Fertilizers & Chemicals Travancore Ltd

Dear Shareholders,

I am pleased to present the 80^thAnnual Report of FACT for the financial year 2023-24, highlighting the Company's physical and financial performance.

I would like to begin by expressing my heartfelt gratitude to each of you for your unwavering support and investment in FACT. Your steadfast confidence in us drives our pursuit of new milestones and achievements.

PERFORMANCE OVERVIEW

The financial year 2023-24 was challenging for the fertilizer industry, marked by volatility in the international market and unfavorable climatic conditions. Despite these obstacles, FACT achieved a turnover of Rs.5054.93 crore and a profit of Rs.147.17 crore. Your Board has recommended a Final Dividend of Rs. 0.97 per equity share.

FACT demonstrated resilience with impressive production levels, achieving 10.70 lakh MT of fertilizer production in 2023-24, including 8,27,717 MT of Factamphos and 2,42,577 MT of Ammonium Sulphate. We also produced 34,662 MT of Caprolactam.

Total sales across all fertiliser products reached 11.76 lakh MT for 2023-24, reflecting an 18% growth compared to the previous year's sales of 9.96 lakh MT, despite adverse climatic conditions and stiff competition. FACT achieved sales of 8,21,012 MT of Factamphos, 2,22,353 MT of Ammonium Sulphate, 34,841 MT of Caprolactam, and 1,06,906 MT of imported fertilizers.

The highly competitive product pricing, rise in cost of raw materialsand the revised Nutrient Based Subsidy (NBS) rates have impacted revenue. Additionally, adjustments for NBS revisions, recovery of profits and naphtha compensation^ prior years, were accounted for in 2023-24.

FACT successfully implemented various government programs, including PMKSK, PM-PRANAM, PM-Mahila Kisan Drone Kendra, Viksit BharatSankalpYatra, and the Community Radio Program.

Expansion and Market Development

As part of our market expansion and territory reorganization efforts, new zones have been established in Andhra Pradesh, Telangana, and Odisha. Additionally, operations have commenced in Maharashtra.

Our Engineering and Consultancy Divisions continue to undertake and implement both internal and external projects, adding further value to FACT's performance.

ECONOMIC SCENARIO

India, the world's second-largest consumer of fertilizer after China, plays a crucial role in the global agricultural economy. The fertilizer industry is essential for the production of key agricultural inputs.

The Indian fertilizer industry is on a robust growth trajectory, projected to reach a market size of Rs.1.38 lakh crore by 2032, with a Compound Annual Growth Rate (CAGR) of 4.2% from 2024 to 2032.

Government initiatives, such as direct income support schemes from both central and state governments, have enhanced farmer liquidity, leading to increased investment in fertilizers. Geopolitical factors have influenced India's fertilizer market, prompting the government to prioritize domestic production of nano urea and nano DAP to reduce dependency on imports.

FERTILIZER SECTOR

The rising consumption of resources underscores the need to enhance agricultural productivity to meet the growing global demand for food. The fertilizer sector in India is integral to the agricultural industry, responsible for producing and distributing fertilizers essential for crop growth and soil fertility.

MARKET CAPITALIZATION

FACT's robust performance has resulted in a market capitalization exceeding Rs. 70,000 Crore recently, reflecting the Company's strong presence in the market. Our stock price has outperformed the sector, showcasing our potential for growth in the fertilizer industry.

FUTURE OUTLOOK

FACT is well-positioned for continued success in delivering consistent and sustainable growth. We firmly believe that reinforcing our core business is pivotal for ensuring the long-term sustainability of FACT. Our business can expand beyond its traditional market through added production, product diversification, improved quality, customer service and deeper customer connect, underscoring our commitment to sustainable growth and positioning ourselves as a leader in emerging growth areas. Toward this end, FACT is implementing various schemes.

The Company plans to increase fertilizer trading activities this year.

In addition to the long term RLNG supply agreement with Indian Oil Corporation Ltd., we have been able to reliably source Sulphur and Benzene from domestic suppliers.

With the establishment of a 1650 TPD NPK plant and the implementation of various CAPEX projects which are in the pipeline, your Company is expected to increase fertilizer production from 10 lakh MT to 15 lakh MT per annum, significantly boosting turnover and profit.

Our R&D efforts are focused on developing new fertilizer formulations to drive future growth.

CORPORATE GOVERNANCE

FACT consistently strives for transparency in all business activities, adopting the best procedures and policies. We are committed to adhering to Corporate Governance standards in their true spirit, with the Board of Directors dedicated to maintaining transparent business practices that enhance stakeholder value. Accordingly, FACT has consistently been rated as 'Excellent' for compliance with the DPE Guidelines on corporate governance.

FACT is also dedicated to complying with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, on corporate governance, as well as the Corporate Governance guidelines for Central Public Sector Enterprises issued by the Department of Public Enterprises, Government of India.

The Company prioritizes ensuring clean air and a better living environment for the communities surrounding our plant areas. The safety and well-being of our employees are also of utmost importance. We continuously provide training for all categories of employees to ensure their development and contribution to the stable growth of FACT.

CORPORATE SOCIAL RESPONSIBILITY

As a responsible corporate citizen, FACT prioritizes social responsibility and developmental initiatives in collaboration with the public administration in surrounding areas. CSR Fund of Rs. 1,662.46 Lakh was spent during the year for CSR activities across various projects, primarily focusing on Rural development, Women empowerment, Health and Nutrition, Promotion of Education, and Sanitation. As part of our Swachhata drive, cleanliness initiatives were conducted to ensure a healthy and hygienic environment. FACT also engaged in various Government initiatives for modernising farming. FACT is also actively involved in educating farmers on the balanced use of fertilizers for sustainable development and livelihood enhancement.

CHALLENGES & OPPORTUNITIES

The year 2023-24 posed significant challenges for the fertilizer industry, characterized by international market volatility and adverse climatic conditions. All major fertilizer inputs are being imported, and the prices remain highly volatile.

FACT has a robust infrastructure, including a dedicated berth for importing raw materials and facilities for the transportation of fertilizer inputs via road and waterways. FACT also has an extensive market network in South India, with about 5,500 dealers. There is potential for expansion into other states, diversification into manufacturing other fertilizer grades, and venturing into the production and trading of various chemicals.

ACKNOWLEDGMENTS

On behalf of the Board of Directors, I wish to express my sincere gratitude to you, our esteemed shareholders, for your ongoing support and trust. Your confidence motivates us to excel in all our endeavors and consistently create value for both you and the nation.

I am also grateful for the unwavering support and invaluable guidance provided by various departments of the Government of India, particularly the Department of Fertilisers, Ministry of Chemicals and Fertilisers, and the Government of Kerala. My sincere thanks extend to our employees, Officers' Forums, Trade Unions, Auditors, Consumers, Suppliers, Bankers and all other stakeholders for their continued cooperation.