-23.

Risk Management | ?

The chemical fertilizer industry is operated in a hazardous environment and faces many risks including those related to health, safety and environment in addition to general business & financial risks. In order to mitigate them, the company has a comprehensive Risk Management Policy which is regularly reviewed and a periodical review of the risks, procedures and strategies is undertaken.

To review the new risks evolved during the quarter along with mitigation action undertaken as well as anticipated risks along with mitigation actions planned in future, the company has a two tier system where quarterly risks report is first reviewed by the Risk Assessment Committee (RAC) and thereafter final report is submitted to Risk Management Committee (RMC) for its recommendations before submission to Audit Committee and the Board of Directors. Efforts are made in a planned way to obviate the risks either fully or to minimize their impact.

Under Risk Management policy, all the risks along with mitigation actions undertaken have been reviewed by Risk Assessment and Risk Management Committees. Some of the major risks having severe financial impact as identified by the company include disallowing of minimum fixed cost for Vijaipur-I Unit under MNPS - III w.e.f. 02.04.2014 and outstanding subsidiary due to delayed subsidiary payment.

Internal Financial Controls

Details in respect of adequacy of internal financial controls with reference to financial statements are given in Management Discussion & Analysis Report.

internal Financial Reporting/ and Control

The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31.03.2023.

Particulars of Employees | ?

As per provisions of section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed Company is required to disclose the ratio of the remuneration of each Director to the median employee's remuneration and other prescribed details in the Board's Report.

As per notification dated 05.06.2015 issued by Ministry of Corporate Affairs, these provisions are not applicable to the Government Company. Accordingly, these particulars are not included in the Board's Report.

Public Procurement Policy of Micro and Small Enterprises (MSEs) Order, 2012

Public Procurement Policy for Micro and Small Enterprises (MSEs) was notified by the Government under the Micro, Small and Medium Enterprises Development Act, 2006 which stipulated that 20% of total annual procurement of goods and services shall be made by all Central Ministries /Departments /CPSUs from Micro & Small Enterprises (MSEs). Within this percentage, a sub total of 4% procurement is to be made from MSEs owned by SC/ST entrepreneurs. The requisite information for the year 2022-23 is appended as Annexure-11 forms part of this Report.

Procurement through GeM Portal | ?

The total procurement through GeM portal during 2022-23 was Rs. 151.15 Crore.

Human Resource Management | ?

The Company has manpower strength of 2964 regular employees as on 31.03.2023, which comprises 1454 Executives and 1510 Non- Executives. 197 women employees are on its roll, which is 6.65% of the total work force. The detailed analysis with regard to human resource including training and executive development programme have been made in the Management Discussion and Analysis Report.

• Employee Strength: The Company had 2964 employees as at the end of FY 2022-2023 of which 1268 were SC/ST/OBC employees and 50 divyangjans.

• Employee Benefits: The vision of the Company for its human resources is to create an enabling environment to enhance the efficiency of the organization. The aim is to encourage the employees to perform their best ability by a system of proper placements and incentives, while creating an atmosphere of trust and a feeling that the organization cares about the wellbeing and personal aspirations of the staff. This helps align personal aspirations with professional goals and enhances efficiency. The Company runs multiple benefit schemes for its employees like Provident Fund, gratuity, pension, medical benefits, contributory pension scheme, concessional interest rates on loans, scholarships to employees' children, executive health check-up etc. The Company also shares part of its profit with employees under its Performance Related Pay scheme in compliance with DPE Guidelines.

• Human Rights: Recruitment policy of the Company does not permit any engagement of child labour, forced labour or involuntary labour, an independent Internal Complaint Committee has been constituted at Corporate Office and each Unit to promptly and appropriately handle complaints of sexual harassment at work places. The Company refrains from any discrimination on the basis of caste, creed, gender or religion and strives to ensure a healthy work-life balance for its employees.

Employee Well Being: NFL believes that workforce is the greatest asset that propels the growth engine. Employees are considered as "Change Catalysts" and the Company nurtures and channelize the expertise and talent of employees for growth performance, feedback, motivation and training. The achievements and efforts are appreciated, acknowledged & rewarded.

On the health front also, Company looks after each & every employee along with his / her dependents for protection from unhygienic conditions and treatment of various illnesses.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention,Prohibition and Redressal) Act, 2013

Policy on Prevention, Prohibition and Redressal of Sexual harassment of women at work place is in line with the requirements of the Sexual Harassment of women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. No complaint of sexual harassment was received in the year 2022-23.

Details of proceedings pending under the Insolvency and Bankruptcy Code, 2016 | ?

During the year under review, no application was made and no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 during the financial year 2022-23.

One-time Settlement and Valuation | ^

During the financial year 2022-23, no event has taken place that gives rise to reporting of details with respect to difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions.

Implementation of Official Language Policy | ^

The Company is making efforts for the propagation and implementation of official language policy of the Government of India. The quarterly meeting of Official Language Implementation Committee (OLIC) is regularly held in all the Units/Offices of the Company under the Chairmanship of Head of respective Office/Unit to review the progress of use of Hindi in Official work. Total 36 meetings were held during the year 2022-23.

To promote the use of Hindi, 36 Hindi Workshops were organized during the year in which 997 employees actively participated. 'Hindi Pakhwara' was organized in all the Units/Offices of the Company to commemorate 'Hindi Diwas'. During the year 57 programmes/competiti'ons were organized for promoting the use of Hindi and a total 1773

employees participated in them out of which 531 participants were awarded prizes. Besides, under 'Cash Incentive Scheme' 85 employees were given cash prizes for doing their official work in Hindi.

Two half yearly meetings were successfully conducted in compliances of the conduct and heading of Town Official Language Committee (Undertaking), Noida on 22-07-2022 and 22-11-2022 by NFL, Corporate Office through video conferencing under the Chairmanship of Chairman & Managing Director of NFL in which 68/77 nos. of nominated heads of members offices and other Official Language Officer attended the meeting.

During the year 2022-23, the First Sub-committee of the Parliamentary Committee on Official Language successfully conducted the Inspection/Tour programme regarding the use of Official Language at Zonal Office, Lucknow on 19.05.2022, Area Office, Gorakhpur on 04.01.2023, Area Office, Agra on 11.01.2023, Area Office, Jodhpur on 13.01.2023 and Area Office, Patna on 27.02.2023 respectively.

NFL, Corporate Office, Noida was awarded First Prize for its excellent work in the field of official language implementation in the "Hindi Advisory Committee" meeting held in New Delhi on 23.06.2022 under the Chairmanship of the Hon'ble Minister of Chemicals and Fertilizers. Also, special honor was given to NFL Official Language Officer in the said meeting. All Units/ Offices of NFL participated in the "Rajbhasha Sammelan" at Surat (Gujrat) organized by Department of Official Language, GOI, from 14-15 September, 2022.

NFL's Bathinda Unit was awarded "Rajbhasha Shield" - First Prize, under PSU category for its commendable work in the field of official language during the year 2020-21 by TOLIC, Bathinda in November, 2022 and TOLIC, Chandigarh on 24.11.2022 bestowed NFL's Zonal Office, Chandigarh with "Rajbhasha Shield"- First Prize, under Board/ Corporation/Undertaking category for its commendable work in the field of official language during the year 202021.

The Ministry of External Affairs, Government of India organized 12th 'World Hindi Conference' from February 15th to 17th, 2023 at Nadi City, Fiji. In this conference, Hindi scholars, litterateurs, journalists, linguists and Hindi lovers from all over the world gathered on one platform. NFL, Corporate Office, Noida was represented by senior officials.

Initiatives taken for development of employees belonging to Scheduled Caste /

Scheduled Tribes /Other Backward Classes (SC/ST/OBC categories).

Company is committed to the development of employees belonging to reserved categories. An Implementation Cell is functional in all Units/ Offices of the Company to oversee the implementation of Presidential Directives on Reservation Policy for SCs / STs. Liasion Officer has been appointed in each Unit / Office and Chief Liasion Officer at CO, NOIDA to ensure due compliance of orders and instructions pertaining to reservation for SCs and STs and other concessions admissible to them. Meetings were periodically held at Unit level as well as at corporate level with the SC /ST Employees' Welfare Associations by the Management for redressal of grievances of SC /ST employees. A statement showing representation of employees belonging to Scheduled Caste/Scheduled Tribes/Other Backward Classes/ Persons is appended as Annexure-12 forms part of this Report.

Presidential Directives | ?

Schedule of Compliances with Presidential Directive issued during financial year 2022-23 and during last three year preceding the financial year 2022-23 is as below:

Financial Year

Content of Presidential Directives

Compliance

2022-23

NIL

NIL

2021-22

NIL

NIL

2020-21

NIL

NIL

2019-20

NIL

NIL

Information Technology | ?

Company has embarked on a journey to become an IT enabled organization to improve operational efficiencies and has made significant investments in digital assets and new technologies intending to address the company's future needs.

Major digital initiatives include implementation of centralized Dispatch Management System, Marketing Management & Information System, Human Resource Management System, Employees Self Service portal and Online APAR system which are handled at Data Centre of Corporate Office, Noida. Recently PRMS (Post-Retirement Medical Scheme) portal has been made live for extending the medical benefits to the eligible ex-employees of NFL and their spouse.

In order to have secure access to business applications, SDWAN solution has been implemented. To reduce the downtime of internet access, redundant internet leased lines had been replaced at each Manufacturing Units, Zonal Offices and Corporate Office, Noida. To prevent cyber threats, UTM based security appliances have been installed.

E-Office application has been implemented across the organization. This initiative has given the twin benefit of being environment friendly (i.e. a step towards paperless office) and has resulted in reduction in file processing time, thus speeding up decision making.

To address the company's future needs, implementation of ERP solution SAP S4/HANA is under progress which is an integrated business solution and will increase productivity, efficiency and will provide data on real time. The project is named as 'SANGAM' - Software Aligned for NFL's Growth and Modernization.

Material impact of CoVID-19 pandemic on operations and performance of the Company | ?

During the FY 2022-23, there was no material impact of CoVID-19 pandemic on the operations and performance of the Company.

AUDITORS | ?

Statutory Auditors | ^

The Statutory Audit of your Company was conducted by Chartered Accountants firms M/s. Arun K. Agarwal & Associates, Chartered Accountants and M/s Dhawan & Co., Chartered Accountants, Joint Auditors appointed by Comptroller & Auditor General of India (C&AG). Auditor's Report on the Financial Statements including consolidated Financial Statements of the Company for the financial year 2022-23 is attached.

Proposal authorising Board of Directors to decide & fix remuneration of Statutory Auditors appointed/to be appointed by the Comptroller and Auditor General of India for the F.Y. 2023-24 is placed for your approval.

Explanation in response to Auditor's Qualification | ?

Statutory Auditors of the Company have issued an Audit Report with Unmodified opinion on Audited Financial Results of the Company (Standalone & Consolidated) for the financial year ended 31.03.2023.

Comments of C&AG !!?

The Financial Statement (Standalone and consolidated) of the Company are subject to comments of C&AG of India under Section 143(6)(b) read with Section 129(4) of the Companies Act, 2013 which shall be sent to shareholders separately.

Cost Auditors | ?

As prescribed under Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules,

2014, the cost accounting records are being maintained by all the Units of the Company. Cost Audit for 2022-23 was carried out by Cost Auditors M/s K.G. Goyal & Associates, M/s Ravi Sahni & Co., M/s Ramanath Iyer & Co. and M/s R. K. Patel & Co., as prescribed under the Companies Act, 2013 and Rules framed thereunder. M/s Ramanath Iyer & Co. acted as the Lead Cost Auditor. Consolidated Cost Audit Report for the financial year 2021-22 was filed with Ministry of Corporate Affairs (MCA) on 07.09.2022.

Internal Auditors | ^

Company has an Internal Audit Department headed by Deputy General Manager. To carry out Non-technical Audit, your company had appointed nine Chartered Accountant firms namely M/s. S.K.Mehta & Co, M/s. G.S. Mathur & Co., M/s. Raj HarGopal & Co., M/s J.Singh & Associates, M/s. Goyal Parul & Co., M/s. Chaturvedi & Co., M/s.S.N. Kapur & Associates, M/s. Amit Ray & Co., and M/s J.K.S.S & Associates for the year 2022-23. Technical Audit and IT/ EDP Audit were carried out by in-house internal audit teams.

Secretarial Auditors | ?

M/s Kumar Naresh Sinha & Associates, Practicing Company Secretaries was appointed by the Board for undertaking the Secretarial Audit for the Financial Year 2022-23 in terms of Section 204 of Companies Act, 2013 and Rules made there under. Secretarial Audit Report for the year 2022-23 and Management's explanation to Secretarial Auditor's observations are appended as Annexure-13 which forms part of this Report.

Annual Secretarial Compliance Report for the Financial Year ended 31.03.2023 issued by M/s Kumar Naresh Sinha & Associates, Practicing Company Secretaries, under Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended as Annexure-14 which forms part of this Report.

Compliance with Secretarial Standards | ?

The Company complies with all applicable Secretarial Standards issued by The Institute of Company Secretaries of India.

Audit Committee | ^

The detailed disclosures have been made in the Corporate Governance Report annexed to this report.

Nomination & Remuneration Committee and Remuneration Policy | ?

Disclosures regarding Nomination & Remuneration Committee and Remuneration Policy are given in the Corporate Governance Report annexed to this report.

Stakeholders Relationship Committee | ?

Disclosures regarding Stakeholders Relationship Committee are given in the Corporate Governance Report annexed to this report.

Corporate Social Responsibility and Sustainable Development Committee | ^

Disclosures regarding Corporate Social Responsibility and Sustainable Development Committee are given in the Corporate Governance Report annexed to this report.

Company's policy on Director's appointment and remuneration | ?

Ministry of Corporate Affairs has granted exemption vide notification No. GSR463 (E) dated 05.06.2015 to the Government Companies from the provisions of Section 134(3)(p) of the Companies Act, 2013. Director's

appointment and remuneration is decided by the Government of India. Keeping in view the exemption, no Remuneration Policy has been formulated.

Board & Committee Meetings | ?

The details of Board Meetings, Committee Meetings and Meetings of Independent Directors are given in the Corporate Governance Report annexed to this report.

Annual Return u/s 92(3) of the Companies Act, 2013 | ?

The Annual Return of the Company will be made available on the website of the Company at www.nationalfertilizers.com.

Investor Education and Protection Fund | ?

The Company has complied with all the provisions relating to the Investor Education and Protection Fund (IEPF) under the Companies Act, 2013 and The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, made there under. Company Secretary is the Nodal Officer to deal with IEPF Authority and compliances related thereto.

During the year 2022-23, an amount of ^ 99,366 of unpaid/unclaimed dividend amount was transferred to Investor Education and Protection Fund on account of unpaid/unclaimed dividend. Accordingly as per Section 124(6) of the Companies Act, 2013 and Rules notified thereunder, 13087 shares were transferred to demat account of IEPF. The details of the unpaid/unclaimed dividend and shares transferred to IEPF Account for the previous years are available at the website of the Company www.nationalfertilizers.com.

Listing | ?

Company's equity Shares are listed at National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). Other disclosures regarding listing regulations have been made in Corporate Governance Report.

Listing Fee | ?

Company has paid requisite listing fee to the stock exchanges during the year 2022-23.

Service to Shareholders !!?

All matters relating to transfer/transmission of shares, issue of duplicate share certificates, payment of dividend, dematerialization and re-materialization of shares and redressal of investors grievances are carried out by the Company's RTA i.e. M/s. MAS Services Limited, New Delhi.

Code of Conduct

Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31.03.2023. Code of Conduct has been uploaded on the website of the Company at www.nationalfertilizers.com.

Corporate Policies & Codes !!?

Details regarding various corporate policies & codes are given in the Corporate Governance Report and also available on the website of the Company at www.nationalfertilizers.com.

Disclosure pursuant to FEMA Regulation | ?

FEMA Regulations applicable to Companies owned or controlled by non-resident entity(s) are not applicable to NFL.

Key Business Development !!?

Overview of the Indian & Global fertilizer industry is given in the Management Discussion & Analysis Report annexed to this report.

Disclosure regarding Mis-appropriation of Funds

Statutory Auditors in its report emphasized regarding fraudulent misappropriation of seed stock amounting to ' 0.64 crore by a Wheat Seed Producer under Warehousing and Processing of Wheat Seed Agreement with the Company during the year. The Company has filed a police complaint in the matter.

Disclosure regarding frauds !!?

No fraud has been reported by the Auditor to the Audit Committee or to the Board, during the financial year 2022-23.

Details of the sickness of the Company | ?

Not applicable.

Management «?Key Managerial Personnel (KMP) | ^

In compliance with provisions of Section 203 of the Companies Act, 2013, Key Managerial Personnel (KMP) position as on 31.03.2023 is as follows:

Shri Atul Baburao Pati'l, had been appointed as Chairman & Managing Director (Addl. Charge) w.e.f. 01.09.2022. Shri Hira Nand had been appointed as Chief Financial Officer w.e.f. 24.05.2022.

Shri Ashok Jha, Company Secretary.

Further, Shri U. Saravanan has been appointed as Chairman & Managing Director w.e.f. 16.06.2023.

Board of Directors | ?Changes in Composition »?

Shri Nirlep Singh Rai ceased to be C&MD w.e.f. 31.08.2022.

Shri Atul Baburao Pati'l was appointed as Additional Director [Director (Marketing)] w.e.f. 07.04.2022 in terms of DoF order 82/1/2021-HR- PSU (part) dated 25.03.2022 and was entrusted with Additional Charge of C&MD w.e.f. 01.09.2022 in terms of DoF order FI. No. 82/1/2014-HR-I dated 24.08.2022 for a period of three months which was extended for a period of three months w.e.f. 01.12.2022 vide DoF order 82/1/2014-HR-I dated 02.12.2022 which was further extended upto 15.06.2023 vide DoF order 82/1/2014-HR-I dated 27.02.2023. Further, Members of the Company appointed him as Director (Marketing), liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Shri Hira Nand was appointed as Chief Financial Officer w.e.f. 24.05.2022 & Additional Director [Director (Finance)] w.e.f. 17.06.2022 in terms of DoF order 82/3/2013-HR-PSU dated 17.06.2022. Further, Members of the Company appointed him as Director (Finance), liable to retire by rotation through Postal Ballot resolution passed on 03.09. 2022.

Shri Rajan Kanwar was appointed as Additional Director [Director (Technical)] w.e.f. 21.10.2022 in terms of DoF order

82/1/2017-HR PSU-Part (1) dated 21.10.2022. Further, Members of the Company appointed him as Director (Technical), liable to retire by rotation through Postal Ballot resolution passed on 24.12.2022.

Shri Dharam Pal, Government Nominee Director absents himself from all the Meetings of Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board. Accordingly, he has ceased to be Government Nominee Director of the Company w.e.f. 10.06.2022.

Ms. Neeraja Adidam was appointed as Government Nominee Director (part time Government Nominee Director) on the Board of the Company w.e.f. 14.10.2021 vice Shri Partha Sarthi Sen Sharma in terms of Order No. 95/1/2019-HR-PSU dated 29.09.2021 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed her as Government Nominee Director, liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Dr. Prathibha A. was appointed as part time Government Nominee Director w.e.f. 03.08.2022 in terms of DoF order 95/1/2019-HR-PSU dated 20.07.2022. Further, Members of the Company appointed her as Government Nominee Director, liable to retire by rotation in 48th Annual General Meeting held on 29.09.2022.

Dr. Poonam Sharma, Shri Ritesh Tiwari and Shri Kashi Ram Godara were appointed as Non-official Independent Directors on the Board of the Company w.e.f. 12.11.2021 in terms of Order No. 78/2/2006-HR-PSU (pt II) dated

05.11.2021 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed them as Non-official Independent Directors, not liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Dr. Venkata Sarvarayudu Thota was appointed as Non-official Independent Director on the Board of the Company w.e.f. 30.11.2021 in terms of Order No. 78/2/2006-HR-PSU (pt II) dated 05.11.2021 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed him as Non-official Independent Directors, not liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

Shri Jyoti Bhramar Tubid was appointed as Non-official Independent Director on the Board of the Company w.e.f.

21.04.2022 in terms of order 78/2/2006-HR-PSU (pt) dated 28.03.2022 issued by Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India. Further, members of the Company appointed him as Non-official Independent Director, not liable to retire by rotation through Postal Ballot resolution passed on 25.06.2022.

In addition to above, Shri U. Saravanan was appointed as Additional Director (Chairman & Managing Director) w.e.f. 16.06.2023 in terms of DoF order F. No. 82/1/2014-HR-I dated 15.06.2023 for a period with effect from the date of his assumption of charge of the post till the date of his superannuation i.e. 31.01.2027 or until further orders, whichever is earlier.

Details of tenure of Directors are provided in the Corporate Governance Report.

Re-appointment of Directors at the AGM «?

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Hira Nand (DIN: 09476034) and Dr. Prathibha A. (DIN: 09692712), will retire by rotation at the ensuing AGM and being eligible have offered themselves for re-appointment.

Declaration by Independent Directors u/s 149(6) of the Companies Act, 2013 | ?

All Independent Directors have given declaration that they meet the criteria of Independence as laid down in Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. In the opinion of the Board, the Independent Directors posses integrity and necessary expertise & experience.

Re-appointment of Independent Directors | ?

As per Section 149(10) of the Companies Act, 2013, none of the Independent Directors have been reappointed on the Board of the Company during the FY 2022-2023.

Disqualifications of Directors | ?

None of the Directors have committed any disqualification as provided under Section 164 of the Companies Act, 2013.

Remuneration to Directors | ?

Details of Remuneration to Directors and Company Secretary are given in the Corporate Governance Report annexed to this Report.

Performance evaluation of Board of Directors | ?

The details regarding performance evaluation of Board of Directors have been given in the Corporate Governance Report.

Directors' Responsibility Statement | ?

Pursuant to the requirement of Section 134(3) (c) of the Companies Act, 2013, your Directors confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) 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 at the end of the financial year 2022-2023 and of the profit of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Acknowledgements | ?

The Board of Directors acknowledge their gratitude for the valuable guidance and support received from the various wings of Government of India, in particular Department of Fertilizers, Fertilizer Industry Coordination Committee (FICC), various State Governments, Financial Institutions, Banks, stakeholders and all others whose continued support has been a source of strength to the Company.

Your Directors also acknowledge the suggestions received from Statutory Auditors, Internal Auditors, Cost Auditors, Secretarial Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board would like to place on record its appreciation to the hard work, commitment and unstinting efforts put in by the employees at all levels throughout the year. Board also place on record active support and cooperation received from Employees Trade Union and Officers Association for sustained improvements.

Registered Office: For and on behalf of the Board of Directors

Scope Complex, Core-III,

7, Institutional Area, Lodhi Road,

New Delhi-110003. (U. Saravanan)

Date: 29 August, 2023 Chairman & Managing Director

DIN: 07274628

 
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