Dear Shareholders,
I am happy to share that Government of India has granted the NAVRATNA
Status to Rashtriya Chemicals and
Fertilizers Limited on August 29, 2023. RCF is the first PSU in
fertilizer sector to be elevated to NAVRATNA Category.
This recognition is a testament to RCF team's (Past & present)
dedication and commitment to the chemicals & fertilizers Sector. With the coveted
NAVRATNA Status, RCF further commits itself towards playing a more decisive and I wish
significant you all the best and congratulate all stakeholders of the Company for their
unwavering support and sincere efforts in achieving the NAVRATNA Status.
It gives me immense pleasure to present the 45th Annual
Report on the performance of your Company for the year 2022-23.
India remains to be one of the fastest growing economies in the world
in 2022-23. The growth figures are, in part, attributed to the performance of agriculture
and allied activities surpassing the growth levels of pandemic years. The buoyant
performance of the Indian agriculture sector could be ascribed to the sustained and timely
measures taken by the Central and State Governments to ensure that there was no
interruption in any of the agriculture related activities. This ensured food security not
just for India but also for other countries impacted by the pandemic and geopolitical
conditions. In recent years, the country has emerged as one of the major exporters of
agricultural products with rising share in overall exports since 2019-20
Overview of the Economy
India's GDP growth accelerated to 6.1% in the January to
March 2023 quarter, lifting the economy's uptick in 2022-
23 to 7.2% from the 7% estimated earlier, according to the provisional
national income data released by the National
Statistical Office (NSO).
The outlook for Indian macroeconomic and corporate performance remains
positive, with stronger GDP growth and a notable moderation in inflation. This puts us in
a favourable position compared to many struggling global economies facing low economic
growth and high inflation.
This year, weak El Nino conditions emerged in May. However, normal
rainfall at 96% of the long-term average is forecasted by the Indian Meteorological
Department.
The perceived risk of a global economic slowdown also poses challenges
for India. India is witnessing weakening of operating performance in export-oriented
sectors like textiles and gems & jewellery. However, the negative impact at an overall
economic level is likely to be mitigated by declining import volumes , primarily due to
lower oil prices that have decreased by 37% over the last 12 months.
The ongoing Russia- Ukraine conflict presents the most challenging
variable. While 2022-23 saw sharp rise in commodity prices due to disruptions in energy
supply chains, a new order seems to have settled in 2023-24, supported by mild winters in
Europe and slowing Western economies. However, the risk lies in any unexpected escalation,
which could have severe economic and strategic disruptions.
India's GDP 2023-24 growth is projected at 6.5% for 2023-
24, driven by domestic consumption, government capex, and to some
extent, private capex.
Overview of the Fertilizer Industry
Overall fertilizers production has increased by 11.23% during financial
year 2022-23 as against financial year 2021-22 due to increase in production of Urea, NPK,
DAP & SSP. Imports have increased by 3.03% due to the increase in DAP & NPK
imports.
Production of urea has increased by 13.63% during the 2022-23 as
against 2021-22 due to financial favourable weather and market conditions. Urea is largely
sourced domestically & with revival of urea plants, imports have decreased by 17.03%
during the year 2022-23. Domestic DAP production increased by 2.96% during financial year
2022-23 as against financial year 2021-22. Imports also have risen by 20.52% in financial
year 2022-23 as against financial year 2021-22.
MOP imports have decreased substantially by 24.15% during financial
year 2022-23 as against financial year 2021-22. India meets its Potassium chloride
(commonly referred to as Muriate of Potash or MOP) requirements majorly through imports
from Canada, Russia, CIS+ Belarus, Israel, Germany,
Jordan and Lithuania.
Production of NPK fertilizers in the country have decreased by 11.91%
during the financial year 2022-23 as against financial year 2021-22. NPK imports have
decreased substantially by 135.21% during financial year 2022-23 as against financial year
2021-22.
The production of SSP which is an indigenous phosphatic multi-nutrient
fertilizer increased by 5.48 % during financial year 2022-23 as against financial year
2021-22. SSP is a cheaper alternative to DAP.
Overall sales of fertilizers have decreased by 0.16% during financial
year 2021-22.financial Sales of MOP , NPK & SSP have decreased by 33.83%, 12.25% &
11.69% respectively during financial year 2022 23 as against financial year 2021-22. The
sales of Urea DAP have increased by 4.52% & 13.58% respectively during the financial
22.
The Budget 2023-24 has the vision of future-ready agriculture sector.
Healthy agriculture sector will help in economic growth making the country a developed
nation as envisaged by our Hon'ble Prime Minister. The budget allocation for
fertilizer subsidy is 1,75,103 crores for FY24. Budget for urea subsidy is 1,31,100
crores which is lower by 22,998 crores than the revised BE for 2022-23. Similarly, the
subsidy for P&K fertilizers has also been reduced by 27,122 crores. The reason
behind this reduction compared toRE 2022-23 is significant prices of fertilizer related
commodities & reduction in gas prices. However, adequacy of allocation will depend on
actual international prices of energy, fertilizers and raw materials during the year.
Corporate Overview of the Company
During the year, your Company achieved highest ever Revenue from
Operations of 21451.54 crore as against
12812.17 crore in previous year (PY). Highest ever Profit Before Tax
(PBT) during the year, stood at 1273.98 crore as against 943.91 Crore due to improved
energy efficiencies at Thal Unit, better margins of Industrial Chemicals and complex
fertilizers. Highest ever Profit After Tax (PAT) stood at 967.15 crore as against
704.36 Crore.
Your Company has been designated as State Trading
Enterprise (STE) in October 2019 for Import of Urea dividend ( on
Government Account. Based on the instructions of dividend pay-out is subject to the
Department of Fertilizers (DoF), your Company imported approx. 25.26
lakh MT quantity of Urea through issue of
Global Tenders during the year 2022-23.
Your Company achieved revenue of 3406.03 Crore during the year from
its Industrial Chemicals segment which is highest ever since inception. Your Company has
registered increase in sales of IPD products and better realisation due to lower RLNG
prices and resultant reduction in cost of production coupled with increasing demand and
focussed marketing strategies. Sales of Ammonium Nitrate Melt,
Dimethyl Acetamide, Sulphuric Acid, STP Water, Argon, Refrigerant
Ammonia, Nitrogen, Phosphoric Acid 27% &
Chalk was increased during the year.
During the year, your Company has achieved:
Highest ever sale of 33.14 LMT of fertilizers, which is an increase of
8 % over last year. This is highest sale after
2015-16.
Sold 4.47 LMT of imported products, which is an increase of 94% over
last year.
Highest ever sale of 6.10 LMT of Indigenous 15:15:15.
Highest ever sale of 2.98 LMT of Imported DAP.
Highest ever sale of 1.20 LMT of Imported 20:20:0:13.
First time the company has sold PDM and PROM under tie-up and sold
8,764 MTs & 2,982 MTs respectively.
Highest ever sale of 151 KL of Biola which is highest sold quantity in
last 10 years. Last year's sale was 134
KL
Highest ever sale of AN melt of 1,75,694 MT.
Highest ever sale of Refrigerant Ammonia of 1,046 MT.
Highest ever sale of Phosphoric Acid 5,175 MT.
Dividend
Although your Company has lined up a number of capex programmes which
will entail substantial expenditure, considering the consistent profits being made by the
Company and based on the Company's performance, your
Directors are pleased to recommend a final Dividend of 3.70 per equity
share of 10/- each for the financial year
2022-23. Your Board had earlier approved payment of interim dividend of
1.60 per equity share of 10/- each for the financial year 2022-23, at its meeting held
on November
29, 2022 and same was paid on December 27, 2022. The total dividend for
the financial year 2022-23 amounts to 5.30 per equity share (Previous year 3.85
per equity share), and would involve a total cash outflow of 292.39 Crore consisting
88.27 crore as interim dividend and 204.12 crore as final 137.92 Crore in the previous
year). approval of The final members at the ensuing Annual General Meeting.
Atmanirbhar Bharat
Under Atmanirbhar Bharat Abhiyan', following initiatives are
taken by your Company:
Increased Complex Fertilizer (NPK 15:15:15)
Production:
Your Company has enhanced the production of Suphala
NPK (15:15:15) by installation of additional spherodizer and associated
system. During FY 2022-23, highest ever production (6.382 Lakh MT) of Suphala (15:15:15)
was achieved.
Optimizing production of Industrial Chemicals:
Your Company is manufacturing various Industrial
Chemical products having high brand values. Plants manufacturing
industrial chemical products like Ammonium Nitrate, Ammonium Bicarbonate, Nitric Acid,
Concentrated Nitric acid and Sulphuric acid are operated at optimum level to meet the
market demand.
Setting up New AN Melt Plant:
In order, to meet the growing power need of the country, enhancement in
domestic production of AN melt is very important. Therefore, your Company is setting-up
new AN Melt plant of 425 MTPD at RCF Trombay unit with latest and energy efficient
technology. The additional production from this AN melt project shall be substituting the
existing imports, leading to improved availability of Coal to the power plants and hence
in turn shall ensure power security to the common people.
Setting up Liquid Nano Urea plant:
Your Company is setting-up liquid Nano Urea plant of 75 KL per day at
RCF Trombay unit using indigenous technology, developed by M/s IFFCO. Nano Urea is
expected to be more efficient as compared to conventional Urea.
Setting up new NPK Fertilizer plant at Thal:
In order to increase domestic supply of DAP/NPK fertilizer, your
Company is exploring possibility of setting up NPK Fertilizer of 1200 MTPD (in terms of
DAP) plant at Thal subject to economic viability
Projects
I am happy to announce that your Company is planning to undertake major
projects in the direction of:
improving efficiency in use of energy in production operations;
participation in the revival of closed fertilizer units; and making efforts for increasing
availability of raw materials / finished fertilizers
The details of such projects are available in the Directors'
Report. Your Company is also looking for opportunities for long term off take agreements
for procurement of fertilizers to ensure sustained growth. I am confident that with your
continuous support, encouragement and faith in us and support from the Government, your
Company would march ahead successfully.
I am delighted to present the Annual Report for the financial year
2022-23 and hope to see you on December 20, 2023 at the 45th Annual General
Meeting of the Company.
Going forward
The industry on its part, has continuously strived to ensure timely
availability of fertilizers through domestic production and imports even at times with
negative margins. The falling prices of fertilizers ironically have posed another
challenge to the industry due to inventory of high cost raw materials and finished
products. P&K sector is almost entirely dependent on import of raw materials due to
lack of natural resources of phosphate and potash.
Under-recovery under all heads of fixed cost in urea pricing policy has
also been a cause of anxiety for the industry. Government is now seriously considering
reforms in the urea pricing and subsidy policy. Industry is fully engaged to help bring
the desirable changes in the interest of supply security of fertilizers and sustainable
agriculture.
Fate of fertilizer industry is ultimately related to agriculture sector
of the country and the performance of the agriculture sector has been very promising so
far. It is essential that in addition to ensuring food security of this vast nation,
agriculture sector becomes sustainable and more remunerative to our farmers. Fertilizer
industry will continue to play its role and help in greening the Indian agriculture
Acknowledgement
Before I conclude, I would like to place on record my sincere
appreciation for all my colleagues on the Board, past and present, for their valuable
contribution in the growth of the Company. Our employees are the backbone of our
operations and it is only because of their support and commitment that your company could
achieve good results. I am thankful to all the stakeholders of RCF, our valued customers
and service providers for their relentless faith in the company. Finally, on behalf of the
Board, I would like to thank each one of you, our valued shareholders, employees of the
Company, Trade
Unions, Officers unwavering support in our journey to deliver value to
all our stakeholders.
Thank you, ladies and gentlemen. |
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(S. C. Mudgerikar) |
Chairman & Managing Director |
Mumbai |
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consistent basis. |
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Dated: September 14, 2022 |
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