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MEMORANDUM OF UNDERSTANDING BETWEEN NATIONAL FERTILIZERS LIMITED AND DEPARTMENT OF FERTILIZERS (MINISTRY OF CHEMICALS AND FERTILIZERS) FOR THE YEAR 2015-2016

AND - nfl.co.in Signed(2015-16).pdf · Preparation of Detailed Feasibility Report ... Total Quality Management at Panipat Unit. Date; ... NATIONAL FERTILIZERS LIMITED WORKING FOR

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MEMORANDUM OF UNDERSTANDING

BETWEEN

NATIONAL FERTILIZERS LIMITED

AND

DEPARTMENT OF FERTILIZERS (MINISTRY OF CHEMICALS AND FERTILIZERS)

FOR THE YEAR 2015-2016

MEMORANDUM OF UNDERSTANDING BETWEEN

NATIONAL FERTILIZERS LIMITED AND

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIZERS

FOR THE YEAR 2015-16 PART-I

Mission / Vision & Objectives of the PSE 1. Mission

NFL’s mission is to be a market leader in Fertilizers and a significant player in all its other business, reputed for customer satisfaction, reasonable reward to shareholders, ethics, professionalism and concern for ecology and the community.

2. Objectives a) To produce and market fertilizers and by-products efficiently and economically

besides achieving a reasonable and consistent growth.

b) To effectively manage the assets and resources of the Company to ensure a reasonable return on investment and to maximize internal resources. As part of diversification and maintaining soil health, to market other Fertilizers in addition to Nitrogenous Fertilizers.

c) To maintain international quality of production & services as per ISO-9001: 2008 & aiming at achieving customer satisfaction & delight.

d) To achieve international standard of excellence in plant & operational safety and maintaining environment as per international standard OHSAS 18001 & ISO-14001 respectively.

e) To carry out R&D activities for increasing plant availability, energy savings, process improvement and utilization efficiency in the application of chemicals and fertilizers and in the R & D activities for application of Fertilizers associating/ networking with other Companies.

f) To work out diversification/expansion schemes to increase the profitability of the Company and promote development of ancillary industries consistent with the Govt. policy.

g) To provide services to the Farming Community by organizing technical training, soil testing facilities etc.

h) To develop and maintain organizational environment for encouraging individual and group initiative, innovation and productivity and by improving employee skill through specialized training.

PART-II

Exercise Of Enhanced Autonomy & Delegation Of Financial Powers There is sufficient autonomy / delegation of powers available with the Board of Directors of NFL for operations of the company.

1 of 9

Excellent (5) V.Good (4) Good (3) Fair (2) Poor (1)

1i.

a) Sales Turnover ` Crore 12 8842 8421 8000 7599 7219b) Gross Operating Margin ` Crore 6 406 387 368 350 332

ii. Profitabilitya) EBIT / Average Capital Employed % 10 17.82 16.97 16.12 15.31 14.55

iii. Cost & Out put Efficiencya) PAT per employee ` Lakh 8 2.44 2.04 1.94 1.84 1.75

iv. Liquidity / Leveragea) Debt Service Coverage Ratio Ratio 8 12.01 11.44 10.84 10.29 9.78

v. Efficency of Asset Usea) Average Number of days of Inventory (Inventory turn over ratio) No. of days 6 8.36 8.80 9.24 9.68 10.12

2i) Corporate Social Responsibility (CSR) & Sustainability

a) Construction of Toilets in Schools (Out of which 10% will be Bio-Toilets) Nos. 2 60 50 45 40 35 External verificationb) Disposal of Fly Ash as % of total Ash Generation % 1 65 60 55 50 45 Self certification

ii) Research & Developmenta) Design of Applicator for Urea Ammonium Nitrate as proposed Date 2 28-02-16 10-03-16 15-03-16 20-03-16 31-03-16 External Agency Certified

Copyb) Preparation of Detailed Feasibility Report (DFR) for use of Petcoke at

Nangal Unit Date 2 31-01-16 15-02-16 25-02-16 15-03-16 31-03-16 Self certification

c) TEFR for Manufacture of Catalyst in collaboration with M/s PDIL/RCF Date 2 31-01-16 15-02-16 25-02-16 15-03-16 31-03-16 Self Certified Copy of the Report

iii) Initiatives for Growtha) Production of Urea LMT 10 36.50 36.41 34.95 33.56 32.21 Self certificationb) Production of Bio-Fertilizers at Vijaipur MT 5 420 400 380 360 340 Self certification

iv.

a) Award of contract for commercial production of MoP (Muriate of Potash) from underground sub soil brine in Little Rann of Kutch Date 4 01-11-15 01-12-15 01-01-16 01-02-16 01-03-16

b) Award of LSTK Contract for setting up Bentonite Sulphur Plant at Panipat Unit Date 4 15-01-16 15-02-16 15-03-16 15-04-16 15-05-16

c) Award of Contract for setting up Packaged Drinking Water Plant Date 2 01-10-15 01-11-15 01-12-15 01-01-16 01-02-16

Evaluation Criteria

Annual Report and self certified working sheets

Growth / Size / ActivitySTATIC / FINANCIAL PARAMETERS

DYNAMIC / NON-FINANCIAL PARAMETERS

Self Certified copy of the Contract

Unit

Project Management & Implementation

PART III NATIONAL FERTILIZERS LIMITED

MoU 2015-16

MoU Target (2015-16)Sr. Wts.

Documentry evidence & source/origin of

documents

2 of 9

Excellent (5) V.Good (4) Good (3) Fair (2) Poor (1)Evaluation Criteria Unit

MoU Target (2015-16)Sr. Wts.

Documentry evidence & source/origin of

documents

v.

a) Installation of Purge Gas Recovery Plant at Vijaipur II Date 3 01-03-16 15-03-16 31-03-16 15-04-16 30-04-16 Self certification

b) Submission of report on customers satisfaction relating to non-Urea fertilizers only through external agency & Action Taken Report for redressal of farmers grievances regarding fertilizers other than Urea

Date 1 31-01-16 15-02-16 25-02-16 15-03-16 31-03-16 Report submitted by external agency

c) Soil Testing for analysis of Micro Nutrients Nos. 1 1500 1400 1300 1200 1100 Self certification

vi.

a) Installation of Vibro Priller at Panipat to improve Prill Quality Date 2 15-02-16 28-02-16 15-03-16 25-03-16 31-03-16 Self Certification

b) Demonstrations of Urease and Nitrification inhibitors Nos. 2 50 45 40 35 30 Self certification

c) Total Quality Management at Panipat Unit Date 1 30-11-15 31-12-15 31-01-16 28-02-16 31-03-16 Self certification

vii Human Resource Management

a) Training to Employees Mandays / Employee 1 2.5 2.4 2.3 2.1 2.0 Self certification

3a) Energy Consumption / MT of Urea Gcal/MT

i) Nangal “ 1 7.08 7.09 7.10 7.11 7.12ii) Bathinda “ 1 7.46 7.47 7.48 7.49 7.50iii) Panipat “ 1 7.59 7.60 7.61 7.62 7.63iv) Vijaipur-I “ 1 5.75 5.76 5.77 5.78 5.79v) Vijaipur-II “ 1 5.42 5.43 5.44 5.45 5.46

Total (1+2+3) 100

Footnotes: The above financial targets are computed based on the following:1) Total no. of employees = 37292) Urea production of 36.50 LMT under "Excellent", 36.41 LMT under "Very Good" and 34.95 LMT under "Good".3) Training to Employees (Mandays / Employee)

a) Executives - 2.79 b) Non-Executives - 2.17

4) All internal documents to be signed atleast by Functional Director of Board.5) Negative marking for CG rating, Non-compliance to DPE guidelines, Entry of MoSPI & Survey data, Non-compliance to MSME guidelines and CSR provisions as per Companies Act.

Productivity and Internal Process

Self certification

Technology, Quality, Innovative Practices

SECTOR / ENTERPRISE SPECIFIC PARAMETERS

3 of 9

` CRORE

2010-11 2011-12 2012-13 2013-14

Actual Actual Actual ActualActual April to Dec 2014

REMoU

ExcellentMOU Very

GoodMoU

ExcellentMOU Very

GoodMOU Good MOU Fair MOU Poor

Gross sales 25 5791.03 7305.29 6720.23 8017.03 6891.11 7951.60 8379 8162 8842.00 8421.00 8000.00 7599.00 7219.00

Expenses consideredStock adjustment 29 -41.28 -56.07 -100.03 67.73 46.53 13.04 1.8 1.8 1.58 1.58 1.58 1.58 1.58Purachse of Traded goods 28 107.42 21.50 28.36 30.75 13.13 13.89 312.52 312.52 476.24 476.24 438.14 403.09 370.84Material consumed and Power and Fuel

27,31 4650.67 6145.02 5814.49 6782.16 5658.04 6505.60 6828.39 6618.13 6842.27 6440.27 6094.95 5764.84 5452.22

Freight and handling 245.51 274.20 305.53 377.92 309.03 419.2 418.88 418.88 464.59 464.59 446.01 428.17 411.04Employee remuneration 30 386.96 407.83 417.89 417.42 337.95 462.07 465.2 465.2 460.53 460.53 460.53 460.53 460.53Repairs and Maintenance 32 74.20 80.31 90.38 67.05 46.56 76.03 87.50 90.76 75.98 75.98 75.98 75.98 75.98Depreciation 34 88.90 91.22 117.67 129.17 63.53 81.19 136.94 136.94 83.33 83.33 83.33 83.33 83.33Other expenses (At Unit Level excluding Corporate Office and Selling Expenses)

35 16.47 25.89 25.57 43.60 34.97 31.31 31.77 31.77 31.48 31.48 31.48 31.48 31.48

Cost of operations 5528.85 6989.90 6699.86 7915.80 6509.74 7602.33 8283.00 8076.00 8436.00 8034.00 7632.00 7249.00 6887.00

Gross operating margin 262.18 315.39 20.37 101.23 381.37 349.27 96.00 86.00 406.00 387.00 368.00 350.00 332.00

Less : Interest 33 9.15 66.24 129.73 203.89 191.33 212.35 179.04 179.04 203.57 203.57 193.39 183.72 174.54Less: Prior period 0.06 0.00 2.99 0.00 0.00 0 0 0 0 0 0 0 0Less: Exceptional items 0.00 0.00 57.41 0.00 -73.61 -73.61 0 0 0 0 0 0 0Less : Corporate Office and Selling Expenses

35 95.17 102.32 97.48 103.79 84.88 117.69 106.1 106.1 124.27 124.27 118.06 112.15 106.55

Add: Other income 26 46.12 37.37 36.62 45.29 26.88 37.34 34.28 34.28 37.17 37.17 34.96 32.81 31.67

Profit before tax 203.92 184.20 -230.62 -161.16 205.65 130.18 -154.86 -164.86 115.33 96.33 91.51 86.94 82.59

Operating Margin 262.18 315.39 20.37 101.23 381.37 349.27 96.00 86.00 406.00 387.00 368.00 350.00 332.00

Less :CO CMO expenses 95.17 102.32 97.48 103.79 84.88 117.69 106.10 106.10 124.27 124.27 118.06 112.15 106.55

Add:Other Income 46.12 37.37 36.62 45.29 26.88 37.34 34.28 34.28 37.17 37.17 34.9615 32.813425 31.6727538

Add Depreciation 88.90 91.22 117.67 129.17 63.53 81.19 136.94 136.94 83.33 83.33 83.33 83.33 83.33

Exceptional item -57.41 0.00 73.61 73.61

Past period -2.99 0.00

EBIDTA 302.03 341.66 16.78 171.90 460.51 423.72 161.12 151.12 402.23 383.23 368.24 353.99 340.46

NATIONAL FERTILIZERS LIMITED

WORKING FOR GROSS OPERATING MARGIN AND RECONCILIATION WITH PROFIT BEFORE TAX

Particulars

Note No. (Annual Report

2013-14)

2014-15 2015-16

5 of 9

Annexure-VI

2015-16 2015-16 2015-16 2015-16 2015-16MOU

ExcellentMoU Very

GoodACTUAL MoU Very

GoodMOU

ExcellentACTUAL MoU Very

GoodMOU

ExcellentACTUAL MoU Very

GoodMOU

ExcellentACTUAL Acutal

upto Dec-2014

Anticipated MoU Excellent MoU very good

MoU (Excellent)

MoU (V.Good)

MoU (Good)

MoU (Fair) MoU (Poor)

Plantwise capacity utilisation

Nangal 100% 105% 99% 83% 118% 100.00% 104.18% 104.18%

Panipat 92% 98% 81% 100% 109% 100.00% 103.91% 103.91%

Bathinda 108% 94% 77% 110% 108% 100.00% 100.00% 100.00%

Vijaipur-I 106% 104% 97% 101% 102% 100.16% 100.01% 100.01%

Vijaipur-II 111% 117% 97% 109% 107% 102.04% 103.96% 103.12%

Production of Urea for Company (in Lakh MT)

32.31 33.00 33.80 32.31 33.00 34.01 32.31 33.00 32.11 35.68 36.00 36.36 28.78 35.91 36.04 35.80 36.50 36.41 34.95 33.56 32.21

Production (in ` crore) 5832.31 7361.36 6820.26 7949.30 6844.58 7938.56 8377.20 8160.20 8840.42 8419.42 7998.42 7597.42 7217.42

Profit and Loss Statement ItemsSales Turnover 4894.00 4950.00 5791.03 5870.00 5940.00 7305.29 6481.92 5940.00 6720.23 7836.00 7931.00 8017.03 6891.11 7951.60 8379.00 8162.00 8842.00 8421.00 8000.00 7599.00 7219.00

Interest and Other Income 46.12 37.37 36.62 45.29 26.88 37.34 34.28 34.28 37.17 37.17 34.96 32.81 31.67

Gross Oerating Margin rate (%)

4.53% 4.32% 0.30% 1.26% 5.53% 4.39% 1.15% 1.05% 4.59% 4.61% 4.60% 4.61% 4.60%

Gross Operating Margin 262.18 315.39 20.37 101.23 381.37 349.27 96.00 86.00 406.00 387.00 368.00 350.00 332.00

EBITDA 250.99 265.43 301.91 285.00 303.00 341.66 325.27 347.52 74.19 385.00 395.00 171.90 460.51 423.72 161.12 151.12 402.23 383.23 368.24 353.99 340.46

Depreciation 91.16 91.16 88.90110.42

110.42 91.22 119.58 119.58 117.67 129.82 129.82 129.17 63.53 81.19 136.94 136.94 83.33 83.33 83.33 83.33 83.33

EBIT (Earnings before interest and taxes)

159.83 174.27 213.01 174.58 192.58 250.44 205.69 227.94 -43.48 255.18 265.18 42.73 396.98 342.53 24.18 14.18 318.90 299.90 284.91 270.66 257.13

Interest expenses 40.00 40.00 9.1536.42

36.42 66.24 76.86 76.86 129.73 143.18 143.18 203.89 191.33 212.35 179.04 179.04 203.57 203.57 193.39 183.72 174.54

Prior period expenses 0.00 0.00 -0.06 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

Extra ordinary items 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 57.41 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Any other expenses 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

Profit before tax 119.83 134.27 203.92138.16

156.16 184.20 128.83 151.08 -230.62 112.00 122.00 -161.16 205.65 130.18 -154.86 -164.86 115.33 96.33 91.51 86.94 82.59

Tax 40.73 45.64 65.42 45.90 51.88 57.47 42.80 50.19 -59.89 38.07 41.47 -71.45 78.84 0.00 -52.03 -55.39 24.17 20.19 19.18 18.22 17.31

Profit After Tax 79.10 88.63 138.50 92.26 104.28 126.73 86.03 100.89 -170.73 73.93 80.53 -89.71 126.81 130.18 -102.83 -109.47 91.16 76.14 72.33 68.72 65.28

Dividend paid 27.76 31.11 48.46 32.27 36.48 44.48 29.67 34.79 0.00 12.56 13.69 0.00 0.00 46.86 0.00 0.00 24.08 27.41 26.04 24.74 23.50

Profit transferred to Statutory reseves

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 0.00 0.00

Any Other items 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 0.00 0.00

Profit transferred to Balance Sheet

51.34 57.52 90.04 59.99 67.80 82.25 56.36 66.10 -170.73 61.37 66.84 -89.71 126.81 83.32 -102.83 -109.47 67.08 48.73 46.29 43.98 41.78

Balance Sheet Items

Gross Block 2973.46 2973.46 2929.54 3557.03 3557.03 2958.21 3780.08 3780.08 3473.97 3650.00 3650.00 3463.04 3642.58 3551.00 3619.00 3619.00 3561.00 3561.00 3561.00 3561.00 3561.00

Less dep 2352.91 2352.91 2330.53 2462.91 2462.91 2408.59 2542.58 2542.58 2366.65 2650.23 2650.23 2321.88 2603.36 2452.00 2646.45 2646.45 2552.00 2552.00 2552.00 2552.00 2552.00

Net block 620.55 620.55 599.01 1094.12 1094.12 549.62 1237.50 1237.50 1107.32 999.77 999.77 1141.16 1039.22 1099.00 972.55 972.55 1009.00 1009.00 1009.00 1009.00 1009.00

NATIONAL FERTILIZERS LIMITED

` croreParticulars 2010-11 2011-12 2012-13 2013-14 2014-15

6 of 9

Annexure-VI

2015-16 2015-16 2015-16 2015-16 2015-16MOU

ExcellentMoU Very

GoodACTUAL MoU Very

GoodMOU

ExcellentACTUAL MoU Very

GoodMOU

ExcellentACTUAL MoU Very

GoodMOU

ExcellentACTUAL Acutal

upto Dec-2014

Anticipated MoU Excellent MoU very good

MoU (Excellent)

MoU (V.Good)

MoU (Good)

MoU (Fair) MoU (Poor)

NATIONAL FERTILIZERS LIMITED

` croreParticulars 2010-11 2011-12 2012-13 2013-14 2014-15

Share capital of CPSE 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58

Reserves & surplus of CPSE 1095.81 1101.99 1181.60 1216.49 1224.16 1263.85 1320.60 1330.34 1093.12 1103.73 1109.20 1003.41 1102.15 1058.66 833.66 827.02 1125.74 1107.39 1104.95 1102.64 1100.44

Add : Deferred Income from GOI

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 0.00 0.00

Less Profit & Loss A/c (Dr. balance)

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 0.00 0.00

Net worth of CPSE 1586.39 1592.57 1672.18 1707.07 1714.74 1754.43 1811.18 1820.92 1583.70 1594.31 1599.78 1493.99 1592.73 1549.24 1324.24 1317.60 1616.32 1597.97 1595.53 1593.22 1591.02

Investment 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 0.00 0.00

Total Current assets 1439.61 1445.79 1907.04 1484.95 1492.62 2943.36 2188.08 2197.40 3468.24 3405.25 3410.72 5648.82 5375.52 3693.69 2320.15 2313.48 3801.29 3990.57 3956.40 3959.09 3956.89

Total current liabilities & provision

650.00 650.00 901.49 700.00 700.00 1971.62 1000.00 1000.00 2624.82 1500.00 1500.00 4988.09 4582.83 3013.48 1708.43 1708.40 3009.84 3244.47 3210.90 3210.90 3210.90

Net current assets 789.61 795.79 1005.55 784.95 792.62 971.74 1188.08 1197.40 843.42 1905.25 1910.72 660.73 792.69 680.21 611.72 605.08 791.45 746.10 745.50 748.19 745.99

Capital employed ( Net worth+ long term Borrowings less CWIP less Investments)

1410.16 1416.34 1604.56 1879.07 1886.74 1521.36 2425.58 2434.90 1950.74 2905.02 2910.49 1801.89 1831.91 1779.21 1584.27 1577.63 1800.45 1755.10 1754.50 1757.19 1754.99

Total debt (loan funds) 786.40 786.40 41.22 2497.00 2497.00 258.81 4454.40 4454.40 460.59 3475.71 3475.71 438.57 386.84 296.52 270.06 270.06 194.16 167.16 167.16 167.16 167.16

Total assets 1410.16 1416.34 1604.56 1879.07 1886.74 1521.36 2425.58 2434.90 1950.74 2905.02 2910.49 1801.89 1831.91 1779.21 1584.27 1577.63 1800.45 1755.10 1754.50 1757.19 1754.99

Ratios

PAT/ Networth 8.28% 7.22% -10.78% -6.00% 7.96% 8.40% -7.77% -8.31% 5.64% 4.76% 4.53% 4.31% 4.10%

EBITDA/ Net Block 50.40% 62.16% 6.70% 15.06% 44.31% 38.56% 16.57% 15.54% 39.86% 37.98% 36.50% 35.08% 33.74%

EBIT/ Average Capital Employed

11.87% 16.02% -2.50% 2.28% 21.85% 19.13% 1.45% 0.85% 17.82% 16.97% 16.12% 15.31% 14.55%

PAT per employee (` in lakhs)

2.95 2.81 -3.98 -2.21 3.27 3.30 -2.50 -2.66 2.44 2.04 1.94 1.84 1.75

Current ratio 2.12 1.49 1.32 1.13 1.17 1.23 1.36 1.35 1.26 1.23 1.23 1.23 1.23

Debt Service Coverage Ratio

NA NA -2.47 1.24 20.52 10.59 0.83 0.49 12.01 11.44 10.84 10.29 9.78

Sales turnover / Net Block 966.77% 1329.15% 606.89% 702.53% 663.10% 723.53% 861.55% 839.24% 876.31% 834.59% 792.86% 753.12% 715.46%

Average no. of days of Inventory

4.3 5.94 10.45 9.61 4.26 8.76 10.49 10.76 8.36 8.80 9.24 9.68 10.12

Inventory turnover ratio (no. of times)

84.94 61.44 34.93 37.99 42.96 41.67 34.78 33.91 43.66 41.47 39.49 37.69 36.07

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