Madras Fertilizers Limited (MFL)

1.   Overview 

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 acquired 50% of the AMOCO’s share and the shareholding pattern became 51% GOI and 24.5% each of AMOCO and NIOC.

In 1985, AMOCO disinvested their shares, which were purchased by GOI and NIOC in the proportions of their respective shares as 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 of the Project, the share holding of GOI & NIOC stand at 69.78% and 30.22%.

During 1997, MFL had 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.  The present Paid up share capital and the shareholding pattern are as follows:

Shareholder 

Paid Up Capital  

(Rs. in Cr) 

Share Holding 

% 

GOI

95.85

59.50

NIOC

41.52

25.77

Public

23.73

14.73

Total

161.10

100.00

 

Though the  Company has an authorised share capital of Rs. 365 Cr comprising of Rs. 175 Cr as equity and Rs. 190 Cr as preference share capital, the preference share capital is yet to be issued and subscribed.  As on 31.03.2014, the paid up equity is Rs. 161.10 Cr.

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 for Urea and also adopted Tariff Committee Recommendations for the Complex fertilizers.  In the year   2003-04, the accumulated loss eroded the total net worth and therefore the Company was referred to BIFR.  However with implementation of Amendment to NPS III w.e.f Apr 01, 2009 and also with improvement in plant performance, Company’s operations became viable and started earning profits from 2009-10 onwards. 

 

Reference to BIFR

Board for Industrial and Financial Reconstruction (BIFR) has registered the Company as Case No.501/2007 and declared it 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 Rehabilitation Scheme (DRS).

The initial  proposal submitted by OA with an option of write-off of GOI loan outstanding principal and interest was not approved by the Planning Commission as well as Department of Expenditure.  BIFR at its hearing on May 7,  2012, directed OA to submit a fully tied-up DRS with various options by organizing a joint meeting with the stakeholders to get their consent along with the approvals from the Ministries concerned. 

DOF organized a joint meeting with the various Ministries during June 2012 and arrived at the option of the total waiver of interest and penal interest and 40% waiver of GOI loan principal as of 31.3.2012. Accordingly, the Company prepared a draft DRS considering   total waiver of interest and penal interest and 40% waiver of GOI loan principal and submitted to BIFR and stakeholders. BIFR at its hearing held on August 27, 2012, directed the OA to submit DRS after obtaining consent from M/s.Naftiran Intertrade Co Ltd (NICO, Co- Promoter) and various Ministries.

As per the directives of the BIFR, DOF had prepared a BRPSE note based on the reply given by the Company for the queries raised by various Ministries viz. Department of Expenditure, Department of Public Enterprises and Planning Commission. 

a) Based on the decision taken by Chairman (BRPSE) on 13.8.2013, a meeting was convened by Secretary (Fertilizers) & Secretary (BRPSE) on September 4, 2013 to identify a workable solution for making operation of the company economically viable since existing revival proposal did not get support from stake holding ministries. It was felt that existing proposal would not substantially reduce energy consumption and hence an alternate proposal need to be put up.

b) The alternate proposal of (a) Continuation of existing dispensation for Urea and NPK till conversion to Gas (b) Waiver of entire interest on GOI loans (c) Repayment of outstanding GOI loan in full (Rs. 554 Cr) in 10 equal yearly installments (interest rate of 4% p.a.) after two year moratorium was not found to be sustainable on long term basis.

c)  Company then suggested setting up of a new large capacity, gas based  Ammonia/Urea plant by 2017-18 since gas is expected to be available by 2016-17 when Ennore LNG Terminal is commissioned. Till that time, Company plans to seek approval of Government to permit operating the existing Plant with Naphtha as feedstock and thereafter permit the Company to invest  Rs. 4500 Cr for the new plant (2,200 MTPD Ammonia & 3,850 MTPD Urea) using latest technology, so that urea can be produced with specific energy consumption of 5.0 Gcal/MT. In this case Government would lose in first four years when naphtha based operation is supported but it would gain in subsequent years when new gas based plant becomes operational. 

d)  In light of above, Company has proposed a revised restructuring proposal to BRPSE  consisting of the following :

 

Waiver of liabilities

  • Outstanding loan worth Rs. 554.24 Crore (as on 31st December 2013)
  • Outstanding interest worth  Rs. 331.66 Crore along with penal interest thereon (as on 31st December 2013)

 

Liberal and flexible Govt. Policy

  • Continuation of special dispensation in pricing mechanism under NPS stage III upto conversion to Natural Gas
  • Continuation of additional subsidy for sourcing “N” through Naphtha based Captive Ammonia Under NBS upto conversion to Natural Gas.

 

In the meantime, BIFR hearing scheduled to be held on January 13, 2014 has been postponed.

 

2.   Vision / Mission 

VISION

Our vision is to become a significant player aiming to set benchmark standards and to bring a positive force in the industry in particular Southern Region through our sheer performance and unstinted growth

 

MISSION

    To ensure timely availability of quality fertilizers and keep flagship product ‘VIJAY’ as the farm hold name

    To play a significant role for sustainable agricultural productivity with focus on Integrated Plant Nutrient Management

    To provide employees with an exciting, enabling and supportive environment to be innovative and entrepreneurial in an ethical working place based on meritocracy and equal opportunity

    To be a committed Corporate Citizen in protecting the environment, complying with Safety Standards and Corporate Social Responsibility

 

3.   Industrial / Business operations
a.     Financial Performance

                                                                                                                                                                                           (in Cr Rs.)

Parameter

2012-13

2013-14 (provisional)

Total Income

2346.24

2593.22

Profit before tax

24.44

105.45

Net Profit

24.44

105.45

Dividend

Nil

Nil

Net-worth

(306.23)

(200.78)

 

b.    Physical Performance

                                                                                                                                  (in MT)

 

Annual Capacity (MT)

Production Details (MT)

Pre-Revamp

Post-Revamp

2012-13

2013-14

Ammonia

2,47,500

3,46,500

2,60,804

2,85,925

Urea

2,92,050

4,86,750

4,35,771

4,86,750

NPK

5,40,000

8,40,000

1,00,125

44,860

During 2013-14, the Company produced 147.22 MT of Bio-fertilizer. Production of Bio-fertilizer is limited to sales.

 

4.   Performance Highlights 

 

  •       For the First Time since inception:
  •          Highest Urea Production:
  •                486750 MT - 100% Capacity Utilization
  •          All-time low energy consumption:
  •         10.086 Gcal/MT Ammonia & 7.386 Gcal/MT Urea  (10.334  Gcal/MT Ammonia & 7.492 Gcal/MT Urea during 2010-11,                  10.908 Gcal/MT Ammonia & 7.822 Gcal/MT Urea during 2012-13)
  •         Highest Number of days:
  •                 Urea Plant crossed day’s installed capacity (1475 MTPD) on 284  days  (last best: 267 days)

 

 

  •         Highest Rate:
  •                Urea production per on-stream day: 1546 MTPD 

 

               (last best: 1524 MTPD)

 

5.   Strategic issues 

  • Stoppage of subsidy for Naphtha based Urea Plants from 01.07.2014 is a major strategic issue having very high impact on viability of MFL Plant.
  • Conversion to Natural Gas feedstock depends upon the availability of LNG at Chennai.
  • In order to sustain its operation, MFL has to concentrate on production and marketing of NPK complex fertilizers using imported Ammonia.
  • MFL is contemplating to source cheaper Ammonia by having tie-up with CIL.  Also, tender has been floated for supply of Ammonia on import parity price.
  • In the present fertilizer marketing scenario, farmers purchase capability has come down due to exorbitant rate of Phosphatic fertilizers.  Hence, marketing has proposed to produce and market Granulated Mixture Fertilizers for the farmers who prefer low cost fertilizers.
  • Under basket approach, presently we are marketing Vijay Organic Manure and Vijay Neem along with Bio-fertilizers produced by MFL.  All the above products would be marketed in a larger way so as to improve and sustain Organic / Eco friendly farming.
  • Company is contemplating trading of Agro Chemicals with latest molecules from reputed agro chemical manufacturers so that it can make good profit. 

 

  • Since there is a huge Demand – Supply gap for Urea, organisations who have urea shall have strategic marketing advantage to sell all other agro inputs. Hence, MFL request DOF to allot imported Urea for trading to the extent of its installed capacity.

 

6.   Human Resources Management

 

a.  Manpower as on 31.3.2014

Group

Total Employees

Number of employees belonging to

 
 
 

SC

ST

EX-SERVICEMEN

PH

OBC

 
 

A

282

54

2

-

2

12

 

B

237

50

3

1

-

8

 

C

215

74

1

9

3

67

 

D

-

-

-

-

-

-

 

TOTAL

734

178

6

10

5

87

 

 

Redressal of Public Grievances and Welfare measures

i.  Welfare of Minorities

Minority representative has been nominated in all the selection committee of MFL as per the guidelines of the DOPT.

ii.  Welfare, Development and Empowerment of Women

MFL is providing equal opportunities at large for the women employees.  Womens’  Forum is active in MFL and womens’ day celebrations are conducted at MFL with much fanfare.  The women employees are given opportunities to participate in external seminars and delegations. To promote gender equality, MFL is conducting sports events periodically, exclusively for women employees, and distributing prizes to encourage and motivate them.

4 women employees from MFL were nominated for the Regional Meet of Forum of Women in Public Sector (WIPS) held in Nov 2012 at Cochin Shipyard Limited, Kochi.

3 women employees from MFL for were nominated for the 23rd National Meet of Forum of Women in Public Sector (WIPS) held on Feb 12 & 13, 2013 at New Delhi, hosted by SCOPE.

15 women employees from MFL were nominated for the Southern Region Annual Meet held on Nov 29, 2013 at Hotel Ambassador Pallava, Egmore, Chennai.

3 women employees from MFL participated in the 24th National Meet of Forum of Women in Public Sector (WIPS) held on Feb 11 & 12, 2014 at Kolkata, hosted by SCOPE.

iii.  Welfare of SCs and STs

13 SC Contract Labourers working with our existing Janitorial contract have been appointed as Plant Attendant Trainees.  On completion of  2 years of training, they will be absorbed in Grade I position.  During the first year of training period, they will be paid with a consolidated amount of Rs.15,000/- p.m and second  year of training period, they will be paid with a consolidated amount of Rs.16,500/- p.m.

GM - P&A’s position falls under SC point under direct recruitment.  Per recruitment Policy, GM - P&A was appointed and confirmed in E8 Scale of Pay.

Recasting of roster effective 02/07/1997 was completed during April 2013.  27 SC employees benefited due to recasting of roster, by way of promotion / pre-ponement of promotions.

Position

No of employees benefited

E1

12

E2

14

E3

1

 

          Recruitment and Training (2013-14)

The following recruitments were made during 2013-14:

Name of the Position

No. of Employees recruited

General Manager – F&A

1

Dy.General Manager – P&A

1

Technical Assistant (Operations)

8

Lab Analyst

7

Total

17

7. Corporate Social Responsibility and Sustainable Development (CSR/SD)

Towards Corporate Social Responsibility, the Company provided budget for the following activities during the year:

Program 

Plan for 2014-15 

Projection 

Apr-Sep 2014 

 (Nos.) 

Projection 

Oct’14 - Mar’15 

(Nos.) 

Annual Budget 

 

 () 

Soil Sample collection – Micro Nutrient

5500

3300

2200

 

55000

Micro Nutrient

550

330

220

Bio Demonstration

72

44

28

43200

Farmers Contact Program

30500

18300

12200

-

Exhibitions

11

6

5

33000

 

 Sustainability Development  

Potable water pipe line to Public and its Maintenance.

We ensure regular supply of potable water through pipelines from MFL to Harikrishnapuram (Manali), a neighbourhood village (around 500 families).

Servicing of computers  already issued to the   Schools

Based on the need and request from the schools, Service Engineers are deputed for maintenance.

 


Social Related 

Gramin Vikas Trust

Rs.50 lac was paid towards Relief and Rehabilitation activities in the flood affected area of Odisha.

Prime Minister's National Relief Fund

Rs. 25,000/- was sent to Prime Minister’s Relief fund for Relief and Rehabilitation activities in the flood affected area of Uttrakhand.

MFL SC / ST Employees Welfare Association

A sum of Rs.30,000/- was spent for Celebration of Dr AmbedkarJayanthi, by MFL SC / ST Employees Welfare Association, MFL, Manali, Tamil Nadu

Tamilnadu Blind Association

In order to take care of the Blind Association’s interests, MFL is giving indirect revenue by giving small works, related to carpentry and purchase of Janitorial materials.

8.  Awards - Nil
9.  Other Developments

 

     Activities for Gas Conversion:

Heads of Agreement signed with IOCL on 17.09.2013, without any financial commitment, for supply of Natural Gas from IOCL’s proposed Ennore LNG Terminal, which would become operational by the year 2017.

 

MFL requested IOCL to continue supply of Naphtha from CPCL at discounted rate / RLNG rate until gas is made available to MFL.

 

     It is proposed to have a Tri-partite Meeting among IOCL, CPCL & MFL to       arrive at methodology and cost workings, which will be beneficial to all the   three Companies.

 

     On March 5, 2014, MFL CMD once again sent a letter to IOCL’s CMD, requesting them to finalize the issue regarding supply of Naphtha at         discounted rate.

 

MFL has received the draft GSA from IOCL.

 

 

ISO:

Renewal certification audit for ISO 9001:2008 (QMS) was conducted by IRQS during Dec 02 &03, 2013 for MFL production unit.  IRQS have renewed the QMS certification for ISO 9001:2008 for MFL for next three years and issued the Certificate on 30.12.2013.

 

REVIEW OF VIGILANCE ACTIVITIES BY MFL BOARD OF DIRECTORS

 

Vigilance activities for the period July 11, 2012 to July 12, 2013 were reviewed by the MFL Board of Directors at the 268th Board meeting held on July 29, 2013.

 

OBSERVANCE OF VIGILANCE AWARENESS WEEK- 2013 AT MADRAS FERTILIZERS LIMITED

 

As advised by the Central Vigilance Commission (CVC), Vigilance Awareness Week (VAW) - 2013 was observed in Madras Fertilizers Limited (MFL) from 28th October (Monday) to 2nd November (Saturday), 2013. 

 

The observance of VAW commenced by administering pledge to all employees at 1100 Hrs on 28th Oct 13, by Dr. I Vijayakumar, IRS, CMD.  The Pledge was followed by the release of a hand-out by the CMD, which was brought out by the Vigilance Section of MFL on the do’s and don’ts in the Tender Processing, Whistle Blowing and the difference between Judicial and Disciplinary Proceedings. As part of VAW, Lectures were organised for the benefit of employees.Besides the above, Slogan and Essay Competitions were held for employees of the organization.  The theme for Slogan and Essay competition were “Eradication of Corruption” and  “Role of Technology in Curbing Corruption in Public Sector Enterprises” respectively.  To create awareness among the youth and the role they have to play in building a corruption free India, an Essay competition  titled “Role of Youth in Transforming India into a Corruption Free Country” was held for the students of Class XI of St. Thomas Matriculation Hr. Sec. School, Manali, Chennai.    The VAW-2013 was concluded with Prize Distribution Ceremony, by the CMD of MFL on November 6, 2013 (originally slated for 1st November 2013, postponed to 6th November). 

 

FUTURE PLANS OF THE COMPANY

 

The Company is planning to expand its business through Joint Venture or    PPP mode in the  following areas of Projects :

 

Medium Term:

 

1)    MODERN LOGISTICS PARK

 

MFL is nearer to the three ports in the vicinity  which are Chennai Port (16 KM),  Ennore Port (20 KM) and Kattupalli Shipyard-cum-Captive Port (23 KM).  Considering the growing Container Traffic and Warehousing requirements for EX-IM Cargo, MFL is planning to establish a Modern Logistics Park at MFL Plant site by effectively utilizing the vacant land available. MFL is in the process of conducting studies and feasibility through Consultants.  The Consultant M/s/.Mahindra Consulting Engineers Limited has submitted the report (Phase I and II) on feasibility, potential, competition Government Policy and growing opportunity to MFL in the field of Logistics.  The preparation of Phase III report on land use plan, project cost and profitability is in the process by the Consultant.

S.No.

Project

Capacity

Cost (Rs.Cr.)

Benefits

2.

Power Plant

20 MW

140

Self-sufficiency & reduction in energy

3.

Imported Ammonia facility

12500 MT

120

Cost reduction

Long Term:

S.No.

Project

Capacity

Cost (Rs.Cr.)

Benefits

4.

Ammonia / Urea Complex

2800 / 3500 MTPD

 

4500

Higher turnover & profits

5

NPK Expansion

2500 MTPD

450

Higher turnover & profits