ANNUAL REPORT 2011-2012

GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS DEPARTMENT OF FERTILIZERS

CONTENTS
S.No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Subjects

Page No.
1-3 4-5 6-14 15-16 17-18 19-37 38-60 61-63 64-67 68-68 69-69 70-72 73-74 75-77 78-78 79-104

Introduction Organizational Set up and Functions Development & Growth of Fertilizer Industry Availability of Major Fertilizers during 2011-12 Plan Performance Measures of Support for Fertilizers Public Sector Undertakings Fertilizer Education Projects Information Technology (IT) Vigilance Activities Rights to Information Act, 2005 Progressive Use of Official Language (Hindi) Welfare of SCs, STs, OBCs and Physically Handicapped persons Woman Empowerment Citizen Charter/Grievance Redressal Mechanism Annexure I to XIV

Presenting the dividend cheque for the year 2010-11 to the Hon'ble Minister (Chemicals & Fertilizers) Shri M.K. Alagiri by Dr. S.K. Das, CMD, FAGMIL. Shri Sutanu Behuria, former Secretary (Fertilizers), Shri S C Gupta, Joint Secretary, DoF, Shri Deepak Kumar, Director (Movement), DoF are also present along with others.

CHAPTER -1
1.1 INTRODUCTION

1.1.1. Agriculture which accounts for one fifth of GDP, provides sustenance to two-thirds of our population. Besides, it provides crucial backward and forward linkages to the rest of the economy. Successive five-year plan have laid stress on self-sufficiency and self-reliance in food grains production and concerted efforts in this direction have resulted in substantial increase in agriculture production and productivity. This is clear from the fact that from a very modest level of 52 million MT in 1951-52, food grain production rose to about 235.88 million MT in 2010-11. In India's success in agriculture sector, not only in terms of meeting total requirement of food grains but also generating exportable surpluses the significant role played by chemical fertilizers is well recognized and established. 1.1.2 Keeping in view the vital role played by chemical fertilizers in the success of India's green revolution and consequent self-reliance in food-grain production, 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 1951-52 to 281.22 lakh MT 2010-11, while per hectare consumption of fertilizers, which was less than 1 Kg in 1951-52 has risen to the level of 144.14 Kg (estimated ) in 2010-11. As of now, the country has achieved near selfsufficiency in production capacity of urea with the result that India could substantially manage its requirement of nitrogenous fertilizers through the indigenous industry. Similarly, adequate indigenous capacity has been

developed in respect of phosphatic fertilizers to meet domestic requirements. However the raw materials and intermediates for the same are largely imported. As for potash (K) since there are no viable sources/reserves in the country, its entire requirement is met through imports. 1.2 GROWTH OF FERTILIZER INDUSTRY

1.2.1. 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 food-grains. Subsequently, green revolution in the late sixties gave an impetus to the growth of fertilizer industry in India and the seventies and eighties then witnessed a significant addition to the fertilizer production capacity. 1.2.2 The installed capacity as on 31.03.2010 has reached a level of 120.61 lakh MT of nitrogen and 56.59 lakh MT of phosphatic nutrient, making India the 3rd largest fertilizer producer in the world. The rapid build-up of fertilizer production capacity in the country has been achieved as a result of a favourable policy environment facilitating large investments in the public, co-operative and private sectors. Presently, there are 30 large size fertilizer plants in the country manufacturing urea (as on date 29 are functioning) 21 units produce DAP and complex fertilizers, 5 units produce low analysis straight nitrogenous fertilizers and the 9 manufacture ammonium sulphate as by-

1.1.3

1.2.3

3 ANNUAL REPORT

product. Besides, there are about 84 medium and small-scale units in operation producing SSP. The sector-wise installed capacity is given in the table below: SECTOR-WISE, NUTRIENT-WISE INSTALLED CAPACITY OF FERTILIZER MANUFACTURING UNITS AS ON 31.03.2010
Sr No N 1 2 3 Total: Public Sector Cooperative Sector Private Sector 120.61 56.59 100.00 100.00 34.98 31.69 53.94 Sector Capacity (lakh MT) P Percentage Share N P 7.65 30.27 62.08

to meet the demand of existing fertilizer plant and/or for their expansion projects along with the possibility for utilising newly discovered gas reserves, is also being explored by various fertilizer companies in India. 1.3.2. 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 P2O5. A policy has therefore been adopted which involves mix of three options, viz, domestic production based on indigenous/imported rock phosphate, imported sulphur and ammonia; domestic production based on indigenous / imported intermediates, viz. ammonia and phosphoric acid; and third, import of finished fertilizers. During 2010-11 roughly 70% of the requirement of phosphatic fertilizers was met through the first two options. 1.3.3. 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. Given the volatility in international market for fertilizer in general and urea market in particular, marginal provision through imports could be used to the country's strategic advantage. This is also desirable as the international market, especially in case of urea, is very sensitive to demand supply scenario. Under the new pricing regime for urea units applicable from 01.04.2003, for securing additional indigenous supply of urea, economically efficient units are being permitted to produce beyond their re-assessed capacity to substitute/ minimize imports. FERTILIZER SUBSIDY The subsidy on fertilizers is passed on to the farmers in the form of subsidized MRPs. The selling prices as notified by Government for the subsidized fertilizers are much lower than the normative delivered cost of these fertilizers at farm gate level. The difference between the

4. 33 29.0 17.13 26.27 35.13 44.73

1.3 1.3.1

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 selfsufficiency 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 1982. 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 by Government w.e.f. 1.4.2002 due to technical and financial nonviability. However, 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 1985. As the usage of gas increased and its available supply dwindled, a number of expansion projects came up in the last few years with duel feed facility using both naphtha and gas. Feasibility of making available Liquefied Natural Gas (LNG)

1.3.4.

1.4 1.4.1.

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

normative delivered cost at farm gate level and the notified selling prices is paid as subsidy to manufacturers/importers on sale of fertilizers to the farmers at the subsidized prices. 1.4.2 The increase in rate of subsidy on fertilizers combined with increase in consumption of fertilizes has led to a substantial increase in requirement of subsidy. In spite of increase in cost of fertilizes, the Government has completely kept the farmers insulated from this increase in cost and have increased the subsidy allocations to meet the consumption needs of the farmers at subsidized level of prices. The subsidy on fertilizers has been increased sharply over the last few years. The details of fertilizer subsidy over the last few years are as below:-

sulphur, ammonia, phosphoric acid, electricity, etc., as also the cost of transportation, went up significantly during the eighties. The gas-based 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 1991. 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 21.2.97. The prices of urea were again revised in February 2002 by 5% and by Rs. 240 PMT of

DETAILS OF EXPENDITURE ON SUBSIDY/CONCESSION

Period Amount of concession disbursed on Decontrolled Fertilizers (Indigenous + imported) Indigenous P&K 2007-08 2008-09 2009-10 2010-11 2011-12 (RE) 2012-13 (BE) 1.4.3 10333.80 32957.10 16000.00 20650.00 19832.00 16000.01 Imported 1P&K 6600.00 32597.69 23452.06 20850.00 14954.87 12576.11 Total (P&K) 16933.80 65554.79 39452.06 41500.00 34786.87 28576.12 Indigenous Urea 16450.37 20968.74 17580.25 15080.73 19308.00 19000.01 Imported Urea 9934.99 12971.18 6999.98 9255.95 17475.00 18016.00 Total (Urea) 26385.36 33939.92 24580.23 24336.68 36783.00 37016.01 43319.16 99494.71 64032.29 65836.68 71569.87 65592.13 Amount of Subsidy disbursed on Urea Total for all 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,

urea w.e.f. 28.2.2003. The price increase made effective from 28.2.2003 was, however, later withdrawn w.e.f. 12.3.2003. The MRP of urea i. e. Rs. 4830 per tonne exclusive of local levies continued upto 31-03-2010. With effect from 104-2010, MRP of urea increased by 10% i. e. from Rs. 4830 per MT to Rs. 5310 per MT.

*****
ANNUAL REPORT

CHAPTER -2

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

*****
ANNUAL REPORT

3.1 3.1.1

DEVELOPMENT AND GROWTH OF FERTILIZER INDUSTRY CAPACITY BUILD-UP At present, there are 30 large size fertilizer plants in the country manufacturing urea (as on date 29 are functioning) 21 units produce DAP and complex fertilizers, 5 units produce low analysis straight nitrogenous fertilizers and the 9 manufacture ammonium sulphate as byproduct. Besides, there are about 84 medium and small-scale units in operation producing SSP. The total installed capacity of fertilizer production which was 119.60 lakh MT of nitrogen and 53.60 lakh MT of phosphate as on 31.03.2004 has marginally increased to120.61 lakh MT of nitrogen and 56.59 lakh MT of phosphate as on 01.04.2010.

SPIC. The production of phosphatic fertilizers was more than target by 6.22 Lakh MT. 3.2.3. The installed capacity of urea units in the country is as follows:-

UREA UNITS SET UP BETWEEN 1967-2005 WITH REASSESSED CAPACITY

Unit Year of Comm. 1967 1969 1970 1971 1973 1975 1976 1978 1978 1979 1979 1981 1982 1982 1985 1986 1987 1988 1988 1988 1992 1993 1994 1995 1996 1997 1997 1998 1999 2005 Note: GSFC-Baroda SFC-Kota DIL-Kanpur MFL-Madras ZIL -Goa SPIC-Tuticorin MCFL-Mangalore NFL-Nangal IFFCO-Kalol NFL-Bhatinda NFL-Panipat IFFCO-Phulpur RCF-Trombay-V GNFC-Bharuch RCF-Thal KRIBHCO-Hazira BVFCL-Namrup-III (Formerly HFC) NFL-Vijaipur IFFCO-Aonla Indogulf-Jagdishpur NFCL-Kakinada CFCL-Gadepan TCL-Babrala KRIBHCO SHYAM Shahja- hanpur (Formerly OCFL) IFFCO-Aonla expansion NFL-Vijaipur expansion IFFCO-Phulpur expansion NFCL-Kakinada expansion CFCL-Gadepan expansion BVFCL:Namrup-II @ After revamp Feedstock and Sector Gas-Private Naphtha-Private Naphtha-Private Naphtha-Public Naphtha-Private Naphtha-Private Naphtha-Private FO/LSHS-Public Gas-Coop. FO/LSHS-Public FO/LSHS-Public Gas--Coop. Gas-Public FO/LSHS-Private Gas-Public Gas-Coop. Gas-Public Gas-Public Gas-Coop. Gas-Private Gas-Private Gas-Private Gas-Private Gas-Private Gas-Cooperative Gas-Public Gas--Cooperative Naphtha-Private Naphtha/GasPrivate Gas-Public Installed Capacity (lakh/MT) 3.706 3.790 7.220 4.868 @ 3.993 6.200 3.800 4.785 5.445 @ 5.115 5.115 5.511 3.30 6.360 17.068 17.292 3.150 8.646 8.646 8.646 5.970 8.646 8.646 8.646 8.646 8.646 8.646 5.970 8.646 2.400 @

3.2 3.2.1.

PRODUCTION CAPACITY AND CAPACITY UTILISATION The production of fertilizers during 2010-11 was 121.56 lakh MT of nitrogen and 42.22 lakh MT of phosphate. The production target for 2011-12 was 127.56 Lakh MT of nitrogen and 49.24 Lakh MT of Phosphate, representing a growth rate of 4.9% in nitrogen and 13.9% in Phosphate as compared to production in 201011. Production target for nitrogenous fertilizer is more than the installed capacity. The production target for phospahtic fertilizer is less than installed capacity due to constraints in availability of raw materials/ intermediates which are substantially imported. However, taken together, the production of 'N' and 'P' during the year is very nearer to the corresponding period of last year

3.2.2. The production performance of both nitrogenous and phosphatic fertilizers during the year 2010-11 was satisfactory. Production of nitrogenous fertilizers was less than target by 2.97 Lakh MT, as there was no production by

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

3.2.4

The following 9 urea plants of the companies are presently closed/under shutdown due to various reasons, inter-alia, on account of technological obsolescence, feedstock limitation, non-viability of unit/company and heavy financial losses.
Name of the Company/Unit Date of closures Annual Installed Capacity (In Lakh MT) 2.85 4.95 4.95 3.30 3.30 3.30 0.98 1.53 3.30 28.46

E x p a n s i o n 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 liquefied natural gas, coal gasification, etc., to overcome the constrai nts i n the dom esti c availability of cheap and clean feedstock, particularly for the production of urea. Looking at possibilities of revival of some of the closed units by setting up brownfield units subject to availability of gas.

Sl. No.

1. 2. 3. 4. 5. 6. 7. 8. 9.

FCI: Gorakhpur FCI: Ramagundam FCI: Talcher FCI: Sindri HFC: Durgapur HFC: Barauni RCF: Trombay-I NLC: Neyveli FACT: Cochin-I Total

10.6.1990 1.4.1999 1.4.1999 16.3.2002 1.7.1997 1.1.1999 1.5.1995 31.3.2002 15.5.2001

Note: Production by DIL-Kanpur (7.22 LMT) was suspended due to financial constraints.

3.2.5. The domestic fertilizer industry has by and large attained the levels of capacity utilisation comparable with others in the world. The capacity utilisation during 2010-11 was 100.9% for nitrogen and 75% for phosphate. The estimated capacity utilisation during 2011-12 is 104.4% of nitrogen and 78.7% of phosphate. Within this gross capacity utilization, the capacity utilisation in terms of the urea plants was 109.2% in 2010-11 and 107.4% in 2011-12. As for phosphate fertilizers, apart from the constraints mentioned earlier, the actual production capacity utilisation has also been influenced by the demand trends. 3.2.6. The capacity utilisation of the fertilizer industry, particularly in respect of urea, is expected to improve further through revamping/ modernisation of the existing plants.. 3.2.7 The unit-wise details of installed capacity, production and capacity utilisation during 201011 and 2011-12 are given in Annexure-IV. STRATEGY FOR GROWTH The following strategy has been adopted to increase fertilizer production:

3.4 3.4.1

FEED STOCK POLICY At present, natural gas based plants account for more than 66% of urea capacity, naphtha is used for less than 30% urea production and 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 nonviability. 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 a n d m o r e c o s t e ff e c t i v e i n t e r m s o f 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

3.4.2

3.4.3

3.3 3.3.1

ANNUAL REPORT

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 non-gas 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. 22nd September 2007. 3.5 3.5.1 REQUIREMENT AND AVAILABILITY OF GAS TO FERTILIZER SECTOR Allocation of Natural Gas for FY 2011-12 Ministry of Petroleum & Natural Gas on 30th September 2011 has allocated 3.021 mmscmd of gas as against the demand of 3.732 mmscmd of gas during the current year 2011-12, from the additional gas available from ONGC's nominated blocks. However, no allocation has been made to IFFCOPhulpur (0.3 mmscmd) and IGFL-Jagdishpur (0.338 mmscmd). Department of Fertilizers has therefore requested Ministry of Petroleum & Natural Gas (MoPNG) to include the above demand. In addition DOF has also requested MoPNG for meeting the requirement of 1.28 mmscmd of gas by the ZIL, Goa who will complete the pipeline connectivity by the first week of Feb 2012 and the requirement of 0.10 mmscmd of NFCL-Kakinada because of lean gas supply to the unit. 3.6. 3.6.1 ALLOCATION OF NATURAL GAS FOR FY 2012-13 ONWARDS DOF has already communicated year-wise requirement of Natural Gas to Ministry of Petroleum & Natural Gas (MoPNG). DOF has requested MoP&NG that a minimum firm allocation of 24.2 mmscmd gas is required to be allocated by MOPNG for setting up of

seven expansion units, two Greenfield units and revival of at least two closed urea units of FCIL/HFCL on gas, so that the country can become self sufficient in Urea production in next three to four years. Further, a firm allocation of 3.75 mmscmd of gas by MOPNG should be made for FO/LSHS based urea units converting to gas and 8.52 mmscmd of gas for conversion of naphtha based units. 3.6.2 Allocation and pricing of CBM MOPNG has been requested to take immediate action for allocation of the required CBM to the urea unit being setup by MATIX at Burdwan. MOPNG has also been requested for deciding the price of CBM as soon as possible, since the unit is under construction and any delay in allocation of CBM and discovery of its price may impact the viability and production from the said urea unit. Gas pipeline connectivity - Connectivity to all FO/LSHS and Naphtha based urea units converting to gas, revival of closed urea units of FCIL and HFCL and proposed Greenfield units need to be provided on priority basis. The required pipeline connectivity through various pipelines for the aforesaid urea units is indicated below: The units of NFL at Bhatinda, Nangal (Punjab) and Panipat (Haryana) are to be connected by Dadri-Bawana-Nangal pipeline. Indian Farmers Fertilizers Cooperative Ltd (IFFCO), Phulpur and Indo-Gulf Fertilizers Limited (IGFL), Jagdishpur were allocated only half of their additional requirement of gas from KG-D6 due to capacity constraint in the pipeline. MoPNG indicated that the remaining gas will be supplied after the enhancement of pipeline capacity by 2011-12. Connectivity to DIL-Kanpur can be through adjacent pipeline network. Construction of Jagdishpur-Haldia pipeline may be expedited for providing gas to units in eastern sector (Halida, Baruni, Gorakhpur, Durgapur, Burdwar, Kanpur).

3.6.3

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

New pipeline to connect the closed units of HFCL-Durgapur, HFCL-Barauni, HFCL-Haldia, FCIL-Sindri & FCIL-Gorakhpur should be targeted for completion by 2013-14. Early gas connectivity to naphtha units viz MFLChennai, ZIL-Goa, MCFL-New Mangalore and SPIC-Tuticorin will lead to a substantial subsidy savings. Status of Pipeline connectivity for Fertilizer Plants.

Revival S.No. 1 a

Name of Unit HFCL/ FCIL Durgapur

Status of pipeline connectivity Proposed to be connected to GAILs proposed HaldiaJagdishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant. Proposed to be connected to GAILs proposed HaldiaJadishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant. No plans to connect this unit to any GAILs upcoming pipeline but may be connected to Mallavaram-Bhilwara pipeline for which bids have been submitted to PNGRB Proposed to be connected to GAILs proposed HaldiaJadishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant. Proposed to be connected to GAILs proposed HaldiaJadishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant.

3.6.4

Expansion S.No. Name of Unit 1 KRIBHCOHazira(Gujarat) Status of pipeline connectivity The plant has been connected through newly laid DUPL connectivity wherein capacity exists. Presently capacity does not exist in DULP pipeline but the same is planned to augmented. Presently limited capacity exists in KotaVijaipur segment, however, the same is planned to be augmented Presently capacity of HVJ/DVPL has been augmented but in the downstream segment there is capacity constraint in the Auraiya-Dadri segment which is planned to be augmented. Presently capacity of HVJ/DVPL has been augmented but in the in the downstream segment there is capacity constraint in the Auraiya-Dadri segment which is planned to be augmented.
b Barauni

RCFThal(Maharashtra)

Ramagundam

Chambal Gadepan(Kota) Rajasthan

TCL-Babrala

Gorakhpur

IGFLJagdishpur(UP)

Haldia

ANNUAL REPORT

New Plants S.No. 1 Name of Unit MatixBurdwan(W B) Status of pipeline connectivity This may be connected to GAILs proposed Haldia-Jagdishpur pipeline authorized by GoI Presently capacity of HVJ/DAVP has been augmented but in the downsteam segment there is capacity constraint in the Auraiya-Jadishpur segment which is planned to be augmented.

through Bidding route. The CCEA has approved the proposal. Revival of each fertilizer unit will result in increase of indigenous production of urea by approximately 1.2 Million Metric tonne per annum. 3.8 3.8.1 JOINT VENTURES ABROAD Due to constraints in the availability of Gas in the country, which is the preferred feed stock for production of nitrogenous fertilizers, a near total dependence on imports for Phosphatic fertilizer and its raw materials and full import dependence for MOP, the Government has been encouraging Indian companies to establish Joint Ventures abroad in Countries which are rich in fertilizer resources for production facilities with buy back arrangements and to enter into long term agreements for supply of fertilizers and fertilizer inputs to India. Further, the Department is also working with the goal of having access to / acquisition of the fertilizer raw materials abroad.

JP IndustriesKanpur (UP)

Ministry of Petroleum & Natural Gas has further stated that the fertilizer units need to enter into commercial agreements with GAIL relating to sale and transportation (GSA/GTA) so that action can be initiated for augmentation/booking of capacity in the relevant pipelines. 3.7 3.7.1 REVIVAL OF CLOSED UREA UNITS OF FCIL & HFCL In order to make the country self sufficiency in the indigenous production of Urea, the Government has decided to revive the eight closed fertilizer units of Fertilizer Corporation of India Limited (FCIL) and Hindustan Fertilizer Corporation Limited. An Empowered Committee of Secretaries (ECOS) was constituted to submit suggestions /recommendations for revival of the closed units of these two PSUs. Based on the recommendations of the ECOS, a proposal for revival of these units of HFCL & FCIL alongwith a Draft Rehabilitation Scheme was submitted for consideration of Cabinet Committee on Economic Affairs (CCEA). It was proposed to revive the three closed units namely Sindri, Ramagundam, Talcher units of FCIL through Nomination route to the consortium of the Public Sector Undertakings (PSUs) and five closed units namely Gorakhpur, Korba of FCIL and Durgapur, Haldia and Barauni of HFCL

3.8.2 The details of the existing joint ventures abroad in the fertilizer sector are: A. OMIFCO OMAN Krishak Bharati Cooperative Ltd. (KRIBHCO), Indian Farmers Fertilizers Cooperatives Ltd. (IFFCO) and Oman Oil Company with respective share holding of 25%, 25% and 50% have collaborated and set up a world class urea-ammonia fertilizer plant 'Oman India Fertilizer Company (OMIFCO), in Oman at a cost of US $ 892 million. It consists of 5060 MTPD granular urea and 3500 MTPD Ammonia plants along with utilities in the coastal town of Sur in Oman. The annual capacity of the fertilizer complex is 16.52 lakh MT of granular Urea. The entire quantity of Urea is taken by the Government of India as per Urea Off-Take Agreement (UOTA) at pre determined prices. Government of India also off takes surplus quantity of Urea, if any, as per price agreed for the additional quantity. In addition, 2.5 lakh MT of surplus Ammonia per year is also produced by the Plant for which IFFCO has Ammonia Off-

10

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Take Agreement (AOTA). OMIFCO is examining possibility of expansion and increase in production of Urea and Ammonia. B. ICS SENEGAL The Government of India (GoI), Indian Farmers Fertilizer Cooperative Ltd. (IFFCO) and Southern Petrochemicals Industries Corporation Ltd. (SPIC) formed a joint venture company in Senegal named Industries Chimiques du Senegal (ICS). Later on SPIC withdrew from the project. In recent past, the company suffered financial losses. However, ICS Senegal has been restructured in 2008 with Government of India, IFFCO and other Indian c on so r ti um pa r tn er s h a ving 8 5% a nd Government of Senegal having 15% share. The restructuring plan after having been approved by the Regional High Court of Dakar (Senegal) on 27.3.2008 has come into effect and ICS Senegal, as restructured is in operation. ICS Senegal has a capacity to produce 6.60 lakh tones of phosphoric acid per annum and also finished phosphate fertilizer such as DAP and Complex fertilizers. A major portion of the phosphoric acid, about 5.5 LMT produced in the ICS plant is off-taken by IFFCO as per a long term buy back arrangement and utilized for production of phosphate fertilizers in India. The finished fertilizers DAP and complex fertilizers, produced by ICS Senegal is for domestic consumption in Senegal. C. IJC JORDAN SPIC, Jordan Phosphates Mines Company Ltd. (JPMC) and Arab Investment Company (AIC) set up a joint venture project, Indo-Jordan Chemicals Company Limited (IJC) in Jordan in May 1997 with a capacity of 2.24 lakh tonnes of phosphoric acid production per annum. 52.17% of the equity of the joint venture is held by SPIC, 34.86% by JPMC and 12.97% by AIC. Phosphoric Acid produced by IJC is off-taken by SPIC and other fertilizer units in India.

D.

IMACID MOROCCO IMACID, a joint venture between Office Cherifien des Phosphates (OCP), Morocco, and Chambal Fertilizers & Chemicals Ltd. (CFCL), India to produce 3.60 lakh MT of phosphoric acid per annum was commissioned in Morocco in October 1999. After subsequent joining of Tata Chemicals Limited (TCL), capacity of the plant has been increased to 4.30 LMT per annum. Initially, 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.

3.8.3 OVERSEAS JOINT VENTURES UNDER IMPLEMENTATION / CONSIDERATION A. JIFCO JORDAN Indian farmers Fertilizers Cooperative Ltd (IFFCO) and Jordan Phosphate Mining Company (JPMC) have agreed for setting up of a joint-venture Phosphoric Acid production plant, Jordan India Fertilizer Company (JIFCO) in Jordan with an installed capacity of 1500 MT of phosphoric acid per day (MTPD) or 4.3 Million Tonne Per Annum . Equity holding in the project is 52:48 between IFFCO and JPMC, respectively. The plant is expected to be commissioned by 2013. B. TIFERT TUNISIA Gujarat State Fertilizers & Chemicals Ltd (GSFC) and Coromandel International Ltd (CIL), formerly Coromandel Fertilizers Ltd.(CFL) both Indian entities alongwith Groupe Chimique Tunisien (GCT) & Compagnie Des Phosphates De Gafsa (CPG), both Tunisian entities are setting up a joint venture project, Tunisian Indian Fertilisers S.A. (TIFERT) at Skhira in Tunisia for production of 3.6 lakh MT of Phosphoric Acid per annum. The entire production of phosphoric acid would be for off take by GSFC and CIL. An MOU to this effect was signed in October, 2005 between parties. Estimated cost of the project is approx. US $ 165 million + 5% with equity of US $66 million

ANNUAL REPORT

11

and borrowings of US $99 million. The project is expected to be commissioned by end of the year 2011-12. C. COOPERATION IN SYRIA The India-Syrian Joint Commission in its meeting held in January 2008 took note of the mutual interest of both countries in the field of Phosphatic raw-materials and products. It was agreed that both countries would work for cooperation in the fertilizer sector in Syria. Accordingly, a consortium of Indian entities including MECON, RITES and PDIL (All central Government PSUs), having expertise in the fields of mining, beneficiation, processing, setting-up and running the phosphatic plants and logistic aspects are undertaking capacity enhancement consultancy study with GECOPHAM in Syria. Government of India is funding the study. As per the MOU signed between this Department and GECOPHAM in May 2009, the Indian consortium undertook the feasibility studies, which have now been completed and the Pre-Feasibility Report has been submitted to the Syrian Authorities. A Government level MOU spelling out broad frame work of cooperation in Phosphate sector between the Countries has also been signed in Oct' 2010. The consortium has submitted the Feasibility Report to GECOPHAM. The authorities concerned in Syria have to consider the report. For the reason of ongoing sociopolitical situation in Syria, matter is stand still at present, however, the DOF is keeping a close watch in the matter. D. COOPERATION WITH RUSSIA On 12.03.2010 an MOU has been signed between the Government of India and the Government of Russia, during the visit of Prime Minister of Russia to India, envisaging inter-alia encouraging collaboration in the areas of trade, production, possible establishment of Joint Ventures, investment and R&D activities, exchange of information and holding of consultations on the issues of production and consumption of mineral fertilizers, exchange F.

experience encourage contacts between the specialists, organization of Joint Conferences, symposia and business events on the issues of Co-operations in the sector of mineral fertilizers. In the follow-up a senior level officers visited Russia in November'2011 to discuss with the various Russian entities about possibilities of Joint Ventures for production of Potash in Russia. Some proposals have been received, which are being examined in the Department. E. COOPERATION IN INDONESIA A team led by the Secretary (F) visited Indonesia during 30.10.2010 to 02.11.2010 to hold preliminary discussions with the Indonesian Authority to ascertain the technical feasibility of putting up of an Ammonia Urea plant based on Coal Gasification Technology. During the visit of the President of Indonesia as Chief Guest on occasion of the Republic Day is January 2011 following two documents have been signed: (i) MOU for setting up an Ammonia Urea Plant in Indonesia and agreement for off-take of surplus urea produced in the plant. (ii) Agreement for supply of 3 L MT of Urea and 2.5 LMT of NPK Complex fertilizer in designated grades. M/s Rashtriya Chemicals & Fertilizers Ltd. (RCFL) is pursuing with the Indonesian Authorities about the proposal for JV Ammonia Urea Plant in Indonesia. The Indonesian Authorities have assured for the full cooperation to RCFL in this regard. COOPERATION IN AUSTRALIA Indian Farmers Fertilizer Cooperative Ltd (IFFCO) has entered into a 'Principles of Offtake Agreement' with Legend International Holdings of Australia to undertake joint mining of rock phosphate in Lady Annie mines (Georgina Basins in Queens land) along with an assured three million MT annual off-take. A total of US $800 million investment has been envisaged for undertaking rock phosphate

12

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

mining in Australia. IFFCO would provide both technical and financial facilitation to Legend International Holdings in the development of its phosphate mining and shipment of its product to India. G. COOPERATION IN GHANA Given its gas reserves, Ghana is considered a rich source of nitrogenous feedstock. Chairman of Ghana National Petroleum Corporation (GNPC), Ghana during his visit to India, in September 2009 and discussed with the Secretary (F) the possibility of cooperation in Fertilizer sector was discussed. It was proposed to set-up a Ammonia-Urea plant (Gas based) in Ghana. To give proper shape to the project proposal, an MOU has been signed in July 2010 at the Government level between the Countries. As per MOU, to proceed further a technical team comprising of Officers from RCF & PDIL visited Ghana. Site selection Report and the Pre-feasibility reports were prepared by RCF and PDIL, which were provided to Ghanaian Authorities. In January'2011 a team led by Secretary (F) visited Ghana to discuss further modalities in the matter. Ghanaian Authorities have been requested for an early decision on pricing of Gas. The Government of Ghana has conveyed that their Cabinet has formally given its approval for formation of the Ghana-India Joint Venture Fertilizer Company (with 1 million tone production capacity). The Share Structure as approved by the Cabinet of Ghana is 48% for RCF (India) and 52% for the Government of Ghana. RCF has prepared the draft Joint Venture Agreement and a copy of the same has b ee n comm u nica ted to th e Gha nai an Authorities for their consideration. It is likely to finalize the JV Agreement by both the sides at an early date. H. CO-OPERATION WITH BELARUS During the visit of a delegation led by Secretary (East), Ministry of External Affairs a Protocol was signed between the Government of India

and the Government of Belarus on 27.08.2011. As per Protocol follow up action are in progress regarding long term agreement for supply of potash from Belarus to India at concessional price and the possible equity acquisition in OJSC Belaruskali by Indian entities. Firm quantities of Potash for off-take to India over the next 7 years beginning from the year 2012, have been communicated to Belarusian company and the negotiations on prices are going on. As regards, exploring possible equity acquisition in Belaruskali, this Department is pursuing the matter with the concerned authorities in Belarus in consultation with MEA and the Indian Mission in the Country. I. CO-OPERATION WITH MALI The President of Mali was scheduled to visit India during 11th 12th of January, 2012. Keeping in view the availability of Phosphate resources in the country, DOF proposed to enter into an MOU with Mali. Accordingly, a copy of the draft MOU was sent to MEA on 2nd January, 2012 with a request to consider the same in consultation with the L&T Division of MEA and also for pursuing the same with the Government of Mali. The response from Mali is awaited. 3.8.4 DISCUSSIONS FOR COOPERATION IN FERTILIZER SECTOR Discussion are on with the fertilizer and mining entities in following resource rich countries for long term cooperation for setting up of projects for production and off take of fertilizers: (i) Discussion at Government level is underway with the Government of Senegal for development of Matam phosphate mines. (ii) Two separate consortia of Indian entities comprising IPL & IFFCO and MMTC & RCF are in discussion with M/s Potash One and M/s Athabasca Inc respectively of Saskatchewan province for setting up Joint Venture projects in mining of Potash and off take to India. Consortium of RCF and MMTC, which is pursuing with Athabasca, have signed an MOU

ANNUAL REPORT

13

for JV project with Athabasca for evaluation and assessment in technical, marketing and financial aspect. They have also signed a confidentiality agreement for sharing related information. Consortium of IFFCO and IPL have requested PotashOne for providing detailed costing and other economic parameters involved in the project. (iii) RCF and IDC/FOSKOR of South Africa are exploring the possibilities to set up a Phosphoric Acid and Ammonia-Urea fertilizer project near Maputo Port, the capital city of Mozambique. The project proposes to source Rock from the new mines of Foskor in Phalaborwa, South Africa. An MOU has been signed between RCF and IDC/FOSKOR. Department of Fertilizers has been pursuing with M/s SASOL, for

allocation of gas in Mozambique for setting up a JV ammonia-urea project. (iv) Discussions are also going on for exploring possibilities for an Ammonia-Urea project Qatar with buy back by India. IFFCO and QUAFCO (Public sector entity of Qatar) have signed 'Agreement of Intention' on 24.2.2009 for the same. (v) M/s Nagarjuna Fertilizers & Chemicals Ltd. (NFCL) is pursuing with the Government of Nigeria for setting up of Ammonia Urea Joint Venture Fertilizer Project in Nigeria. The Nigerian Government has assured about supply of adequate quantity of gas for the project. The prices of the gas for the project have also been finalized.

***** 14
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -4
4.1 AVAILABILITY OF MAJOR FERTILIZERS DURING 2011-12 CONTROLLED FERTILIZER UREA 4.1.1 The availability of urea, which is the only fertilizer under price and partial movement control of Government, remained satisfactory throughout the Kharif 2011 season as well as during the current Rabi 2011-12 (upto December, 2011). KHARIF 2011 4.1.2 The field opening stock of 4.25 LMT as on 1.4.2011 coupled with indigenous production of 108.16 LMT and imports of 33.82 LMT 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 146.23 LMT against the assessed requirement of 142.16 LMT. The sales were of 139.21 LMT urea during Kharif 2011. RABI 2011-12 4.1.3 The requirement of urea for Rabi 2011-12 has been assessed at 162.80 LMT envisaging a growth of about 4.31% over the sales of 156.08 LMT in Rabi 2010-11. The requirement is being met from the opening stocks taken together with estimated production of 112.97 LMT and imports of about 45,00 LMT during the season. Thus the cumulative availability of urea for Rabi 2011-12 has been estimated to be about 157.97 LMT by the end of 31st March, 2012. 4.1.4 Allocation of urea was restricted to 50% of production of installed capacity of each manufacturer during Kharif 2011 and Rabi 2011-12. The manufacturers are free to sell the remaining quantity of urea to the farmers 4.2 anywhere in the country at notified maximum retail price. DECONTROLLED FERTILIZERS DAP & MOP KHARIF 2011 4.2.1 In case of fertilizers other than the urea, which are decontrolled, no allocation is made under Essential Commodities Act (ECA) by the Central Government. Assessment of requirement of Urea, DAP and MOP is being made by the Department of Agriculture & Cooperation to enable better monitoring of availability at the national level. 4.2.2 DAP and MOP are the two major decontrolled and decanalised fertilizers, which may be imported freely. DAP 4.2.3 The imports of 40.23 LMT of DAP coupled with indigenous production of 19.67 LMT and the opening stock of 0.90 LMT of DAP as on st 1 April, 2011 resulted slightly less availability of about 60.80 LMT DAP during Kharif 2011 season against the assessed requirement of 71.38 LMT. The sales of DAP in Kharif 2011 were about 48.71 LMT. MOP 4.2.4 The imports of 5.51 LMT of MOP taken together with opening stock of 5.22 LMT as on 1st April, 2011 resulted in availability of about 10.73 LMT during Kharif 2011 season against the assessed requirement of 22.54 LMT. The sales of MOP were reported as about 7.00 LMT. RABI 2011-12 DAP 4.2.5 The production of DAP during Rabi 2011-12 is

3 ANNUAL REPORT

15

estimated to be about 22.83 LMT. Stocks as on 1.10.2011 coupled with estimated imports will be adequate in meeting the country's requirement of DAP assessed at 54.79 LMT during Rabi 2011-12, considering that about 4.04 LMT of DAP will be surplus towards the requirement of Rabi 2011-12. During the current year, there is a shortage of DAP because of the political disturbances in the Middle East and gulf countries which is main source of DAP import. During the Zonal Conference organized by Department of Agriculture and Cooperation (DAC), it was clearly indicated to all the State Governments that there will be a shortage of DAP fertilizer during current year. MOP 4.2.6 Stocks of MOP as on 1.10.2011 coupled with adequate imports till March 2012 will ensure that the country's requirement of MOP during Rabi 2011-12 is fully met. As regards MOP, there is tightness in availability of MOP during current year. There is no viable source of Potash in the country as such the entire demand of MOP is met through imports. During the current year up to the month of July, contracting for import of MOP could not be materialized due to substantial increase of prices and cartelization by MOP producers in the International market. The contracting of MOP took place only in the month of August. As a result, MOP availability for direct application as well as for indigenous production of NPK fertilizers will be comfortable in Rabi 2011-12. Following table summarizes the seasonwise position in respect of the availability and

sales of the major fertilizer i.e. Urea, DAP & MOP during the last three seasons:
Crop season Demand Cumulative Cumulative % age of availability to Assessment Availability Sales assessed demand 136.65 68.75 22.98 154.14 52.17 24.82 142.16 71.38 22.54 132.16 79.01 27.51 165.77 46.64 20.22 146.23 60.80 10.73 126.02 65.05 19.63 156.08 47.63 19.27 139.21 48.71 7.00 96.71 114.92 119.71 107.54 89.40 81.46 102.86 85.17 47.60

Kharif 2010 Urea DAP MOP Rabi 2010-11 Urea DAP MOP Kharif 2011 Urea DAP MOP

4.3

MOVEMENT OF FERTILIZERS

4.3.1 Under the Allocation of Business Rules, the Department of Fertilizers has been entrusted the responsibility of ensuring movement, distribution and allocation of controlled fertilizer, i.e. urea, from various fertilizer plants and ports in accordance with the Statewise req uirement 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. 4.3.2 The major share in transportation of fertilizers is of the Railways. During 2011-12, Railways had moved about 75% of the fertilizers produced and/or imported in the country. 4.3.3 Judicious management of the demandsupply balance has helped in maintaining the average lead of fertilizer movement by rail. During 2010-11 the average lead was 827 KMs. During the current year the average lead for the period April-November, 2011 would also be almost same.

***** 16
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -5
5.1 PLAN PERFORMANCE 5.1.1 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 5th year of tenth plan (2006-07) are indicated below: 5.1.3 Year-wise consumption, production and imports of fertilizers in nutrients terms are given in Annexure-V 5.1.4 The production of fertilizers in nutrient terms during 2010-11 was 121.56 LMT of nitrogen and 42.22 LMT of phosphate. The estimated

INSTALLED CAPACITY AND PRODUCTON OF NITROGENOUS AND PHOSPHATIC FERTILIZERS IN EIGHT, NINTH AND TENTH FIVE YEAR PLANS. (In lakh MT(LMT)) Sr. Particulars At the end of At the end of Ninth Plan At the beginning of 5th No ( 2001-02). year of Tenth Plan Eighth Five Year Plan (1996-97) (2006-07) 1 Capacity i ) Nitrogen 97.77 120.58 120.61 ii) Phosphates 29.05 52.31 56.59 2 Production i ) Nitrogen ii) Phosphates 85.99 25.56 107.68 38.60 115.78} 45.17}

5.1. 2 The installed capacity of nitrogen and phosphate in the terminal year (1996-97) of the eighth plan was 97.77 LMT and 29.05 LMT, respectively. Three major phosphatic fertilizer plants were commissioned during the ninth five year plan period, namely, Oswal Chemicals & Fertilizers Ltd.-Paradeep ( since taken over by IFFCO), Indo-Gulf Corporation-Dahej and Gujarat State Fertilizers Company Ltd.-Sikk a-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 97.77 LMT at the end of eighth plan to 120.61 LMT and 29.05 LMT to 56.59 LMT respectively during the same period.

production for 2011-12 is 125.76 LMT of nitrogen and 44.32 LMT of phosphate. Sector-wise targets and achievements in respect of production and capacity utilization from 2003-04 onwards are given in Annexures-VI & VII respectively. 5.2 5.2.1 Plan Outlays For the Eleventh Five Year Plan (2007-12), Planning Commission has approved an outlay of Rs.20627.87 crore consisting of Rs.1492.00 crore as Domestic Budgetary Support and Rs.19135.87 crore as Internal & Extra Budgetary Resources (IEBR). For the year 2011-12, a plan outlay of Rs.3550.22 crore was approved by the Planning Commission with Rs.3325.22 crore to be met out of IEBR and balance amount of Rs.225.00 crore as budgetary support. The

5.2.2

3 ANNUAL REPORT

17

details of Plan outlays are given at Annexure-VIII. The gross outlay of Rs.3550.22 crore is f or Rashtriya Chemicals & Fertilizers Limited (Rs.293.30 crore), FAGMIL (Rs.4.15 crore), Project & Development India Limited (Rs.9.73 crore), National Fertilizers Limited (Rs.2363.08 crore), Krishak Bharati Cooperative Limited (Rs.654.96 crore), Brahmaputra Valley Fertilizer Corporation Limited (Rs.67.80 crore), Fertilizers & Chemicals Travancore Limited (Rs.60.74 crore), Madras Fertilizers Limited (Rs.88.95 crore), and other Miscellaneous Departmental schemes such (MIS/IT and R&D) Rs.7.50 crore. Department of Fertilizers is exploring possibilities of joint ventures abroad. Since there is no firm proposal in hand right now, only a token provision of Rs.0.01 crore has been provided. 5.2.3 Out of the budgetary support provided by the Government, bulk of allocation was

made to three loss making PSUs, namely BVFCL, FACT and MFL for meeting their urgent capital expenditure requirement. A small amount of Rs.2.00 crore was earmarked for Grants-in-Aid to various research institutes for carrying out relevant research which may be beneficial to the fertilizer industry in the field of fertilizer sector under S&T Head. Similarly, another small amount of Rs.5.50 crore was earmarked for Management Information Technology (MIT) scheme.
5.2.4 For the year 2011-12, there was net Budgetary Provision (BE) of Rs 50,245 crore. Rs 225 crore under Plan and Rs 50,020 crore under Non-Plan. In the Revised Estimates (RE) for 2011-12 the net provision is Rs 68,225 crore, Rs 225 crore under Plan and Rs 68,000 crore under Non-Plan. The details of Non-Plan and Plan provisions in FY 2011-12 (BE) and (RE) are given in Annexure-IX.

***** 18
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -6
6.1 MEASURES FERTILIZERS OF SUPPORT FOR 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. 6.2.2 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 3rd April 1998, inter-alia, recommended that unit-wise 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. 6.2.3 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

6.1.1 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. 6.2 MEASURES OF SUPPORT FOR UREA

6.2.1 Until 31.3.2003, 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

3 ANNUAL REPORT

19

20 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. 6.2.4 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 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 30.1.2003. The new scheme took effect from 1.4.2003. It aims at inducing the urea units to achieve internationally competitive levels of efficiency, besides bringing in greater transparency and simplification in subsidy administration. 6.2.5 New Pricing Scheme (NPS) for urea was introduced w.e.f. 1st April, 2003. The Stage-I st of NPS was of one year duration from 1 April, 2003 to 31st March, 2004 and Stage-II was of st two year duration from 1 April 2004 to st 31 March, 2006. With the Stage-III of NPS being implemented w.e.f. 1st October, 2006, st the Stage-II of NPS stands extended upto 31 September, 2006. 6.2.6 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-1992 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 1.4.2002. 6.2.7 Under NPS, escalation/de-escalation is given in respect of variable cost related to changes in the price of feedstock, fuel, purchased 6.2.8

th

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 DISTRIBUTION OF UREA

6.3 6.3.1

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 1.4.2003 to 31.3.2004, 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 2003-04, respectively. It was further envisaged that during Stage-II commencing from 1.4.2004, 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. 1.4.2004 i.e., up to Kharif 2004, which has been subsequently deferred up to Rabi 2005-06 i.e., up to 31.3.2006. The existing system of 50% ECA allocation and 50% outside ECA allocation has been extended upto 31-3-2010.

6.3.2

6.3.3 The pricing policy for urea units for Stage-III of New Pricing Schemes (NPS) which is effective from 1.10.2006 to 31.3.2010 has been formulated keeping in view the

20

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

recommendations of the Working Group set up under the Chairmanship of Dr. Y.K. Alagh. The salient features of 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 nongas based Units to gas, incentivizing 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 system in order to ensure availability of urea in the remotest corners of the country. 6.3.4 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, GNFC, NFL-Nangal, NFLBhatinda, 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. 22.9.2007. 6.3.5 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 was expected that the availability of gas in the country will improve from 2008-09 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. 6.3.6 In order to incentivize 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 has been announced by the Government on 6th March 2009.. 6.3.7 The policy also lays down a formulation to dis-incentivize high cost production from the non-gas based units and to facilitate their early conversion to gas. It is proposed that these units may be allowed to produce 100% of capacity should they adhere to an agreed timetable 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 1st year (1.4.2007) and 50% of the fixed cost beyond 93% capacity utilization from 2nd year (1.4.2008) onwards. 6.3.8 C o n s i d e r i n g t h e l i k e l y g r o w t h i n 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

ANNUAL REPORT

21

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 incentivized 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 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. 6.3.9 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 de-regulated urea in districtwise, month-wise and supplier-wise 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. 6.3.10 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 31st March, 2003. 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. 6.3.11 NPS Stage-III seeks to take forward the principles of uniformity and efficiency in

22

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

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 nongas 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 endeavour to promote the growth of fertilizer industry in the country and ensure adequate availability of fertilizers to the farmers. 6.4 AMENDMENTS TO STAGE III OF NEW PRICING SCHEME (NPS)

various provisions of the group based NPS. The issues raised by the units have been examined within the Department and these can be divided into two categories. The first issue relates to losses due to group averaging, and the second issue relates to increase in capacity utilization norms for NPS Stage-III. 6.4.3 It was found that some of the companies are losing upto 85% of their fixed cost due to the group averaging principle followed under NPS-III, making their operations unsustainable from day one. Thus, there was a need to limit the reduction due to averaging procedure for various units so as to ensure sustainability of production while encouraging efficiency. It has been, therefore, decided to restrict the reduction in fixed costs of a unit due to group averaging under NPS-III to 10% of the total fixed cost of the unit, w.e.f 1st April 2009 onwards. It was also found that for all the companies the capacity utilization norms have been increased by 3% from NPS-II stage to NPSIII. However, for post-92 Naphtha based group it has been increased by 8% on the pretext that the units have converted to gas. But since the cost of conversion is not borne by GOI, an indiscriminate increase by 8% for this group has put the units under this group at a disadvantage. It was thus decided to take capacity utilization for post 1992 naphtha group at 95%, instead of earlier approved 98% under NPS-III, for calculation of notional retention price of the units within the group, if there has been no recognition of cost of conversion under NPS-III. UREA POLICY BEYOND NPS-III The tenure of NPS Stage-III policy expired on st 31 March 2010. The provisions of the NPSIII policy has since been extended provisionally till further order. Now the policy beyond NPS-III is under consideration of

6.4.4

6.4.1 The Stage-III of New Pricing Scheme (NPS) st is being implemented w.e.f. 1 October, 2006 and will be effective till March, 2010. In the Policy proposal approved by CCEA, it was mentioned that some urea units such as Nagarjuna Fertilizers & Chemicals Ltd. (NFCL), Kakinada, Southern Petrochemicals Industries Corporation Ltd. (SPIC), Tuticorin etc. has represented that the implementation of group based NPS in place of unit specific cost plus Retention Price Scheme (RPS) has resulted in certain under recoveries of their individual costs of production. It was proposed to take appropriate action in these cases on merits in consultation with Department of Expenditure (DoE). 6.4.2 Accordingly, after notification of NPS-III on 8th March, 2007, a number of units have represented to Department of Fertilizers indicating the under recoveries on account of

6.5 6.5.1

ANNUAL REPORT

23

Government. The Group of Ministers (GoM) constituted to review the fertilizer policy has decided in its meeting held on 5th January 2011 to constitute a Committee under the Chairmanship of Dr. Saumitra Chaudhuri, Member Planning Commission to examine the proposal for introduction of NBS in urea, including various options therefore, and make suitable recommendations. The committee has also to examine the issues relating to investment policy and amendments proposed therein, and make appropriate recommendations. 6.5.2 The Committee constituted under the Chairmanship of Dr. Saumitra Chaudhuri, Member Planning Commission has submitted its report on 26-04-2011 on the proposal for Nutrient Based Subsidy in Urea sector. The Group of Ministers, considered the report of the Committee of Secretary in its meeting th held on 5 August 2011 and directed that the proposal on Nutrient Based Subsidy (NBS) for Urea may be placed before CCEA along with the proposal of Department of Fertilizers and the views of Minister of Chemicals & Fertilizers and sought directions of CCEA. Draft Note for consideration of CCEA was circulated on 25-11-2011 for Inter-Ministerial comments. Final CCEA Note, incorporating comments of all Ministries/Departments, is being finalised. 6.6 MRP OF UREA

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 policy was based on the principle of Long Run Average Cost (LRAC). 6.7.2 The above policy was not successful in attracting investment in this sector. The nonavailability of natural gas, which is the 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. The Government has recently announced on 4th September 2008, a new investment policy for urea sector to attract the much required investment in this sector. The policy is based on IPP benchmark and has been finalized in consultation with the industry. 6.7.3 The New Investment Policy aims at revamp, expansion, revival of existing urea units and setting up of Greenfield/ Brownfield projects. The policy was notified keeping in view adequate availability of gas at reasonable prices for new investments, which may result in bridging the gap between the consumption and domestic consumption. The policy has to lead to savings to the Government in the form of availability of Urea at a price below IPP. The salient features of the new investment policy are as under :I. The policy is based on Import Parity Price (IPP) benchmarked with suitable floor

6.6.1 The MRP of urea since 2003 was Rs. 4830/per tonne. The MRP of urea has increased to Rs. 5310/- per tonne w.e.f. 1st April 2010. The MRP fixed is exclusive of CST, Sales Tax and Central Excise Duty. There has been no further increase in MRP of urea. 6.7 PRICING POLICY FOR INVESTMENT IN FERTILIZER SECTOR UREA 6.7.1 A pricing policy was announced on 29.1.2004 for setting up new urea projects and

24

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

and ceiling prices of USD 250/MT and USD 425/MT respectively. II. Revamp project: Any improvement in capacity of existing plants through investment upto Rs. 1000 crore, in the existing train of ammonia-urea production will be treated as revamp of existing units. The additional urea from the revamp of existing units will be recognized at 85% of IPP with the floor and ceiling price as indicated above. Expansion projects: Setting up of a new ammonia-urea plant (a separate new ammonia-urea train) in the premises of the existing fertilizer plants, utilizing some of the common utilities will qualify for being treated as expansion project. The investment should exceed a minimum limit of Rs.3000 crore. The urea from the expansion of existing units will be recognized at 90% of IPP, with the floor and ceiling price as indicated above. Revival/Brownfield projects: The urea from the revived units of Hindustan Fertilizer Corporation Limited(HFCL) and Fertilizer Corporation of India Limited (FCIL) will be recognized at 95% of IPP with prescribed floor & ceiling price, if the revival of closed units takes placed in public sector. Greenfield projects: The pricing of Greenfield projects will be decided based on a bidding process which will be for a discount over IPP, after firming up of the location (States) of the proposed new plants. Gas transportation charges: An additional gas transportation cost will be paid to units undertaking expansion and revival on the basis of actuals (upto 5.2 Gcal per MT of urea) as decided by the Regulator(Gas) subject to a maximum ceiling of USD 25 per MT of urea.

VII.

Allocation of Gas: Only non-APM gas will be considered for the new investment in urea sector. Coal gasification based Urea Projects: The Coal gasification based urea projects will also be treated on par with a revival or a Greenfield project as the case may be. In addition, any other incentives or tax benefits as provided by Government for encouraging coal gasification technology will also be extended to these projects. Joint Ventures abroad: The Joint Venture projects abroad in gas rich countries are also proposed to be e n c o u r a g e d t h r o u g h f i r m o ff t a k e contracts with pricing decided on the basis of prevailing market conditions and in mutual consultation with the joint venture company. However, the principle for deciding upon the maximum price will be the price achieved under Greenfield projects or 95% of IPP as proposed for revival projects (in absence of any Greenfield projects) with a cap of USD 405 CIF India per MT and a floor of USD 225 CIF India per MT (inclusive of handling and bagging costs) Time period for proposed investment policy: Only those revamp projects which start production of additional capacities within four years of notification of the new policy would qualify for the dispensation recommended above. Similarly production from expansion and revival (brownfield) units that come about within five years of notification of the new policy would qualify for dispensation provided in the policy. If the production does not come through within the stipulated time period, such brownfield projects will be treated similar to a Greenfield projects wherein price will be decided through limited bidding options. The time period for setting up of new Joint Ventures would also be five years under the new investment policy.

VIII.

III.

IX.

IV.

X.

V.

VI.

ANNUAL REPORT

25

6.8 6.8.1

IMPACT OF INVESTMENT POLICY ON FERTILIZER SECTOR The fertilizer Industry has responded positively towards the New Investment Policy by initiating investment decision for revamp of existing capacities. The fertilizer units like IFFCO-Aonla I & II, IFFCO-Phulpur I & II, Chambal Fertilizers and Chemicals Limited (CFCL) Gadepan I&II, Nagarjuna Fertilizers and Chemicals Limited (NFCL) Kakinada I & II and the unit of Tata Chemicals Limited - Babrala have informed regarding availability of additional production of urea after revamp. Further, RCF, Thal; KRIBHCO- Hazira and NFL, Vijaipur have undertaken revamp of their units. As regards expansion projects, six companies viz. IFFCO, KRIBHCO, Rashtriya Chemicals and Fert ilizer s Lim ited, I NDO-G ULF Fertilizers Limited, TATA Chemicals Limited and Chambal Fertilizers and Chemicals Limited have proposed to undertake expansion of their units. However, these units have expressed concern regarding pricing and firm availability of gas before taking final investment decision to undertake expansion of their existing units

6.9 6.9.1

NUTRIENT BASED PRICING REGIME FOR ALL SUBSIDIZED FERTILIZERS Keeping in view the interests of the farmers and to promote balanced use of fertilizers, the th Department of Fertilizers has notified on 17 June 2008 a nutrient based pricing regime for all subsidized fertilizers. It has been further decided to fix the farmgate price of nutrients at the level of their existing price in straight fertilizers viz. Urea, DAP, MOP and SSP. This will lead to significant reduction in existing Maximum Retail Prices (MRPs) of complex fertilizers. Under this regime, the farm gate price of each nutrient will be uniform across all subsidized fertilizers. The selling price of subsidized fertilizers will be determined on the basis of the nutrients contained therein

6.8.2 The Group of Ministers(GoM) constituted to review the fertilizer policy has decided in its meeting held on 5th January 2011 to constitute a Committee under the Chairmanship of Dr. Saumitra Chaudhary, Member Planning Commission to examine the proposal for introduction of NBS in urea, including various options therefore, and make suitable recommendations. The committee has also to examine the issues relating to investment policy and amendments proposed therein, and make appropriate recommendations. The report of the Committee on Investment Policy in Urea sector has been finalised and signed on 7th January 2012. The report is being placed before the GoM for directions. A proposal to amend the New Investment policy is under consideration of Government.

6.9.2 Under existing pricing regime, the price of nutrients in complex fertilizers were higher than the price of same nutrients in other straight fertilizers like Urea, DAP, MOP and SSP. This led to comparatively higher usage of straight fertilizers vis--vis complex fertilizers, which are agronomically better fertilizer products. The nutrient based pricing will lead to parity in price of complex fertilizers with other straight fertilizers and, thus, is expected to promote balanced fertilization by encouraging usage of complex fertilizers. 6.9.3 POLICY FOR ENCOURAGING PRODUCTION AND AVAILABILITY OF FORTIFIED AND COATED FERTILIZERS IN THE COUNTRY Department of Fertilizers has notified on 2nd June 2008 a policy for encouraging production and availability of fortified and coated fertilizers in the country. In terms of this policy, the indigenous manufacturers/ producers of the subsidized fertilizers are allowed to produce fortified/coated subsidized fertilizers up to a maximum of 20% of their total production of respective subsidized fertilizers. The manufacturers/ producers are allowed to sell all the FCO a ppr oved f or t if ied/ coat ed su bsidi zed

26

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

fertilizers, except for Zincated Urea and Boronated SSP at a price up to 5% above the MRP of the subsidized fertilizer as indicated in the table above. For Zincated Urea and Boronated SSP, the manufacturers are allowed to charge up to 10% above MRP of Urea and SSP respectively. In January 2011, the ceiling of production of Neem Coated urea which has been incorporated in Schedule 1 of the Fertilizer Control Order, 1985 has been increased from the existing limit of 20% to a maximum of 35% of their total production, company wise of their respective subsidized fertilizers. 6.9.4 P O L I C Y F O R U N I F O R M F R E I G H T SUBSIDY ON ALL FERTILIZERS UNDER THE FERTILIZER SUBSIDY REGIME To ensure easy availability of fertilizers in all parts of the country, the Department of th Fertilizers has notified on 17 July 2008 a uniform freight subsidy regime for all subsidized fertilizers, wherein freight subsidy will be paid separately on receipt of all subsidized fertilizers in the districts/blocks. The freight subsidy will constitute of two components, namely, rail freight and road freight. The rail freight will be paid on actual, and the road freight will be paid on a normative average district lead (average of the actual leads of block headquarters from the nearest rail rake point) and a normative per KM rate. 6.9.5 ROAD FREIGHT RATES FOR UREA MANUFACTURING/IMPORTING UNITS UNDER THE UNIFORM FREIGHT SUBSIDY SCHEME It was decided in the policy for Stage-III of New Pricing Scheme for urea manufacturing units notified on 8th March 2007 that Tariff Commission will be requested to fix Per Tonne Per Km (PTPK) base rates for road transportation in the case of secondary movement of fertilizers from unloading Rake Point to retail points. The Tariff Commission has conducted the study and submitted the

report to Department of Fertilizers on Finalizing Per KM Per Tonne Rate for Transportation of Fertilizers by road. These rates will be escalated by WPI (composite road transport index) every year. As per the recommendations made by the Tariff Commission in their report, the Government has issued a notification on 1st September 2011 notifying the district wise revised road transportation rates for UREA dispatches by all the units with effect from 1st April 2008. The normative PTPK rate is to be annually escalated/de-escalated based on a composite road transport index as per NPSth III policy dated 8 March 2007. In case of Jammu and Kashmir the rates recommended by Tariff Commission for Jammu region (Rs 5.29 per km per metric tonne) will be treated for all the districts in Jammu as well as Srinagar in J&K. The ad hoc PTPK transportation rates for Himachal Pradesh Rs. 4.13 and North-Eastern States ( i.e. Rs. 2.22 PTPK for Arunachal Pradesh, Rs. 4.38 PTPK for Manipur, Rs. 6.39 PTPK for Meghalaya, Rs. 3.44 PTPK for Mizoram, Rs. 3.50 PTPK for Nagaland, Rs.7.07 PTPK for Sikkim and Rs. 4.27 for Tripura) will continue to be as notified earlier. 6.9.6 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 Naphtha (4) and FOLHS (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 units to gas. To incentivise 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/LHS based units to gas,

ANNUAL REPORT

27

the scheme for capital assistance to these units has also been agreed to under New Pricing Scheme Stage-III. The 4 FO/LHS based units have already started work on conversion of units to gas. The feasibility report has been prepared for all 4 units and the 'in principle' approval of Planning Commission has also been provided for all the four units. Assured availability of gas is main constraint for expediting conversion process. The units are in regular touch with gas suppliers for confirm commitment towards supply of gas, after which conversion process will be expedited. To encourage the conversion of existing Fuel Oil/Low Sulphur Heavy Stock (FO/LSHS) based urea units to gas. The Department of Fertilizers has notified on 6th March, 2009, the policy for conversion and restart of existing urea units to increase indigenous production and also efficiency in production of fertilizers. The policy provides f or a Special Fixed Cost towards reimbursement of the cost of conversion to the urea unit after its conversion to gas is completed. The conversion of these units will lead to increase in efficiency of urea production in the country and also add to usage of natural gas, which is the most efficient and cleaner fuel/feedstock for p r o d u c t i o n o f u r e a i n t h e c o u n t r y. The policy also approved a special dispensation under New Pricing Scheme, Stage-III, to enable restart of production of urea from the Trombay-V unit of M/s Rashtriya Chemical Limited which has remained closed for last more than 4 years. The restart of RCF Trombay will add to indigenous production of urea and reduce import dependence towards meeting the requirement of urea in the country. Besides, the policy has provision to restart of existing Naphtha based units which are under shutdown, on naphtha, provided they convert to gas before March, 2010, as is necessary for other operational Naphtha based units.

6.9.7 RECOVERY OF THE INCIDENCE OF NONREIMBURSABLE INPUT TAXATION LEVIED BY STATE GOVERNMENTS FROM TIME TO TIME IN SUBSIDY REGIME Under the New Pricing Scheme (NPS) for urea policy, additional VAT is not considered for reimbursement. Therefore there is no provision for reimbursement of additional VAT levied by State Government in subsidy. Department of Fertilizers has submitted a p r o p o s a l o n 11 t h J a n u a r y 2 0 11 f o r consideration of the Cabinet Committee on Economic Affairs (CCEA) to resolve the long pending issue of non-reimbursable input taxation levied by the State Government. It has been proposed to allow the companies to recover the incidence of non-reimbursable State levies under subsidy regime, from the sale of subsidized Urea within that State in the form of additional cost over and above the MRP. The CCEA in its meeting held on 0303-2011 has approved the above proposal projects in the CCEA Note. Department of Fertilizers has implemented the decision of CCEA and notification issued vide letter No. 12014/4/2009-FPP, dated 29th March 2011 and dated 31st March 2011. Under this scheme, the urea units are allowed to recover additional incidence of non-reimbursable taxes on the urea sold in the States levying additional VAT by levying additional MRP in these States and deposit the same with Government. Thereafter, the same will be redistributed on quarterly basis to the concerned urea producing units. As regards the impact of non-reimbursed additional taxation for the period from 1-10-2006 to 3103-2011, the fertilizer companies have to intimate to Department of Fertilizers, the amount of ACTN (Additional Cost due to NonRecognized input taxation) due to additional VAT, levied by the State Governments for urea sold in the States from 1-10-2006 to 3103-2011. The Government will take up the matter with concerned State Governments for reimbursement.

28

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

6.10

CONCESSION SCHEME AND NUTRIENT BASED SUBSIDY POLICY (NBS) FOR D E C O N T R O L L E D P H O S P H AT I C & POTASSIC (P&K) FERTILIZERS

6.10.1. C O N C E S S I O N S C H E M E F O R T H E D E C O N T R O L L E D P H O S P H AT I C & POTASSIC FERTILIZERS: Government of India decontrolled Phosphatic and Potassic (P&K) fertilizers with effect from 25th August 1992 on the recommendations of Joint Parliamentary Committee. Consequent upon the decontrol, the prices of the P&K fertilizers registered a sharp increase in the market, which exercised an adverse impact on the demand and consumption of the same. It led to an imbalance in the usage of the nutrients of N, P & K (Nitrogen, Phosphate and Potash) and the productivity of the soil. Keeping in view the adverse impact of the decontrol of the P&K fertilizers, Department of Agriculture & Cooperation introduced Concession Scheme for decontrolled Phosphatic & Potassic (P&K) fertilizers on ad-hoc basis w.e.f. 1.10.1992, which has been allowed to continue by the Government of India upto 31.3.2010 with changed parameters from time to time. The basic purpose/objective of the Concession Scheme for P&K fertilizers has been to provide P&K fertilizers to the farmers at affordable prices so as to increase the food productivity in the country through balanced use of fertilizers. The concession scheme was also aimed at ensuring reasonable rate of return on the investments made by the entrepreneurs in the fertilizer sector. Initially, the ad-hoc Concession Scheme was applicable on DAP, MOP, NPK Complex fertilizers. This scheme was also extended to SSP from 1993-94. Concession was disbursed to the manufacturers/importers by the State Governments during 1992-93 and 1993-94 based on the grants provided by Department of Agriculture & Cooperation. Subsequently, DAC started releasing

payment of concession to the fertilizer companies based on the certificate of sales issued by the State Governments. During 1997-98, Department of Agriculture & Cooperation also started indicating an all India uniform Maximum Retail Price (MRP) for DAP/NPK/MOP. The responsibility of indicating MRP in respect of SSP rested with the State Governments. The Special Freight Subsidy Reimbursement Scheme was also introduced in 1997 for supply of fertilizers in the difficult areas of J&K and North-eastern States, which continued upto 31.3.2008. Based on the cost price study of DAP and MOP conducted by Bureau of Industrial Costs & Prices (BICP - now called Tariff Commission), Department of Agriculture & Cooperation announced rates of concession based on the cost plus approach on quarterly basis w.e.f. 1.4.1999. The total delivered cost of fertilizers being invariably higher than the MRP indicated by the Government, the difference in the delivered price of fertilizers at the farm gate and the MRP was compensated by the Government as subsidy to the manufacturers/importers. The administration of the scheme was transferred from Department of Agriculture & Cooperation to Department of Fertilizers w. e . f . 1 . 1 0 . 2 0 0 0 . T h e G o v e r n m e n t introduced a new methodology for working out subsidy to complex fertilizers w.e.f. 1.4.2002 based on the recommendations of the Tariff Commission. The complex manufacturers were divided into groups based on feedstock for sourcing Nitrogen, such as gas, naphtha, imported ammonia. With the passage of time, the structure of DAP industry also changed as some of the new DAP manufacturing plants were established using the Rock Phosphate for manufacturing indigenous Phosphoric acid/DAP. Accordingly, the Tariff Commission made a fresh Cost Price Study and submitted its report in February 2003. Payment of

ANNUAL REPORT

29

concession to the DAP manufacturing units from 2003-04 to 2007-08 was made as per two groups depending upon the source of the raw materials (Rock Phosphate/Phosphoric acid). Based on the decisions of the Government in 2004-05, Department of Fertilizers framed a proposal suggesting methodology to link phosphoric acid price with international DAP price. Subsequently, the matter was referred to the Expert Group. The Expert Group under Prof. Abhijit Sen, submitted its report in October 2005. The recommendations of the Expert Group were considered by an Inter-Ministerial Group (IMG). Tariff Commission conducted fresh cost price study of DAP/MOP and NPK complexes and submitted its report in December 2007. Based on the examination of the Tariff Commission Report and the longterm approach suggested by the Expert Group under the Chairmanship of Prof. Abhijit Sen, the Government approved the Concession Scheme with effect from 1.4.2008 for DAP/MOP/NPK Complexes /MAP, which continued upto 31.3.2010 with certain modifications. The final rates of concession were worked out on monthly basis. Concession for indigenous DAP was the same as that of imported DAP (on the basis of import parity price). Concession on complex fertilizers was based on the methodology recommended by Tariff Commission with certain modifications. The NPK complex industry was divided into 4 groups, depending upon the source of Nitrogen, vis--vis, Group-I (Natural Gas), Group-II (naphtha), Group-III (imported Ureaammonia mixture) and Group-IV (imported Ammonia). A separate cost of 'S' for Sulphur containing complex f ertilizers was recognized w.e.f. 1.4.2008. The input/fertilizer prices for Concession Scheme ware derived on the basis of an outlier methodology. The Buffer Stocking Scheme was allowed to continue with 3.5

LMTs for DAP and 1 LMTs for MOP as buffer. The MRPs of the P&K fertilizers, which had been indicated by the Government/State Government, had been constant since 2002 till 31.3.2010. The MRPs of the NPK complexes were reduced w.e.f. 18.6.2008 which was based on nutrient content. In order to enhance the basket of fertilizers in the Concession Scheme, Mono-Ammonium Phosphate (MAP) was included into the Concession Scheme w.e.f. 1.4.2007, Triple Super Phosphate (TSP) was inducted into the Concession Scheme w.e.f. 1.4.2008 and Ammonium Sulphate (AS) manufactured by M/s FACT and M/s GSFC was inducted w.e.f. 1.7.2008. 6.10.2 CONCESSION SCHEME FOR SINGLE SUPER PHOSPHATE (SSP) SSP, a popular Phosphatic fertilizers, is a source of not only phosphate and sulphur but also calcium. SSP contains 16% P2O5, 11% S and 16% Ca. SSP is agronomically suitable for dry land oil seeds crop. After decontrol of P&K fertilizers, Concession Scheme for SSP was introduced w.e.f. 1993-94, which continued on ad-hoc basis for concession upto 30.4.2008. Based on the report of the Cost Accounts Branch (CAB) 2004, the Government vide its notification dated 25.8.2008 revised the Concession Scheme for SSP w.e.f. 1.5.2008, which was continued upto 30.9.2009. As per this policy, Department of Fertilizers announced All India MRP at Rs. 3400 PMT in place of the earlier system of indicating MRP by each State. As per the policy-dated 25.8.2008, the concession rates were announced month-wise separately for SSP produced on the use of imported Rock Phosphate and on indigenous Rock Phosphate. The Concession rate of SSP was escalated/de-escalated based on the rise/fall of the prices of the raw materials of Rock

30

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Phosphate, Sulphur and also the exchange rate. The rates of concession for SSP from May 2008 to October 2009 were as under:
Month/year Rates of Concession based on Imported Rock Phosphate (Rs. PMT) 6406 8942 9160 10391 11661 13003 7914 8965 8075 7503 5870 2927 2709 2453 2510 1951 2251 Rates of Concession based on Indigenous Rock Phosphate (Rs. PMT) 4587 5383 5674 6776 6990 5823 3070 2012 1967 1961 1944 1873 2006 1982 1986 2331 2295

May, 2008 June, 2008 July, 2008 August, 2008 September, 2008 October, 2008 November,2008 December, 2008 January, 2009 February, 2009 March, 2009 April, 2009 May, 2009 June, 2009 July, 2009 August 2009 September 2009

Then, DOF announced further revised policy on 13.8.2009 w.e.f. 1.10.2009, which continued upto 30.4.2010. As per this policy, the Government decided to leave the selling price of SSP open w.e.f. 1.10.2009 instead of the earlier MRP of Rs. 3400 PMT on all India basis. The Government provided ad-hoc concession for an amount of Rs. 2000 PMT for powdered, granulated and boronated SSP. As per revised policy dated 13.8.2009, the manufacturers were required to produce 50% of the annual installed capacity or 40,000 Mts per annum during this period in order to be eligible for subsidy. 6.10.3 NUTRIENT BASED SUBSIDY POLICY FOR D E C O N T R O L L E D P H O S P H AT I C & P O TAS S I C ( P & K ) F E R T I L I Z E R S INCLUDING SSP (A) During the implementation of Concession Scheme upto 31.3.2010, it has been experienced that no investment has taken place in last decade, the subsidy outgo

increased exponentially by 530% during 2004 to 2009 with about 90% of the increase due to rise in the international prices of fertilizers & its inputs and constant MPR of fertilizers from the year 2002 onwards, Agricultural productivity did not increase commensurately with the subsidy bill. The marginal response of agricultural productivity to additional fertilizer usage in the country has fallen sharply, leading to near stagnation in agricultural productivity and consequently agricultural production. The unbalanced NPK application, rising multi-nutrient deficiency and lack of application of organic manures leading to reduction in carbon content of the soil, was attributed to the stagnating agricultural productivity. The innovation in fertilizer sector had also suffered, as very few products are introduced by fertilizer companies, since they get outpriced by subsidized fertilizers. The industry has no incentive to focus on farmers leading to poor farm extension services, which were necessary to educate farmers about the modern fertilizer application techniques, soil health and promote soil test based application of soil and crop specific fertilizers. To consider all the issues relating to agriculture productivity, balanced fertilization and growth of indigenous fertilizer industry, and to overcome the deficiency of concession scheme, a Group of Ministers (GoM) was constituted which r ecommended f or introduction of Nutrient Based Subsidy (NBS) scheme which to be based on the contents of the nutrients in the subsidized fertilizers. The Hon'ble Finance Minister in its Budget Speech 2009 announced for introduction of Nutrient Based Subsidy Policy for Phosphatic & Potassic fertilizers with the objective of ensuring Nation's food security, improving agricultural productivity and ensuring the balanced application of fertilizers. The Government introduced the Nutrient Based Subsidy (NBS) Policy w.e.f. 1.4.2010 in continuation of the erstwhile Concession Scheme for decontrolled P & K fertilizers (w.e.f. 1.5.2010 for SSP). The details of Nutrient Based Subsidy Policy for the year 2010-11 and 2011-12 are as under:

ANNUAL REPORT

31

(I)

NBS is applicable for Di-Ammonium Phosphate (DAP, 18-46-0), Muriate of Pot as h ( MO P) , Mon o Am m oniu m Phosphate (MAP, 11-52-0), Triple Super Phosphate (TSP, 0-46-0), 12 grades of complex fertilizers and Ammonium Sulphate (AS - (Caprolactum grade by GSFC and FACT), which were covered under the earlier Concession Scheme for Phosphatic and Potassic (P&K) fertilizers st up to 31 March 2010 and Single Super Phosphate (SSP). Primary nutrients, namely Nitrogen 'N', Phosphate 'P' and Potash 'K' and nutrient Sulphur 'S' contained in the fertilizers mentioned above are eligible for NBS. At present, 25 grades of P&K fertilizers are covered under the NBS scheme. List of these fertilizers is at para (C) below. Any variant of the fertilizers mentioned above with secondary and micronutrients (except Sulphur 'S'), as provided for under FCO, is also eligible for subsidy. The secondary and micro-nutrients (except 'S') in such fertilizers attracts a separate per tonne subsidy to encourage their application along with primary nutrients. An Inter-Ministerial Committee (IMC) has been constituted with Secretary (Fertilizers) as Chairperson and Joint Secretary level representatives of Department of Agriculture & Cooperation (DAC), Department of Expenditure (DOE), Planning Commission and Department of Agricultural Research and Education (DARE). This Committee recommends per nutrient subsidy for 'N', 'P', 'K' and 'S' before the start of the financial year for decision by the Government (Department of Fertilizers). The IMC also recommends a per tonne additional subsidy on fortified subsidized fertilizers carrying secondary (other than 'S') and micro- nutrients. The Committee considers and recommends inclusion of new fertilizers under the subsidy regime based on application of manufacturers/ importers and its need appraisal by the

Indian Council for Agricultural Research (ICAR), for decision by the Government. (iv) As per the Government decision, NBS rates are to be announced on annual basis on each nutrient namely, 'N', 'P', 'K' and 'S' based on the recommendation of IMC. Distribution and movement of fertilizers along with import of finished fertilizers, fertilizer inputs and production by indigenous units continues to be monitored through the online web based Fertilizer Monitoring System (FMS) as being done under t he outg oing Concession Scheme for P&K fertilizers. 20% of the price decontrolled fertilizers produced/imported in India is now in the movement control under the Essential Commodities Act 1955 (ECA). Department of Fertilizers will regulate the movement of these fertilizers to bridge the supplies in under-served areas. In addition to NBS, freight for the movement and distribution of the decontrolled fertilizers by rail and road is being provided to enable wider availability of fertilizers in the country. Import of all the subsidized P&K fertilizers, including complex fertilizers have been placed under Open General License (OGL). Earlier, no concession was available for imported complex fertilizers. Now, NBS is available for imported complex fertilizers also. However, in case of Ammonium Sulphate (AS), as NBS is applicable only if it is produced by M/s FACT and M/s GSFC. Though the market price of subsidized fertilizers, except Urea, is determined based on demand-supply balance, the fertilizer companies are required to print Maximum Retail Price (MRP) along with applicable subsidy on the fertilizer bags clearly. Any sale above the printed net MRP is punishable under the Essential Commodities (EC) Act.

(v)

(vi)

(ii)

(vii)

(iii)

(viii)

(ix)

32

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

(x)

Manufacturers of customized fertilizers and mixture fertilizers are eligible to source subsidized fertilizers from the manufacturers/ importers after their receipt in the districts as inputs for manufacturing customized fertilizers and mixture fertilizers for agricultural purpose. There is no separate subsidy on sale of customized fertilizers and mixture fertilizers. A separate additional subsidy is provided to the indigenous manufacturers producing complex fertilizers using Naphtha based captive Ammonia to compensate for the higher cost of production of 'N'. However, this will be for a maximum period of two years during which the units will have to convert to gas or use imported Ammonia. The quantum of additional subsidy will be finalized by Department of Fertilizers in consultation with DOE, based on study and r e c o m m e n d a t i o n s b y t h e Ta r i f f Commission. The NBS is being released through the industry during the first phase. The payment of NBS to the manufacturers /importers of DAP/MOP/Complex Fertilizers/ MAP/TSP, SSP and AS is released as per the procedure notified by the Department.

NBS rates (Rs. per Kg) Nutrients 1st Apr 31st Dec 2010 * N (Nitrogen) 23.227 P Phosphate) 26.276 K (Potash) 24.487 S (Sulphur) 1.784

1st Jan31st Mar 2011** 23.227 25.624 23.987 1.784

2011-12

27.153 32.338 26.756 1.677

* Including Rs. 300/- per MT for secondary freight from rake point to retail points. ** Excluding the secondary freight of Rs. 300/- PMT, which is being paid separately on per Ton per KM basis.

(C)

The Per MT Nutrient Based Subsidy during 2010-11 and 2011-12 is as follows:
Fertilizer Grades(FG) (N P K S nutrient)

(xi)

NBS rates (Rs. per MT) 2010-11 1st Apr Sl. 1st Jan to 2011-12 to 31st No. 31st Mar Dec 2011 2010 FG already under CS carried under NBS w.e.f. 1.4.2010 1. DAP (18-46-0-0) 16268 15968 19763 MAP (11-52-0-0) 2. 16219 15897 19803 (w.e.f. 1.4.2007) TSP (0-46-0-0 3. 12087 11787 14875 (w.e.f. 1.4.2008) 4. MOP (0-0-60-0) 14692 14392 16054 5. SSP (0-16-0-11) 4400 4296+200 5359 6. 16-20-0-13 9203 9073 11030 7. 20-20-0-13 10133 10002 12116 8. 20-20-0-0 9901 9770 11898 9. 23-23-0-0 11386 11236 13686 10. 28-28-0-0 13861 11678 16657 11. 10-26-26-0 15521 15222 18080 12. 12-32-16-0 15114 14825 17887 13. 14-28-14-0 14037 13785 16602 14. 14-35-14-0 15877 15578 18866 15. 15-15-15-0 11099 10926 12937 16. 17-17-17-0 12578 12383 14662 17. 19-19-19-0 14058 13839 16387 Ammonium Sulphate 18. (20.6-0-0-23) (w.e.f. 5195 5195 5979 1.7.2008) New fertilizers included under NBS after 1.4.2010 16-16-16-0 19. 11838 11654 13800 (w.e.f. 1.7.2010) 15-15-15-9 20. 11259 11086 13088 (w.e.f. 1.10.2010) 24-24-0-0 21. 11881 11724 14278 (w.e.f. 1.10.2010) DAP Lite(16-44-0-0) 22. ------14991 18573 (w.e.f. 1.2. 2011) DAP Lite Grade (II) (14-46-0-0) (for one 23. ------------18677 year w.e.f.. 30.8.2011 to 30.8.2012) MAP Lite (11-44-0-0) (for one year w.e.f.. 24. ---------17276 30.8.2011 to 30.8.2012 13-33-0-6 (for one year w.e.f.. 25. ----------14302 30.8.2011 to 30.8.2012)

(xii)

(B)

Nutrient Based Subsidy Per Kilogram of Nutrients Based on the recommendations of the Inter Ministerial Committee constituted under the N u tri e n t Ba se d Su b si d y Po l i cy, th e Government has allowed the per Kg NBS for 'N', 'P', 'K' & 'S' (Nitrogen, Phosphate, Potash and Sulphur) and the amount of subsidy per MT on the Phosphatic & Potassic fertilizers for 2010-11 and 2011-12 is as follows:

ANNUAL REPORT

33

(D)

Subsidy for fortified fertilizers Per MT additional subsidy for fortified fertilizers with secondary and micro-nutrients as per FCO has also been allowed by Department during 2010-11 and 2011-12 under NBS as follows:

Sl. No. 1. 2. (E)

Nutrients for fortification as per FCO Boron B Zinc Zn

Additional subsidy per MT of fortified fertilizers (in Rs. PMT) 300 500

Department of Fertilizers has also provided the following amount of separate additional subsidy to the indigenous manufacturers producing complex fertilizers using Naphtha/Fuel Oil based captive Ammonia to compensate for their higher cost of production of 'N' subject to final recommendation of the Tariff Commission. This compensation is allowed for a maximum period of two years (w.e.f. 1.4.2010 to 31.3.2012) during which the units will have to convert to gas or use imported Ammonia. Grades of Fertilizers Amount (Rs. PMT) of additional compensation (Provisional) 3121

Name of the company

mporters claim the 'On Account' payment in prescribed Proforma 'A' duly certified by the authorized signatory as well as the statutory auditor of the company. The balance payment of subsidy is also claimed by the fertilizer companies based on information in prescribed Proforma 'D' duly certified by the authorized signatory as well as the statutory auditor of the company. The State Governments are required to submit certificate to DOF in receipt of the fertilizers in prescribed Proforma 'B'. The payment of subsidy to SSP is released on sales basis. Accordingly, the eligible units are allowed to claim 85% 'On Account' payment of subsidy based on the information in respect of sale of SSP duly certified by the authorized signatory as well as the statutory auditor of the company. The balance payment is released by DOF based on the certification of sales issued by the State Governments in prescribed Proforma 'B'. At present, 46 manufacturers/importers of P&K fertilizers and 84 SSP manufacturers are covered under the Nutrient Based Subsidy Policy. (G) Freight subsidy Policy for distribution/ movement of fertilizers With effect from 1.4.2008, Uniform Freight Policy (UFP) for all subsidized fertilizes was announced by the Department on 17.7.2008. As per this policy, freight for distribution of P&K fertilizers (except SSP) became reimbursable on the basis of actual Rail Freight as per Railway Receipt for Rail Movement (Primary Movement) and on the basis of average district lead (average leads from the nearest rake point to block headquarters) and provisional per KM per MT road movement (secondary movement) from the nearest rake point to the various retail points. For direct road movement from manufacturing units/ports to retail points, freight was reimbursable on the basis of provisional per KM per MT rate. The UFP for P&K fertilizers (except SSP) announced by the Department was

FACT(Cochin)

MFL, Manali GNVFC, Bharuch

20-20-0-13 (APS) (Udyogmandal and Cochin) Ammonium Sulphate (20.60-0-13) (Udyogmandal) 20-20-0-13 (APS) 17-17-17-0 20-20-0-0(ANP)

3658

5434 4640 2534

(F)

Procedure for Payment of subsidy under NBS Department of Fertilizers releases 85% (90% with Bank Guarantee) 'On Account' payment of subsidy month-wise to the manufacturers/importers of P&K fertilizers (SSP) based on receipt of fertilizers in the districts/States. T he manufacturers/I

34

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

applicable from 1.4.2008 to 31.3.2010. As per this policy, the secondary fright to P&K fertilizers (except SSP) was given as per UFP as applicable to Urea. W.e.f. 1.4.2010 to 31.12.2010, UFP applicable upto 31.3.2010 was done away with for P&K fertilizers while it continued for Urea. Instead, freight subsidy on subsidized fertilizers (except SSP) was restricted to the rail freight. The road freight was assumed to be part of the fixed subsidy and the retail prices. Accordingly, the road freight was merged in subsidy by adding lump sum Rs. 300 per MT in the computation of subsidy rates of DAP and MOP. The freight subsidy on P&K fertilizers (except SSP) was announced on 19.4.2010 according to which freight subsidy on P&K fertilizers (except SSP) for rail movement would be as per actual expenditure as per Railway Receipt and for direct road movement, it would be subject to actual expenditure or equivalent rail freight, whichever is lower. For the purpose of admissibility of equivalent rail freight for direct road movement, the following rates were applicable:

(c)

Freight for direct movement would be subject to lower of actual expenditure and equivalent rail freight. Direct road movement will be allowed to a maximum distance of 500 KM. for the purpose of admissibility of equivalent rail freight for direct road movement the above mentioned slabs were applicable. Impact of Nutrient Based Subsidy Maximum Retail Price (MRP) of fertilizers under Nutrient Based Subsidy Policy Prior to 1.4.2010, i.e., before the introduction of NBS Policy, the MRPs of the P&K fertilizers were fixed by the Government of India at below the actual cost of the P&K fertilizers and the difference between the actual cost and the MRPs was reimbursed by the Government to the manufacturers/importers in the form of subsidy. Under the NBS Policy w.e.f. 1.4.2010, the MRPs of the P&K fertilizers have been left open and the manufacturers/importers/marketers are allowed to fix the MRP of P&K fertilizers at reasonable level. As our country is fully dependent on imports for Potassic (K) fertilizers and to the extent of 90% in Phosphatic (P) fertilizers, any rise or fall in international prices of P&K fertilizers and fertilizer inputs has direct bearing on the prices of fertilizers. D u r i n g t h e f i r s t y e a r ( 2 0 1 0 - 11 ) o f implementation of NBS policy, the MRP of P&K fertilizers was registered an increase of Rs. 30 per bag( 50Kg) . The MRP of SSP was reduced by Rs. 70 per bag. In the year 201112, due to the increase in the international prices of the finished/ intermediate/raw materials of P&K fertilizers, the MPRs of P&K fertilizer has registered sharp increase due to which the farmers may not be able to avail the benefit of the price which was enjoyed by them earlier under the concession scheme, as the increase in international prices was earlier absorbed by the Government. However, the farmers are still paying approximately 50% of the delivered cost of the P&K fertilizers and the rest of the cost is

(H) (i)

Movement(K.M.) Upto 100 101-200 201-300 301-400 401-500

Rates Rs. per MT 108 183 256 327 400

W.e.f. 1.1.2011, freight subsidy for P&K fertilizers (except SSP) was revised as under: (a) (b) Freight subsidy for rail movement would be paid as per actual claim; Secondary freight for P&K fertilizers (except SSP) will be paid as per UFP as applicable for Urea;

ANNUAL REPORT

35

borne by the Government of India in the form of subsidy. (ii) Inclusion of new fertilizers under the NBS Policy In the initial year of implementation of NBS Policy (2010-11), there were 18 grades of fertilizers under the NBS policy. Thereafter, with the objective of providing a variety of subsidized fertilizers to the farmers depending upon the requirement of the soil and crops, the Government has included the following 7 new grades of NPKS complex fertilizers under the NBS regime.

6.10.5 C O S T P R I C E S T U D Y B Y TA R I F F COMMISSION In order to update/finalize provisional rates of subsidy for Ammonium Sulphate and Naphtha based NPK complex fertilizer, Tariff Commission has been requested to undertake Cost Price Study and give its recommendations. The report of the Tariff Commission on the above issues has been received and the same is under consideration in the Department. 6.10.6 QUALITY OF FERTILIZERS Government of India has declared fertilizer as

Fertilizer grades (N-P-K-S nutrient) 1 2 3 4 5 6 7 16-16-16-0 24-24-0-0 15-15-15-9 DAP Lite (16-44-0-0) DAP Lite grade-II (14-46-0-0) MAP Lite (11-44-0-0) 13-33-0-6

Included in NBS with Reasons for inclusion effect from 1.7.2010 1.10.2010 1.10.2010 1.2.2011 30.8.2011 (valid for one year) -do-doInclusion of new fertilizers under the NBS were based on the principle of diversification of sources of nutrients particularly to reduce dependence on DAP and other such fertilizers as main source of P. Inclusion of these fertilizers is expected to bridge the gap between requirement and availability of P&K fertilizers.

It is expected that the farmers shall be able to purchase the desired quantity of fertilizers and may choose the fertilizers of his choice depending upon the soil specific/crop specific/season specific requirement. 6.10.4 SUBSIDY RELEASED
The amount of subsidy provided by the Government during 2001-02 was Rs. 12695.02 crore, which has increased upto Rs. 99494.71 crore in 2008-09. It was decreased to Rs. 65836.68 crore during 2010-11. Actual expenditure on subsidy , as on 28.2.2012, is Rs 66060.82 crore. The budget estimate for fertilizer subsidy for 2012-13 is Rs. 65592.13 crore. The statement showing subsidy released by the DOF on Urea and P&K fertilizer is at Annexure-X.

an essential commodity under the Essential Commodities Act, 1955 (ECA) and has notified Fertilizer Control Order, 1985 (FCO) under this Act. Accordingly, it is the responsibility of the State Governments to ensure the supply of quality of fertilizers by the manufacturers/importers of fertilizers as prescribed under the FCO under the ECA. As per the provision of the FCO, the fertilizers, which meet the standard of quality laid down in the order can only be sold to the farmers. There are 71 fertilizer testing laboratories including four laboratories of the Government of India at Faridabad, Kalyani, Mumbai and Chennai with an annual analyzing capacity of 1.34 lakh samples. The quality of the fertilizers imported in the

36

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Country is invariably checked by the fertilizer quality control laboratories of the Government of India. The State Governments are adequately empowered to draw samples of the fertilizers anywhere in the Country and take appropriate action against the sellers of Non- Standard fertilizers. The penal provision includes prosecution of offenders and sentence if convicted up to seven years imprisonment under the ECA, 1955 besides cancellation of authorization certificate and other administrative action. The Department of Fertilizers make deductions alongwith penal interest on the quantity of the fertilizers for which the State Governments have reported to be Non- Standard. During the year 200607, 2007-08 and 2008-09, the percentage of samples of fertilizers declared Non- Standard at all India level were 6.0%, 6.2% and 5.5% respectively. Payment of concession for P&K fertilizers and for Single Super Phosphate (SSP) is made by the Department taking into account the certificate of quality given by the respective State Governments in Proforma 'B' for the fertilizers received and sold in the State. Further, SSP units are required to produce month-wise 'Quality Certificates' issued by the State Governments of the State in which the units are located. The units are required to have well equipped laboratory to test the sample of its SSP. The SSP units are also required to print 'Quality Certified' on each bag released in the market. DOF also deputes PDIL to conduct first time technical

inspection of the new SSP units. PDIL conducts six monthly inspections of the SSP units to check the quantity and quality of the fertilizers for which the units are claiming payment of subsidy. The units are also required to use only those grades of Rock Phosphate as inputs for manufacturing SSP under the NBS, which are notified by DOF from time to time. A statement showing the notified grades is at Annexure-XI. DOF has also asked the State Government to constitute teams with that of PDIL to test samples of Single Super Phosphate (SSP) at the retailer level. The marketers of the SSP are also responsible for he quality of the fertilizer marketed by them. Department of Fertilizers has also constituted vigilance teams of the Officers of the Department to check the availability and quality of the fertilizers in the States. 6.10.7 R E S T R I C T I O N O N E X P O R T O F FERTILIZER The Government has received complaints of smuggling of subsidized fertilizers to the neighboring countries. Keeping in view the availability of the fertilizers in the country and the subsidy paid thereon, in addition to urea, the Government has decided to put the export of DAP/MOP in the restrictive category in order to discourage the exports and smuggling. The DGFT has been requested to place all other subsidized fertilizers also in the restricted category.

*****
ANNUAL REPORT

37

CHAPTER -7
PUBLIC SECTOR UNDERTAKINGS
There are nine Public Enterprises under the administrative control of the Department. A statement indicating profitability of these organizations has been given at Annexure-XII

7.1.4

Grievance Cell Grievance Cell is functioning to redress the public and staff grievances and no grievance is pending as on date.

(I) For Public grievance Head Office at Jodhpur receives the public grievances, which are redressed by the Grievance Cell. At present, no grievance is pending. (ii) For Staff Grievance 1. The employees who are working in various Mines are advised to submit their grievances through the respective Area Managers to General Manager. 2. The employees working at Head O f f i c e , J o d h p u r, r o u t e t h e i r grievances through Sectional Heads to General Manager. At present, no grievance is pending. 7.1.5 Employment of SC/ST, Ex-servicemen, Physi cally Handi capped & Ot her Backward Classes (OBCs) persons. Company has total man-power of 86 as on 31.3.2011, 14 belong to scheduled caste, 4 to scheduled tribes, and 7 to OBCs categories. 7.1.6 Corporate Social Responsibility (CSR) FAGMIL has earmarked 2% of its profits before tax for providing assistance for public health and medical relief, education etc. and accordingly made a provision of Rs. 39.79 lakh (previous year Rs.31.75 lakh) in the books of accounts during the year 2010-11. The Company has installed a mobile soil testing van for testing the soil of villages near by its mines to make the farmers aware about

7.1 7.1.1

FCI ARAVALI GYPSUM & MINERALS INDIA LIMITED (FAGMIL) Introduction The FCI Aravali Gypsum and Minerals India Limited was incorporated under the Companies Act, 1956 as a Public Sector Undertaking on 14.02.2003 after being hived off the Jodhpur Mining Organization (JMO) of Fertilizer Corporation of India Ltd. (FCIL). The authorized share capital of the Company is Rs.10 Crore and the paid up capital is Rs. 7.33 Crore as on 31-03-2011.

7.1.2

Production Performance During the year 2010-11, the company has produced 8.84 LMT of Gypsum, utilizing its 97% capacity. In the current year 2011-12 (Up to December 2011), Company has produced 3.85 LMT of Gypsum against the targeted annual production of 9.05 LMT. Due to non-clearance of mining leases from the State Government, company is facing problem in achieving target.

7.1.3

Financial Performance During the year 2010-11, Company has registered a profit (after tax) of Rs. 24.05 Crore (including the Minimum Alternative Tax entitlement of Rs. 11.82 crore) in the year. Company paid a dividend of Rs. 245.55 lakh @ Rs. 3.35 per share of Rs. 10/- each. In the current year 2011-12 ( up to Dec. 2011), the provisional profit (before tax) of the company is Rs. 8.21 crore.

38

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

the type of crops which could be shown in that climatic conditions and for that what type of fertilizers are required. 7.2 7.2.1 BRAHMAPUTRA VALLEY FERTILIAZER CORPORATION LIMITED (BVFCL) Introduction Brahmaputra Valley Fertilizer Corporation Limited (BVFCL) was f ormed af ter segregation of Namrup Units in Assam from Hindustan Fertilizer Corporation Ltd. w.e.f. 1.04.2002. The Namrup complex of BVFCL comprise of three separate units designated as Namrup-I, Namrup-II and Namrup-III. Presently only Namrup-II and Namrup-III are in operation. The Corporate Office of the company is situated at Namrup. 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 31.03.2011 were Rs. 510 Crores and Rs. 365.83 Crores respectively. 7.2.2 Physical Performance During the year 2010-11, Company has produced 2.85 LMT of Urea, utilizing its 55.91% capacity. In the current year 2011-12 ( upto Dec. 2011), the actual production of urea is 2.01 LMT. The targeted (RE) production for the year 2011-12 is 3,18,021 MT of Urea. The Company is operating its Namrup-II Unit with 50% load due to limitation in availability of Natural gas and obsolete technology. Similarly its NamrupIII plant has restricted the load due to low conversion in synthesis converter in Ammonia III. 7.2.3 Financial Performance During the year 2010-11 Company incurred net loss of Rs. 85.09 crore. However the operating profit of the company was Rs. 30.36 crore. In the current year 2011-12 ( upto Dec. 2011, the estimated loss is Rs. 71.28 crore.

7.2.4. Measures taken for Financial Restructuring of the Company Company had appointed M/s. Haldor Topsoe as Process Licensor for comprehensive study of Ammonia plants and M/s PDIL for Urea plant and offsites/utilities, situated at Namrup-II and Namrup III plant. After a thorough study at the existing Namrup-II and Namrup-III plants, Process licensor have submitted their reports to the company. Based on the technical study report of Process Licensor, BVFCL has submitted a comprehensive proposal for revival of the company. The proposal is under examination in Department of Fertilizers. 7.2.5 Public/Staff grievance redressal machinery and Status of Grievances A Grievance Redressal Committee chaired by an Officer of the level of Dy. General Manager in place for redressal of grievances of the staff. Numbers of Grievance Boxes are placed in different places within and outside the precinct of the factory. For addressing the problems relating to harassment of women employees, a committee headed by a lady officer is constituted. 7.2.6 Employment of SC/ST, Ex-Servicemen, Physically Handicapped & other backward classes persons The matter of employment of persons belonging to SC/ST, Ex-servicemen, Physically handicapped & other backward classes are taken care at the time of recruitment and promotions, Reservation policy has been followed as per Government guidelines. Out of strength of 1087, there are 86 SCs, 164 STs, 339 OBCs, 3 Ex-servicemen and 3 PHPs on the rolls of the Company.

ANNUAL REPORT

39

7.2.7 Welfare of minorities and reservation in dealership Welfare of minorities are well looked after and directive of Prime Minister's 15 Point Programme relating to welfare of minorities are followed during recruitment and promotion. At the time of promotion and recruitment, a representative of the minority is included in the Selection Committee. In the reservation of dealership, the policy laid down by the Government of India is being followed at the time of appointment. Category-wise details of SC/ST dealers are as follows: ST Category: 57 SC Category: 14 Total Dealers: 588 7.3 7.3.1 THE FERTILIZER CORPORATION OF INDIA LIMITED (FCIL) Introduction The Fertilizer Corporation of India Limited (FCIL) has its units located at Sindri (Jharkhand), Gorakhpur (Uttar Pradesh), Ramagundam (Andhra Pradesh) and Talcher (Orissa). It also has an un-commissioned project at Korba (Chhattisgarh). Against the authorized share capital of the Company of Rs.800 crore, the paid up share capital was Rs. 750.92 crore as on 31.3.2011. 7.3.2 Reference to BIFR The Corporation was declared sick in November, 1992 by the Board for Industrial and Financial Reconstruction (BIFR). 7.3.3 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 2002. Consequently, a Voluntary Separation Scheme (VSS) was offered to all its 5712 employees. All the employees, who 7.3.4

opted for VSS have since been released, except 27 employees who are engaged in discharging statutory obligations, including safety & security of properties/ assets of the various units of the Company. BIFR in their meeting held on 2.4.2004 confirmed their prima facie opinion regarding winding up of the Company. BIFR vide their orders dated 17.5.2004 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 of the Department of Fertilizers and the Company, the High Court in its hearing held on 20.8.2010 has remitted the matter back to BIFR for revival of the fertilizer units of the Company. Revival of the Company Considering the shortage of domestic production of urea in order to meet its growing demand in the country and availability of welldeveloped infrastructure in the various closed units of the Company, the Cabinet has decided in April 2007 to explore the feasibility of reviving the fertilizer units of Fertilizer Corporation of India Limited. Subsequently, the Cabinet constituted and an Empowered Committee of Secretaries (ECOS) on 30.10.2008 to consider various options of revival and further approved 'in principle' to consider waiver of GoI Loan & Interest, in case of availability of viable fully tied up revival proposal. After detailed study and recommendations for a revival option, ECOS on 24.8.2009 selected a suitable Revival Model and recommended the same for seeking the approval of GoI. Following PSUs have shown interest in the revival of some Units of the Company: a. b. c. GAIL-RCF-CIL for Talcher Unit EIL-NFL for Ramagundam Unit SAIL-NFL for Sindri Unit

40

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Considering the above, ECOS in their 4 meeting held on 4.3.2011 recommended permitting revival by these PSUs on nomination basis on offering and Equity Participation to FCIL by 11% against the usage of the assets and land of FCIL, subject to approval of CCEA. The process of revival and the Draft Rehabilitation Scheme (DRS), as recommended by ECOS, has been approved by CCEA on 4.8.2011. The proposal is under consideration of BIFR. 7.3.5 Progress of proceedings before BIFR Hon'ble BIFR in its hearing held on 12.11.2010 on deliberations of the progress made : (i) (ii) Appointed State Bank of India as the Operating Agency; Advised the Company/DoF to obtain the approval of the Cabinet for the proposed Revival Scheme and suggested that the waiver of liabilities of FCIL towards CPSUs and Government agencies through One Time Settlement (OTS) also be taken up. Accordingly the proposal for revival of closed units of FCIL was placed before Cabinet Committee on Economic Affairs (CCEA). CCEA in its meeting held on 4.8.2011 approved the same. The BIFR has considered the revival proposal in the hearing held on 18.8.2011, 15.11.2011 & 10.1.2012. The operating agency and FCIL is taking necessary action as per the direction of BIFR. The next date of BIFR hearing is scheduled for 29.3.2012. 7.3.6 Financial Results During the year 2010-11, the Company incurred a book loss of Rs. 508.09 crore, which includes Rs. 554.10 crore as interest on GOI Loan and Rs. 0.29 crore towards depreciation. In the current year 2011-12 company would incur an approximate loss of Rs. 554.10 crore.

th

7.4 7.4.1

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 the year 1972, NIOC (National Iranian Oil Company) acquired 50% of the AMOCO's share and the shareholding become 51% GOI and 24.5% each of AMOCO and NIOC. In 1985, AMOCO disinvested their shares, which were purchased by GOI and NIOC in their respective proportions on 22.07.1985. The revised share holding pattern was GOI 67.55% and NIOC 32.45%. Subsequent to the Issue of Rights shares in 1994 for part financing the Project, the holding of GOI & NIOC stands at 69.78% and 30.22%. During 1997, MFL has gone for Public Issue of 2, 86, 30,000 shares with face value of Rs. 10 and a premium of Rs. 5 per share. Of these, 2, 58, 09,700 shares were subscribed. At present Sector-wise Paid up share capital and the shareholding pattern are as follows: Shareholder Rs in Cr 95.85 41.52 % 59.50 25.77

Govt. of India Naftrian Intertrade Company Ltd.(NICO), affiliate of NIOC Public Total

23.73 161.10

14.73 100.00

Though the Company has an authorized 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 30.11.2011, the paid up equity was Rs. 161.10 Cr.

ANNUAL REPORT

41

MFL commenced commercial production in 1971, with an annual installed capacity of 2, 47,500 MT of Ammonia, 2, 92,050 MT of Urea and 5, 40,000 MT of NPK. A major revamp / expansion was carried out in 1998 at a cost of Rs. 601 Cr, enhancing the annual installed capacity to 3, 46,500 MT of Ammonia, 4,86,750 MT of Urea and 8, 40,000 MT of NPK. With effect from 01.04.2003, GOI introduced a New Pricing Scheme I and adopted Tariff Committee Recommendations for the Complex fertilizers. In the year 200304, the accumulated loss eroded the total net worth and therefore the Company was referred to BIFR. On account of better production performance and lower energy consumption in urea operation coupled with One Time Settlement benefit from Financial Institutions, the Company's operation for the financial year 2010-11 ended with a profit of Rs. 169.86 Cr. During the year 2010-11, the Company produced 4, 78,834 MT of Urea with capacity utilization of 98.4%. 7.4.2 Reference to BIFR The Company has been referred to Board for Industrial and Financial Reconstruction (BIFR) on the total erosion of net worth. BIFR declared the Company as Sick under Section 15 of SICA in its hearing held on April 2, 2009 and appointed State Bank of India (Commercial Branch, Chennai) as the Operating Agency (OA) to prepare a Draft Revival Scheme (DRS). OA earlier engaged SBI CAPS for preparing financial rehabilitation proposal and SBI CAPS accordingly prepared and forwarded the same to OA and the Company, who in turn forwarded the report to DOF after obtaining approval from Board, for further proceedings. SBICAPS in their report recommended that Write-off of GOI outstanding principal and interest appears to be the most suitable option for the Company to come out of BIFR with the understanding that GOI would

recommend waiver of the tax incidence under the option. The Financial restructuring proposal prepared by DOF, based on the above recommendation, was circulated to the stake holder Ministries. The comments from the concerned Ministries/Departments have been received and considered in the DoF. Department of Expenditure and Planning Commission have been requested to submit the fresh comments considering the views of DoF. Meanwhile BIFR in its hearing held on 25th August 2011 has directed the Operating Agency (State Bank of India) to workout financial restructuring of MFL considering the conversion of GOI loan into equity. 7.4.3 Production Performance
The capacity and production details of MFL are as follows:
Annual Capacity (MT) Pre-Revamp Ammonia Urea NPK 2,47,500 2,92,050 5,40,000 Post-Revamp 3,46,500 4,86,750 8,40,000 Production Details (MT 2010-11 2,80,408 4,78,834
-

2011-12 @ 2,05,846 3,55,935 16,835

@ up to November 2011

The Company so far produced 355935 MT of Urea with the capacity utilization of 109.7% and is hopeful of producing 4,64,401 MT of Urea with capacity utilization of 95.4%. The Company is taking Annual Turnaround during January 2012. The Company resumed production of NPK Complex fertilizers on October 20, 2011 where NPK `A' Train was started and produced 16385 MT of Vijay 20:20:0:13 till Nov 30, 2011. On receipt of MOP (Muriat of Potash), Company would commence production of Vijay 17-17-17. The Company is hopeful of producing 81,585 MT of NPK Complex during the year 2011-12. During the year 2011-12, the Company shall achieve Bio-fertilizer production of 450 MT.

42

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

7.4.4

Sales Performance
2010-11 Actuals 2011-12 Projections Dec11Mar12

7.4.8

Product

Actuals AprNov11

Anticipate d sales for 2011-12

Efforts and initiatives taken by the PSU for the Welfare, Development and Empowerment of Women and for mainstreaming gender issues MFL do not have any problems for mainstreaming gender issues and all the women employees are being involved in all the activities. Further, MFL is having a separate Women's Forum affiliated to Women in Public Sector (WIPS) and there is a women coordinator from MFL nominated for this purpose for coordinating the activities and promoting the interests of women employees in their welfare, development and empowerment. Every year, MFL is conducting Women's Day and almost all the women employees are participating in the programme /event. Last year 2010-11, on March 15, MFL conducted Women's Day in a grand manner.

Vijay Urea(MT) Vijay Biofertilizers(MT) Vijay Neem(KL) Vijay Organic(MT)

473782 452.60 100.34 -

353767 342.32 97.67 2712

106233 153.00 22.53 1000

460000 495.32 120.20 3712

7.4.5

Financial Performance During the year 2010-11, the company earned a profit of Rs. 169.86 Cr and the total accumulated loss was brought down to Rs. 617.19 Cr as on 31st March, 2011 During the period April December 2011, the Company has estimated to earn a profit of Rs. 111.43 Cr.

7.4.6

Information relating to welfare of Minorities and reservation in Dealership The company has been following GOI guidelines on inclusion of representative from minorities in selection committee for Recruitment of more than ten candidates. The Company has network of 5903 dealers. There are 1614 SC/ST dealers which represents 27.34%. The SC / ST dealers are allowed waiver or Security Deposit of Rs. 5,000 and exemption from minimum sales norms. 7.5 7.5.1

PROJECTS & DEVELOPMENT INDIA LIMITED (PDIL) Introduction Projects & Development India Limited (PDIL) an erstwhile Division of the Fertilizer Corporation of India (FCI) was registered as a separate company in March 1978. The company has its registered office at Noida, Uttar Pradesh. Company has been granted Mi ni-r atna C at eg ory- 1 s tatu s. T he authorized share capital of the company is Rs.60 crores and paid up capital is Rs.17.30 crores as on 31.3.2011. As an ISO 9001:2008 Certified premier consultancy and engineering organization, PDIL played a pivotal role for the growth of Indian Fertilizer Industry. It has over six decades of experience and expertise in providing design, engineering and related project execution services from concept to commissioning of various Projects. PDIL provides the services mainly in the following five sectors viz. Fertilizers, Oil & Gas and Refinery, Chemicals, Infrastructure, Offsite and Utilities.

7.4.7

Corporate Social Responsibility The budget provision towards corporate social responsibility is detailed as under:

Program

Plan for 2011-12 (NOs.)

Actuals Upto Nov11 (NOs.) 5070

Soil Sample Collection- Macro Nutrient(NPK) Micro Nutrient Bio Demo Bio Special Campaign Farmers Contacted Exhibitions

5500

Plan for Dec11 to Mar12 (NOs.) 430

Annual Actuals Budget Upto (in Rs.) Nov11 (in Rs.)

55000 550 72 11 71000 11 427 50 4 55436 123 22 7 15564 11 43200 55000 33000

31360 13131 15080 -

ANNUAL REPORT

43

7.5.2

Operating Results PDIL had earned Profit(after tax) of Rs. 21.02 crores for the year 2010-11 out of the total turnover of Rs. 111.20 crores. During the period April to November, 2011, a profit of Rs. 21.19 crores (before Tax) has been earned out of the total turnover of Rs 70.48 crores. The estimated net profit for the year 2011-12 is Rs. 29.85 crores.

7.5.3

Declaration of Dividend Dividend is being paid continuously since 2007-08. A dividend of 22% of the paid up capital of the company amounting to Rs.3.81 crores has been paid in the year 2010-11.

7.5.4

'Excellent' Ranking In MOU PDIL has secured Excellent rating in MoU since the first year of its singing MoU in 200607. PDIL got 'Excellent' MoU rating for 200910 and 'Excellent' rating is expected in 201011 also. PDIL won prestigious MoU Excellence Award for 2008-09 for top performing CPSE's in the Consultancy Sector, which was conferred by Hon'ble Prime Minister of India, Dr. Manmohan Singh on 15.12.2010.

Fertilizer Pvt. Ltd., Australia. The Project was commissioned successfully in 2006. PDIL tied up with M/s MHI, Japan for associating its engineers for their ammonia projects in Russia. PDIL is also currently providing PMC Services for Brownfield project of Algeria Oman Fertilizer Projects at Arzew, Algeria and Engineering Consultancy Services for several assignments of M/s Jordan India Fertilizer Company (JIFCO) in Eshidiya, Jordan. PDIL is providing engineering services for many Revamp / Modernization / Energy Saving Schemes for its clients viz. KRIBHCO at Surat, NFL at Vijaipur, RCF at Thal, GSFC at Vadodara, etc. PDIL is working on a prestigious order from M/s Matix Fertilizers & Chemicals Ltd. for providing Detailed Engineering Consultancy Services for a 2200 MTPD Ammonia Plant at Panagarh, West Bengal, which is the first plant in India based on Coal Bed (CBM) Methane feedstock. Besides, PDIL secured orders for PMC services for Feedstock Changeover Projects at Panipat, Bathinda and Nangal from NFL, at Bharuch from GNFC and at Chennai for MFL. ii Oil & Gas and Refinery Sector PDIL has provided services for Projects in Oil, Gas & Refinery Sector owned by all the major organizations in India. The facilities include LPG Import Terminals, POL Terminals/ Depots/Storages, Crude/Gas/ Petroleum Products Pipelines, Gas Gathering Stations, Mounded Storages for LPG, Atmospheric Cryogenic Storages for Petroleum Products, LPG Bottling Plants, City Gas Distribution including CNG Stations, Skid Mounted/ Relocatable Refinery. PDIL has undertaken Revamp Jobs for Refineries covering Atmospheric Distillation Unit, Sulphur Recovery Unit, Lube Oil Complex, Crude Distillation Unit, Crude Topping Unit. etc. PDIL provided detailed engineering services for three large Hydrogen Plants for ESSAR Engineering Centre for their Refinery

7.5.5 i

Engineering & Consultancy Division. Fertilizer Sector PDIL is the prime mover of most of the fertilizer projects, especially Ammonia, Urea and Offsites & Utilities established in India in the last four decades. It has engineered and successfully executed so far 25 Ammonia Units (Grass Root / Expansions) and 38 Urea Units (Grass Root / Expansions) in the country. Our esteemed clients are almost all the major Fertilizer Manufacturers in India in Public, Co-operative and Private Sectors. Apart from the projects in India, PDIL provided Detailed Engineering and other Associated Consultancy Services for the then world's largest single stream gas based 2200 MTPD Ammonia Plant of M/s Burrup

44

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

expansion Project at Vadinar, PMC services for installation of Hydrogen unit of IOCL Barauni and Sulphur Recovery Unit for IOCL Mathura. PMC services for installation of Hydrogen Unit at CPCL Chennai, for Debottlenecking of FCCU-I & GCU for HPCL Vizag refinery, for installation of H2 & N2 unit on BOO basis at Paradeep for IOCL, for Flue Gas Desulphurization system & Purge Gas treatment unit for HPCL of Vizag, etc. are under progress. iii Chemical Sectors PDIL has undertaken many projects in Chemical sector such as Methanol Plant, Hydrogen Plant, Methyl Amines, Sulphuric Acid, Phosphoric Acid, Nitric Acid, Sodium Nitrite/Nitrate, Ammonium Nitrate and Ammonium Bi-Carbonate. PDIL is currently providing consultancy services to GAIL for GSU & GPU modification job at their Pata Petrochemical Plant and Detailed Engineering Services to GSFC, Baroda for Methanol Plant. M/s Shriram EPC has associated PDIL for providing Basic Design Engineering for Ammonium Sulphate Plant and Ammonia Liquor Treatment Plant of Rourkela Steel Plant at Rourkela. iv Infrastructure sector PDIL has established credentials in infrastructure sector also and has provided PMC services/ Review consultant services for Housing projects of the Ministry of Defence, City Water Distribution system. v Offsites and Utilities PDIL has designed, engineered, tendered and procured many Offsites and Utilities packages for a large number of clients. These include DM Water Plants, Effluent Treatment Plants, Captive Power Plants, Material handling Plants, and Atmospheric Ammonia Storage and Handling facilities. vi Assignments Abroad PDIL is striving hard to make a breakthrough

in securing assignments from abroad. Presently PDIL is providing PMC Services for Algeria Oman Fertilizer Project at Arzew, Algeria for AOA, Algeria. During the current year, PDIL secured the jobs of preparation of Pre-Feasibility Reports (PFRs) for Coal based Ammonia plant for M/s MEC, Indonesia and for Phosphatic fertilizer complex in Andhra Pradesh for M/s Industies Chimiques du Senegal. vii Third Party Inspection & NDT Services PDIL is a recognized Third Party Inspection Agency for Inspection & Quality Assurance Services and undertakes TPI Services for many projects of organizations like IOCL, RINL/VSP, BHEL, BPCL, HPCL, NDMC, PWD, State PHEDs, ONGC, DTL etc. It provides services for Shop & Field Inspection of Equipment & Machinery, Electricals, Instruments, Electrical Safety Audit Inspections, Terminal Automation System of Oil Terminals, Depots & Retail outlets and Work Assessment & Evaluation of Vendors. It provides NDT services for plants in various sectors like Fertilizer, Chemical, Refineries, Oil & Gas, Cross Country pipeline etc. PDIL specialized NDT services include Automatic Ultrasonic scanning, Infra-Red ThermoVision/imaging, Eddy current testing, Vibration signature analysis etc. PDIL undertakes Inspection, statutory testing & safety Certification of storage tanks for petroleum products as well as ammonia. viii Technical Audit Department of Fertilizers (DoF) continued to engage PDIL for Techno-commercial Audit of SSP Plants located throughout India. The Audits were undertaken and the reports with TAC observation and comments have already been submitted to DoF. ix Manufacturing of Catalysts PDIL's Catalysts Division located at Sindri

ANNUAL REPORT

45

(Jharkhand) manufactures and supplies a wide range of commercially proven catalysts used in Ammonia Plants and other Industries. Catalysts manufactured by PDIL are Primary Gas Reforming, Secondary Reforming, IronChromia, High Temperature CO Shift, Copper Promoted High Temperature Shift, Conventional Low Temperature Shift, High Copper Low Temperature Shift, Methanation & Super Methanation, De-Sulphurization, and Vanadium Pentoxide. PDIL's Catalysts are in use in almost all the old and new generation Ammonia Plants in India in the Public, Cooperative and Private Sector. Besides Fertilizer Plants, PDIL's Catalysts are used in Refineries also. PDIL's Vanadium Pentoxide Catalysts have been supplied to many Sulphuric Acid Plants in India as well as abroad. 7.5.6 i In-house strengths of PDIL IT & Other Infrastructure Facilities PDIL has two full fledged Design Engineering Centers situated at NOIDA and Baroda. Both the design engineering centers are equipped with State-of-the-Art computer and software facilities such as AutoCAD 2012, Microstation, Plant Design System (PDS), Smart Plant Electrical, Smart Plant Instrumentation, Smart Plant P&ID, Frame Work Plus, Smart Plant Review, CAESAR II, PV Elite, Mocroprotal, STAAD Pro, Aspen Plus, Syner GEE Gas, ASD Pipe Router, ASD Pipe Support Optimizer, PHA-Pro, Safeti Micro, Conval, ETAP, Primavera, MS Project and work specific softwares for carrying out design engineering works. PDIL, being a member of Heat Transfer Research INC. USA, has the right to use Xchanger Suite of Software. All the offices of PDIL are connected through VPN (Virtual Private Network). ii Enterprise Resource Planning (ERP) Project With the implementation of SAP ERP, PDIL

has been able to integrate its activities on a single platform. Go live of SAP was done on February 8, 2011 and in use since then, which has further strengthened MIS. DMS Project PDIL is contemplating to implement Documentum of EMC2 as its Electronic Docum ent Manag ement Syst em f or preserving all its documents in electronic form. iii Human Resources PDIL is having highly competent and experienced technical manpower. At present, PDIL is having more than 500 technical employees of various disciplines such as Chemical Engineering, Mechanical Engineering, Civil & Structural Engineering, Electrical Engineering, Instrumentation Engineering, Computer Science & Information Technology, etc. from reputed Engineering Institutes. With the vast experience & technical expertise of these resources, PDIL is having annually more than 1.1 Million Man-Hours which are sufficient to execute a number of mega projects simultaneously. 7.5.7 Employment to SC/ST/OBC/ PH persons In line with Government Guidelines issued from time to time, your company continues to extend required number of facilities to SC/ST/OBC employees. The details of employees as on 30.11.11 is as follows:EMPLOYEE STRENGTH AS ON 30.11.11 (REGULAR INCLUDING MANAGEMENT TRAINEES AND CONTRACT) Category Total MIP SC ST OBC A 413 48 20 62 B 33 4 0 2 C 32 9 0 7 D Nil Nil Nil Nil On contract 67 9 3 13 Total 545 70 23 84

46

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Complaints/ Grievances redressal mechanism is in place. Regarding implementation of National Policy for Persons with Disabilities, for easy/ hassle free mobility of employee with disability, ramp has been constructed and in respect of welfare, development and empowerment of women and for mainstreaming gender issues, there is complete equality gender in PDIL.

alleviate the social imbalances and helping the community in which it operates. Accordingly, PDIL Board has approved the CSR policy on the basis of guidelines issued by DPE. During the year 2010-11, an amount of Rs. 13.78 lakhs has been spent on CSR activities towards education of slum children, Animal Hospital, Orphanages etc & contribute to NCSR Hub thru' Tata Institute of Social Science.

Celebration of Hindi Fortnight at PDIL in September, 2011

7.5.8 Corporate Social Responsibility PDIL has been pursuing CSR activities as per policy duly approved by the Board as well as directives issued by Govt. of India from time to time. As per the Govt. Guidelines on CSR activities, the CSR fund has also been created. The objective of CSR policy is to 7.6 7.6.1 HINDUSTAN FERTILIZER CORPORATION LIMITED (HFCL) Introduction Hindustan Fertilizer Corporation Limited (HFCL) has its units located at Barauni (Bihar), Durgapur (West Bengal). It also has

ANNUAL REPORT

47

an un-commission project at Haldia (West Bengal). Against the authorized share capital of the company of Rs.1200 crore, the paid up share capital was Rs. 686.54 crore as on 31.3.2011. 7.6.2 Status of Company's case with BIFR The Company was referred to BIFR in the year 1992 and since then it is still under BIFR. The Govt. of India had decided to close down Barauni and Durgapur Units and Haldia Division along with other offices and Establishments of the Company in the year 2002. Now, Cabinet Committee of Economic Affairs (CCEA) in its meeting held on 04.08.2011 has approved the proposal for revival of closed Units of HFCL. A copy of Draft Rehabilitation Scheme (DRS) of the company was submitted to BIFR. The BIFR has considered the revival proposal in the hearing held on 18.8.2011, 15.11.2011 & 10.1.2012. The operating agency and HFCL is taking necessary action as per the direction of BIFR. The next date of BIFR hearing is scheduled on 1.3.2012. 7.6.2 Revival of Units/Divisions of HFCL status thereof CCEA, in its meeting held on 04.08.2011, has approved the proposal for revival of closed Units of HFCL, viz. Barauni, Durgapur and Haldia for setting up a 1.15 MTPA Urea Plant at each of these locations and approved DRS as per the recommendation of ECOS. DRS has been submitted before BIFR for approval. 7.6.3 Financial Performance During the year 2010-11, the Company incurred a book loss of Rs. 382.28 crore (after considering prior period adjustments and tax) as compared to previous year's net loss of Rs. 382.47 crore. 7.6.4 Manpower The manpower as on 31.03.2011 was 23 as compared to 30 as on 31.03.2010. 7.7 7.7.1

Reduction in manpower by 7 during the year was due to superannuation. Due to the decision taken by the Govt. of India to close down the Company, there was no activity on promotion, recruitment, etc. during the year. R A S H T R I YA C H E M I C A L S FERTILIZERS LIMITED (RCF) Introduction Rashtriya Chemicals and Fertilizers Limited (RCF) was incorporated as a separate company on 6th March 1978 as a result of reorganization of the erstwhile Fertilizer Corporation of India Limited (FCI). At the time of its inception, there was only one unit of company at Trombay. In 1985, another unit of RCF was established at Thal which is about 100 KM from Trombay. As on 31st March 2011, the company had an authorized share capital of Rs.800 crore and a subscribed and paid up capital of Rs.551.69 crore. 7.7.2 Production Performance The annual installed capacity of all the units of RCF is about 10.36 LMT of nitrogen and 1.17 LMT of phosphate (as P2O5). The production of nitrogen & phosphate during 2010-11 was, 10.759 LMT and 0.986 LMT respectively. 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-November 2011, RCF produced 6.615 LMT of nitrogen as against 7.026 LMT during the same period of the previous year. Company also produced 0.663 LMT of phosphate (as P 2 O 5 ) as against the production of 0.614 LMT of the previous year. During the year 2011-12, the Company is likely to produce 10.69 LMT of nitrogen and 1.140 LMT of phosphate. AND

48

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

7.7.3

Sales Performance The sales turnover during the year 2010-11 was Rs.5574.10 crore compared to Rs.5697.18 crore in the previous year. The sales turnover of industrial products division of the Company was Rs. 726.25 crore for the year 2010-11. During the period Apr- Nov 2011 sales turnover of industrial production division was Rs.537.42 crore.

7.7.5

Modernization/expansion Schemes Thal Ammonia/Urea Revamp Thal Ammonia Revamp Project is being implemented by the Company to enhance capacity of existing Thal Ammonia Plants from 2 x 1500 MTPD to 2 x 1750 MTPD and to reduce specific energy consumption from 9.0 MKcal/MT to 8.15 MKcal/MT. Under Thal ammonia revamp project Urea capacity will enhance from present 17.07 to 20 LMT per annum after it's commissioning in 2011-12. This revamp is being carried out, by the company, in three phases. So far two phases have been completed and this has resulted in the increase of 400 MTPD of Urea production. Last phase of the revamp will be completed in March 2012.

7.7.4

Financial Results During the year 2010-11, the company reported a net profit (after tax) of Rs. 245.12 crore. During the period April November 2011, the Company has made a net profit (before tax) of Rs.157.37 crore & net profit after tax of Rs.106.30 crore.

Shri Ajay Bhattacharya, Secretary (Fert) (2nd from right), Shri R.G. Rajan, CMD, RCF Ltd. (centre), Dr. V. Rajagopalan, Additional Secretary & FA, DoF (extreme right), Shri Sham Lal Goyal, Joint Secretary, DoF (left) on the occasion of signing of MOU between Department of Fertilizers and Rashtriya Chemicals & Fertilizers Limited (RCF)

ANNUAL REPORT

49

Thal Ammonia Revamp: Phase-II Erection of S-50 Convertor

7.7.6

Grievance Redressal Public / Staff grievance redress machinery and status of Grievances of company and its field agencies / unit / attached office The Company has a good grievance address and redressal system. Any citizen having complaints in respect of the production or services rendered may approach the Company. Similarly any aggrieved customer / dealer or other citizen can approach the Company for any failure of the quality / price charged / conduct of any officer / employee and will be dealt as under. The grievances can be addressed to a special officer of the Company not below the rank of Dy. General Manager who will act as the Nodal Officer for redressal. The name, address and telephone No. of the officers is available on Internet on Company's website www.rcfltd.com. 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. 7.7.7 Employment Of Sc/st, Ex-service Men, Physicall y Handicapped & Other Backward Classes The guidelines regarding reservation in Recruitment and Promotion for SC, ST, OBC, Ex-Servicemen and Physically Handicapped Persons (PHP) are followed. Out of total strength of 4,144, there are 576 SCs, 257 STs, 341 OBCs, 7 Ex-Servicemen and 35 PHPs on the rolls of the Company. 7.7.8 Welfare of Minorities & Reservation In Dealership: RCF as a policy includes representative of the minorities in the recruitment selection

50

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

boards to ensure that the minorities get an adequate share in the services and benefit of developments. 7.7.9 Corporate Social Responsibility 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 f oc us es o n e co n omic u p lif tme nt of small/marginal farmers and landless labourers through training and education. c) Subsidiary Occupation- Artisan Development Programme This provides a platform for training and making available financial facilities to rural artisans and entrepreneurs which enable them to revive and develop their skill for commercial use. d) S o c i a l F o r e s t r y a n d W a s t e L a n d Development Programme - This focuses on development of sericulture, social forestry, waste land use, dry land farming and biogas development. e) P u b l i c H e a l t h & V i l l a g e S a n i t a t i o n 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 the yield. Soil diagnostics form a major part of determining which fertilizer needs to be used for each soil and crop. The Company has also mobile soil testing laboratories across its major marketing territories which undertakes soil sample analysis. About 70,000 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. About 1,000 samples are analyzed every year. 7.7.10 Adoption of New Technology a) Clean Development Programme Under Clean Development Mechanism (CDM), RCF has taken up N2O abatement programme in its Nitric Acid plants at Trombay unit. By reducing N2O emission, which is a greenhouse gas having a global warming potential of 310, company will be awarded tradable Certified Emission Reduction (CER). The Nitric Acid CDM projects have been successfully registered with UNFCCC in November 2009. Also in January 2011, RCF has received first tranche of 1,55,115 CER's from UNFCCC. b) STP Plant In its efforts towards conservation and recycling, RCF has set up a highly sophisticated Sewage Treatment Plant which is one of its kind with an in built capacity to treat 5 million gallons (MGD) of sewage received from the Mumbai Municipal Corporation. After treating the sewage, plant

ANNUAL REPORT

51

generates 3.5 (MGD) of pure water each day, and saves the equivalent amount of potable water for the city. Further RCF is planning to set up another STP plant and become totally self sufficient in its day to day industrial water requirement. 7.8 7.8.1 NATIONAL FERTILIZERS LIMITED (NFL) Introduction NFL is a Schedule 'A' and Mini Ratna Company, which was incorporated on 23rd August, 1974 for setting up of two Nitrogenous fertilizer plants, at Bathinda (Punjab) and Panipat (Haryana) with LSHS as feedstock, each having an installed capacity of 5.11 lakh MT of Urea per annum.

Consequent upon reorganization of FCI, the Nangal unit (including Nangal expansion project) of FCI was transferred to NFL w.e.f. 1.4.1978. A gas based ammonia and urea fertilizer project on the HBJ popeline at Vijaipur in Guna district of Madhya Pradesh, with an annual installed capacity of 7.26 lakh tones Urea commenced commercial production on 1.7.1988. The urea capacity was doubled from 7.26 LMT to 14.52LMT per annum on commissioning of its expansion unit on 31.3.1997. The production capacity of gas based plants in the country has been reassessed w.e.f. 1st april, 2000 resulting in capacity revision from 7.26LMT to 8.64LMT for both Vijaipur-I and Vijaipur-II.

NFL VIJAIPUR PLANT

***** 52
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

A revamp of urea plant at Nangal was successfully completed three months ahead of schedule and commercial production commenced w.e.f. 1st Feb.2001. With this, the installed capacity of urea at Nangal Unit tones per annum raising the company's total installed capacity to 32.31 LMT of urea corresponding to 14.86 LMT of 'N' (Nitrogen) in terms of fertilizer nutrient. The company also produces various industrial products like nitric acid, ammonium nitrate, sodium nitrite/nitrate, sulphur, metenol, liquid nitrogen, liquid oxygen etc. besides bio-fertilizers. The company commissioned an argon gas plant designed to produce 120 NM3/hr. of Argon gas at the Panipat Unit in October 1997. 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 bio fertilizers plant at Indore produces three strains of bio fertilizers with an installed capacity of 100 MT per annum. The authorized capital of the company as on 31.3.2011 stood at Rs.1000 crore and the paid up capital at Rs.490.58 crore, comprising Govt. of India share of 479 crore (97.64%) and the remaining Rs.11.58 crore (2.36%) held by financial institutions and others. 7.8.2 Production Performance During the year 2010-11 the company produced 33.80 LMT of Urea (104% of installed capacity). The company achieved ever best production of 231 tonnes of Biofertilizers and 120067 tonnes of Neem Coated Urea. The percentage share of NFL in Urea production in the country has been estimated at 15.4%. 7.8.3 Sales Performance The company, during 2010-11, sold 33.59 lakh tonnes of Urea. Company achieved ever best Bio-fertilizers sales of 219 tonnes.

The sales turnover including subsidy for the year was Rs.5791 crore. During the year, sales turnover for industrial products was Rs.115 crore. 7.8.4 Financial Performance NFL registered a Profit before tax (PBT) of Rs.204 crore and Profit after tax (PAT) of Rs.139 crore during 2010-11. The company has maintained its trend of paying dividend since last 26 years. The total dividend payout during 2010-11 was Rs. 48.46 crore (including dividend tax of Rs. 6.76 crore) which is 30% of the Profit after Tax (PAT). 7.8.5 Employment of SC/ST, Ex-Servicemen, Physicall y Handicapped & Other Backward Classes (OBCs) Persons in Public Sector Undertakings (As on 30.09.2011).
Total Number of SC/ST/OBC/EXSM/PH number of employees SC ST OBC *EXSM **PH 9 23 15 3 50

Group

A B C D Total

1623 1938 827 137 4525

356 508 210 108

81 157 41 3

81 113 110 7 311

4 31 32 1 68

1182 282

* EXSM Ex- Servicemen ** - PH Physically Handicapped

7.8.6

P u b l i c / S t a ff G r i e v a n c e R e d r e s s Machinery Based on the model grievance procedure notified by DPE, company has framed a 'Grievance Redressal Procedure' for employees of NFL. The objective of the Procedure is to provide easily accessible machinery for settlement of grievances and to adopt measures as would ensure expeditious settlement of grievances of employees leading to increased satisfaction on the job and resulting in improved productivity and efficiency of the organization.

ANNUAL REPORT

53

For systematic monitoring and supervision of Public Grievances, Head of Corporate HR Department has been nominated as Director (Grievance). In addition to this, the company has also set up a Public Grievances Cell at the Units which is headed by a Grievance Officer, who generally belongs to senior management cadre. Apart from this on the Company's website "www.nationalfertilizers.com, a feedback form has been created for posting of query / grievances by the public. 7.8.7 Information relating to welfare of Minorities and reservation in dealership All the employees at Units & Offices celebrate the festivals of various communities with a sense of brotherhood. The organization believes in equality of all communities and follows all Government regulations on empowerment of minorities such as

representation of the minority communities on interview boards in Group C & D. As on 3009-2011, the percentage share in NFL dealership under SC/ST category is 26.79%. 7.8.8 Corporate Social Responsibility and Agriculture Extension Activities The Company is committed towards upliftment of under privileged Section of the Society and has supported various social and communities initiatives touching the lives of large number of people. The Company has identified CSR Activities in economic, environmental, health and social areas and had earmarked Rs. 3 crore towards CSR activities during the financial year 2010-11. Separate budgets and achievement targets have been fixed for each CSR initiative. The unspent budget from 2010-11 has been carried forward to the next financial year.

Vocational Training program for women

54

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Roadmap was developed to undertake integrated development of 9 villages situated in the vicinity of our Plants/Offices. Baseline survey has been completed in all the Units/ Offices of the Company. Activities identified under CSR like digging of tube well for supplying of potable water, laying pipelines for distribution of water, Construction of concrete approach roads, Anganwadies, kitchen sheds, toilets, overhead water tanks, carrying out various civil jobs in nearby villages, construction of boundary wall, Preparation of Volley ball play ground, installation of submersible tube well, procurement of furniture for distribution in nearby schools etc. are Bathinda. Further, procurement of 35 nos. of solar lights for installation in nearby villages is under process. 100519 saplings have been planted during the year in the vicinity of Company's plants and units. Company's manufacturing units at Vijaipur, Panipat, Bathinda and Nangal also carried out various useful activities for the benefit of socially and economically weaker sections of the society in the surrounding

areas of the respective unit. Health awareness Programs / Medical Camps were organized. In addition, financial aid, ceiling fans, sewing machines etc. were also provided to the poor and needy persons of nearby villages. In addition, Company extended financial assistance to Bitnoti College, Orissa for construction of one Auditorium-cum-Gallery Class Room. Mayurbhanj is a tribal dominated backward district of Odisha. The objective of construction of auditorium is to prepare students of backward tribal areas to face the competitive world by developing their presentation skills, public speaking and entrepreneurship. Balasore is a tribal dominated backward district of Orissa and Utkal Bal Ashram is one of the oldest and reputed orphanage of Balasore. This Ashram was established in the year 1944 and has been rendering valuable services to about 250 orphan children. Company is extending a contribution for construction and renovation of Utkal Bal Ashram.

Frontiline demonstration of Kisan Urea on paddy crop

ANNUAL REPORT

55

As in the past, the Company continued to facilitate the farming community in improving the crop productivity. The Company also continued its efforts to improve the living standard of socio-economically weaker sections of the society. 7.9 THE FERTILIZERS AND CHEMICALS TRAVANCORE LIMITED (FACT) Introduction The Fertilizers And Chemicals Travancore Limited (FACT) was incorporated in the year 1943 and as the first large scale fertilizer plant in India located at Udyogamandal, Kerala started production in 1947. Initially in the private sector promoted by the Seshasayee Brothers, FACT became a PSU in the year 1960 and towards the end of 1962, Government of India became the major shareholder of FACT. From a modest beginning, FACT has grown and diversified into a multi-division/ multifunction Organization with core activities in manufacture and marketing of Fertilisers and Petrochemicals, Design, Engineering & Consultancy and in Fabrication & Erection of Industrial Equipment. 7.9.2 Performance During the Financial Year 2010-11 FACT was able to maintain an impressive level in the overall performance and made an upsurge in Turn over. The Turn over of the company touched an all time record of Rs.2512 Crore. During the year 2010-11, the company has achieved considerable improvement in the production of Ammonium Sulphate. Production, Sales and profitability of the company for the year 2010-11 compared to 2009-10 is given below:

2009-10 1 Production / in Tonnes Factamfos 20:20 Ammonium Sulphate Caprolactam Sales / in Tonnes Fertilisers Caprolactam

2010-11

2011-12 (Projected) 635284 187218 42353 915252 43422

753744 179546 42006 1044893 38253

644454 200311 44345 932878 44136

3 Financial / Rs. lakh Turnover Profit / Loss (-) before Interest, Depreciation and tax Profit/Loss after tax

214161 3654

251183 13439

313850 436

7.9.1

(-)10383

(-)4933

--

7.9.3

Performance Highlights During the current year up to November 2011, the company produced 395144 MT of NP which is 76 % of the target as compared to 442749 MT during the corresponding period of the previous year. Production of Ammonium Sulphate upto November 2011 was 118083 MT which is 87% of the target as against 125897 MT during the corresponding period of the previous year. During the financial year up to November 2011, the total sale of Fertilizers is 556608 MT as against 717892 MT during the same period of the previous year. During the year 2011-12 upto November 2011, the company has sold 386697 MT of Factamfos and 135580 MT of Ammonium Sulphate. During the financial year till November 2011, 19930 MT of Zincated Factamfos, the commercial production of which began last year, has been sold in the market. This product provides higher returns to FACT and will also serve to promote the balanced use of fertilizer nutrients in the country. In order to improve the turnover and profitability, the company is concentrating in increasing volume of traded products.

58

56

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

During the year 2011-12, FACT has already handled a Urea ship of 32996 MT at Cochin Port. To promote Integrated Plant Nutrient Management, FACT is expanding the sale of organic manure to the State of Tamil Nadu. During the year 2011-12, FACT has considerably increased the sale of bulk Gypsum and plans to sell 50,000 MT of bagged Gypsum. The sale of bulk Gypsum is set to touch an all time record of 6 to 7 lakh MT during the year 2011-12. Sale of Gypsum reached 492500 MT upto November 2011 as against 252050 MT during the same period last year. New fertilizer products, Zinc fortified Gypsum, FACT Organic, and Zincated factamfos are also being promoted in the market. The production and financial performance of the company for the year 2011-12 upto November 2011 has not been encouraging as compared to the corresponding figures of the same period of the previous year. Shortage of phosphoric acid and extended shut down has affected the production performance of the company during the first quarter of the current year. The production and profitability of the company have improved from November 2011. During the second and third quarter, the company has been able to achieve satisfactory level of production. The company has made arrangement for tie-up of raw materials and hopeful of make good of the production loss of the 1st quarter and end up the financial year 2011-12 with a marginal profit. 7.9.4 Crop Specific Fertilizers/FACTMIX FACT has developed its proprietary formulation branded known as FACTMIX. This formulation has been found very successful for important crops of Kerala such a s R u b b e r, Ba n a n a , R i ce , Ta p i o ca , Vegetables, Cardamom, Coconut etc. as

proved in research experiments and in field trials conducted at FACT (R&D) and Kerala Agricultural University. In order to broaden the product base and extend geographical coverage, FACT has undertaken research on development of Customized Fertilizer Granulated (CFG) on important crops of Tamil Nadu namely Rice, Maize, Banana and Sugarcane in association with Tamil Nadu Agricultural University (TNAU), Coimbatore. This project has been undertaken as per the guidelines of Ministry of Agriculture, Government of India. 7.9.5 FACTMIX for Paddy After successfully launching crop specific fertilizer mixtures for Rubber, Coconut, Cardamom and Banana under the brand name of FACTMIX, during the year 2011-12, FACT has launched crop specific fertilizer mixture for Paddy under the same brand name, FACTMIX. This highly beneficial fertilizer mixture has been developed after intensive in-house Research and Development study and field study by Kerala Agricultural University. 7.9.6 MOU with Coir Board FACT and Coir Board have entered into a Memorandum of Understanding (MOU) for conducting research studies for developing a technology to convert coir pith (a waste in the production of coir from coconut husk) into value added products like organic fertilizer and filler for fertilizer mixtures. FACT Research and Development wing will carry out the research studies. 7.9.7 Vision Plan In line with the long term Vision plan approved by the Board of Directors of FACT certain projects and schemes have been identified

ANNUAL REPORT

57

and are under various stages of consideration and approval/ implementation. A brief outline of these projects is given below. A. Under Implementation 1. Feed Stock conversion of Ammonia Plant to LNG LNG is expected to be available at Kochi by end of 2012. FACT is carrying out modifications in the Ammonia Plant for using cheaper LNG as feed stock and fuel for Ammonia manufacture as soon as it is available. The Project will bring an energy saving in the Ammonia Plant to the tune of 0.3 Gcal / MT Ammonia. The total cost of the project is estimated as Rs.31.57 crore. The pay back period of this project on account of energy savings alone is just six months. 2. Automation of Mixing Centre at Cochin Division FACT is setting up a granulated fertilizer mixing plant at Cochin Division, Ambalamedu. The project is proposed to be executed on a Lumpsum Turnkey (LSTK) mode with the Project Management Contract (PMC) handled by FEDO. 3. Sulphuric Acid Storage Facility at Willington Island The company has decided to set up its own Sulphuric acid storage facility at Willington Island to enable receipt of Bulk Acid shipments of above 5000 MT. It is proposed to set up 2 storages of 8200 MT each. The total cost of this project is Rs.12 Crore. The benefits of this project are the availability of Bulk quantities of Sulphuric Acid which will facilitate increasing captive production of phosphoric acid. B. Proposed 1. New Urea Plant at Udyogamandal FACT intends to set up a new Urea plant of 1500 MT capacity per day at Udyogamandal utilising the CO2 being vented from the

Ammonia Plant at a Project cost of Rs.940 Crore. A pre Feasibility report has been prepared by FACT Engineering And Design Organisation (FEDO). Bids were invited for selection of process licensors. The DPR is being prepared by FEDO. 2. A New 1000 TPD NP Plant FACT is considering to set up an additional NP Plant of 1000 TPD capacity at Cochin Division along with revamp of Willingdon Island Facilities for handling increased volumes of Raw-materials utilising modern equipments to increase the discharge rates from shipments. The estimated project cost is Rs.283 Crore (including Port improvement schemes) distributed over 3 years. 3. Revamp of Phosphoric Acid Plant at Cochin Division One of the major problems being faced by the company to sustain higher levels of production at present is the non availability of sufficient quantities of imported phosphoric acid. In order to meet the challenge posed by this problem, FACT intends to revamp its phosphoric acid plant at Cochin Division to increase the capacity from 360 Tonnes per day to 550 to 600 Tonnes per day. The r evam p woul d m eet t he com pany' s requirements for producing 2500 MT of NP complex fertilizer on a daily basis. 4. Marketing of SSP FACT has plans to enter into the area of SSP marketing from existing SSP plants in the southern region through a tie up with the owners of the existing plants. 7.9.8 Redressal of Public Grievances Welfare Measures and

A Public Grievance Cell is functioning in the Company, as per norms laid down by Government of India. At present, no

58

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

grievance received from public is pending for redressal. 7.9.9. E m p l o y e e Machinery Grievance Redressal

Category of Dealership Total Dealership SC / ST

As on 31.03.2011 7983 615

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 concerned is given an opportunity to present his grievance in person before the committee, if required. The respective Committee will deliberate on the grievance and give their recommendations to the management for appropriate action. In addition, there is an SC/ST Grievance Cell that looks into complaints received from SC/ST Employees. 7.9.10 Employment of SC/ST, Ex-servicemen, Physically Handicapped and Other B a c kw ar d Cl as se s (O B Cs) a s on 30.11.2011 Company has total man-power of 3198, out of which 430 belong to Schedule Caste, 99 to Schedule Tribes, 1000 to OBC, 1668 to General, 228 to women, 36 to ex-servicemen and 72 from Physically Handicapped categories. 7.9.11 Reservation in Dealership FACT has always followed a policy of encouraging SC/ST Candidates to take up dealership. Details of dealership allotted to SC/ST are given below:

No security deposit is collected from SC/ST Dealers and they are encouraged to do business by constant advice/follow up. All efforts will be made to ensure that maximum representation is given for SCs/STs in Dealer appointments wherever additional dealerships are provided. 7.9.12 Corporate Social Responsibility FACT is giving prime importance for fulfilling its Corporate Social Responsibility. As part of Corporate Social Responsibility, FACT has undertaken the following activities. Village Adoption Programme Under the Village Adoption Programme,10 progressive farmers having at least one acre of land, in a village is identified. The soils of the plots are analyzed for major, secondary and micro nutrients.. Based on the soil test results, soil and crop specific nutrients as per the respective State Agricultural University recommendations in the form of a proprietary fertilizer mixture developed by FACT are given to the farmers. In addition, micronutrients specified by the University were supplied free of cost. FACT has c o n d u c t e d 7 s u c h Vi l l a g e A d o p t i o n Programmes (VAP) in Kerala, Tamil Nadu, Andhrapradesh and Karnataka. Farmer Training Programme The Farmer Training Programme is intended to impart training to limited group of 20-25 farmers on balanced use of fertilizers based on soil test results. The objectives of this programme are to create awareness on soil

ANNUAL REPORT

59

sampling methodology and use of balanced fertilizer based on soil test results. FACT has conducted 13 two day Farmer Training Programmes in all the four southern states. Field Demonstration This Field Demonstration Programme aims to demonstrate the effectiveness of correct fertilizer application at farmer level. For this one acre of plot of the farmer is divided into 2 equal 50 cents plots, control plot and treatment plot. In control plot, farmer's practice is followed. In treated plot, University recommendation by way of

FACATMIX is given based on soil test results. The yield difference between treated plot and control plot are compared. FACT has conducted 9 Field demonstrations during the year 2010-11. During the year a farmer's fair was organized and effectiveness of balanced fertilizer application was explained to the farmers. Drinking Water supply to residents of EloorMunicipality FACT is supplying drinking water for more than 3000 households of Eloor Municipality.

Farm level demonstration to educate farmers regarding scientific farming with optimum use of fertilizers. Shri Sham Lal Goyal, IAS & CMD, FACT along with senior FACT officers and farmers on his farm visit in Kerala

60

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -8
8.1 8.1.1 FERTILIZER EDUCATION PROJECTS The basic purpose of the application of fertilizer is to enhance the crop productivity in the country. The Fertilizer companies launch their fertilizer projects for educating the farmers about the quality/contents of the soil for crops. Resultantly, the farmers are encouraged by the companies to use the balanced fertilizers based on the quality of the soil nutrient wise and apply fertilizers accordingly. Department of Fertilizers does not implement Fertilizer Education Projects. Such proj ects are administered by Department of Agriculture & Cooperation, ICAR, State Governments and the agriculture universities. However, some fertilizer companies including PSUs do undertake such projects as part of their extension and marketing activities. The PSUs under the administrative control of Department of Fertilizers are encouraged to launch fertilizer education projects for the benefit of farming community as per the MOUs signed with the Department of Fertilizers in this regard. The main activities undertaken by various fertilizer companies under the Fertilizers Education Projects are agricultural seminars, dealers meetings and trainings, soil sample analysis, demonstration, soil test recommendations, exhibitions, orientation programmes, R&D trials, field trials of fortified fertilizers, bio fertilizers, distribution of crop literature, organizing Krishi Melas etc, media publicity. 8.1.2 In order to promote balanced and integrated use of fertilizers, Department of Agriculture & Cooperation has introduced a new scheme National Project on Management of Soil Health & Fertility (NPMSHF) to promote balanced and judicious use of fertilizer in conjunction with Organic Manure on soil test basis. The Scheme has been taken up from 2008-09 with on outlay of Rs. 429.85 crore during 11th Plan period.

Shri Satish Chandra, IAS, Joint Secretary DoF and CMD MFL is replying to farmer's queries on availability of fertilizers during the visit of Parliamentary Standing Committee on Chemical & Fertilizers to Kanakammal Chatram Village, Thiruvallur District, Tamil Nadu.

3 ANNUAL REPORT

61

So far, cumulative physical achievement under this scheme in respect of Static Soil Te s t i n g L a b o r a t o r i e s ( S T L s ) / M o b i l e STLs/FQCLs set up/strengthened are 1049. During 2010-11, 85.06 lakh soil samples were analyzed against 106.95 lakh analyzing capacity and a total of Rs. 408.19 lakh soil health cards (SHC) issued to farmers .Funds amounting Rs. 16.90 crore has been released to implementing agencies during 2010-11 for different components under NPMSF Scheme. 8.1.3 Government is also encouraging use of fortified fertilizers. So far 10 (ten) such fertilizers have been included in Fertilizer Control Order (FCO). Customized fertilizers for promoting site specific nutrient management to achieve maximum fertilizer use efficiency of applied nutrient in a cost effective manner are also being encouraged. These fertilizers are soil specific and crop specific and are formulated on the basis of soil testing results. So far, 36 such fertilizers have been notified under Clause 20B of FCO. To ensure quality of organic inputs, 5 biofertilizers viz. Rhizobium, Azotobacter,

Azospirillum, Phosphate Solubilising microorganism and Mycorrhizal Bio-fertilizer and two organic fertilizers, namely city compost, vermin-compost and de-oiled castor cake were notified under FCO. 1,228 samples of bio fertilizers and 271 samples of organic manures were analyzed for quality control. 1,465 mother culture strains of different microorganisms were supplied to various biofertilizers production units in the country. To ensure access of organic quality assurance system to small and marginal farmers (at practically no cost), a farmers group centric organic guarantee system known as Participatory Guarantee System (PGS) has been launched. Government is also educating farmers through training and field demonstrations on balanced use of fertilizers for improving soil fertility and its productivity. It also aims at strengthening soil testing facilities, upgrading the skill of staff working in soil testing laboratory and strengthening the fertilizer quality control facilities. As per the above said scheme, the following amounts of subsidy is to be provided by Department of Agriculture & Cooperation for STL.

Sl. No. 1.

Particulars For Setting up of additional Soil Testing Labora tories by Agri clinics/NGOs /Cooperative, entrepreneurs, etc.under Private partnership mode. For Adoption of village by Soil Testing Laborato ries through Frontline Field Demonstration. For Setting up of Mobile Soil Testing Laboratori es by Agri Laboratories by Agri clinics/NGOs/Cooperative, Private entrepreneurs, etc. under Pvt. partnership mode.

Policy @50% of project cost limited to maximum of 30 lakh as one time subsidy. @ Rs. 20000 per Frontline Field Demonstration. @ 75%of project cost limited to maximum of 30 lakh as one time subsidy.

2. 3.

62

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

8.1.4

Up to 2010-11, 4.08 crore soil health cards have been issued by the State Governments for balanced and judicious use of fertilizers. Ye a r - w i s e n u m b e r o f S o i l Te s t i n g Laboratories (STLs) and Fertilizer Quality Control Laboratories (FQCLs) sanctioned under the scheme are given in table below:New Static STLs (Nos) 42 66 16 0 124 New Mobile STLs (Nos) 44 62 10 2 118 Strengthening of New existing FQCLs STLs (Nos) (Nos) 39 107 9 10 165 2 11 1 1 15 Strengthening of existing FQCLs (Nos) 19 19 1 0 39

Year

submitted proposals of fertilizer companies for setting up soil testing laboratories, training and demonstration on balanced use of fertilizers to the Department of Agriculture & Cooperation. The proposals of the following twelve fertilizer companies have been approved by the Department of Agriculture & Cooperation during 2009-10 and 2010-11: Sl. No Fertilizer Company Year 2009-10 1. FCI Arawali Gypsum and Minerals India Ltd. 2. Gujarat Narmada Valley Fertilizers Company Ltd. 3. Gujarat State Fertilizers & Chemicals Ltd. 4. Indian Potash Ltd. 5. Krishak Bharati Cooperative Ltd. 6. Mangalore Chemicals & Fertilizers Ltd. 7. Rashtriya Chemicals & Fertilizers Ltd. 8. Southern Petrochemical Corpn. Ltd. 9. Zuari Industries Ltd. Year 2010-11 10. Indo Gulf Fertilizers 11. National Fertilizers Limited 12. The Fertilizers & Chemicals Travancore Ltd.

2008-09 2009-10 2010-11 2011-12 (as on 13/12/2011 Total

8.1.5

As a follow up on the recommendation of the Standing Committee on Chemicals & Fertilizers (2009-10) on Fertilizer Education Projects, the Department of Fertilizers

*****
ANNUAL REPORT

63

CHAPTER -9
9.1 9.1.1 INFORMATION TECHNOLOGY (IT)

E-DELIVERY FOR FERTILIZER MANAGEMENT

Fertilizer Managemenlt On-line has been developed in Department of Fertilizers in close collaboration with National Informatics Centre to meet the nation objective of making fertilizers available timely, adequately in good quality and at affordable price to the farmers by maintaining growth of fertilizer industry through subsidies/concession. Proper planning and monitoring of various aspects like fertilize production, imports, quality control, distribution, movement, sales, stocks, subsidies and concessions has been felt essential. In order to manage these issues effectively, the following applications systems have been developed /upgraded in order to pace with the IT enhancements and change in fertiizer policy:-

Urea manufacturers to the consumption centers across the country. The processing of monthly claims through application system helps in timely release of subsidy to the urea manufacturers. The system helps in monitoring various activities pertaining to the payment of subsidy by generating various periodic reports as well as query retrieval. 9.1.4 APPLICATION SYSTEM FOR MONITORING ENERGY CONSUMPTION NORMS The 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, and daily production rate and capacity utilization of ammonia / Urea. The system also maintains consumption and balance of ammonia for each quarter. 9.1.5 APPLICATION SYSTEM FOR REVISION IN UREA CONCESSION RATES The 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 dispatched quantities.

9.1.2 WEB BASED FERTILIZER PRODUCTION MONITORING SYSTEM The application system facilitates On-line data entry and provides information support for planning and monitoring the fertilizer production I 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 in the country. The system cover various aspects viz., installed capacity, production targets, actual production, capacity utilization, requirement and consumption of raw materials/intermediates for fertilizer plants. 9.1.3 F E R T I L I Z E R S U B S I D Y PAY M E N T INFORMATION SYSTEM The system is used to compute the subsidy amount based on the subsidy rates, equated freight rates and sales tax rates notified by the Government for the quantity moved by the

64

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

9.1.6 WEB BASED FERTILIZER DISTRIBUTION AND MOVEMENT INFORMATION SYSTEM The system maintains the data related to ECA supply plan, fertilizer requirements in Sates/UTs, opening stocks with state institutional agencies and fertilizer companies, monthly movement orders, imports, dispatches (reg ulated/deregulated/imported by rail/road), availability and sales of different fertilizers. 9.1.7 WEB BASED FERTILIZER CONCESSION SCHEME MONITORING SYSTEM The 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 Stats/UTs. The monthly claims at various stages i.e. 'On Account', 'Differential' and 'Balance' are processed using the software based on base/final rates, regist4ration for sales, certification. The computerized noting for approval and sanctions for payments to PAO, Expenditure and Control Register (ECR) and various queries/reports are generated to make and monitor the concession payments. 9.1.8 W E B B A S E D F E R T I L I Z E R I M P O R T MANAGEMENT SYSTEM The 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 Government 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. 9.1.9 WEB BASED HANDLING & PAYMENTS SYSTEM FOR FERTILIZER IMPORTS The 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 /dispatch with handling/marketing agencies. 9.1.10 FERTILIZER PROJECT MONITORING SYSTEM The 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. 9.2 EXECUTIVE VIDEO CONFERENCING SYSTEM (EVCS) NICNET Based Executive Video conferencing system (EVCS) has been made operational in the desk of Secretary, Department of Fertilizers and is being used as an effective mode of communication for interMinisterial consultations and quick decision making. Point-to-Point Video conferencing can be initiated by anyone connected to EVCS and multi-point Video conferencing can be organized through NIC, Delhi. 9.3 INFORMATION & COMMUNICATION TECHNOLOGY (ICT) INFRASTRUCTURE DoF's intranet consisting of 270 nodes is operational in Departments' offices located in Shastri Bhawan, Udyog Bhawan, Janpath Bhawan and Sewa Bhawan. NIC's iNoc (Integrated Network Operation centres) 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 and internet through RF link of NICNET, all the computers are connected through NIC's proxy server where built-in firewall capabilities are enabled.

ANNUAL REPORT

65

9.4

WEB SITE/WEB APPLICATIONS HOSTING The website of DoF and fertilizer PSUs are hosted at Internet Data Center(IDC), NIC Hqrs. 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. 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. Cabinet Secretary to the Government of India directed all Government Ministries / Departments to have their websites as per the guidelines adopted by DAR&PG. Accordingly, the website of Department of Fertilizers has been redesigned and enriched in order to make it compliant to the guidelines. The website has been made more qualitative, informative and user friendly to bring transparency in Government functioning and citizen interface.

9.5

INTRAFERT PORTAL 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 equall y and instantaneously to all employees. This eliminates the requirements of personal visits to HR, Cash and Administration Sections.

direct subsidy to the farmer , the DOF had initiated action for tracking the sale of fertilizers to the farmers. The National Informatics Centre ( NIC) has been mandated with the task of development of the software to track further movement of the fertilizers from the district as is available in the FMS to the retailers, so that the information availability at the last point of sale to the farmer is visible in the public domain. Thereafter, the system will be extended to capture the sales to the farmer. The Government has also appointed a Task Force, under the Chairmanship of Shri Nandan Nilekani, Chairman,UIDAI, to suggest an implementable solution for the transfer of direct subsidy to the farmer. The mandate of the Task Force is to recommend and implement a mechanism for transfer of direct subsidy in fertilizers, including, inter-alia, to identify and suggest the required changes in the existing systems, processes and procedures, IT frameworks and supply chain management. The Task Force is also to oversee and evaluate the implementation of the solutions proposed on pilot basis through the concerned implementing Ministries. T h e Ta s k F o r c e h a s r e c o m m e n d e d implementation of examining the feasibility of direct subsidy to intended beneficiaries in three phases. Phase-I on information flow would extend the information collection to the retailer level on both , receipt and sales. Phase-II on subsidy to the retailer would deal with the transfer of subsidy directly to the retailer on receipt of fertilizers. Phase-III on subsidy to the farmer deals with the transfer of subsidy to the farmer and will be done only after the stabilization of Phase-II and on the availability of policy details on the intended beneficiaries.

9.7

E-GOVERNANCE

9.6

MOBILE BASED FERTILIZER MONITORING SYSTEM (mFMS) Consequent to the budget announcement of the Finance Minister regarding the transfer of

9.7.1 Department of Fertilizers has taken various measures to bring e-Governance: Office Automation Packages: CompDDO (Comprehensive Function Management of Drawing & Disbursing Officer) Payroll System

66

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

for Central Government Offices, Web based File Tracking System, Application Monitoring System under RTI Act, Leave Management System, CPGRAMS (Centralized Public Grievances Redress and Monitoring System) and CPENGRAMS (Centralized Pension Grievance Redress and Monitoring System) developed by NIC in collaboration with DARPG are operational in the Department of Fertilizes. To strengthen further the Office Automation in Department of Fertilizers, an IT based system Office Notifications Management System has been developed and implemented to generate, store and manage different kinds of official letters viz. Office Memorandum, Letters, Office Orders, Orders, D.O. Letters, Resolutions, Inter-Departmental Notes, Press Communiqus etc in compliance of Manual of Office Procedures (MOP). The facility of work processing in Hindi is available in all the computers in the Department.

E-mail service is being extensively used by the officials of Department of Fertilizers for inf or ma ti o n e xc h a ng e wit h f ert ilize r companies and other agencies. I M P L E M E N TAT I O N O F E - O F F I C E MISSION MODE PROJECT IN THE DEPARTMENT The Department of Administrative Reforms and Public Grievances has taken up a project for implementation of e-office (paperless office) in Government Departments. The Department of Fertilizers has been identified as one of the Departments for implementing e-office. Under the Project the DARPG is providing technical support and training to staff through IC and the Department is providing inf rastructure req uired f or implementation of the project. It is expected st that the E-office project will function in the 1 month of next financial year. With the implementation of the E-office mission mode project there will be considerable reduction in the paper work, expedite decision making and transparency.

9.7.2

*****
ANNUAL REPORT

67

CHAPTER -10
VIGILANCE ACTIVITIES 10.1 The vigilance activities of the Department extend not only to the Department but also to that of 7 Public Sector Undertakings and 1 Multi State Cooperative Society. The Vigilance Division of the Department is headed by the Joint Secretary who is designated as the Chief Vigilance Officer (CVO) in the Department. The CVO is assisted by Deputy Secretary, Under Secretary and other vigilance staff. The Department supervises the vigilance activities within the framework provided by the Central Vigilance Commission (CVC). The Department plays pro-active role in ensuring the prompt disposal and in framing preventive guidelines. This helps in minimizing the occurrence of vigilance cases. Efforts are being made by the Department to simplify the procedures in the PSUs to promote transparency in their working. This reduces the chance of corruption VIGILANCE ACTIVITIES DURING 2011 10.2 The number of pending vigilance (Disciplinary Proceeding) cases in the PSUs was 34 as on 31.12.2011. The Department has been regularly monitoring the pending complaints/investigations by having close inter-action with the concerned CVOs of PSUs and constant efforts are being made to ensure the disposal of disciplinary proceedings. 10.5 10.3 C E L E B R AT I O N S O F V I G I L A N C E AWARENESS WEEK The 'Vigilance Awareness Week' was st celebrated in this Department from 31 th October 2011 to 5 November 2011. Banners 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 was held thereafter. There was active and enthusiastic participation of the officers and employees of the Department in this Essay Competition. The 'Vigilance Awareness Week' was also celebrated with great gusto in the PSUs and KRIBHCO and various competitions like slogan writing, Essay, Debate, Quiz, Workshops etc. were held. SURVEILLANCE AND DETECTION 10.4 Agreed list of public servants as well as List of Public Servants of Doubtful Integrity for the year 2011 have been finalized. PUNITIVE ACTION As on 1st January 2011, 35 complaints from various sources against the officials of PSU's were under examination. During the period from 1st January 2011 to 31st December 2011, 17 complaints were received in the Department. A total of 18 complaints were got investigated/ examined and disposed off.

***** 68
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -11
11.1 RIGHT TO INFORMATION ACT, 2005 11.1.1 The Right to Information /act, 2005 (RTI) was assented by the President of India on 15.6.2005 and notified on 21.6.2005. 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 th RTI act came into force on the 120 day of its th enactment i.e. 12 October 2005. 11.1.2 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:A. Created a separate link for RTI Act on its website http://fert.nic.in placing a handbook on RTI giving general information about the Department required under the Act. B. Orders designating PIOs, with required details, placed on website, which are up dated from time to time. C. Counter opened at Public Information Centre of DoF at Shastri Bhavan for application as well as prescribed fee under RTI. D. Appointment of Nodal Officer intimated to Department of Post enabling providing of services by that Department as CAPIOs across the country. 11.1.3 The Department has started registration of applications and appeals under the RTI Act on the Management Information System (RTIRAMIS) software available on the Web-Site of CIC. 11.1.4 During the year 2011-2012, 195 applications and 8 appeals were received of which 181 applications and 7 appeals were disposed of, in time, during the said year. 9 applications were rejected for not being accompanied by requisite fees in the prescribed manner, as per the RTI Act. Remaining applications and appeal are under process and reply would be sent to the applicants in time.

*****
ANNUAL REPORT

69

CHAPTER -12
12.1 PROGRESSIVE USE OF LANGUAGE HINDI OFFICIAL 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. All the letters received in Hindi are invariably replied to in Hindi. Efforts are also being made to reply the letters in Hindi which are received in English from region 'A' & 'B' Original correspondence in Hindi with the state govt. is also being increased. 12.3 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 regularly reviews the progress made in the use of Hindi in the Department, its attached offices, FICC and PSUs on quarterly basis. It gives appropriate suggestions and recommends measures to be taken for the effective implementation of the official language policy. 12.4 HINDI SALAHKAR SAMITI With a view to render advice for effective implementation of the official language policy of the Government, the Hindi Salahkar Samiti (Advisory Committee) of the Ministry of Chemicals and Fertilizers (Department of Chemicals, Deptt. of Pharmaceuticals and the Department of Fertilizer has been reconstituted. Joint Secretary (A&M) Department of Fertilizers, is the Joint Member Secretary of this committee. The Meeting of the Committee held on 10t October, 2011 in Port Blair under the Chairmanship of the Minister of State for Chemical and Fertilizers. The members of Parliament, Non-Official

12.1.1 Department of Fertilizers continued its efforts towards greater use of Hindi in official work during 2011-2012 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 and one Assistant. 12.1.2 All the 205 Computers (PCs) and 10 Laptops 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. Continue Efforts are being made to promote the use of Hindi in the correspondence. During the year Two Assistants and one lower Division Clerk of the Department have been trained in Hindi Typing. Besides, a number of measures have been taken for the promotion of progressive use of Hindi in the Department, its attached office of FICC and PSU's under its administrative control. Details of these measures are summarized below:12.2 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 correspondence

70

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Members, Government officer Members and the Heads of the PSU's under the Department were present in the Meeting. The Hon'ble Minister expressed his pleasure for the work of Official Language Hindi being done in all the three Deptts. of the Ministry viz. Chemicals and Petro-Chemicals, Deptt. of Pharmaceuticals and Deptt. of Fertilizers and all the PSU,s under them. He also advised to use simple and day-to-day used words and take forward the work of dissemination of the Official language Hindi:

Language is continued. This scheme carries One prize of Rs.1000/- each, Two second prizes of Rs.600/-600/- each and Two third prizes of Rs.300/- 300/-each. 12.6 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 12th September, 2011. During the Hindi fortnight, which th wasorganised in the Department from 12

Hon'ble Union Miniter of State for Chemicals & Fertilizers, Shri Srikant Kumar Jena presiding over the meeting of the Hindi Salahkar Samiti of the Ministry of Chemical & of Fertilizers.
12.5 INCENTIVE SCHEME FOR ORIGINAL NOTING/DRAFTING WORK IN HINDI The incentive scheme for noting/drafting in Hindi introduced by the Department of Official September, 2011 to 26th September, 2011, various competitions such as Hindi Essay writing, Hindi typing, short extempore speech in Hindi, noting and

ANNUAL REPORT

71

drafting in Hindi, Hindi general knowledge and poem recitation competitions in Hindi were organised. On 14th November, 2011 prizes were a warded by Secretary (Fertilizers) to those participants who scored first, second, third prizes and consolation prizes viz. Rs. 2500/-, Rs. 2000/-, Rs. 1500/& Rs. 1000/- in these competitions (Three consolation prizes each in Hindi Essay & Hindi Noting & Drafting competitions, two prizes each in Hindi Typing, Poem recitation, Hindi Stenography and General Knowledge Competitions) alongwith certificates. 12.7 PRATI DIN EK SHABD The Scheme named 'Prati Din Ek Shabd', is being run in the Department, that continued this year also Under this scheme, one word/phrase in Hindi and its English equivalent was being displayed on the White Board installed on the second floor 'A' wing Shastri Bhavan. These words/phrases are generally of administrative and technical in nature which are used in day-to-day official work.

12.8

HINDI WORKSHOPS During the year, 3 Hindi workshops, one for Section Officers, one for Assistants and Stenographers and one for LDC's & UDC's, were organised in the Department to encourage the officials to do more and more work in Hindi and altogether 30 officers/employees participated in these workshops. One of these workshop included officers/employees trained to do their work in Hindi on computed based system.

12.9

INSPECTIONS REGARDING PROGRESSIVE USE OF HINDI In order to oversee the implementation of the official language policy of the 4 PSUs under the administrative control of this Department were inspected by the Deputy Director (O.L.) of the Department during the year. In addition, the first Sub-Committee of the Parliamentary Committee on Official Language inspected six office under the administrative control of the Department.

***** 72
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -13
13.1 WELFARE OF SCS, STS, OBCS AND PHYSICALLY HANDICAPPED PERSONS 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 date is as under:concerted efforts are being made to fill up the vacancies for the reserved categories. The representation of SCs, STs, ex-servicemen, physical handicapped persons and OBCs in the PSUs is given in the Annexure-XIII. Besides providing employment, PSUs have been advised to prepare and implement special programmes/schemes for education of tribal 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 area. 13.3 WELFARE OF MINORITIES The PSUs under the Department have further been advised to provide facility of preexamination 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. 13.4 RESERVATION IN DEALERSHIP

Group Total No. of SC Officers/Staff A B C Total

13.2

ST OBC 01 05 05 11 01 07 11 19

PH 01 01 02

39 105 105 249

03 17 27 47

REPRESENTATION OF SCS, STS, OBCS A N D P H Y S I C A L LY H A N D I C A P P E D 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 under the administrative control of the Department. The Presidential Directives regarding reservation for OBCs have also been made applicable w.e.f. 8.9.93 in the Department. The implementation of these directives is being monitored in the Department and

13.4.1 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: Exemption/relaxation from security deposits.

ANNUAL REPORT

73

 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.

13.4.2 The PSUs have also been advised to reserve 10% of fertilizer dealerships for exservicemen.

***** 74
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -14
14.1 WOMEN EMPOWERMENT The principle of gender equality is enshrined in the Indian constitution in the Preamble, Fundamental Rights, Fundamental Duties and Directive Principles. The constitution not only grants equality to women but also empowers the State to adopt measures of positive discrimination in favour of women. The Department of Fertilizers is committed towards giving importance to women in different spheres. Though there is not specific scheme, as such, for women, the PSUs under its administrative control are involved in year long activities to create large scale awareness among women with their active participation. These programmes are aimed towards enabling women to realize their full potential and involvement in decision making. Department of Fertilizers has a Complaint s Committee to attend to grievances of its women employees. Department has also allocated a separate room for women to serve as common room. The Department takes pride in providing cong enial environment to women employees. 14.2 RCF 14.2.3 All the welfare and employee benefit schemes are equally applicable to male and female employees of RCF. Under the special schemes and policies for women employees RCF has set up Special Cell for Women Employees (as per Communication from National Commission on Women) Committee for Sexual Harassment Cases (as per Supreme Court Guidelines) Special Medical check-ups/camps. 14.2.4 All the benefits under legal requirements such as Maternity Benefits, Nursing Breaks, etc. are given to women employees. 14.2.5 RCF is one of the pioneer members in the Forum of Women in Public Sector (WIPS) since its inception (1990). It is a corporate member of this forum and has been representing in all activities of the forum with total support and participation in all activities. Some RCF women officers have been working with the forum as heads of taskforces, members of committees and have contributed in policy making and development of women to a great extent. 14.2.6 As a part of regular training, RCF incorporates awareness building for all officers (Men and Women) on the Sexual Harassment Guidelines and also covers gender sensitization issues. 14.3 NFL

14.2.1 RCF as an organization has always been fair in treating employees without any gender bias. Opportunities for growth, training, challenging jobs, learning are equally available to both men and women employees of RCF. Women represent in fair numbers in the batch of apprentice trainees in technical areas. 14.2.2 Women are working in technical / nontechnical / managerial positions and some of them have risen to the level of top management positions in the organization.

14.3.1 Female employees comprise 5.3% of the total workforce of the Company. The Company has a female Full-time Functional Director on its Board. The Company has adopted adequate measures to facilitate a

ANNUAL REPORT

75

congenial work atmosphere for its women employees. 14.3.2 There is no instance of any Gender inequality and both men and women employees are enj oyin g eq ual r ig hts. T he wor k ing atmosphere is very cordial and harmonious. 14.4 MFL MFL do not have any problems for mainstreaming gender issues and all the women employees are being involved in all the activities. Further, MFL is having a separate Women's Forum affiliated to Women in Public Sector (WIPS) and there is a women coordinator from MFL nominated for this purpose for coordinating the activities and promoting the interests of women employees relating to their welfare , development and empowerment. Every year, MFL is conducting Women's Day and almost all the women employees are participating in the programmes / events. Last year 2010-11, on March 15, MFL conducted Women's Day in a grand manner. 14.5 BVFCL 14.7

empowerment of women and for mainstreaming gender issues. FACT

14.7.1 Employment of women employees in FACT and their profile Equal opportunity has been provided to women in recruitment to posts both in technical and administrative disciplines. Exception has been made only for jobs involving shift-work round the clock. Equal remuneration is paid to employees of both genders doing the same type of work. There is no discrimination on grounds of gender. This has enabled some of our women officers to excel in their respective field of activities leading to their being chosen for the coveted Me r it Awa r d g ive n f or o uts tan d ing performance and achievements. Women executives occupy key positions in the Management cadre as Deputy General Managers/ Chief Managers/ Chief Engineers & Dy. Chief Managers/ Dy. Chief Engineers in var ious Eng ineer ing disciplines like Chemical, Electrical, Civil, Computer, Industrial Engineering etc. and administrative disciplines like Finance, Human Resources, Materials, Marketing etc. 14.7.2 Statutory Welfare Measures implemented for Women employees. Under the Maternity Benefit Act, women employees are entitled for maternity leave of 90 days and medical benefits associated with pregnancy, delivery, miscarriage etc. Under the provisions of the Factories Act, the working hours of women employees covered under the Act is restricted between 6 am and 7 pm. Nursing mothers are given two intervals of 15 minutes each as feeding time, or alternatively as a working arrangement of 30 minutes at a stretch, for feeding their infants, up to a maximum of fifteen months after confinement.

14.5.1 BVFCL lays emphasis in development of employees without any gender discrimination. There is no discrimination against Women employees. Adequate healthcare provided for the welfare of the Women. 14.5.2 Emphasis is given at the time of recruitment and many women candidates have been recruited in recent past. As per the directives of the Controlling Ministry, a committee headed by a Lady Officer is constituted to address any problem related to sexual harassment. Till date no such case has been received. 14.6 FAGMIL As such, the company is a new Company and is engaged in the business of mining in the desert areas of Rajasthan. Suitable measures will be taken for the welfare and the

***** 76
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

As per GOI Orders, women employees undergoing family planning operation are given special leave up to 2 weeks. A crche is also provided for the welfare of women employees. 14.7.3 Non-statutory Welfare measures implemented The Company sponsors a Ladies Club for the recreational activities of women employees and wives of male employees. There is also an association of women employees, by the

name FACT Women' Welfare Association, whose activities are welfare oriented. 14.7.4 Security at Work Based on the GoI Orders, there is a full fledged and active complaints Committee to look into complaints of atrocities/harassment meted out to women employees at work place. Not less than half the members are women including an external member who is a lady Professor of a reputed Social Work College.

*****
ANNUAL REPORT

77

CHAPTER -15
CITIZEN CHARTER/GRIEVANCE REDRESSAL MECHANISM Citizen Charter Department of Fertilizer has created a Sevottam complaint Citizens'/Clients' Charter for the year 2011-12 as well as Sevottam Complaint Grievance Redress Mechanism under Results Framework Document (RFD) of the Department. The Citizen Charter of Fertilizer Industries Coordination Committee (FICC), which is an attached office of Department of Fertilizers, is under preparation. Our Mission Achieving fertilizer security for the country for sustainable agricultural growth supported by a robust domestic fertilizer industry. Our Vision Ensuring adequate and timely availability of fertilizers to the farmers at affordable prices through planned production and imports and distribution of fertilizers in the country and planning for self-sufficiency in Urea production. Stake Holders The following are our stake holders; All PSUs under the Administrative Control of DoF All other Fertilizer Producing Companies Department of Agriculture and Cooperation State Governments Importers of Fertilizers (Urea, MOP, Complexes) Importers/Raw material suppliers Other Ministries (Ministry of Finance, Ministry of Petroleum and Natural Gas, Ministry of Railways, Ministry of Surface Transport, Planning Commission, Department of Public Enterprise, Public Enterprises Selection Board, Tariff Commission, DGFT etc. Grievance Redressal Mechanism With an objective of speedy redressal, e ff e c t i v e m o n i t o r i n g o f g r i e v a n c e s , Department of Fertilizers (DOF) has implemented an integrated application system based on web-technology prepared and developed by Department of Administrat ive Ref orms and Public Grievances and national Informatics Centre called Centralized Public Grievance Redress and Monitoring System (CPGRAMS) through which citizens can submit their grievances from anywhere and anytime for easy communication between DoF and citizens. The system provides the on-line facility to the citizen to monitor the progress of redressal process in respect of grievance lodged by them. The system provides link between DoF and offices under its control. The grievances are forwarded to concerned division of DoF, its attached office and PSUs under the control of the Department for action in a time-bound manner. Disposal of grievances is followed up by sending reminders at various levels at regular intervals. The grievances received by post are also properly recorded and redressed in a time bound manner.

***** 78
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

ANNEXURES

ANNEXURE-1 LIST OF ACTIVITIES BEING CARRIED OUT BY DEPARTMENT OF FERTILIZERS

1.

Planning for fertilizer production including import of fertilizer through a designated canalising agency. Allocation and supply linkages for movement and distribution of urea in terms of assessment made by the Department of Agriculture & Cooperation. Administration of concession schemes and management of subsidy for controlled as well as decontrolled fertilizer including quantum of concession of decontrolled fertilizers, costing of such fertilisers and pricing of Phosphatic and Potassic fertilizers. Administration of the Fertilizer (movement Control) Order, 1960. Policy and pricing matters relating to urea. All matters pertaining to fertilizer PSUs including matter related to their disinvestment. All matters pertaining to Fertilizer Projects, Joint Venture/Joint Sector companies. External assistance for new fertilizer projects. Matters relating to Fertilizer Industry Coordination Committee (FICC), an attached office of DoF, which is concerned with cost aspects of urea production and disbursement of subsidy on indigenous urea.

2.

3.

4. 5. 6. 7. 8. 9.

10. Matters connected with supply and availability of fertilizer raw material and marketing of fertilizers. 11. Fixation of remuneration rate for handling imported fertilizers.

12. Work relating to planning, monitoring and valuation of fertilizer production. 13. All matters relating to WTO in the fertilizer sector.

ANNUAL REPORT

81

ANNEXURE-II LIST CONTAINING THE NAMES OF MINISTER-IN-CHARGE AND THE OFFICERS OF THE LEVEL OF DEPUTY SECRETARY AND ABOVE, WHO HAVE WORKED IN THE DEPARTMENT DURING 2011-2012 Minister for Chemicals & Fertilizers Minister of State for C&F Secretary : : : Shri M.K. Alagiri Shri Srikant Kumar Jena Dr. Sutanu Behuria (upto 01.11.2011) Sh. Ajay Bhattacharya (w.e.f. 02.11.2011) Additional Secretary & Financial Adviser Joint Secretary : : Dr. V. Rajagopalan Shri Sham Lal Goyal Shri Satish Chandra Shri S. C. Gupta (w.e.f. 17.05.2011) Joint Secretary Level Officers : : Directors : Shri A.K. Parashar, Economic Adviser Shri M.P. Johnson, DDG Shri Deepak Kumar Shri B.B. Mehtani (upto 31.10.2011) Shri Sanjay Kumar Sinha Director Level Officer : Smt. T.C.A Kalayaani (Director of Accounts) Shri T.A. Basil (FICC) (upto 06.04.2011 ) Shri Umesh Dongre (FICC) (upto 30.11.2011 ) Shri A.S. Sandhu (FICC) Shri Gobinda Gopal Mitra, Jt. Director (FICC) (w.e.f. 09.12.2011) Deputy Secretary : Shri H. Abbas (upto 18.05.2011) Shri Manish Tripathi Smt. Lalitha Das Shri Rajiva Kumar, FICC Shri S. Anandan, Shri R. Selvam, PS to Minister Shri Tapan Dutta, DC (POP) Sh. Anand Kumar Pal (w.e.f 17.08.2011) Controller of Accounts : Shri Akhilesh Jha

82

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

ANNEXURE III

LIST OF PUBLIC SECTOR UNDERTAKINGS UNDER THE ADMINISTRATIVE CONTROL OF DEPARTMENT OF FERTILIZERS Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. Name of the Company Headquarters Incorporation in

The Fertilizers and Chemicals Travancore Ltd. (FACT) Fertilizer Corporation of India Ltd. (FCI) National Fertilizers Limited (NFL) Rashtriya Chemicals & Fertilizers Ltd (RCF) Madras Fertilizers Limited (MFL) Projects & Development India Limited (PDIL) Hindustan (HFC) Fertilizer Corporation Limited

Udyogamandal New D elhi Noida Mumb ai Chennai Noid a New Delhi Guwahati

September, 1943 January, 1961 August, 1974 March, 1978 Decembe r, 1966 March, 1978 March, 1978 April, 2002

Brahmaputra Valley Fertilizer Corporation Limited (BVFCL) FCI Aravali Gypsum And Minerals India Limited (FAGMIL)

9.

Jodhpur

February, 2003

ANNUAL REPORT

83

ANNEXURE IV
UNIT-WISE INSTALLED CAPACITY, PRODUCTION Nitroge n
Name of Company/ Plant Public Sector: NFL:Nangal-II NFL:Bhatinda NFL:Panipat NFL:Vijaipur NFL:Vijaipur Expn. TOTAL (NFL): BVFCL:Namrup-II BVFCL:Namrup-III TOTAL (BVFCL): FACT:Udyogamandal FACT:Cochin-II TOTAL (FACT): RCF:Trombay RCF:Trombay-IV RCF:Trombay-V RCF:Thal TOTAL (RCF): MFL:Chennai SAIL:Roulkela By Product Total(Public): Cooperative Sector IFFCO:Kandla IFFCO:Kalol IFFCO:Phulpur-I IFFCO:Phulpur-II IFFCO:Aonla-I IFFCO:Aonla-II IFFCO:Paradeep TOTAL(IFFCO): KRIBHCO:Hazira Total(Co -operative): Total(Pub.+Coop.):

84
Urea Urea Urea Urea Urea Urea Urea A/S , 20:20 20:20 15:15:15 20.8:20.8, 20:20 Urea Urea Urea / 17:17:17 CAN A/S

AND CAPACITY UTILIZATION FOR THE YEARS 2010-11 & 2011-12

Name of Products Annual Installed Capacity (As on 1-04-10) ( in 000 MTs) 220.1 235.3 235.3 397.7 397.7 1486.1 110.4 144.9 255.3 77.0 97.0 174.0 45.0 75.1 151.8 785.1 1057.0 366.7 120.0 38.4 3497.5 351.5 250.5 253.5 397.7 397.7 397.7 325.2 2373.8 795.4 3169.2 6666.7 Production (000 MT) 2010-11 2011-12 Percentage capacity utilization 2010-11 2011-12

220.1 254.4 216.2 421.6 442.3 1554.6 39.6 91.5 131.1 67.3 99.2 166.5 66.9 31.6 156.9 820.4 1075.8 219.9 0.0 18.9 3166.8 273.3 276.0 342.8 472.0 454.7 479.6 314.1 2612.5 846.5 3459.0 6625.8

217.9 209.3 245.7 433.5 471.8 1578.2 50.4 89.0 139.4 63.0 90.4 153.4 55.5 44.6 142.9 826.9 1069.9 273.8 0.0 18.9 3233.6 317.1 268.4 321.5 484.6 475.7 479.6 343.8 2690.7 795.1 3485.8 6719.4

100.0 108.1 91.9 106.0 111.2 104.6 35.9 63.1 51.4 87.4 102.3 95.7 148.7 42. 1 103.4 104.5 101.8 60.0 0.0 49.2 90.5 77.8 110.2 135.2 118.7 114.3 120.6 96.6 110.1 106.4 109.1 99.4

99.0 89.0 104.4 109.0 118 .6 106.2 45.7 61.4 54.6 8 1.8 93.2 88.2 123.3 59.4 94.1 105.3 101.2 74.7 0.0 49.2 92.5 90.2 107.1 126.8 121.9 119.6 120.6 105.7 113.3 100.0 110.0 100.8

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

10:26:26 / 12:32:16 / DAP Urea Urea Urea Urea Urea DAP / 10:26:26 / 20:20 / 12:32:16 Urea

Private Sector GSFC:Vadodara GSFC:Sikka-I GSFC:Sikka-II TOTAL(GSFC-Sikka): GNFC:Bharuch KSFL:Shahjahanpur Private Sector CIL:Vizag CIL:Ennore CIL:Kakinada SFC:Kota DIL:Kanpur ZIL:Goa SPIC:Tuticorin MCF:Mangalore TAC:Tuticorin TCL:Haldia IGL:Jagdishpur Hin.Ind.Ltd.:Dahej DFPCL:Taloja NFCL:Kakinada-I NFCL:Kakinada-II TOTAL(NFCL): CFCL:Gadepan-I CFCL:Gadepan-II TOTAL(CFCL): TCL:Babrala PPL:Paradeep By Product
Total (Private Sector): Total(Pub+Coop+Pvt):

ANNUAL REPORT

Urea / DAP / 20:20 / A/S DAP / 12:32:16 DAP / 12:32:16 Urea / CAN / 20:20 Urea 28:28 / 14:35:14 / 20:20 / 16:20 / 10:26:26 / DAP 16:20 / 20:20 DAP / 10:26:26 / 20:20 / 14:35:14 / 12:32:16 Urea Urea Urea / DAP / 19:19:19 / 10:26:26 / 12:32:16 Urea / DAP / 20:20 / 17:17:17 Urea / DAP / 20:20 / 16:20 A/C DAP / 10:26:26 / 12:32:16/ 14:35:14 / 15:15:15 Urea DAP / 10:26:26 / 12:32:16 23:23 Urea Urea Urea Urea Urea DAP / 14:35:14 / 20:20 / 12:32:16 / 10:26:26 / 28:28 A/S

248.1 105.8 71.3 177.1 356.7 397.7

227.4 52.4 74.7 127.1 353.8 474.0

250.6 51.2 60.1 111.3 382.5 446.2

91.7 49.5 104.8 71.8 99.2 119.2

101.0 4 8.4 84.3 62.8 107.2 112.2

124.0 41.2 120.6 174.3 332.1 288.7 370.7 207.2 16.0 121.5 397.7 72.0 52.9 274.8 274.8 549.6 397.7 397.7 795.4 397.7 129.6 7.5 5378.3 12045.0

179.6 42.2 189.7 185.6 0.0 264.3 179.0 215.7 0.0 70.6 505.3 38.6 28.4 382.5 379.0 761.5 474.8 491.3 966.1 513.7 204.5 3.7 5530.8 12156.6

231.3 46.9 189.9 176.6 110.4 213.6 359.6 220.8 8.3 91.0 546.0 40.0 44.9 364.0 356.3 720.3 496.7 477.6 974.3 494.3 192.8 5.3 5856.9 12576.3

144.8 102.4 157.3 106.5 0.0 91.5 48.3 104.1 0.0 58.1 127.1 53.6 53.7 139.2 137.9 138.6 119.4 123.5 121.5 129.2 157.8 49.3 102.8 100.9

186.5 113.8 157.5 101.3 33.2 74.0 97.0 106.6 51.9 74.9 137.3 55.6 84.9 132.5 129.7 131.1 124.9 120.1 122.5 124.3 148.8 70.7 108.9 104.4

85

Phosphate
Name of Products Name of Company/Plant Annual Installed Capacity
(1-04-09) Public Sector:

86
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Production (000 MT) 2010-11 2011-12

Percentage capacity utilisation 2010-11 2011-12

FACT:Udyogamandal FACT:Cochin-II Total(FACT): RCF:Trombay RCF:Trombay-IV Total(RCF): MFL:Chennai SSP Units Total(Public): Cooperative Sector IFFCO:Kandla IFFCO:Paradeep Total( Co -op.) Total(Pub.+Coop.): Private Sector GSFC:Vadodara GSFC:Sikka-I GSFC:Sikka-II TOTAL(GSFC-Sikka): GNFC:Bharuch CFL:Vizag

20:20 20:20

29.7 97.0 126.7

29.6 99.2 128.8 66.9 31.6 98.5 0.0 0.0 227.3

30.2 90.4 120.6 55.5 44.6 100.1 28.3 0.0 249.0

99.7 102.3 101.7 148.7 42.1 82.0 0.0 0.0 56.5

101.7 93.2 95.2 123.3 59.4 83.3 19.8 0.0 61.9

15:15:15 20.8:20.8/ 20:20

45.0 75.1 120.1

20:20 / 19:19:19 / 17:17:17 SSP

142.8 12.8 402.4

DAP / 10:26:26 / 12:32:16 DAP / 10:26:26 / 20:20 / 12:32:16

910.0 802.8 1712.8 2115.2

717.0 570.7 1287.7 1515.0

764.6 601.1 1365.7 1614.7

78.8 71.1 75.2 71.6

84.0 74.9 79.7 76.3

DAP / 20:20 DAP , 12:32:16 DAP

75.9 270.5 182.2 452.7

56.1 134.0 190.8 324.8 33.2 217.3

59.8 131.0 153.5 284.5 39.9 270.3

73.9 49.5 104.7 71.7 116.5 130.9

78.8 48.4 84.2 62.8 100.3 162.8

20:20 14:35:14 / 28:28 /

28.5 166.0

ANNUAL REPORT
10:26:26 / 20:20 / DAP CFL:Ennore CIL:Kakinada ZIL:Goa SPIC:Tuticorin MCF:Mangalore TCL:Haldia Hin.ind.Ltd.:Dahej DFPCL:Taloja PPL:Paradeep SSP Units
Total (Private Sector): Total(Pub+Coop+Pvt):

16:20 / 20:20 DAP / 12:32:16 / 20:20 / 14:34:14 / 10:26:26 DAP / 19:19:19 / 10:26:26 / 12:32:16 DAP / 17:17:17 / 20:20 DAP / 20:20 / 16:20 DAP / 10:26:26 / 12:32:16/ 14:35:14 DAP / 10:26:26 / 12:32:16 23:23 DAP / 14:35:14 / 20:20 / 12:32:16 / 10:26:26 / 28:28 SSP

48.0 308.2 197.4 218.5 82.8 336.9 184.0 52.9 331.2 1030.6 3513.6 5628.8

52.2 483.0

58.6 434.9

108.8 156.7 107.8 22.5 109.8 59.5 53.5 53.7 129.5 41.9 77.1 75.0

122.1 141.1 104.1 68.0 107.9 70.9 55.6 84.9 123.1 41.9 80.2 78.7

212.8 49.1 90.9 200.6 98.5 28.4 428.9 432.0 2707.8 4222.8

205.5 1 48.5 89.3 238.8 102.3 44.9 407.6 432.0 2816.9 4431.6

* Actual figures have been considered from April 2011- November 2011 and estimated for December 2011 to March 2012

* Estimated Production figures have been reported for the year 2011 -12.

87

ANNEXURE-V YEAR-WISE, NUTRIENTS-WISE CONSUMPTION, PRODUCTION AND IMPORTS OF FERTILIZERS

YEAR N 1981-82 1982-83 1983-84 40.69 42.24 52.86 54.87 56.61 57.16 57.17 72.51 73.86 79.97 80.46 84.27 87.89 95.07 98.23 103.01 109.01 113.54 115.92 CONSUMPTION P 13.22 14.37 17.07 18.86 20.05 20.79 21.87 27.21 30.14 32.21 33.21 28.44 26.69 29.31 28.98 29.77 39.14 41.12 47.99 K 6.73 7.27 7.99 8.38 8.08 8.50 8.80 10.68 11.68 13.28 13.61 8.84 9.08 11.25 11.56 10.30 13.73 13.32 16.78 TOTAL 60.64 63.88 77.92 82.11 84.74 86.45 87.84 110.40 115.68 125.46 127.28 121.55 123.66 135.63 138.77 143.08 161.88 167.98 180.69 N 31.44 34.24 34.85 39.17 43.28 54.10 54.66 67.12 67.47 69.93 73.01 74.30 72.31 79.45 87.77 85.99 100.86 104.80 108.90 PRODUCTION P 9.49 9.80 10.48 12.64 14.28 16.60 16.65 22.52 17.96 20.52 25.62 23.06 18.16 24.93 25.58 25.56 29.76 31.41 33.99 K 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL 40.93 44.04 45.33 51.81 57.56 70.70 71.31 89.64 85.43 90.45 98.63 97.36 90.47 104.38 113.35 111.55 130.62 136.21 142.89 N 10.54 4.25 6.56 20.08 16.80 11.03 1.75 2.19 5.23 4.14 5.66 11.37 15.88 14.76 19.93 11.67 13.62 6.35 8.33 P 3.43 0.63 1.43 7.45 8.16 2.55 0.00 4.07 13.11 10.16 9.67 6.89 7.22 3.80 6.47 2.46 6.72 9.68 15.03 IMPORTS K 6.44 6.44 5.56 8.71 9.03 9.52 8.09 9.82 12.80 13.28 12.36 10.82 8.57 11.09 13.15 6.13 11.40 15.42 17.39 TOTAL 20.41 11.32 13.55 36.24 33.99 23.10 9.84 16.08 31.14 27.58 27.69 29.08 31.67 29.65 39.55 20.26 31.74 31.45 40.75 (lakh M.T.)

88
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS
1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00

ANNUAL REPORT
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 109.20 113.10 104.74 110.76 117.14 127.23 137.74 144.19 150.90 155.80 165.58 N.A. N.A. 42.15 43.82 40.19 41.24 46.24 52.04 55.43 55.15 65.06 72.74 80.50 N.A. 15.67 16.67 16.01 15.98 20.61 24.13 23.34 26.36 33.13 36.32 35.14 167.02 173.59 160.94 167.98 183.99 203.40 216.51 225.70 249.09 264.86 281.22 N.A. 109.61 107.68 105.64 106.34 113.38 113.54 115.78 109.00 108.7 119.0 121.56 81.23 37.43 38.60 39.10 36.32 40.67 42.21 45.17 38.07 34.64 43.21 42.22 27.79 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 147.04 146.28 144.74 142.66 154.05 155.75 160.95 147.07 143.34 162.21 163.78 109.02 1.54 2.69 0.66 1.32 4.09 13.85 26.88 36.77 38.44 34.47 44.92 38.83 3.96 4.29 1.70 3.38 2.96 11.21 13.23 12.53 29.27 27.56 38.02 34.71 15.41 17.01 14.38 15.48 20.45 27.47 20.69 26.53 33.80 29.44 40.69 22.48 20.91 23.99 16.74 20.18 27.50 52.53 60.80 75.83 101.51 91.47 123.63 96.02 * Actual figures have been considered from April 2011- Nov 2011 ** Provisional Import figures are reported upto 30.11.2011

89

90
ANNEXURE-VI
SECTOR-WISE PRODUCTION OF NITROGENOUS AND PHOSPHATIC FERTILIZERS Nutrient
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS
2003-04 Target Nitrogen(N) Public Sector Co-operative Sector Private Sector Total(Nitrogen): Phosphate(P) Public Sector Co-operative Sector Private Sector Total(Phosphate): Grand Total: 399.8 776.0 3464.8 4640.6 353.3 778.7 2668.4 3800.4 402.7 875.1 3648.1 4925.9 266.3 938.3 2862.7 4067.3 383.0 880.0 3400.0 4663.0 294.9 1035.8 2890.6 4221.3 387.3 1461.5 2972.0 4820.8 16269.1 232.7 1129.7 3154.8 4517.2 234.0 1496.2 3184.2 4914.4 161.4 969.2 2676.7 3807.3 14707.3 241.8 1104.8 3087.7 4434.3 16332.1 191.7 916.2 2356.4 3464.3 14334.0 207.3 937.0 2986.8 4131.1 16215.7 227.7 1194.1 2899.1 4320.9 236.5 1242.2 3366.2 4844.9 227.2 1287.7 2707.8 4222.7 16379.3 292.4 248.9 1311.8 1365.7 3321.9 2817.0 4926.1 4431.6 17684.5 17007.9 3106.2 2672.7 5401.9 11180.8 3007.9 2797.3 5130.5 3091.5 2812.3 5502.0 3051.0 3141.8 2901.7 2832.5 5382.5 5837.0 2958.6 2958.3 5437.6 11354.5 3117.0 3106.4 5224.9 11448.3 3046.7 3004.3 5526.9 11577.9 3119.7 3303.4 5485.0 11908.1 2887.0 3031.0 4982.0 10900.0 3053.5 3260.7 5583.6 11897.8 2925.2 3133.0 4811.5 10869.7 3054.8 3280.8 5749.0 12084.6 3118.1 3404.3 5378.0 3079.8 3363.5 6010.0 3166.7 3459.1 5530.8 12156.6 3200.9 3233.5 3359.8 3485.8 6197.7 5857.0 12758.4 12576.3 Actual 2004-05 Target Actual 2005-06 Target Actual 2006-07 Target Actual 2007-08 Target Actual 2008-09 Target Actual 2009-10 Target Actual 2010-11 Target Actual (000 MT) 2011-12 * Target Estt. 10935.7 11405.8 11335.2 11811.3 11900.4 12453.3 15821.4 14736.1 16331.7 15402.5 16474.3 15575.8 16095.1 16822.5 16221.3 17298.2 * Estimated Production figures have been reported for the year 2011 -12.

ANNUAL REPORT

SECTOR-WISE CAPACITY UTILIZATION OF NITROGENOUS AND PHOSPHATIC FERTILIZERS

ANNEXURE-VII

(%age) 2009-10 2010-11 2011-12

Nutrient Nitrogen(N)
Public Sector: Co-operative Sector: Private Sector: Total(Nitrogen): Phosphate(P) Public Sector: Co-operative Sector: Private Sector: Total(Phosphate):

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

86.7 99.5 89.7 91.1

87.2 102.0 94.1 94.0

84.6 93.3 100.8 94.1

87.1 94.8 102.5 96.0

82.5 95.6 92.4 90.4

83.6 98.9 89.5 90.2

89.2 107.4 100.0 98.8

90.5 109.1 105.1 100.9

92.5 110.0 108.9 104.4

81.7 94.4 64.1 70.1

61.6 103.1 66.3 71.9

68.2 60.5 82.3 74.6

53.8 60.5 89.8 79.8

37.3 60.5 76.2 67.3

44.3 53.5 67.1 61.2

56.6 69.7 82.5 76. 8

56.5 75.2 77.1 75.0

61.9 79.7 80.2 78.7

* Estimated ( Actual Production have been considered from April, 2008-October, 2008)

91

92
ANNEXURE-VIII

Department of Fertilizers ANNUAL PLAN 2011-12

Sl. No. Name of the Scheme Annual Plan 2009-10 (Actual) GBS IEBR Total Annual Plan 2010-11 (BE) GBS IEBR Total Annual Plan 2010-11 (RE) GBS IEBR Total Annual Plan 2011 -12 (BE) GBS IEBR Total

(Rs. crore)

Outlay Earmarked for NER

Centrally Sponsored Scheme (CSS) Total CSS Central Sector Scheme (CS) 1 RCF 141.02 141.02 622.82 622.82 237.37 237.37 2 FAGMIL 0.37 0.37 11.29 11.29 5.89 5.89 3 PDIL 7 .52 7.52 5.38 5.38 9.45 9.45 4 NFL 43.05 43.05 900.50 900.50 655.71 655.71 5 KRIBHCO 319.61 319.61 1160.00 1160.00 1138.63 1138.63 6 Revival of Sick CPSEs 6(i) BVFCL 65.00* 65.00* 45.00* 45.00* 45.00* 45.00* 6(ii) FACT 34.00 34.00 89.99 89.99 89.99 89.99 6(iii) MFL 96.99 96.99 74.50 74.50 74.50 74.50 6(iv) FCI 0 0 0 6(v) HFC 0 0 0 6(vi) PPCL 7 Misc. Schemes 3.68 3.68 5.50 5.50 5.50 5.50 (MIS/IT and R&D) 8 Capital Subsidy for conversion 9 Investments for 0.01 0.01 0.01 0.01 JVs abroad# 10 Revival of Closed Units TOTAL CS: 199.67 511.57 711.24 215.00 2699.99 2914.99 215.00 2047.05 2262.05 *The amount earmarked for BVFCL will be utilized for the benefits of North Eastern Region #DoF is exploring possibilities of JVs abroad. Since no firm proposal is at hand right now, only a token amount of Rs.01.00 lakh has been provided.

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

293.30 4.15 9.73 2363.08 654.96

293.30 4.15 9.73 2363.08 654.96

67.80* 60.74 88.95

67.80* 60.74 88.95

7.50

7.50

0.01

0.01 0

225.00

3325.22

3550.22

ANNEXURE-IX

I A

B.

II A.

DETAILS OF HEAD -WISE ALLOCATION OF FUNDS UNDER NON -PLAN AND PLAN FOR BE 2011-12 and RE 2011-12 (Rs In Crore) NON-PLAN PROVISIONS: BE 2011-12 RE 2011-12 REVENUE SECTION 1. Sectt. Proper (MH 3451) 20.00 20.00 2. Office of FICC & other Programmes (FICC+MIT) (MH 2852) 2.07 2.07 3. Subsidy on Nitrogenous Fertilizers (MH 2852) (a)Indigenous Urea including Frieght Subidy (Gross) 13308.00 19108.00 (b)Compensation on account of loss due to sale of fertilizers bonds 0.00 200.00 4. Subsidy on Imported Fertilizers (MH 2401) Gross 10575.00 17475.00 Recovery(-) 3592.00 3592.00 Net 6983.00 13883.00 5. Payment to Manufacturers/ Agencies for concessional sale of Decontrolled Fertilizers (MH 2401) (i) (a) Indigenous Decontrolled Fertilizers (Gross) 14343.00 19543.00 (b)Compensation on account of loss due to sale of fertilizers bonds 0.00 289.00 (ii) (a) Imported Decontrolled Fertilizers (Gross) 15363.87 14664.94 (b) Compensation on account of loss due to sale of fertilizers bonds 0.00 289.93 Total (Decontrolled Fertilizers) -(Gross) 29706.87 34786.87 6. Write off of loans, interest and penal interest on GOI loan outstanding against HFCL, FCI, MFL, PDIL and FACT (MH 3475) 0.01 0.01 7. Post closure adjustment liabilities of PPL (MH 3475) 0.01 0.01 TOTAL : (REVENUE SECTION) Gross 53611.96 71591.96 Net 50019.96 67999.96 CAPITAL SECTION Non-Plan loans to PSUs (MH 6855) HFC 0.01 0.01 FCI 0.01 0.01 PPCL 0.01 0.01 BVFCL 0.01 0.01 FACT ----TOTAL (CAPITAL SECTION) 0.04 0.04 TOTAL : (NON -PLAN) Gross 53612.00 71592.00 Net 50020.00 68000.00 PLAN PROVISIONS: REVENUE SECTION

ANNUAL REPORT

93

94
B. 1. Grant to PDIL for R &D 2. S&T Programme of Department (MH 2852) 3. Grant in the field of Management Information Technology (MH 2852) 4. Capital subsidy for conversion of 4 existing FO/LSHS Plants to NG/LNG (MH 2852) TOTAL (REVENUE SECTION) CAPITAL SECTION : Investment in and loans to PSUs (MH 6855) 1. FACT 2. BVFCL 3. HFC 4. PDIL 5. MFL 6. FCI 7. PPCL Investments for JVs abroad (MH 4855) TOTAL (CAPITAL SECTION) TOTAL PLAN TOTAL -DEPARTMENT OF FERTILIZERS (Gross) TOTAL -DEPARTMENT OF FERTILIZERS (Net) --2.00 5.50 0.00 7.50 --2.00 5.50 0.00 7.50

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

60.74 67.80 ------88.95 ------0.01 217.50 225.00 53837.00 50245.00

60.74 67.80 ------88.95 ------0.01 217.50 225.00 71817.00 68225.00

ANNUAL REPORT
Period Amount of Concession disbursed on Decontrolled Fertilizers (Indigeneous + Imported) Indigenous P&K 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (Cash) (Bonds) 2008-09 (Cash) (Bonds) 2009-10 2010-11 3759.52 2487.94 2606.00 3977.00 4499.20 6648.17 7833.80 2500.00 24707.10 }32957.10 8250.00 16000.00 }10333.80 Imported P&K 744.00 736.58 720.00 1165.18 2096.99 3649.95 5100.00 1500.00 23847.69 }32597.69 8750.00 23452.06 }6600.00 20650.00 BE 2011-12 RE 2011-12 Actual Booked Expenditure as on 28-02-2012 * * BE 2012-13 14343.00 19832.00 19539.84 20850.00 15363.87 14954.87 12662.82

DETAILS OF EXPENDITURE ON SUBSIDY/ CONCESSION DURING THE YEAR 2001-02 to 2010-11 AND BUDGET ESTIMATES 20 12-13 Amount of subsidy disbursed on urea Total 4503.52 3224.52 3326.00 5142.18 6596.19 10298.12 12933.80 4000.00 48554.79 17000.00 39452.06 }65554.79 }16933.80 Indigenous Urea 8044.00 7790.00 8521.00 10243.15 10652.57 12650.37 12950.37 }16450.37 3500.00 17968.74 }20968.74 3000.00 17580.25 Imported Urea 147.50 1.16 0.82 742.37 2140.88 5071.06 9934.99 ---12971.18 }12971.18 ---6999.98 }9934.99 Total of Urea(Gross) 8191.50 7791.16 8521.82 10985.52 12793.45 17721.43

ANNEXURE-X
Total for all fertilizers (Rs In Crores) (Gross) 12695.02 11015.68 11847.82 16127.70 19389.64 28019.55 35819.16 }43319.16 7500.00 79494.71 }99494.71 20000.00 64032.29

22885.36 }26385.36 3500.00 30939.92 }33939.92 3000.00 24580.23

41500.00 29706.87 34786.87 32202.66

15080.73 13308.00 19308.00 16796.96

9255.95 10575.00 17475.00 17061.20

24336.68 23883.00 36783.00 33858.16

65836.68 53589.87 71569.87* 66060.82

16000.01 12576.11 28576.12 19000.01 18016.00 37016.01 65592.13 * Including Rs.13778.93 Crore allocated under 2nd Supplementary Demands for Grants for 2011 -12 under which Rs.778.93 Crore have been allocated towards compensation on account of loss due to sale of Fertilizers Bonds. Additional allocation of Rs.4201.07 Crore have also been made in RE 2011-12 which will be available for expenditu re only in 3rd Supplementary. Besides, Ministry of Finance has p roposed to allocate Rs.3,000 Crore under 3rd Supplementary. ** As per PAOsProgressive Expenditure Statement

95

ANNEXURE XI List of the grades of Rock Phosphate notified by Department of Fertilizers for manufacturing/selling SSP under Concession Scheme/ Nutrient Based Subsidy Policy of decontrolled P & K fertilizers
Notification No.M-19011/33/2001-MPR dated 19th September, 2001 Primary Grade of S.No. Specification of blending rock rock phosphate A Mined rock chips with 31.5% and above P2O5 content by wt. On an average B Jordan Rock with 30.0% and above P2O5 content by wt. On an average C Beneficiated rock phosphate (BRP with 33.55% and above P2O5 content by wt. On an average. D Syrian rock with 29.36% and above P2O5 content by wt. On an average. E Beneficiated rock Jhabua A or B grade rock with 23% P2O5 content by wt. phosphate (BRP To get a mixture having 31.6% and above P2O5 conten t by wt. On an average. with 33.55% and above P2O5 content by wt. On an average. F Jordan rock with Jhabua rock with 25% P2O5 content by wt to get a 31.6% and above mixture having 30% and above P2O5 content by wt. On an average. P2O5 content by wt. On an average. Notification No.M-19011/33/2001-MPR dated 8th October, 2001 G Egyptian rock with 32% and above P2O5 content by wt. On an average. H Beneficiated rock Lower grade rocks with 25% P2O5 content by wt. From phosphate (BRP) mines of Madhya Pradesh State Mining Coproration with 33.55% and Ltd., RSMML, Rajasthan State Mineral Development above P2O5 Corpn. (RSMDC) or 27-31% P2O5 content by wt. Of content by wt. On Matton mines to get a mixture having 31.4% and above an average. P2O5 content by wt. On an average. Notification No. M -19011/33/2001-MPR dated 31st January, 2002 I Beneficiated rock (i) Lower grade rocks with +22% but less than 25% phosphate (BRP) P2O5 content by wt. Of RSMDC to get a mixture with 33.55% and having 31.7% and above P2O5 content by wt. On an above P2O5 content average. by wt. On an (ii) Rocks with 25% and above to 27% P2O5 content by average. 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 mine s 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. 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. Source of origin Rajasthan State Mines & Minerals Limited (RSMML)

Rock imported Jordan.

from

RSMML

Rock Syria

imported

from

BRP from RSMML and blending rock from Madhya Pradesh State Mining Corpn. Ltd. (MPSMC)

Rock imported from Jordan and blending rock from MPSMC.

Rock imported Egypt.

from

BRP from RSMML. Blending rock from MPSMC, RSMDC, RSMML and Hindustan Zinc. Ltd. (HZL).

BRP from RSMML. Blending rock from RSMDC and RSMML.

Jordan rock with 32% and above P2O5 content by wt. On an average. Notification No. 19011/33/2001-MPR dated 13th May, 2002 Israeli Rock K Not applicable phosphate with 32% P2O5 content and above by wt. On an average.

Rock imported from Jordan and blending rock from RSMML.

Rock phosphate imported from Israel.

96

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Notification No. M-19011/33/2001-MPR (Vol.II) dated 23 rd April 2003 Beneficiated rock Lower grade rock with P2O5 content 29% by wt and BRP from RSMML. phosphate with above with 2.78% average iron oxide content of MPSMC Blending rock from L Hirapur Mines of to get a mixture of 31.4% on an average. 33.5% P2O5 content MPSMC. by wt on an average. Notification NO.19011/33/2001-MPR dated 14.12.2005 Beneficiated Rock Phosphate with 30.2% P2O5 produc ed by M/s. Krishana Phoschem Ltd., 115-118, AKVN M Industrial Area, P.O. Meghnagar, Jhabua, Madhya Pr adesh 19011/33/2001-MPR dated 19.9.2006 (Notified on 19.9.2006) Beneficiated rock RSMMLphosphate (BRP with 33.55% and above P2O5 content by wt. On an average. 19011/33/2001-MPR (Vol -II) dt. 8.5.2007 Primary grade of Rock Phosphate of Vietnam with 34% P205 content by weight on an average. 19011/33/2001-MPR (Vol -II) dt. 30.10.2007 Primary grade of Rock Phosphate of Algeria with 31. 2% P205 content by weight on an average. 19011/33/2001-MPR (Vol -II) dt. 19.11.2007 Primary grade of Rock Phosphate of Egypt with 31.02 % P205 content by weight on an average. Notification No. 19011/33/2001-MPR (Vol.II) dt. 15.6.2009 Beneficiated Rock Phosphate with 31% P2O5 produced by M/s. BEC fertilizers Ltd., Bilaspur Chhattisgarh F.No. 19011/33/2001 -MPR dated 3.1.2011 (i) Blend of primary Rock Phosphate of Nauru of 37.70% P2O5 with secondary Rock Phosphate of Egypt of 28.02% P2O5, in the ratio of 30% minimum P ( rimary Rock Phosphate) and 70% maximum (Secondary Rock Phosphate). Blend of primary Rock Phosphate of Togo of 36. 16% P2O5 with secondary Rock Phosphate of Vietnam with 26.8-27.13% P2O5 in the ratio of 50% minimum (Primary Rock Phosphate) and 50% maximum (Secondary Rock Phosphate).

O P Q R

(ii)

(iii) Rock Phosphate of Israel with 31% P2O5. (iv) Blend of primary Rock Phosphate of RSMML of 31.5% P2O5 with secondary Rock Phosphate of Egypt with 30% P2O5 in the ratio of 60% minimum (Primary Rock Phosphate) and 40% maximum (Secondary Rock Phosphate). (v) Blend of primary Rock Phosphate of Nauru containing 38.5-39% P2O5 with secondary Rock Phosphate of Vietnam with 26-28% P2O5 in the ratio of 30% minimum (Primary Rock Phosphate) and 70% maximum (Secondary Rock Phosphate).

Beneficiated Rock Phosphate having 31% P2O5 contentproduced by M/s Shiva Fertilizers Ltd. Nanded, Maharashtra (now known as Shiva Global Agro Industr ies Ltd.) F.No. 19011/33/2001 -MPR dated 29.4.2011 Primary grade of Rock Phosphate of Maton Mines of Hindustan Zinc Ltd., Udaipur with 31.5% P2O5 content by weight on an average. .

ANNUAL REPORT

97

ANNEXURE-XII

PROFITABILITY OF THE PUBLIC SECTOR UNDERTAKINGS UND ER THE ADMINISTRATIVE CONTROL OF DEPARTMENT OF FERTILIZERS
Net Profit (+)/ Net Loss (-) (in Rs crores)

Name of Undertaking

2007-08

2008-09

2009-10

2010-11

2011-12 (upto Dec11)

(-)443.74

Fertilizer Corporation of India limited (FCI) Hindustan Fertilizer Corporation Ltd (HFCL) Rashtriya Chemicals and Fertilizers Limited (RCF) National Fertilizers Limited (NFL) Project and Development India Limited (PDIL) The Fertilizers and Chemicals Travancore Limited (FACT) Madras Fertilizers Limited (MFL) Brahmaputra Valley Fertilizer Corporation Limited (BVFCL) FCI- Aravali Gypsum and Minerals India Limited (FAGMIL)

(-) 1504.83

(-) 752.60

(-) 585.86

(-)508.09

(-)1101.98

**4841.16

(-)382.47

(-)382.28

***(-)300.19

158.15

211.58

234.87

245.12

135.73

109.00 12.26*

97.00 14.82

171.51 14.48

139.00 21.02

69.88 15.70

8.97

42.95

(-)103.83

(-)49.33

(-)14.42

(-)134.85 (-)105.83

(-)145.38 (-)215.04

6.88 (-) 27.86

169.86 (-)85.09

111.43 (-)78.28

7.54

9.04

8.67

24.05

8.21

*Pre-Tax Profit **Book Profit is due to write back of interest on Government of India loan ***Unaudited

98

92 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

ANNEXURE-XIII EMPLOYMENT OF SC/ST, EX- SERVICEMENT, PHYSICALLY HANDICAPPED & OTHER BACKWARD CLASSES (OBCs) PERSONS IN PUBLIC SEC TOR UNDERTAKING/CO-OPERATIVE SL. NO. NAME PSU OF GROUP TOTAL NO. OF EMPLOYEE S SC 1. NFL A B C D TOTAL A B C D 1623 1938 827 137 4525 297 178 266 356 508 210 108 1182 39 35 98 ST 81 157 41 3 282 3 3 1 NO.OFEMPLOYEES BELONGING TO

2.

MFL

EX.SE WO GEN P.Hs OBC R MEN 81 4 9 113 31 23 110 32 15 7 1 3 282 NIL NIL 68 50 1 26 1 9 12 3 68 -

3. 4.

FAGMIL PDIL

5.

RCF

TOTAL TOTAL A B C D ON CONTR ACT TOTAL A B C D TOTAL A B C D D-S TOTAL A B C D TOTAL

741 86 413 33 32 NIL 67

172 14 48 4 9 NIL 9

7 4 20 0 0 NIL 3 23 47 78 121 11 257 10 54 18 17 0 99 26 49 86 3 164

12 NIL

NIL NIL

NIL 5 NIL NIL

103 7 62 2 7 NIL 13

545 1472 1276 1275 121 4144 471 1441 653 612 21 3198 306 287 472 22 1087

70 224 164 171 17 576 76 183 78 86 7 430 28 26 28 4 86

1 3 1 2 7 0 12 20 4 0 36 2 1 3

8 6 17 4 35 4 27 9 31 1 72

84 111 8 175 47 341 68 396 268 258 10 1000 80 92 164 3 339

6.

FACT

7.

BVFCL

47 317 121 807 40 289 6 251 14 4 228 1668 - - - 3 - - 3

ANNUAL REPORT

99

SUMMARY OF AUDIT OBSEVATIONS PERTAINING TO DEPARTMENT OF FERTILIZERS Audit Report No. CA 3 of 2011-12 National Fertilizers Limited Para 8.1 Marketing of products Though the Company ranks as the second largest producer of urea in the country with a market share of 16.8 per cent of total urea production, there is still scope for improvement. E ff i c i e n c y a n d c o s t effectiveness was not visible where marketing and sale of its products was concerned as marketing expenses on sale of urea led to under recovery of Rs. 15.04 crore during 2007-08 to 2009-10, while untimely import of Muriate of Potash led to a loss of Rs. 86 lakh with stocks remaining unsold till February 2010. Also sale of industrial products below their cost of production led to a loss of Rs. 7.06 crore during the period under review. Further, where marketing operations like handling, transportation, warehousing etc. were concerned the Company continued to incur secondary freight expenditure in violation of the New Policy of Uniform Freight Subsidy which resulted in non-recovery of Rs 8.34 crore. Also, allowing credit in excess of limits and without obtaining security resulted in blocking of funds. Non-renewal of handling and transportation contract on aregular basis resulted in delay in awa4d of contact and award of contracts on a single tender basis. Rashtriya Chemicals and Fertilizers Limited Para 8.2 Project implementation Audit examined the projects implemented by Rashtriya Chemical and Fertilizers Limited during 2007-08 to 2009-10. Delays were observed at different stages of the project starting from tendering to award of contract in each of the contract and resulting in cost over run despite a creation of a dedicated cell to monitor the progress of the projects. The

ANNEXURE-XIV

delay had resulted in cost over run of Rs. 68.35 crore (March 2010). Moreover the slippages in the project schedule also affected the marketability of the project due to change in the market conditions. Besides there were deficiencies in the selection of the vendor, non-evaluation of capability of vendor, non-conducting of market study, nonidentification of viable associate, noncompliance with Board directive on tendering and unproven technology. Thus the project deliverables envisaged during conceptual stage could not be realised due to inadequate monitoring. Summary of important audit observations printed in the report of the CAG of India Union Government (Civil)-No. 8 of 201112-Peformance Audit of Fertilizer Subsidy 1. Assessment of Fertilizer Requirements We found that the process of detailed assessment of fertilizer requirements was flawed. No minutes of the deliberations of the seasonal Agriculture Zonal Inputs Conferences were maintained by the Department of Agriculture and Co-operation, in the absence of which the justification for the State-wise and month-wise requirement of major fertilizers could not be ascertained. This was further confirmed by the Statespecific audit findings, which revealed that requirements of fertilizers were generally projected by an increase of 5 to 10 per cent over the previous season's / year's requirements, and indicated that no scientific method was followed for assessing the requirement of fertilizers. In most States, the requirement of various types of fertilizers were projected at the level of the State Directorate of Agriculture only (without input from the District and lower levels) and not

100

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

based on the availability of irrigation facilities soil health and other local factors. Further, in most States, testing of soil health, which would facilitate determination of the correct dosage of fertilizer nutrients, covered only a fraction of the agricultural land holdings. 2. Fertilizer projection, import and Consumption We found that the assessed requirement of fertilizers went up by more than 70 per cent during the 11 year period from 1998-99 to 2008-09, total production went up by just 11 per cent, while imports went up by nearly 236 per cent. Despite the huge amount of subsidy (increasing from Rs. 11,387 crore in 1998-99 to Rs. 96,603 crore in 2008-09), the production of fertilizers increased only marginally from 269 lakh MT to 298 MT. Changes in the subsidy regime, including States I to III of the New Pricing Scheme (NPS), have failed incentivize increase in domestic production of fertilizer. Increased consumption of fertilizer is, thus, largely met through increased fertilizer import. This leaves the country dependent on imports, whose pricing is volatile. The subsidy/ concession on imported fertilizers over 199899 to 2008-09 increased from 3 per cent to 47 per cent of the total subsidy. The production of urea during the 11 yea period from 1998-99 to 2008-09 registered a negligible increase of just 3 per cent. Although the change in urea subsidy policy from individual unit-based pricing under the Retention Price Scheme (RPS) to group based pricing under the new Pricing Scheme (NPS) resulted in a substantial shift from naphtha-based urea production to gas-based urea production. It did not result in a significant increase in either capacity or production of urea. Increased consumption of urea was met primarily through imports. Further, the weighted average cost of production of urea increases substantially by

81 per cent to 120 per cent, post the NPS. Even the conversion of naphtha units to gasbased units did not result in a reduction in the cost of production. Also, despite the group approach of NPS, the pre-set norms for energy consumption (which represents the single larges component of the cost of production of urea) varied from unit to unit within the same group. As regards phosphatic fertilizers, although the capacity nearly doubled from 1998-99 to 2008-09, actual production of DAP and NPK complexes increased by only 30 per cent. In fact, the production of DAP came down substantially. However, the indigenous production of phosphatic fertilizers is largely based on imported raw materials/ intermediates. The increase in consumption of DAP/ MAP/ NPK complexes was met primarily through imports fat very high prices, which led to multi-fold increase in the subsidy burden. As regards Potassic fertilizers, the country's requirement is met fully through imports. We found that, instead of curbing further imports and drawing down on available stock as of March 2008, the Ministry imported an additional 57 lakh MT of MOP (43 lakh MT as per expenditure figures), with an avoidable addition to the subsidy burden of about Rs. 10,000 crore. On the consumption front, while there was a consistent gap between consumption of assessed requirements, the consumption figures broadly tracked the total availability of fertilizers (production + import), indicating that whatever fertilizer was available was readily consumed. While this is most likely on account of the highly subsidised price, this also confirms the lack of assessment of requirement on a scientific basis. While fertilizer consumption increased by 46 per cent from 2003-08 to 2008-09, the major

95 ANNUAL REPORT

101

components of agricultural production (foodgrains, oilseeds and sugarcane) increased by just 16 per cent over the same period, indicating a relatively weak correlation. Also, the pattern of fertilizer consumption across different States was highly skewed, with States like Andhra Pradesh, Punjab, Haryana and Bihar having high consumption rates while Madhya Pradesh, Orissa, Assam and Jharkhand had very low consumption rates. There was a fairly high degree of correlation between the consumption rates and the proportion of irrigated area; the higher the proportion of irrigated area, the higher the rate of consumption of fertilizers. For example, Punjab with 98 per cent irrigated area consumed 221 Kg/ha in 2008-09, while Jharkhand with 10 per cent irrigated area consumed only 56 kg/ha. It may be noted that data on fertilizer consumption is based only on first point sales at the district levels and does not taken note of actual consumption (let alone purchases) by individual farmers for agricultural purpose; to that extent, the fertilizer consumption data is unreliable. Also, despite huge amounts of subsidy/ concession, we found numerous instances of non-availability/shortage of f ertili zers as well as instanc es of overstocking/excess availability of fertilizers, confirming a mismatch between supply and requirement at the grassroot level. We also found several instances of diversion of fertilizers for non-agricultural purposes, as well as smuggling of fertilizers in border districts in the Eastern/North-eastern States. 3. Payment of Subsidy Claims Fertilizer units/importers are eligible for subsidy payments when fertilizers are despatched to the first stocking points in the district, and details of despat6ch are uploaded onto the web-based Fertilizer Management System (FMS). However,

there is no mechanism for reconciliation of unit-wise and district-wise despatch data with corresponding data on receipts at the first stocking point in the districts. We attempted a limited reconciliation exercise on a sample basis for 2008-09 (April 2008 to December 2008) which revealed that 48624 MT of fertilizers valuing Rs.83 crore stated to have been despatched by the manufacturing units were not recorded a received at the 1st stocking points in various states. In our opinion, the requirement for certification in Performa 'B' by the State governments of sales of decontrolled fertilizers for agricultural purposes (notwithstanding the inadequacies in the certification process) is the only major control over end-use of fertilizers. Linking certification with release of balance payment of 10/15 per cent (with the penal clause providing for bank guarantee for 100 per cent of unadjusted concession) provided clear incentive/disincentives for ensuring timely submission of Performa 'B'. With the removal of such a linkage from June 2007, there is no longer adequate incentive to ensure certification by the competent authorities (viz. the State Governments) of end-use of decontrolled fertilizers for agricultural purposes. This resulted in accu7mlation of outstanding Performa 'B' for the years 2007-08 to 2009-10 of Rs. 50,587 crore. Further, in most of the States, verification of sales for agricultural purposes (which would provide assurance of proper end-use of subsidy) was non-existent or inadequate, as it did not involve physical verification of stocks or sales beyond the 1st point sales,. And in many cases not even verification of receipts, invoices etc. Further, although the subsidy was released on the basis of the receipt of fertilizers at district level and the freight

102

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

subsidy was paid upto block level, there was no state level mechanism for physical verification of the confirmation of receipt at district, block and consumer levels. We also found deficiencies in licensing and other arrangements for sale of fertilizers. Records relating to the import of urea on Government account for the period 2005-06 to 2008-09 from the Department of Fertilizers and import of DAP by IPL on Government instructions during 2007-08 from IPL were not provided to audit. Based on the records relating to fertilizer imports provided to us, we found certain irregularities in import of DAP by IPL, as well as certain discrepancies between imports and corresponding supply of DAP by IPL. We found a disturbing trend of increasing consumption of subsidised fertilizers (urea, DAP, MOP etc.) by mixing units in several States. This resulted in breaking of the subsidy chain, since the prices of mixtures fare generally higher and subject to varying levels of license and regulation/ selfregulation in different States. Further, the fertilizer consumed by these mixing units is at the expense of the ordinary farmer. Control over quality of fertilizer mixtures is also minimal, exposing unsuspecting farmers to the risk of sub-standard quality mixtures. 4. Quality Control We found that the fertilizer quality testing infrastructure in the country was grossly inadequate. The annual capacity of the existing quality control laboratories was only 25 per cent of the required capacity for testing of samples from all sales outlets twice a year (i.e. once each for rabi and kharif). Further, many of the laboratories were deficient in terms of both physical and human infrastructure. Consequently, there was significant shortfall in the actual number of samples tested vis--vis both the target as

well as the capacity of the laboratories. Also, the stipulated time limits for sending of samples to the quality control laboratories, sending of analysis reports by the laboratories to the concerned authorities and corrective faction thereon were not adhered to in most States, with huge delays. As a result, even when sub-standard quality fertilizer was detected, by the time the analysis reports reached the concerned authorities and action was initiated, the balance stock of the fertilizer lot(pertaining to the sub-standard sample) had already been sold to unsuspecting farmers, who unknowingly used such sub-standard fertilizers. 5. Results of Surveys of Farmers and Dealers The survey of 1092 fertilizer dealers revealed several significant findings. 57 per cent of the dealers indicated that they were not getting the required quantity and type of fertilizers in time. 37 per cent indicated that they were facing problems in transportation in lifting their requirement. Only 51 per cent indicated that they were able to supply fertilizers as pr demand to the farmers in time. As many as 40 per cent of the dealers indicated that samples had not been selected in any of the last three years from their stock for fertilizer quality testing. The survey of 5498 farmers also threw up important findings. 45 per cent of the surveyed farmers indicated that they6 had bought fertilizers at prices higher than the MRPs, while 56 per cent indicated that they did not know that MRPs for fertilizers fixed by the Government. 59 per cent of the farmers faced problems for getting their full requirement of fertilizers in a timely fashion. 55 per cent of the surveyed farmers expressed their need for fertilizers in small quantity bags (contrarily, only 40 per cent of

ANNUAL REPORT

103

the surveyed dealers indicated that farmers were demanding small quantity bags); 51 per cent indicated that they did not have enough money to buy their full requirement of fertilizers.76 per cent of the surveyed farmers had not got their soil tested for scientifically ascertaining the requirement of fertilizers. 6. Conclusion In spite of massive amounts of expenditure by Gol on fertilizer subsidy/ concession, annual production of fertilizers increased only marginally from 284 lakh MT in 2003-04 to 298 lakh MT in 2008-09. Changes in the subsidy regime, have failed to incentivize significant increase in domestic production of fertilizer. Overall, the increased consumption of fertilizer is, thus, largely met through increased fertilizer import. The process for detailed assessment of fertilizer requirements was flawed, with the general practice being merely projections of increases of 5 to 10 per cent over the previous season's/ year's requirement. Further, first point sales wer e being treated as consumption for purposes of passing on fertilizer subsidy. There were significant deficiencies in planning of fertilizer supplies, with several instances of both over-supply and undersupply at the district and lower levels, with consequential excesses/shortages of the

required fertilizers at the time when the farmers needed the same. Even the prescribed checks for verification of sales of decontrolled fertilizers by the State Government sere largely restricted to first point sales, and were not performed at block and lower levels and to the ultimate consumers i.e., the farmers. There was no physical verification of sales and stocks (even on a sample/percentage basis). The consumption of subsidized fertilizers by mixing units in different States represents a major flaw in the subsidy chain, since these units consu8me subsidized fertilizers, but sell mixtures at higher rates and are subject to var ying levels of license/ r eg ulat ion/ self=regulation in different States(without any Central control). We also found significant deficiencies in quality control over subsidized fertilizers in terms of inadequate/ poor infrastructure, lack of adequate skilled manpower, and huge shortfalls in testing of fertilizer samples. Consequently, we find it difficult to derive assurance that the huge expenditure incurred on fertilizer subsidy payment to manufactures/ importers of fertilizers actually result in full availability of high quality fertilizers as per requirement at the stipulate subsidized prices in a timely manner to the farmers.

*****

104

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS