ANNUAL REPORT

Transcription

1 Designed & Printed at Brijbasi Art Press Ltd. Pc-10 Dt # ANNUAL REPORT GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS DEPARTMENT OF FERTILIZERS GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS DEPARTMENT OF FERTILIZERS

2 ANNUAL REPORT Government of India MINISTRY OF CHEMICALS & FERTILIZERS DEPARTMENT OF FERTILIZERS 1 A n n u a l R e p o r t

3 2 Department of Fertlizers, Ministry of Chemicals Fertilizers

4 Contents 1. Introduction Organisational Set up and Functions Development & Growth of Fertilizer Industry Availability of Major Fertilizers during Plan Performance Measures of Support for Fertilizers Public Sector Undertakings and Cooperative Societies Fertilizer Education Projects Information Technology (IT) Vigilance Activities Right to Information Act, Progressive Use of Official Language Hindi Welfare of SCs, STs, OBCs and Physically Handicapped Persons Activities in the North-East Region Women Empowerment ANNEXURES I to XII A n n u a l R e p o r t

5 Hon ble Union Minister for Chemicals & Fertilizers and Steel Shri Ram Vilas Paswan lighting lamp on the occasion of 34th Foundation Day Celebration Function of NFL organised at Siri Fort Auditorium, New Delhi. 4 Department of Fertlizers, Ministry of Chemicals Fertilizers

6 Chapter - 1 Introduction Indian economy has witnessed an impressive rate of growth during the last few years. While Indian agriculture did not grow at the targeted rate, it has transformed from a predominantly subsistence farming at the time of independence to a market oriented agriculture, particularly after the Green Revolution. Although share of agriculture in GDP has declined from over 50% at the time of independence to less than 20%, agriculture remains the prominent sector in terms of employment and livelihood with more than half of India s workforce engaged in agriculture. Besides, it provides crucial backward and forward linkages for the rest of the economy. Successive Five Year Plans have laid stress on self-sufficiency and self-reliance in foodgrains production and concerted efforts in this direction have resulted in substantial increase in agriculture production and productivity. Indian agriculture today not only meets the growing and diverse demands of the domestic population, but also contributes significantly to export earnings Consumption of Fertilizers Fertilizer has been considered as a crucial input to Indian agriculture for improving productivity to meet the requirements of a growing population. Chemical fertilizers impact agricultural production along with a number of supporting factors like high yielding varieties of seeds,assured irrigation, access to credit and land reforms. Keeping in view the vital role played by chemical fertilizers in making India self-reliant in terms of food security, the Government of India has been consistently pursuing policies conducive to increased availability and consumption of fertilizers in the country. As a result, the annual consumption of fertilizers in nutrient terms (N, P & K) has increased from 0.7 lakh MT in to lakh MT in , with the per hectare consumption of fertilizers, which was less than 1 kg. in having increased kg (estimated) in Consumption of Urea, DAP and MOP has been increasing successively for the last three years at lakh MT, lakh MT and lakh MT respectively during , lakh MT, lakh MT and lakh MT respectively during and lakh MT, lakh MT and lakh MT respectively during The current financial year has seen unprecedented growth in the demand for fertilizers. The demand projected by DAC for the Kharif 2007season was for lakh MT of urea, lakh MT of DAP and lakh MT of MOP. The demand was met fully and sales of lakh MT of Urea, lakh MT of DAP and lakh MT of MOP were registered. Similarly, for the Rabi season of , the demand projected by DAC was for lakh MT of Urea, lakh MT of DAP and lakh MT of MOP. As per the current trends, the sale is likely to be lakh MT of Urea, lakh MT of DAP and lakh MT of MOP Production of Fertilizers The country had achieved near selfsufficiency in production capacity of urea by with the result that India could completely manage its requirement of nitrogenous fertilizers through the indigenous industry. However, there has been sharp increase in consumption of fertilizers in last 3-4 years without any corresponding increase in indigenous production. As a result, in , approximately 25% of the urea requirement is being met through imports. While indigenous capacity has been similarly developed in respect of phosphatic fertilizers to meet domestic requirements, the raw materials and intermediates for the production of phosphatic fertilizers are 5 A n n u a l R e p o r t

7 largely imported. Steep increase in the price of phosphoric acid and sulphur alongwith insufficient availability have adversely affected indigenous production of phosphatic fertilizers in India. Hence input dependency has increased in case of Phosphatic Fertilizers. As for Potash (K), since there are no viable sources/reserves in the country, its entire requirement is met through imports. Production of Urea which was lakh MT in increased to lakh MT in and further to a record level of lakh MT in Production of DAP, however, declined in at lakh MT after reaching a peak at lakh MT in , mainly because of feedstock problems and shift of phosphatic capacity towards production of complexes. Shortfall was made up by importing the required quantity so as to meet demand as assessed by the D/O Agriculture and Cooperation. During April-December 2007, there has been decline in production of Urea, DAP and complexes when compared with the corresponding period in the previous year. Marginal decline in urea production has been due to technical problems in some of the plants. Decline in production of phosphatic fertilizers has been due to constraints in availability of phosphoric acid and high prices of sulphur. Requirement of MOP is met fully by imports. The production of Urea, DAP and complexes during the last five years and during the current year up to December, 2007 are given below: Growth Of Fertilizer Industry The industry made a very humble beginning in 1906, when the first manufacturing unit of Single Super Phosphate (SSP) was set up in Ranipet near Chennai with an annual capacity of 6000 MT. The Fertilizer & Chemicals Travancore of India Ltd. (FACT) at Cochin in Kerala and the Fertilizers Corporation of India (FCI) in Sindri in Bihar (now Jharkhand) were the first large sized fertilizer plants set up in the forties and fifties with a view to establish an industrial base to achieve self-sufficiency in foodgrains. Subsequently, the Green Revolution in the late sixties gave an impetus to the growth of fertilizer industry in India and the seventies and eighties witnessed a significant addition to the fertilizer production capacity. However, there have not been any substantive addition to fertilizer production capacity during the last 15 years A s o n 31 Jan 08, the country has an installed capacity of lakh MT of nitrogen and lakh MT of Phosphate. Presently, there are 56 large size fertilizer plants in the country manufacturing a wide range of nitrogenous, phosphatic and complex fertilizers. Out of these, 30 (as on date 28 are functioning) units produce urea, 21 units produce DAP and complex fertilizers, 5 units produce low analysis straight nitrogenous fertilizers and the remaining 9 manufacture ammonium sulphate as-product. Besides, there are about 72 medium and small-scale units in operation producing SSP. The sector-wise (In lakh MT) Prod April-Dec.07 April-Dec.06 Urea DAP Complexes Department of Fertlizers, Ministry of Chemicals Fertilizers

8 installed capacity is given in the table below:- SECTOR-WISE NUTRIENT-WISE INSTALLED CAPACITY OF FERTILIZER MANUFACTURING UNITS AS ON * lakh MT S.N. Sector N P Capacity* %Share Capacity* %Share 1 Public Cooperative Private Total Self-Sufficiency In Fertilizer Sector Out of three main nutrients namely nitrogen, phosphate and potash (N, P & K) required for various crops, indigenous raw materials are available mainly for nitrogenous fertilizers. The Government s policy has hence aimed at achieving the maximum possible degree of self-sufficiency in the production of nitrogenous fertilizers based on utilization of indigenous feedstock. Prior to 1980, nitrogenous fertilizer plants were mainly based on naphtha as feedstock. A number of fuel oil/lshs based ammonia-urea plants were also set up during 1978 to In 1980, two coal-based plants were set up for the first time in the country at Talcher (Orissa) and Ramagundam (Andhra Pradesh). These coal based plants have, however, been closed w.e.f due to technical and financial considerations. With natural gas becoming available from offshore Bombay High and South Basin, a number of gas based ammonia-urea plants have been set up since However, as the usage of gas increased and its available supply dwindled, a number of expansion projects came up in the last few years with dual feed facility using both naphtha and gas. Feasibility of making available liquified Natural Gas (LNG) to meet the demand of existing fertilizer plants and/or for their expansion projects along with the possibility for utilizing newly discovered gas reserves, is also being explored by various fertilizer companies in India. Government has, in 2007, decided in principle to explore the possibility of revival of 8 fertilizer plants at Barauni, Sindri, Haldia, Gorakhpur, Talcher, Ramagundm, Korba and Durgapur, subject to confirmed availability of gas In case of phosphates, the paucity of domestic raw material has been a constraint in the attainment of self-sufficiency in the country. Indigenous rock phosphate supplies meet only 5-10% of the total requirement of P 2 O 5. A policy has, therefore, been adopted which involves mix of three options, viz. domestic production based on indigenous/ imported rock phosphate and imported sulphur; domestic production based on indigenous/imported intermediates, viz. ammonia and phosphoric acid; and import of finished fertilizers. During , roughly 77% of the requirement of phosphatic fertilizers was met through the first two options. The share of imported finished fertilizers is however, increasing In the absence of commercially exploitable potash sources in the country, the entire demand of potassic fertilizers for direct application as well as for production of complex fertilizers is met through imports Fertilizer Subsidy In spite of increase in cost of fertilizers, the Government has kept the farmers completely insulated by keeping MRP of fertilizers unchanged for the last several years. Correspondingly, the subsidy on fertilizers has increased sharply over the last few years. Fertilizer subsidy is projected at Rs A n n u a l R e p o r t

9 crores in as against Rs crores in It is estimated that 88% of the increase in subsidy is due to sharp increase in international prices of fertilizer inputs and finished fertilizer. The balance 12% increase in the last five years can be attributed to the increase in consumption of fertilizers With a view to streamline the fertilizer subsidy in the country, Government is planning to shift to a system of nutrient based pricing wherein the price for each nutrient would be common across the range of fertilizers products. Further in light of the fact that large parts of the country are deficient in Sulphur(S) nutrient, the proposal to provide subsidy on S in addition to N, P, and K, is under active consideration Fertilizer Pricing Policy Fertilizer Control Order (FCO) was passed under the Essential Commodities Act (ECA) to regulate the sale, price and quality of fertilizers in fifties. Due to fertilizer shortages in early 70s, Fertilizer Movement Control Order, 1973 (FMCO) was passed bringing fertilizer distribution and Inter State movement under the government control Due to steep hike in international prices, Fertilizer Prices Committee, under the Chairmanship of Shri S.S. Marathe, the then Chairman of BICP, was set up to recommend the pricing policy for the fertilizers. Based on the recommendations of the Marathe Committee, Retention Prices Scheme (RPS) was introduced for various fertilizers fixing the prices based on cost of production and fair return on investment. In 1998, a High Powered Fertilizer Pricing Policy Review Committee was set up under the Chairmanship of Prof. C.H. Hanumantha Rao to review the existing system of subsidy to urea and suggest alternate mechanism. Based on recommendations of the Committee, unit-wise retention prices of urea were discontinued and a group based uniform normative referral prices for 6 major groups were fixed Subsequently, Expenditure Reforms Commission (ERC) studied the pricing policy for fertilizers and made recommendations for phased decontrol of fertilizer industry. The New Pricing Scheme (NPS) for urea was introduced w.e.f The Stage-I of NPS was of one year duration from 1st April, 2003 to 31st March, 2004 and Stage-II was of two year duration from 1st April to 31st March, With the Stage-III of NPS being implemented w.e.f. 1st October, 2006, the Stage-II of NPS was extended upto 31st September, Under the New Pricing Scheme for urea units, it was envisaged that decontrol of urea distribution/movement will be carried out in a phased manner. During Stage-I, i.e. from to , the allocation of urea under the Essential Commodities Act, 1955 (ECA) was restricted upto 75% and 50% of installed capacity (as reassessed) of each unit in Kharif 2003 and Rabi respectively. It was further envisaged that during Stage-II commencing from , urea distribution will be totally decontrolled after evaluation of Stage-I and with the concurrence of the Ministry of Agriculture. The total decontrol of urea distribution was deferred initially for a period of six months w.e.f , i.e. upto Kharif 2004, which has been subsequently deferred upto Rabi , i.e. upto The existing system of 50% ECA allocation and 50% outside ECA allocation has been extended upto The pricing policy for urea units for Stage-III of NPS, which is effective from to , has been formulated keeping in view the recommendations of the Working Group set up under the Chairmanship of Dr. Y.K. Alagh. 8 Department of Fertlizers, Ministry of Chemicals Fertilizers

10 Hon ble Union Minister for Chemicals & Fertilizers and Steel Shri Ram Vilas Paswan unveiled the Statue of Dr. Bhim Rao Ambedkar at Corporate office, RCF, Mumbai. The salient features of the proposed Stage-III Policy which is aimed at promoting further investment in the urea sector are to maximize urea production from the urea units including through conversion of non-gas based units to gas, incentivising additional urea production and encourage investment in Joint Venture (JV) projects abroad The availability of gas is critical to the growth of urea industry in the country. Presently, the indigenous availability is not sufficient to meet the demand of existing gas based urea units in the country. The policy also lays down a formulation to dis-incentivise high cost production from the non-gas based units and to facilitate their early conversion to gas. The policy seeks to encourage the existing urea units to produce beyond 100% of their installed capacities by introducing a system of incentives for additional urea production subject to merit order procurement. The policy seeks to rationalize distribution and movement of urea and the system of freight reimbursement with the objective of ensuring availability of urea in all parts of the country. The Government will continue to regulate 9 A n n u a l R e p o r t

11 movement of urea upto 50% of production depending upon the exigency of the situation Government of India decontrolled phosphatic and potassic (P & K) fertilizers w.e.f. 25th August, 1992 on the recommendations of Joint Parliamentary Committee. Afterwards the prices of these fertilizers registered a sharp increase compared to urea. Department of Agriculture & Cooperation (DAC) introduced a scheme of concession on decontrolled P & K fertilizers in on adhoc basis. The administration of the Concession Scheme was transferred from the DAC to Department of Fertilizers (DoF) w.e.f. 1st October Government fixes the Maximum Retail Price (MRP) of DAP, MAP, MOP and NPK Complexes uniformly for the country. MRP of SSP is indicated by the respective State Governments. Government computes the total delivered cost of fertilizer as per the methodology recommended by the Tariff Commission implemented from This is based on Cost Plus approach, which takes into account raw material and input cost including utilities, handling and distribution cost, dealers margin, interest and return on capital employed, etc., in case of indigenous finished products. In case of imported finished products, it takes into account the import price including custom applicable, handling and distribution cost, dealers margin, interest and return. Based on this methodology, normative delivered cost of P & K fertilizers (DAP, MAP, MOP and NPK Complexes excluding SSP) is computed. The difference between the normative delivered cost and the MRP is provided as concession/subsidy. In case of SSP, an adhoc subsidy is provided. The DoF has entrusted the Tariff Commission to conduct a fresh Cost Price Study of the P & K fertilizers to update the various parameters under the Concession Scheme. Tariff Commission has since submitted its report which is under examination Global Scenario International prices of major state fertilizers, such as urea, DAP and MOP, came under severe pressure during the current year, resulting in steep increases in prices of both finished fertilizers as well as intermediates. Urea prices, which prevailed at $ (average FOB) per MT during January, 2007 increased to $ (average) per MT during January, Prices of DAP, which were $ (average C&F) per MT in January, 2007 increased to $ per MT during January, MOP prices, which prevailed at $ 170 (average, FOB) in January, 2007 went up to $ per MT during January, Raw material prices also showed exponential jumps during the last one year Ammonia prices, which, on an average, were $ per MT (C&F) in January, 2007, went up to $ per MT in January, Phosphoric Acid witnessed a sharp increase in the prices between January, 2007 and January, Prices of phos acid were $ per MT (C&F) on average in January, 2007, but shot up to all time high of $ per MT in January, Same is the case with Sulphur where prices ruled at $ (C&F) per MT during January, 2007 and increased to $ 556 per MT in January, Similarly, rock phosphate prices which were $ 79.5 per MT (average) in January, 2007 shot up to $ 245 per MT (average) during January, The spurt in international prices have impacted prices of imported finished fertilizers as well as raw material into India. As a result, subsidy outgo is expected to increase from Rs crores during to Rs crores in Current indications are that rising trend in international prices are likely to continue during the year 2008 as well. 10 Department of Fertlizers, Ministry of Chemicals Fertilizers

12 Chapter - 2 Organizational Set Up and Functions The main activities of Department of Fertilizers (DOF) include planning, promotion and development of the Fertilizer Industry, planning and monitoring of production, import and distribution of fertilizers and management of financial assistance by way of subsidy/concession for indigenous and imported fertilizers The Department is broadly divided into 4 Divisions dealing with (i) Fertilizers Projects and Planning (ii) Fertilizer Imports, Movement and Distribution (iii) Administration and Vigilance and (iv) Finance and Accounts. The work of these divisions is handled by two Joint Secretaries, one Economic Adviser & one Additional/Joint Secretary cum Financial Adviser. Recently one post of Joint Secretary has been created in the Department by converting the existing post of Executive Director FICC into Joint Secretary and one of the Joint Secretaries will also function as Executive Director, FICC on ex-officio basis The Joint Secretary in-charge of Administration and Movement looks after the work relating to Establishment & Administration matters, monitoring and assessment of production, import, movement and distribution of fertilizers, policy relating to and administration and management of concession scheme for decontrolled phosphatic and potassic fertilizers, joint ventures project in the P & K sectors, and all matters relating to W.T.O in the fertilizer sector. The Joint Secretary (Administration & Movement) also attends to grievances of the public and the employees of the Department Joint Secretary (Fertilizers) is entrusted with the work pertaining to planning of fertilizer production and development of fertilizer industry, which includes pricing policy for urea units; and issues relating to availability of raw materials such as natural gas, fuel oil and naphtha. In respect of PSUs, the Joint Secretary (Fertilizer) is concerned with joint venture projects in respect of nitrogenous fertilizers, external assistance for new fertilizer projects; revival/rehabilitation of sick fertilizer units, matters pertaining to company affairs The Economic Adviser (EA), an officer of Joint Secretary level advises the Department on various economic issues like creation of additional capacity, pricing and costing of fertilizers. He also supervises the functions pertaining to bio-fertilizers, micronutrients and organic manure. Besides, he functions as the Chief Vigilance Officer of the Department The list containing the names of Minister-incharge and the officers up to the level of Deputy Secretary who have worked in the department during is given in Annexure-II. 2.2 Fertilizer Industry Coordination Committee (FICC) The Office of Fertilizer Industry Coordination Committee (FICC) is an attached office under the Department of Fertilizers headed by Executive Director. Recently the post of ED, FICC has been converted to Joint Secretary in Department of Fertilizers and one of Joint Secretaris will look after the work of ED, FICC on ex-officio basis. The FICC comprises of the Secretaries to the GOI in the Department of Fertilizers, Industrial Policy and Promotion, Agriculture and Coperation, Expenditure, Ministry of Petroleum & Natural Gas, Chairman, Tariff Commission and two representatives of the urea industry. FICC, which was initially constituted w.e.f to administer and operate the erstwhile Retention Price cum Subsidy Scheme (RPS), has been replaced vide Resolution dated to administer and operate the New Pricing Scheme (NPS), which has come into existence w.e.f The policy for stage-iii (NPS-III) of the new pricing scheme for Urea has been amended on 8 th March 2007 effective from The Department has under its administrative control ten public sector undertakings (PSUs), one multi-state co-operative society and one Joint Sector Company. The list is given at Annexure-III. 11 A n n u a l R e p o r t

13 Chapter - 3 Development and Growth of Fertilizer Industry 3.1. Capacity Build-Up At present, there are 56 large size fertilizer units in the country manufacturing a wide range of nitrogenous, phosphatic and complex fertilizers. Of these, 30 units ( as on date 28 units are functioning ) produce urea, 21 units produce DAP and complex fertilizers, 5 units produce low analysis straight nitrogenous fertilizers and 9 manufacture ammonium sulphate as by-product. Besides, there are about 72 small and medium scale units in operation producing single super phosphate (SSP). The total installed capacity of fertilizer production which was lakh MT of nitrogen and lakh MT of phosphate as on , has marginally increased to lakh MT of nitrogen and lakh MT of phosphate as on Production capacity and capacity utilisation The production of fertilizers during was lakh MT of nitrogen and lakh MT of phosphate. The production target for has been fixed at lakh MT of nitrogen and lakh MT of phosphate, representing a growth rate of 2.85% in nitrogen and 8.79% in phosphate, as compared to the actual production in Production target for nitrogenous fertilizer is less than the installed capacity because of constraints in supply and quality of natual gas for Rashtriya Chemicals & Fertilizers (RCF), Trombay and Bramaputra Valley Fertilizer Corporation Ltd. (BVFCL), Namrup. Similarly, the production target for phospahtic fertilizer is less than installed capacity due to constraints in availability of raw materials/ intermediates which are largely imported The production of nitrogenous fertilizers during this year was less than the target mainly due to constraints in supply and quality of natural gas, equipment breakdowns and RCF Trombay-V & DIL Kanpur remained under unscheduled shutdown. In the case of phosphate, production in DAP plants was low on account of shortage of imported phosphoric acid and sharp increase in prices of raw materials / intermediates. Production of complexes was marginally lower than the coresponding period of last year The installed capacity of urea units in the country is as follows:- Urea Units Set Up Between: with Reassessed Capacity Year of Comm. Unit Feedstock and Sector Installed Capacity (lakh/mt) 1967 GSFC-Baroda Gas-Private SFC-Kota Naphtha-Private DIL-Kanpur Naphtha-Private MFL-Madras Naphtha-Public 1973 ZIL -Goa Naphtha-Private SPIC-Tuticorin Naphtha-Private MCFL-Mangalore Naphtha-Private NFL-Nangal FO/LSHS-Public IFFCO-Kalol Gas-Coop NFL-Bhatinda FO/LSHS-Public NFL-Panipat FO/LSHS-Public IFFCO-Phulpur Gas Coop RCF-Trombay-V Gas-Public GNFC-Bharuch FO/LSHS-Private RCF-Thal Gas-Public KRIBHCO-Hazira Gas-Coop BVFCL-Namrup-III (Formerly HFC) Gas-Public NFL-Vijaipur Gas-Public IFFCO-Aonla Gas-Coop Indogulf- Jagdishpur Gas-Private NFCL-Kakinada Gas-Private CFCL-Gadepan Gas-Private Department of Fertlizers, Ministry of Chemicals Fertilizers

14 1994 TCL-Babrala Gas-Private KRIBHCO SHYAM Shahjahanpur (Formerly OCFL) Gas-Private IFFCO-Aonla expansion Gas-Cooperative NFL-Vijaipur expansion Gas-Public IFFCO-Phulpur expansion Gas-Cooperative NFCL-Kakinada expansion Naphtha-Private CFCL-Gadepan expansion 2005 BVFCL Naphtha/Gas- Private Namrup-II Gas-Public After revamp The following 9 urea plants of the companies are presently closed/under shutdown due to various reasons, inter-alia, on accoount of technological absolescence, feedstock limitation, non-vaibility of unit/company and heavy financial losses. Sl. Name of the No. Company/Unit Date of closures 1. FCI: Gorakhpur FCI: Ramagundam FCI: Talcher FCI: Sindri HFC: Durgapur HFC: Barauni RCF: Trombay-I NLC: Neyveli FACT: Cochin-I Total Annual Installed Capacity (In Lakh MT) Note: Two urea units have suspended production for the last three years namely RCF-Trombay-V (3.3 LMT) due to shortage of natural gas and DIL-Kanpur (7.22 LMT) due to financial constraints The domestic fertilizer industry has by and large attained the levels of capacity utilisation comparable internationally. The capacity utilisation during was 96.0% for nitrogen and 79.8% for phosphate. The estimated capacity utilisation during is 92.2% of nitrogen and 71.9% of phosphate. Within this gross capacity utilization, the capacity utilisation in terms of the urea plants was 103.1% in and is estiamted to be 101.1% in The capacity utilisation of the fertilizer industry, particularly in respect of urea, is expected to improve further through revamping/ modernisation of the existing plants The unit-wise details of installed capacity, production and capacity utilisation during and (estimated) are given in Annexure-IV Strategy For Growth The following strategy has been adopted to increase fertilizer production: Expansion and capacity addition/efficiency enhancement through retrofitting / revamping of existing fertilizer plants. Setting up joint venture projects in countries having abundant and cheaper raw material resources. Working out the possibility of using alternative sources like liquified natural gas, coal gasification, etc., to overcome the constraints in the domestic availability of cheap and clean feedstock, particularly for the production of urea. Revival of the closed units by setting up brownfield units subject to availability of gas. Setting up of Greenfield projects in urea sector Feedstock Policy Natural gas based plants presently account for more than 66% of urea capacity. Naphtha is used for less than 30% urea production and 13 A n n u a l R e p o r t

15 the balance capacity is based on fuel oil and LSHS as feedstock. The two coal based plants at Ramagundam and Talcher were closed down due to technological obsolescence and non-viability Natural gas has been the preferred feedstock for the manufacture of urea over other feedstocks viz. naphtha and FO/LSHS, firstly, because it is clean and efficient source of energy and secondly, it is considerably cheaper and more cost effective in terms of manufacturing cost of urea which also has a direct impact on the quantum of subsidy on urea Accordingly, the pricing policy, announced in January 2004, provides that new urea projects, expansion of existing urea units and capacity increase through de-bottlenecking/ revamp/modernization will be also allowed/ recognized if the production comes from using natural gas/lng as feedstock. For the same reasons, a policy for conversion of the existing naphtha/fo/lshs based urea units to natural gas/lng as feedstock has also been formulated in January 2004, which encourages early conversion to natural gas/lng. Pursuant to formulation of policy for conversion of nongas urea units to gas, three naphtha based plants namely, Chambal Fertilizers & Chemicals Limited (CFCL), Gadepan-II and IFFCO-Phulpur-I & II have already converted to NG/LNG. Shriram Fertilizers & Chemicals Limited (SFC-Kota) has also started using gas w.e.f. 22 nd September Requirement and Availability of Gas to Fertilizer Sector The projected requirement of gas during the 11 th Plan period for fertilizer sector is as below: It is expected that with the above availability of gas, the production capacities in existing units will increase, closed fertilizer units will be revived new Greenfield/Brown field projects will be set up and non gas based fertilizer plants will be converted to gas, taking the overall production capacity of urea in the country to more than 31 million tonnes. Likewise, the projected requirement of urea by the end of 11 th Plan is expected to be around 31 million tones including the required quantities for maintaining the supply chain and buffer stocks. It is expected that with above availability of gas at reasonable prices, the country will become self-sufficient in urea by the end of 11 th Plan. The above availability of gas will also help our country to become an export surplus nation in urea sector The above requirement of gas is based on the desired need to make the country self-sufficient in urea production. This is necessary in light of the fact that our agricultural sector needs to be insulated from the volatile international prices of fertilizers and at the same time the fertilizer subsidy bill needs to be reduced. Urea is the only fertilizer, in which the country can become self-sufficient with the projected availability of gas in future. In phosphatic and potassic sector, we are largely import dependent and are subject to large-scale volatility in world prices of these fertilizers The indigenous production capacities can come up in future with the above gas availability provided the gas is available at reasonable price. World over the price ranging from gas is showing an upward trend but the countries rich in gas resources are having special assured price for fertilizer sector. The fertilizer sector in Middle East and North East Africa is based on gas prices of approximately 50 cents per Gas Demand (MMSCMD) Department of Fertlizers, Ministry of Chemicals Fertilizers

16 MMBTU to $ per MMBTU. This has led to a lower cost of production in these countries, which are also the major exporters of urea in the world By producing in India, the country not only becomes self-sufficient in urea production and immune from demand driven escalation in international prices, but it also leads to increase in economic activity within the country, increase in employment, industrial development, etc. At the same level of gas prices, the country will save approximately USD 60 per MT of urea by producing within the country as compared to importing from Middle East countries on price equivalent to cost of production. The savings will be on account of lower capital cost (USD 20 per MT approx), shipping freight (USD 20 per MT) and port handling charges (USD 20 per MT). In addition, there will be savings on account of internal transportation of urea depending upon the location of the plant In addition to the issue of availability in pricing of gas, the other major important issue in this sector is provision of gas pipeline connectivity to the existing urea units in the country and proposed urea units in future. At present 9 operational units are not on the gas grid and their connectivity with the gas grid is critical for their conversion to gas. Further 8 closed units of FCIL and HFCL are presently away from the gas grid and their connectivity with gas pipeline is a prerequisite for revival of these closed units. Ministry of Petroleum and Natural Gas has projected the following pipeline connectivity of gas to existing and closed units in the country which will be provided by :- S No. PIPELINE CONNECTIVITY PLAN (AS PROVIDED BY GAIL AN MOPNG) Proposed pipeline Agency for Fertilizer unit Expected year Connecting Proposed to Connnectivity. Plants. be connected. Naphtha based plants 1 Dhabol, Bangalore- GAIL ZIL, Goa Kochi-Mangalore. Bangalore 3 Kochi-Mangalore- banglore (also from Kochi LNG Terminal) 4 Kakinada-Tuticorin Via Chennai Fuel Oil/Shs based Plants GAIL MFCL, Mangalore GAIL FACT, Cochin RIL SPIC, Tuticorin MFL Chennai 5 Dadri-Baqana-nangal GAIL NFL- Nangal, Closed Units 6 Spur on Kakinda to Uran via Hyderabad 7 Spur from the following pipeline: Jagdishpur- Haldia 8 Spur from Kakinada-Haldia Pipeline RIL GAIL RIL Panipat, Bhatinda FCI Ramagundam FCI Sindri FCI, Gorakhpur,HFC, Barauni HFC, Durgapur, HFC Haldia FCI, Talcher A n n u a l R e p o r t

17 3.6. Joint Ventures Abroad Due to constraints in the availability of gas, which is the preferred feedstock for production of nitrogenous fertilizers and the near total dependence of the country on imported raw materials for production of phosphatic fertilizers, the Government has been encouraging Indian companies to establish joint venture production facilities, with buy back arrangement, in other countries, which have rich reserves of natural gas and rock phosphate The joint ventures already established have given the Indian sponsors an assured source of supply of urea and phosphoric acid, a vital input for manufacture of DAP and other phosphate and complex fertilizers. The details of the existing joint ventures in the fertilizer sector are : Joint Venture Oman India Fertilizer Company, Oman (OMIFCO): KRIBHCO, IFFCO and Oman Oil Company with a share holding of 25%, 25% and 50% respectively have collaborated and set up a world-class urea-ammonia fertilizer plant in Oman. It consists of 5060 MTPD granular Urea and 3500 MTPD Ammonia plants along with all other offsite and utilities in the coastal town of Sur in Oman. The annual capacity of the fertilizer complex is lakh MT of granular Urea. The project was completed at a cost of US$ million against an approved cost of US$ million resulting in saving of US$ 77.0 million. The urea produced in OMIFCO is being purchased by Govt. of India. In addition, plant produces 2.5 lakh MT of surplus Ammonia per year, for which IFFCO is the offtaker. During the financial year April 06 to March 07 OMIFCO has produced Lakh MT of Granular Urea and the quantity received by KRIBHCO was about 9.27 Lakh MT of granular Urea. During the financial year till 31 st October 2007 OMIFCO has produced lakh MT of Granular Urea. 3.8 ICS Senegal The Government of India (GOI), Indian Farmers Fertiliser Cooperative Ltd. (IFFCO) and Southern Petrochemicals Industries Corporation Ltd. (SPIC) are equity partners in a joint venture company set up in Senegal. The initial equity contribution of the Indian consortium in the venture in 1980 amounted to Rs crore, i.e. about 18.20% of its total equity. At present, the Indian sponsors together hold 27.28% equity (GOI-6.97%, IFFCO-19.09% and SPIC-1.13%), in the Joint Venture Company in Senegal named Industries Chimiques du Senegal (ICS) The company has a capacity to produce 6.60 lakh tonnes of phosphoric acid per annum and finished phosphate fertilizers in its plants in Senegal. A major portion of the phosphoric acid produced in the ICS plant is being utilized for production of phosphate fertilizers in the country through long term buy back arrangements with IFFCO On account of financial difficulties, the performance of ICS has been adversely affected. The Government is making efforts to restructure the company to improve its performance. A Memorandum of Understanding was signed between Minister of Mines and Industry, Government of Senegal and Managing Director, IFFCO on 11 th December, 2007 based on which the investment through IFFCO Consortium for restructuring of ICS will be initiated. The restructuring of ICS will improve the availability of Phosphoric Acid in the country and will hopefully have some moderating effect on the increasing trend of international prices of the acid JV with Jordan SPIC, Jordan Phosphates Mines Company Ltd. (JPMC) and Arab Investment Company (AIC) have set up a joint venture project in Jordan to produce 2.24 lakh tonnes of phosphoric acid per annum % of the equity of the joint venture named Indo Jordan Chemicals 16 Department of Fertlizers, Ministry of Chemicals Fertilizers

18 Company Limited is held by SPIC, 34.86% by JPMC and 12.97% by AIC. The plant had been commissioned in May The Phosphoric Acid from this venture is supplied to SPIC and few other fertilizer units in India JV with Morocco A Joint venture IMACID (Indo Moroc Phosphore SA) between Office Cherifien Des Phosphates (OCP), Morocco and Chambal Fertilizers & Chemicals Ltd. (CFCL) to produce 3.30 lakh tonnes of phosphoric acid per annum was commissioned in Morocco in October After completion of first phase of revamp / debottlenecking project during 2004, the capacity has been increased to 3.65 lakhs tonnes per annum. The equity of US$ 65 million in the venture was held by OCP & CFCL equally. Subsequently in May 2005, both OCP & CFCL have sold one-third of their equity stake in IMACID to TATA Chemicals Limited. Overseas Joint Ventures Under Implementation/ Consideration: JV in UAE SPIC is in the process of setting up a gasbased nitrogenous fertilizer plant at Dubai in United Arab Emirates to produce 4.00 LMT of urea per annum at an estimated cost of US$ 170 million. The joint venture company by name SPIC Fertilisers and Chemicals Limited, incorporated in Mauritius is promoted by SPIC with equity participation of US $ million and Emirates Trading Agency of UAE with equity holding of US $ 6.4 million. The project is currently under discussion JV in Egypt Indian Farmers Fertiliser Cooperative Ltd (IFFCO and El Nasr Mining Co. (ENMC) have formed a Joint Venture Company, the Indo Egyptian Fertiliser Company on 15 th November 2005 for setting up a Phosphoric Acid plant in Egypt with an installed capacity of 5,00,000 tonnes of P 0 per annum. The estimated cost 2 5 of the Project is US$ 325 million, which is expected to be financed with a debt: equity ratio of 67:33. IFFCO and its Affiliates would hold the majority equity shareholding of 76% while ENMC and Affiliates would hold the balance equity of 24% in the Joint Venture Company. ENMC, the largest Rock Phosphate Mining Company of Egypt will supply Rock Phosphate, the basic raw material of the Project and IFFCO will buy back the entire Phosphoric Acid production. The Project construction period is estimated at 36 months. While the financial closure of the project has been achieved, the construction of the project has not commenced due to delay in issuance of licence by the Egyptian Industrial Development Authority JV in Tunisia Gujarat State Fertilizers & Chemicals Ltd (GSFC) and Coromandel Fertilizers Ltd (CFL) alongwith Group Chimique Tunisien (GCT) & M/s Compagnie Des Phosphates De Gafsa (CPG) are setting up a joint venture project in Tunisia for production of 3,60,000 MTs of Phosphoric Acid per annum. The name of the JV Company is M/s Tunisian Indian Fertilisers S.A. (TIFERT). The JV will sell its full production to both the Indian parties viz GSFC and CFL. An MOU to this effect was signed in October, 2005 between GSFC & GCT/CPG. The cost of the project is approx. US $ 165 million + 5% with equity of US$66 million and borrowings of US $99 million. The project is expected to be commissioned by mid 2009 or latest by December, JV in Jordan The Indian farmers Fertilizers Cooperative Ltd (IFFCO) and Jordan Phosphate Mining Company (JPMC) have agreed on a joint venture for setting up of a Phosphoric Acid plant in Jordan with an installed capacity of 5,00,000 tonnes of P 0 per annum. The equity 2 5 holding is 52:48 between IFFCO and JPMC, respectively. The financial closure and environmental closure are in progress and are likely to be achieved within May 08. The project construction period is estimated at 36 months thereafter. 17 A n n u a l R e p o r t

19 Chapter - 4 Availability of Major Fertilizers During Farmers study visit to Flouriculture Farm organised by KRIBHCO Controlled Fertilizer Urea The availability of urea, which is the only fertilizer under partial movement control of Government, remained satisfactory throughout the Kharif 2007 season as well as during the current Rabi Kharif The field opening stock of 9.43 LMTs as on coupled with indigenous production of LMTs and imports of LMTs helped in progressively ensuring adequate availability to the States throughout the season. The cumulative availability of urea at the end of the season was nearly LMTs against the assessed requirement of LMTs. The sales of LMTs urea during Kharif 2007 were higher by about 9.62% over LMTs of sales in Kharif Rabi The requirement of urea for Rabi has been assessed at LMTs envisaging a growth of about 6.7% over the sales of LMTs in Rabi The requirement is being met from the opening stocks taken together with estimated production of and imports of about 35 LMTs during the season. Thus the cumulative availability of urea for Rabi has been estimated to be about LMTs by the end of 31 st March, Allocation of urea was restricted to 50% of production of installed capacity of each manufacturer during Kharif 2007 and Rabi The manufacturers are free to sell the remaining quantity of urea to the farmers anywhere in the country at notified maximum retail price Decontrolled Fertilizers DAP & MOP Kharif In case of fertilizers other than the urea, which are decontrolled, no allocation is made under Essential Commodities Act (ECA) by the Central Government. DAP and MOP are the two major decontrolled and decanalised fertilizers, which may be imported freely The imports of LMTs of DAP coupled with indigenous production of LMTs and the opening stock of 7.30 LMTs of DAP as on 1 st April, 2007 resulted in satisfactory availability of about LMTs DAP during Kharif 2007 season. Sales of DAP in Kharif 2007 was about LMTs The imports of LMTs of MOP taken together with opening stock as on 1 st April, 2007 resulted in availability of about LMTs. The sales of MOP were reported as about LMTs. Department of Fertlizers, Ministry of Chemicals Fertilizers

20 Rabi The production of DAP during Rabi is estimated to be about LMTs. Stocks as on coupled with estimated imports will be adequate in meeting the country s requirement of DAP assessed at LMTs during Rabi Stocks of MOP as on coupled with adequate imports till March 2008 will ensure that the country s requirement of MOP during Rabi is fully met Following table summarizes the season-wise position in respect of the availability and sales of the major fertilizers i.e. Urea, DAP & MOP during the last three seasons: (Figures in LMTs) distribution and allocation of controlled fertilizer, i.e. urea, from various fertilizer plants and ports in accordance with the State-wise requirement assessed by the Department of Agriculture & Co-operation (DAC). The distribution of imported urea is made keeping in view the requirements of each of the States The major share in transportation of fertilizers is of the Railways. During , Railways had moved about 73% of the fertilizers produced and/or imported in the country. During April-December 2007, about 280 LMTs of fertilizers was moved by the Railways as against 266 LMTs in the corresponding period of Judicious management of the demand-supply balance has helped in maintaining the Crop Demand season Assessment Kharif 2006 Urea DAP MOP Rabi Urea DAP MOP Kharif 2007 Urea DAP MOP Rabi Urea DAP MOP * Estimated ** Upto December $ Excluding silo stock & stock at shipment. Cumulative Availability Cumulative Sales %age of availability to assessed demand $ 40.26$ 19.29$ * 48.58* 18.73* ** 28.82** 7.35** Movement of Fertilizers Under the Allocation of Business Rules, the Department of Fertilizers has been entrusted the responsibility of ensuring movement, average lead of fertilizer movement by rail. During the average lead was 827KMs. During the current year the average lead for the period April-December, 2007 is also 827 KMs. 19 A n n u a l R e p o r t

21 Chapter - 5 Plan Performance 5.1. Plan Performance The installed capacity and production of fertilizers in the country at the end of Eighth Five Year Plan, in the terminal year of the Ninth Plan and at the beginning of 5 th year of Tenth Plan ( ) are indicated below:- INSTALLED CAPACITY AND PRODUCTION OF NITROGENOUS AND PHOSPHATIC FERTILIZERS IN EIGHTH, NINTH AND TENTH FIVE YEAR PLANS. (In lakh MT) Sr. No Particulars At the end of Eighth Five Year Plan ( ) At the end of Ninth Five Year Plan ( ) At the beginning of 5 th year of Tenth Five Year Plan ( ) 1 Capacity i) Nitrogen ii) Phosphates Production i) Nitrogen * ii) Phosphates * *estimated The installed capacity of nitrogen and phosphate in the terminal year ( ) of the Eighth Five Year Plan was lakh MT and lakh MT, respectively. Three major Phosphatic plants were commissioned during the Ninth Five Year Plan period, namely, Oswal Chemicals & Fertilizers Limited Paradeep (since taken over by IFFCO), Indo-Gulf Corporation Dahej and Gujarat State Fertilizer Company Limited Sikka-II. Consequent upon reassessment of urea capacity on the basis of Dr. Y.K. Alagh Committee and DAP capacity by Tariff Commission, despite phasing out of 10 urea units due to closure, the installed capacity of nitrogen and phosphate has increased from lakh MT at the end of 8 th Five Year Plan to lakh MT and lakh MT to lakh MT respectively during the same period The production of fertilizers in nutrient terms during was lakh MT of nitrogen and lakh MT of phosphate. Sector-wise targets and achievements in respect of production and capacity utilization from onwards are given in Annexure-VI & VII Plan Outlays For the Eleventh Five Year Plan( ), Planning Commission has approved an outlay of Rs crore consisting of Rs crore as Domestic Budgetary Support and Rs as Inter & Extra Budgetary Resources (IEBR) For the year , a plan outlay of Rs crore was approved by the Planning Commission, with Rs crore to be met out of IEBR and balance amount of Rs crore as budgetary support. The details of Plan outlays are given in Annexure IX The outlays for is Rs crore, of which an amount of Rs crore will be met from the internal and extra budgetary resources and the balance amount of Rs crore will be provided by way of budgetary support. The gross outlay of Rs crore is for FCI-FAGMIL (Rs Department of Fertlizers, Ministry of Chemicals Fertilizers

22 Hon ble Union Minister for Chemicals & Fertilizers and Steel, Shri Ram Vilas Paswan addressing the officers/employees at FACT, Cochin Division. crore), Fertilizers and Chemicals Tranvancore Ltd. (Rs crore), Brahamaputra Valley Fertilizer Corporation Ltd. (Rs crore), Madras Fertilizers Ltd. (Rs crore), National Fertilizers Ltd., (Rs crore), Project and Development of India Ltd. ( Rs crore), Rastriya Chemicals & Fertilizers Ltd. ( Rs crore), Krishak Bharti Cooperative Ltd. ( Rs crore), and other Departmental schemes (Rs crore) Of the total outlay, the budgetary support of Rs crore is for Fertilizers & Chemicals Tranvancore Ltd. (Rs crore), Madras Fertilizers Ltd. (Rs crore), Brahamaputra Valley Fertilizer Corporation Ltd. (Rs crore) and other Departmental schemes (Rs crore). Under the other Departmental schemes, there is a provision of Rs crore for S & T Programme: Rs crore for Information Technology. Rs crore has been for capital subsidy for conversion of 4 existing FO/LSHS Plants into NG/LNG For the year , there was net budgetary provision of Rs crore under Plan and Rs crore under Non-Plan. In the Revised Estimate (RE) for , the net provision is Rs crore under Plan and Rs crore under Non-Plan. The details of Non-Plan and Plan Provision in (BE), (RE) and (BE) are given in Annexure-X. 21 A n n u a l R e p o r t

23 Chapter - 6 Measures of Support For Fertilizers 6.1 Measures Of Support For Fertilizers For sustained agricultural growth and to promote balanced nutrient application, it is imperative that fertilizers are made available to farmers at affordable prices. With this objective, urea being the only controlled fertilizer, is sold at statutorily notified uniform sale price, and decontrolled phosphatic and potassic fertilizers are sold at indicative maximum retail prices (MRPs). The problems faced by the manufacturers in earning a reasonable return on their investment with reference to controlled prices, are mitigated by providing support under the New Pricing Scheme for urea units and the Concession Scheme for decontrolled phosphatic and potassic fertilizers. The statutorily notified sale price and indicative MRP is generally less than the cost of production of the respective manufacturing unit. The difference between the cost of production and the selling price/mrp is paid as subsidy/concession to manufacturers. As the consumer prices of both indigenous and imported fertilizers are fixed uniformly, financial support is also given on imported urea and decontrolled phosphatic and potassic fertilizers Measures of Support for Urea Until , the subsidy to urea manufacturers was being regulated in terms of the provisions of the erstwhile Retention Price Scheme (RPS). Under RPS, the difference between retention price (cost of production as assessed by the Government plus 12% post tax return on networth) and the statutorily notified sale price was paid as subsidy to each urea unit. Retention price used to be determined unit wise, which differed from unit to unit, depending upon the technology, feedstock used, the level of capacity utilization, energy consumption, distance from the source of feedstock/raw materials, etc. Though the RPS did achieve its objective of increasing investment in the fertilizer industry, and thereby creating new capacities and enhanced fertilizer production along with increasing use of chemical fertilizers, the scheme had been criticized for being cost plus in nature and not providing incentives for encouraging efficiency Given the importance of fertilizer pricing and subsidization in the overall policy environment, which has direct implications with reference to the growth and development of agriculture and sustainability of the fertilizer industry, the need for streamlining the subsidy scheme in respect of urea producing units had been felt for a long time. A High Powered Fertilizer Pricing Policy Review Committee (HPC) was constituted, under the chairmanship of Prof. C.H. Hanumantha Rao, to review the existing system of subsidization of urea, suggest an alternative broad-based, scientific and transparent methodology, and recommend measures for greater cohesiveness in the policies applicable to different segments of the industry. The HPC, in its report submitted to the Government on 3 rd April 1998, inter-alia, recommended that unitwise RPS for urea may be discontinued and, instead, a uniform Normative Referral Price be fixed for existing gas based urea units and also for DAP and a Feedstock Differential Cost Reimbursement (FDCR) be given for a period of five years for non-gas based urea units The Expenditure Reforms Commission (ERC), headed by Shri K.P. Geethakrishnan, had also examined the issue of rationalizing fertilizer subsidies. In its report submitted on 20 th September 2000, the ERC recommended, inter-alia, dismantling of existing RPS and in its place the introduction of a Concession Scheme for urea units based on feedstock used and the vintage of plants The recommendations of ERC were examined in consultation with the concerned Ministries/ Departments. The views of the fertilizer industry and the State Governments/Union territories, and economists/research institutes 22 Department of Fertlizers, Ministry of Chemicals Fertilizers

24 were also obtained. After due examination of all these views, a New Pricing Scheme (NPS) for urea units for replacing the RPS was formulated and notified on The new scheme took effect from It aims at inducing the urea units to achieve internationally competitive levels of efficiency, besides bringing in greater transparency and simplification in subsidy administration New Pricing Scheme (NPS) for urea was introduced w.e.f. 1 st April, The Stage-I of NPS was of one year duration from 1 st April, 2003 to 31 st March, 2004 and Stage-II was of two year duration from 1 st April to 31 st March, With the Stage-III of NPS being implemented w.e.f. 1 st October, 2006, the Stage-II of NPS stands extended upto 31 st September, Under NPS, the existing urea units have been divided into six groups based on vintage and feedstock for determining the group based concession. These groups are : Pre-1992 gas based units, post-1992 gas based units, pre naphtha based units, post-1992 naphtha based units, fuel oil/low sulphur heavy stock (FO/LSHS) based units and mixed energy based units. The mixed energy based group shall include such gas based units that use alternative feedstock/fuel to the extent of more than 25% as admissible on Under NPS, escalation/de-escalation is given in respect of variable cost related to changes in the price of feedstock, fuel, purchased power and water. Under the scheme, no reimbursement is allowed in respect of investment made by a unit for improvement in its operations nor are the gains as a result of operational efficiencies to be mopped up It has also been provided under the scheme that the concession rates during Stage-II shall be adjusted for reduction in capital related charges and enforcement of efficient energy norms. Pre-set energy norms for urea units during Stage-II of NPS have already been notified and intimated to urea units. Reduction in rates of concession during Stage-II of NPS for urea units on account of reduction in capital related charges have also been notified and intimated to urea units Phased Decontrol of Urea Distribution As per the New Pricing Scheme for urea units, it was also envisaged that decontrol of urea distribution/movement will be carried out in a phased manner. During Stage-I, i.e. from to , the allocation of urea under the Essential Commodities Act 1955 (ECA) was restricted up to 75% and 50% of installed capacity (as reassessed) of each unit in Kharif 2003 and Rabi , respectively. It was further envisaged that during Stage-II commencing from , urea distribution will be totally decontrolled after evaluation of Stage-I and with the concurrence of the Ministry of Agriculture The total decontrol of urea distribution was deferred initially for a period of six months w.e.f i.e., up to Kharif 2004, which has been subsequently deferred up to Rabi i.e., up to The existing system of 50% ECA allocation and 50% outside ECA allocation has been extended upto The pricing policy for urea units for Stage-III of New Pricing Schemes (NPS) which is effective from to has been formulated keeping in view the recommendations of the Working Group set up under the Chairmanship of Dr. Y.K. Alagh. The salient features of the proposed Stage-III Policy which is aimed at promoting further investment in the urea sector, are to maximize urea production from the Urea units including through conversion of non-gas based Units to gas, incentivising additional urea production and encourage investment in Joint Venture (JV) projects abroad. It is also aimed at establishing a more efficient urea distribution and movement 23 A n n u a l R e p o r t

25 system in order to ensure availability of urea in the remotest corners of the country The Stage-III policy seeks to promote usage of most efficient and comparatively cheaper feed stock natural gas/lng for production of urea in the country. The policy lays down a definite plan for conversion of all non-gas based urea units to gas. At present, there are 8 urea units (MFL,SPIC, ZIL, MCFL, SFC, GNFC, NFL-Nangal, NFL-Bhatinda, NFL- Panipat) in the country which are based on naphtha or FO/LSHS as feed stock. All these 8 units are required to switch over to natural gas/lng within a period of next three years. Beyond this time limit, the high cost urea produced by these non-gas based units will not be entitled to subsidy at the existing levels and it will be restricted to import parity price of urea. The units, which are unable to tie up gas will have to explore alternative feedstocks like Coal Bed Methane (CBM) and coal gas. SFC has started using gas w.e.f The availability of gas is critical to the growth of urea industry in the country. Presently, the indigenous availability is not sufficient to meet the demand of existing gas based urea units in the country. To this end, the Department of Fertilizers constituted a Committee under the chairmanship of Secretary(P&NG) with Secretary (Fertilizers), Secretary (Expenditure), Secretary (Planning Commission) as its members to deliberate upon various issues relating to connectivity and assured supply of gas to the fertilizer sector. The Committee will also develop an appropriate mechanism for fixing the price of the gas in a transparent manner. It is expected that the availability of gas in the country will improve from onwards and the new policy, taking into account the above fact, has laid down specific timelines for conversion of all non-gas based units in the country to gas In order to incentivise conversion of non gas based units to gas, the policy provides for a regime where there will be no mopping up of energy efficiency for a fixed period of five years for naphtha based as well as FO/LSHS based units. The policy also recognizes the comparative higher cost of conversion of FO/ LSHS based units to gas and provides for one time capital investment assistance to these units for conversion to gas during the next three years. A specific policy to this effect will be announced separately by the Government The policy also lays down a formulation to disincentivise high cost production from the nongas based units and to facilitate their early conversion to gas. It is proposed that these units may be allowed to produce 100% of capacity. They should adhere to an agreed time table for conversion to Gas and tie up requisite Gas/CBM/Coal gas. If they do not, they will be given only 75% of the fixed costs beyond 93% of capacity utilization in the 1 st year ( ) and 50% of the fixed cost beyond 93% capacity utilization from 2 nd year ( ) onwards Considering the likely growth in consumption of urea in the years to come, the policy seeks to encourage the existing urea units to produce beyond 100% of their installed capacities by introducing a system of incentives for additional urea production subject to merit order procurement. The policy of requiring prior Government permission for additional urea production has been dispensed with. All production between 100% and 110% of the existing reassessed capacity will be incentivised on the existing net gain sharing formula between the Government and the unit in the ratio of 65:35 respectively with the proviso that the total amount paid to the units after including the component of variable cost will be capped at the units own concession rate. The units increasing production beyond 110% will be 24 Department of Fertlizers, Ministry of Chemicals Fertilizers

26 compensated at their concession rate subject to the over all cap of Import Parity Price (IPP). To the extent Government does not require any quantities of additional production, the urea companies would be free to dispose of the remaining quantities by way of export or sale to complex manufacturers without any permission. The policy also encourages setting up of Joint Venture projects abroad where gas is readily available at reasonable prices. It recognizes our heavy dependence on imported raw materials/intermediates and feedstock in the fertilizer sector and to properly leverage this position, the policy seeks to create specialized agency to coordinate investments abroad in fertilizer sector The policy seeks to rationalize distribution and movement of urea and the system of freight reimbursement with the objective of ensuring availability of urea in all parts of the country. The Government will continue to regulate movement of urea up to 50% of production depending upon the exigency of the situation. The State Governments will be required to allocate the entire quantity of planned urea arrivals including both regulated and deregulated urea in districtwise, monthwise and supplierwise format. The units will be required to maintain a district level stock point and the subsidy will be paid only when the urea reaches the district. The monitoring of movement and distribution of urea throughout the country up to the district level will be done by an On line Web based monitoring system. To facilitate movement of fertilizers to far flung area, the reimbursement of freight will be based on actual leads for rail and road movement. The rail freight will be reimbursed as per the actual expenditure and the road freight will be escalated as per composite road transport index every year. One time enhancement of 33% will be granted on the road component of primary freight to offset the impact of Supreme Court directive regarding maximum truck load limit of 9 MT on road vehicles. The existing special freight subsidy scheme will continue for supply of urea to the North Eastern States except Assam and Jammu & Kashmir. In addition, the Department will operate a buffer stock through the state institutional agencies/fertilizer companies in major urea consuming States up to a limit of 5% of the seasonal requirement The Stage-III of NPS seeks to carry on the existing 6 group classification of urea manufacturing units in the country with updation of all costs upto 31 st March, The respective pre-set energy consumption norm of each urea units during Stage-II of NPS or the actual energy consumption achieved during the year 2003, whichever is lower, will be recognized as the norm for Stage-III of NPS. The policy also provides for updation of costs on account of cost of bags through 3 year moving weighted average cost of bags to compensate for the rise in prices for the last three years. It also provides for payment of sales tax on input and other taxes recognized under erstwhile Retention Price Scheme, on actual basis NPS Stage-III seeks to take forward the principles of uniformity and efficiency in urea production as enunciated during Stage I and II of NPS and also aims at bringing in more transparency in distribution of fertilizers across the country. It is expected that the policy will encourage increase in indigenous production from the existing urea units in the country and facilitate early conversion of non-gas based units to gas leading to substantial savings in subsidy. It is also expected that with the launch of Fertilizer Monitoring System (FMS) to monitor movement of fertilizers upto district level and the freight rationalization proposed in the new policy, the distribution of fertilizers in remote corners of the country will improve considerably without any complaints of shortages in future. The Department of Fertilizers will continue its 25 A n n u a l R e p o r t

27 endeavour to promote the growth of fertilizer industry in the country and ensure adequate availability of fertilizers to the farmers Pricing policy for investment in urea sector A pricing policy was announced on for setting up new urea projects and expansion of existing urea projects for augmenting the domestic production capacity of urea to meet the growing demand for enhancing the agricultural production in the country. The new policy aimed at enabling the entrepreneurs to decide about their investment plans in the fertilizer sector. The new policy was expected to encourage setting up of plants with international efficiency standards for fresh investment in new projects and expansion of existing units The above policy has not been successful in attracting investment in this sector. The nonavailability of critical feedstock for production of urea has also been one of the major constraints in further addition of indigenous capacity for production of urea. However, with the projected improved availability of gas from 2009 onwards, it is expected that investment in fertilizer sector will also take place. Department is considering a new policy for investment in urea sector to attract much required investment in this sector. A draft policy is presently under active consideration of the Department Policy For Revamp Of Existing Urea Unit The policy for approval of de-bottlenecking/ revamp/ modernization of existing urea units under NPS Stage II has not been completely done away with NPS Stage-III. The revamp of existing units will now take place as a commercial decision of the company. The Department is also considering additional investment to existing urea units for production beyond the existing capacity. These additional incentives for revamp of existing units is being considered as a part of the policy for investment in urea sector Policy for Conversion of Existing Non-Gas based Urea Units to Natural Gas/LNG for Feedstock/Fuel At present there are 8 units in this country which is based on Nephtha (5) and FO/LSHS (4) as feedstock/fuel. Under new Pricing Policy Stage-III, specific time schedule of three years has been laid down for conversion of the non gas based unit to gas To intensify conversion of non gas based units to gas, it has been decided that units will be allowed to keep the savings on account of improved energy efficiency after conversion for first five year of commercial production. Further to compensate for the higher cost of conversion of FO/LSHS based units to gas, the scheme for capital assistance to these units has also been agreed to under New Pricing Scheme, Stage-III The 4 FO/LSHS based units have already started work on conversion of units to gas. The feasibility report have been prepared and the same is presently with the Planning Commission for its principal approval. It is expected that these units may be converted to gas by the end of Assured availability of gas is main constraint for expediting conversion process. The units are in regular touch with gas suppliers for confirmed commitment for supply of gas, after which conversion process will be expedited Concession Scheme for decontrolled P & K fertilizers Government of India decontrolled Phosphatic and Potassic (P&K) fertilizers with effect from 25 August, 1992 on the recommendations of Joint Parliamentary Committee. Afterwards, the prices of these fertilizers registered a sharp increase compared to Urea. This impacted 26 Department of Fertlizers, Ministry of Chemicals Fertilizers

28 demand and consumption of the P&K fertilizers adversely. It, in turn, led to imbalance in the usage of Nitrogen(N)- Phosphate(P)-Potash(K) nutrients in the soil and affected agricultural productivity. In order to cushion the impact of increase in prices of the decontrolled P & K fertilizers and promote balanced usage of NPK nutrient, Department of Agriculture & Cooperation (DAC) introduced a scheme of concession on decontrolled P & K fertilizers in on adhoc basis. The Concession Scheme covered Di-ammonium Phosphate (DAP), Muriate of Potash (MOP) and 11 grades of NPK complex fertilizers. With effect from 1st April 1997, concession to these fertilizers was increased vis-à-vis their indicative Maximum Retail Prices (MRPs) The administration of the Concession Scheme was transferred from the DAC to Department of Fertilizers (DOF) with effect from 1st October, Presently, Di-Ammonium Phosphate (DAP, ), Mono-Ammonium Phosphate (MAP, ), Muriate of Potash (MOP, ), 11 grades of Complex Fertilizers and Single Super Phosphate (SSP, ) are covered under the Concession Scheme for decontrolled P&K fertilizers. The objective of the Concession Scheme is to make decontrolled P&K fertilizers available to the farmers at the affordable prices and also to provide reasonable rate of return on the investments made by the entrepreneurs in the P&K fertilizer sector. To achieve this objective, Government fixes the Maximum Retail Price (MRP) of DAP, MAP, MOP and NPK Complexes uniformly for the country. MRP of SSP is indicated by the respective State Governments, as there are wide variation in the input and distribution of SSP across the States. Total delivered cost of fertilizers under the Concession Scheme at the farm gate is higher than the MRP payable by the farmers. The difference between the total delivered costs of the fertilizer at the farm gate and the MRP payable by the farmers is given by the Government of India as Concession / Subsidy to the farmers and paid to the fertilizer manufactures and importers. At present 25 DAP/NPK/MOP manufacturers/importers and 75 SSP manufacturers are availing concession from Department of Fertilizers under the Concession Scheme While the MRP of P & K fertilizers indicated by the Government of India has remained unchanged from till date, due to continuous increase in price of inputs and raw materials, total delivered cost of fertilizers covered under the Concession Scheme has increased. This requires compensating the manufacturers / importers for their investment and incentivising them to remain committed to making adequate fertilizer available to the farmers. Government computes the total delivered cost of fertilizer as per the methodology recommended by the Tariff Commission implemented from This is based on Cost Plus approach, which takes into account raw material and input cost including utilities, handling and distribution cost, dealers margin, interest and return on capital employed, etc., in case of indigenous finished products. In case of imported finished products, it takes into account the import price including custom applicable, handling and distribution cost, dealers margin, interest and return. Based on this methodology, normative delivered cost of P & K fertilizers (DAP, MAP, MOP and NPK Complexes excluding SSP) is computed. The difference between the normative delivered cost and the MRP is provided as concession/ subsidy. In case of SSP, an ad hoc subsidy is provided. The DOF has entrusted the Tariff Commission to conduct a fresh Cost price Study of the P&K fertilizers to update the various parameters under the Concession Scheme. The recommendations of the Tariff Commission are expected soon. 27 A n n u a l R e p o r t

29 The Government of India in the DOF at the start of a financial year, announces base concession rates for each of the P&K fertilizers covered under the Concession Scheme. Base concession rates are computed on the basis of price trends of various raw materials, intermediates and finished fertilizers in the previous year and expected trend in the current year. Generally, the base rates announced are relatively lower than the expected final concession rates. This ensures that manufacturers / imports would be able to receive on account payment on sale of fertilizers without any delay. The final concession rates are announced after some time lag due to process involved in finalization of prices. The manufacturers / importers claim the final concession based on the final rates announced by the Department Government of India has decided to continue the Concession Scheme on decontrolled P & K fertilizers for the year with effect from 1st April 2007 to 31st March It has been decided that the final concession rates would be worked on monthly basis with effect from 1st April 2007 for on the basis of prices of imported fertilizer products, raw materials/intermediates for the preceding month instead of on quarterly basis, as was the case earlier. Government has also decided to allow ad hoc increase in other costs on account of freight subject to recommendation of the Tariff Commission. Further, restriction on concession on indigenous DAP Group I presently capped by the concession payable to Group II units have been removed with effect from 1st April Concession payable to the fertilizer manufacturers/importers be released in full within 30 days on arrival / receipt of fertilizers (instead of first point sale as was the case earlier) in the district based on the certification by the Statutory Auditors of the manufacturers/importers with effect Products DAP MAP BASE CONCESSION RATES (RUPEES PER MT) Product Base Concession rates for (from to ) Group I Group II Indigenous DAP Imported DAP MOP from 1st November The payment to the DAP/NPK/MOP manufacturers/importers is being made through the Fertilizer Monitoring System (FMS) introduced by the Department. MRP of decontrolled P & K fertilizers (except SSP) covered under the Concession Scheme (as shown in the following table) has been maintained at the same level as has been in force with effect from 12 March 2003 :- MAXIMUM RETAIL PRICES (MRP) MRP (Rupees per MT) MOP 4455 Complex Fertilizers 16:20:00 20:20:00 23:23:00 28:28:00 10:26:26 12:32:16 14:28:14 14:35:14 15:15:15 17:17:17 19:19: Base rates, as shown in the following table, have been announced for the year with effect from 1st April 2007 for availing on account payment of concession by the manufacturers/importers as per the Concession Scheme : Department of Fertlizers, Ministry of Chemicals Fertilizers

30 MAP SSP NPKComplex fertilizers 16:20:0 20:20:0 20:20:0 (gas) 23:23:0 (gas) 28:28:0 10:26:26 12:32:16 14:28:14 14:35:14 15:15:15 (gas) 15:15:15 17:17:17 19:19:19 (Rupees per MT) S.No. Product Base concession rates for w.e.f 1 st April Indigenous DAP 8162 Complex Fertilizers (N:P:K) :26:26 12:32: The base concession rates for with effect from for IFFCO, Kandla: In an effort to explore a viable strategy of availability of Phosphatic and Potassic fertilizers in the country and particularly to reduce dependence on DAP as the only source of Phosphatic fertilizers, alternative sources of Phosphatic fertilizers available in the international market is being explored. Government of India has decided to include imported MAP (11:52:0) and MAP (11:52:0) granulated out of imported powdered MAP under the Concession Scheme for decontrolled Phosphatic and Potassic (P&K) fertilizers with effect from 1st April 2007 applicable for the period from 1st April 2007 to 31st March The MRP and the base Concession rate for both imported MAP (11:52:0) and MAP (11:52:0) produced by granulating imported powdered MAP has been kept at par with DAP to make it accessible to the farmer The country is almost fully dependent on imported raw material/intermediates (i.e. Rock Phosphate, Sulphur, Phosphoric Acid, MOP etc.) for the production of Phosphatic and Potassic fertilizers in the country. Prices of these commodities, both finished fertilizers and intermediates, have shown a rising trend in the international market during last few years. Simultaneously, the requirements of the decontrolled P & K fertilizers have increased in the country. As a result of rising prices of finished fertilizers/fertilizer inputs along with increased requirement, quantum of total subsidy outgo on P&K fertilizers has increased in the last few years as given below :- CONCESSION PAID ON P & K FERTILIZERS Year Amount (Rs. Crore) * * projected Department of Fertilizers releases ad hoc 29 A n n u a l R e p o r t

31 subsidy to SSP. The MRP of SSP is fixed by State Governments and it varies from state to state. This ad hoc dispensation and the low rates of concession, coupled with the progressive increases in the input cost of Sulphur and Rock Phosphate, has led to a sharp decrease in SSP consumption and has exercised a serious adverse impact on the SSP industry. Department of Fertilizers increased the ad hoc concession rate to SSP from Rs.650/- to Rs.975/- per metric tonne with effect from 1 September 2005, which has been further revised upwardly to Rs per metric tonne with effect from 1 April The Department had constituted an Expert Group under the chairmanship of Prof. Abhijit Sen, Member, Planning Commission to evolve a methodology for working out concession of P&K fertilizers based on the international price of DAP to be adopted as a benchmark. The examine the recommendations of the Expert Group submitted in December 2005, an Inter- Ministerial Group (IMG) under the Chairmanship of Joint Secretary (A&M), Department of Fertilizers was constituted. The IMG has taken a long-term approach, which links the pricing of the Phosphatic fertilizers to price in the international market and future scenario. They have recommended that the pricing of indigenous DAP should be linked to the price of imported DAP in the international market. The Department is considering various options available for fine-tuning its Phosphatic and Potassic policy To examine the relevance and usage of Water Soluble Fertilizers, the Department constituted a Working Group, which has submitted its recommendations. A policy paper on the same is under inter-ministerial consultation for further consideration. 6.7 Fertilizer Subsidy The subsidy on fertilizers has been increased sharply over the last few years. The details of fertilizer subsidy over the last few years is as below:- Years Urea subsidy P & K Fertilizers-Total SUBSIDY ON FERTILIZERS Total subsidy disbursed in year Carryover to next year (Rs.in Crores) Net incidence of subsidy for the year 30 Department of Fertlizers, Ministry of Chemicals Fertilizers

32 It is estimated that 88% of the increase in subsidy is due to the sharp increase in international price of fertilizer inputs and finished fertilizer. Although 12% increase in the last five years can be attributed to the increase in consumption of fertilizers The steady increase in fertilizer subsidies over the years has largely been the result of increasing production / consumption and increases in the costs of inputs of indigenous fertilizers and prices of imported fertilizers from time to time. The cost of various inputs / utilities, such as coal, gas, naphtha, rock phosphate, sulphur, ammonia, phosphoric acid, electricity, etc., as also the cost of transportation, went up significantly during the eighties. The gasbased fertilizer units commissioned during this period also involved higher capital investment per tonne of installed capacity, necessitating constant upward revision in the retention prices. The selling prices of fertilizers to the farmers, however, remained almost at the same level between July, 1981 and July The Government effected an increase of 30% in the issue prices of fertilizers in August, 1991 after a gap of a decade. The selling price of urea, which was reduced by 10% in August 1992, was revised upwards by 20% in June 1994 followed by another increase by 10% with effect from The prices of urea were again revised in February 2002 by 5% and by Rs. 240 PMT of urea w.e.f The price increase made effective from was, however, later withdrawn w.e.f The current price is Rs per tonne exclusive of local levies. However, the hikes in prices of urea have not materially altered the position in terms of the absolute outgo in the form of subsidy, because of the steady growth in production to meet the growing demand and rise in the costs of inputs Rationalizing and Streamlining of Concession Scheme Since 1992, the Department of Agriculture and Cooperation (DAC) administered the Concession Scheme on decontrolled Phosphatic & Potassic (P&K) fertilizers. In October 2000, it was transferred to the Department of Fertilizers. The Department of Fertilizers issued fresh guidelines dated 5 August 2002 for monitoring various aspect of the Scheme, which has been in operation with effect from 1 August Under the extant guidelines, On Account payment of 85% (with Bank Guarantee, 90%) of the Concession payable is released to the manufacturers/ importers on submission of details of sales in the prescribed Proforma-A. The balance payment of concession is released to the manufacturers/importers after the State Governments certify the sales in Proforma - B. The idea behind releasing On Account payment of concession is to ensure liquidity of working capital to the manufacturers/ importers in the event of delay in the certification of sales by the States The role and responsibilities of the State Governments in certification of sales have been clearly defined laying down the time frame for the same. Under the guidelines, the fertilizer sold by the manufacturers/importers to the dealers registered under Fertilizer Control Order (FCO), the Government agencies and the NPK mixture manufacturers is eligible for concession. In order to facilitate the manufacturers to make the fertilizer available far and wide, the Department has been permitting marketing arrangements whereby the manufacturers use the dealer s network of the other manufacturers/importers. The manufacturers/ importers receive on account payment of concession based on the details of sales in Proforma A certified by the Statutory Auditor of the company. The balance 31 A n n u a l R e p o r t

33 payment is released on the receipt of the certificate of sales in Proforma B from the State Government. Since the State Government could not issue certification of sales in the prescribed period of time, resulting in delay in receiving payment, the system of Fertilizer Monitoring System (FMS) has been introduced for monitoring arrival and sales of fertilizers and for release payment. In partial modification of the payment procedure, it has been now decided that Concession payable to the fertilizer manufacturers/importers be released in full within 30 days on arrival / receipt of fertilizers (instead of first point sale as was the case earlier) in the district based on the certification by the Statutory Auditors of the manufacturers/importers with effect from 1 November 2007 and to be ratified by the State Government subsequently To ensure standard and quality of SSP, a Technical Audit & Inspection Cell (TAC), under the aegis of Projects & Development India Ltd., (PDIL), was constituted. Accordingly, the TAC is assigned the task of examining various grades of Rock Phosphate (both indigenous and imported) and recommending the grades of Rock Phosphate with source of origin, along with technical parameters, such as consumption norms of each grade for manufacture of SSP as per FCO specifications. The TAC is also mandated to conduct six monthly techno-commercial audits of SSP plants and to confirm to whether the SSP units are using the specified/notified grades of Rock Phosphate. The objective behind the constitution of TAC is to put a curb on the sale of non-standard SSP to the farmers and to cross check the concession claimed by the industry The manufacturers of SSP are required to use the specified/notified grades of Rock Phosphate for manufacturing SSP. A list of the notified grades of Rock Phosphate is given below:- LIST OF THE SPECIFIED ROCK PHOSPHATE NOTIFICATIONS UNDER GUIDELINES DATED ON CONCESSION SCHEME OF DECONTROLLED P & K FERTILIZERS FOR SSP MANUFACTURERS (UPDATED ON ) Notification No.M-19011/33/2001-MPR dated 19 th September, 2001 S.No. Primary Grade of rock phosphate Specification of blending rock Source of origin A B C D Mined rock chips with 31.5% and above P2O5 content by wt. On an average Jordan Rock with 30.0% and above P2O5 content by wt. On an average Beneficiated rock phosphate (BRP with 33.55% and above P2O5 content by wt. On an average. Syrian rock with 29.36% and above P2O5 content by wt. On an average. - Rajasthan State Mines & Minerals Limited (RSMML) - Rock imported from Jordan. - RSMML - Rock imported from Syria E Beneficiated rock phosphate (BRP with 33.55% and above P2O5 content by wt. On an average. Jhabua A or B grade rock with 23% P2O5 content by wt. To get a mixture having 31.6% and above P2O5 content by wt. On an average. BRP from RSMML and blending rock from Madhya Pradesh State Mining Corpn. Ltd. (MPSMC) 32 Department of Fertlizers, Ministry of Chemicals Fertilizers

34 F Jordan rock with 31.6% and above P2O5 content by wt. On an average. ` Jhabua rock with 25% P2O5 content by wt to get a mixture having 30% and above P2O5 content by wt. On an average. Rock imported from Jordan and blending rock from MPSMC. Notification No.M-19011/33/2001-MPR dated 8 th October, 2001 G Egyptian rock with 32% and above P2O5 content by wt. On an average. - Rock imported from Egypt. H Beneficiated rock phosphate (BRP) with 33.55% and above P2O5 content by wt. On an average. Lower grade rocks with 25% P2O5 content by wt. From mines of Madhya Pradesh State Mining Corporation Ltd., RSMML, Rajasthan State Mineral Development Corpn. (RSMDC) or 27-31% P2O5 content by wt. Of Matton mines to get a mixture having 31.4% and above P2O5 content by wt. On an average. BRP from RSMML. Blending rock from MPSMC, RSMDC, RSMML and Hindustan Zinc. Ltd. (HZL). Notification No. M-19011/33/2001-MPR dated 31 st January, 2002 I Beneficiated rock phosphate (BRP) with 33.55% and above P2O5 content by wt. On an average. (i) Lower grade rocks with +22% but less than 25% P2O5 content by wt. Of RSMDC to get a mixture having 31.7% and above P2O5 content by wt. On an average. (ii) Rocks with 25% and above to 27% P2O5 content by wt. From mines of RSMDC to get a mixture having 31.4% and above P2O5 content by wt on an average. (iii) Rocks with +30% P2O5 content by wt. From mines of RSMDC to get a mixture having 31.5% P2O5 content by wt. On an average. (iv) Rock with 23% P2O5 content by wt. From mines of RSMML to get a mixture having 31.4% P2O5 content by wt. On an average. BRP from RSMML. Blending rock from RSMDC and RSMML. 33 A n n u a l R e p o r t

35 J Jordan rock with 32% and above P2O5 content by wt. On an average. Lower grade rock with 25% P2O5 content by wt. From mines of RSMML to get a mixture having 30.66% P2O5 content by wt. On an average. Rock imported from Egypt and blending rock from RSMML. Notification No /33/2001-MPR dated 13 th May, 2002 K Israeli Rock phosphate with 32% P2O5 content and above by wt. On an average. Not applicable Rock phosphate imported from Israel. Notification No. M-19011/33/2001-MPR (Vol.II) dated 23 rd April 2003 L Beneficiated rock phosphate with 33.5% P2O5 content by wt on an average. Notification NO.19011/33/2001-MPR dated Lower grade rock with P2O5 content 29% by wt and above with 2.78% average iron oxide content of MPSMC to get a mixture of 31.4% on an average. BRP from RSMML. Blending rock from Hirapur Mines of MPSMC. M Beneficiated Rock Phosphate produced by M/s. Krishana Phoschem Ltd., , AKVN Industrial Area, P.O. Meghnagar, Jhabua, Madhya Pradesh 19011/33/2001-MPR dated (Notified on ) N Beneficiated rock phosphate (BRP with 33.55% and above P2O5 content by wt. On an average. - RSMML- O P Q 19011/33/2001-MPR (Vol-II) dt Primary grade of Rock Phosphate of Vietnam with 34% P205 content by weight on an average /33/2001-MPR (Vol-II) dt Primary grade of Rock Phosphate of Algeria with 31.2% P205 content by weight on an average /33/2001-MPR (Vol-II) dt Primary grade of Rock Phosphate of Egypt with 31.02% P205 content by weight on an average In the wake of shortage of Rock Phosphate of the specified/notified grades, Department of Fertilizers modified the existing guidelines pertaining to the use of Rock Phosphate and issued fresh guidelines on 10 August 2005, whereby the scope of grades/sources of Rock Phosphate were expanded. As per the modified guidelines, the manufacturers of SSP can procure the Rock Phosphate from the sources other than the notified ones. Keeping in view the worldwide scarcity of Rock Phosphate and its rising prices in the international market, Department of Fertilizers is taking steps to explore the Rock Phosphate indigenously. For this purpose, the Geological Survey of India, Indian Bureau of Mines, M/s. Rajasthan State Mines & Minerals Ltd., M/s. Madhya Pradesh State Mining Corpn. Ltd. have been involved in the process. Department also proposes to constitute a Task Force on the exploration of further low grade Rock Phosphate in the country. Department has also allowed to produce Beneficiated Rock Phosphate in the private 34 Department of Fertlizers, Ministry of Chemicals Fertilizers

36 sector by M/s. Krishna Phoschem Ltd., Meghnagar, Madhya Pradesh. The State Governments of endowed with the natural resources of Rock Phosphate e.g. Madhya Pradesh and Rajasthan have been requested to consider the possibility of de-reserving mines (so far reserved only for State mining entities) for collaboration with mining entities of other States and also private for financial and technical support Fertilizer Monitoring System Fertilizer Monitoring System (FMS) was formally launched by Hon ble Minister (C&Fand S) on 22 nd January, FMS is a path breaking IT initiative undertaken by Department of Fertilizers (DOF). FMS monitors movement of different fertilizers at various stages in their value chain. It monitors the production, distribution and sales of DAP, MOP & NPK fertilizers and also facilitates subsidy payment Prior to the implementation of FMS, Movement Division was able to monitor availability of fertilizers only till the level of State. Further, the frequency of data updation for monitoring availability was once a week FMS provides availability of information at the district level. Soon the software will start capturing blockwise availability status. This is a quantum jump because many of the fertilizer shortages occur at local levels. This often results into situations wherein even though DOF may have ensured availability of a fertilizer at State level according to their requirement, there is a problem of distribution within the State. The data from FMS provides a complete and comprehensive picture in this regard The software has the capability to capture data on a real time basis. Data on transactions like despatches, receipts, sales etc. can be captured right after the transaction on ground has been completed. Further, in order to ensure the real time nature of the data, certain software locks have been put in place in the system to ensure timely data entry by the users. For example, the data on despatches is to be entered within 24 hours of the actual transaction. The reports generated out of the system are dynamic. Therefore, reports on the availability status can be generated from the system at any point of time with the latest data In the manual system, Movement Division was able to monitor only despatches and sales. In FMS, receipt in a district is also captured. Further, the receipts are linked to the corresponding despatches FMS also facilitates subsidy payment for decontrolled fertilizers. With FMS, the time taken in the process of subsidy payment is being reduced substantially Balanced Use Of Fertilizers The stagnant agriculture productivity in the country is of major concern and it is felt that lack of balance fertilisation has been one of the critical factors in impeding the growth of agriculture productivity. It has been ascertained that the application of secondary and micro nutrients in our soil is very low. As a result, our soil have been found to be deficient in sulphur, zinc, boron etc To over come the deficiency of secondary and micro nutrients in our soil, the Government is considering expansion the basket of subsidised fertilisation so that the fertilizer contain secondary and micro nutrients which are also available to farmers at affordable prices. The proposal for encouraging production of fortified coated fertilizer in the country is presently under active consideration of the Government The Government is also concerned about the imbalanced consumption of N P&K fertilisers in our agriculture and is considering rationalisation of selling price based on nutrients based selling price wherein the price of nutrients to farmers is same irrespective of the fertilizer products. 35 A n n u a l R e p o r t

37 Chapter - 7 Public Sector Undertakings & Co-operative Societies 7.1. There are 10 public enterprises and one multi- Separation Scheme (VSS) was offered to all state co-operative society namely Krishak its 5712 employees. All the employees, who Bharati Cooperative Limited (KRIBHCO) opted for VSS have since been released, under the administrative control of the except 54 employees who are engaged in Department. discharging statutory obligations including 7.2. The Fertilizer Corporation of India Limited safety and security of properties/assets of the various units of the Company. Introduction However, on appeals filed by the Government Incorporated on 1 st January, 1961, FCI was reorganized along with National Fertilizers Ltd. (NFL) with effect from into five companies namely, FCI, NFL, Hindustan Fertilizer Corporation Ltd.(HFC), Rashtriya Chemicals & Fertilizers Ltd. (RCF) and Projects & Development India Ltd. (PDIL). Following reorganisation FCI comprised four units located at Sindri (Jharkhand), Gorakhpur (Uttar Pradesh), Ramagundam (Andhra Pradesh) and Talcher (Orissa), with a total annual capacity of 5.87 lakh MT of nitrogen beside an abandoned project at Korba (Chhattisgarh). As on , FCI had an authorized share capital of Rs.800 crore and paid up share capital of Rs crore. The accumulated losses as on was Rs crores. and the Company against the orders of AAIFR and BIFR for winding up of FCI, the High Court of Delhi on directed the BIFR to reconsider their order dated to the extent of hiving off the Jodhpur Mining Organisation for forming a new company and revival of other units if any proposals are received within a reasonable time. BIFR in their meeting held on sanctioned the scheme of arrangement of de-merger between FCI and FAGMIL with effect from and confirmed their prima facie opinion regarding winding up of the company. BIFR vide their orders dated conveyed their opinion to High Court of Delhi. This reference was registered as Company Petition (C.P.) No.183/ 2004 in the High Court. Pursuant to the prayer Reference to BIFR of the Department of Fertilizers, the High Court has, inter-alia, granted further time to the company and the Department for submission of a viable proposal for revival of the FCIL. The matter is pending before the High Court The Corporation was declared sick in November, 1992 by the Board for Industrial and Financial Reconstruction (BIFR), and on the BIFR ordered winding up the FCI in terms of Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, The Appellate Authority for Industrial and Financial Reconstruction (AAIFR) on upheld BIFR s order dated Closure of the Company In view of the continuing losses of the Company, stemming from technical and financial non-viability of operations, the Government decided to close down FCI in September Consequently, a Voluntary Production / Sales Performance In view of the closure of the Company, the operations have remained suspended as per details given below: Name of Unit Gorakhpur Ramagundam Talcher Sindri Year of stoppage Korba(*) : The project was never commissioned. 36 Department of Fertlizers, Ministry of Chemicals Fertilizers

38 Financial Results During the year , the Company incurred a net loss of Rs crore, which includes Rs crore as interest on GoI Loan and Rs.0.31 crore towards depreciation. During the year , the Company incurred a loss of Rs crore with an interest component on GoI Loan at Rs crore and Rs.0.30 crore towards depreciation Hindustan Fertilizer Corporation Limited Introduction The Hindustan Fertilizer Corporation Limited (HFC) was incorporated on 14 th March, 1978 as a result of the reorganization of the erstwhile Fertilizer Corporation of India Limited (FCIL), and NFL Group of Companies. The HFCL comprised Barauni unit (Bihar), Durgapur unit and Haldia Project (West Bengal) and Namrup Unit (Assam). The Namrup Unit was hived off with effect from to form a separate entity with the name of Brahmaputra Valley Fertilizer Corporation Ltd.(BVFCL). As on 31 st March 2007, HFC had an authorized capital of Rs crore and a paid up capital of Rs crores. Closure of the Company The Company was declared sick by B.I.F.R. in November Subsequently, the Government decided to close the Company on account of techno-economic non-viability. Almost all employees have opted for Voluntary Separation Scheme (VSS) and as on , only 44 employees were on the rolls of the company to carry out post-closure activities. BIFR Status During the course of proceedings before BIFR, the Namrup units of the Company were demerged with effect from and the residual Company comprising three units at Barauni, Durgapur and Haldia and the Fertilizer Promotion & Agricultural Research Division (FP&ARD) was ordered to be closed. The AAIFR through its order on had permitted hiving off the Namrup units of HFC into a new company under the name of Brahmaputra Valley Fertilizer Corporation Limited w.e.f and remitted back the matter to BIFR for reconsideration of its decision regarding revival of Durgapur, Barauni units and the Research Division. The case registered as Case No.516/1992 is pending before the BIFR. The Department of Fertilizers has conveyed the intention of the Government for exploring possibilities of revival of the HFCL, to the BIFR. In the hearing held on , the BIFR has appointed IDBI as the Operating Agency (OA) under section 17(3) of the Sick Industrial Companies (Special Provisions) Act and has, inter-alia, directed the OA to take further necessary action and submit report within one month. The Government, as the promoters of the Company, have also been permitted to submit their fully tied up offer in response to the advertisement to be issued by the OA. The matter is pending before the BIFR. Operating Performance The operational activities of the Company have been suspended due to the decision taken by the Government for closure. During the year , HFC has incurred a net loss of Rs crore and during , the company has posted net loss of Rs crore. Due to suspension of operations of Barauni unit since January, 1999 and of Durgapur unit since July, 1997, the production performance has been nil. The Haldia Project was never commissioned Revival of Closed Units of FCIL and HFCL On , the Government had decided in principle to examine the possibility of revival 37 A n n u a l R e p o r t

39 of FCIL and HFCL subject to the confirmed availability of gas. The decision of the Government had been intimated to FCIL and HFCL for implementation. Fertilizer PSUs/ Cooperatives Rashtriya Chemicals & Fertilizers Ltd. (RCF), National Fertilizers Ltd. (NFL) and Krishak Bharati Cooperative Ltd. (KRIBHCO) have shown their intention to participate in the revival process and accordingly process of preparing technoeconomic feasibility reports have been initiated. The units of FCIL/HFCL for which PSUs/Cooperative have shown their intentions for revival are indicated below : NFL - Barauni (HFCL) and Ramagundam (FCIL) RCF - (HFCL) Talcher (FCIL) and Durgapur KRIBHCO - Gorakhpur unit (FCIL) PDIL has prepared final techno-economic feasibility reports (TEFRs) in respect of Barauni and draft TEFR in respect of other units (except Gorakhpur). However, it would possible to give final shape to TEFRs only after finalization of investment policy for fertilizer sector by the Government and assured availability/connectivity of gas at reasonable price. The Cabinet Note on the Investment Policy is under Inter-Ministerial consultations. Regarding availability of gas the GOM in its meeting on has assured that gas would be made available to meet the requirements of Fertilizer Industry. Another meeting of GOM has taken place on on the issue of Fertilizer subsidy in which the issue of revival was also discussed Regarding revival of 3 units viz. Haldia, Sindri and Korba, before initiating action for inviting EOI, it was decided that views of the Chief Ministers of the States wherein these units are located may be solicited seeking their interest in equity. Accordingly, Chief Ministers of West Bengal, Chhatisgarh and Jharkhand were requested at the level of Minister (C&F&S) to ascertain if the State Governments would be interested in considering equity before any other option is explored. Only the State Government of West Bengal has intimated that the State Government is not interested in investing the required amount for revival. The idea of reviving the said closed units on Lease Rehabilitate Operate Transfer model is being mooted in the Department Request for plan funds of at least 5000 crore towards GOI support for revival had been made to the Planning Commission, which is under discussion Pyrites, Phosphates & Chemicals Ltd. Introduction Pyrites, Phosphates & Chemicals Ltd. (PPCL) was set up in It was entrusted the responsibility of exploiting the country s pyrites deposits. The company had three production units located at Amjhore (Bihar), Dehradun (Uttaranchal) and Saladipura (Rajasthan). The company was also engaged in trading of indigenous fertilizers. As against the authorized capital of Rs. 100 crore, the paid up capital of the company was Rs crore as on The Government approved closure and hiving off of the Dehradun and Saladipura units in July, 2002 and the Amjhore unit including all other establishments in June 2003, implementation of the Voluntary Separation Scheme (VSS) for its employees, and disposal of the assets as per due procedure. Accordingly, the company has relieved 1211 employees till December, 2006 retaining 7 employees for all the three units, the Registered Office and the Corporate Office. The company has so far spent Rs crore on implementation of VSS from the funds provided by the Government for the purpose. 38 Department of Fertlizers, Ministry of Chemicals Fertilizers

40 The company s winding up proceedings are pending before the Patna High Court in the Case C.P. No.14/2002. Hon ble High Court, on has ordered for winding up of the company and appointing the Official Liquidator hence the Board of Directors ceases to exist. 7.6 Rashtriya Chemicals and Fertilizers Limited (RCF) Introduction Rashtriya Chemicals and Fertilizers Limited (RCF) was incorporated as a separate company on 6 th March 1978 as a result of reorganization of the erstwhile Fertilizer Corporation of India Limited. At the time of its formation, the company had only one operating unit at Trombay (near Mumbai) and two major projects under implementation viz.; Trombay IV and Trombay-V expansion. The gas based Thal-Vaishet fertilizer complex about 100 Kms from Trombay, was also later implemented by RCF and it commenced commercial production on June 1, As on 31 st March 2007, the company had an authorized share capital of Rs. 800 Crore and a subscribed and paid up capital of Rs Crore Production Performance The annual installed capacity of all the units of RCF is about lakh MT of nitrogen and 1.17 lakh MT of phosphate. The production during was 9.32 lakh tonnes of nitrogen and 0.79 lakh tonnes of phosphate. Production during the year was severely affected due to feedstock natural gas short supply and due to suspension of ANP production after detonation on the prilling tower top. Besides fertilizers, the company also produces a number of industrial products such as Methanol, Concentrated Nitric Acid, Methylamines, Ammonium Bicarbonate, Sodium Nitrate, Sodium Nitrite, Dimethyl Formamide, Dimethyl Acetamide, Ammonium Nitrate, Argon, etc. During April-December 2007, RCF produced 6.86 lakh tonnes of nitrogen as against 7.04 lakh tonnes during the corresponding period of the previous year and 0.53 lakh MT of phosphate as against the production of 0.60 lakh tonnes in the corresponding period of the previous year. During the year , the Company is likely to produce 9.14 lakh MT of nitrogen and 0.72 lakh MT of phosphate. Capacity utilization during the present year has been affected mainly due to ANP production remaining suspended after detonation on the prilling tower top on 30 th May, 2006 and also due to continued gas shortage. Continued feedstock constraint is limiting the production performance. Trombay Urea-V is shutdown due to non availability of associated gas Sales Performance The sale of fertilizers (including bought-out products) during the year was of the order of lakh tonnes, which corresponds to 9.40 lakh tonnes of nitrogen and 1.08 lakh tonnes of phosphate. During the period April-December 2007, RCF sold lakh tonnes of nitrogen and 1.35 lakh tonnes of phosphate as against 7.94 lakh tonnes of nitrogen and 0.97 lakh tonnes of phosphate for the corresponding period last year. The Company also produces and sells biofertilizers, micronutrients, 100% solid soluble fertilizers. In the period April-December 2007, the company has laid special emphasis on micronutrient and Biofertilizers. Sales of Biofertilizers, Biola were MTs in the period April-December 2007 vis a vis MTs in corresponding period last year ( A n n u a l R e p o r t

41 %). In use of liquid micronutrients, the company effected a sale of KL during April- December 2007 vis a vis 0.99 KL in corresponding period last year. The company s specialty (water soluble fertilizer 19:19:19) fertilizer also saw an 83 % increase in the period April-Dec 2007 vis a vis Apr-Dec Sales went up from MTs (Apr- Dec 2006) to MTs (Apr-Dec 2007). The sales turnover of industrial products division of the Company was Rs. 559 Crore for the year During the period Apr- Dec 2007 sales of industrial production division was Rs. 454 Crore. The company continued with its Fertilizer Promotion Programmes to educate the farmers in the scientific and balanced use of fertilizers. RCF has two Farmer Training Institutes, one at Nagpur and other at Thal to impart training to farmers and farm labourers in integrated development and new farming techniques etc. The Integrated Rural Development Programme is implemented in various villages of the country. Overall development of these villages is the focal point. Some of the programmes carried out under Integrated Rural Development Programme (IRDP) are as under: a) Meeting Basic Needs of Rural Community The scheme covers providing essential amenities like drinking water supply, school buildings, community centers, development of irrigation systems etc. b) Agricultural Development Programme - This focuses on economic upliftment of small/ marginal farmers and landless labourers through training and education. c) Subsidiary Occupational Artisan Development Programme - This provides a platform for training and making available financial facilities to rural artisan and entrepreneurs which enable them to revive and develop their skill for commercial use. d) Social Forestry and Waste Land Development Programme - This focuses on development of sericulture, social forestry, waste land use, dry land farming and biogas development. e) Public Health & Village Sanitation Programme This covers health care, village sanitation, health camps, and veterinary camps. f) Youth and Women Skill Development Programme - Rural sports and cultural activities are organized in different villages to encourage participation by youths. g) Soil Testing - The Company places tremendous importance on empowering farmer to increase his yield. Soil diagnostics find a major part of determining which fertilizer needs to be used for each soil and crop. The Company has 6 static and 3 mobile soil testing laboratories across its major marketing territories which undertakes soil sample analysis. About to soil samples are analyzed every year. h) Micronutrient Analysis - To increase crop yield the presence of micronutrients in adequate proportion is necessary. Micronutrients analysis identifies the deficiency in the soil and prescribes doses of micronutrients that need to be applied to ensure optimum yield. i) Earn While You Learn Scheme - This unique scheme has been developed by the Company. It seeks to educate and train children studying in class IX and above to participate in the process of agriculture development. These students are trained to understand latest developments in agriculture and transfer this knowledge to the farming community. The scheme provides all opportunities to students to earn while they learn. The students participating are offered token money which supports them while studying and at the same 40 Department of Fertlizers, Ministry of Chemicals Fertilizers

42 time imparts practical knowledge of agriculture to them. The students are required to do field extension work for promoting specialty fertilizers, micronutrients & bio fertilizers during vacation and holidays Financial Results During the year , the Company reported a net profit (after tax) of Rs Crore. During the period April December 2007, the Company has made a net profit (before tax) of Rs Crore & net profit after tax of Rs Crore Disinvestment Government of India disinvested about 5.64 percent of the equity Share Capital of the Company during Further disinvestment of about 1.57 percent and about 0.27 percent was effected during October 1992 and December 1994 respectively. Thus, the total disinvestment has been of the order of 7.48 percent Modernisation / Expansion Schemes: Ammonia-V plant at Trombay, started in 1981, has been technologically upgraded and commissioned in June 2007 with an estimated cost of Rs. 249 Crore, to reduce energy consumption. Technically upgraded Concentrated Nitric Acid Plant at Trombay has been commissioned in February 2007 at an estimated cost of Rs. 14 Crore to improve the longevity of plant. Argon plant is being set up at Thal to recover argon from purge gas of ammonia plant. The project is estimated to cost Rs. 94 Crore. RCF envisages expansion project at Thal (Thal-III Expansion) by setting up 2200 MTPD ammonia plant and 3500 MTPD Urea plant at an estimated cost of Rs.3156 Crore. Planning Commission s in principle approval has been obtained. DFR is being prepared and is expected to be submitted by April Methanol plant at Trombay, commissioned in 1965, is being technologically upgraded with an estimated cost of Rs. 135 Crore, to reduce energy consumption. Rapidwall plant for manufacturing of unique building material is being set up at Trombay using phosphogypsum as a raw material which is by product of Phosphoric Acid plant. The project is estimated to cost Rs. 75 Crore. To manufacture indigenous DAP and reduce dependence on import RCF is putting up a plant in Joint Venture with RSMML to produce 850 MTPD DAP Plant at Rajasthan, Joint Venture company has been formed and LSTK bids are under commercial evaluation. Thal Ammonia Revamp: The process designer M/s Haldor Topsoe has proposed various schemes for reducing energy consumption/ capacity enhancement. Various schemes were discussed and evaluated by the technical team with HTAS. Financial viability is to be evaluated after the new policy is finalized Grievance Redressal: The Company has a good grievance address and redressal system. Any citizen having complaints in respect of the product or services rendered may approach the Company through complaints/suggestion boxes placed at convenient locations in the Area Offices/ Administrative Building at Trombay and Thal. Any aggrieved customer/dealer or other citizen can approach the Company for any failure of the quality/price charged/conduct of any officer/employee to the addresses mentioned and will be dealt as under: The grievances can be addressed to a special designated officer of the Company not below the rank of General Manager who acts as the Nodal Officer for redressal. The name, address and telephone No. of the officers is 41 A n n u a l R e p o r t

43 available on Intranet on Company s website It is assured that the Nodal Officer will immediately take up the issue with the concerned department and appropriate action will be taken within seven days from the date of receipt of the complaint or an appropriate reply is sent within seven days as the case may warrant. A similar grievance address and redressal system procedure is followed by the Company in issues related to staff also EMPLOYMENT OF SC/ST, EX-SERVICE MEN, PHYSICALLY HANDICAPPED & OTHER BACKWARD CLASSES: The guidelines regarding reservation in Recruitment and Promotion for SC, ST, OBC, Ex-Servicemen and Physically Handicapped Persons are followed. Out of total strength of 4147 (as on 1 st January, 2008), there are 556 SCs, 261 STs, 229 OBCs, 11 Ex-Servicemen and 22 PHPs in the Company. Details are annexed WELFARE OF MINORITIES & RESERVATION IN DEALERSHIP: RCF as a policy includes representative of the minorities in the recruitment selection boards to ensure that the minorities get an adequate share in the services and benefit of developments. A special drive was conducted recently for appointment of dealers from SC/ST Communities. Under this, 1084 new dealers were appointed till September 30, 2007 in the states where the Company operates. Some of the concessions given to these dealers are No dealership deposit (as against Rs. 10,000/- for other categories). Preference in supply of material for first three years of operation. Efforts to provide training to them so that they can acquire necessary knowledge of business. 7.7 National Fertilizers Limited (NFL) Introduction National Fertilizers Limited (NFL) was incorporated on 23 rd August, 1974 for setting up two nitrogenous plants, at Bathinda (Punjab) and Panipat (Haryana) with LSHS as feedstock, each having Urea production capacity of 5.11 lakh MT per annum. Consequent upon the reorganization of the FCI, the Nangal Unit (including Nangal Expansion Project) of FCI was also transferred to NFL w.e.f A gas based ammonia and urea fertilizer project on the HBJ pipeline at Vijaipur in Guna District of Madhya Pradesh, with an annual installed capacity of 7.26 lakh tonnes Urea commenced commercial production on The urea capacity was doubled from 7.26 lakh MT to lakh MT per annum on commissioning of its expansion unit on The production capacity of gas based plants in the country has been reassessed w.e.f. 1 st April, 2000 resulting in capacity revision from 7.26 lakh tones to 8.64 lakh tones for both Vijaipur-I and Vijaipur-II. A revamp of urea plant at Nangal was successfully completed three months ahead of schedule and commercial production commenced w.e.f. 1 st Feb With this, the installed capacity of urea at Nangal Unit increased from 3.30 lakh tonnes to 4.78 lakh tones per annum raising the company s total installed capacity to lakh MT of urea corresponding to lakh MT of N (Nitrogen) in terms of fertilizer nutrient. The company also produces various industrial products like nitric acid, ammonium nitrate, sodium nitrite/nitrate, sulphur, methanol, liquid nitrogen, liquid oxygen etc. besides biofertilizers. The company commissioned an 42 Department of Fertlizers, Ministry of Chemicals Fertilizers

44 Argon gas plant designed to produce 120 NM3/hr. of Argon gas at the Panipat Unit in October A Methanol Augmentation Scheme at Nangal Unit was commissioned in October 1998 thereby enhancing the daily production capacity of Methanol from 50 tonnes to 67 tonnes. The company s biofertilizers plant at Indore produces three strains of biofertilizers with an installed capacity of 100 MT per annum. The authorized capital of the company as on stood at Rs.500 crore and the paid up capital at Rs crore, comprising Government of India s share of Rs.479 crore (97.64%) and the remaining Rs crore (2.36%) held by financial institutions and others. Production Performance During the year , the company produced lakh MT of urea in addition to 124 MT of Bio-fertilizers and tonnes of industrial Nitrogen ( N ). The percentage share of NFL in Urea production in the country has been estimated at 16.53% for the year During the year Department of Fertilizers allowed production of additional Urea of 10,000 MT from Vijaipur-I and 1.10 LMT from Vijaipur-II over and above the 100% capacity of the respective units. Vijaipur-II unit achieved best ever production of Urea at 9.74 lakh MT, achieving % capacity utilization and four units Nangal, Panipat, Bathinda & Vijaipur-I achieved best ever energy consumption. During the period April,2007 to December, 2007, the Company has produced LMT of Urea and 11.6 LMT of Nitrogen. Marketing The Company, during , recorded the Urea sale of lakh MT. NFL has recorded its ever-best sales turnover crossing Rs crores compared to Rs crores in previous financial year. C&AG issued NIL comments on company s annual accounts for Financial Performance During the year , the company recorded a post-tax profit of Rs crores, and disbursed a dividend of Rs crore which is 10.77% of the paid up capital. The Company has posted a profit of Rs crore during the period April, 2007 to December, MoU The company has been awarded Excellent rating for the fiscal year thus achieving excellent rating for the last seven consecutive years. The company also received MoU Excellence Certificates during for the year & on achieving MoU Excellent rating. EMPLOYMENT OF SC/ST, EX-SERVICEMEN, PHYSICALLY HANDICAPPED & OTHER BACKWARD CLASSES (OBCS) PERSONS IN PUBLIC SECTOR UNDERTAKINGS (AS ON ) Group Total number of employees SC Number of SC/ST/ OBC/EXSM/PH ST OBC *EXSM **PH A B C D Total * EXSM Ex- Service men ** - PH Physically Handicapped Public/Staff Grievance Redress Machinery Based on the model grievance procedure notified by DPE, the company has framed a 43 A n n u a l R e p o r t

45 Grievance Redressal Procedure for staff and officers of NFL. The objective of the Grievance Redressal Procedure is to provide easily accessible machinery for expeditious settlement of grievances of staff and officers with the aim of providing satisfaction and in improved productivity and job efficiency of the organization. For systematic monitoring and supervision of Public Grievances, Head of Corporate HR Department has been nominated as Director (Grievance) as per the directives of the Government. In addition to this in-built system, the company has also set up Public Grievances Centres at the Units, whose working is supervised by respective Heads of the Unit/Marketing Division with the help of the Grievances Redressal Mechanism. Information relating to welfare of Minorities and reservation in dealership Company follows all Government regulations on empowerment of minorities such as representation of the minority communities on interview boards in Group C & D. The organization believes in equality of all communities and celebrates festivals with great fervor for all the communities. Presently as per policy of the Government of India, 25% of total dealership are for SC/ST category. Being capital-intensive business, the response from SC/ST category for obtaining fertilizer dealership was less. In order to achieve the desired target of 25%, a drive was initiated in to fill up the gap for allotment of dealership to SC/ST category and as a result their share increased from 1.92% to 13.7%. Second drive has been initiated during to further increase the share Projects & Development India Limited Projects & Development India Limited (PDIL) an erstwhile Division of the Fertilizer Corporation of India (FCI) was registered as a separate company in March The company has its registered office at Noida, Uttar Pradesh. The authorized share capital of the company was Rs.60 crores and paid up capital was Rs crores as on Operating Results The company has earned a net profit of Rs Crores during as against the target of Rs Crores. During the period April to Dec., 2007, a profit of Rs 9.27 Crores has been earned. The estimated profit for the year is Rs Crores. Engineering & Consultancy Division The company is mainly engaged in Design, Engineering, Procurement, Inspection, Store Management and Supervision during construction and commissioning of fertilizer and chemical plants. It has played a pivotal role in establishing fertilizer plants in India from concept to commissioning, besides providing trouble shooting and NDT services for health maintenance of plants. It has also diversified its activities into the field of Oil and Gas, Pipeline, Refinery and Infrastructure Development such as Housing project and City Gas Distribution. During , the following major projects / assignments in the fertilizer sector were under execution for various clients with PDIL as Consultant :- After the successful commissioning of world s largest Ammonia Plant at Karratha in Australia, another valuable job from IFFCO for providing Engineering & Consultancy Services for De- Bottlenecking and Capacity Enhancement of Ammonia / Urea Plants of Aonla-I and II and Phulpur-I & II has been completed. Detailed Engineering and Consultancy Services for De-bottlenecking of Ammonia-I & 44 Department of Fertlizers, Ministry of Chemicals Fertilizers

46 II, Urea-I &II at Gadepan Plant of Chambal Fertilizers and Chemicals Limited. Design Engineering and Procurement job for Trombay V Ammonia upgradation project of RCF Mumbai has been completed and the plant has also been commissioned. Detailed engineering and other technical services for revamp of Urea Plant for energy saving from M/s GNFC Bharuch. Detailed Design Engineering of new converter, procurement assistance, inspection and expediting services, supervision of construction and erection, pre commissioning, commissioning services for Trombay Methanol Revamp project of RCF Trombay. Consultancy services for Ammonia plant feed stock change over project at Panipat, Bhatinda and Nangal Units of NFL. Techno-Economic Feasibility Report PDIL continued to assist the Fertilizer Industry by preparing Techno Economic Feasibility Reports and Detailed Project Reports. During the year under review the major job secured were preparation of DPR for Ammonia / Urea expansion project at Jagadishpur, preparation of TEFR for capacity augmentation of Vijaipur Fertilizer complex, preparation of DFR for switching over feed and fuel from F.O. and LSHS to R-LNG at NFL Panipat. In addition, the Company prepared draft TEFR for Barauni, Ramagundam, Durgapur and Talcher fertilizer plants. Assignment Abroad Apart from securing Engineering and Consultancy jobs in India, PDIL continued to seek foreign assignments in Fertilizer as well as in related fields. The major jobs undertaken during the year under review were rapid technical due diligence study of Ammonia, Weak Nitric Acid, Ammonium Nitrate and Urea Plant located at Fargana Azot Complex, Uzbekistan and due diligence study of Ammonia Plant for relocation from Star Petro Energy LLC, Dubai. PDIL also secured job of Consultancy Services for development of facilities existing at Safagada port of IEFC Egypt and preparation of ITB for LSTK execution of 1350 MTPD Ammonia Plant in Iran, etc.. Apart from the above assignment PDIL has also provided consultancy services for improvement in Material Management System at OMIFCO at Oman. Jobs In Diversified Sector PDIL is playing a significant role in Oil & Gas, Refineries & Pipelines and Infrastructure Development, Some of the Credentials established by PDIL in diversified sectors are: Refinery, Oil & Gas And Other Sectors PDIL is in constant touch with BPCL, IOCL, ONGC, GAIL, NRL Numaligarh and other refineries and they have reposed confidence in PDIL by awarding various jobs. The major jobs completed in the year were PMC for Lube Oil pipeline of BPCL Mumbai, Design Engineering for Power-cum-Motor Control Centre (PMCC) for Rajkot Bottling Plant of IOCL Ahmedabad, Design and Drawing of LPG Bullet at LPG Plant Raipur of M/s IOCL Mumbai. PDIL has also secured jobs in this field in collaboration with reputed companies such as L&T Chiyoda Ltd and Indus Project Ltd., Mumbai. In Refinery Sector, PDIL has secured valuable jobs from IOCL which includes adequacy check of OISD guidelines for Mathura refinery. Various jobs have been secured from NRL Numaligarh which include UT Attenuation of Hydrogen Reformer Tube, Enlistment / 45 A n n u a l R e p o r t

47 registration of vendors/ contractors, AUS of Reformer Tubes and other jobs. PDIL has also secured job of Environment Impact Assessment & Risk Analysis from IOCL, BPCL etc. Infrastructure Sector PDIL Continued to provide Project Management Consultancy Services and Review Consultancy job for Married Accommodation Project at various locations for the Director General Married Accommodation Project, Ministry of Defence. SSP Audit Deptt. of Fertilizers continued to engage PDIL for Techno-commercial Audits of SSP Plants located throughout India. The Audits were undertaken and the reports with TAC observation and comments were submitted to DOF, within the agreed schedule. Inspection & Non-Destructive Testing (NDT) Third Party Inspection & NDT jobs remain one of the major source of Income for PDIL, due to its specialized nature. Based on our credentials Bharat Heavy Electrical Limited has awarded a rate contract for third party Inspection of various bought out equipment and other items through out India. Job is being carried out to the full satisfaction of BHEL. It is expected that this job will continue to be a major source of income of TPI for PDIL in the coming years. PDIL secured jobs of NDT Services in fertilizer as well as in Oil & Gas and refinery sector. The major NDT Services includes NDT services and SMPV certification for Horten Sphere and LPG Bullet, Eddy Current scanning of Titanium tubes of Urea strippers of IFFCO Aonla, Health Check up of pipelines at LPG Import Plant at Kandla, AUS reformer of Catalyst tubes of IFFCO-Aonla, NFCL- Kakinada and NRL- Numaligarh. Catalyst The production of the Catalyst was 220 MT for the year as compared to 59 MT in the previous year. PDIL Catalyst for Fertilizer Industry includes HT CO Conversion shift catalyst (conventional and copper promoted), LT CO Conversion Shift Catalyst (conventional and high copper), Vanadium Pentoxide Catalyst and Alumina Balls. During the year, PDIL executed prestigious orders of NFL Nangal, NFL Vijaipur, RCF Thal and KRIBHCO for HT & LT Catalyst. It also supplied Catalyst to HPCL Vishakapattanam. PDIL supplied V O Catalyst (Ring) to Krishna 2 5 Industrial Corporation, Asian Fertilizer Ltd. SAIL Bhilai and Bokaro. Excellent Ranking in MoU PDIL entered into MoU for the year for the first time with the Department of Fertilizers, Ministry of Chemicals & Fertilizers. Department of Public Enterprises has assessed PDIL s performance Excellent for the year MoU for has also been signed with the DOF. Activites and Achievement of Vigilance Department The Company considers the Vigilance to be an integral part of the management function. The Chief Vigilance Officer posted at Corporate Office, Noida, provides direction, guidance and supervision over the vigilance matters of the company. Vigilance Officers have been posted at Noida Head Office, Sindri Unit and Baroda office. The Company has adopted Proactive and Preventive Vigilance as the main theme. The stress is on transparency and accountability in the working of the company. Vigilance Notice Boards have been installed in all the offices, displaying the address and telephone numbers of the Chairman & Managing Director, Chief 46 Department of Fertlizers, Ministry of Chemicals Fertilizers

48 Vigilance Officer and Central Vigilance Commissioner, who can be approached for complaints of corruption. To sensitize the employees about the evils of corruption and to create awareness about Vigilance functions, Vigilance Awareness Week was observed from 6 th to 10 th November, 2006, with active participation of the employees at various levels. Facilities to SC/ST/OBC Employees In line with Government Guidelines issued from time to time PDIL continued to extend number of facilities to SC/ST/OBC employees. A Liaison Committee is functioning to protect and safeguard the interests of SC/ST employees in the matter of promotion and for SC/ST/OBC in the matter of recruitment. The company has managed to execute the various jobs apart from regular employees with the help of Consultants and Technical manpower on contract basis. The Men in position as on including SC/ ST & OBC are as follows:- Total No. of Employees SC ST OBC A B C D On contract Total The Fertilizers and Chemicals Introduction Travancore Limited (FACT) The fertilizers And Chemicals Travancore Limited(FACT) was incorporated in In 1947 FACT started production of Ammonium Sulphate with an installed capacity of 50,000 MT per annum at Udyogamandal, near Cochin. In the year 1960, FACT became a PSU and towards the end of 1962, Government of India became the major shareholder. From a modest beginning, FACT has grown and diversified into a multi-division/ multifunction Organisation with basic interest in manufacture and marketing of Fertilisers and Petrochemicals, Engineering Consultancy and Design and in Fabrication & Erection of Industrial Equipments. The Company was making profits continuously for 14 years till However the rising prices of inputs and the use of naphtha as feedstock for ammonia production have affected the profitability of operation of the company. During the financial year , FACT has incurred a loss of Rs.124 crore. Performance Performance of the Company in the field of Production and Sales along with Profitability for the year is given below: 1 Production / In Tonnes Factamfos 20: Ammonium Sulphate Caprolactam Sales / In lakh Tonnes Fertilisers 9.47 Caprolactam Financial / Rs.lakh Turnover A n n u a l R e p o r t

49 Operating Profit/Loss(-) (-) Adjustments in respect of prior years Profit / Loss (-) before tax (-) Provision for taxation Earlier years Provision for Fringe benefit tax Profit/Loss after tax (-) Profit/Loss b/f from previous year Net deficit carried to Balance Sheet (-) (-) The production of Ammonium Sulphate registered an increase with a total output of MT as compared to MT during The Production of Caprolactam has also registered an increase with a total output of MT as compared to MT of the previous year. The company was also able to utilize 115% of its capacity in complex fertilizer plant at Cochin Division. However, the Production of Factamfos has shown a marginal decrease in with a total output of as compared to MT during the year The financial performance of the company during the year has been seriously affected by the unprecedented increase in raw material prices. The financial restructuring sanctioned by the Government of India in April 2006 had only a limited impact on the day-today operations of the company as it did not result in infusion of any funds. The company could get the enhancement of cash credit facility from the consortium of banks only in December The limited availability of working capital till that time affected the operation of the company. Further, the unprecedented increase in the price of raw materials much above the levels taken for BRPSE projections and limited availability of intermediates also severely affected the financial performance. The additional impact on account of increase in prices of raw material for over is to the extent of Rs crore. During the period April, 2007 to December, 2007, the Company has produced NP to the quantum of 3.63 LMT. The loss posted by the Company during this period has gone to the tune of Rs crore. During the first quarter of the financial year , the performance of the company was comparatively better in terms of production, sales and profitability. The unprecedented increase in the prices of sulphur in international market has affected the smooth running of the plants in the second quarter. Considering the steep increase in the price and its serious impact on the profitability of the organization, it was decided by the board of directors to defer the procurement of sulphur until the price come down to a reasonable level and utilize the existing stock to produce Factamfos 20:20 to the maximum extent possible with a view to contain losses. This has necessitated shutting down of the Caprolactam and Ammonium Sulphate plants from In order to derive maximum benefit of imported ammonia whose current price is relatively low compared to Ammonia produced through Naphtha, it was also decided to shut down the ammonia plant from Performance highlights during the Year UDYOGAMANDAL COMPLEX Udyogamandal Division: During the year Udyogamandal Division produced 48 Department of Fertlizers, Ministry of Chemicals Fertilizers

50 MT of Factamfos 20:20 and MT of Ammonium Sulphate. During the financial year , production of Factamfos and Ammonium Sulphate were MT and MT respectively. Nutrient wise the production during was MT of N and MT of P2O5 as against MT of N and MT of P205 during the previous year. Petrochemical Division: The production of Caprolactam for the year was MT as against MT during the year Cochin Division: During the financial year Cochin Division produced MT of Factamfos 20:20 as against MT during the year The production of Nutrient nitrogen and Nutrient P205 was MT as against MT during the year Marketing Division: Fertiliser sales during was 9.47 Lakh MT as against 9.83 lakh MT during the year Sale of Facatmfos during the year was 6,95,103 MT as compared to 7,89,049 MT during The reduction in Sales volume is due to supply constraints. During the year , 1,81,624 MT of Ammonium Sulphate was sold which is an increase of 7% over the previous years sales of 1,69,243 MT. The division imported MT of MOP and 25,033 MT of Ammonium Sulphate during the year The Division also traded MT of KRIBHCO Urea. The Mixture sales also was increased by 46% to 15,954 MT, over the previous years sales of 10,916 MT. All Sales were on Cash and Carry basis and against Trade Advances. FEDO & FEW : During the year , FEDO has orders on hand worth Rs.1408 lakh compared to Rs.1230 lakh in FEDO has considerably improved its order position in comparison to the previous year. One of the major projects which FEDO has undertaken is the Single Point Mooring Facility of BPCL- Kochi Refinery. To improve the turnover, FEDO is planning to take up small turnkey projects. Active discussions with certain overseas companies is also in progress for taking up engineering jobs which are likely to be outsourced by these companies. The turnover of FEW for the year was Rs.685 lakh as against Rs.362 lakh for the year During the year , FEW has bagged orders for a value of Rs.1,066 lakh as against 538 lakh for the year FEW is making efforts to penetrate into areas of defence and space research applications as well as to other high potential areas of marine vessel fabrication and infrastructure development. Redressal of Public Grievances and Welfare Measures A Public Grievance Cell is functioning in the Company, as per norms laid down by Government of India. At present, no grievance received from public is pending for redressal. Employee Grievance Redressal Machinery A machinery for redressal of employee grievances exists in the Company. Generally the grievances are related to work, work place, shift arrangement, grant of increment, promotion, salary fixation, transfer, etc. An aggrieved employee may submit a complaint/ request for settling the grievance in the Division and if still aggrieved with the decision of the Division Head, it may be submitted before the appropriate Grievance Committee. Separate grievance committees exist for examining and redressal of grievances of managerial and nonmanagerial employees. The individual 49 A n n u a l R e p o r t

51 concerned is given an opportunity to present his grievance in person before the Committee, e) Land for Marthoma Church, Ambalamedu (45.01 cents) if required. The respective Committee will f) Land for Jacobite Syrian Church, Ambalamedu deliberate on the grievance and give their (40 Cents) recommendations to the management for g) Land for Mosque, Ambalamedu (40 cents) appropriate action. In addition, there is an SC/ ST Grievance Cell that looks into complaints h) Separate cemeteries to above 4 Christian received from SC/ST Employees. Churches in Ambalamedu i) Cremation ground for Muslims (Khabaristan) Employment of SC/ST, Ex-servicemen, Physically in Ambalamedu Handicapped and Other Backward Classes (OBCs) as on j) Cremation ground for Muslims in Udyogamandal Group Total No. of employees Number of employees belonging to SC ST Ex- Physiservice- cally men Handicapped OBC A B C D Total Welfare of Minorities The Company had provided facilities as below for the Welfare of Minority Communities. a) Land for Mosque near FACT Junction, Udyogamandal b) Land for Christian Cemetery in Udyogamandal Pathway to St:Joseph s Church near JNM Hospital, Udyogamandal. c) Land for CSI Church, Ambalamedu (25.51 cents) d) Land for Catholic Church, Ambalamedu (44.73 cents) The Company has been facing severe financial crisis during the last few years and therefore no further welfare measures could be taken up. Welfare of SCs & STs Employment The Company has taken all measures for reservation of SCs/STs in accordance with the Presidential directives. Reservation is maintained for direct recruitments and promotions based on the Reservation Rosters. The Company has been facing severe financial difficulties and various cost reduction measures were adopted. The manpower strength in all the areas of operation were substantially reduced by restructuring. The excess employees available were redeployed against vacancies that occurred within the restructured strength. Feasibility for further optimizing the strength in various Sections/ Departments is under consideration. A ban on direct recruitment has been imposed in May 1998 and another ban on promotions was in force w.e.f However further to Government directives, steps have been taken for filling the backlog vacancies reserved for SC/ST in recruitment and promotion. Recruitment is under process for filling 47 backlog vacancies 50 Department of Fertlizers, Ministry of Chemicals Fertilizers

52 Training reserved for SC/ST in recruitment. All promotions against the backlog vacancies reserved for SC/ST for which eligible candidates were available, have been granted. Promotions against the remaining backlog vacancies shall be granted as and when the candidates become eligible In-service training to Company employees is arranged through the Training Department. Maximum representation is ensured for SC/ ST employees to attend in-house training programmes. Of the total number of 531 SC employees, 178 employees had undergone training and out of the 104 ST employees, 28 had undergone training, during the year up to Training on reservation policies was imparted to office bearers of SC/ ST Association and members of the SC/ST Grievance Cell. The Training School is also organizing similar training to all SC/ST employees in the Company. For engagement of Apprentices under the Apprentices Act, representation as per rules is provided. The representation for SC/ST in apprentices as on is as follows: Total No SC ST SC/ST Grievance cell As per presidential directives on reservation of SCs/STs in employment, a Chief Liaison officer is appointed for ensuring compliance with the directives on reservation. An SC/ ST Grievance Cell constituted by the Chairman & Managing Director is functioning with the Chief Liaison Officer as Chairman assisted by suitable number of members including the Liaison Officers of the various Divisions of the Company and two Officers each belonging to SC and S T. The grievances received are examined by the Cell and appropriate redressal made. The employee concerned is informed of the decision/action taken on his/her grievance by the Grievance Cell. Further there are Associations representing SC/ST employees exclusively and these Associations also take up individual grievances of SC/ST employees with the Management for direct redressal. Reservation in Dealership Category of Dealership As on Total Dealership 5747 SC 565 ST 50 Allotment of Residential Quarters Due consideration is given for allotment of residential quarters to SC/ST employees. The quarters allotted to SC/ST employees are as follows: Total No occupying Qtrs SC ST Madras Fertilizers Limited (MFL) Introduction Madras Fertilizers Limited (MFL) was incorporated in December 1966 as a Joint Venture between GOI and AMOCO India Incorporation of USA (AMOCO) with GOI holding 51% of the equity share capital. In 1985, AMOCO disinvested their shares, which were purchased by GOI and NIOC in their respective proportions on The revised share holding pattern was GOI 67.55% and NIOC 32.45%. The share holding pattern upto May 11, 1997 was GOI 69.78% and NIOC 30.22%. 51 A n n u a l R e p o r t

53 On May 12, 1997, MFL made its maiden Public Issue of 2,86,30,000 shares of face value of Rs 10 at a premium of Rs 5 per share. Of these, 2,58,09,700 shares were subscribed. After the Public Issue, the shareholding pattern is as follows : Shareholder Rs. Cr % GOI NIOC Public Total The company has an authorised share capital of Rs 365 Cr comprising of Rs 175 Cr as equity and Rs 190 Cr as preference share capital. The preference share capital is yet to be issued and subscribed. As on , the paid-up equity was Rs Cr. MFL commenced commercial production in 1971, with an annual installed capacity of 1.7 lakh tonnes of Nitrogen (N) and 1.12 lakh tonnes of Phosphate (P). A major revamp / expansion was carried out in 1998 at a cost of Rs 601 crore, enhancing the annual installed capacity to 2.54 lakh tonnes of N and 1.42 lakh tonnes of P, corresponding to 4,86,750 MT of urea and 8,40,000 MT of complex fertilizers. However, certain problems were also experienced in the revamp process which led to frequent shut downs, low capacity utilization and resultant financial difficulties and liquidity problems. In the wake of this, there were also problems of adjusting to the Urea Pricing Policy with effect from and the norms of determination of concession on decontrolled complex fertilizers, which came into effect in Over a period of time, despite two rounds of financial restructuring, financial difficulties and problems of capacity utilization etc., have, therefore, continued and financial position started deteriorating. Reference to BIFR The Company has informed the Board for Industrial and Financial Reconstruction (BIFR) of the total erosion of net worth and its current negative value. The BIFR has registered the Company as Case No. 501/2007. It has further served notice on stake holders, viz., Banks, Financial Institutions, Workers Union for their statements. Revised Proposal for Restructuring The Company has since submitted a revised proposal to the Department of Fertilizers for financial restructuring which is under the active consideration of the Government. Production Performance The annual installed capacity of MFL is as follows: Product Annual Capacity (MT) Pre-Revamp Post-Revamp Ammonia 2,47,500 3,46,500 Urea 2,92,050 4,86,750 NPK 5,40,000 8,40,000 During the year , the company produced thousand tonnes of Urea and thousand tonnes of NPK-Complex fertilizers with capacity utilisation of 97% and 7% respectively. During the period April October 2007, the company produced thousand tonnes of Urea and 35.2 thousand tonnes of NPK-Complex fertilizers. During the year , the company is likely to produce thousand tonnes of Urea and 35.2 thousand tonnes of NPK-Complex fertilizers with capacity utilisation of 91% and 4% respectively. Further during the year , the company produced 228 tonnes of Bio-fertilizers. The company is likely to produce 360 tonnes of Biofertilizers during the year During the 52 Department of Fertlizers, Ministry of Chemicals Fertilizers

54 period April, 2007 to December, 2007, the Company has produced 1.86 LMT of Ammonia, 3.06 LMT of Urea and MT of NPK. Sales Performance The sales performance of the company is given below: Product State Actuals (in MT) SC/ST Dealers Tamil Nadu 526 Pondicherry 9 Andhra Pradesh 406 Karnataka 484 Kerala 172 Total 1597 Estimates of Urea 4,78,469 4,44,429 NPK 60,330 35,184 Bought NPK Mixture 3,037 10,092 Bio Fertilizers Total Sales 5,42,061 4,89,930 Financial performance : During , the Company ended up with a net loss of Rs Cr and the total accumulated losses went up to Rs Cr. During the period April, 2007 to December, 2007, the Company has posted a net loss of Rs.85 crore and is likely to post a loss of Rs crore for the year Information Relating To Welfare Of Minorities And Reservation In Dealership Reservation in Dealership State-wise SC/ST dealer strength is as below : The following special terms are allowed for the above category : SC/ST dealers constitute 25.6% of the total dealer strength. The following special terms are allowed for the above category : Waiver of security deposit of Rs 5000/-. Exemption from seasonal minimum sales norms Brahmaputra Valley Fertilizer Corporation Limited Introduction Brahmaputra Valley Fertilizer Corporation Limited (BVFCL) with its Corporate Office at Namrup, Assam, was incorporated after being hived off from the Hindustan Fertilizer Corporation Ltd. (HFCL) w.e.f It owns Units at Namrup (Assam). The other establishments of the company are Liaison Offices at NOIDA & Kolkata and Marketing Offices at Guwahati, Siliguri & Patna. The authorized share capital and paid up capital of the company as on were Rs.510 Crores and Rs Crores respectively. Physical Performance Company produced 3.08 MT of urea during the year The main constraints for higher production remain due to lower availability of gas. Production loss due to gas itself was about MT for the plants. Apart from shortage of gas the performance of Namrup-II suffered due to some technical problems Reformed Gas Boiler tube sheet, synthesis Gas Compressor. Company also produced 7.06 MT of Bio-fertilizers in the first year of its Bio-fertilizer Plant. The actual production of the Company for April to December 2007 zis 2.5 LMT of Urea. The targeted production for the Year is 3,50,486 MT of Urea as per RE submitted for 53 A n n u a l R e p o r t

55 There has been about 29% increase in production this year against previous year for April to December period. Performance of the Company during the current year has been greatly affected due to short supply in the gas against contracted quantity of 1.72 MMSCMD of gas from M/S Oil India Ltd forcing many a time, shutdown of plants. The total production loss due to Natural Gas limitation has been MT of Urea till December This has resulted in higher energy consumption and financial losses due to unproductive consumption of gas during start-up/ shutdown of plants. Beside Namrup-II Plant could be run at 50% load only due to availability of only 1.72 MMSCMD gas against requirement of 1.95 MMSCMD of gas. This has increased cost of production of Namrup-II plants. The company manufactured 9.34 MT biofertilizers till October 2007 and plan to produce 20 MT Biofertilizer in The company has sold 860 MT Quality Seeds to farmers through its dealer network with turnover of Rs.1.24 crores and profit of Rs.6.91 Lakhs in Rabi season. The company plans to sale 1900 MT of Wheat Seed in Rabi Season with turnover of 3.61 crores. The Company has exported MT of Urea to Nepal under Import Parity Price. Financial Performance BVFCL has incurred a profit (before tax) of Rs during as against a loss of Rs crores in The loss up to December 07 was Rs crore. Sales Performance The Company sold 3.15 LMT of Urea during as against 2.13 LMT during The company has sold 5.58 MT of Bio- fertilizers also. In the year the Company has sold 2.36 LMT of Urea, MT of Bio-fertilizer and 860 MT of quality seeds up to the month of December, Public /Staff grievance redress machinery and Status of Grievances: A grievance Redressal Committee has been constituted to look into the individual grievances of the employees and the citizens. No specific complaint has been received about its unsatisfactory functioning.further to this, information are provided to the citizens under Right to Information Act 2005 and 12 applications have already been received and information requested has been provided as per the Act. Employment of SC/ST, Ex-servicemen, Physically Handicapped & Other Backward Classes persons: The matter of employment of persons belonging to SC/S T, Ex-servicemen, Physically handicapped & other backward classes are taken care of at the time of recruitment/ promotions. Reservation policy has been followed as per Government guidelines. Information on employment under different categories are given below. The information as on is furnished below: Officers Workers Total Total no. of employees Scheduled Caste Scheduled Tribe Ex-Serviceman Physically handicapped OBC Minority Community Department of Fertlizers, Ministry of Chemicals Fertilizers

56 Welfare of minorities and reservation in dealership: There is no separate welfare policy for the minorities in the job area. However all cares have been taken so that there is no discrimination against the employees belonging to the minority community. All facilities/ amenities available to the employees in general are also extended to the employees belonging to minority communities. Interest of the members of the minority communities is taken care of at the time of recruitment/ promotion. As per the scheme for appointment of SC/ST candidates as dealers formulated by the Government of India, 25% of the appointment of dealers is to be reserved for SC/ST category. Category-wise details of which are as follows: ST : 53 SC : 21 Total : 619 In spite of advertisement, we are getting very limited applications from SC/ST candidates. All the applications received from SC/ST category have been considered for BVFCL dealership FCI Aravali Gypsum & Minerals India Limited, Jodhpur Introduction The FCI Aravali Gypsum & Minerals India Limited was incorporated under the Companies Act 1956 as a Public Sector Undertaking on after being hived off the Jodhpur Mining Organisation (JMO) of Fertilizer Corporation of India Ltd. (FCI). The authorized share capital of the Company was Rs.10 crore as on date and the paid up capital was Rs.7,32,98,000/- as on Production Performance The Production/Sale of gypsum in was 8.96 lakh MT as against the target of 8.70 lakh MT. The company has produced 6.97 LMT of Gypsum up to December, 2007 as against the target of 6.55 LMT for the period and 9.15 LMT for the financial year Financial Performance The Company has earned a net profit of Rs crores during the year as against Rs lakh during the year Company paid a dividend of 20% on paid up capital, amounting to Rs lakh, and a dividend tax amounting to Rs lakh thereon. The company has posted a profit of Rs crores up to Dec Grievance Cell Grievance Cell is functioning to redress the public and staff grievances and no grievance is pending as on date. (i) (ii) (a) (b) For Public grievance- Head Office at Jodhpur receives the public grievances, which are redressed by the Grievance Cell. At present, no grievance is pending. For Staff Grievance- The employees who are working in various Mines are advised to submit their grievances through the respective Area Managers to Chief Manager (Mining). The employees working at Head Office, Jodhpur, route their grievances through Sectional Heads to Chief Manager (Mining). At present, no grievance is pending. Employment of SC/ST, Ex-servicemen, Physically Handicapped & Other Backward Classes (OBCs) persons in Public Sector Undertakings Information in respect of employment of SCs/ STs, Ex-Servicemen, Physically handicapped & OBCs as on 30 th Oct is as furnished below:- 55 A n n u a l R e p o r t

57 Total employees SC S T Ex-Service men PHC OBC NIL Krishak Bharati Cooperative Limited Introduction (KRIBHCO) KRIBHCO was incorporated as a Multi State Cooperative Society on to implement the Ammonia/Urea fertiliser project at Hazira, based on natural gas from Bombay High/South Bassein. The Society commissioned its Ammonia/Urea Plant in The Hazira complex has two ammonia plants and four streams of Urea. The annual reassessed capacity of Urea Plants is lakh MT. KRIBHCO has also installed a Bio-fertilizer unit at Hazira in The capacity of this Unit was enhanced from 100 MTPA to 250 MTPA in Two more Bio-fertilizer units of 150 MTPA capacity each have also been installed one at Varanasi, U.P in September 2003 and another one in Lanja, Maharashtra in March As on the paid up share capital was Rs crore which includes Rs crore(67.6%) of Government of India and remaining Rs crore (32.4%) by Cooperative Societies. The total membership as on was As on the authorised share capital of the Society is Rs.500 crore and the paid up share capital is Rs crore which includes Rs crore(67.6%) of Government of India and remaining Rs crore (32.4%) by Cooperative Societies. The total membership as on was Production Performance During the year KRIBHCO produced lakh MT of Urea (7.89 lakh MT in terms of nitrogen) achieving capacity utilization of 99 % and lakh MT of Ammonia achieving capacity utilization of 104 % based on reassessed capacity. Society has also produced MT of Bio-fertilizers during the year. During the year up to Dec. 2007, the Society has produced 12.8 lakh MT of Urea (4.45 lakh MT in terms of nitrogen). During the whole year ( to ), the Society is likely to produce lakh MT of Urea (7.96 lakh MT of nitrogen) which is 100% of capacity utilisation. Society has also produced 871 MT of Bio-fertilizers during the year (up to October 2007). During the whole year ( to ), the Society is likely to produce 940 MT of Biofertilizers. The society has produced 1.64 LMT of quality seeds also during the period April,2007 to December, Marketing Activities Sales : Total urea: In the year , the Society sold lakh MT of total Urea. This is the highest total annual sales of Urea achieved by KRIBHCO since inception. In the year (up to December 2007) the Society has sold lakh MT of total Urea. Own urea: In the year , the Society sold lakh MT of own Urea. In the year (up to October 2007) the Society has sold 8.99 lakh MT of own Urea. OMIFCO Granular Urea : During the year the Society sold lakh MT OMIFCO Granular Urea. During the year (up to Dec. 2007) Society sold 6.83 lakh MT OMIFCO Granular Urea. KSFL urea : The Society has sold a quantity of 8.83 lakh 56 Department of Fertlizers, Ministry of Chemicals Fertilizers

58 A night view of KRIBHCO Hazira Plant at Surat, Gujarat. MT of KSFL Urea during During the financial year (up to Dec. 2007) Society has sold 6.84 lakh MT of KSFL Urea. Ammonia Sale : The Society also sold 0.52 lakh MT of surplus Ammonia during the financial year During the financial year (upto October 2007) the Society has sold 0.28 lakh MT of surplus Ammonia. Bio-fertilizers Sale : During the year , the Society sold 784 MT of Bio-fertilizer. This is the highest ever sale so far. During the year (up to Dec. 2007) the sale of Bio-fertilizer was 836 MT. KRIBHCO has conducted several promotional programmes on use and benefits of Bio-fertilizers. Financial Results : During the financial year , the Society earned a net profit of Rs crore (post-tax) and paid a dividend of Joint Ventures Rs to GOI. Since inception KRIBHCO has paid dividend of Rs crore to GOI. KRIBHCO has achieved highest turnover of Rs crore during the year During the financial year (up to Dec.07) the Society has made a provisional profit (pre-tax) of Rs crore. Joint Venture Oman India Fertilizer Company, Oman (OMIFCO): KRIBHCO, IFFCO and Oman Oil Company with a share holding of 25%, 25% and 50% respectively have collaborated and set up a world-class fertilizer plant in Oman. It consists of 5060 MTPD granular Urea and 3500 MTPD Ammonia plants along with all other offsite and utilities in the coastal town of Sur in Oman. The annual capacity of the fertilizer complex is lakh MT of granular Urea. The project was completed at a cost of US$ million against an approved cost of US$ 57 A n n u a l R e p o r t

59 Shri G.S. Mangat, Chairman & Managing Director, NFL presenting Dividend Cheque for the year to Hon ble Union Minister (C&F and Steel), Shri Ram Vilas Paswan. Sr. Officials of DoF and NFL are also seen on the occasion million resulting in saving of US$ 77.0 million. single stream Ammonia plant of annual capacity 5.02 Lakh MT and two streams of The urea produced in OMIFCO is being Urea plants with a combined annual capacity purchased by Govt. of India. In addition, plant of 8.64 Lakh MT. produces 2.5 lakh MT of surplus Ammonia per KRIBHCO holds 60% of the equity, management year, which is to be brought to India. control and the entire marketing rights of Urea During the financial year April 06 to March and other products of the company. 07 OMIFCO has produced Lakh MT of During the financial year KSFL Granular Urea and the quantity received by produced 8.72 lakh MT of Urea (100.9% KRIBHCO was about 9.27 Lakh MT of capacity utilization) and 5.23 Lakh MT of granular Urea. Ammonia (104.3% capacity utilization)and During the financial year till 31 st posted a pre-tax profit of Rs.9.51 crore. October 2007 OMIFCO has produced lakh MT of Granular Urea. During the financial year upto October 2007 KSFL has produced 5.24 lakh MT of Urea(103.9% capacity utilization) 3.08 Lakh MT KRIBHCO Shyam Fertilizers Limited ( KSFL): of Ammonia (105.4% capacity utilization) KRIBHCO Shyam Fertilizers Limited (KSFL) has acquired Ammonia Urea Fertilizer Complex of Oswal Chemicals and Fertilizers Ltd. at Shahjahanpur,U.P, consisting of a Equity Participation Gujarat State Energy Generation Limited (GSEG): KRIBHCO has diversified into power sector 58 Department of Fertlizers, Ministry of Chemicals Fertilizers

60 and has invested Rs crore being 30.2% equity in Gujarat State Energy Generation Limited. GSEG is a joint venture with Gujarat State Petroleum Corporation Limited (GSPCL), other Gujarat Government companies and GAIL (India). GSEG is operating a 156 MW combined cycle power plant based on natural gas at Mora, district Surat. During the Financial Year plant achieved an overall Plant Load Factor (PLF) of 78.29%. Further GSEG has posted a posttax profit of Rs crore and declared dividend of 5% on the share capital. GSEG is in the process of setting up Combined Cycle gas based Power Project of capacity 351MW expansion project at its existing site at an estimated cost of Rs crore. Various pre-project activities are in advanced stage of completion. Nagarjuna Fertilisers & Chemicals Limited ( NFCL): Society has an equity participation of Rs crore in NFCL, which is 2.15% of NFCL s paid-up share capital of Rs crore. Project under implementation Argon Recovery Plant: The Society is implementing Argon Recovery Plant at its Hazira Complex at an investment of Rs crore to produce about 6.77 million NM 3 per annum. The trial production of Argon is expected to be achieved by December Logistics: The Society has also diversified into Total Logistic Business and has deposited Rs crore to Ministry of Railways for the license for operating Container Trains in Category-I (i.e. entire Rail network in relation to both Exim Traffic and Domestic Traffic). The necessary permission has been accorded by Railways on February 15, 2007 Future Plans for the purpose. The Society has signed Concession Agreement with Ministry of Railways on May 14, 2007, which is valid for 20 years with provision for further extension of 10 years. A detailed business plan for Logistic Business is under preparation. The Society will procure its rakes and other rolling stock and build Inland Container Depots (ICD s)/container Freight Station (CFS) for operating container trains. Hazira Fertilizer Project Phase-II: Society is contemplating to set up a modern mega size Ammonia Urea plant at its existing fertilizer complex at Hazira, Surat. The existing infrastructure and offsite facilities at Hazira will be utilized resulting in saving in the project cost Power Project Society is actively considering setting up of mega coal based Power Plant of 2x1000 MW capacity in Chhattisgarh in two phases. MOU is expected to be signed shortly with Chhattisgarh State Government / Chhattisgarh State Electricity Board (CSEB). Agricultural Promotion And Rural Development KRIBHCOcontinuedtoorganizeprogrammesfor the benefit of farmers such as kisan melas, farmers meetings, block demonstrations, field days, agriculture campaigns like tree plantations, animal and human health checkups, farmers study visits, cooperative conferences, group discussions, cooperative societies and village adoption programmes, technical wall paintings and distribution of technical literature, etc. The Society organized 1469 agricultural and rural development programmes during the financial year directly benefitting more than 8.60 lakh farmers. It had also adopted 63 cooperative societies for their over all development. Till date 122 storagecum-community centres have also been built. 59 A n n u a l R e p o r t

61 Hon ble Union Minsiter for Chemicals & Fertilizers and Steel Sri Ram Vilas Paswan having a feel of Urea Prills at NFL Vijaypur (M.P). During Kharif 2007, 576 agricultural and rural development programmes were conducted directly benefitting more than 1.50 lakh farmers. The other important activities undertaken by KRIBHCO include the following:- Krishak Parivar Sangam Programmes organized to promote National integration. The Society has also set-up a high-tech farm advisory center known as KRIBHCO Krishi Pramarsh Kendra at NOIDA to provide latest information to farmers of all states. The facilities are free and include testing of soil samples and advise farmers regarding balanced fertilizer use aimed at higher production and quality. During , 6875 soil samples were tested for micronutrients and during Kharif 2007, 1534 soil samples were tested. KRIBHCO is also having a Kisan Helpline Phone No and krishipramarsh@kribhco.net for answering queries from farmers. KRIBHCO also provides through its website, information about happenings in Department of Fertilizers and other agencies to the farmers by means of useful web-links. Agri-market and weather information are similarly made available to farmers through website. Seed Multiplication Programme KRIBHCO also initiated Seed Production Programme in to provide quality/ certified seeds of main crops to the farmers which has had a very encouraging response from farmers and cooperative societies. The seeds are made available to the farmers through KBSKs, Cooperative Societies and State Cooperative Federations in different states. The Society stepped up production of seeds from 2928 quintals in to 1.20 lakh quintals in This is the highest ever production of seeds so far. During the financial year , the Society has sold 1.51 lakh quintals of seeds. 60 Department of Fertlizers, Ministry of Chemicals Fertilizers

62 Rapidwall Demo Building at Trombay. During the financial year , (upto October 2007) KRIBHCO has already produced 1.51 lakh quintals of Seeds and sold 1.16 lakh quintals Official Language KRISHAK BHARATI COOPERATIVE LIMITED (KRIBHCO) has sufficient staff to implement Official Language Policy. An Official Language Implementation Committee (OLIC) has been constituted in KRIBHCO. OLIC meetings were organized regularly. Follow up action was taken on the decisions taken in these meetings. Two Hindi workshops were organized in KRIBHCO NOIDA. To motivate the employees for doing official work in Hindi, a running trophy has been introduced in KRIBHCO Head Office. There is a competition among employees to win this trophy. Maximum of the employees do their 100% official work in Hindi. Rajbhasha Puruskar- 1 st prize was awarded by Sh. Ram Vilas Paswan, Hon ble Union Minister for Chemicals & Fertilizers and Steel for the year to KRIBHCO in the year KRIBHCO celebrated Hindi Pakhwara from 5 th to 19 th September,2007 at its Head Office. Hindi Week & Hindi Day was celebrated also in Plant/State Marketing Offices. Many programmes like essay competition, Hindi dictation, Debate, Hindi noting/drafting & slogan competitions were organized during this period. Essay competition & Hindi dictation competition was organized for C Region employees separately. W inners of the competitions were awarded prizes. KRIBHCO is always committed towards implementation of Official Language Hindi. To create Hindi atmosphere in the organization a Kavi Sammelan was organized on the eve 61 A n n u a l R e p o r t

63 A night view of RCF Thal Plant. of new year On the occasion of Holi festival a Hindi play was staged in KRIBHCO auditorium on 2 nd March, Besides this a Cultural Programme was organised by KRIBHCO employees on 16 th march, KRIBHCO has designated one official for Hindi work in each State Marketing Office and Area Office. To provide knowledge of Official Language Rules and Annual Programme two days Hindi Workshop(5-6 September,2007) was organized for these employees in Dr. Yeshwant Singh Parmar University for Horticulture and Forestry,Nauni(HP). Information Technology Keeping in line with ever changing business requirements, the Society is strengthening and vigorously pursuing business process improvement through strategic use of IT in the field of production, marketing, fertilizer distribution logistics, business communication and human resource development. KRIBHCO started building its IT infrastructure since 1990 onwards and adopted present trend of Web based computing systems with a goal to keep abreast with technological trends utilizing IT for the benefit of the organization. KRIBHCO has implemented customized integrated application software package adopting modern IT infrastructure thru Local Area Network (LAN) and Wide Area Network(WAN) using VPN (Virtual private Network) connectivity for computerization of Financial Accounting, Inventory Management, Personnel Information Management System, Payroll, Share Accounting System, Hospital Management System, Provident Fund Management System, Biometric based Time Attendance Management System etc. which are being used at Head office, Central Marketing Office, Plant, State Marketing Offices and Area offices using Relational Database Management System. Due to enhanced use of IT and 62 Department of Fertlizers, Ministry of Chemicals Fertilizers

64 Hon ble Union Minsiter for Chemicals & Fertilizers and Steel Shri Ram Vilas Paswan s visit to BVFCL, Namrup. implementation of best practices in IT operations, the society has largely achieved stabilization in its IT Operations. A web based Fertilizer Monitoring System of KRIBHCO i.e. (KRIBHCO-MCS) has been developed for monitoring production, dispatches, receipts, sales and movement plan as per guide lines given by Ministry of Chemicals & Fertilizers. Web based share accounting system has been developed to monitor Societies membership & allotment of shares. Dividend warrants, share certificates, call money notices etc are generated through this system. KRIBHCO has also developed web based farmers information support system which provides information dissemination to farmers about social infrastructure, agricultural practices, weather conditions and land & soil type information of the region thru modern soil testing laboratory functional at Corporate Office -Noida. Under E-Governance initiatives, Electronic transfer of funds to vendors and employees, remittance of income tax, service tax, transactions are thru electronic system. It has brought transparency and enhanced vendor satisfaction. KRIBHCO has implemented proper Backup Solution for Data backup to prevent data loss. In order to take care of menace of virus, a comprehensive suite of anti-virus asset management and remote maintenance has been implemented with auto update on daily basis. Dual language support Office Automation packages have been implemented in KRIBHCO. Hindi word Processor facility has been provided in computer systems of the society. Employees have been empowered to maximize correspondence in Hindi using computers. Extensive need based IT-Training is being imparted regularly to employees to improve 63 A n n u a l R e p o r t

65 Hon. ble Union Minsiter for Chemicals & Fertilizers and Steel Shri Ram Vilas Paswan s visit to BVFCL, Namrup. computer literacy as well as know how of latest software/hardware available. Corporate intranet has been developed to serve the information needs of the employees. A Website of KRIBHCO ( has been developed which is constantly updated and also has been upgraded to provide access to outside agencies, vendors, employees and customers to address their grievance and seek redress by sending electronic mail directly to Senior Executives. Public Tenders are also being published in website. In order to have more transparency in purchase procedure, the society has taken decision to procure items thru E-Procurement system. 64 Department of Fertlizers, Ministry of Chemicals Fertilizers

66 Chapter - 8 Fertilizer Education Projects Gramin Vikas Trust (GVT) Gramin Vikas Trust (GVT), an independent legal entity established by KRIBHCO through Department of Fertilizers had managed two Projects i.e. Eastern India Rainfed Farming Project and Western India Rainfed Farming Project with the technical and financial support from the Department of Fertilizers and Department for International Development (DFID) of the British Government. The aim of the Project was to initiate a process of widespread and sustainable renewable natural resource development using flexible, cost effective and participatory approaches to improve the livelihood of poor men and women in the Western and Eastern India through farming systems development and participatory research The Eastern India Rainfed Farming Project operated from 1995 to March This Project covered 252 core villages improving lives of 5.5 lakh population and 61,000 households The Western India Rainfed Farming Project Phase II worked in seven districts of three States namely M.P, Rajasthan and Gujarat and covered 202 core villages and improving lives of 7 lakh population. This Project operated till June 30 th Under participatory planning and community development, different activities, involving the communities have been taken up. Community development programs include working with local organizations to help them accomplish their goals. This assistance is in the form of leadership education, group facilitation, and participation in collaborative efforts with other organizations or developing information useful for community leaders. More than 5000 PRA exercises have been conducted creating around 4100 Self Help Groups (SHGs). These groups are making huge savings and diversifying their activities. Under the crop program, 3000 MTs of seed of different crops were distributed. About 60 Lakh saplings of fuel, fodder and fruit tress have been planted in more than 5000-hectare wasteland as well as homestead area Through Participatory Varietal Selection and Participatory Plant Breeding two varieties each of maize and chickpea and one each of horsegram and blackgram have been released. Project has played an important role in ensuring that the technical know-how is being used to come out with varieties that suits the local farmers needs by an intense involvement of the latter Under the Migration Labour Support Programme (MLSP) GVT has been working with migrant labourers to facilitate and support them to reduce their suffering during migration and improve their livelihoods. Special training centers, information and communication centers Palayan Suchna Kendras (PSKs) were opened in different clusters to disseminate knowledge about employment opportunities, legal awareness, human rights and other laws of contract. Special identity cards have been issued through these PSKs. Around 30,000 migrants have been registered in 85 PSKs. In September 2007 GVT has joined hands and sharing its expertise and experience on MLSP with a groups of 15 other organisations in Delhi GVT s Sustainable Livelihood Approaches (SLAs) are people centric. They prioritize people s assets (tangible and Intangible); their ability to withstand shocks (the vulnerability context); and policies and institutions that reflect poor people s priorities. A number of programmes have been undertaken by GVT to secure the livelihoods of the tribal and rural communities. The intervention have succeeded in changing borrowing pattern among the BPL households. Household dependency on moneylenders has reduced substantially (57.3%) and borrowings from 65 A n n u a l R e p o r t

67 SHGs and banks have increased exponentially. Goals Achieved by GVT in the Year Enhanced the socio economic conditions of the small marginal farmers and tribal communities through various integrated rural development programmes. Developed and successfully implemented the gender and poverty focused participatory approaches through sustainable productivity systems. Established model farms to demonstrate the experiments on various techniques to improve the quality of agriculture. Established village based institutions such as co-operative societies, saving and credit groups, micro-credits etc. for strengthening the process of participatory development in the field of agriculture. The DFID Funding has come to an end with effect from 30 th June, Integrated Nutrient Management To avoid discriminate use of chemical fertilizers without scientific basis that could have an adverse impact on soil fertility, the Department of Agriculture & Cooperation is advocating to promote Integrated Nutrient Management (INM) through soil test based judicious and balanced use of chemical fertilizers including micro-nutrient in conjunction with organic manures, compost, vermi compost and biofertilisers etc. under Centrally Sponsored Scheme on Balanced and Integrated Use of Fertilisers as part of macro Management Scheme. Under this scheme Government is promoting establishment of new soil testing laboratories and strengthening of existing soil testing laboratories alongwith training/ workshop orientation for soil testing laboratories staff. At present there are 651 soil testing laboratories out of which 517 are static and 134 are mobile laboratories. The total analyzing capacity of these laboratories is 6.9 million soil samples. However, still about 200 districts in the country have no soil testing laboratory. Fertiliser companies are playing an active role in educating farmers through various programmes on the need to adopt soil testing and the application of balanced Use of Fertilizers in terms of NPK is about Kg/ha during Fertilizer companies may play an important role to educate the farmers about Balanced and Integrated Use of Fertilizer and to set up more number of soil testing laboratories to analyse soil samples and to use fertilizer judiciously. Fertiliser companies may give priority to establish soil testing laboratories in the districts where there is no soil testing laboratory. Department of Agriculture & Cooperation is also working on a new scheme namely, National project on Promotion of Balanced Use of Fertilisers for implementation during XIth Plan. Under this scheme more number of soil testing laboratories and Fertiliser Quality Control Laboratories are proposed to be set up including by the Private Sector/ Fertiliser Companies In pursuance of Clause 20 A of FCO (1985), Ministry of Agriculture, Department of Agriculture & Cooperation has permitted M/s National Fertiliser Limited, M/s Sri Ram Fertilisers Ltd., M/s Indo Gulf Fertilisers Ltd. and M/s Tata Chemicals and M/s Chambal Fertilisers Ltd. to manufacture Neem Coated Urea for commercial trials/purpose. ICAR has sanctioned an ad-hoc project entitled standardization of nitrification in inhibitory principles in Neem Coated Urea at Indian Agricultural Research Institute, New Delhi. The outcome of this project is expected soon. In addition, a provision of customized fertilizers under Clause 20 B of FCO, 1985 has been provided. The main aim of customized fertilizer is to promote site, soil and crop specific fertilizer to increase the agriculture production. 66 Department of Fertlizers, Ministry of Chemicals Fertilizers

68 Chapter - 9 Information Technology (IT) IT Based Systems Towards Increasing Efficiency in Fertilizer Management 9.1. IT Based Application Systems for E-delivery services have been developed and implemented in collaboration with National Informatics Centre (NIC) in order to increase efficiency in Fertilizer Management for smooth and timely supply of fertilizers in the country by ensuring efficient and wide spread distribution of fertilizers with planning and monitoring of indigenous production capacity, actual production, imports, distribution, movement, subsidy and concession payments in the Department of Fertilizers. The following applications systems have been developed/ upgraded in order to keep pace with the IT enhancements and change in fertilizer policy:- Web Based Fertilizer Production Monitoring System This application system provides information support for planning and monitoring the fertilizer production in the form of material as well as nutrients. The system provides analysis in identifying the macro and micro level factors responsible for deviations in production on plant to plant basis in order to take corrective measures to enhance fertilizer production in the country. The system covers various aspects viz., installed capacity, production targets, actual production, capacity utilization, requirement and consumption of raw materials/ intermediates for fertilizer plants. Web Based Fertilizer Distribution and Movement Information System This system facilitates on-line data entry of despatches and sales of fertilizer products on fortnightly/ weekly basis by the fertilizer companies to enable fertilizer management to monitor and ensure adequate & timely supply of fertilizers in the country. The system generates monthly movement orders for the companies to despatch the planned quantity to states/uts. The system also maintains ECA plan, details of fertilizer imports and their allocation to various states. Web Based Fertilizer Concession Scheme Monitoring System This computer based application system is the major integral process of Fertilizer Concession Scheme for timely release of concession payments to the fertilizer manufacturers and importers for the sales of indigenous/ imported phosphatic and potassic fertilizers in States/ UTs. The monthly claims at various stages i.e. On Account, Differential and Balance are processed using the software based on base/ final rates, registration for sales, bank guarantee, eligibility and sales certification. The computerised noting for approval and sanctions for payments to PAO, and various queries/ reports are generated to make and monitor the concession payments. Fertilizer Subsidy Payment Information System This application system is used for processing of monthly claims for timely subsidy payment to urea manufacturers for the despatches based on the subsidy rates, equated freight rates and sales tax rates notified by the Government. The system helps in monitoring various activities pertaining to the payment of subsidy by generating various periodic reports as well as query retrieval. Application System for Monitoring Energy Consumption Norms This system is used to calculate the overall energy consumption in urea production by plants based on various inputs and their calorific values purchased from various sources and consumed in ammonia production. The system provides information support to monitor operational performance of the plants viz., daily reassessed capacity, average productive hours, daily production 67 A n n u a l R e p o r t

69 rate and capacity utilization of ammonia/ urea. The system also maintains consumption and balance of ammonia for each quarter. Application System for Revision in Urea Concession Rates This system facilitates in quarterly revision of concession rates for urea manufacturing units in each group under group concession scheme on account of escalation/deescalation in the variable cost of various inputs and utilities consumed in urea production. The software derives energy consumption proportions of various inputs w.r.t the total normative energy and computes input wise proportional costs. The total input energy cost, normative costs of various utilities and fixed cost are then summed to arrive at the rate of concession. The total financial impact is exercised w.r.t the previous rate of concession and despatched quantities. Fertilizer Equated Freight Fixation Information System This system is used to fix the equated freight rate for each urea producing plant based on ECA allocation, despatches by rail/road, normative rail/road distances, rail/road rate and secondary rate in various states/uts for transporting urea from the plants to the consumption centers at block headquarters level. Web Based Fertilizer Import Management System This system assists in monitoring the fertilizer Import Plan based on actual imports against targets, status of FOB and C&F import contracts for prilled urea on Govt. account under ECA demand and import of granular urea from OMIFCO under UOTA. The system also maintains details of Department of Fertilizer s authorization to State Trading Enterprises (STEs)/ Handling & Marketing Agents for import of urea during a scheduled period. Web Based Handling & Payments System for Fertilizer Imports This application system provides decision support to the Department of Fertilizers in selecting handling agents, fixation of handling rates and monitoring of expenditure. The system processes the claims from handling/ marketing agents towards making payments of inland freight and handling charges after adjusting the recovery of cost of cargo at Pool Issue Price (PIP) from handling/ marketing agencies, settlement of the port dues/icc/ other charges and demurrage/despatch with handling/ marketing agencies. Fertilizer Project Monitoring System This system facilitates in monitoring monthly expenditure incurred through Internal and Extra-budgetary Resources(IEBR) and Budgetary Support on various schemes/ projects approved by DoF during Five Year Plans w.r.t. plan outlays and yearly outlays. Information & Communication Technology (ICT) Infrastructure 9.2. DoF s intranet consisting of 270 nodes is operational in Department s offices located in Shastri Bhawan, Udyog Bhawan, Janpath Bhawan and Sewa Bhawan. NIC s inoc (Integrated Network Operation Centre) at Shastri Bhavan, Udyog Bhavan and Sewa Bhavan protect computer systems of DOF s intranet from network security attacks. The clients systems in the Department have been provided upto LDC level with internet connectivity to make wider use of IT services. For accessing the internet through RF link of NICNET, all the computers are connected through NIC s proxy server where built-in firewall capabilities are enabled. Web Site/ Web Applications Hosting 9.3. The websites of DOF and fertilizer PSUs are hosted at Internet Data Center(IDC), NIC Hqrs. 68 Department of Fertlizers, Ministry of Chemicals Fertilizers

70 in a secured ICT environment to bring citizen interface and transparency in Government functioning. The web based applications for fertilizer production, movement, concessions payment, imports & handling are operational from IDC. A separate website link for the office of Controller of Accounts has been created to view the weekly/monthly expenditure statement, bill status(subsidy payment) and scheme-wise monthly receipts/ expenditure figures. The remote facility through secured Virtual Private Network (VPN) connection of NIC is being used in DoF and Fertilizer PSUs for instant updations in the websites. IntraFERT Portal 9.4. IntraFERT, an Intranet portal has been developed to provide comprehensive, accurate, reliable and one stop source of information to the staff and officers of the Department of Fertilizers. The portal aims in bringing less paper office environment in the department. It facilitates a common information platform whereby, all office orders, circulars, critical news-updates, downloading of standard forms, telephone directory of DOF, electronic pay-slip generation, personal profile, GPF details, income tax statement etc. and links to useful websites are available equally and instantaneously to all employees. This eliminates the requirement of personal visits to HR, Cash and Administration Sections. E-Governance 9.5 Department of Fertilizers has taken various measures to bring e-governance: Office Automation Packages : Comp DDO (Comprehensive Function Management of Drawing & Disbursing Officer) Payroll System for Central Government Offices, Web based File Tracking System, Application Monitoring System under RTI Act, Inventory Management System, Foreign Visit Tracking System, Board Level Appointment System, PGRAMS (Public Grievances Software Package) and CPENGRAMS (Centralized Pension Grievance Redress And Monitoring System) developed by NIC are operational in the Department of Fertilizers. The facility of word processing in Hindi is available in all the computers in the Department. service is being extensively used by the officials of Department of Fertilizers for information exchange with fertilizer companies and other agencies. Fertilizer Monitoring System : 9.6 Fertilizer Monitoring System (FMS) is a path breaking IT initiative undertaken by Department of Fertilizers. FMS monitors movement of urea and decontrolled fertilizers at various stages in their value chain. It monitors the production, distribution and sales of DAP, MOP and NPK fertilizers and also facilitates subsidy payment. FMS provides availability of information at the district level. Soon the software will start capturing block wise availability status. This is a quantum jump because many of the fertilizer shortages occur at local levels. This often results into situations wherein even though DOF may have ensured availability of a fertilizer at State level according to their requirement, there is a problem of distribution within the State. The data from FMS provides a complete and comprehensive picture in this regard. 69 A n n u a l R e p o r t

71 Chapter - 10 Vigilance Activities Vigilance Activities The ambit of the supervisory, vigilance activities of the Department extends not only to the Department but also to the supervision of the vigilance activities of the 8 PSUs and the one-multi state cooperative society. The departmental vigilance set up is headed by the Joint Secretary (Administration and Vigilance) who is the Chief Vigilance Officer designate of the Department assisted by Director (Vigilance), Under Secretary (Vigilance) and other vigilance staff. The Department supervises the vigilance activities in the PSUs and the Multi State Cooperative under its administrative control, within the framework provided by the Central Vigilance Commission. With the thrust on pre-emptive rather than remedial vigilance, pro-active role is played by the Department in ensuring not only the prompt disposal of vigilance cases but also in framing preventive guidelines based on which the occurrence of vigilance cases can be minimized A constant effort is made by the Department to streamline and simplify the procedure prevalent in the Public Sector Fertilizer Companies in order to make the working of these organisations more transparent thereby reducing the chances of corruption. By virtue of being the administrative Ministry for the fertilizer sector, the Department is entrusted with the duty of being the watch dog of the fertilizer PSUs and this is achieved by an energetic pursuance of the vigilance activities in these units coupled with frequent inter active sessions held with the Chief Vigilance Officers of these Companies. As per the framework provided by the CVC, a meeting of the Chief Vigilance Officers of the Fertilizer PSUs chaired by Secretary (F) was held on The meeting was also attended by CVO of the Department. During the course of the meeting an appraisal of the working/ functioning and achievements of the CVOs was done along with initiatives taken by CVOs towards pro-active vigilance environment of the PSEs. Vigilance Activities During The number of pending disciplinary/vigilance cases in the PSUs was 21 as on 30 th Sept., 2007 as compared to 27 as on 30 th Sept., The Department has been regularly monitoring the pending complaints/ investigations by having close inter action with the concerned CVOs of PSUs and a constant effort is being made to ensure the disposal of disciplinary proceedings within the time frame stipulated by the Central Vigilance Commission. Vigilance Week Celebrations The Vigilance Week was celebrated during the 12 th to 16 th of November A number of banners and posters were displayed in the Department to create vigilance awareness among the staff. A pledge was administered to the staff by Secretary (Fertilizers) and an essay competition on the topic Removal of corruption will result in removal of poverty in our country was held. There was active and enthusiastic participation from the officers and employees of the Department in this Essay Competition. The Vigilance week was also celebrated with great gusto in the fertilizers PSUs, including KRIBHCO and various competitions like slogan writing, Essay, Debate, Quiz, Workshops etc. were held. Surveillance And Detection Agreed list of public servants as well as Public Servants of Doubtful Integrity are complete. Further, with a view to check corruption in the Department, the Rotational Transfer of Staff as per the norms/guidelines issued by CVC was implemented. Accordingly, a number of 70 Department of Fertlizers, Ministry of Chemicals Fertilizers

72 Punitive Action officials/officers of the Department who were looking after sensitive nature of work on a particular seat for more than five years were transferred Twenty complaints were received from various sources against the officials of PSUs, which were got investigated/examined and appropriate action was taken The Department had recommended two cases to the CBI for registration of regular case during the year against the officials of a PSU. Investigations in both the cases have been completed by the CBI and further action is being taken. Further the CBI on a reference from this Department has registered a case against Chief Executive Officer of a PSU during A n n u a l R e p o r t

73 Chapter - 11 Right of Information Act, 2005 Shri J.S. Sarma, Secretory (Fertilizers) and Shri G.S. Mangat, CMD, NFL inking MoU document The Right to Information Act, 2005 (RTI) was assented by the President of India on and notified on Some of the Sections of the Act, namely, Sections 4(1), 5(1) & (2),12,13,15,16, 24, 27 & 28 relating to obligations of Public Authorities for maintenance and computerization of record/ information, designation of Public Information Officers(CPIO), Constitution of Central Information Commission and State information Commission, exclusion of certain organization etc. came into force immediately. The remaining provision of the RTI Act came into force on the 120 th day of its enactment i.e. 12 th October In compliance of the RTI Act the Department has designated CPIOs and CAPIO. The respective PSUs under the administrative control of the Department have been directed to ensure compliance of the RTI Act. Some of the important steps taken by the Department in compliance of the Act are:- Created a separate link for RTI Act on its website placing a Handbook on RTI giving general information about the Department required under the Act. Orders designating PIOs, with required details, placed on website, which are up dated from time to time. Counter opened at Public Information Centre of DoF at Shastri Bhavan for applications as well as prescribed fee under RTI. Appointment of Nodal Officer intimated to Department of Post enabling providing of services by that Department as CAPIOs across the country. The Department has started registration of Requests and Appeals under the RTI Act on the Management Information System (RTI RAMIS) software available on the Web-Site of CIC During the year , 56 applications and 7 appeals were received of which 45 applications and 4 appeals were disposed of during the said year. Between April, 07 to November, 07, 54 applications and 4 appeals have been received. Except 3 applications all the applications and appeals have been disposed of. 72 Department of Fertlizers, Ministry of Chemicals Fertilizers

74 Chapter - 12 Progressive use of Official Language Hindi Department of Fertilizers continued its efforts towards greater use of Hindi in official work during keeping in view the Annual Programme issued by the Department of Official Language, Ministry of Home Affairs for implementation of the Official language policy of the Union. The work pertaining to the progressive use of Hindi in the Department is under the administrative control of Joint Secretary (Administration), assisted by a Deputy Director (OL). The Hindi Section consists of one Assistant Director (OL), a Senior Translator, three Junior Translators All the 245 Computers (PCs) in the Department are equipped with bilingual facility. Adequate reading material in Hindi has been made available in the library of the Ministry of Chemicals & Fertilizers. Efforts are being made to promote the use of Hindi in the correspondence. All officers/employees of the Department are having working knowledge of Hindi. Similarly, all the stenographers and typists except two typist and three stenographer are trained in Hindi Stenography and Hindi typing respectively. Besides, a number of measures have been taken for the promotion of progressive use of Hindi in the Department, its attached office of FICC, PSU s and the multi-cooperative society namely KRIBHCO, under its administrative control. Details of these measures are summarized below: - Implementation of Section 3(3) of the Official Language Act In pursuance of the official language policy of the Govt. of India, all documents covered under section 3(3) of the Official Language Act, 1963 are being issued both in English and Hindi. In order to ensure issuance of correspondence in Hindi to Central Government offices located in Region A, B and C, action plan based on the checkpoints identified in the Department has been prepared to ensure compliance of the official language policy. Official Language Implementation Committee (OLIC) There is an Official Language Implementation Committee (OLIC) under the Chairmanship of Joint Secretary (Adm.) in the Department. This committee periodically reviews the progress made in the use of Hindi in the Department, its attached office of FICC, PSUs and a Cooperative Society namely KRIBHCO on quarterly basis. It gives appropriate suggestions and recommends measures to be taken for the effective implementation of the official language policy. Rajbhasha Shield/Trophy The Department is operating a Scheme which was drawn up in the year for the grant of awards to various PSU s/cooperative society/office under the administrative control of the Department. Under this scheme, Rajbhasha Shields for the year , is yet to be awarded. The scrutiny is under process. Hindi Salahkar Samiti With a view to render advice for effective implementation of the official language policy of the Government, fourth meeting of the Hindi Salahkar Samiti (Advisory Committee) of the Ministry of Chemicals and Fertilizers (The joint committee of the Department of Chemical & Petro-Chemical and the Department of Fertilizer) under the chairmanship of the Minister for Chemicals and Fertilizers. The fourth meeting of the committee scheduled on was postponed due to sad demise of former Prime Minister Sh. Chander Shakher. 73 A n n u a l R e p o r t

75 Incentive Scheme for original noting/drafting work in Hindi The incentive scheme for noting/drafting in Hindi introduced by the Department of Official Language was also continued during the year. This scheme carries two prizes of Rs. 1000/- each, three second prizes of Rs. 600/- each and five third prizes of Rs. 300/- each. During the year only eight persons participated under the scheme. Cash prize scheme for dictation in Hindi An incentive scheme for officers for giving dictation in Hindi is in operation in the Department. Under this scheme, there is a provision of two cash prizes of Rs. 1000/- each (one for Hindi speaking and other for Non- Hindi speaking). During the year no entry was received under the scheme. Hindi Day/Hindi Fortnight In order to encourage the use of Hindi in official work amongst officers/employees of the Department, an appeal was made by the Honourable Minister on 14 th September, During the Hindi fortnight, which was organised in the Department from 14 th September, 2007 to 28 th September, 2007, various competitions such as Hindi Essay writing, Hindi shorthand, Hindi typing, Hindi- English translation, Hindi noting and drafting, and poetry recital competitions were organised. Prati Din Ek Shabd The Scheme named Prati Din Ek Shabd, which has been launched in the Department seven years back is being continued during the year. Under this scheme, one word/phrase in Hindi and its English equivalent is displayed on the White Board installed on the second floor A wing of the Department. These words/ phrases are generally administrative and technical in nature and are being used in dayto-day official work. Hindi Workshops During the year 3 workshops were organised in the Department to encourage the officials to undertake more work in Hindi and altogether 60 officers/employees participated in these workshops. Inspections regarding progressive use of Hindi In order to oversee the implementation of the official language policy 6 offices/units of different PSUs were inspected by the officers of the Department during the year. In addition, the first Sub-Committee of the Parliamentary Committee on Official Language inspected 8 offices/units of the different PSUs under the administrative control of the Department. 74 Department of Fertlizers, Ministry of Chemicals Fertilizers

76 Chapter - 15 Welfare of SCs/STs/OBCs and Physically Handicapped Persons in the Department Due care has been exercised during the year under review to implement Government s instructions regarding recruitment and promotion of candidates belonging to the Scheduled Castes (SCs), Scheduled Tribe (STs), Other Backward Classes (OBCs) and Physically Handicapped (PHPs) categories in various groups of services in the Department. The representation of these categories in the Department as on was as under:- Group Total No. of Officers/ Staff SC ST OBC PH A B C D Total Representation of SCs, STs, OBCs and Physically Handicapped Persons in PSUs Presidential Directives on reservation for the candidates belonging to the SCs and STs issued from time to time by the Department of Public Enterprises (DPE), have been implemented in all the PSUs/Cooperative under the administrative control of the Department. The Presidential Directives regarding reservation for OBCs have also been made applicable w.e.f in the Department. The Cooperative Society viz. KRIBHCO has also adopted the guidelines relating to OBCs w.e.f The implementation of these directives is being monitored in the Department and concerted efforts are being made to fill up the vacancies for the reserved categories. The representation of SCs, STs, ex-servicemen, physically handicapped persons and OBCs in the PSUs as on is given in the Annexure-XI Besides providing employment, PSUs/ Cooperative have been advised to prepare and implement special programmes/schemes for education of tribals in scientific use of fertilizers, building up of dealer/retailer network in the tribal areas, and making fertilizers available in small packs in the tribal predominated areas. Welfare of Minorities The PSUs/Co-operative under the Department have further been advised to provide facility of pre-examination coaching to the candidates of minority community, wherever feasible, and to take steps to increase awareness of candidates belonging to the communities about employment opportunities. They have also been advised to include a representative of the minorities in the recruitment selection boards to ensure that the minorities get an adequate share in the services and benefit from development schemes. Reservation in Dealership The Department had instructed all the PSUs under its administrative control to reserve at least 25% of dealerships of fertilizers for the members belonging to SCs/STs. To ensure availability of sufficient numbers of suitable SC/ST candidates, the following concession are generally given by the undertakings:- (a) (b) (c) (d) exemption/relaxation from security deposits. preference in supply of fast moving materials. higher rate of dealership margin as compared to that allowed to general dealers; and free training for handling of fertilizers The PSUs have also been advised to reserve 10% of fertilizer dealerships for ex-servicemen. 75 A n n u a l R e p o r t

77 Chapter - 14 Activities in the North-East Region Hon ble Union Minister for Chemicals & Fertilizers and Steel, Shri Ram Vilas Paswan presenting Award to Shri G. S. Mangat, CMD, NFL during FAI s Seminar, Also seen are Shri J. S. Sarma, Secretary, Fertilizers and Shri U. S. Jha, CMD, RCF The States of the North-East, including Sikkim, face a locational disadvantage due to difficult terrain, besides, inadequate rail and road infrastructure. Except for the State of Assam, all other North-Eastern States including Sikkim have very sparse rail network. The difficulties of movement and transportation are compounded in these States by problems arising out of militancy in certain parts, limited sources of supply etc. The per tonne cost of transportation, as a result, has been exceedingly high as compared to the rest of the country. These have been the major bottlenecks in sending urea supplies to these States in time Considering this and with a view to ensure timely and adequate supply of urea, which would help in boosting agriculture production in the region, the Government decided to reimburse the freight for carrying urea on actual basis through a Special Freight Reimbursement Scheme. This scheme has been introduced in lieu of the Equated Freight Scheme for these States, including Sikkim, but excluding Assam. The Scheme has been in operation since and has helped in ensuring timely distribution of urea to these States. Under the special scheme, an expenditure of Rs.4.05 crore and Rs crore was incurred during the years and , respectively. A similar scheme is also in operation in these States, including Assam, on movement of decontrolled phosphatic and potassic fertilizers covered under the Concession Scheme, at a fixed rate from the declared railheads specific to each State to various destinations within that State. 76 Department of Fertlizers, Ministry of Chemicals Fertilizers