ANNUAL REPORT

2010-2011

GOVERNMENT OF INDIA

MINISTRY OF CHEMICALS & FERTILIZERS

DEPARTMENT OF FERTILIZERS

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ANNUAL REPORT2010-2011

GOVERNMENT OF INDIAMINISTRY OF CHEMICALS & FERTILIZERS

DEPARTMENT OF FERTILIZERS

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CONTENTS

S.No. Subjects Page No.

1. Introduction 5-11

2. Organizational Set up and Functions 12-13

3. Development & Growth of Fertilizer Industry 14-21

4. Availability of Major Fertilizers during 2010-11 22-23

5. Plan Performance 24-25

6. Measures of Support for Fertilizers 26-41

7. Public Sector Undertakings and Cooperative Society 42-71

8. Fertilizer Education Projects 72-73

9. Information Technology (IT) 74-76

10. Vigilance Activities 77

11. Right to Information Act, 2005 78

12. Progressive Use of Official Language (Hindi) 79-80

13. Welfare of SCs, STs, OBCs and Physically Handicapped Persons 81-82

14. Women Empowerment 83-84

15. Citizen Charter/Grievance Redress Mechanism 85

16. Annexure I to XVI 86-108

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Dr. Chandra Pal Singh, Vice-Chairman and Shri B.D. Sinha, Managing Director, KRIBHCO handing over the DividendCheque of Rs. 37.78 crore to Shri M.K. Alagiri, Hon’ble Union Minister for Chemicals & Fertilizers in the presenceof Shri Srikant Jena, Hon’ble State Minister for Chemicals & Fertilizers, Shri S. Krishnan, Secretary (Fertilizers), ShriDeepak Singhal, Joint Secretary (F&P), Shri S.L. Goel, Joint Secretary (P&P), Shri Satish Chandra, Joint Secretary(A&M) along with Shri N. Sambasiva Rao, Marketing Director of KRIBHCO and other officers of Ministry of Chemicals& Fertilizers, GOI.

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1.1 Introduction

1.1.1 Agriculture which accounts for one fifth ofGDP, provides sustenance to two-thirds ofour population. Besides, it provides crucialbackward and forward linkages to the rest ofthe economy. Successive five-year plan havelaid stress on self-sufficiency and self-reliancein food grains production and concertedefforts in this direction have resulted insubstantial increase in agriculture productionand productivity. This is clear from the factthat from a very modest level of 52 millionMT in 1951-52, food grain production roseto about 218.20 million MT in 2009-10. InIndia’s success in agriculture sector, not onlyin terms of meeting total requirement of foodgrains but also generating exportablesurpluses the significant role played bychemical fertilizers is well recognized andestablished.

1.1.2 Keeping in view the vital role played bychemical fertilizers in the success of India’sgreen revolution and consequent self-reliancein food-grain production, the Government ofIndia has been consistently pursuing policiesconducive to increased availability andconsumption of fertilizers in the country. Asa result, the annual consumption of fertilizersin nutrient terms (N, P & K), has increasedfrom 0.7 lakh MT in 1951-52 to 264.86 lakhMT 2009-10, while per hectare consumptionof fertilizers, which was less than 1 Kg in1951-52 has risen to the level of 135.27 Kg(estimated) in 2009-10.

1.1.3 As of now, the country has achieved nearself-sufficiency in production capacity of ureawith the result that India could substantiallymanage its requirement of nitrogenousfertilizers through the indigenous industry.Similarly, adequate indigenous capacity has

been developed in respect of phosphaticfertilizers to meet domestic requirements.However the raw materials and intermediatesfor the same are largely imported. As forpotash (K) since there are no viable sources/reserves in the country, its entire requirementis met through imports.

1.2 Growth of Fertilizer Industry

1.2.1 The industry made a very humble beginningin 1906, when the first manufacturing unit ofSingle Super Phosphate (SSP) was set upin Ranipet near Chennai with an annualcapacity of 6000 MT. The Fertilizer &Chemicals Travancore of India Ltd. (FACT)at Cochin in Kerala and the FertilizersCorporation of India (FCI) in Sindri in Bihar(now Jharkhand) were the first large sized -fertilizer plants set up in the forties and fiftieswith a view to establish an industrial base toachieve self-sufficiency in food-grains.Subsequently, green revolution in the latesixties gave an impetus to the growthof fertilizer industry in India and theseventies and eighties then witnessed asignificant addition to the fertilizer productioncapacity.

1.2.2 The installed capacity as on 31.03.2009 hasreached a level of 120.61 lakh MT of nitrogenand 56.59 lakh MT of phosphatic nutrient,making India the 3rd largest fertilizer producerin the world. The rapid build-up of fertilizerproduction capacity in the country has beenachieved as a result of a favourable policyenvironment facilitating large investments inthe public, co-operative and private sectors.Presently, there are 56 large size fertilizerplants in the country manufacturing a widerange of nitrogenous, phosphatic andcomplex fertilizers. Out of these, 30 (as ondate 29 are functioning) units produce urea,

Chapter-1

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21 units produce DAP and complex fertilizers,5 units produce low analysis straightnitrogenous fertilizers and the remaining 9manufacture ammonium sulphate as by-product. Besides, there are about 85 mediumand small-scale units in operation producingSSP. The sector-wise installed capacity isgiven in the table below: -

SECTOR-WISE, NUTRIENT-WISE INSTALLEDCAPACITY OF FERTILIZER MANUFACTURINGUNITS AS ON 31.03.2010.

Sr. Sector Capacity PercentageNo. (lakh MT) Share

N P N P

1 Public Sector 34.98 4.33 29.0 7.65

2 Cooperative Sector 31.69 17.13 26.27 30.27

3 Private Sector 53.94 35.13 44.73 62.08

Total: 120.61 56.59 100.00 100.00

1.3 Self-sufficiency in Fertilizer Sector

1.3.1 Out of three main nutrients namely nitrogen,phosphate and potash, (N,P&K) required forvarious crops, indigenous raw materials areavailable mainly for nitrogenous fertilizers.The Government’s policy has hence aimedat achieving the maximum possible degreeof self-sufficiency in the production ofnitrogenous fertilizers based on utilisation ofindigenous feedstock. Prior to 1980,nitrogenous fertilizer plants were mainlybased on naphtha as feedstock. A numberof fuel oil/LSHS based ammonia-urea plantswere also set up during 1978 to 1982. In1980, two coal-based plants were set up forthe first time in the country at Talcher,(Orissa) and Ramagundam, (AndhraPradesh). These coal based plants have,however, been closed by Government w.e.f.1.4.2002 due to technical and financial non-viability. However, with natural gas becomingavailable from offshore Bombay High andSouth Basin, a number of gas basedammonia-urea plants have been set up since

1985. As the usage of gas increased and itsavailable supply dwindled, a number ofexpansion projects came up in the last fewyears with duel feed facility using bothnaphtha and gas. Feasibility of makingavailable Liquefied Natural Gas (LNG) tomeet the demand of existing fertilizer plantand/or for their expansion projects along withthe possibility for utilising newly discoveredgas reserves, is also being explored byvarious fertilizer companies in India.

1.3.2 In case of phosphates, the paucity ofdomestic raw material has been a constraintin the attainment of self-sufficiency in thecountry. Indigenous rock phosphate suppliesmeet only 5-10% of the total requirement ofP2O5. A policy has therefore been adoptedwhich involves mix of three options, viz,domestic production based on indigenous/imported rock phosphate, imported sulphurand ammonia; domestic production basedon indigenous / imported intermediates, viz.ammonia and phosphoric acid; and third,import of finished fertilizers. During 2009-10roughly 72% of the requirement of phosphaticfertilizers was met through the first twooptions.

1.3.3 In the absence of commercially exploitablepotash sources in the country, the entiredemand of potassic fertilizers for directapplication as well as for production ofcomplex fertilizers is met through imports.

1.3.4 Given the volatility in international market forfertilizer in general and urea market inparticular, marginal provision through importscould be used to the country’s strategicadvantage. This is also desirable as theinternational market, especially in case ofurea, is very sensitive to demand supplyscenario. Under the new pricing regime forurea units applicable from 01.04.2003, forsecuring additional indigenous supply of urea,economically efficient units are beingpermitted to produce beyond their re-assessed capacity to substitute/ minimizeimports.

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Dividend cheque given to Secretary (F) by MD, FAGMIL

1.4 Fertilizer Subsidy

1.4.1 The subsidy on fertilizers is passed on tothe farmers in the form of subsidized MRPs.The selling prices as notified by Governmentfor the subsidized fertilizers are much lowerthan the normative delivered cost of thesefertilizers at farm gate level. The differencebetween the normative delivered cost at farmgate level and the notified selling prices ispaid as subsidy to manufacturers/importerson sale of fertilizers to the farmers at thesubsidized prices.

1.4.2 The increase in rate of subsidy on fertilizerscombined with increase in consumption offertilizers has led to a substantial increase inrequirement of subsidy. In spite of increasein cost of fertilizers, the Government hascompletely kept the farmers insulated fromthis increase in cost and have increased thesubsidy allocations to meet the consumptionneeds of the farmer at subsidized level ofprices. The subsidy on fertilizers has beenincreased sharply over the last few years.The details of fertilizer subsidy over the lastfew years are as below:-

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DETAILS OF EXPENDITURE ON SUBSIDY/CONCESSION

(Rs in crores)

Period Amount of concession disbursed Amount of Subsidy Totalon Decontrolled Fertilizers disbursed on Urea for all

(Indigenous+ imported) fertilizers

Indigenous Imported Total Indigenous Imported TotalP&K P&K (P&K) Urea Urea (Urea)

2006-07 6648.17 3649.95 10298.12 12650.37 5071.06 17721.43 28019.55

2007-08 10333.80 6600.00 16933.80 16450.37 9934.99 26385.36 43319.16

2008-09 32957.10 32597.69 65554.79 17968.74 12971.18 33939.92 99494.71

2009-10 16000.00 23452.06 39452.06 17580.25 6999.98 24580.23 64032.29

2010-11 13000.00 15500.00 28500.00 15980.73 8360.00 24340.73 52840.73(BE)

1.4.3 The steady increase in fertilizer subsidiesover the years has largely been the result ofincreasing production / consumption andincreases in the costs of inputs of indigenousfertilizers and prices of imported fertilizersfrom time to time. The cost of various inputs/ utilities, such as coal, gas, naphtha, rockphosphate, sulphur, ammonia, phosphoricacid, electricity, etc., as also the cost oftransportation, went up significantly duringthe eighties. The gas-based fertilizer unitscommissioned during this period alsoinvolved higher capital investment per tonneof installed capacity, necessitating constantupward revision in the retention prices. Theselling prices of fertilizers to the farmers,however, remained almost at the same levelbetween July, 1981 and July 1991. TheGovernment effected an increase of 30% inthe issue prices of fertilizers in August, 1991after a gap of a decade. The selling price ofurea, which was reduced by 10% in August1992, was revised upwards by 20% in June1994 followed by another increase by 10%with effect from 21.2.97. The prices of ureawere again revised in February 2002 by 5%and by Rs. 240 PMT of urea w.e.f. 28.2.2003.The price increase made effective from

28.2.2003 was, however, later withdrawnw.e.f 12.3.2003. The MRP of urea i.e. @Rs. 4830 per tonne exclusive of local leviescontinued upto 31-03-2010. With effect from1-04-2010, MRP or urea increased by 10%i.e. from Rs. 4830 per MT to Rs. 5310 perMT.

1.5 Fertilizer Pricing Policy

1.5.1 Given the importance of fertilizer pricing andsubsidization in the overall policyenvironment, which has direct implicationswith reference to the growth and developmentof agriculture and sustainability of the fertilizerindustry, the need for streamlining thesubsidy scheme in respect of urea producingunits had been felt for a long time. A HighPowered Fertilizer Pricing Policy ReviewCommittee (HPC) was constituted, under thechairmanship of Prof. C.H. Hanumantha Rao,to review the existing system of subsidizationof urea, suggest an alternative broad-based,scientific and transparent methodology, andrecommend measures for greatercohesiveness in the policies applicable todifferent segments of the industry. The HPC,in its report submitted to the Government on3rd April 1998, inter-alia, recommended that

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unit-wise RPS for urea may be discontinuedand, instead, a uniform Normative ReferralPrice be fixed for existing gas based ureaunits and also for DAP and a FeedstockDifferential Cost Reimbursement (FDCR) begiven for a period of five years for non-gasbased urea units.

1.5.2 The Expenditure Reforms Commission(ERC), headed by Shri K.P. Geethakrishnan,had also examined the issue of rationalizingfertilizer subsidies. In its report submitted on20th September 2000, the ERCrecommended, inter-alia, dismantling ofexisting RPS and in its place the introductionof a Concession Scheme for urea units basedon feedstock used and the vintage of plants.

1.5.3 The recommendations of ERC wereexamined in consultation with the concernedMinistries/Departments. The views of thefertilizer industry and the State Governments/Union territories, and economists/researchinstitutes were also obtained. After dueexamination of all these views, a New PricingScheme (NPS) for urea units for replacingthe RPS was formulated and notified on30.1.2003. The new scheme took effect from1.4.2003. It aims at inducing the urea unitsto achieve internationally competitive levelsof efficiency, besides bringing in greatertransparency and simplification in subsidyadministration.

1.5.4 New Pricing Scheme (NPS) was introducedw.e.f. 1st April, 2003. The Stage-I of NPSwas of one year duration from 1st April, 2003to 31st March 2004 and State-II was of twoyear duration from 1st April 2004 to 31st

March, 2006. With the State-III of NPS beingimplemented w.e.f. 1st October 2006, theStage-II of NPS stands extended upto 31st

September, 2006.

1.5.5 Under NPS, the existing urea units have beendivided into six groups based on vintage andfeedstock for determining the group basedconcession. These groups are : Pre-1992gas based units, post-1992 gas based units,pre-1992 naphtha based units, post-1992naphtha based units, fuel oil/low sulphur

heavy stock (FO/LSHS) based units andmixed energy based units. The mixed energybased group shall include such gas basedunits that use alternative feedstock/fuel tothe extent of more than 25% as admissibleon 1.4.2002.

1.5.6 Under NPS, escalation/de-escalation is givenin respect of variable cost related to changesin the price of feedstock, fuel, purchasedpower and water. Under the scheme, noreimbursement is allowed in respect ofinvestment made by a unit for improvementin its operations nor are the gains as a resultof operational efficiencies to be mopped up.

1.5.7 It has also been provided under the schemethat the concession rates during State-II shallbe adjusted for reduction in capital relatedcharges and enforcement of efficient energynorms. Pre-set energy norms for urea unitsduring State-II of NPS have already beennotified and intimated to urea units.Reduction in rates of concession duringStage-II of NPS for urea units on account ofreduction in capital related charges have alsobeen notified and intimated to urea units.

1.6 Amendments to New Pricing SchemeStage - III for Urea Units.

Following amendments in NPS III have been made

1.6.1 It has been decided that the reduction in thefixed cost of each Urea units strictly due toGroup Averaging principle under the NewPricing Scheme III will be restricted to 10%of the Normated Fixed Cost computed underthe base concession rates. The limitation onreduction of fixed cost will be applicable w.e.f1st April, 2009.

1.6.2 Capacity utilization of Post – 1992 Napthabased Group Average will be considered as95% instead of 98% for calculating the baseconcession rates of urea units provided nocost towards conversion is recognized underNPS III. The approved amendments will helpthe indigenous urea units reduce their lossesdue to the group averaging under NewPricing Scheme Stage - III and help them to

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generate resources for reinvestment in theirplants towards modernization and increasedefficiency.

1.6.3 To maintain stocks of urea in case there iseither a shortfall in production due todisruption in supplies of feedstocks or delay/disruption in imports and to tide over thesudden spurt in demand/shortages, abufferstocking scheme for urea is underimplementation in major States. Thecompanies are reimbursed buffer stockingexpenses on following parameters.

(i) The company operating the buffer stockwill be entitled to Inventory Carrying Cost(ICC) at a rate 1 percentage point less thanthe PLR of SBI as notified from time to time.This rate would be applicable at Rs 4650per MT (MRP less than the dealer’s margini.e. Rs 4830- Rs 180) for the quantity andthe duration for which the stock is carried asbuffer. In case of cooperatives, it will be atRs 4630 per MT as dealers margin in thiscase is Rs 200 per MT.

(ii) The company will be paid warehousingand insurance charges at the rate of Rs 23per tonne per month on the quantity carriedas buffer.

(iii) Since the material will be moved in twostages i.e. from the plant to the bufferstocking point and then on to consumptionpoints, additional handling charges at the rateof Rs 30 per MT will be paid to the FertilizerCompany on the quantity sold from the bufferstock.

(iv) In addition, freight from the buffer stockingwarehouse to the block in case of movementoutside the district in which buffer stockinggodown is located, will also be paid to thecompany, in accordance with the provisionsunder the Uniform policy for freight subsidyannounced by the Government with effectfrom 1st April, 2008

1.7 MRP of Decontrolled P & K Fertilizers

The MRP of the DAP/NPK/MOP has beenconstant from February 2003 to 17.6.2008.

Then Department of Fertilizers introducednutrient based subsidy in June 2008 andaccordingly, revised the MRP of NPKComplex Fertilizers downwards w.e.f.18.6.2008. However, the MRP of the otherfertilizers remained the same. The MRP offertilizers is shown in the table below:-

MAXIMUM RETAIL PRICE OF FERTILIZERS(Rupees per MT)

Product From From12.3.2003 18.06.08

to17.6.2008

Urea 4830 4830

Di Ammonium 9350 9350Phosphate (DAP)

Muriate of Potash (MOP) 4455 4455

Mono-Ammonium 9350 9350Phosphate (MAP)(w.e.f. 1.4.2007)

Triple Super Phosphate 7460 7460(TSP) (w.e.f. 1.4.2008)

Single Super Phosphate 3400 3400(SSP) (w.e.f. 1.5.2008 to30.6.2009) all India MRP

Ammonium Sulphate (AS) 10350(w.e.f. 1.7.2008)

Grades of ComplexFertilizers - N:P:K:S

16:20:00:13 7100 5875(earlier 16:20:00)

20:20:00:00 7280 5343

20:20:00:13 7280 6295

23:23:00:00 8000 6145

28:28:00:00 9080 7481

10:26:26:00 8360 7197

12:32:16:00 8480 7637

14:28:14:00 8300 7050

14:35:14:00 8660 8185

15:15:15:00 6980 5121

17:17:17:00 8100 5804

19:19:19:00 8300 6487

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1.8 Global Scenario

Prices of Major fertilizers, such as Urea, DAPand MOP and fertilizer inputs such asAmmonia, Sulphur, Rock Phosphate andPhosphoric acid increased manifold during2008-09. This resulted in steep increase inprices of both finished fertilizers as well asintermediates and consequently led tosubstantial increase in subsidy outgo of theGovernment. Urea Price, which was US$280.75 fob per MT in January 2007 increasedto US$ 403.75 fob per MT in January 2008and US $ 815 fob per MT in August 2008.Price of DAP, which was US $ 320.5 cfr perMT in January 2007 increased to US$ 802cfr per MT in January 2008 and US $ 1331cfr pt in May 2008. MOP price, whichprevailed at US $ 170 fob per MT in January2007 went up to US $ 328 fob per MT inJanuary 2008 and US$ 945 fob per MT inOctober 2008.

Raw material prices also showed exponentialjumps during the last one year. Ammoniaprice, which, on an average, was $ 301.5 cfr(India) per in January 2007, went upto US $389 cfr (India) per MT in January 2008 and

US $ 834 cfr (India) in September 2008. Priceof Phosphoric Acid witnessed a sharpincrease during the year. Price of Phosphoricacid which was US $ 566.25 cft pt (annualcontract price) for 2007-2008, went up to1985 cfr pt in April-June 2008 and to US $2310 cft pt in July-September 2008. Sulphurprice increased from US $ 78.75 cfr per MTin January 2007 to US $ 561 cfr per MT inJanuary 2008 and to US $ 846 cfr pt in July2008. Price of Rock Phosphate which wasUS $ 79.5 cfr pt in January 2007 went up toUS $ 245 cfr pt in January 2008 and to US$ 460 cfr pt in June 2008.

The spurt in international prices haveimpacted prices of imported finished fertilizersas well as raw material in India. As a result,subsidy outgo for 2008-09 was about onelakh crore

From July 2008 to January 2010, the pricesof the raw materials/intermediates/finishedfertilizers have shown a declining trend. Theprices in January 2010 in comparison to thatof and July 2008 and March 2009 are asfollows :

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(US$ pmt)

Raw material/intermediate/Fertilizers July 2008 March 2009 January 2010

DAP 1291.90 414.00 499.13

MOP 725.00 767.50 381.25

Urea FOB 783.00 305.63 306.88

Phos Acid, India (C&F) 2200-2310 650.760 610-627.50

Ammonia (C&F) 571.10 261.00 327.88

Sulphur (C&F) 846.00 57.00 139.50

Rock (C&F) 384.00 301.00 (in Jan, 09) 142.50

Sulphuric Acid (C&F) Brazil 360.00 0.00-50.0 35.38

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Chapter-2

2.1 Organizational set up and functions

2.1.1 The main activities of Department ofFertilizers (DOF) include planning, promotionand development of the Fertilizer Industry,planning and monitoring of production, importand distribution of fertilizers and managementof financial assistance by way of subsidy/concession for indigenous and importedfertilizers. List of subjects allocated to theDepartment of Fertilizers as per Governmentof India (Allocation of Business) Rules, 1961amended from time to time has been givenat Annexure-I.

2.1.2 The Department is broadly divided into 5Wings dealing with (i) Fertilizers Policy,Projects and Planning for Urea (ii) FertilizerPolicy, Projects and Planning for P&KFertilizers (iii) Fertilizer Imports, Movement,Distribution and General Administration &Vigilance (iv) Finance and Accounts and (v)Economics and Statistics. The work of theseWings are being handled by three JointSecretaries, one Additional Secretary cumFinancial Adviser and one Economic Adviserrespectively.

2.1.3 The Joint Secretary in-charge of (P&P) looksafter the work relating to Phosphatic FertilizerPolicy, P & K Subsidy payments and importon government account payments, JointVenture Projects of P & K Fertilizers(domestic and overseas), and WTO relatedissues.

2.1.4 Joint Secretary (F&P) & ED FICC (Ex officio)is entrusted with the work pertaining to UreaPolicy, PSUs matters, except vigilance,Special Purpose Vehicle for exploring JointVentures abroad, revival of closed Urea unitsincluding FCIL and HFCL, Urea FertilizersJoint Ventures Projects (domestic andoverseas), over all project coordination

including JVs and long-term off-take policy.

2.1.5 Joint Secretary (A&M) looks after the workrelating to overall Fertilizer PolicyCoordination, the movement of fertilizers andrelated policies and coordination with States,shipping and import of Urea on Governmentaccount, Parliamentary work andcoordination, branch administration andvigilance, FMS, OMIFCO related mattersincluding off-take of Urea, implementation offinalized long term off take arrangements.

2.1.6 The Economic Adviser, an officer of JointSecretary level advises the Department onvarious economic issues which haveeconomic implications, S&T projects, mattersrelating to Agriculture Ministry such as Biofertilizers, balanced fertilizers, soil healthcards, nutrient absorption issues, micro-nutrients, organic fertilizers based on urbansolid waste, subjects related to renewableand non-renewable energy, clean technologyand general environmental issues, supply,demand, availability and price movementforecasting of various fertilizers, intermediatesand raw materials and economic analysis ofspecific importance assisting in firming uppolicy issues.

2.1.7 The list containing the names of Minister-in-charge and the officers of the level of DeputySecretary and above, who have worked inthe Department during 2010-2011 is givenin Annexure-II.

2.2 Fertilizer Industry CoordinationCommittee (FICC)

2.2.1 The office of Fertilizer Industry CoordinationCommittee is an attached office under theDepartment of Fertilizers headed byExecutive Director. The FICC, was initiallyconstituted w.e.f. 01.12.1977 to administer

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and operate the erstwhile Retention Pricecum Subsidy Scheme (RPS), The RetentionPrice Scheme stimulated indigenousproduction and consumption of fertilizers inthe country. However, for attaining greaterinternal efficiencies and globalcompetitiveness, unit specific approach ofRPS was replaced by a group basedconcession scheme called the New PricingScheme (NPS) from 01 April, 2003. TheFertilizers Industry Coordination Committee(FICC), continues under the New PricingScheme for administration of the scheme forurea.

2.2.2 FICC is responsible to evolve and reviewperiodically, the group concession ratesincluding freight rates for units manufacturingnitrogenous fertilizers, maintain accounts,

make payments to and to recover amountsfrom fertilizer companies, undertake costingand other technical functions and collect andanalyze production data, costs and otherinformation.

2.2.3 The FICC comprises of the Secretaries tothe GOI in the Department of Fertilizers,Industrial Policy and Promotion, Agricultureand Cooperation, Expenditure, Ministry ofPetroleum & Natural Gas, Chairman, TariffCommission and two representatives of theurea industry.

2.2.4 The Department has under its administrativecontrol nine(9) Public Sector Undertakings(PSUs), one multi –state cooperative society.The list is given at Annexure-III.

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Chapter-3

3.1 Development & Growth of FertilizerIndustry

3.1.1 Capacity Build-up

At present, there are 56 large size fertilizerunits in the country manufacturing a widerange of nitrogenous, phosphatic andcomplex fertilizers. Of these, 30 units (as ondate 28 units are functioning) produce urea,21 units produce DAP and complex fertilizers,5 units produce low analysis straightnitrogenous fertilizers and 9 manufactureammonium sulphate as by-product. Besides,there are about 72 small and medium scaleunits in operation producing single superphosphate (SSP). The total installed capacityof fertilizer production which was 119.60 lakhMT of nitrogen and 53.60 lakh MT ofphosphate as on 31.03.2004, has marginallyincreased to120.61 lakh MT of nitrogen and56.59 lakh MT of phosphate as on01.04.2010.

3.2 Production Capacity And CapacityUtilization

3.2.1 The production of fertilizers during 2009-10was 119.00 lakh MT of nitrogen and 43.21lakh MT of phosphate. The production targetfor 2010-11 was 125.16 Lakh MT of nitrogenand 48.70 Lakh MT of Phosphate,representing a growth rate of 5.2% in nitrogenand 12.7% in Phosphate as compared toproduction in 2009-10. Production target fornitrogenous fertilizer is more than theinstalled capacity. The production target forphospahtic fertilizer is less than installedcapacity due to constraints in availability ofraw materials/ intermediates which aresubstantially imported. However, takentogether, the production of ‘N’ and ‘P’ duringthe year is higher than that in thecorresponding period of last year

3.2.2 The production performance of bothnitrogenous and phosphatic fertilizers duringthe year 2009-10 was satisfactory. Productionof nitrogenous fertilizers was less than targetby 1.84 Lakh MT, as there was no productionby SPIC. The production of phosphaticfertilizers was more then target by 1.90 LakhMT.

3.2.3 The installed capacity of urea units in thecountry as follows:-

UREA UNITS SET UP BETWEEN: 1967-2010 WITHREASSESSED CAPACITY

Year of Unit Feedstock InstalledComm. and Sector Capacity

(lakh/MT)1967 GSFC-Baroda Gas-Private 3.7061969 SFC-Kota Naphtha-Private 3.7901970 DIL-Kanpur Naphtha-Private 7.2201971 MFL-Madras Naphtha-Public 4.868 @1973 ZIL -Goa Naphtha-Private 3.9931975 SPIC-Tuticorin Naphtha-Private 6.2001976 MCFL-Mangalore Naphtha-Private 3.8001978 NFL-Nangal FO/LSHS-Public 4.7851978 IFFCO-Kalol Gas-Coop. 5.445 @1979 NFL-Bhatinda FO/LSHS-Public 5.1151979 NFL-Panipat FO/LSHS-Public 5.1151981 IFFCO-Phulpur Gas—Coop. 5.5111982 RCF-Trombay-V Gas-Public 3.301982 GNFC-Bharuch FO/LSHS-Private 6.3601985 RCF-Thal Gas-Public 17.0681986 KRIBHCO-Hazira Gas-Coop. 17.2921987 BVFCL-Namrup-III Gas-Public 3.150

(Formerly HFC)1988 NFL-Vijaipur Gas-Public 8.6461988 IFFCO-Aonla Gas-Coop. 8.6461988 Indogulf-Jagdishpur Gas-Private 8.6461992 NFCL-Kakinada Gas-Private 5.9701993 CFCL-Gadepan Gas-Private 8.6461994 TCL-Babrala Gas-Private 8.6461995 KRIBHCO SHYAM-Shahja- Gas-Private 8.646

hanpur (Formerly OCFL)1996 IFFCO-Aonla expansion Gas-Cooperative 8.6461997 NFL-Vijaipur expansion Gas-Public 8.6461997 IFFCO-Phulpur expansion Gas—Cooperative 8.6461998 NFCL-Kakinada expansion Naphtha-Private 5.9701999 CFCL-Gadepan expansion Naphtha/Gas-Private 8.6462005 BVFCL:Namrup-II Gas-Public 2.400 @

Note: @ After revamp

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3.2.4 The following 9 urea plants of the companiesare presently closed/under shutdown due tovarious reasons, inter-alia, on account oftechnological obsolescence, feedstocklimitation, non-viability of unit/company andheavy financial losses.

Sl. Name of the Date of Annual InstalledNo. Company/Unit closures Capacity

(In Lakh MT)

1. FCI: Gorakhpur 10.6.1990 2.85

2. FCI: Ramagundam 1.4.1999 4.95

3. FCI: Talcher 1.4.1999 4.95

4. FCI: Sindri 16.3.2002 3.30

5. HFC: Durgapur 1.7.1997 3.30

6. HFC: Barauni 1.1.1999 3.30

7. RCF: Trombay-I 1.5.1995 0.98

8. NLC: Neyveli 31.3.2002 1.53

9. FACT: Cochin-I 15.5.2001 3.30

Total 28.46

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

3.2.5 The domestic fertilizer industry has by andlarge attained the levels of capacity utilisationcomparable with others in the world. Thecapacity utilisation during 2009-10 was 98.8%for nitrogen and 76.8% for phosphate. Theestimated capacity utilisation during 2009-10 is 99.2% of nitrogen and 76.9% ofphosphate. Within this gross capacityutilization, the capacity utilisation in terms ofthe urea plants was 104.4% in 2009-10 and104.3% in 2010.11. As for phosphatefertilizers, apart from the constraintsmentioned earlier, the actual productioncapacity utilisation has also been influencedby the demand trends.

3.2.6 The capacity utilisation of the fertilizerindustry, particularly in respect of urea, isexpected to improve further throughrevamping/ modernisation of the existingplants.

3.2.7 The unit-wise details of installed capacity,production and capacity utilisation during2009-10 and 2010-11 are given in Annexure-IV.

3.3 Strategy for Growth

3.3.1 The following strategy has been adopted toincrease fertilizer production:

• Expansion and capacity addition/efficiency enhancement throughretrofitting / revamping of existingfertilizer plants.

• Setting up joint venture projects incountries having abundant and cheaperraw material resources.

• Working out the possibility of usingalternative sources like liquefied naturalgas, coal gasification, etc., to overcomethe constraints in the domesticavailability of cheap and cleanfeedstock, particularly for the productionof urea.

• Looking at possibilities of revival ofsome of the closed units by setting upbrownfield units subject to available ofgas.

3.4 Feedstock Policy

3.4.1 At present, natural gas based plants accountfor more than 66% of urea capacity, naphthais used for less than 30% urea productionand the balance capacity is based on fuel oiland LSHS as feedstock. The two coal basedplants at Ramagundam and Talcher wereclosed down due to technologicalobsolescence and non-viability.

3.4.2 Natural gas has been the preferred feedstockfor the manufacture of urea over otherfeedstocks viz. naphtha and FO/LSHS, firstly,because it is clean and efficient source ofenergy and secondly, it is considerablycheaper and more cost effective in terms ofmanufacturing cost of urea which also has adirect impact on the quantum of subsidy onurea.

3.4.3 Accordingly, the pricing policy, announcedin January 2004, provides that new ureaprojects, expansion of existing urea units andcapacity increase through debottlenecking/revamp/modernization will be also allowed/

16

recognized if the production comes fromusing natural gas/LNG as feedstock. For thesame reasons, a policy for conversion of theexisting nephtha/FO/LSHS based urea unitsto natural gas/LNG as feedstock has alsobeen formulated in January 2004, whichencourages early conversion to natural gas/LNG. Pursuant to formulation of policy forconversion of non-gas urea units to gas,three naphtha based plants namely, ChambalFertilizers & Chemicals Limited (CFCL),Gadepan-II and IFFCO-Phulpur-I & II havealready converted to NG/LNG. ShriramFertilizers & Chemicals Limited (SFC-Kota)has also started using gas w.e.f. 22nd

September 2007.

3.5 Requirement and availability of Gas toFertilizer Sector

3.5.1 The projected yearwise/plantwise additionalrequirement of gas during the years 2011-12 to 2014-15 for fertilizer sector which hasbeen communicated to Ministry of Petroleum& Natural Gas (as on January 2011) forallocation by EGoM, is as below:

YEARWISE/PLANTWISE ADDITIONALREQUIREMENT OF NATURAL GAS

S.No. Name of the unit Additional Requirement(mmscmd)

2011-12 2012-13 2013-14 2014-15

A Naphtha based

1 ZIL-Goa 0.00 1.28 1.28 1.28

2. MCFL-Mangalore 0.00 1.00 1.00 1.00

3 SPIC-Tuticorin 0.00 1.66 1.66 1.66

4. MFL-Manali 1.54 1.54 1.54 1.54

5 FACT- 0.00 0.94 0.94 0.94Udyogmandal

6. DIL-Kanpur 0.00 1.70 1.70 1.70

I Sub-Total of 1.54 8.12 8.12 8.12Naphtha basedplants

B Fuel-Oil Based

7 NFL-Panipat 0.00 0.90 0.90 0.90

8 NFL-Nangal 0.00 1.00 1.00 1.00

9. NFL-Bathinda 0.00 0.90 0.90 0.90

10 GNVFC-Bharuch 0.00 0.95 0.95 0.95

II Sub-Total of 0.00 3.75 3.75 3.75Fuel-Oil Based

C Expansion Units

11 IFFCO-Kalol 0.00 0.00 2.90 2.90

12 Kribhco-Hazira 0.00 0.00 2.20 2.20

13 RCF-Thal 0.00 0.00 2.20 2.20

14 CFCL-Gadepan 0.00 0.00 2.40 2.40

15 TCL-Babrala 0.00 0.00 2.20 2.20

16 IGFL-Jadgishpur 0.00 0.00 2.20 2.20

17 KSFL- 0.00 0.00 2.22 2.22Shahjahanpur

18 NFCL-Kakinda 0.00 0.00 2.4 2.4(AP)

III Sub-total of 0.00 0.00 18.72 18.72Expansion Units

Total of I+II+III 1.54 11.87 30.59 30.59

D Closed Units

18 HFCL-Durgapur 0.00 0.00 2.20 2.20

19 HFCL-Barauni 0.00 0.00 2.20 2.20

20 HFCL-Haldia 0.00 0.00 2.20 2.20

21 FCI-Ramagundam 0.00 0.00 2.20 2.20

22 FCI-Talcher 0.00 0.00 2.20 2.20

23 FCI-Sindri 0.00 0.00 2.20 2.20

24 FCI-Korba 0.00 0.00 2.20 2.20

25 FCI-Gorakhpur 0.00 0.00 2.20 2.20

IV Sub-Total of 0.00 0.00 17.60 17.60closed units

E REVAMPPROJECTS

26 KRIBHCO-Hazira 0.80 0.80 0.80 0.80

27 NFL-Vijaipur 0.60 0.60 0.60 0.60

28 NFCL-Kakinada 0.04 0.60 0.70 0.70

29 RCF-Thal 0.45 0.45 0.45 0.45

V Sub total of 1.89 2.45 2.55 2.55Revamp Projects

F GREEN FIELDSPROJECTS

30 MATIX Fert. & 0.55 3.20+1 4.75 4.75Chem, Burdwan (as fall

backallocation)

31 ZIL-Greenfield 0.00 0.00 2.46 2.46project-Belgaun

S.No. Name of the unit Additional Requirement(mmscmd)

2011-12 2012-13 2013-14 2014-15

17

32 DIL-Kanpur 0.00 3.85 4.60 4.60(for feed-stock) 1.0(for steamgeneration)

33 GSFC-Dahej 0.00 0.00 3.50 3.50

34 GNVFC 1.00 1.00 1.00 1.00(CPSU)

35 Oswal Chem & 0.00 2.4 2.4 2.4Fertilizers Ltd

VI Subtotal of 1.55 12.45 18.71 18.71Greenfield Projects

G. TOTAL 4.98 26.77 69.45 69.45

3.5.2 It is expected that with the above availabilityof gas, the production capacities in existingunits will increase, closed fertilizer units willbe revived new Greenfield/Brown fieldprojects will be set up and non gas basedfertilizer plants will be converted to gas,taking the overall production capacity of ureain the country to more than 31 million tonnes.Likewise, the projected requirement of ureaby the end of 11th Plan is expected to bearound 31 million tones including the requiredquantities for maintaining the supply chainand buffer stocks. It is expected that withabove availability of gas at reasonable prices,the country will become self-sufficient in urearequirement by the end of 11th Plan. Theabove availability of gas will also help ourcountry to become an export surplus nationin urea sector.

3.5.3 The above requirement of gas is based onthe desired need to make the country self-sufficient in urea production. This isnecessary in light of the fact that ouragricultural sector needs to be insulated fromthe volatile international prices of fertilizersand at the same time the fertilizer subsidybill need to be reduced. Urea is the onlyfertilizer, in which the country can becomeself-sufficient with the projected availabilityof gas in future. In phosphatic and potassicsector, we are largely import dependent andare subject to large-scale volatility in worldprices of these fertilizers.

3.5.4 The indigenous production capacities cancome up in future with the above gasavailability provided the gas is available atreasonable price. World over the price ofgas is showing an upward trend but thecountries rich in gas resources are havingspecial assured price for fertilizer sector. Thefertilizer sector in Middle East and North EastAfrica is based on gas prices ofapproximately 50 cents per MMBTU to $ 1.5– 2 per MMBTU. This has led to a lowercost of production in these countries, whichare also the major exporters of urea in theworld.

3.5.5 By producing in India, the country not onlybecomes self-sufficient in urea productionand immune from demand driven escalationin international prices, but it also leads toincrease in economic activity within thecountry, increase in employment, industrialdevelopment, etc. At the same level of gasprices, the country will save approximatelyUSD 60 per MT of urea by producing withinthe country as compared to importing fromMiddle East countries on price equivalent tocost of production. The savings will be onaccount of lower capital cost (USD 20 perMT approx), shipping freight (USD 20 perMT) and port handling charges (USD 20 perMT). In addition, there will be savings onaccount of internal transportation of ureadepending upon the location of the plant.

3.5.6 In addition to the issue of availability in pricingof gas, the other major important issue inthis sector is provision of gas pipelineconnectivity to the existing urea units in thecountry and proposed urea units in future.At present 8 operational units are not on thegas grid and their connectivity with the gasgrid is critical for their conversion to gas.Further 8 closed units of FCIL and HFCLare presently away from the gas grid andtheir connectivity with gas pipeline isprerequisite for revival of these closed units.Ministry of Petroleum and Natural Gas hasprojected the following pipeline connectivityof gas to existing and closed units in thecountry will be provided by 2012:-

S.No. Name of the unit Additional Requirement(mmscmd)

2011-12 2012-13 2013-14 2014-15

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3.6. Joint Ventures abroad

3.6.1 Due to constraints in the availability of gasin the country, which is the preferred feedstock for production of nitrogenous fertilizers,a near total dependence of the country onimported raw materials for production ofPhosphatic fertilizers and full importdependence for MOP, the Government hasbeen encouraging Indian companies toestablish Joint ventures production facilitieswith buy back arrangement in other countries,which are rich in fertilizer resources.

3.6.2 Existing joint ventures, namely Oman IndiaFertilizer Company (OMIFCO), Oman in Ureaand Industries Chimiques du Senegal (ICS),Senegal and Indo-Maroc Phosphor (IMACID),Morocco in Phosphate have given the

Country assured sources of supplies of Ureaand Phos acid, a critical input for productionof Phosphatic fertilizers. Further two moreprojects JIFCO Jordan and TIFERT Tunisiaare about to be commissioned in the year2010. The details of the existing joint venturein the fertilizer sector are:

3.6.2.1 OMIFCO Oman:

Krishak Bharati Cooperative Ltd. (KRIBHCO),Indian Farmers Fertilizers Cooperatives Ltd.(IFFCO) and Oman Oil Company withrespective share holding of 25%, 25% and50% have collaborated and set up a worldclass urea-ammonia fertilizer plant ‘OmanIndia Fertilizer Company (OMIFCO), in Omanat a cost of US $ 892 million. It consists of

PIPELINE CONNECTIVITY PLAN ( As provided MoPNG)

S.No. Proposed pipeline Agency for Fertilizer unit Expectedconnecting proposed to be year ofplants connected connectivity

Naphtha based plants

1 Dhabol.-Gogak-Bangalore GAIL ZIL, Goa 2012

2 Chennai-Bangalore-Mangalore RGTIL MCFL, Mangalore Dec-12

3 Kochi-Kanjrrikod-Bangalore-Mangalore GAIL FACT,Cochin 2012

4 Chennai-Tuticorin RGTIL SPIC, Tuticorin Dec-12

5 Kakinada- Chennai RGTIL MFL, Chennai Dec-12

Fuel Oil/LSHS based plants

5 Dadri-Bawana-Nangal GAIL NFL- Nangal, 2009-10Panipat, Bhatinda

Closed units

6 Spur on Kakinda to Uran via RGTIL FCI, RamagundamHyderabad

7 Spur from the following pipeline : GAIL FCI, SindriJagdishpur-Haldia FCI, Gorakhpur

HFC, BarauniHFC, DurgapurHFC, Haldia

8 Spur from Kakinada-Haldia Pipeline RGTIL FCI,Talcher

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5060 MTPD granular urea and 3500 MTPDAmmonia plants along with utilities in thecoastal town of Sur in Oman. The annualcapacity of the fertilizer complex is 16.52lakh MT of granular Urea. The entire quantityof Urea is off taken by the Government ofIndia as per Urea Off-Take Agreement(UOTA) at pre determined prices.Government of India also off takes surplusquantity of Urea, if any, as per price agreedfor the additional quantity. In addition, 2.5lakh MT of surplus Ammonia per year is alsoproduced by the Plant for which IFFCO hasAmmonia Off-Take Agreement (AOTA).OMIFCO is examining possibility ofexpansion and increase in production of Ureaand Ammonia.

3.6.2.2 ICS Senegal

The Government of India (GoI), IndianFarmers Fertilizer Cooperative Ltd. (IFFCO)and Southern Petrochemicals IndustriesCorporation Ltd. (SPIC) formed a jointventure company in Senegal namedIndustries Chimiques du Senegal (ICS). Lateron SPIC withdrew from the project. In recentpast, the company suffered financial losses.However, ICS Senegal has been restructuredin 2008 with Government of India, IFFCOand other Indian consortium partners having85% and Government of Senegal having15% share. The restructuring plan afterhaving been approved by the Regional HighCourt of Dakar (Senegal) on 27.3.2008 hascome into effect and ICS Senegal, asrestructured is in operation.

ICS Senegal has a capacity to produce 6.60lakh tones of phosphoric acid per annumand also finished phosphate fertilizer suchas DAP and Complex fertilizers. A majorportion of the phosphoric acid, about 5.5 LMTproduced in the ICS plant is off-taken byIFFCO as per a long term buy backarrangement and utilized for production ofphosphate fertilizers in India. The finishedfertilizers, DAP and complex fertilizers,produced by ICS Senegal is for domesticconsumption in Senegal.

3.6.2.3 IJC Jordan

SPIC, Jordan Phosphates Mines CompanyLtd. (JPMC) and Arab Investment Company(AIC) set up a joint venture project, Indo-Jordan Chemicals Company Limited (IJC) inJordan in May 1997 with a capacity of 2.24lakh tonnes of phosphoric acid productionper annum. 52.17% of the equity of the jointventure is held by SPIC, 34.86% by JPMCand 12.97% by AIC. Phosphoric Acidproduced by IJC is off-taken by SPIC andother fertilizer units in India.

3.6.2.4 IMACID Morocco

IMACID, a joint venture between OfficeCherifien des Phosphates (OCP), Morocco,and Chambal Fertilizers & Chemicals Ltd.(CFCL), India to produce 3.60 lakh MT ofphosphoric acid per annum wascommissioned in Morocco in October 1999.After subsequent joining of Tata ChemicalsLimited (TCL), capacity of the plant has beenincreased to 4.30 LMT per annum. Initially,equity of US$ 65 million in the venture washeld by OCP & CFCL equally. Subsequently,in May 2005, both OCP & CFCL have soldone-third of their equity stake in IMACID toTATA Chemicals Limited.

3.7 Overseas Joint Ventures UnderImplementation / Consideration:

3.7.1 JIFCO Jordan

Indian farmers Fertilizers Cooperative Ltd(IFFCO) and Jordan Phosphate MiningCompany (JPMC) have agreed for settingup of a joint-venture Phosphoric Acidproduction plant, Jordan India FertilizerCompany (JIFCO) in Jordan with an installedcapacity of 1500 MT of phosphoric acid perday (MTPD). Equity hodling in the project is52:48 between IFFCO and JPMC,respectively. The plant is expected to becommissioned in 2010.

3.7.2 TIFERT Tunisia

Gujarat State Fertilizers & Chemicals Ltd(GSFC) and Coromandel International Ltd

20

(CIL), formerly Coromandel FertilizersLtd.(CFL) both Indian entities alongwithGroupe Chimique Tunisien (GCT) &Compagnie Des Phosphates De Gafsa(CPG), both Tunisian entities are setting upa joint venture project, Tunisian IndianFertilisers S.A. (TIFERT) at Skhira in Tunisianfor production of 3.6 lakh MT of PhosphoricAcid per annum. The entire production ofphosphoric acid would be for off take byGSFC and CIL. An MOU to this effect wassigned in October, 2005 between parties.Estimated cost of the project is approx. US$ 165 million + 5% with equity of US$66million and borrowings of US $99 million.The project is expected to be commissionedin 2010.

3.7.3 Cooperation in Syria

The India-Syrian Joint Commission in itsmeeting held in January 2008 took note ofthe mutual interest of both countries in thefield of Phosphatic raw-materials andproducts. It was agreed that both countrieswould work for cooperation in the fertilizersector in Syria. Accordingly, a consortium ofIndian entities including MECON, RITES andPDIL (All central Government PSUs), havingexpertise in the fields of mining, beneficiation,processing, setting-up and running thephosphatic plants and logistic aspects areundertaking capacity enhancementconsultancy study with GECOPHAM in Syria.Government of India is funding the study. Asper the MOU signed between thisDepartment and GECOPHAM in May 2009,the Indian consortium undertook thefeasibility studies, which have now beencompleted and the Pre-Feasibility Report hasbeen submitted to the Syrian Authorities. AGovernment level MOU spelling out broadframe work of cooperation in Phosphatesector between the Countries has also beensigned in Oct’2010. A delegation from DOFand the consortium is visiting Syria inFebruary’2011 to discuss the Draft FeasibilityReport and other modalities to proceedfurther, with the Syrian Authorities.

3.7.4 Cooperation with Russia

On 12.03.2010 an MOU has been signedbetween the Government of India and theGovernment of Russia, during the visit ofPrime Minister of Russia to India, envisaginginter-alia encouraging collaboration in theareas of trade, production, possibleestablishment of Joint Ventures, investmentand R&D activities, exchange of informationand holding of consultations on the issuesof production and consumption of mineralfertilizers, exchange experience encouragecontacts between the specialists,organization of Joint Conferences, symposiaand business events on the issues of Co-operations in the sector of mineral fertilizers.

3.7.5 Cooperation in Indonesia

A team led by the Secretary (F) VISITEDIndonesia during 30.10.2010 to 02.11.2010to hold preliminary discussions with theIndonesian Authority to ascertain thetechnical feasibility of putting up of anAmmonia Urea plant based on CoalGasification Technology. During the visit ofthe President of Indonesia Chief Guest onoccasion of the Republic Day is Jan’2011following two documents have been signed:

(i) MOU for setting up an Ammonia UreaPlant in Indonesia and agreement for off-take of surplus urea produced in the plant.

(ii) Agreement for supply of 3 lakh MT ofUrea and 2.5 LMT of NPK Complex fertilizerin designated grades.

3.7.6 Cooperation in Australia

Indian Farmers Fertilizer Cooperative Ltd(IFFCO) has entered into a ‘Principles of Off-take Agreement’ with Legend InternationalHoldings of Australia to undertake jointmining of rock phosphate in Lady Anniemines (Georgina Basins in Queens land)along with an assured three million MTannual off-take. A total of US $800 millioninvestment has been envisaged forundertaking rock phosphate mining in

21

Australia. IFFCO will receive 30 millionoptions in Legend International Holdings.IFFCO would provide both technical andfinancial facilitation to Legend InternationalHoldings in the development of its phosphatemining and shipment of its product to India.

In Ammonia-Urea sector, KRIBHCO andNWCF, a private company in Australia arein the process of setting up of a coal basesammonia-urea plant in Australia. The projectcost is approx. US $ 2.6 billion andKRIBHCO’s equity will be approx. US $ 165million. The Australian company proposedto enter into a 20 year agreement for supplyof urea. Agreement on mutual Terms &Conditions including the price on which theurea will be made, are yet to be finalized.

3.7.7 Cooperation in Ghana

Given its gas reserves, Ghana is considereda rich source of nitrogenous feedstock.Chairman of Ghana National PetroleumCorporation (GNPC), Ghana during his visitto India, in Sep’2009 and discussed with theSecretary (F) the possibility of cooperationin Fertilizer sector was discussed. It wasproposed to set-up a Ammonia-Urea plant(Gas based) in Ghana. To give proper shapeto the project proposal, an MOU has beensigned in July’2010 at the Government levelbetween the Countries. As per MOU, toproceed further a technical team comprisingof Officers from RCF & PDIL visited Ghana.Site selection Report and the Pre-feasibilityreports were prepared by RCF and PDIL,which were provided to Ghanian Authorities.In January’2011 a team led by Secretary (F)visited Ghana to discuss further modalitiesin the matter. Ghanian Authorities have beenrequested for a quick decision on pricing ofGas.

3.7.8 Discussions for cooperation in fertilizersector

3.7.8.1 Discussion are on with the fertilizer andmining entities in following resource rich

countries for long term cooperation for settingup of projects for production and off take offertilizers:

(i) Discussion at Government level isunderway with the Government of Senegalfor development of Matam phosphate mines.

(ii) Two separate consortia of Indian entitiescomprising IPL & IFFCO and MMTC & RCFare in discussion with M/s Potash One andM/s Athabasca Inc respectively ofSaskatchewan province for setting up JointVenture projects in mining of Potash and offtake to India. Consortium of RCF and MMTCwhich is pursuing with Athabasca, havesigned an MOU for JV project with Athabascafor evaluation and assessment in technical,marketing and financial aspect. They havealso signed a confidentiality Agreement forsharing related information. Consortium ofIFFCO and IPL have requested PotashOnefor providing detailed costing and othereconomic parameters involved in the project.

(iii) RCF and IDC/FOSKOR of South Africaare exploring the possibilities to set up aPhosphoric Acid and Ammonia-Urea fertilizerproject near Maputo Port, the capital city ofMozambique. The project proposes to sourceRock from the new mines of Foskor inPhalaborwa, South Africa. An MOU has beensigned between RCF and IDC/FOSKOR.Department of Fertilizers has been pursuingwith M/s SASOL, for allocation of gas inMozambique for setting up a JV ammonia-urea project.

3.7.8.2 M/s SPIC and Chambal Fertilizers are in theprocess of setting-up a gas basednitrogenous fertilizer plant at Dubai in UAEto produce 4.00 LMT of urea per annum.

3.7.8.3 Discussion are also going on for exploringpossibilities for a Ammonia-Urea projectQatar with buy back by India. IFFCO andQUAFCO (Public sector entity of Qatar) havesigned ‘Agreement of Intention’ on 24.2.2009for the same.

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4.1 Availability of Major Fertilizers During2010-11

Controlled Fertilizer – Urea

4.1.1 The availability of urea, which is the onlyfertilizer under price and partial movementcontrol of Government, remained satisfactorythroughout the Kharif 2010 season as wellas during the current Rabi 2010-11(Up toDecember, 2010).

Kharif 2010

4.1.2 The field opening stock of 2.21 LMT as on1.4.2010 coupled with indigenous productionof 104.12 LMT and imports of 25.83 LMThelped in progressively ensuring adequateavailability to the States throughout theseason. The cumulative availability of ureaat the end of the season was nearly 132.16LMT against the assessed requirement of136.65 LMT. The sales of 126.02 LMT ureaduring Kharif 2010.

Rabi 2010-11

4.1.3 The requirement of urea for Rabi 2010-11has been assessed at 154.14 LMTenvisaging a growth of about 8.79% overthe sales of 141.69 LMT in Rabi 2010-11.The requirement is being met from theopening stocks taken together with estimatedproduction of 108.55 LMT and imports ofabout 54.90 LMT during the season. Thusthe cumulative availability of urea for Rabi2010-11 has been estimated to be about168.55 LMT by the end of 31st March, 2011.

4.1.4 Allocation of urea was restricted to 50% ofproduction of installed capacity of eachmanufacturer during Kharif 2010 and Rabi2010-11. The manufacturers are free to sellthe remaining quantity of urea to the farmers

Chapter-4

anywhere in the country at notified maximumretail price.

4.2 Decontrolled Fertilizers – DAP & MOP

Kharif 2010

4.2.1 In case of fertilizers other than the urea,which are decontrolled, no allocation is madeunder Essential Commodities Act (ECA) bythe Central Government. Assessment ofrequirement of Urea, DAP and MOP is beingmade by the Department of Agriculture &Cooperation to enable better monitoring ofavailability at the national level.

4.2.2 DAP and MOP are the two majordecontrolled and decanalised fertilizers,which may be imported freely.

DAP

4.2.3 The imports of 57.85 LMT of DAP coupledwith indigenous production of -19.14 LMTand the opening stock of 2.02 LMT of DAPas on 1st April, 2010 resulted in satisfactoryavailability of about 79.01 LMT DAP duringKharif 2010 season against the assessedrequirement of 68.75 LMT. The sales of DAPin Kharif 2010 were about 65.05 LMT.

MOP

4.2.4 The imports of 26.54 LMT of MOP takentogether with opening stock of 0.97 LMT ason 1st April, 2010 resulted in availability ofabout 27.51 LMT during Kharif 2010 seasonagainst the assessed requirement of 22.98LMT. The sales of MOP were reported asabout 19.63 LMT.

Rabi 2010-11

DAP

4.2.5 The production of DAP during Rabi 2010-11is estimated to be about 18.53 LMT. Stocks

23

as on 1.10.2010 coupled with estimatedimports will be adequate in meeting thecountry’s requirement of DAP assessed at52.17 LMT during Rabi 2010-11, consideringthat about 5.88 LMT of DAP will be surplustowards the requirement of Rabi 2010-11.

MOP

4.2.6 Stocks of MOP as on 1.10.2010 coupled withadequate imports till March 2011 will ensurethat the country’s requirement of MOP duringRabi 2010-11 is fully met.

4.2.7 Following table summarizes the season-wiseposition in respect of the availability and salesof the major fertilizer i.e. Urea, DAP & MOPduring the last three seasons:

Crop season Demand Cumulative Cumulative %age ofAssessment Availability Sales availability

to assesseddemand

Kharif 2009Urea 136.36 130.83 122.78 95.94DAP 49.21 65.19 61.34 132.47MOP 21.61 22.51 18.52 104.16

Rabi 2009-10Urea 145.53 142.83 141.69 98.14DAP 57.77 42.71 42.57 73.93MOP 22.24 29.07 28.21 130.71

Kharif 2010Urea 136.65 132.16 126.02 96.71DAP 68.75 79.01 65.05 114.92MOP 22.98 27.51 19.63 119.71

4.3 Movement of Fertilizers

4.3.1 Under the Allocation of Business Rules, theDepartment of Fertilizers has been entrustedthe responsibility of ensuring movement,distribution and allocation of controlledfertilizer, i.e. urea, from various fertilizerplants and ports in accordance with the State-wise requirement assessed by theDepartment of Agriculture & Co-operation(DAC). The distribution of imported urea ismade keeping in view the requirements ofeach of the States.

4.3.2 The major share in transportation of fertilizersis of the Railways. During 2009-10, Railwayshad moved about 75% of the fertilizersproduced and/or imported in the country.

4.3.3 Judicious management of the demand-supplybalance has helped in maintaining theaverage lead of fertilizer movement by rail.During 2009-10 the average lead was 827KMs. During the current year the averagelead for the period April-November, 2010would also be almost same.

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24

Chapter-5

5.1 Plan Performance

5.1.1 The installed capacity and production offertilizers in the country at the end of eighthfive year plan, in the terminal year of theninth plan and at the beginning of 5th year oftenth plan (2006-07) are indicated below:

5.1.3 Year-wise consumption, production andimports of fertilizers in nutrients terms aregiven in Annexure-V

5.1.4 The production of fertilizers in nutrient termsduring 2009-10 was 119.00 lakh MT ofnitrogen and 43.21 lakh MT of phosphate.

INSTALLED CAPACITY AND PRODUCTON OF NITROGENOUS AND PHOSPHATIC FERTILIZERSIN EIGHT, NINTH AND TENTH FIVE YEAR PLANS.

(In lakh MT)

Sr. Particulars At the end of At the end of At the beginningNo Eighth Five Year Ninth Plan of 5th year of Tenth

Plan (1996-97) (2001-02) Plan (2006-07)

1 Capacityi) Nitrogen 97.77 120.58 120.61ii) Phosphates 29.05 52.31 56.59

2 Productioni) Nitrogen 85.99 107.68 115.78}ii) Phosphates 25.56 38.60 45.17}

5.1.2 The installed capacity of nitrogen andphosphate in the terminal year (1996-97) ofthe eighth plan was 97.77 lakh MT and 29.05lakh MT, respectively. Three majorphosphatic fertilizer plants werecommissioned during the ninth five year planperiod, namely, Oswal Chemicals &Fertilizers Ltd.-Paradeep, (since taken overby IFFCO), Indo-Gulf Corporation-Dahej andGujarat State Fertilizers Company Ltd.-Sikka-II. Consequent upon reassessment of ureacapacity on the basis of Dr. Y.K. AlaghCommittee and DAP capacity by TariffCommission, despite phasing out of 10 ureaunits due to closure, the installed capacity ofnitrogen and phosphate has increased from97.77 lakh MT at the end of eighth plan to120.61 lakh MT and 29.05 LMT to 56.59LMT respectively during the same period.

The estimated production for 2010-11 is121.75 lakh MT of nitrogen and 45.32 lakhMT of phosphate. Sector-wise targets andachievements in respect of production andcapacity utilization from 2001-02 onwards aregiven in Annexures-VI & VII.

5.2 Plan Outlays

5.2.1 For the Eleventh Five Year Plan (2007-12),Planning Commission has approved anoutlay of Rs. 20627.87 crore consisting ofRs. 1492.00 crore as Domestic BudgetarySupport and Rs. 19135.87 as Internal & ExtraBudgetary Resources (IEBR).

5.2.2 For the year 2010-11, a plan outlay of Rs.2914.99 crore was approved by the PlanningCommission, with Rs. 2699.99 crore to bemet out of IEBR and balance amount of Rs.

25

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215 crore as budgetary support. The detailsof Plan outlays are given Annexure-VIII.

5.2.3 The outlays for 2011-12 is Rs. 3550.22 crore,of which an amount of Rs. 3325.22 crorewill be met from the internal and extrabudgetary resources and the balance amountof Rs. 225.00 crore will be provided by wayof budgetary support. The gross outlay ofRs. 3550.00 crore is for FCI-FAGTMIL (Rs.4.15 crore), Fertilizers ad ChemicalsTravancore Ltd (Rs. 60.74 crore),Bramhaputra Valley Fertilizer Corppration Ltd(Rs. 67.80 crore), Madras Fertilizers Ltd. (Rs.88.95 crore), National Fertilizes Ltd (Rs.2363.08 crore), Project and Development ofIndia Ltd. (Rs. 9.73 crore), RashtriyaChemicals & Fertilizers Ltd (Rs. 293.30crore). Krishak Bharati Cooperative Ltd(Rs.654.96 crore) and other Mis.Departmental Schemes such as (MIS/IT andR&D) 7.50 crore. Department of Fertilizersis exploring possibilities of Joint Venturesabroad. Since there is no firm proposal inhand right now only a token provision of Rs.

0.10 crore has been provided.

5.2.4. Of the total outlay, the budgetary support ofRs. 225.00 crore is for Fertilizers &Chemicals Travancore Ltd. (Rs. 60.74 crore),Madras Fertilizers Limited,(Rs. 88.95 crore),Bramhaputra Valley Fertilizer Corporation Ltd(Rs. 67.80 crore) and other DepartmentalSchemes (Rs. 7.50 crore). Under the otherDepartmental Schemes, there is a provisionof Rs. 2.00 crore for S&T Programme: Rs.5.50 crore for Information Technology, Rs.0.001 crore has been for investment for JointVentures abroad.

5.2.5. For the year 2010-11, there was netbudgetary provision of Rs. 50,215.00 crore.Rs. 215.00 Crore under Plan and Rs.50,000.00 crore under Non-Plan. In theRevised Estimates (RE) for 2010-11, the netprovision is Rs. 55,215.00 crore, Rs. 215.00crore under Plan and Rs. 55.000.00 croreunder Non-Plan. The details of Non-Plan andPlan Provision in 2010-11 (BE) and (RE) aregiven in Annexure-IX.

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6.1 Measures of support for fertilizers

6.1.1 For sustained agricultural growth and topromote balanced nutrient application, it isimperative that fertilizers are made availableto farmers at affordable prices. With thisobjective, urea being the only controlledfertilizer, is sold at statutorily notified uniformsale price, and decontrolled phosphatic andpotassic fertilizers are sold at indicativemaximum retail prices (MRPs). The problemsfaced by the manufacturers in earning areasonable return on their investment withreference to controlled prices, are mitigatedby providing support under the New PricingScheme for urea units and the ConcessionScheme for decontrolled phosphatic andpotassic fertilizers. The statutorily notifiedsale price and indicative MRP is generallyless than the cost of production of therespective manufacturing unit. The differencebetween the cost of production and theselling price/ MRP is paid as subsidy/concession to manufacturers. As theconsumer prices of both indigenous andimported fertilizers are fixed uniformly,financial support is also given on importedurea and decontrolled phosphatic andpotassic fertilizers.

6.2 Measures of Support for Urea

6.2.1 Until 31.3.2003, the subsidy to ureamanufacturers was being regulated in termsof the provisions of the erstwhile RetentionPrice Scheme (RPS). Under RPS, thedifference between retention price (cost ofproduction as assessed by the Governmentplus 12% post tax return on networth) andthe statutorily notified sale price was paid assubsidy to each urea unit. Retention priceused to be determined unit wise, whichdiffered from unit to unit, depending uponthe technology, feedstock used, the level of

Chapter-6

capacity utilization, energy consumption,distance from the source of feedstock/rawmaterials, etc. Though the RPS did achieveits objective of increasing investment in thefertilizer industry, and thereby creating newcapacities and enhanced fertilizer productionalong with increasing use of chemicalfertilizers, the scheme had been criticizedfor being cost plus in nature and not providingincentives for encouraging efficiency.

6.2.2 Given the importance of fertilizer pricing andsubsidization in the overall policyenvironment, which has direct implicationswith reference to the growth and developmentof agriculture and sustainability of the fertilizerindustry, the need for streamlining thesubsidy scheme in respect of urea producingunits had been felt for a long time. A HighPowered Fertilizer Pricing Policy ReviewCommittee (HPC) was constituted, under thechairmanship of Prof. C.H. Hanumantha Rao,to review the existing system of subsidizationof urea, suggest an alternative broad-based,scientific and transparent methodology, andrecommend measures for greatercohesiveness in the policies applicable todifferent segments of the industry. The HPC,in its report submitted to the Government on3rd April 1998, inter-alia, recommended thatunit-wise RPS for urea may be discontinuedand, instead, a uniform Normative ReferralPrice be fixed for existing gas based ureaunits and also for DAP and a FeedstockDifferential Cost Reimbursement (FDCR) begiven for a period of five years for non-gasbased urea units.

6.2.3 The Expenditure Reforms Commission(ERC), headed by Shri K.P. Geethakrishnan,had also examined the issue of rationalizingfertilizer subsidies. In its report submitted on20th September 2000, the ERCrecommended, inter-alia, dismantling of

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existing RPS and in its place the introductionof a Concession Scheme for urea units basedon feedstock used and the vintage of plants.

6.2.4. The recommendations of ERC wereexamined in consultation with the concernedMinistries/Departments. The views of thefertilizer industry and the State Governments/Union territories, and economists/researchinstitutes were also obtained. After dueexamination of all these views, a New PricingScheme (NPS) for urea units for replacingthe RPS was formulated and notified on30.1.2003. The new scheme took effect from1.4.2003. It aims at inducing the urea unitsto achieve internationally competitive levelsof efficiency, besides bringing in greatertransparency and simplification in subsidyadministration.

6.2.5. New Pricing Scheme (NPS) for urea wasintroduced w.e.f. 1st April, 2003. The Stage-I of NPS was of one year duration from 1st

April, 2003 to 31st March, 2004 and Stage-II was of two year duration from 1st April to31st March, 2006. With the Stage-III of NPSbeing implemented w.e.f. 1st October, 2006,the Stage-II of NPS stands extended upto31st September, 2006.

6.2.6 Under NPS, the existing urea units have beendivided into six groups based on vintage andfeedstock for determining the group basedconcession. These groups are : Pre-1992gas based units, post-1992 gas based units,pre-1992 naphtha based units, post-1992naphtha based units, fuel oil/low sulphurheavy stock (FO/LSHS) based units andmixed energy based units. The mixed energybased group shall include such gas basedunits that use alternative feedstock/fuel tothe extent of more than 25% as admissibleon 1.4.2002.

6.2.7 Under NPS, escalation/de-escalation is givenin respect of variable cost related to changesin the price of feedstock, fuel, purchasedpower and water. Under the scheme, noreimbursement is allowed in respectofinvestment made by a unit for improvementin its operations nor are the gains as a result

of operational efficiencies to be mopped up.

6.2.8 It has also been provided under the schemethat the concession rates during Stage-II shallbe adjusted for reduction in capital relatedcharges and enforcement of efficient energynorms. Pre-set energy norms for urea unitsduring Stage-II of NPS have already beennotified and intimated to urea units.Reduction in rates of concession duringStage-II of NPS for urea units on account ofreduction in capital related charges have alsobeen notified and intimated to urea units.

6.3 Amendments to New Pricing SchemeStage - III for Urea Units.

Following amendments in NPS III have beenmade

6.3.1 It has been decided that the reduction in thefixed cost of each Urea units strictly due toGroup Averaging principle under the NewPricing Scheme III will be restricted to 10%of the Normated Fixed Cost computed underthe base concession rates. The limitation onreduction of fixed cost will be applicable w.e.f1st April, 2009.

6.3.2 Capacity utilization of Post – 1992 Napthabased Group Average will be considered as95% instead of 98% for calculating the baseconcession rates of urea units provided nocost towards conversion is recognized underNPS III. The approved amendments will helpthe indigenous urea units reduce their lossesdue to the group averaging under NewPricing Scheme Stage - III and help them togenerate resources for reinvestment in theirplants towards modernization and increasedefficiency.

6.3.3 To maintain stocks of urea in case there iseither a shortfall in production due todisruption in supplies of feedstocks or delay/disruption in imports and to tide over thesudden spurt in demand/shortages, a bufferstocking scheme for urea is underimplementation in major States. Thecompanies are reimbursed buffer stockingexpenses on following parameters.

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The company operating the buffer stock willbe entitled to Inventory Carrying Cost (ICC)at a rate 1 percentage point less than thePLR of SBI as notified from time to time.This rate would be applicable at Rs 4650per MT (MRP less than the dealer’s margini.e. Rs 4830- Rs 180) for the quantity andthe duration for which the stock is carried asbuffer. In case of cooperatives, it will be atRs 4630 per MT as dealers margin in thiscase is Rs 200 per MT.

I. The company will be paid warehousingand insurance charges at the rate ofRs 23 per tonne per month on thequantity carried as buffer.

II. Since the material will be moved in twostages i.e. from the plant to the bufferstocking point and then on toconsumption points, additional handlingcharges at the rate of Rs 30 per MT willbe paid to the Fertilizer Company onthe quantity sold from the buffer stock.

III. In addition, freight from the bufferstocking warehouse to the block in caseof movement outside the district in whichbuffer stocking godown is located, willalso be paid to the company, inaccordance with the provisions underthe Uniform policy for freight subsidyannounced by the Government witheffect from 1st April, 2008.

6.4 Phased Decontrol of Urea Distribution

6.4.1 As per the New Pricing Scheme for ureaunits, it was also envisaged that decontrol ofurea distribution/movement will be carried outin a phased manner. During Stage-I, i.e. from1.4.2003 to 31.3.2004, the allocation of ureaunder the Essential Commodities Act 1955(ECA) was restricted up to 75% and 50% ofinstalled capacity (as reassessed) of eachunit in Kharif 2003 and Rabi 2003-04,respectively. It was further envisaged thatduring Stage-II commencing from 1.4.2004,urea distribution will be totally decontrolledafter evaluation of Stage-I and with theconcurrence of the Ministry of Agriculture.

6.4.2 The total decontrol of urea distribution wasdeferred initially for a period of six monthsw.e.f. 1.4.2004 i.e., up to Kharif 2004, whichhas been subsequently deferred up to Rabi2005-06 i.e., up to 31.3.2006. The existingsystem of 50% ECA allocation and 50%outside ECA allocation has been extendedupto 31-3-2010.

6.4.3 The pricing policy for urea units for Stage-IIIof New Pricing Schemes (NPS) which iseffective from 1.10.2006 to 31.3.2010 hasbeen formulated keeping in view therecommendations of the Working Group setup under the Chairmanship of Dr. Y.K. Alagh.The salient features of the proposed Stage-III Policy which is aimed at promoting furtherinvestment in the urea sector, are tomaximize urea production from the Urea unitsincluding through conversion of non-gasbased Units to gas, incentivising additionalurea production and encourage investmentin Joint Venture (JV) projects abroad. It isalso aimed at establishing a more efficienturea distribution and movement system inorder to ensure availability of urea in theremotest corners of the country.

6.4.4 The Stage-III policy seeks to promote usageof most efficient and comparatively cheaperfeed stock natural gas/LNG for production ofurea in the country. The policy lays down adefinite plan for conversion of all non-gasbased urea units to gas. At present, thereare 8 urea units (MFL,SPIC, ZIL, MCFL,GNFC, NFL-Nangal, NFL-Bhatinda, NFL-Panipat) in the country which are based onnaphtha or FO/LSHS as feed stock. All these8 units are required to switch over to naturalgas/LNG within a period of next three years.Beyond this time limit, the high cost ureaproduced by these non-gas based units willnot be entitled to subsidy at the existing levelsand it will be restricted to import parity priceof urea. The units, which are unable to tieup gas will have to explore alternativefeedstocks like Coal Bed Methane (CBM)and coal gas. SFC has started using gasw.e.f. 22.9.2007.

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6.4.5 The availability of gas is critical to the growthof urea industry in the country. Presently,the indigenous availability is not sufficient tomeet the demand of existing gas based ureaunits in the country. To this end, theDepartment of Fertilizers constituted aCommittee under the chairmanship ofSecretary(P&NG) with Secretary(Fertilizers),Secretary(Expenditure), Secretary(PlanningCommission) as its members to deliberateupon various issues relating to connectivityand assured supply of gas to the fertilizersector. The Committee will also develop anappropriate mechanism for fixing the priceof the gas in a transparent manner. It isexpected that the availability of gas in thecountry will improve from 2008-09 onwardsand the new policy, taking into account theabove fact, has laid down specific timelinesfor conversion of all non-gas based units inthe country to gas.

6.4.6 In order to incentivise conversion of non gasbased units to gas, the policy provides for aregime where there will be no mopping up ofenergy efficiency for a fixed period of fiveyears for naphtha based as well as FO/LSHSbased units. The policy also recognizes thecomparative higher cost of conversion of FO/LSHS based units to gas and provides forone time capital investment assistance tothese units for conversion to gas during thenext three years. A specific policy to thiseffect has been announced by theGovernment on 6th March 2009.

6.4.7 The policy also lays down a formulation todis-incentivise high cost production from thenon-gas based units and to facilitate theirearly conversion to gas. It is proposed thatthese units may be allowed to produce 100%of capacity should they adhere to an agreedtimetable for conversion to Gas and tie uprequisite Gas/CBM/Coal gas. If they do not,they will be given only 75% of the fixed costsbeyond 93% of capacity utilization in the 1st

year (1.4.2007) and 50% of the fixed costbeyond 93% capacity utilization from 2nd year(1.4.2008) onwards.

6.4.8 Considering the likely growth in consumptionof urea in the years to come, the policy seeksto encourage the existing urea units toproduce beyond 100% of their installedcapacities by introducing a system ofincentives for additional urea productionsubject to merit order procurement. Thepolicy of requiring prior Governmentpermission for additional urea production hasbeen dispensed with. All production between100% and 110% of the existing reassessedcapacity will be incentivised on the existingnet gain sharing formula between theGovernment and the unit in the ratio of 65:35respectively with the proviso that the totalamount paid to the units after including thecomponent of variable cost will be cappedat the units own concession rate. The unitsincreasing production beyond 110% will becompensated at their concession rate subjectto the over all cap of Import Parity Price(IPP). To the extent Government does notrequire any quantities of additionalproduction, the urea companies would befree to dispose of the remaining quantitiesby way of export or sale to complexmanufacturers without any permission. Thepolicy also encourages setting up of JointVenture projects abroad where gas is readilyavailable at reasonable prices. It recognizesour heavy dependence on imported rawmaterials/intermediates and feedstock in thefertilizer sector and to properly leverage thisposition, the policy seeks to createspecialized agency to coordinate investmentsabroad in fertilizer sector.

6.4.9 The policy seeks to rationalize distributionand movement of urea and the system offreight reimbursement with the objective ofensuring availability of urea in all parts ofthe country. The Government will continueto regulate movement of urea up to 50% ofproduction depending upon the exigency ofthe situation. The State Governments will berequired to allocate the entire quantity ofplanned urea arrivals including both regulatedand de-regulated urea in districtwise,monthwise and supplierwise format. The

30

units will be required to maintain a districtlevel stock point and the subsidy will be paidonly when the urea reaches the district. Themonitoring of movement and distribution ofurea throughout the country up to the districtlevel will be done by an On line Web basedmonitoring system. To facilitate movementof fertilizers to far flung area, thereimbursement of freight will be based onactual leads for rail and road movement. Therail freight will be reimbursed as per theactual expenditure and the road freight willbe escalated as per composite road transportindex every year. One time enhancement of33% will be granted on the road componentof primary freight to offset the impact ofSupreme Court directive regarding maximumtruck load limit of 9 MT on road vehicles.The existing special freight subsidy schemewill continue for supply of urea to the NorthEastern States except Assam and Jammu &Kashmir. In addition, the Department willoperate a buffer stock through the stateinstitutional agencies/fertilizer companies inmajor urea consuming States up to a limit of5% of the seasonal requirement.

6.4.10 Further to ensure availability of fertilizer inall parts of the country, the freight regime onall subsidized fertilizers including urea hasbeen revised with effective from 1st April,2008 through Uniform Pricing Policy forfreight subsidy. Under the new policy the railfreight will be paid at actuals whereas theroad freight will be based on normated districtlead worked out from the nearest rail rakepoint for each district in the country andnormative per Km rate recommended byTariff Commission.

6.4.11 The Stage-III of NPS seeks to carry on theexisting 6 group classification of ureamanufacturing units in the country withupdation of all costs upto 31st March, 2003.The respective pre-set energy consumptionnorm of each urea units during Stage-II ofNPS or the actual energy consumptionachieved during the year 2003, whichever islower, will be recognized as the norm for

Stage-III of NPS. The policy also providesfor updation of costs on account of cost ofbags through 3 year moving weightedaverage cost of bags to compensate for therise in prices for the last three years. It alsoprovides for payment of sales tax on inputand other taxes recognized under erstwhileRetention Price Scheme, on actual basis.

6.4.12 NPS Stage-III seeks to take forward theprinciples of uniformity and efficiency in ureaproduction as enunciated during Stage I andII of NPS and also aims at bringing in moretransparency in distribution of fertilizersacross the country. The policy will encourageincrease in indigenous production from theexisting urea units in the country and facilitateearly conversion of non-gas based units togas leading to substantial savings in subsidy.The launch of Fertilizer Monitoring System(FMS) to monitor movement of fertilizers uptodistrict level and the freight rationalizationproposed in the new policy, the distributionof fertilizers in remote corners of the countrywill improve considerably without anycomplaints of shortages in future. TheDepartment of Fertilizers will continue itsendeavour to promote the growth of fertilizerindustry in the country and ensure adequateavailability of fertilizers to the farmers.

6.4.13 The tenure of New Pricing Scheme (Stage-III) policy was upto 31-03-2010. Theprovisions of Policy for Stage-III of NPS hasbeen extended till further orders onprovisional basis. The formulation of NewPricing policy commencing from 1.4.2010 isunder consideration of the Government.

6.5 Formulation of policy for existing ureabeyond Stage-III of New Pricing Scheme

A Group of Minister (GoM) constituted toreview the fertilizer policy has decided in themeeting held on 5th January 2011 to set upa Committee under the Chairmanship of ShriSaumitra Chaudhuri, Member, PlanningCommission to examine the proposal forintroduction of Nutrient Based Subsidy

31

(NBS) in urea and to make suitablerecommendations.

6.6 Pricing Policy for Investment in Fertilizersector

6.6.1 A pricing policy was announced on 29.1.2004for setting up new urea projects andexpansion of existing urea projects foraugmenting the domestic production capacityof urea to meet the growing demand forenhancing the agricultural production in thecountry. The new policy aimed at enablingthe entrepreneurs to decide about theirinvestment plans in the fertilizer sector. Thenew policy was expected to encouragesetting up of plants with internationalefficiency standards for fresh investment innew projects and expansion of existing units.The policy was based on the principle ofLong Run Average Cost (LRAC).

6.6.2 The above policy was not successful inattracting investment in this sector. The non-availability of natural gas, which is the criticalfeedstock for production of urea, has alsobeen one of the major constraints in furtheraddition of indigenous capacity for productionof urea. However with the projected improvedavailability of gas from 2009 onwards, it isexpected that investment in fertilizer sectorwill also take place. The Government hasrecently announced on 4th September 2008,a new investment policy for urea sector toattract the much required investment in thissector. The policy is based on IPPbenchmark and has been finalized inconsultation with the industry.

6.6.3 The policy is expected to lead to savings tothe Government in the form of availability ofUrea at a price below IPP and will also leadto indirect savings by bringing down theimport price due to reduction in imports. TheNew Investment Policy aims at revamp,expansion, revival of existing urea units andsetting up of Greenfield/ Brownfield projects.The policy is likely to substantially bridgethe gap in next five years between theconsumption and domestic production

subject to confirmed and adequate availabilityof gas at reasonable prices. The salientfeatures of the new investment policy are asunder :-

1. The policy is based on Import ParityPrice (IPP) benchmarked with suitablefloor and ceiling prices of USD 250/MTand USD 425/MT respectively.

2. Revamp project: Any improvement incapacity of existing plants throughinvestment upto Rs. 1000 crore, in theexisting train of ammonia-ureaproduction will be treated as revamp ofexisting units. The additional urea fromthe revamp of existing units will berecognized at 85% of IPP with the floorand ceiling price as indicated above.

3. Expansion projects: Setting up of a newammonia-urea plant (a separate newammonia-urea train) in the premises ofthe existing fertilizer plants, utilizingsome of the common utilities will qualifyfor being treated as expansion project.The investment should exceed aminimum limit of Rs.3000 crore. Theurea from the expansion of existing unitswill be recognized at 90% of IPP, withthe floor and ceiling price as indicatedabove.

4. Revival/Brownfield projects: The ureafrom the revived units of HindustanFertilizer Corporation Limited(HFCL)and Fertilizer Corporation of IndiaLimited (FCIL) will be recognized at 95%of IPP with prescribed floor & ceilingprice, if the revival of closed units takesplaced in public sector.

5. Greenfield projects: The pricing ofGreenfield projects will be decidedbased on a bidding process which willbe for a discount over IPP, after firmingup of the location (States) of theproposed new plants.

6. Gas transportation charges: Anadditional gas transportation cost will be

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paid to units undertaking expansion andrevival on the basis of actuals (upto 5.2Gcal per MT of urea) as decided by theRegulator(Gas) subject to a maximumceiling of USD 25 per MT of urea.

7. Allocation of Gas: Only non-APM gaswill be considered for the newinvestment in urea sector.

8. Coal gasification based Urea Projects:The Coal gasification based ureaprojects will also be treated on par witha revival or a Greenfield project as thecase may be. In addition, any otherincentives or tax benefits as providedby Government for encouraging coalgasification technology will also beextended to these projects.

9. Joint Ventures abroad: The JointVenture projects abroad in gas richcountries are also proposed to beencouraged through firm offtakecontracts with pricing decided on thebasis of prevailing market conditionsand in mutual consultation with the jointventure company. However, theprinciple for deciding upon the maximumprice will be the price achieved underGreenfield projects or 95% of IPP asproposed for revival projects (in absenceof any Greenfield projects) with a capof USD 405 CIF India per MT and afloor of USD 225 CIF India per MT(inclusive of handling and baggingcosts)

10. Time period for proposed investmentpolicy: Only those revamp projectswhich start production of additionalcapacities within four years ofnotification of the new policy wouldqualify for the dispensationrecommended above. Similarlyproduction from expansion and revival(brownfield) units that come about withinfive years of notification of the newpolicy would qualify for dispensationprovided in the policy. If the production

does not come through within thestipulated time period, such brownfieldprojects will be treated similar to aGreenfield projects wherein price will bedecided through limited bidding options.The time period for setting up of newJoint Ventures would also be five yearsunder the new investment policy.

6.6.4 The fertilizer Industry has respondedpositively towards the New Investment Policyby initiating investment decision for revampof existing capacities. The fertilizer units likeIFFCO-Aonla – I & II, IFFCO-Phulpur – I &II, Chambal Fertilizers and Chemicals Limited(CFCL) – Gadepan – I&II, NagarjunaFertilizers and Chemicals Limited (NFCL) –Kakinada – I & II and the unit of TataChemicals Limited - Babrala have informedregarding availability of additional productionof urea after revamp. Further, RCF, Thal;KRIBHCO- Hazira and NFL, Vijaipur haveundertaken revamp of their units.

6.6.5 The companies have been regularlyrequesting the Government for either firmallocation of gas at predetermined fixedprices from domestic gas sources or insulateindustry from any additional liability arisingdue to increase in delivered price of gas bycorrespondingly increasing the floor pricesand in the absence of commitment onallocation of natural gas at fixed prices. Theinvestment decisions exceeding Rs.30,000crore are under hold. The revival and closedplants is not envisaged in public sector andbidding is not a feasible option in Green Fieldinvestment. Keeping in view the aboveconstraint expressed by the fertilizer industryregarding pricing policy and firm availabilityof gas, the EGOM has decided that thedemand emanating beyond 2008-09 from de-bottlenecking of the expansion of fertilizerplants, conversion of naphtha-based and fueloil-based fertilizer plants, and revival ofclosed fertilizer plants would be given thehighest priority and they would be suppliednatural gas as and when they are ready toutilize the gas. To address the issue of

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uncertainty in gas price, a proposal foramendments in the New Investment Policynotified on 4th September 2008 is underconsideration of Department of Fertilizers.

6.7 Policy for encouraging production andavailability of fortified and coatedfertilizers in the country

6.7.1 Department of Fertilizers has notified on 2nd

June 2008 a policy for encouragingproduction and availability of fortified andcoated fertilizers in the country. In terms ofthis policy, the indigenous manufacturers/producers of the subsidized fertilizers areallowed to produce fortified/coated subsidizedfertilizers up to a maximum of 20% of theirtotal production of respective subsidizedfertilizers. The manufacturers/producers areallowed to sell all the FCO approved fortified/coated subsidized fertilizers, except forZincated Urea and Boronated SSP at a priceup to 5% above the MRP of the subsidizedfertilizer as indicated in the table above. ForZincated Urea and Boronated SSP, themanufacturers are allowed to charge up to10% above MRP of Urea and SSPrespectively.

6.7.2 With effect from 11th January 2011, theindigenous manufacturers/producers of ureaare allowed to produce Neem Coated ureawhich has been incorporated in Schedule 1of the Fertilizer Control Order, 1985, up to amaximum of 35% of their total production ofrespective subsidized fertilizers. The ceilingof production of Neem Coated urea has beenincreased from the existing limit of 20% to amaximum of 35% of their total production ofrespective subsidized fertilizers. Theproduction of Neem Coasted Urea will betaken as company wise and not plant/unitwise. The fertilizer companies will also berequired to submit a certificate from thestatutory auditors regarding total productionof Neem Coated Urea as against the totalproduction of subsidized fertilizer to indicatethe adherence to the ceiling of 35% asindicated above.

6.8 Policy for Uniform freight subsidy on allfertilizers under the fertilizer subsidyregime

6.8.1 To ensure easy availability of fertilizers in allparts of the country, the Department ofFertilizers has notified on 17th July 2008 auniform freight subsidy regime for allsubsidized fertilizers, wherein freight subsidywill be paid separately on receipt of allsubsidized fertilizers in the districts/blocks.The freight subsidy will constitute of twocomponents, namely, rail freight and roadfreight. The rail freight will be paid on actual,and the road freight will be paid on anormative average district lead (average ofthe actual leads of block headquarters fromthe nearest rail rake point) and a normativeper KM rate.

6.8.2 The uniform freight subsidy regime willfacilitate availability of fertilizers in all partsof the country, especially in areas which arefar from the production facilities and ports byreimbursing freight on actual.

6.9 Concession scheme/nutrient basedsubsidy policy for decontrolledphosphatic & potassic fertilizers

Background

6.9.1. Government of India decontrolled Phosphaticand Potassic (P&K) fertilizers with effect from25th August 1992 on the recommendationsof Joint Parliamentary Committee.Consequent upon the decontrol, the pricesof the Phosphatic & Potassic fertilizersregistered a sharp increase in the market,which exercised an adverse impact on thedemand and consumption of the same. Itled to an imbalance in the usage of thenutrients of N, P & K (Nitrogen, Phosphateand Potash) and the productivity of the soil.Keeping in view the adverse impact of thedecontrol of the P&K fertilizers, Departmentof Agriculture & Cooperation introducedConcession Scheme for decontrolledPhosphatic & Potassic (P&K) fertilizers onad-hoc basis w.e.f. 1.10.1992, which has

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been allowed to continue by the Governmentof India upto 31.3.2010 with changedparameters from time to time. Then theGovernment introduced Nutrient BasedSubsidy Policy w.e.f. 1.4.2010 (w.e.f.1.5.2010 for SSP) in continuation of theerstwhile Concession Scheme fordecontrolled P & K fertilizers. The basicpurpose of the Concession Scheme andNutrient Based Subsidy Policy has been toprovide fertilizers to the farmers at thesubsidized prices. Initially, the ad-hocConcession Scheme was introduced forsubsidy on DAP, MOP, NPK Complexfertilizers. This scheme was also extendedto SSP from 1993-94. Concession wasdisbursed to the manufacturers/importers bythe State Governments during 1992-93 and1993-94 based on the grants provided byDepartment of Agriculture & Cooperation.Subsequently, DAC started releasingpayment of concession to the fertilizercompanies based on the certificate of salesissued by the State Governments on 100%basis. The Government introduced thesystem of releasing 80% ‘On Account’payment of concession in 1997-98 to thefertilizer companies month-wise, which wasfinally settled based on the certificate of salesissued by the State Government. During1997-98, Department of Agriculture &Cooperation also started indicating an allIndia uniform Maximum Retail Price (MRP)for DAP/NPK/MOP. The responsibility ofindicating MRP in respect of SSP rested withthe State Governments. The Special FreightSubsidy Reimbursement Scheme was alsointroduced in 1997 for supply of fertilizers inthe difficult areas of J&K and North-easternStates, which continued upto 31.3.2008.Based on the cost price study of DAP andMOP conducted by Bureau of IndustrialCosts & Prices (BICP - now called TariffCommission), Department of Agriculture &Cooperation started announcing rates ofconcession based on the cost plus approachon quarterly basis w.e.f. 1.4.1999. The totaldelivered cost of fertilizers being invariablyhigher than the MRP indicated by the

Government, the difference in the deliveredprice of fertilizers at the farm gate and theMRP was compensated by the Governmentas subsidy to the manufacturers/importersfor selling the fertilizers at the MRP indicatedby the Government. The administration ofthe scheme was transferred from Departmentof Agriculture & Cooperation to Departmentof Fertilizers w.e.f. 1.10.2000. TheGovernment introduced a new methodologyfor working out subsidy to complex fertilizersw.e.f. 1.4.2002 based on therecommendations of the Tariff Commission.The complex manufacturers were divided intogroups based on feedstock for sourcingNitrogen, such as gas, naphtha, importedammonia. With the passage of time, thestructure of DAP industry also changed assome of the new DAP manufacturing plantswere established using the Rock Phosphatefor manufacturing indigenous Phosphoricacid/DAP. Accordingly, the Tariff Commissionmade a fresh Cost Price Study and submittedits report in February 2003. Payment ofconcession to the DAP manufacturing unitsfrom 2003-04 to 2007-08 was made as pertwo groups depending upon the source ofthe raw materials (Rock Phosphate/Phosphoric acid). Based on the decisions ofthe Government in 2004-05, Department ofFertilizers framed a proposal suggestingmethodology to link phosphoric acid pricewith 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. Therecommendations of the Expert Group wereconsidered by an Inter-Ministerial Group(IMG). Tariff Commission conducted freshcost price study of DAP/MOP and NPKcomplexes and submitted its report inDecember 2007. Based on the examinationof the Tariff Commission Report and the long-term approach suggested by the ExpertGroup under the Chairmanship of Prof. AbhijitSen, the Government approved theConcession Scheme with effect from1.4.2008 for DAP/MOP/NPK Complexes/MAP, which continued upto 31.3.2010 with

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certain modifications. The final rates ofconcession were worked out on monthlybasis. Concession for indigenous DAP wasthe same as that of imported DAP (on thebasis of import parity price). Concession oncomplex fertilizers was based on themethodology recommended by TariffCommission with certain modifications. TheNPK complex industry was divided into 4groups, depending upon the source ofNitrogen, vis-à-vis, gas, naphtha, importedUrea-ammonia mixture and importedAmmonia. A separate cost of ‘S’ for Sulphurcontaining complex fertilizers was recognizedw.e.f. 1.4.2008. The input/fertilizer prices forConcession Scheme was derived on thebasis of an outlier methodology. The BufferStocking Scheme was allowed to continuewith 3.5 Lakh MTs for DAP and 1 Lakh MTsfor MOP as buffer. Modifications in certainelements of the Concession Scheme werealso carried out with effect from 1.4.2009 toadjust parameters of concession scheme toInternational pricing dynamics and rationalize‘N’ pricing group-wise as well as paymentsystem. Certain changes were effected inthe existing policy for P &K Fertilizers.Accordingly, w.e.f. 1.4.2009 final rates ofconcession were worked out on monthlybasis, taking into account the averageinternational price of the month precedingthe last month or the actual weighted averageC&F landed price at the Indian ports for thecurrent month, whichever lower with respectto DAP and MOP. In case of raw materials/inputs for complex fertilizers, there was alag of one month. From 1.12.2008, paymentof concession has been made to themanufacturers/importers of the Decontrolledfertilizers (except SSP) on the basis of arrival/receipt of fertilizers and certificate of receiptby the State Government/statutory auditor ofthe company subject to final settlement onthe basis of sale of the quantity. The MRPsof the P&K fertilizers, which has beenindicated by the Government/StateGovernment, has been constant since 2002till 31.3.2010. The MRPs of the NPKcomplexes were reduced w.e.f. 18.6.2008.

In order to enhance the basket of fertilizersin the Concession Scheme, Mono-Ammonium Phosphate (MAP) was includedinto the Concession Scheme w.e.f. 1.4.2007,Triple Super Phosphate (TSP) was inductedinto the Concession Scheme w.e.f. 1.4.2008and Ammonium Sulphate (AS) manufacturedby M/s FACT and M/s GSFC was inductedw.e.f. 1.7.2008. The rates of concessionduring 2009-10 under the ConcessionScheme for decontrolled P & K fertilizers(except SSP) were as per Annexure-X.

6.9.2 (A) Nutrient Based Subsidy Policy fordecontrolled Phosphatic & Potassicfertilizers

In the implementation of ConcessionScheme, it has been experienced that noinvestment has taken place in last decade.The subsidy outgo increased exponentiallyby 530% during 2004 to 2009 with about90% of the increase due to rise in theinternational prices of fertilizers and inputs.Agricultural productivity did not registerincrease in commensurate with the increasein the subsidy bill. The MRP of the fertilizersremained constant from 2002 onwards. AGroup of Ministers (GoM) constituted to lookinto all aspects of the fertilizer regime,recommended that Nutrient Based Subsidy(NBS) may be introduced based on thecontents of the nutrients in the subsidizedfertilizers. The Hon’ble Finance Minister inits Budget Speech 2009 announced forintroduction of Nutrient Based Subsidy Policyfor Phosphatic & Potassic fertilizers with theobjective of ensuring Nation’s food security,improving agricultural productivity andensuring the balanced application offertilizers. The Government introduced theNutrient Based Subsidy (NBS) Policy w.e.f.1.4.2010 in continuation of the erstwhileConcession Scheme for decontrolled P & Kfertilizers (w.e.f. 1.5.2010 for SSP). Thedetails of Nutrient Based Subsidy Policy areas under:

(i) NBS is applicable for Di AmmoniumPhosphate (DAP, 18-46-0), Muriate of

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Potash (MOP), Mono AmmoniumPhosphate (MAP, 11-52-0), Triple SuperPhosphate (TSP, 0-46-0), 12 grades ofcomplex fertilizers and AmmoniumSulphate (AS - (Caprolactum grade byGSFC and FACT), which were coveredunder the earlier Concession Schemefor Phosphatic and Potassic (P&K)fertilizers up to 31st March 2010 andSingle Super Phosphate (SSP). Primarynutrients, namely Nitrogen ‘N’,Phosphate ‘P’ and Potash ‘K’ andnutrient Sulphur ‘S’ contained in thefertilizers mentioned above are eligiblefor NBS.

(ii) Any variant of the fertilizers mentionedabove with secondary andmicronutrients (except Sulphur ‘S’), asprovided for under FCO, is also eligiblefor subsidy. The secondary and micro-nutrients (except ‘S’) in such fertilizersattracts a separate per tonne subsidyto encourage their application along withprimary nutrients.

(iii) An Inter-Ministerial Committee (IMC)has been constituted with Secretary(Fertilizers) as Chairperson and JointSecretary level representatives ofDepartment of Agriculture &Cooperation (DAC), Department ofExpenditure (DOE), PlanningCommission and Department ofAgricultural Research and Education(DARE). This Committee recommendsper nutrient subsidy for ‘N’, ‘P’, ‘K’ and‘S’ before the start of the financial yearfor decision by the Government(Department of Fertilizers). The IMCalso recommends a per tonne additionalsubsidy on fortified subsidized fertilizerscarrying secondary (other than ‘S’) andmicro- nutrients. The Committeeconsiders and recommends inclusion ofnew fertilizers under the subsidy regimebased on application of manufacturers/importers and its need appraisal by theIndian Council for Agricultural Research(ICAR), for decision by the Government.

(iv) NBS to be paid annually on eachnutrient namely, ‘N’, ‘P’, ‘K’ and ‘S’ hasbeen decided by the Government for2010-11 on recommendation of IMC.For 2010-11, per kg NBS and per tonneNBS for each subsidized fertilizer w.e.f1st April 2010 has been announced.

(v) Distribution and movement of fertilizersalong with import of finished fertilizers,fertilizer inputs and production byindigenous units continues to bemonitored through the online web based“Fertilizer Monitoring System (FMS)” asbeing done under the outgoingConcession Scheme for P&K fertilizers.

(vi) 20% of the price decontrolled fertilizersproduced/imported in India is now in themovement control under the EssentialCommodities Act 1955 (ECA).Department of Fertilizers will regulatethe movement of these fertilizers tobridge the supplies in under-servedareas.

(vii) In addition to NBS, freight for themovement and distribution of thedecontrolled fertilizers by rail and roadis being provided to enable wideravailability of fertilizers in the country.

(viii) Import of all the subsidized P&Kfertilizers, including 13 grades ofcomplex fertilizers has been placedunder Open General License (OGL).Earlier, no concession was available forimported complex fertilizers. Now, NBSis available for imported complexfertilizers also. However, subsidy will notbe applicable on imported AmmoniumSulphate (AS), as NBS is applicableonly to Ammonium Sulphate producedby FACT and GSFC, both Public Sectorentities. Import of Urea is canalizedduring the first phase of NBS Policy andUrea continues under Governmentcontrol. MRP of Urea has beenincreased by 10% w.e.f. 1.4.2010 andis ‘ 5310 PMT.

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(ix) Though the market price of subsidizedfertilizers, except Urea is determinedbased on demand-supply balance, thefertilizer companies are required to printMaximum Retail Price (MRP) along withapplicable subsidy on the fertilizer bagsclearly. Any sale above the printed netMRP is punishable under the EC Act.

(x) Manufacturers of customized fertilizersand mixture fertilizers are eligible tosource subsidized fertilizers from themanufacturers/ importers after theirreceipt in the districts as inputs formanufacturing customized fertilizers andmixture fertilizers for agriculturalpurpose. There is no separate subsidyon sale of customized fertilizers andmixture fertilizers.

(xi) A separate additional subsidy isprovided to the indigenousmanufacturers producing complexfertilizers using Naphtha based captiveAmmonia to compensate for the highercost of production of ‘N’. However, thiswill be for a maximum period of twoyears during which the units will haveto convert to gas or use importedAmmonia. The quantum of additionalsubsidy will be finalized by Departmentof Fertilizers in consultation with DOE,based on study and recommendationsby the Tariff Commission.

(xii) The NBS is being released through theindustry during the first phase. Thepayment of NBS to the manufacturers/importers of DAP/MOP/ComplexFertilizers/ MAP/TSP, SSP and AS isreleased as per the procedure notifiedby the Department.

(B) Nutrient Based Subsidy Per Kilo Gram ofNutrients

Based on the recommendations of the InterMinisterial Committee constituted under theNutrient Based Subsidy Policy, theGovernment has allowed the per Kg NBSfor ‘N’, ‘P’, ‘K’ & ‘S’ (Nitrogen, Phosphate,

Potash and Sulphur) and the amount ofsubsidy per MT on the Phosphatic & Potassicfertilizers for 2010-11 and 2011-12 is asfollows:

(Amount in ‘)

Sl. Nutrients NBS per Kg of NBS perNo. nutrient (2010-11) Kg of

nutrientFrom From (2011-12)

1.4.2010 to 1.1.2011 to31.12.2010 31.3.2011

1. ‘N’ 23.227 23.227 20.111

2. ‘P’ 26.276 25.624 20.304

3. ‘K’ 24.487 23.987 21.386

4. ‘S’ 1.784 1.784 1.175

(C) The Per MT Nutrient Based Subsidyduring 2010-11 and 2011-12 is as follows:

(Amount in ‘ PMT)

Fertilizers Nutrient Based Subsidy Nutrientper MT (2010-11) Based

SubsidyFrom From per MT

1.4.2010 to 1.1.2011 to (2011-12)31.12.2010 31.3.2011

DAP 16268 15968 12960

MAP 16219 15879 12770

TSP 12087 11787 9340

MOP 14692 14392 12831

16-20-0-13 9203 9073 7431

20-20-0-13 10133 10002 8236

23-23-0-0 11386 11236 9295

10-26-26-0 15521 15222 12850

12-32-16-0 15114 14825 12332

14-28-14-0 14037 13785 11495

14-35-14-0 15877 15578 12916

15-15-15-0 11099 10926 9270

20-20-0-0 9901 9770 8083

28-28-0-0 13861 13678 11316

17-17-17-0 12578 12383 10506

19-19-19-0 14058 13839 11742

16-16-16-0 11838 (w.e.f. 116541.7.2010

inducted intoNBS on

6.8.2010)

Ammonium 5195 5195 4413Sulphate

SSP 4400 4296 3378

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(D) Department of Fertilizers has alsoprovided additional subsidy on the NPKcomplex fertilizers based on Naphtha/Furnace Oil for Nitrogen for a period oftwo years w.e.f. 1.4.2010 as follows:

Name of the Grades of Amount ofCompany Fertilizers additional

compensation(provisional)in ‘ per MT

FACT (Cochin) 20-20-0-13 (APS) 2331(Udyogmandaland Cochin)

Ammonium Sulphate 2792(20.6-0-0-13)

(Udyogmandal)

MFL, Manali 20-20-0-13 (APS) 4784

17-17-17-0 4079

GNVFC, Bharuch 20-20-0-0 (ANP) 1914

(E) Subsidy for fortified fertilizers

Per MT additional subsidy for fortifiedfertilizers with secondary and micro-nutrientsas per FCO has also been allowed underNBS as follows:

Sl. Nutrients for Additional subsidy perNo. fortification as per MT of fortified

FCO fertilizers (‘)

1. Boron ‘Bn’ 300

2. Zinc ‘Zn’ 500

(F) Procedure for Payment of subsidy underNBS:

Department of Fertilizers releases 85% (90%with Bank Guarantee) ‘On Account’ paymentof subsidy month-wise to the manufacturers/importers of P&K fertilizers (SSP) based onreceipt of fertilizers in the districts/States. Themanufacturers/importers claim the ‘OnAccount’ payment in prescribed Proforma ‘A’duly certified by the authorized signatory aswell as the statutory auditor of the company.The balance payment of subsidy is alsoclaimed by the fertilizer companies basedon information in prescribed Proforma ‘D’ dulycertified by the authorized signatory as well

as the statutory auditor of the company. TheState Governments are required to submitcertificate to DOF in receipt of the fertilizersin prescribed Proforma ‘B’. The payment ofsubsidy to SSP is released on sales basis.Accordingly, the eligible units are allowed toclaim 85% ‘On Account’ payment of subsidybased on the information in respect of saleof SSP duly certified by the authorizedsignatory as well as the statutory auditor ofthe company. The balance payment isreleased by DOF based on the certificationof sales issued by the State Governments inprescribed Proforma ‘B’. At present, 38manufacturers/importers of P&K fertilizersand 82 SSP manufacturers are coveredunder the Nutrient Based Subsidy Policy.

(G) Freight under NBS

In addition to NBS, freight for the movementand distribution of the decontrolled fertilizersby rail and road is being provided to enablewider availability of fertilizers in the country.Subsidy under the NBS on decontrolled P &K fertilizers (except SSP) is being paid asper the actual claim. Under the NutrientBased Subsidy Policy, the manufacturers/importers (except SSP) have been allowedto claim freight from 1.4.2010 to 31.12.2010,based on the railway receipts, which includesan amount of ‘ 300 for secondary movement.Secondary movement freight has also beenallowed to the SSP manufacturers. Freightsubsidy under Nutrient Based Subsidy forrail movement has been allowed as peractual claim w.e.f. 1.1.2011 for 2010-11 andaccordingly, the rates of subsidy has beenrevised w.e.f. 1.1.2011. A lumpsum freightof ‘ 200 PMT has also been allowed for SSP.The secondary freight on P&K fertilizers(except SSP) will be paid in line with theUniform Freight Subsidy Policy w.e.f.1.1.2011 as applicable in Urea. The freightfor direct road movement from plant or port(primary movement) would be subject tolower of actual claim and equivalent railfreight upto a maximum distance of 700 Kmsw.e.f. 1.1.2011.

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(H) Impact of Nutrient Based Subsidy

(i) MRP of fertilizers under Nutrient BasedSubsidy :

The MRP of fertilizer, which was indicatedby the Government and has been constantsince 2002, has now been decontrolled w.e.f.1.4.2010 under the Nutrient Based SubsidyPolicy. However, the Government hasdecided to fix subsidy in such a manner thatthe MRP of the fertilizer does not affect thefarmers adversely. Accordingly, the MRP ofP&K fertilizers has registered an increase of‘ 30 per bag. The MRP of SSP has reducedby ‘ 70 per bag. The MRP of the other P&Kfertilizers has registered a minor increaseunder the NBS. It has been observed thatthe farmers have to pay only 25-40% of theactual cost of fertilizers. The MRP andsubsidy released under the NBS during 2010-11 has been as at Annexure-XI.

6.9.3. Direct Subsidy to the farmers under NBS :

Under the present subsidy regime, fertilizersare provided to the farmers at the MaximumRetail Price, which is much below the actualcost of fertilizers. Accordingly, the farmerspay 25-40% of the actual cost of fertilizersand rest of the cost is borne by theGovernment. In the first phase of NutrientBased Subsidy policy, the subsidy is releasedthrough the fertilizer industry (manufacturer/marketer/importers). With respect toexamination of the feasibility of disbursingsubsidy directly to the farmers, Departmentof Fertilizers is appointing a consultant forimplementation of proof of concept (pilot)study for examining the feasibility ofimplementation of tracking of fertilizers to thefarm gate level and also of examining thefeasibility of disbursement of subsidy directto the retailer (farm gate/farmer). The proofof concept is proposed to be held in 7 Statesviz. Haryana, Andhra Pradesh, Tamil Nadu,Rajasthan, Madhya Pradesh, Assam andMaharashtra in approximately 50-70blocks.

6.9.4 Subsidy Released

The amount of subsidy provided by theGovernment during 2001-02 was ‘ 12695.02crore, which has increased upto ‘ 99494.71crore in 2008-09. It was ‘ 64032.29 croreduring 2009-10. The budget estimate forfertilizer subsidy for 2010-11 is ‘ 52840.73crore. A statement showing subsidy releasedDepartment of Fertilizers on urea and P&Kfertilizers is at Annexure-XII.

6.6.5 Cost Price Study by Tariff Commission

In order to update/finalize provisional ratesof subsidy for Ammonium Sulphate andNaphtha based NPK complex fertilizer, TariffCommission has been requested toundertake Cost Price Study and give itsrecommendations. The Government is alsoconsidering the report of the TariffCommission in respect of freight subsidy fromplant/ports to the districts.

6.9.6 Quality of Fertilizers

Government of India has declared fertilizeras an essential commodity under theEssential Commodities Act, 1955 (ECA) andhas notified Fertilizer Control Order, 1985(FCO) under this Act. Accordingly, it is theresponsibility of the State Governments toensure the supply of quality of fertilizers bythe manufacturers/importers of fertilizers asprescribed under the FCO under the ECA.As per the provision of the FCO, thefertilizers, which meet the standard of qualitylaid down in the order can only be sold tothe farmers. There are 71 fertilizer testinglaboratories including four laboratories of theGovernment of India at Faridabad, Kalyani,Mumbai and Chennai with an annualanalyzing capacity of 1.34 lakh samples. Thequality of the fertilizers imported in theCountry is invariably checked by the fertilizerquality control laboratories of the Governmentof India. The State Governments areadequately empowered to draw samples ofthe fertilizers anywhere in the Country andtake appropriate action against the sellers of

40

Non- Standard fertilizers. The penal provisionincludes prosecution of offenders andsentence if convicted up to seven yearsimprisonment under the ECA, 1955 besidescancellation of authorization certificate andother administrative action. The Departmentof Fertilizers make deductions alongwithpenal interest on the quantity of the fertilizersfor which the State Governments havereported to be Non- Standard. During theyear 2006-07, 2007-08 and 2008-09, thepercentage of samples of fertilizers declaredNon- Standard at all India level were 6.0%,6.2% and 5.5% respectively. Payment ofconcession for P&K fertilizers and for SingleSuper Phosphate (SSP) is made by theDepartment taking into account the certificateof quality given by the respective StateGovernments in Proforma ‘B’ for the fertilizersreceived and sold in the State. Further, SSPunits are required to produce month-wise‘Quality Certificates’ issued by the StateGovernments of the State in which the unitsare located. The units are required to havewell equipped laboratory to test the sampleof its SSP. The SSP units are also requiredto print ‘Quality Certified’ on each bagreleased in the market. DOF also deputesPDIL to conduct first time technical inspectionof the new SSP units. PDIL conducts sixmonthly inspections of the SSP units to checkthe quantity and quality of the fertilizers forwhich the units are claiming payment ofsubsidy. The units are also required to useonly those grades of Rock Phosphate asinputs for manufacturing SSP under the NBS,which are notified by DOF from time to time.A statement showing the notified grades isat Annexure-XIII. DOF has also asked theState Government to constitute teams withthat of PDIL to test samples of Single SuperPhosphate (SSP) at the retailer level. Themarketers of the SSP are also responsiblefor he quality of the fertilizer marketed bythem. Department of Fertilizers has alsoconstituted vigilance teams of the Officers ofthe Department to check the availability andquality of the fertilizers in the States.

6.9.7 Ban on Export of Fertilizer

The Government has received complaints ofsmuggling of subsidized fertilizers to theneighboring countries. Keeping in view theavailability of the fertilizers in the country andthe subsidy paid thereon, in addition to urea,the Government has decided to put theexport of DAP/MOP in the restrictive categoryin order to discourage the exports andsmuggling. The DGFT has been requestedto place all other subsidized fertilizers alsoin the restricted category.

6.9.8 Concession Scheme/Nutrient BasedSubsidy for SSP

After decontrol of P&K fertilizers, ConcessionScheme for SSP was introduced w.e.f. 1993-94, which continued on ad-hoc basis forconcession upto 30.4.2008. After the transferof the administration of the ConcessionScheme from Department of Agriculture &Cooperation to DOF w.e.f. October 2000,DOF revised the guidelines. Accordingly, aTechnical Audit and Inspection Cell (TAC)under the aegis of PDIL was constituted videguidelines dated 17.5.2001. The SSPmanufacturers were required to use onlythose grades of Rock Phosphate, which hasbeen notified by DOF from time to time, forclaiming payment of concession. All the newSSP manufacturing units were required toundergo first time technical inspection of theunits to ascertain their technical competenceto manufacture SSP of the standards laiddown under the FCO. Subsequently, the unitswere also required to undergo six monthlyinspection to ascertain as to whether the unitsare working as per the tenets of theConcession Scheme. The units were allowedto claim 85% ‘On Account’ payment ofconcession to be settled subsequently byDOF based on the certification of salesissued by the State Governments inprescribed Proforma ‘B’. This practice hasalso been allowed to continue till date thoughthe other policy parameters for SSP havebeen changed from time to time. TheGovernment revised Concession Scheme for

41

SSP w.e.f. 1.5.2008, which continued upto30.9.2009. As per this policy, Department ofFertilizers announced All India MRP at ` 3400PMT in place of the earlier system ofindicating MRP by each State. As per thepolicy-dated 30.4.2008, the concession rateswere announced month-wise separately forSSP based on the imported Rock Phosphateand that based on indigenous RockPhosphate. The Concession was escalated/de-escalated based on the rise/fall of theprices of the raw materials of RockPhosphate, Sulphur and also the exchangerate. Then, DOF announced further revisedpolicy on 13.8.2009 w.e.f. 1.10.2009, whichcontinued upto 30.4.2010. As per this policy,the Government decided to leave the sellingprice of SSP open w.e.f. 1.10.2009 insteadof the earlier MRP of ` 3400 PMT on allIndia basis. The Government provided ad-hoc concession for an amount of ` 2000 PMTfor powdered, granulated and boronatedSSP. Only those SSP manufacturers wereallowed to claim subsidy, which produced50% of the annual installed capacity or40,000 MTs per annum. The system ofreleasing ‘On Account’ as well as balancepayment of concession continued as it was.Further, Nutrient Based Subsidy Policy hasalso been extended to SSP w.e.f. 1.5.2010.Accordingly, the criteria of capacity utilizationhas been continued for being eligible for

NBS. As per the NBS for 2010-11, the perKg NBS for Phosphate and Sulphur is `26.276 and ` 1.784 respectively. Accordingly,subsidy for an amount of ` 4400 PMT hasbeen announced for 2010-11. This amounthas been revised w.e.f. 1.1.2011 andaccordingly, subsidy for an amount of ` 4296PMT has been allowed in addition to alumpsum freight of ` 200 PMT. Additionalper metric tonne subsidy for Boronated SSPhas also been allowed for an amount of `300 PMT. Though the MRP of the SSP inthe NBS has been decontrolled but thisfertilizer has been sold by the manufacturersat ` 3200 PMT based on the MOU betweenthe manufacturers and the Governmentduring 2010-11. Per Kilogram NBS forPhosphate and Sulphur in the SSP has alsobeen announced for 2010-11 for an amountof ` 25.624 and ` 1.784 respectively inaddition to the lumpsum freight of ` 200 PMT.The subsidy for boronated SSP has beencontinued and the manufacturers ofBoronated SSP are allowed to fix their MRPbased on demand and supply forces. In orderto ensure quality of SSP, the SSPmanufacturers are required to produce acertificate of quality issued by the StateGovernments in which the units are located.The units are required to write/print “QualityCertified” on each bag of the SSP.

���

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Chapter-7

Public Sector Undertaking and CooperativeSociety

There are nine public enterprises and one Multi-State Cooperative Society namely Krishak BharatiCooperative Limited (KRIBHCO) under theadministrative control of the Department. A statementindicating profitability of these organizations has beengiven at Annexure-XIV.

7.1 FCI Aravali Gypsum & Minerals IndiaLimited (FAGMIL)

7.1.1 Introduction

The FCI Aravali Gypsum and Minerals IndiaLimited was incorporated under theCompanies Act, 1956 as a Public SectorUndertaking on 14.02.2003 after being hivedoff the Jodhpur Mining Organisation (JMO)of Fertilizer Corporation of India Ltd. (FCIL).The authorized share capital of the Companyis Rs.10 Crore and the paid up capital is Rs.7,32,98,000/- as on 31-03-2010.

7.1.2 Production Performance

During the year 2009-10 the companyproduced 7.23 LMT of Gypsum against thetarget of 7.65 LMT. During the current year2010-11, the Company has produced 5.51LMT of Gypsum up to December 2010 asagainst the revised annual target of 9.15 lakhMT.

7.1.3 Financial Performance

During the year 2009-10 the company earneda profit before tax of Rs.15.88 crores on salesof Rs.45.61 crore. Upto December 2010 thecompany has earned a profit of Rs.8.58crores before tax on the sales of Rs.35.11crores.

7.1.4 Grievance Cell

Grievance Cell is functioning to redress thepublic and staff grievances and no grievanceis pending as on date.

(i) For Public grievance

The Company has a well establishedpublic grievances cell to redress thegrievances of public at Head Office atJodhpur. The Grievance Cell disposesof public grievances promptly.

(ii) For Staff Grievance

1. The employees who are workingin various Mines are advised tosubmit their grievances through therespective Area Managers toGeneral Manager.

2. The employees working at HeadOffice, Jodhpur, route theirgrievances through SectionalHeads to General Manager. Atpresent, no grievance is pending.

7.1.5 Employment of SC/ST, Ex-servicemen,Physically Handicapped & OtherBackward Classes (OBCs) persons.

Company has a total man-power of 97 as on31.3.2010. Out of which, 13 are scheduledcaste, 6 scheduled tribes, 1 Ex-servicemenand 7 are from OBC category.

7.1.6 Corporate Social Responsibility (CSR)

FAGMIL has earmarked 2% of its profitsbefore tax for providing assistance for publichealth and medical relief, education etc. andaccordingly made a provision of Rs. 31.75lakh (previous year Rs.27.92 lakh) in thebooks of accounts during the year 2009-10.

7.2 Brahmaputra Valley Fertilizer CorporationLimited (BVFCL)

7.2.1 Introduction

BVFCL is a public sector undertaking underthe administrative control of the Departmentof Fertilizers (DOF) formed after segregationof Namrup units in Assam from Hindustan

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Fertilizer Corporation Limited (HFCL) w.e.f.1.4.2002. The Namrup Complex of BVFCLcomprise of three separate units designatedas Namrup-I, Namrup-II and Namrup-III. Theraw material for all the three units is naturalgas, both as feed stock and as fuel. Namrup-I has only Ammonia plant whereas Namrup-II & Namrup-III have Ammonia & Urea plants.Presently only Namrup-II and Namrup-III arein operation. The other establishments of thecompany are Liaison Offices at NOIDA &Kolkata and Marketing Offices at Guwahati,Siliguri & Patna. The authorized share capitaland paid up capital of the company as on31.03.2010 were Rs. 510 Crores and Rs.365.83 Crores respectively.

7.2.2 Physical Performance

During the year 2009-10 the companyproduced 2.30 LMT of Urea against the MOUtarget of 3.70 LMT due to frequent powerfailures, poor conversion in Synthesisconverter and tube leakages in coolers. Theperformance of the company improved andthe actual production increased to 1.93 LMTupto December 2010 against the annualMOU target of 3,26,860 MT of Urea.

Performance of the Company, during 2010-11 has been greatly affected due to shortfallin NG supply from M/s OIL. Namrup-II plantsremained under shutdown for most of thedays during May 2010 to July 2010 due tolimitation in NG supply. In Namrup-III

performance was affected due to poorconversion in Synthesis Converter and linerleakage of Urea reactor.

Further Namrup-II Plant could run only at50% load capacity due to availability of 1.72MMSCMD gas against requirement of 1.95MMSCMD of gas. This has increased energyconsumption and cost of production ofNamrup-II plants.

The company manufactured 15.98 MT of Bio-fertilizer during the period April 2010 toDecember 2010 and plan to produce 20 MTBio-fertilizer in 2010-11. The company hassold 235 MT Quality Seeds to farmersthrough its dealer network during Khariff2010-11 and Order for 1991 MT seed hasbeen placed with M/s State FarmsCorporation of India Ltd., New Delhi fordistribution during Rabi 2010-11. 464.71 MTof seeds has been received till Nov’2010.The company has started production ofVermicompost and has sold 11.43 MT ofvermin-compost till November 2010 during2010-11.

7.2.3 Financial Performance

During the year 2009-10 the company hasincurred a net loss of Rs.133.23 crores outof total sales of Rs.231.46 crores. The salesof the company upto December 2010 isRs.237.62 crores incurring an estimated lossof Rs.96.44 crores.

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7.2.4 Public/Staff grievance redress machineryand Status of Grievances:

A Grievance Redressal Committee headedby Company Secretary and consisting ofrepresentatives from recognized Union &Joint Council of Officer, is in operation tolook into the individual grievances of theemployees and the citizen. Aggrievedemployees submit the grievances to theCoordinator of the Committee and in thesitting of the Committee, grievances areredressed.

Complaints received are uploaded in ‘OnlinePublic Grievance Lodging and MonitoringSystem” set up by Govt. of India. Thecompany uploads complaints and attends tothem promptly.

The company also provides information tocitizens under Right to Information Act 2005.During 2010-11 upto November 2010, 12applications seeking information under RTIAct were received. Requested informationhas been provided as per the provision ofthe Act.

7.2.5 Employment of SC/ST, Ex-Servicemen,Physically Handicapped & other backwardclasses persons

The matter of employment of personsbelonging to SC/ST, Ex-servicemen,Physically handicapped & other backwardclasses are taken care at the time ofrecruitment and promotions. Reservationpolicy has been followed as per Governmentguidelines.

7.2.6 Welfare of minorities and reservation indealership

Welfare of minorities are looked after anddirective of Prime Minister’s 15 PointProgramme relating to welfare of minoritiesare followed during recruitment andpromotion. At the time of promotion andrecruitment, a representative of the minorityis included in the Selection Committee forpromotion and recruitment.

In the reservation of dealership, the policylaid down by the Government of India is beingfollowed at the time of appointment.

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Category-wise details of SC/ST Dealers areas follows:

ST Category: 57SC Category: 12

Total Dealers: 602

7.3 The Fertilizer Corporation of India Limited(FCIL)

7.3.1 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-commissionedproject at Korba (Chhattisgarh). Against theauthorized share capital of the Company ofRs.800 crore, the paid up share capital isRs. 750.92 crore as on 31.3.2010.

7.3.2 Reference to BIFR

The Corporation was declared sick inNovember, 1992 by the Board for Industrialand Financial Reconstruction (BIFR).

7.3.3 Closure of the Company

In view of the continuing losses of theCompany, stemming from technical andfinancial non-viability of operations, theGovernment decided to close down FCI inSeptember 2002. Consequently, a VoluntarySeparation Scheme (VSS) was offered to allits 5712 employees. All the employees, whoopted for VSS have since been released,except 35 employees who are engaged indischarging statutory obligations, includingsafety & security of properties/ assets of thevarious units of the Company.

BIFR in their meeting held on 2.4.2004confirmed their prima facie opinion regardingwinding up of the Company. BIFR vide theirorders dated 17.5.2004 conveyed theiropinion to High Court of Delhi. This referencewas registered as Company Petition (C.P.)No.183/2004 in the High Court. Pursuant tothe prayer of the Department of Fertilizers

and the Company, the High Court in itshearing held on 20.8.2010 has remitted thematter back to BIFR for revival.

7.3.4 Revival of the Company

Considering the shortage of domesticproduction of urea in meeting the the variousclosed units of the Company, the Cabinethas decided in April 2007 to consider thefeasibility of reviving the various units ofFertilizer Corporation of India Limited.Subsequently, Cabinet constituted andEmpowered Committee of Secretaries(ECOS) on 30.10.2008 to consider variousoptions of revival and further approved ‘inprinciple’ to consider waiver of GoI Loan &Interest, in case of availability of viable fullytied up revival proposal. After detailed studyand recommendations for a revival option,ECOS on 24.8.2009 selected a suitableRevival Model and recommended the samefor seeking the approval of GoI.

Following PSUs & Co-operative have showninterest in the revival of some Units of theCompany:

a. GAIL-RCF-CIL for Talcher Unitb. NFL-EIL for Ramagundam Unitc. SAIL-NFL for Sindri Unit

Considering the above, ECOS in their 3rd

meeting held on 4.8.2010 recommendedpermitting revival by these PSUs & Co-operative on nomination basis at reservevalues of the bid parameters of the ‘revenuesharing’ model, subject to approval of CCEA.

FCIL & DOF are in the process of finalizinga Draft Rehabilitation Scheme (DRS) withthe assistance of the Project Advisor, M/sDeloitte and approval of CCEA would besought on the DRS.

The case came up for hearing before theHon’ble BIFR on 12.11.2010 and ondeliberations of the progress made, theHon’ble Bench advised as under:

(i) Appointed State Bank of India as theOperating Agency;

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(ii) Advised the Company/DoF to obtain theapproval of the Cabinet for the proposedRevival Scheme and suggested that thewaiver of liabilities of FCIL towardsCPSUs and Government agenciesthrough One Time Settlement (OTS)also be taken up.

(iii) The next hearing is scheduled for 3rd

March 2011 for consideration of RevivalScheme approved by the Government.

7.3.5 Financial Results

During the year 2009-10, the Companyincurred a net loss of Rs. 585.09 Crore, whichincludes Rs.553.14 Crore as interest on GoILoan and Rs.1.62 Crore towardsdepreciation. During the year 2010-11 (UptoNovember 2010), the Company has incurreda loss of Rs. 367.23 crore (Prov.) with anInterest of Rs. 363.00 crore on GoI Loanand Rs. 0.27 crore towards depreciation andthe Company would incur a loss of Rs.552.00 crore (Approx.) and Rs. 0.4. croretowards depreciation during the whole year(2010-11).

7.4. Madras Fertilizers Limited (MFL)

7.4.1 Introduction

Madras Fertilizers Limited (MFL) wasincorporated in December 1966 as a JointVenture between GOI and AMOCO IndiaIncorporation of USA (AMOCO) with GOIholding 51% of the equity share capital. Inthe year 1972, NIOC acquired 50% of theAMOCO’s share and the shareholdingbecome 51% GOI and 24.5% each ofAMOCO and NIOC.

In 1985, AMOCO disinvested their shares,which were purchased by GOI and NIOC intheir respective proportions on 22.07.1985.The revised share holding pattern was GOI67.55% and NIOC 32.45%. Subsequent tothe Issue of Rights shares in 1994 for partfinancing the Project, the holding GOI &NIOC stands at 69.78% and 30.22%.

During 1997, MFL has gone for Public Issueof 2,86,30,000 shares with face value of

Rs.10 and a premium of Rs.5 per share. Ofthese, 2, 58, 09,700 shares were subscribed.Sector-wise Paid up share capital and theshareholding pattern are as follows:

Shareholder Rs. in Cr %

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 authorisedshare capital of Rs.365 Cr comprising ofRs.175 Cr as equity and Rs.190 Cr aspreference share capital, the preferenceshare capital is yet to be issued andsubscribed. As on 30.11.2010, the paid upequity was Rs.161.10 Cr.

MFL commenced commercial production in1971, with an annual installed capacity of 2,47,500 MT of Ammonia, 2, 92,050 MT ofUrea and 5, 40,000 MT of NPK. A majorrevamp / expansion was carried out in 1998at a cost of Rs.601 Cr, enhancing the annualinstalled capacity to 3, 46,500 MT ofAmmonia, 4, 86,750 MT of Urea and 8,40,000 MT of NPK. With effect from01.04.2003, GOI introduced a New PricingScheme I and adopted Tariff CommitteeRecommendations for the Complex fertilizers.In the year 2003-04, the accumulated losseroded the total net worth and therefore theCompany was referred to BIFR. On accountof implementation of New Pricing Scheme(NPS) – Stage III amendment by GOIrestricting the reduction in fixed cost to 10%,the Company’s operation for the financialyear 2009-10 ended with a profit of Rs.6.88Cr. During the year 2009-10, the Companyproduced 4, 36,100 MT of Urea with capacityutilisation of 90%. The Company produced7335 MT of 20:20:0:13 to IPL on tolling basisby restarting NPK ‘A’ Train.

7.4.2 Reference to BIFR

The Company has been referred to Boardfor Industrial and Financial Reconstruction

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(BIFR) of the total erosion of net worth andits current negative value. The BIFR hadregistered the Company as Case No.501/2007. In the first hearing held on April 2,2009, MFL was declared as Sick Companyunder Section 15 of SICA and State Bank ofIndia (Commercial Branch, Chennai) wasappointed as the Operating Agency (OA) toprepare a Draft Revival Scheme (DRS) byBIFR.

In order to prepare a viable proposal for DRS,PDIL was engaged for preparation of viabilityproposal for MFL and PDIL submitted thesame to OA and Company. Companyforwarded the viability proposal to DOF withdue approval of Board. In the PDIL’s Viabilityproposal for MFL, the technical viability ofthe Company was covered in detail and thefinancial viability has been slightly touchedupon. In Order to firm up the financialrehabilitation, OA engaged SBI CAPS forpreparing financial rehabilitation proposal andSBI CAPS accordingly prepared andforwarded the same to OA and Company,who in turn forwarded the report to DOF afterobtaining approval from Board, for furtherproceedings.

7.4.3 Production Performance

The annual installed Capacity of MFL is asfollows:

Product Annual Capacity (MT)

Pre-Revamp Post-Revamp

Ammonia 2,47,500 3,46,500

Urea 2,92,050 4,86,750

NPK 5,40,000 8,40,000

During the period April to December 2010,the Company produced 3,34,071 MT of Ureawith the capacity utilisation of 91.5%. TheCompany is hopeful of producing 4, 60,000MT of Urea with capacity utilisation of 94.5%during the year. The company is alsoplanning to produce 40,000 MT of Vijay20:20:0:13.

During the year 2010-11, the Company shallachieve a Bio Fertilizer production of 450MT.

7.4.4 Financial Performance

During the year 2009-10, the Companyended up with a profit of Rs.6.88 Cr and thetotal accumulated losses as on 31st March,2010 was Rs.787.05 Cr. During the periodApril – December 2010, the Company hasestimated to earn a profit of Rs.52.59 croresout of the total turnover of Rs.1042.56 crores.

7.4.5 Information relating to welfare ofMinorities and reservation in dealership:

We have been following GOI guidelines oninclusion of representative from minorities inselection committee for Recruitment of morethan ten candidates. Mr. R Lawrence,General Manager (HR & M&D) wasnominated in the selection committee as P&Anominee, OBC representative and Minorityrepresentative in the recent recruitment ofTechnical Assistant Trainee during 2010.

The Company has a dealer strength of 5900including 1614 SC/ST dealers which worksout to 27.14% of total strength. The SC/STdealers are allowed waiver of security depositof Rs. 5000/- and exemption from minimumsales norms

7.4.6 Efforts and initiatives taken by the PSUfor the Welfare, Development andEmpowerment of Women and formainstreaming gender issues.

MFL do not have any problems related togender issues. However, a wing of Womenin Public Sector (WIPS) is functioning in MFLand women employees are nominated forthe programs organized by WIPS.

7.5 Project & Development India Limited(PDIL)

7.5.1 Introduction

Projects & Development India Limited (PDIL)an erstwhile Division of the Fertilizer

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Corporation of India (FCI) was registered asa separate company in March 1978. Thecompany has its registered office at Noida,Uttar Pradesh. The authorized share capitalof the company is Rs.60 crores and paid upcapital is Rs.17.30 crores as on 31.3.2010.

7.5.2 Financial/Physical Performance

The company had earned net profit ofRs.21.21 Crores for the year 2009-10 out ofthe total turnover of Rs.83.53 crores. Duringthe period April to December 2010, a profitof Rs.19.54 Crores (before tax) has beenearned out of the total turnover of Rs.71.26crores. The estimated net profit for the year2010-11 is Rs.26.33 Crores.

7.5.3 Declaration of Dividend

A dividend of 22% (Previous Year 20%) ofthe paid up capital of the company amountingto Rs.3.81 crores (dividend tax extra) for theyear 2009-10 has been paid to Govt of India.

7.5.4 ‘Excellent’ Ranking in MOU

PDIL has won prestigious MOU ExcellenceAward for the year 2008-09 for “Topperforming CPSE in Consultancy Sector”.PDIL has won the prestigious MOU ExcellentAward for the year 2007-08 for “TurnaroundCPSE” & also secured Excellent rating forthe year 2006-07 and expecting ‘Excellent’rating for the year 2009-10.PDIL hasperformed exceedingly well in last five years

Catalyst produced by PDIL

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continuously and has become eligible for MiniRatna – Category-II Status under the DPEScheme of Mini Ratna.

7.5.5 Engineering & Consultancy Division

PDIL has played a pivotal role in thedevelopment of Fertilizer industries in Indiafrom concept to commissioning. It is stillcontinuing its hold on this sector and is readyto take up the new challenges in executingthe Brown field, Green field, Revamp andExpansion Projects of many fertilizer units inthe country. It has also diversified its activitiesinto the field of Oil and Gas, Pipeline,Refinery and Infrastructure Developmentsuch as Housing project and City GasDistribution etc. During the year under reviewPDIL secured a prestigious order forproviding detailed engineering andconsultancy services for a 2200 MTPDAmmonia Plant at Panagarh, West Bengalfor M/s Matix Fertilizers and Chemicals Ltd.The plant will be the first plant in India basedon Coal Bed Methane Gas as a feed stock.It also secured orders for providingConsultancy Services for the Capacityenhancement project in Ammonia –II & Urea–II plant of NFL Vijaipur as well asConsultancy services for Urea-I CapacityEnhancement Project of NFL, Vijaipur.

The Company was also successful in gettingPMC Services for Ammonia Syn GasGeneration plant from GNFC Bharuch andNFL’s Feedstock changeover project forPanipat, Bathinda & Nangal Plants.

During the year 2009-10 the company isexecuting the following major projects /assignments in the fertilizer sector for variousclients:-

• Detailed Engineering consultancy forcapacity enhancement for Vijaipur IIAmmonia- Urea for NFL.

• Detailed Engineering Consultancy forcapacity enhancement of Vijaipur I Ureafor NFL.

• Detailed Engineering ConsultancyServices for Surat Ammonia - Urea

Debottlenecking for KRIBHCO isprogressing satisfactorily.

• Detailed Engineering jobs for ThalAmmonia Revamp, RCF Thal

• Consultancy Services for Energy SavingProject of Ammonia Plant-I of VijaipurUnit (NFL).

• Feed Stock Changeover of ZuariIndustries Ltd.

7.5.6 Refinery, Oil & Gas and other Sectors

PDIL has established its credentials in theOil and Gas sector and has shown itspresence by securing jobs from almost allthe prestigious public sector undertakings inthe Oil and Gas sector. It secured the job ofProject Management Consultancy servicesfor installation of H2 and N2 facilities atParadeep Refinery project on BOO basisfrom IOCL, New Delhi.

It also secured the job of EngineeringConsultancy services for Flue GasDesulphurization units (FGDU) and PurgeTreatment Unit (PTU) for FCCU unit at VizagRefinery of HPCL, Vizag.

It is successfully executing the PMC servicesfor a Hydrogen plant of Chennai PetroleumCorp. Ltd., Manali. It has also successfullycompleted the job of Hydrogen GenerationUnit of Essar Refinery at Vadinar. The job ofHydrogen Generation plant of IOCL Barauniand 60 TPD Sulphur Recovery Unit-IV ofIOCL Mathura Refinery is progressing well.With the execution of these jobs PDIL hasgot confidence to take up more jobs in theOil & Gas sector.

7.5.7 Inspection & NDT

PDIL has established its credentials for ThirdParty Inspection (TPI) and Non DestructiveTesting (NDT) Services, Statutory inspection,testing and certification of Horton Spheres,Mounded LPG Bullets. Inspection andrecommissioning of Ammonia Storage Tanksetc. continued to be a specialized activity ofPDIL.

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On the basis of credential and satisfactorypast performance, Bharat Heavy ElectricalsLimited (BHEL), extended the TPI RateContract for one more year i.e. upto March,2011 for third party inspection of variousequipment and bought out items ordered byall Manufacturing Units of BHEL throughoutIndia. Jobs are being carried out to the fullsatisfaction of BHEL and their clients NTPC,PGCIL and DVC.

Various Oil and Gas companies such asGAIL, CPCL, IOCL, HPCL reposedconfidence in PDIL by awarding theinspection and NDT jobs to PDIL. IOCLcontinued to be a major TPI client. Most ofthe orders for Project ManagementConsultancy (PMC) for Terminal AutomationSystem (at Meerut, Haldwani, Allahabad,Kanpur, Mugalsarai, Tikrikalan, Patna,Kandla, Rajkot, Hazira, Sangrur, Bhatinda,Devangundi, Bijapur, Cochin, etc.) have beenawarded to PDIL.

During the year PDIL has been awarded oneprestigious Order by HPCL, Mumbai forTerminal Automation System.

Apart from the above, PDIL also receivedTPI orders for Automation of Retail Outlets,automation of tank truck filling and tank farmmanagement system for POL Depots andCCTV surveillance system in IOCL Depotsand other installations under IOCL’s variousstate offices.

IOCL also awarded orders for electrical safetyaudit of their LPG Bottling Plants, OilTerminals and Oil Depots and Retail Outlets.During the year PDIL carried out Inspectionof Petroleum Horizontal Storage Tanks forIOCL. PDIL also got Orders from IOCL forElectrical Safety Audit of their LPG BottlingPlant, Oil Terminal and Oil Depots.

7.5.8 Techno-Economic Feasibility Report

One of the major activities of PDIL continuedto be preparation of Techno – EconomicFeasibility Report. During the year PDIL hassecured number of jobs in this area likePreparation of DFR for the proposed

Ammonia Urea Fertilizer Project based onCoal Bed Methane, TEFR for ammonia –urea plant in Karnataka-ZIL, Preparation ofa TEFR for a Phosphatic Fertilizer Complexfor GECOPHAM- Syria, Asset Evaluation ofAmmonia - Urea plants at FACT- Kochi,Preparation of Basic Data relating to Gasbased Economic activities in the givenGeographical area (Six Geographical Areas)for M/s PNGRB, TEFR for Natural GasPipeline in HP for M/s Directorate ofIndustries Govt. of HP, Detailed Audit of theTechnical Operations/ Energy efficiencyparameters for M/s FACT and ProjectAdvisory services for revival of FCIL’s 4 Nos.Units (Module B)

7.5.9 Assignments Aborad

PDIL is striving hard to make a breakthroughin securing assignments from abroad.Presently PDIL is providing PMC Servicesfor Algeria Oman Fertilizer Project at Arzew,Algeria for AOA, Algeria. PDIL is alsoexecuting the job of Health Study of NaturalGas Let Down station in Ammonia Plant atOman for OMIFCO (Oman India FertilizerCompany). It also secured the job ofpreparation of TEFR for Phosphatic FertilizerComplex for GECOPHAM, Syria forDepartment of Fertilizer and Chemicals, Govt.of India. It further secured the job of Studyof Design and Drawings of existing structuralof Granulation House to suit the new Rotexmake vibrating screens from OMIFCO

7.5.10 Technical Audit

Department of Fertilizers (DOF) continuedto engage PDIL for Techno-commercial Auditof SSP Plants located throughout India. TheAudits were undertaken and the reports withTAC observation and comments havealready been submitted to DOF.

7.5.11 Engineering Business

PDIL has executed engineering jobs worthRs.66.37 Crores during the year ascompared to Rs.48.70 Crores in previousyear, an increase of 36.28 %.

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7.5.12 Catalyst Division DIV

For Fertilizer Industry PDIL continued toproduce catalyst such as HT CO Conversionshift catalyst (conventional), LT COConversion Shift Catalyst (conventional),Vanadium Pentoxide Catalyst, PRG Catalyst,Iron oxide and Alumina Balls.

PDIL executed prestigious orders for supplyof LT CO conversion shift catalyst to GSFC,Vadodara, Nickel based reformation catalystto RCF, Trombay, HT Co Shift Catalyst toHPCL, Vizag & GSFC & Vanadium PentoxideCatalyst to SAIL, Rourkela.

To sensitize the employees about the evilsof corruption and to create awareness aboutVigilance, the ‘Vigilance Awareness Week’was observed from 3rd November to 7thNovember, 2009, with active participation ofthe employees at various levels.

7.5.13 Facilities to SC/ST/OBC Employees

In line with Government Guidelines issuedfrom time to time, your company continuesto extend required number of facilities to SC/ST/OBC employees. The details ofemployees as on 31.12.10 is as follows:-

EMPLOYEE STRENGTH AS ON 31.12.10(REGULAR INCLUDING MANAGEMENT

TRAINEES)

Category Total MIP SC ST OBC

A 424 48 21 62

B 40 5 2

C 33 10 6

D Nil Nil Nil Nil

On Contract 77 11 1 22

Total 574 74 22 92

7.5.14 Corporate Social Responsibility

PDIL is aware about its Corporate SocialResponsibility towards the community inwhich it operates. It has been decided tomake an expenditure on socially relevantschemes upto 1% of its profit after tax, which

will be progressively increased to 3% by20012-13. During 2009-10, PDIL gavecontribution to I-Care towards purchase ofAuto Refractrometer for performing free ofcost surgeries of poor and under privilegedrural population. It also contributed forsponsoring education of slum children andfor help of handicapped children for theirsurgeries. An amount of Rs. 5.2 lakhs hasbeen earmarked for SPCA Hospital.

7.6 Hindustan Fertilizer Corporation Limited(HFCL)

7.6.1 Status of Company’s case with BIFR.

The Company was referred to BIFR in theyear 1992 and since then it is still underBIFR. The Govt. of India had decided to closedown Barauni and Durgapur Units and HaldiaDivision along with other offices andEstablishments of the Company in the year2002.In the hearing held on 08.03.2010, theBIFR requested for expediting the revivalprocess.

7.6.2 Status of Revival of Units/Divisions ofHFCL

An Empowered Committee of Secretarieswas constituted with the mandate to evaluateall financial options for revival of the closedunits of FCIL/HFCL and to make suitablerecommendations for consideration of theGovernment. The Empowered Committee ofSecretaries had submitted itsrecommendations after a series of meetings.Based on the recommendations of ECOS &DOF, a draft CCEA note was prepared andcirculated for inter-ministerial consultations.

7.6.3 Financial Performance

During the year under report, the Companymade an operating profit of Rs. 35 lakh, butincurred a loss of Rs. 382.47 crore afterconsidering prior period adjustments and taxas compared to previous year’s net profit ofRs. 4841.16 crore. The Unit-wise break upof net profit and loss is given below in theTable:

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7.6.4 Future Prospects:

The process of revival of all the three Unitsis progressing well. The Govt. of India hasalso agreed ‘in principle’ for waiver of all theloans and interest due to GOI. As per therevival scheme, the Company is likely to getup-front fee and revenue sharing. Therefore,the Company is on the path of revival andthe net-worth is likely to become positive onimplementation of revival package and waiverof loans and interests due to GOI.

7.6.5 Voluntary Separation Scheme

Since the closure of the Corporation,employees were being released under VSS.As on 31.03.2010, 4665 number ofemployees have been released against apayment of Rs. 283.96 crores towards ex-gratia and terminal benefits.

7.7 Rashtriya Chemicals and FertilizersLimited (RCF)

7.7.1 Introduction

Rashtriya Chemicals and Fertilizers Limited(RCF) was incorporated on 6th March, 1978and it came into being as a result of the reorganization of the erstwhile FertilizerCorporation of India Limited. At the time ofits formation, the company had one operatingunit, viz. Trombay (old plants) and two majorprojects under implementation viz. TrombayIV expansion and Trombay V expansion,besides the West, South Marketing Zonesand the Bombay Purchase and Liaison office.RCF was the first fertilizer company in Indiato commission a green field, mega fertilizercomplex at Thal-Vaishet in the state ofMaharashtra.

The Trombay IV Expansion Project with anannual capacity of 75,000 tonnes each ofNitrogen and Phosphate (P2O5) went intocommercial production on 1st January 1979.Trombay V Expansion also startedcommercial production w.e.f. 1st July 1982with an annual capacity of 1,51,800 tonnesof Nitrogen. The Thal Fertilizer Plant of

annual installed capacity of 6,83,000 tonnesof Nitrogen started commercial productionw.e.f. 1st June, 1985.

RCF has a total installed capacity of about10.54 lakh tonnes of Nitrogen and 1.17 lakhtonnes of P2O5 and 0.45 lakh tonnes ofK2O.Besides fertilizers, the Company alsoproduces a number of industrial chemicalssuch as Methanol, Concentrated Nitric Acid,Methylamines, Ammonium Bicarbonate,Sodium Nitrate/Nitrite, DMF, DMAC, etc.

The capital structure of the company is asfollows:

Authorised Capital Rs. 800.00 crores

Paid up Capital Rs. 551.69 crores.

7.7.2 Physical Performance

The company produces a number ofproducts. The details of production of theseproducts for the year 2009-10 and from Aprilto December 2010 are given below.

Plant Installed Nine Months 2009-10Capacity April 10 to

Dec. 10

Urea 2036800 1591395 2089076

Suphala 300000 341461 490000

ANP 361000 104369 17070

Complex Fertilizers 661000 445830 507070

Total Indu. Products: 110400 108898 119323

Ammonia I 115500 72825 87856

Ammonia V 297000 240585 330235

Ammonia Thal 990000 846430 1128320

Nitric Acid 352500 266840 362815

Sulphuric Acid 99000 55528 59753

Phosphoric Acid 30000 18760 17040

7.7.3 Financial performance

PARTICULARS 2009-10 2010-11 uptoDecember

Turnover/Operating 5826.25 3968.95Income

Profit before Tax 344.21 216.12

Net Profit / Loss (-) 234.87 149.02

Net Worth 1837.14 1986.16

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7.7.4 Production Performance

The annual installed capacity of all the unitsof RCF is about 10.36 lakh MT of nitrogenand 0.99 lakh MT of phosphate. Theproduction of nitrogen & phosphate during2009-10 was, 10.379 lakh MT and 0.769 lakhMT respectively. Production during the yearwas severely affected due to suspension ofANP production which is under revamp.

Besides fertilizers, the company alsoproduces a number of industrial productssuch as Methanol, Concentrated Nitric Acid,Methylamines, Ammonium Bicarbonate,Sodium Nitrate, Sodium Nitrite, DimethylFormamide, Dimethyl Acetamide, AmmoniumNitrate, Argon, etc.

During April-November 2010, RCF produced7.026 lakh MT of nitrogen as against 6.697lakh MT during the period of the previousyear. Company also produced 0.614 lakh MTof phosphate as against the production of0.481 lakh tonnes of the previous year.During the year 2010-11, the Company islikely to produce 10.74 lakh MT of nitrogenand 1.047 lakh MT of phosphate.

7.7.5 Sales Performance

The sale of fertilizers (including bought-out

products) during the year 2009-10 was ofthe order of 40.82 lakh MT corresponding to14.35 lakh MT of nitrogen, 1.88 lakh MT ofphosphate and 3.34 lakh MT of potash.

During the period April-November 2010, RCFsold 9.33 lakh MT of nitrogen, 1.16 lakh MTof phosphate as against 8.83 lakh MT ofnitrogen and 1.53 lakh MT of phosphate forthe corresponding period last year. TheCompany also produces and sells bio-fertilizers, micronutrients and 100% solidsoluble fertilizers. In the period April-November 2010, the company has laidspecial emphasis on micronutrient andBiofertilizers. Sale of Biofertilizers, Biola was153 MT in the period April-November 2010.In case of liquid micronutrients, Microla, thecompany effected a sale of 80 KL duringApril-November 2010. A total of 2,610 MT ofthe Company’s specialty fertilizer (drip+foliar)was sold during the period April to November2010.

The sales turnover of industrial productsdivision of the Company was Rs.717.77Crore for the year 2009-10. During the periodApr- Nov 2010 sales turnover of industrialproduction division was Rs.460.74 Crore.

Methanol Phase-II Project, Trombay

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7.7.6 Modernization/Expansion Schemes

ANP 20:20:0 granulation unit has beencommissioned and plant has achieved itsrated capacity.

In Rapid wall plant load bearing panels havebeen produced since July 2010.Companyhas approached BMTPC for performanceappraisal certification for usage of thesepanels for load bearing structures.

Methanol plant phase-I has beencommissioned in March 2010.Due to this,production capacity of methanol has gonefrom 180 to 225 MTPD with reduction inenergy consumption to the tune of 1.0Mkcal/MT.Under phase-II revamp new synthesisgas compressor has been installed. It isunder commissioning. After this productioncapacity will increase from 225 to 242 MTPD.

Under Thal ammonia revamp project: Ureacapacity will enhance from 17.07 to 20 LakhMT per annum after it’s commissioning in2011-12. Critical long delivery equipment hasbeen ordered and civil work is underway.

7.7.7 Grievance Redressal

The Company has a good grievance addressand redressal system. Any citizen havingcomplaints in respect of the production orservices rendered may approach theCompany. Similarly any aggrieved customer/ dealer or other citizen can approach theCompany for any failure of the quality / pricecharged / conduct of any officer / employeeand will be dealt as under.

The grievances can be addressed to aspecial officer of the Company not belowthe rank of General Manager who will act asthe Nodal Officer for redressal. The name,address and telephone No. of the officers isavailable on Internet on Company’s websitewww.rcfltd.com. It is assured that the NodalOfficer will immediately take up the issuewith the concerned department andappropriate action will be taken within sevendays from the date of receipt of the complaintor an appropriate reply is sent within sevendays as the case may warrant.

ANP Granulation Unit , Trombay

55

A similar grievance address and redressalsystem procedure is followed by theCompany in issues related to staff also.

7.7.8 Employment of SC/ST, Ex-Servicemen,Physically handicapped & OtherBackward Classes

The guidelines regarding reservation inRecruitment and Promotion for SC, ST, OBC,Ex-Servicemen and Physically HandicappedPersons (PHP) are followed.

Out of total strength of 4241, there are 592SCs, 258 STs, 323 OBCs, 8 Ex-Servicemenand 36 PHPs on the rolls of the Company.

7.7.9 Disinvestment

Government of India disinvested about 5.64percent of the equity Share Capital of theCompany during 1991-92. Furtherdisinvestment of about 1.57 percent andabout 0.27 percent were effected duringOctober 1992 and December 1994respectively. Thus, the total disinvestmenthas been of the order of 7.50 percent.

7.7.10 Welfare of Minorities & Reservation inDealership

RCF has a policy to include representativeof the minorities in the recruitment selectionboards so as to ensure that the minoritiesget an adequate share in the services.

7.7.11 Welfare, Development & Empowerment ofWomen

Women are working in technical / non-technical / managerial positions and someof them have risen to the level of topmanagement positions in the organization.

All the welfare and employee benefitschemes are equally applicable to male andfemale employees of RCF.

Under the special schemes and policies forwomen employees, RCF has set up

� Special Cell for Women Employees (asper Communication from NationalCommission on Women)

� Committee for Sexual HarassmentCases (as per Supreme CourtGuidelines)

� Special Medical check-ups/camps.

All the benefits under legal requirements suchas Maternity Benefits,

Nursing Breaks, etc. are given to womenemployees.

As a part of regular training, RCFincorporates awareness building for allofficers (Men and Women) on the SexualHarassment Guidelines and also coversgender sensitization issues.

7.7.12 Corporate Social Responsibility

a) The Integrated Rural DevelopmentProgramme - is implemented in variousvillages of the country. Overalldevelopment of these villages is thefocal point. Some of the programmescarried out under Integrated RuralDevelopment Programme (IRDP) are asunder:

b) Meeting Basic Needs of RuralCommunity - The scheme coversproviding essential amenities likedrinking water supply, school buildings,community centers, development ofirrigation systems etc.

c) Agricultural Development Programme -This focuses on economic upliftment ofsmall/marginal farmers and landlesslabourers through training andeducation.

d) Subsidiary Occupation- ArtisanDevelopment Programme - Thisprovides a platform for training andmaking available financial facilities torural artisans and entrepreneurs whichenable them to revive and develop theirskill for commercial use.

e) Social Forestry and Waste LandDevelopment Programme - This focuseson development of sericulture, socialforestry, waste land use, dry landfarming and biogas development.

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f) Public Health & Village SanitationProgramme – This covers health care,village sanitation, health camps, andveterinary camps.

g) Youth and Women Skill DevelopmentProgramme - Rural sports and culturalactivities are organized in differentvillages to encourage participation byyouths.

h) Soil Testing - The Company placestremendous importance on empoweringfarmer to increase the yield. Soildiagnostics form a major part ofdetermining which fertilizer needs to beused for each soil and crop. TheCompany has 5 static and 3 mobile soiltesting laboratories across its majormarketing territories which undertakessoil sample analysis. About 70,000 soilsamples are analyzed every year.

i) Micronutrient Analysis - To increasecrop yield the presence of micronutrientsin adequate proportion is necessary.Micronutrients analysis identifies thedeficiency in the soil and prescribesdoses of micronutrients that need to beapplied to ensure optimum yield. About1000 samples are analyzed every year.

j) Earn While You Learn Scheme - Thisis a unique scheme that has beendeveloped by the Company. It seeks toeducate and train children studying inclass IX and above to participate in theprocess of agricultural development.These students are trained tounderstand latest developments inagriculture and transfer this knowledgeto the farming community. The schemeprovides all opportunities to students toearn while they learn. The studentsparticipating are offered token moneywhich supports them while studying andat the same time imparts practicalknowledge of agriculture to them. Thestudents are required to do fieldextension work for promoting specialtyfertilizers, micronutrients & bio fertilizers

during vacation and holidays

7.8 National Fertilizers Limited (NFL)

7.8.1 Introduction

NFL is a Schedule ‘A’ and Mini RatnaCompany, which was incorporated on 23rd

August, 1974 for setting up of twoNitrogenous fertilizer plants, based ongasification technology of Feed Stock / LSHSat Bathinda (Punjab) and Panipat (Haryana)having an installed capacity of 5.11 lakhtonnes of Urea each. The commercialproduction from these plants commencedw.e.f. 1.10.1979 & 1.9.1979 respectively.Consequent upon reorganization of FCI inApril 1978, the Nangal unit (including Nangalexpansion project) of FCI was transferred toNFL.

The Govt. of India, in 1984, entrusted theCompany to execute the country’s first inlandgas based fertilizer project of 7.26 lakhtonnes Urea capacity in District Guna ofMadhya Pradesh and commercial productionstarted from 01-07-1988. Expansion ofVijaipur Plant was taken up in the year 1993for doubling its annual production capacity.The commercial production from VijaipurExpansion Plant commenced with effect from31.3.97. The Department of Fertilizersubsequently re-assessed the annualinstalled capacity of Vijaipur Plants from 7.26lakh tonnes of Urea to 8.64 lakh tonnes(each) with effect from 1st April 2000.

A revamp of Urea plant at Nangal forincreasing the production from 3.30 lakhtonnes to 4.78 lakh tonnes per annum wasunder taken and commercial productioncommenced from 1st February 2001 raisingthe total present annual installed productioncapacity of Urea at NFL to 32.31 lakh tonnes(i.e. 14.86 lakh tonnes in terms of NitrogenFertilizer).

The Company also produces variousIndustrial Products, like Nitric Acid,Ammonium Nitrate, Sodium Nitrite, SodiumNitrate, Sulphur, Methanol, Argon Gas, Liquid

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Nitrogen, Liquid Oxygen etc besides Bio-fertilizers.

Bio-Fertilizers plant at Vijaipur produces threestrains of Bio-Fertilizer namely PSB,Rhizobium & Azotobacter. Company has alsostarted marketing of special fungus basedbio-fertilizer “Mycorrhiza” under the brandname of ‘Kisan Mycorrhiza’

The value-added Neem Coated Ureadeveloped by NFL & widely recognized forits effectiveness is being produced at its threeunits at Panipat, Bathinda & Vijaipur. NFL isthe first company in India to be permitted bythe Government of India to produce andmarket Neem Coated Urea.

The authorized capital of the company as on31-03-2010 stood at Rs.500 crore and thepaid up capital at Rs.490.58 crore,comprising Govt. of India share of Rs.479crore (97.64%) and remaining Rs.11.58 crore(2.36%) held by financial institutions andothers.

7.8.2 Modernization and Expansion Projects

The year 2009-10 was a landmark year forthe Company. Consequent upon notificationof remunerative investment policies byGovernment of India in Urea sector, theCompany has undertaken a number ofprojects as follows:-

Revamp of fuel-oil based plants at Panipat,Bathinda & Nangal

Company has undertaken revamp of fuel-oilbased plants at panipat, Bathinda & Nangalfor change over of feedstock from FO/LSHSto NG/RLNG. Zero date of these projectshas been fixed as 29th January 2010. Theseprojects involve a total investment of Rs.4066crore and gestation period of 36 months fromthe zero date i.e. 29th January 2010. Contractfor revamp of Panipat and Bathinda unitshas been signed with M/s Larson & Toubro(L&T) on 10th March 2010 and for Nangalunit with consortium of M/s Tecnimont ICB(TICB) on 12th May 2010. M/s Project &

Development India Limited (PDIL) has beenengaged as Project Management Consultantfor all the projects.

Capacity Augmentation & Energy SavingProject (ESP) at Vijaipur

Company has undertaken Capacityaugmentation of urea plants at Vijaipur-I & IIby 16% and 23% respectively includinginstallation of Carbon Dioxide Recovery plantat an investment of around Rs.900 crore.The total urea capacity after completion ofEnergy Saving project at Vijaipur-I andCapacity Enhancement Project at Vijaipur-IIis expected to be 6261 MTPD. Basicengineering for Ammonia-I, Ammonia-II,Urea-I and Urea-II has been completed.Procurement of equipment is in progress.The projects are expected to becommissioned by 2011-2012.

NFL in collaboration with M/s KRIBHCO &RCF has formed a joint venture company(JVC) named as “Uravarak Videsh Limited”to explore investment opportunities abroadand within country in Nitrogenous, Phosphatic& Potassic sectors and to render consultancyservices for setting up Projects in India &Abroad. The Company’s Marketing Networkcomprises of Central Marketing Office atNOIDA, three Zonal Offices at Bhopal,Lucknow & Chandigarh, 16 State Offices andabout 38 Area Offices spread across thecountry.

7.8.3 Production Performance

The Company, during 2009-10, produced33.30 lakh tonnes of Urea (103.7% ofinstalled capacity). The company achievedever best production of 226 tonnes of Bio-fertilizers and 37648 tonnes of Neem CoatedUrea. The percentage share of NFL in Ureaproduction in the country has been estimatedat 15.8%. Company has also started theproduction of foundation and certified seedsunder a pilot project. During 2010-11 uptoDecember the company produced 25.28 LMTof Urea utilizing 104.3% capacity.

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7.8.4 Sales performance

The company, during 2009-10, sold 33.78lakh tonnes of Urea. Company achieved everbest Bio-fertilizers sales of 196 tonnes. Italso sold 3468 tonnes of seeds during theyear. The sales turnover including subsidyfor the year was Rs.5091.34 crore. Duringthe year, sales turnover for industrial productsis Rs.98.35 crore. The Company also soldCompost, Mycorhizza & seeds of the valueof Rs.7.31 crore.

7.8.5 Financial Performance

The Company has achieved a profit beforetax (PBT) of Rs.259.91 crore during FY 2009-10, Rs.155.61 crore during FY 2008-09,Rs.155.82 crore during FY 2007-08. TheCompany has achieved a profit before tax

(PBT) of Rs.163.46 crore during the currentfinancial year i.e. 2010-11 (up to December2010). Detailed statement is as follows:

2007-08 TO 2009-10 and 2010-11 (up to Dec.2010)

Rs. in crore

Particulars Amount Amount Amount Amount2007-08 2008-09 2009-10 2010-11

(uptoDec.2010)

Gross margin 261.76 292.91 364.55 235.08

Less: Depreciation 89.30 96.41 93.75 65.98

Less: Interest 16.64 40.89 10.89 5.64

Profit before 155.82 155.61 259.91 163.46tax (PBT)

Less: Tax 47.17 58.15 88.40 51.68

Profit after tax 108.65 97.46 171.51 11.78

R&D Activities at Nangal Plant

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7.8.6 Employment of SC/ST, Ex-Servicemen,Physically handicapped & OtherBackward classes Persons (As on30.9.2010)

The guidelines regarding reservation inRecruitment and Promotion for SC, ST, OBC,Ex-Servicemen and Physically HandicappedPersons (PHP) are followed.

Out of total strength of 4673, there are 1211SCs, 285 STs, 322 OBCs, 81 Ex-Servicemenand 54 PHPs on the rolls of the Company.

7.8.7 MoU

NFL received the 9th consecutive “Excellent”MoU rating for the fiscal year 2008-09. Thecompany is also expected to receive‘Excellent’ rating for the year 2009-10. For

the year 2010-11, the company has enteredinto MoU with DoF which is the 20th

consecutive year of the signing.

7.8.8 Awards & Accolades

Company excelled in performance in variousareas, which got recognition from variousquarters during the year. The company hasreceived the ninth consecutive “Excellent”MoU rating for the fiscal year 2008-09.

Vijaipur unit received “Green Tech safetyaward 2009” in Fertilizer sector from GreenTech Foundation, New Delhi. For best safetypractices. Vijaipur unit has also beenawarded cash prize of Rupees one lakh &Certificate of Honour during the year byDepartment of Commercial Tax, Governmentof Madhya Pradesh for Best Tax Payer for

Director (Finance), NFL receiving ICWAI AWARD to Bathinda Unit for Cost Management

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2007-08. Vijaipur unit also received SecondAward for Bio-Fertilizers in manufacturingsector for the year 2006-07 from NationalProductivity Council, New Delhi. Vijaipur unit& Panipat Unit also received National SafetyAwards. Bathinda unit received First prizefor achieving largest reduction in AccidentFrequency Rate in Chemical Industry for theyear 2009 from Punjab Industrial SafetyCouncil, Chandigarh.

7.8.9 Public / Staff Grievance RedressMachinery

Based on the model grievance procedurenotified by DPE, company has framed a‘Grievance Redressal Procedure’ foremployees of NFL. The objective of theProcedure is to provide easily accessiblemachinery for settlement of grievances andto adopt measures as would ensureexpeditious settlement of grievances ofemployees leading to increased satisfactionon the job and resulting in improvedproductivity and efficiency of the organization.

For systematic monitoring and supervisionof Public Grievances, Head of Corporate HRDepartment has been nominated as Director(Grievance). In addition to this, the companyhas also set up “Public Grievances Cell” atthe Units which is headed by a GrievanceOfficer, who generally belongs to seniormanagement cadre. Apart from this on theCompany’s website“www.nationalfertilizers.com”, a feedbackform has been created for posting of query/grievances by the public.

7.8.10 Information relating to welfare ofMinorities and reservation in dealership.

The organization believes in equality of allcommunities and follows all Governmentregulations on empowerment of minoritiessuch as representation of the minoritycommunities on interview boards in GroupC & D. As on 30-09-2010, the percentageshare in NFL dealership under SC/STcategory is 26.72%.

7.8.11 Environment Management

The Company has in place a system forcontrolling and monitoring pollutants at allunits complying with environmental standardsand legislations. Resource conservation,waste management and pollution preventionare the driving forces for environmentalexcellence at our company.

Silo system for collecting fly ash from ESPHoppers using dense phase pneumaticconveying system has been installed atPanipat and Bathinda units for evacuation ofash from the plants. All the Units are ISO9001-2000 certified for Quality ManagementSystem, ISO-14001 certified for EnvironmentManagement System and have receivedOHSAS-18001 certification for OccupationalHealth and Safety Management System.Company has finalized and submitted theproject development document for installationof facilities for reducing Nitrous Oxideemissions from Nitric Oxide Plant at Nangal.The project shall enable the company to earnCarbon Credits under Clean DevelopmentMechanism. Company is putting up a CarbonDioxide Recovery plant of 450 MTPDcapacities for recovery of Carbon Dioxidefrom Flue gases of primary reformer atVijaipur. This will also help in reduction indischarge of green house gases.

7.8.12 Corporate Social Responsibility andAgriculture Extension Activities

Company is committed towards improvingthe crop productivity and living standard ofsocio-economically weaker sections of thesociety and educating farmers about theefficient use of fertilizers. In furtherance ofthis cause, during the year 424 fielddemonstrations and 161 R&D trials wereundertaken on different crops in differentareas. Around 60,000 soil samples werecollected and tested for nutrient deficiencyand analysis report provided to the farmers.

Krishi Melas, exhibitions, crop seminars,farmers & dealers training programmes andstudy tours organized to disseminate

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information regarding improved farmtechnology and establish directcommunication with the farmers and also toeducate the farmers of the balanced use offertilizers and its timely application besidesproviding guidance on pesticides &fungicides. More than 2 lakh crop literaturein the form of folders, leaflets, pamphlets inlocal languages were distributed during theseprogrammes. Krishi diary, an annualpublication for farmers and Kisan Sandesh,a season-wise crop advisory newsletter wasaddressed to farmers. A number of healthcamps for women and children, animal healthcamps, vocational training programmes wereorganized. Water tank, water coolers, solarlights, tricycles, school furniture, books etc.were also distributed.

Vijaipur, Panipat, Bathinda and Nangal Unitscarried out various activities for the benefitof socially and economically weaker sectionsof the society in their peripheral areas. Healthawareness programmes, medical campswere also organized. Financial aid, blankets,sewing machines etc. were provided to thepoor and needy persons of the nearbyvillages. Scholarship to meritorious studentsbelonging to SC/ST categories, stationeryitems, sweaters, furniture items etc. were alsodistributed to school children. Communityworks in the surrounding villages such asconstruction of boundary wall, flooring workand other civil works at nearby schools werealso carried out to provide better environmentfor the students.

7.9 The Fertilizers and Chemicals TravancoreLimited (FACT)

7.9.1 Introduction

Fertilizers And Chemicals Travancore Limited(FACT) was incorporated in 1943. In 1947FACT started production of AmmoniumSulphate with an installed capacity of 50,000MT per annum at Udyogamandal, nearCochin. In the year 1960, FACT became aPSU and towards the end of 1962,

Government of India became the majorshareholder.

From a modest beginning FACT has grownand diversified into a multi-division/multifunction Organization with basic interestin manufacture and marketing of Fertilisersand Petrochemicals, Design Engineering &Consultancy and in Fabrication & Erectionof Industrial Equipment.

7.9.2 Performance

During the Financial Year 2009-10 FACT hasmade an upsurge in Production and sales.For the continuous second year, companycould maintain a turnover above Rs. 2100Crore. Production, Sales and profitability ofthe company for the year 2010-11 uptoDecember 2011 as compared to 2009-10 &2008-09 is given below:

2009-10 2008-2009 Apr-Dec.2010

Production/in Tonnes

Factamfos 20:20 753744 605047 481457

Ammonium Sulphate 179546 128845 145554

Caprolactam 42006 13548 32070

Sales/ in lakh Tonnes

Fertilizers 10.45 8.33 7.18*

Caprolactam 0.38 .0.12 0.32

Financial /Rs. Lakh

Profit/Loss(-) before tax (-)10370.34 4311.44 (-) 1409

*including traded products

7.9.3 Performance Highlights

During the current year up to November2010, the company produced 4.42.749 MTof NP which is 97% of the target . Productionof Ammonium Sulphate during the period was125897 MT which is 113% of the target.

During the financial year up to November2010, the total sale of Fertilizers is 7.18 lakhMT valued at Rs.1427.94 crores comparedto Rs. 1276.54 crores for the correspondingperiod last year.

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Company sold 45475 MT of imported MOPduring the period. Sale of Gypsum reached252050 MT till November 2010. New fertilizerproducts, Zinc fortified Gypsum, FACTOrganic, and Zincated factamfos launchedlast year are moving smoothly in the market.

Caprolactam sales for the period April-Nov.2010 is 28112 MT of which 6460 MT wasexported.

Commercial production of the Zincatedfactamfor began this year and till date a totalof 19199 MT of zincated factamfos has beensold in the market. This product provideshigher returns to FACT and will also serveto promote the balanced use of fertilizernutrients in the country.

1) FACT-RCF Building Products Limited(FRBL)

FACT has formed a Joint VentureCompany with Rashtriya Chemicals &Fertilizers Limited for manufacturing loadbearing panels and other buildingproducts using phospho gypsum. Theproject is expected to achievemechanical completion during January2011. Commissioning shall beginshortly.

2) Switch over of feedstock and fuel toLNG

LNG which is a cheaper feedstock thanthe presently used Naphtha is expectedto be available from the upcomingTerminal being set up by Petronet LNGat Puthuvypeen. FACT has taken stepsto carry out modification of its existingAmmonia plant and also the boilers forthe use of LNG. M/s. Haldor Topsoewho is the licensor for Ammonia planthas submitted detailed offer forengineering works for the feedstockconversion of the Ammonia plant. BHELhas undertaken a study for theconversion work for the boilers. FACTintends to change over these plants fordual feedstock and fuel in order to take

advantage of the relative economies ofdifferent raw materials.

FACT is also taking steps for a GasTransmission and Gas Supplyagreement with GAIL/BPCL/IOC for thetransport and supply of the requiredquantities of gas from the LNG Terminal.However the proposed price of LNG atKochi terminal is US$14-15 per mmbtuwhen compared to average price of US$4-5 per mmbtu for natural gas, raisesconcern to the company in the scenariowhen additional subsidy is withdrawnafter change over to gas.

3) Expansion and Diversification plans

FACT has drawn up plans to set up a5 lakh MT per annum Urea plant atUdyogamandal as an add-on to theexisting Ammonia plant utilizing thecarbon dioxide being vented from thisplant. Preparation of the Detailed ProjectReport and selection of the processlicensor is in progress. The costestimated for this project is Rs.695crore. Implementation of this project isscheduled for 2012-13.

FACT is going ahead with its plans toexpand the production capacity ofcomplex fertilizers at FACT (CochinDivision) from 2000 TDP to 3000 TDP.Site selection has been completed andpreparation of the DPR is in progress.To cater to the higher volumes of rawmaterials to be handled up on expansionof the production facility, expansion/revamp of the Raw material handlingfacility at Willingdon Island has alsobeen planned. The total cost of theseventures is expected to beapproximately Rs. 283 crores.

FACT ventured into the field ofinfrastructure development by enteringinto MOUs with Container Corporationof India (CONCOR) and CentralWarehousing Corporation (CWC) forsetting up Container Freight Stations by

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the side of the newly laid highway tothe Vallarpadam ContainerTransshipment Terminal which passesthrough FACTs premises. The finalbusiness plans for these ventures hasbeen drawn up. Construction of theseFreight Stations is expected to becompleted within a year. A joint venturewith Kerala State IndustrialDevelopment Corporation for setting upa state of art convention centre at itsUdyogamandal premises is also beingconsidered and detailed feasibility reportfor this is under preparation.

7.9.4 Redressal of Public Grievances andWelfare Measures

A Public Grievance Cell is functioning in theCompany, as per norms laid down by

Government of India. Grievances areattended to promptly.

7.9.5 Employee Grievance Redressal Machinery

There is a redressal Machinery to attend toemployees grievances in the company.Generally the grievances are related to work,work place, shift arrangement grant ofincrement, promotion, salary fixation, transfer,etc. An aggrieved employee may submit acomplaint/request for settling the grievancein the Division and if still aggrieved with thedecision of the Division Head, it may besubmitted before the appropriate GrievanceCommittee. Separate grievance committeesexist for examining and redressal ofgrievances of managerial and non-managerial employees. The individualconcerned is given an opportunity to present

A view of the revamped cooling tower of FACT Petrochemical Plants which was inaugurated on June 22, 2010

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his grievance in person before the committee,if required. The respective Committee willdeliberate on the grievance and give theirrecommendations to the management forappropriate action. In addition, there is anSC/ST Grievance Cell that looks intocomplaints received from SC/ST Employees.

7.9.6 Employment of SC/ST, Ex-servicemen,Physically Handicapped & OtherBackward Classes (OBCs) as on30.11.2010.

Company has a total man-power of 3340 ason 31.11.2010, out of which 458 belong toscheduled caste, 109 to scheduled tribes,41 to Ex-servicemen, 1023 to OBCscategories, 244 women, 73 Physicallyhandicapped and 1750 General categories.

7.9.7 Reservation in Dealership

FACT has always followed a policy ofencouraging SC/ST Candidates to take updealership. Details of dealership allotted toSC/ST are given below:

Category of Dealership As on 31.03.2010

Total Dealership 7948

SC/ST 614

No security deposit is collected from SC/STDealers and they are encouraged to dobusiness by constant advice/follow up. Allefforts will be made to ensure that maximumrepresentation is given for SCs/STs in Dealerappointments wherever additionaldealerships are provided.

7.9.8 Corporate Social Responsibility

As part of Corporate Social Responsibility,FACT has undertaken the following activities.

1. Drinking Water Supply to Residents ofEloor Panchayath

FACT processes water from the RiverPeriyar at their advanced drinking waterfacility for their Industrial/townshipneeds. To meet the scarcity of water in

Eloor Panchayat, FACT is providingabout 1500 M3 water per day to morethan 500 residential users of the EloorGrama Panchayath.

2. Public Health insurance for residents ofEloor Panchayat

FACT has joined hands withGovernment of Kerala to introduce aGeneral Health Insurance for about3000 families residing in Eloor GramaPanchayat. Company has contributedRs. 8 lakh towards the premium for theGeneral Health Insurance.

3. Farmer Education programme

Regular agricultural seminars, dealertraining programmes, crop campaigns,field demonstrations etc, wereconducted. This helped the farmers togain experience of scientific practicesto be adopted for successful farming.Our field staff regularly make follow upto clarify doubts if any, and inculcatethe adoption of modern technology forintegrated farming.

4. Soil Testing and Agronomy Services

During the year 2009-10, 2867 numberof soil samples were collected by ourfield staff from various villages in thestates of Andhra Pradesh, Kar5nataka,Tamilnadu and Kerala. The focus wason collecting samples from remote tribalareas with limited access to Governmentlaboratories. Based on the soil tests thefarmers were educated on theagronomic practices to be adopted,namely crop variety selection, type ofsoil tillage to be adopted, use ofavailable organics in fields, dosage offertilizers to be used etc. These activitieshave benefited the farming communityto maximize their crop yields.

5. Fire and Emergency Services

The well equipped fire servicesestablished in FACT provide emergencyservices not only to the surrounding

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areas but also to Ernakulam district aswell.

6. Training facilities

In addition to Employees andApprentices Training, FACT TrainingCentre has of late emerged as a SkillDevelopment Academy offering thefollowing courses, utilizing its resourcesfor the benefit of the public at large:

(a) One year Diploma in Fire & SafetyEngineering for ITI/Plus 2 passedstudents-1st batch started inFebruary 2008.

(b) 3 months Certificate course inHeavy Equipment Operation-1st

batch commenced on October2008.

(c) 3 months Certificate course inInstrumentation & Maintenance-1st

batch commenced in September2008.

(d) Kerala Institute of Welding &Research, a Joint Venture withGovernment of Kerala, functioningat FACT Training Centre hasstarted a 3 months Certificatecourse in Welding leading to awardof IBR certificate in Welding. Firstbatch commenced in September2009.

7.9 Krishak Bharati Cooperative Limited(KRIBHCO)

7.10.1 Introduction

KRIBHCO was incorporated as a Multi StateCooperative Society on 17.04.1980 toimplement the Ammonia/Urea fertilizer projectat Hazira, based on natural gas from BombayHigh/South Bassein. The Societycommissioned its Ammonia/Urea Plant in1985.

The Hazira complex has two streams ofAmmonia plants and four streams of Ureaplants. The annual capacity of Urea Plants

is 17.29 lakh MT. The revamp of the plant isin advanced stage of implementation. Postrevamp the Urea and Ammonia productioncapacity will increase to 21.95 lakh MT and12.47 lakh MT respectively.

KRIBHCO has also installed a Bio-fertilizerunit at Hazira in 1995. The capacity of thisUnit was enhanced from 100 MTPA to 250MTPA in 1998. Two more Bio-fertilizer unitsof 150 MTPA capacity each have also beeninstalled one at Varanasi, U.P in September2003 and another one in Lanja, Maharashtrain March 2004.

As on 31.03.2010 the authorized sharecapital of the Society is Rs. 500 crore andthe paid up share capital is Rs. 390.67 crorewhich includes Rs. 188.90 crore held byGovernment of India and remaining Rs.201.77 crore held by Cooperative Societies.The total membership as on 31.03.2010 was6546.

7.10.2 Physical Performance

PRODUCTION- Unit 2010-11 2009-10 2008-09KRIBHCO (upto

Dec.10)

Ammonia Lakh MT 8.90 11.10 10.85

Urea Lakh MT 14.15 17.80 17.43

Bio-Fertilizer MT 804 953 865

Capacity

Ammonia Lakh MT 10.03 10.03 10.03

Urea Lakh MT 17.29 17.29 17.29

Bio-Fertilizer MT 550 550 550

CAPACITYUTILISATION %

Ammonia % 118.24 110.65 108.11

Urea % 109.14 102.94 100.83

Bio-Fertilizer % 195.00 173.25 157.3

ENERGYCONSUMPTION

Ammonia Gcal/MT 8.301 8.276 8.208

Urea Gcal/MT 5.955 5.932 5.933

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7.10.4 Joint Ventures

1. Joint Venture Oman India FertilizerCompany, Oman (OMIFCO):

KRIBHCO, IFFCO and Oman OilCompany with a share holding of 25%,25% and 50% respectively havecollaborated and set up a world-classfertilizer plant at Sur in Oman. Theannual capacity of the fertilizer complexis 16.52 lakh MT of granular Urea and11.9 lakh MT of Ammonia.

• The Urea produced in OMIFCO isbeing purchased by Govt. of Indiaand half of the produce is beingmarketed by KRIBHCO. Inaddition, plant produces 2.5 lakhMT of surplus Ammonia per year,which is to be brought to India.

• During the financial year April ‘09to March ’10 OMIFCO hasproduced 20.30 Lakh MT ofGranular Urea.

• During the financial year 2010-11upto November 2010, OMIFCOhas produced 14.11 Lakh MT ofGranular Urea.

2. KRIBHCO Shyam Fertilizers Limited(KSFL):

KRIBHCO Shyam Fertilizers Limited(KSFL) has acquired Ammonia –UreaFertilizer Complex of M/s. OswalChemicals and Fertilizers Ltd. atShahjahanpur, U.P, consisting of asingle stream Ammonia plant of annualcapacity 5.02 Lakh MT and two streamsof Urea plant with a combined annualcapacity of 8.64 Lakh MT.

• KRIBHCO holds 85% of the equity,management control and the entiremarketing rights of Urea and otherproducts of the company.

• During the financial year 2009-10KSFL achieved highest everproduction of 9.73 lakh MT of Urea

7.10.3 Financial Performance

PARTICULARS Unit 2010-11 2009-10 2008-09(Upto

Dec.’10)

TURNOVER/OPERATING Rs. Crore 2596.14 2597.08 2559.12INCOME

Profit-(PBDIT) Rs. Crore 200.31 288.57 307.25

DEPRICIATION Rs. Crore 22.42 30.62 27.53

INTEREST Rs. Crore 14.08 5.18 10.38

Profit-(PBT) Rs. Crore 163.81 252.77 269.34

TAX Rs. Crore 39.18 24.60 19.21

PROFIT AFTER TAX Rs. Crore 124.63 228.17 250.13

SHARE CAPITAL Rs. Crore 390.28 390.67 390.67

RESERVES & SURPLUS Rs. Crore 2469.88 2306.46 2158.68

NET WORTH Rs. Crore 2860.16 2697.13 2549.42

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(113 % capacity utilization) and5.72 Lakh MT of Ammonia (114 %capacity utilization).

• During the financial year 2010-11upto November’10, KSFL hasproduced 6.95 lakh MT of Urea(121 % capacity utilization) and4.07 Lakh MT of Ammonia (122 %capacity utilization).

7.10.5 Equity Participation

1. Gujarat State Energy GenerationLimited (GSEG):

Gujarat State Energy GenerationLimited (GSEG) is a joint venture withGujarat State Petroleum Corporation Ltd(GSPC), other Government of GujaratCompanies, KRIBHCO and GAIL(India)Ltd. KRIBHCO has so far made equitycontribution of Rs. 80.68 crore (27.48%).Further equity contribution of Rs.26.36crore is likely to be made shortly.

GSEG is operating a 156 MWCombined Cycle Power Plant based onNatural Gas at Mora, Distt. Surat,Gujarat.

During the financial year 2009-10, Planthas achieved an overall Plant Loadfactor (PLF) of 81.3%

GSEG is implementing Combined CycleGas Based Expansion Project ofcapacity 350 MW at its existing Site atan estimated cost of Rs.1160 crore.Erection work is in progress and theProject is likely to be completed inJanuary 2011.

GSEG has provisional post tax profit ofRs.9.72 Crore during the 2009-10 andhas declared a dividend of 3 % on theshare capital.

2. Nagarjuna Fertilizers & ChemicalsLimited (NFCL):

Society has an equity participation of‘Rs.10.00 crore in NFCL, which is 2.15%

of NFCL’s paid-up share capital ofRs.465.16 crore.

3. Indian Commodity Exchange Ltd.(ICEX)

KRIBHCO has entered into InvestorShare Subscription Agreement withIBFSL, MMTC and ICEX on 19.09.2009for acquiring 5% equity stake at par inthe above company. Accordingly,KRIBHCO has contributed Rs.5.00 croreas equity in ICEX. The upcomingexchange is a national level multicommodity exchange and has startedits operation since 27.11.2009.

7.10.6 Project under implementation/consideration

1. Revamp of Ammonia and Urea Plant:

Society is undertaking Revamp of itsexisting plant to augment its annualcapacity of Urea Plant from 17.19 lakhMT to 21.95 lakh MT and of AmmoniaPlants from 10.03 lakh MT to 12.47 lakhMT. Zero date for the project has beendeclared on 27th January 2010. Thecompletion period of the project is 32months with an estimated project costof Rs.1301 Crore.

Basic Engineering Job for both ammoniaand urea has been completed. TheDetail Engineering work andprocurement services are underprogress. Procurement of majorequipments have been completed andorders for all long lead items have beenplaced, ITBs are being issued forprocurement of Pipings and Fittingsitems as per MTO-2. Procurementdeliveries have started arriving at site.

The mechanical erection work is also inprogress and orders for electrical andinstrumentation erection contract hasbeen placed, the contractors for bothwould also mobilize soon.

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2. KRIBHCO Infrastructure Limited(KRIL):

KRIBHCO has incorporated KRIBHCOInfrastructure Limited (KRIL), a 100%subsidy of KRIBHCO, with authorizedshare capital of Rs.500 crore foroperating Container trains andundertaking Infrastructure Projects. KRILhas commenced Container trainsoperation w.e.f. December 2009. KRILis presently having six Container rakes.KRIL is in an advanced stage of settingup Inland Container Depots (ICDs) atRewari, Modinagar, Hindaun City andShahjahanpur.

3. Revival of Jetty Terminal, Hazira:

Society has revived its own Jetty

Terminal at Hazira. KRIBHCO wouldhandle OMIFCO Urea and otherfertilizers and gainfully utilize the rail/road connectivity for evacuation to therest of the country. A transit godown ofcapacity 15000MT has also been build.The evacuation potential from the jettyis about 7000MT per day.

7.10.7 Corporate Social Responsibility

Agriculture income is the main strength offarmers. A large number of them aremembers of our member cooperatives.KRIBHCO with its large dedicated team ofagriculture professionals continued itssignificant contribution along with otherserious players in latest farm technologytransfer and other rural welfare schemes for

KRIBHCO Bio-Fertilizer Plant at Hazira

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improving the profitability of farmingcommunity.

During 2009-10 , KRIBHCO organized morethan 2786 programmes for our farmingcommunity such as farmers meetings, kisanmelas, field demonstrations, field days,cooperative conferences, group discussion,special campaign etc. benefiting 12.72 lakhfarmers and cooperatives across the country.To back up the Agriculture Technologytransfer, the Society also made available 6.05lakh technical folders on various crops tothe farmers and cooperatives.

KRIBHCO Krishi Pramarsh Kendra, a high-tech centre at KRIBHCO Bhawan, NOIDAcontinued free consultancy to farm-relatedproblems. The centre also propagatedefficient and balanced use of fertilizer bytesting 4240 soil samples collectedscientifically for micro-nutrients and 1248samples for macro-nutrients & irrigation waterfrom 15 states free of cost. Results alongwithrecommendations were forwarded throughelectronic medium to farmers at their door-steps, apart from using KRIBHCO websitefor display of results. Pramarsh Kendra alsoprovided latest information on weather, likerainfall, temperature, relative humidity,monsoon movement etc. for use in planningfarm operations and mid-term corrections inthe event of crop failure generally throughkisan helplines.

All State Director of Agriculture were informedabout educational programmes conductedand soil samples tested from their statesalong with district-wise deficiency noticed invarious soil samples. KRIBHCO also joinedhands with ICAR, State AgricultureUniversities, State Cooperative Federationsfor free soil testing and technology transferwhich was thankfully acknowledged andappreciated at all platforms.

As a step towards modernization, KRIBHCOcontinued to promote InformationCommunication Technology (ICT) throughKRIBHCO Kisan helpline using e-mail,

phone, computer and KRIBHCO website forinforming farmers about latest farmtechnology alongside with traditional tools.Information on monthly farm operations arealso made available on website.

Strengthening cooperatives and ruraldevelopment always remained a top priorityfor KRIBHCO. In this direction 38 cooperativesocieties were adopted, 22525 cooperativemanagers were trained through 209cooperative conferences and workshops and30 study visits, wherein they were educatedabout the use of Society’s product forimproving farm productivity and alsoenhanced our corporate image. The societyalso organized 41 health campaigns forlivestock and humans, promoted 6 waterfacilities including micro-irrigation systems forcrops in rainfed areas and rural sports forintegrated rural development. A group ofRepresentative General Body(RGB)Members from Uttrakhand, Haryana,Karnataka, MP., Punjab, Rajasthan, TamilNadu, Maharashtra & Kerala, visited Haziraplant to apprise themselves of the stepstaken to maintain the quality of the product.Storage-cum-community centre schemestarted on Golden Jubilee celebration of Indiastill continuing with 146 centres sanctionedand 131 are completed and being used fully.

During the financial year 2010-11, KRIBHCOcontinued its services to farmers &cooperative. A total 1667 of programmes sofar have been organized upto November2010 which mainly include Farmersmeetings, Cooperative conference, Healthcampaigns for human and animals, Technicalwall paintings, Technical literature Printing &distribution and soil testing campaign, directlybenefiting 2.20 lakh farmers. Besides this4.36 lakh technical crop folders weredistributed and 5004 Soil samples weretested for pH, Electric conductivity, macroand micro-nutrients from 104 districts of 13states. KRIBHCO Kisan helpline was usedby 277 farmers for solving their farm relatedproblems.

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7.10.8 Seed Multiplication Programme

KRIBHCO also initiated Seed ProductionProgramme in 1990-91 to provide quality/certified seeds of main crops to the farmerswhich has had a very encouraging responsefrom farmers and cooperative societies. Theseeds are made available to the farmersthrough KBSKs, Cooperative Societies andState Cooperative Federations in differentstates. The Society stepped up productionof seeds from 2928 quintals in 1991-92 to2.29 Lakh quintals of Seeds in 2009-10. Thisis the highest ever production of seeds sofar.

• During the financial year 2009-10, theSociety has produced 2.29 thousandquintals and sold 2.22 lakh quintals ofseeds which is highest since inception.

• During the financial year 2010-11 uptoNovember’10, Society has alreadyproduced 2.35 lakh quintals and sold2.32 lakh quintals.

7.10.9 Public/Staff Grievance RedressalMachinery

A Public Grievance Redressal Machinery isin operation in KRIBHCO. Grievance/Complaint Box is kept at the reception ofoffice for convenient registration of complaintsby member of the public. DGM(HR),Corporate Office is designated as GrievanceOfficer to attend any public grievance/complaint. A quarterly progress report ofredressal of Public Grievance is being sentto Dept. of Fertilizers, Government of India.

7.10.10 Employment of SC/ST, Ex-Servicemen,Physically handicapped & OtherBackward classes Persons (As on30.11.2010)

The guidelines regarding reservation inRecruitment and Promotion for SC, ST, OBC,Ex-Servicemen and Physically HandicappedPersons (PHP) are followed.

Out of total strength of 2048, there are 92SCs, 47 STs, 263 OBCs, 14 Ex-Servicemen

and 8 PHPs on the rolls of the Company.

7.10.11 Gramin Vikas Trust

Krishak Bharati Cooperative Ltd (KRIBHCO)has promoted Gramin Vikas Trust (GVT) asa non-profit, rural development trust. GVTas an independent legal entity is acting as acatalyst to enable the socially andeconomically disadvantaged rural and tribalcommunities to improve their livelihoods onsustainable basis. The prime focus of GVTis to empower the local and traditional peopleespecially those in resource poor and Rainfedareas, through participatory approach. TheTrust is operating in 7 states namely MadhyaPradesh, Rajasthan, Gujarat in the WesternIndia and Orissa, Jharkhand, Chhattisgarhand West Bengal in the Eastern India throughwell established offices and team. It has alsoundertaken short term assignments likestudies, evaluation work etc. in the state ofHaryana, Maharastra, Uttarakhand and Bihar.

GVT has been a pioneer in the field ofcollaborative research in agriculture withacademic institutions and communities aspartners. GVT and its projects havedeveloped close links with Govt. of India,State Governments, NGOs, ResearchInstitutions and international organizations forbetter dissemination of research outcomesand appropriate technology, which havepotential value for the rural development.Partnerships are ongoing with EU and Centrefor Arid Zone Studies (CAZS), BangorUniversity, U.K.

GVT through its watershed projects hasbrought nearly 70000 hectares area fortreatment and covered nearly 200000Households in the targeted areas. Over thepast decade participatory and more client-oriented approaches (through the concept ofParticipatory Varietal Selection- (PVS) andParticipatory Plant Breeding (PPB) of GVThave produced officially released andrecommended varieties that are highlyadapted to the needs of farmers in marginalareas. The varieties have greater drought

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tolerance; higher and more stable yields; andother traits that are important to farmers suchas early maturity, high grain quality, and highfodder yields. Because the varietiessubstantially improve their livelihoods,farmers enthusiastically adopt these highlyadapted varieties (HAVs) and spread theseed of them to other farmers.

GVT has been piloting 5 agriculturalinnovation projects in its operating states inconsortium mode either as lead agency oras a partner organization funded under NAIP.GVT is in the process of establishing 14Homestead Farming projects (WADI) throughfunding by NABARD to address sustainablelivelihood of marginal farmers by generatingsupplement income through horticulture,improved agriculture and vegetable growingin home gardens. In the area of skilldevelopment, GVT has made appreciableprogress by providing skill up-gradationtraining to tribal migrants in order to up-gradetheir existing capacity, which will providethem, increased earnings. GVT has beenawarded a Training project along with aVocational Training Centre at Dahod, Gujaratby Government of Gujarat to train 5060 Tribalyouth in construction industry related tradesin 10 years period and to ensure theirplacement.

GVT has developed strategic institutionalpartnerships with IRMA Anand, NIRDHyderabad, WALMI Bhopal, ICRISAT, CAZSUK, TERI etc. MLSP is being replicated byNGOs in different parts of the country. GVTextensively worked in the HIV/AIDS pronearea with a purpose of reducing STI infectionamong FSWs and enabling them to opt forsafe sexual behaviour.

GVT, due to its vast experience in ruraldevelopment activities, is being associated

by Corporate like IOC, NTPC, ITC, CFCLetc. to outsource their CSR activities. GVThas undertaken a project under Public-Private-Community Partnership Model inRajasthan where Govt. of Rajasthan, CFCLand GVT would implement a project ofconstructing 715 toilets at individual HouseHolds in 22 villages and to develop a cadreof Mason trained on construction of improvedtoilet through 5 days Training. A total of 715families have been covered under thisproject.

GVT has started a fully equipped andresidential National Livelihood ResourceInstitute at Ratlam (M.P.) to provide qualityinputs on the sustainable livelihoodprogrammes through its various courses onParticipatory watershed development andmanagement; Participatory technologydevelopment addressing varied farmingsystems in arid and semi-arid regions;developing community based organizationsto manage micro-finance and micro-enterprises on commercially viable scale,Capacity development of PRI’s and otherinstitutions to augment both rural non-farmand farm based livelihoods.

GVT is running a Krishi Vigyan Kendra (KVK)at Godda, Jharkhand funded by ICAR. It hasfacilities for assessment, refinement anddemonstration of agricultural technologies forpromotion of various farming systemsavailable in operational area. It has alsotraining facilities on quality seed productionof different cereal, leguminous, oilseeds,horticultural crops and promotion of the seedvillage programme. KVK is also well-equipped to provide training on productionof bioagents, biofertilizers, biopesticide andother organic manures for promotion oforganic farming.

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Chapter-8

8.1 Fertilizer Education Projects

8.1.1 The basic purpose of the application offertilizer is to enhance the crop productivityin the country. The Fertilizer companieslaunch their fertilizer projects for educatingthe farmers about the quality/contents ofthe soil for crops. Resultantly, the farmersare encouraged by the companies to usethe balanced fertilizers based on the qualityof the soil nutrient wise and apply fertilizersaccordingly. Department of Fertilizers doesnot implement Fertilizer Education Projects.Such projects are administered byDepartment of Agriculture & Cooperation,ICAR, State Governments and theagriculture universities. However, somefertilizer companies including PSUs doundertake such projects as part of theirextension and marketing activities. ThePSUs under the Administrative control ofDepartment of Fertilizers are encouragedto launch fertilizer education projects forthe benefit of farming community as perthe MOUs signed with the Department ofFertilizers in this regard. The main activitiesundertaken by various fertilizer companiesunder the Fertilizers Education Projects areagricultural seminars, dealers meetingsand trainings, soil sample analysis,demonstration, soil test recommendations,exhibitions, orientation programmes, R&Dtrials, field trials of fortified fertilizers, biofertilizers, distribution of crop literature,organizing Krishi Melas etc, mediapublicity. Department of Agriculture &Cooperation has launched National Projecton Management of Soil Health and Fertilityto promote integrated nutrient management

through judicious use of chemicalfertilizers, secondary and micro nutrientscoupled with organic and bio fertilizer forimproving the soil health and cropproductivity. It also aims at strengtheningsoil testing facilities, upgrading the skill ofstaff working in soil testing laboratory andstrengthening the fertilizer quality controlfacilities. At present there are 651 soiltesting laboratories in the Country including517 static and 134 mobile laboratorieshaving annual analyzing capacity of about7 million soil samples. The above saidnational projects proposes to set up 500new soil testing laboratories and 250mobile soil testing laboratories for micronutrient analysis. It also proposes tostrengthening of 315 existing state staticlaboratory during the 11th Five Year Plan.It further proposes to upgrade 63 existingstate fertilizer quality control laboratoriesand setting up of 20 new such laboratoryplus 50 laboratories for advisory purposes.The total outlay of the project is ‘ 429.85crore during the five year plan. A projectsanctioning cum monitoring committeeunder the Chairmanship of AdditionalSecretary, Department of Agriculture &Cooperation has been constituted, whichshall be advised by National MonitoringTeam of Experts. The implementingagencies shall be agro-clinics, NGOs,Cooperative Societies, PrivateEntrepreneurs, State Governments. As perthe above said scheme, the followingamounts of subsidy is to be provided byDepartment of Agriculture & Cooperationfor STL.

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8.1.2 The following fertilizer companies havesubmitted their proposals to Department ofAgriculture & Cooperation for setting up soiltesting laboratory:

• FCI Arawali Gypsum and Minerals IndiaLtd.

• Krishak Bharati Cooperative Ltd.

• Mangalore Chemicals & Fertilizers Ltd.(MCF)

• Zuari Industries Ltd. (ZIL)

• Southern Petrochemical IndustriesCorporation Ltd. (SPIC)

Sl.No. Particulars Policy

1. For Setting up of additional Soil Testing Laboratories by @50% of project cost limitedAgri clinics/NGOs /Cooperative, entrepreneurs, etc. to maximum of ‘ 30 lakh asunder Private partnership mode. one time subsidy.

2. For Adoption of village by Soil Testing Laboratories through @‘ 20000 per FrontlineFrontline Field Demonstration. Field Demonstration.

3. For Setting up of Mobile Soil Testing Laboratories by Agri @75% of project cost limitedLaboratories by Agri clinics/NGOs/Cooperative, Private to maximum of ‘ 30 lakh asentrepreneurs, etc. under Pvt. partnership mode. one time subsidy.

• Gujarat Narmada Valley FertilizersCompany Ltd.

• Indian Potash Ltd.

• Rashtriya Chemicals & Fertilizers Ltd.

• GSFC.

• Indo Gulf

• NFL

8.1.3 Department of Agriculture & Cooperation hasbeen requested by the Department to releasesubsidy to the above said fertilizers as perthe policy.

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Chapter-9

9.1 Information Technology (IT)

9.1.1 e-Delivery for Fertilizer Management

Fertilizer Management On-line has beendeveloped in Department of Fertilizers inclose collaboration with National InformaticsCentre to meet the national objective ofmaking fertilizers available timely, adequatelyin good quality and at affordable price to thefarmers by maintaining growth of fertilizerindustry through subsidies/concessions.Proper planning and monitoring of variousaspects like fertilizer production, imports,quality control, distribution, movement, sales,stocks, subsidies and concessions has beenfelt essential. In order to manage theseissues effectively, the following applicationssystems have been developed/ upgraded inorder to pace with the IT enhancements andchange in fertilizer policy:-

9.1.2 Web Based Fertilizer ProductionMonitoring System

The application system facilitates On-linedata entry and provides information supportfor planning and monitoring the fertilizerproduction in the form of material as well asnutrients. The system provides analysis inidentifying the macro and micro level factorsresponsible for deviations in production onplant to plant basis in order to take correctivemeasures to enhance fertilizer production inthe country. The system covers variousaspects viz., installed capacity, productiontargets, actual production, capacity utilization,requirement and consumption of rawmaterials/ intermediates for fertilizer plants.

9.1.3 Fertilizer Subsidy Payment InformationSystem

The system is used to compute the subsidy

amount based on the subsidy rates, equatedfreight rates and sales tax rates notified bythe Government for the quantity moved bythe Urea manufacturers to the consumptioncenters across the country. The processingof monthly claims through application systemhelps in timely release of subsidy to the ureamanufacturers. The system helps inmonitoring various activities pertaining to thepayment of subsidy by generating variousperiodic reports as well as query retrieval.

9.1.4 Application System for Monitoring EnergyConsumption Norms

The system is used to calculate the overallenergy consumption in urea production byplants based on various inputs and theircalorific values purchased from varioussources and consumed in ammoniaproduction. The system provides informationsupport to monitor operational performanceof the plants viz., daily reassessed capacity,average productive hours, and dailyproduction rate and capacity utilization ofammonia / urea. The system also maintainsconsumption and balance of ammonia foreach quarter.

9.1.5 Application System for Revision in UreaConcession Rates

The system facilitates in quarterly revisionof concession rates for urea manufacturingunits in each group under group concessionscheme on account of escalation/de-escalation in the variable cost of variousinputs and utilities consumed in ureaproduction. The software derives energyconsumption proportions of various inputsw.r.t. the total normative energy andcomputes input wise proportional costs. Thetotal input energy cost, normative costs ofvarious utilities and fixed cost are then

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summed to arrive at the rate of concession.The total financial impact is exercised w.r.t.the previous rate of concession anddispatched quantities.

9.1.6 Web Based Fertilizer Distribution andMovement Information System

The system maintains the data related toECA supply plan, fertilizer requirements inStates/UTs, opening stocks with stateinstitutional agencies and fertilizercompanies, monthly movement orders,imports, dispatches (regulated/de-regulated/imported by rail/road), availability and salesof different fertilizers.

9.1.7 Web Based Fertilizer Concession SchemeMonitoring System

The computer based application system isthe major integral process of FertilizerConcession Scheme for timely release ofconcession payments to the fertilizermanufacturers and importers for the sales ofindigenous/ imported phosphatic andpotassic fertilizers in States/ UTs. Themonthly claims at various stages i.e. ‘OnAccount’, ‘Differential’ and ‘Balance’ areprocessed using the software based on base/final rates, registration for sales, bankguarantee, eligibility and sales certification.The computerized notings for approval andsanctions for payments to PAO, Expenditureand Control Register (ECR) and variousqueries/ reports are generated to make andmonitor the concession payments.

9.1.8 Web Based Fertilizer Import ManagementSystem

The system assists in monitoring the fertilizerImport Plan based on actual imports againsttargets, status of FOB and C&F importcontracts for prilled urea on Govt. accountunder ECA demand and import of granularurea from OMIFCO under UOTA. The systemalso maintains details of Department ofFertilizer’s authorization to State TradingEnterprises (STEs)/ Handling & Marketing

Agents for import of urea during a scheduledperiod.

9.1.9 Web Based Handling & Payments Systemfor Fertilizer Imports

The application system provides decisionsupport to the Department of Fertilizers inselecting handling agents, fixation of handlingrates and monitoring of expenditure. Thesystem processes the claims from handling/marketing agents towards making paymentsof inland freight and handling charges afteradjusting the recovery of cost of cargo atPool Issue Price (PIP) from handling/marketing agencies, settlement of the portdues/ICC/other charges and demurrage/dispatch with handling/ marketing agencies.

9.1.10 Fertilizer Project Monitoring System

The system facilitates in monitoring monthlyexpenditure incurred through Internal andExtra-budgetary Resources (IEBR) andBudgetary Support on various schemes/projects approved by DoF during Five YearPlans w.r.t. plan outlays and yearly outlays.

9.2 Executive Video Conferencing System(EVCS)

NICNET Based Executive VideoConferencing System (EVCS) has beenmade operational on the desk of Secretary,Department of Fertilizers and is being usedas an effective mode of communication forinter-Ministerial consultations and quickdecision making. Point-to-Point VideoConferencing can be initiated by anyoneconnected to EVCS and multi-point VideoConferencing can be organized through NIC,Delhi.

9.3 Information & CommunicationTechnology (ICT) Infrastructure

DoF’s intranet consisting of 270 nodes isoperational in Department’s offices locatedin Shastri Bhawan, Udyog Bhawan, JanpathBhawan and Sewa Bhawan. NIC’s iNOC(Integrated Network Operation Centres) at

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Shastri Bhavan, Udyog Bhavan and SewaBhavan protect computer systems of DOF’sintranet from network security attacks.

The clients systems in the Department havebeen provided upto LDC level with internetconnectivity to make wider use of IT services.For accessing the internet through RF link ofNICNET, all the computers are connectedthrough NIC’s proxy server where built-infirewall capabilities are enabled.

9.4 Web Site/ Web Applications Hosting

The websites of DOF and fertilizer PSUs arehosted at Internet Data Center(IDC), NICHqrs. in a secured ICT environment to bringcitizen interface and transparency inGovernment functioning. The web basedapplications for fertilizer production,movement, concessions payment, imports &handling are operational from IDC. Theremote facility through secured Virtual PrivateNetwork (VPN) connection of NIC is beingused in DOF and Fertilizer PSUs for instantupdations in the websites.

Cabinet Secretary to the Government of Indiadirected all Government Ministries/Departments to have their websites as perthe guidelines adopted by DAR&PG.Accordingly, the website of Department ofFertilizers has been redesigned and enrichedin order to make it compliant to theguidelines. The website has been made morequalitative, informative and user friendly tobring transparency in Government functioningand citizen interface.

9.5 IntraFERT Portal

IntraFERT, an Intranet portal has beendeveloped to provide comprehensive,accurate, reliable and one stop source ofinformation to the staff and officers of theDepartment of Fertilizers. The portal aims inbringing less paper office environment in thedepartment. It facilitates a commoninformation platform whereby, all officeorders, circulars, critical news-updates,

downloading of standard forms, telephonedirectory of DOF, electronic pay-slipgeneration, personal profile, GPF details,income tax statement etc. and links to usefulwebsites are available equally andinstantaneously to all employees. Thiseliminates the requirement of personal visitsto HR, Cash and Administration Sections.

9.6 E-Governance

Department of Fertilizers has taken variousmeasures to bring e-Governance:

• Office Automation Packages:CompDDO (Comprehensive FunctionManagement of Drawing & DisbursingOfficer) Payroll System for CentralGovernment Offices, Web based FileTracking System, Application MonitoringSystem under RTI Act, LeaveManagement System, PGRAMS (PublicGrievances Software Package) andCPENGRAMS (Centralized PensionGrievance Redress And MonitoringSystem) developed by NIC areoperational in the Department ofFertilizers.

• To strengthen further the OfficeAutomation in Department of Fertilizers,an IT based system “Office NotificationsManagement System” has beendeveloped and implemented togenerate, store and manage differentkinds of official letters viz. OfficeMemorandum, Letters, Office Orders,Orders, D.O. Letters, Resolutions, Inter-Departmental Notes, PressCommuniqués etc in compliance withManual of Office Procedures (MOP).

• The facility of word processing in Hindiis available in all the computers in theDepartment.

• E-mail service is being extensively usedby the officials of Department ofFertilizers for information exchange withfertilizer companies and other agencies.

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10.1 Vigilance Activities

The vigilance activities of the Departmentextend not only to the Department but alsoto that of 7 Public Sector Undertakings and1 Multi State Cooperative Society. Thedepartmental vigilance set up is headedby a Joint Secretary who is designated asthe Chief Vigi lance Officer of theDepartment. The CVO of the Departmentis assisted by a Deputy Secretary, UnderSecretary and other vigilance staff. TheDepartment supervises the vigilanceactivities within the framework provided bythe Central Vigi lance Commissioner(CVC). The Department plays a pro-activerole in ensuring the prompt disposal ofvigilance cases and in framing preventiveguidelines. This helps in minimizing theoccurrence of vigilance cases. Efforts aremade by the Department to simplify theprocedures in the PSUs to make them workin a transparent manner. This reduces thechances of corruption.

10.2 Vigilance Activities during 2010

The number of pending vigi lance(Disciplinary Proceeding) cases in thePSUs was 25 as on 31.10.2010 ascompared to 24 as on 31.10.2009. TheDepartment has been regularly monitoringthe pending complaints/investigations byhaving close inter-action with theconcerned CVOs and constant efforts arebeing made to ensure the disposal ofdisciplinary proceedings.

Chapter-10

10.3 Celebrations of Vigilance AwarenessPeriod

The ‘Vigilance Awareness Period’ wascelebrated during 25th October, 2010 to 1st

November, 2010. Banners were displayedin the Department to create vigilanceawareness among the staff. A pledge wasadministered to the officials of theDepartment by Secretary (Fertilizers) and anessay competition was held thereafter. Therewas active and enthusiastic participation ofthe officers and employees of the Departmentin this essay competition. The ‘VigilanceAwareness Period’ was also celebrated withgreat gusto in the fertilizer PSUs andKRIBHCO and various competitions likeslogan writing, essay, debate, quiz,workshops etc. were held.

10.4 Surveillance and Detection

Agreed lists of public servants as well as theList of Public Servants of Doubtful Integrityfor the year 2010 have been finalized. Nocases were detected during the period 2009-10.

10.5 Punitive Action

As on 1st January 2010, twenty complaintsfrom various sources against the officials ofPSUs, were under examination. During theperiod from January, 2010 to 31st October,2010, twenty five more complaints werereceived. A total of twelve were gotinvestigated/examined and disposed off.

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Chapter-11

11.1 Right to Information Act, 2005

11.1.1 The Right to Information Act, 2005 (RTI) wasassented by the President of India on15.6.2005 and notified on 21.6.2005. Someof the Sections of the Act, namely, Sections4(1), 5(1) &(2),12,13,15,16,24,27 & 28relating to obligations of Public Authoritiesfor maintenance and computerization ofrecord/information, designation of PublicInformation Officers(CPIO), Constitution ofCentral Information Commission and Stateinformation Commission, exclusion of certainorganization etc. came into forceimmediately. The remaining provision of theRTI Act came into force on the 120th day ofits enactment i.e. 12th October 2005.

11.1.2 In compliance of the RTI Act the Departmenthas designated CPIOs and CAPIO. Therespective PSUs under the administrativecontrol of the Department have been directedto ensure compliance of the RTI Act. Someof the important steps taken by theDepartment in compliance of the Act are:-

Created a separate link for RTI Act on itswebsite http://fert.nic.in placing a Handbook

on RTI giving general information about theDepartment required under the Act.

Orders designating PIOs, with requireddetails, placed on website, which are updated from time to time.

Counter opened at Public Information Centreof DoF at Shastri Bhavan for applications aswell as prescribed fee under RTI.

Appointment of Nodal Officer intimated toDepartment of Post enabling providing ofservices by that Department as CAPIOsacross the country.

11.1.3 The Department has started registration ofRequests and Appeals under the RTI Act onthe Management Information System (RTI –RAMIS) software available on the Web-Siteof CIC.

11.1.4 During the year 2010-2011, 112 applicationsand 5 appeals were received of which 101applications and 5 appeal were disposed ofduring the said year and the remaining 11applications are under process for sendingreply to the applicants.

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Chapter-12

12.1 Progressive use of official language Hindi

12.1.1 Department of Fertilizers continued itsefforts towards greater use of Hindi inofficial work during 2010-2011 keeping inview the Annual Programme issued by theDepartment of Official Language, Ministryof Home Affairs for implementation of theOfficial language policy of the Union. Thework pertaining to the progressive use ofHindi in the Department is under theadministrative control of Joint Secretary(Administration), assisted by a DeputyDirector (OL). The Hindi Section consistsof one Assistant Director (OL), a SeniorTranslator, three Junior Translators andone Assistant.

12.1.2 All the 275 Computers (PCs) in theDepartment are equipped with bilingualfacility. Adequate reading material in Hindihas been made available in the library of theMinistry of Chemicals & Fertilizers. Effortsare being made to promote the use of Hindiin the correspondence. All officers/employeesof the Department, except one officer, whois being trained in Hindi throughcorrespondence course, are having workingknowledge of Hindi. Two stenographers,three Assistants and one lower Division Clerkof the Deptt. have been nominated for HindiShorthand and Hindi Typing. With thephasewise nomination of remaining sixstenographers and three LDC’s, all typists/stenographers working in the Deptt., will becompetent in doing their work in Hindi.Besides, a number of measures have beentaken for the promotion of progressive useof Hindi in the Department, its attached officeof FICC, PSU’s and the multi statecooperative society namely KRIBHCO, underits administrative control. Details of thesemeasures are summarized below:-

12.2 Implementation of Section 3(3) of theOfficial Language Act.

In pursuance of the official language policyof the Govt. of India, all documents coveredunder section 3(3) of the Official LanguageAct, 1963 are being issued both in Englishand Hindi. In order to ensure correspondencein Hindi to Central Government officeslocated in Region ‘A’, ‘B’ and ‘C’, action planbased on the checkpoints identified in theDepartment has been prepared to ensurecompliance of the official language policy.All the letters received in Hindi are invariablyreplied to in Hindi. Efforts are also beingmade to reply the letters in Hindi which arereceived in English from region ‘A’ & ‘B’Original correspondence in Hindi with thestate govt. is also being increased.

12.3 Official Language ImplementationCommittee (OLIC)

There is an Official Language ImplementationCommittee (OLIC) under the Chairmanshipof Joint Secretary (Adm.) in the Department.This committee regularly reviews theprogress made in the use of Hindi in theDepartment, its attached offices, FICC, PSUsand a Cooperative Society namely KRIBHCOon quarterly basis. It gives appropriatesuggestions and recommends measures tobe taken for the effective implementation ofthe official language policy.

12.4 Hindi Salahkar Samiti

With a view to render advice for effectiveimplementation of the official language policyof the Government, the reconstitution of theHindi Salahkar Samiti (Advisory Committee)of the Ministry of Chemicals and Fertilizers(The joint committee of the Department ofChemicals, Deptt. of Pharmaceuticals and

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the Department of Fertilizer under thechairmanship of the Minister for Chemicalsand Fertilizers was held on 10.2.2009) isunder process. Draft resolution of thecommittee have been sent to the Departmentof Official Language for their approval/sanction.

12.5 Incentive Scheme for original noting/drafting work in Hindi

The incentive scheme for noting/drafting inHindi introduced by the Department of OfficialLanguage is continued. This scheme carriestwo prizes of Rs.1000/- each, three secondprizes of Rs.600/- each and five third prizesof Rs.300/- each.

12.6 Cash prize scheme for dictation in Hindi

An incentive scheme for officers for givingdictation in Hindi is in operation in theDepartment. Under this scheme, there is aprovision of two cash prizes of Rs. 1000/-each (one for Hindi speaking and other forNon-Hindi speaking).

12.7 Hindi Day/Hindi Fortnight

In order to encourage the use of Hindi inofficial work amongst officers/employees ofthe Department, an appeal was made by theHonourable Minister on 14th September,2010. During the Hindi fortnight, which wasorganised in the Department from 14th

September, 2010 to 29th September, 2010,various competitions such as Hindi Essaywriting, Hindi typing, short extempore speechin Hindi, noting and drafting in Hindi, Hindigeneral knowledge and poem recitation

competitions in Hindi were organised.Officers/employees took part veryenthusiastically in these competitions andwon prizes.

12.8 Prati Din Ek Shabd

The Scheme named ‘Prati Din Ek Shabd’,which has been launched in the Departmentis continued for the last six years. Under thisscheme, one word/phrase in Hindi and itsEnglish equivalent was being displayed onthe White Board installed on the second floor‘A’ wing Shastri Bhavan. These words/phrases are generally of administrative andtechnical in nature which are used in day-to-day official work.

12.9 Hindi Workshops

During the year 3 Hindi workshops, one forSection Officers, one for Assistants andStenographers and one for LDC’s & UDC’s,were organised in the Department toencourage the officials to do more and morework in Hindi and altogether 28 officers/employees participated in these workshops.

12.10 Inspections regarding progressive use ofHindi

In order to oversee the implementation ofthe official language policy seven sectionsof the Deptt. and offices/units of differentPSUs were inspected by the Deputy Director(O.L.) of the Department during the year. Inaddition, the first Sub-Committee of theParliamentary Committee on OfficialLanguage inspected six office under theadministrative control of the Department.

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Chapter-13

13.1 Welfare of SCs, STs, OBCs andPhysically Handicapped Persons.

Due care has been exercised during theyear under review to implementGovernment’s instructions regardingrecruitment and promotion of candidatesbelonging to the Scheduled Castes (SCs),Scheduled Tribe (STs), Other BackwardClasses (OBCs) and PhysicallyHandicapped (PHPs) categories in variousgroups of services in the Department. Therepresentation of these categories in theDepartment as on date is as under:-

Group Total SC ST OBC PHNo. of

Officers/Staff

A 39 02 01 02 -

B 104 13 06 07 01

C 64 10 03 09 -

D 56 18 02 06 01

Total 263 43 12 24 02

13.2 Representation of SCs, STs, OBCs andPhysically Handicapped Persons inPSUs

Presidential Directives on reservation forthe candidates belonging to the SCs andSTs issued from time to time by theDepartment of Public Enterprises (DPE),have been implemented in all the PSUs/Cooperative under the administrativecontrol of the Department. The PresidentialDirectives regarding reservation for OBCshave also been made applicable w.e.f.8.9.93 in the Department. The CooperativeSociety viz. KRIBHCO has also adopted

the guidelines relating to OBCs w.e.f.1.10.95. The implementation of thesedirectives is being monitored in theDepartment and concerted efforts arebeing made to fill up the vacancies for thereserved categories. The representation ofSCs, STs, ex-servicemen, physicallyhandicapped persons and OBCs in thePSUs is given in the Annexure-XV.

Besides providing employment, PSUs/Cooperative have been advised to prepareand implement special programmes/schemes for education of tr ibals inscientific use of fertilizers, building up ofdealer/ retailer network in the tribal areas,and making fertilizers available in smallpacks in the tribal predominated areas.

13.3 Welfare of Minorities

13.3.1 The PSUs/Co-operative under theDepartment have further been advised toprovide facility of pre-examination coachingto the candidates of minority community,wherever feasible, and to take steps toincrease awareness of candidatesbelonging to the communities aboutemployment opportunities. They have alsobeen advised to include a representativeof the minorit ies in the recruitmentselection boards to ensure that theminorities get an adequate share in theservices and benefit from developmentschemes.

13.4 Reservation in Dealership

13.4.1 The Department had instructed all thePSUs under its administrative control toreserve at least 25% of dealerships offertilizers for the members belonging toSCs/STs. To ensure availability of sufficient

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numbers of suitable SC/ST candidates, thefollowing concession are generally givenby the undertakings:-

• exemption/relaxation from securitydeposits.

• preference in supply of fast movingmaterials.

• higher rate of dealership margin ascompared to that allowed to generaldealers; and

• free training for handling of fertilizers.

13.4.2 The PSUs have also been advised toreserve 10% of fertilizer dealerships forex-servicemen.

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Chapter-14

14.1 Women Empowerment

The principle of gender equality is enshrinedin the Indian Constitution in the Preamble,Fundamental Rights, Fundamental Dutiesand Directive Principles. The Constitution notonly grants equality to women but alsoempowers the State to adopt measures ofpositive discrimination in favour of women.The Department of Fertilizers is committedtowards giving importance to women indifferent spheres. Though there is not specificscheme, as such, for women, the PSUs andCo-operative under its administrative controlare involved in year long activities to createlarge scale awareness among women withtheir active participation. These programmesare aimed towards enabling women to realizetheir full potential and involvement in decisionmaking. Department of Fertilizers has a“Complaints Committee” to attend togrievances of its women employees.Department has also allocated a separateroom for women to serve as commonroom. The Department takes pride inproviding congenial environment to womenemployees.

14.2 RCF

14.2.1 RCF as an organization has always beenfair in treating employees without any genderbias. Opportunities for growth, training,challenging jobs, learning are equallyavailable to both men and women employeesof RCF. Women are represented in fairnumbers in the last few batches of apprenticetrainees in technical areas.

14.2.1 Women are working in technical / non-technical / managerial positions and someof them have risen to the level of topmanagement positions in the organization.

14.2.2 All the welfare and employee benefitschemes are equally applicable to male andfemale employees of RCF.

14.2.3 Under the special schemes and policies forwomen employees, RCF has set up –

• Special Cell for Women Employees (asper Communication from NationalCommission on Women)

• Committee for Sexual HarassmentCases (as per Supreme CourtGuidelines)

• Special Medical check-ups/camps.

14.2.4 All the benefits under legal requirements suchas Maternity Benefits, Nursing Breaks, etc.are given to women employees.

14.2.5 RCF is one of the pioneer members in theForum of Women in Public Sector (WIPS)since its inception (1990). It is a corporatemember of this forum and has beenrepresenting in all activities of the forum withtotal support and participation in all activities.Some RCF women officers have beenworking with the forum as heads oftaskforces, members of committees and havecontributed in policy making anddevelopment of women to a great extent.

14.2.6 As a part of regular training, RCFincorporates awareness building for allofficers (Men and Women) on the SexualHarassment Guidelines and also coversgender sensitization issues.

14.3 NFL

14.3.1 Efforts and initiatives taken by the individualPSUs / Cooperative for the Welfare,Development and Empowerment of Womenand for mainstreaming gender issues.

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14.3.2 Female employees comprise 5.26% of thetotal workforce of the Company. TheCompany has a female Full-time FunctionalDirector on its Board. The Company hasadopted adequate measures to facilitate acongenial work atmosphere for its womenemployees.

14.3.3 There is no instance of any Genderinequality and both men and womenemployees are enjoying equal rights. Theworking atmosphere is very cordial andharmonious.

14.4 MFL

MFL do not have any problems related withgender issues. However, a wing of Womenin Public Sector (WIPS) is functioning inMFL and women employees are nominatedfor the programs organized by WIPS.

14.5 BVFCL

14.5.1 BVFCL lays emphasis in development ofemployees without any genderdiscrimination. There is no discriminationagainst Women employees. Adequatehealthcare provided for the welfare of theWomen.

14.5.2 Emphasis is given at the t ime ofrecruitment and many women candidateshave been recruited in recent past. As perthe directives of the Controlling Ministry, acommittee headed by a Lady Officer isconstituted to address any problem relatedto sexual harassment. Till date no suchcase has been received.

14.6 FAGMIL

As such, the company is a new Companyand is engaged in the business of mining inthe desert areas of Rajasthan. Suitablemeasures will be taken for the welfare andthe empowerment of women and formainstreaming gender issues.

14.7 KRIBHCO

14.7.1 The role of women employee in KRIBHCOhas always been seen in more holistic term.Women’s issues are well integrated in thetotal development endeavor. Women areprovided equal opportunities with theircounterpart keeping in mind the principles ofequality in gender with respect to theirworking, development and growth.

14.7.2 The physical & mental growth anddevelopment of women employees inKRIBHCO are given special attention byimparting them specialized training andnominating in specialized womenempowerment seminars and programmes.Female officers are equally associated informulation of policies, be it promotion,recruitment policies or other matters ofimportance.

14.7.3 A Complaint Committee headed by a womanofficer as its chairperson has beenfunctioning to resolve their grievance, if any.In order to avoid any incidence ofmisconducts relating to harassment towardswomen employees, special provisions havebeen incorporated in the Conduct, Discipline& Appeal (CDA) Rules of the Society toprevent the same and protect the femaleemployees.

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Citizen Charter/Grievance Redress Mechanism

Citizen Charter

Department of Fertilizer has created aSevottam Compliant Citizens’/Clients’ Charterfor the year 2010-11 as well as SevottamCompliant Grievance Redress Mechanismunder Results Framework Document (RFD)of the Department. The Citizen Charter ofFertilizer Industries Coordination Committee(FICC), which is an attached office ofDepartment of Fertilizers, is underpreparation.

Our Mission

Achieving fertilizer security for the countryfor sustainable agricultural growth supportedby a robust domestic fertilizer industry.

Our Vision

Ensuring adequate and timely availability offertilizers to the farmers at affordable pricesthrough planned production and imports anddistribution of fertilizers in the country andplanning for self-sufficiency in Ureaproduction.

Stake Holders

The following are our stake holders:

• All PSUs/Cooperative under theAdministrative Control of DoF

• All other Fertilizer Producing Companies

• Department of Agriculture andCooperation

• State Governments

• Importers of Fertilizers (Urea, MOP,Complexes)

Chapter-15

• Importers/Raw Material suppliers

• Other Ministries (Ministry of Finance,Ministry of Petroleum and Natural Gas,Ministry of Railways, Ministry of SurfaceTransport, Planning Commission,department of Public Enterprises, PublicEnterprises Selection Board, TariffCommission, DGFT etc.

• Farmers

Grievance Redress Mechanism

With an objective of speedy redressal,effective monitoring of grievances,Department of Fertilizers (DoF) hasimplemented an integrated applicationsystem based on web-technology preparedand developed by Department ofAdministrative Reforms and PublicGrievances and National Informatics Centrecalled Centralized Public Grievance Redressand Monitoring System (CPGRAMS) throughwhich citizens can submit their grievancesfrom anywhere and any time for easycommunication between DoF and citizens.The system provides the on-line facility tothe citizen to monitor the progress ofredressal process in respect of grievancelodged by them. The system provides linkbetween DoF and offices under its control.The grievances are forwarded to concerneddivision of DoF, its attached office and PSUs/Cooperative Society under the control of theDepartment for action in a time-boundmanner. Disposal of grievances is followedup by sending reminders at various levels atregular intervals. The grievances receivedby post are also properly recorded andredressed in a time bound manner.

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ANNEXURE - I

LIST OF SUBJECTS ALLOCATED TO THE DEPARTMENT OF FERTILIZERS AS PERGOVERNMENT OF INDIA

(ALLOCATION OF BUSINESS) RULES, 1961

1. Planning for fertilizer production including import of fertilizer through a designated canalising agency.

2. Allocation and supply linkages for movement and distribution of urea in terms of assessment madeby the Department of Agriculture & Cooperation.

3. Administration of concession schemes and management of subsidy for controlled as well asdecontrolled fertilizers including determination of retention price for urea, quantum of concession ofdecontrolled fertilizers costing of such fertilizers and pricing of Phosphatic and Potassic fertilizes.

4. Administration of the Fertilizers (Movement Control) Order, 1960.

5. Administrative responsibility for fertilizer production units in the cooperative sector, namely, KrishakBharti Cooperative Limited.

6. Administrative responsibility for the Indian Potash Limited (IPL).

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ANNEXURE - II

(See Chapter-2)

Minister for Chemicals & Fertilizers : Shri M.K. Alagiri

Minister of State for C&F : Shri Srikant Kumar Jena

Secretary : Shri S. Krishnan (upto 31.08.2010)

Dr. Sutanu Behuria (w.e.f. 01.09.2010)

Additional Secretary & Financial Adviser : Dr. V. Rajagopalan (w.e.f. 23.04.2010)

Joint Secretary : Shri Sham Lal Goyal (w.e.f.28.06.2010)

Shri Satish Chandra

Shri Deepak Singhal

Joint Secretary Level Officers : Shri A.K. Parashar, Economic Adviser

: Shri B.N. Tiwari, DDG (upto 25.05.2010)

Shri M.P. Johnson, DDG (w.e.f. 24.05.2010)

Directors : Shri Deepak Kumar

Shri B.B. Mehtani

Shri Gautam Chaterjee(w.e.f. 03.01.2011 to 31.01.2011)

Shri Manoj Kumar Gupta (upto 30.06.2010)

Director Level Officer : Shri M. Dandayudhapani (FICC)(upto 04.11.2010)

Shri Pradeep Yadav, PS to Minister (C&F)(upto 30.06.2010)

Smt. T.C.A Kalayaani (Director of Accounts)

Shri T.A. Basil (FICC)

Shri Umesh Dongre (FICC)

Shri A.S. Sandhu (FICC)

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Deputy Secretary : Shri Sanjay Kumar Sinha

Shri H. Abbas

Shri K.K. Padmanabhan (upto 31.12.2010)

Shri Manish Tripathi (w.e.f. 31.05.2010)

Smt. Lalitha Das (w.e.f. 27.08.2010)

Shri Rajiva Kumar (w.e.f. 03.01.2011) FICC

Shri R. Selvam, PS to Minister (w.e.f.01.07.2010)

Shri Tapan Dutta, DC (POP)

Controller of Accounts : Shri Akhilesh Jha

Deputy Secretary Level Officer : Shri A.K. Chandwani, Sr. PPS

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ANNEXURE - III

LIST OF PUBLIC AND COOPERATIVE SECTOR UNDERTAKINGS UNDER THE ADMINISTRATIVECONTROL OF DEAPRTMENT OF FERTILIZERS

PUBLIC SECTOR :

Sl. Name of the Company Headquarters Incorporation inNo.

1. Fertilizers And Chemicals Travancore Ltd. (FACT) Udyogamandal September, 1943

2. Fertilizer Corporation of India Ltd. (FCI) New Delhi January, 1961

3. National Fertilizers Limited (NFL) Noida August, 1974

4. Rashtriya Chemicals & Fertilizers Ltd. (RCF) Mumbai March, 1978

5. Madras Fertilizers Limited (MFL) Chennai December, 1966

6. Projects & Development India Limited (PDIL) Noida March, 1978

7. Hindustan Fertilizer Corporation Limited (HFC) New Delhi March, 1978

8. Brhamaputra Valley Fertilizer Corporation Limited Guwahati April, 2002(BVFCL)

9. FCI Aravali Gypsum And Minerals India Limited Jodhpur February, 2003(FAGMIL)

COOPERATIVE SECTOR :

10 Krishak Bharati Cooperative Limited (KRIBHCO) Noida April, 1980

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ANNEXURE-IVUNIT-WISE INSTALLED CAPACITY, PRODUCTION

AND CAPACITY UTILIZATION FOR THEYEAR 2009-10 & 2010-11

NITROGEN

Name of Name of Annual Installed Production Percentage capacityCompany/Plant Products Capacity (‘000 MT) utilization

(As on 1-04-09)(in ‘000’ MTs) 2009-2010 2010-11 2009-2010 2010-2011

(Estimated) (Estimated)

Public Sector:

NFL:Nangal-II Urea 220.1 218.0 206.6 99.0 93.9

NFL:Bhatinda Urea 235.3 236.8 243.4 100.6 103.4

NFL:Panipat Urea 235.3 235.9 211.2 100.3 89.8

NFL:Vijaipur Urea 397.7 404.1 413.5 101.6 104.0

NFL:Vijaipur Expn. Urea 397.7 436.8 433.8 109.8 109.1

TOTAL (NFL): 1486.1 1531.6 1508.5 103.1 101.5

BVFCL:Namrup-II Urea 110.4 36.4 35.8 33.0 32.4

BVFCL:Namrup-III Urea 144.9 106.0 84.5 73.2 58.3

TOTAL (BVFCL): 255.3 142.4 120.3 55.8 47.1

FACT:Udyogamandal A/S , 20:20 77.0 72.2 59.7 93.8 77.5

FACT:Cochin-II 20:20 97.0 115.4 95.7 119.0 98.7

TOTAL (FACT): 174.0 187.6 155.4 107.8 89.3

RCF:Trombay 15:15:15 45.0 73.6 66.2 163.6 147.1

RCF:Trombay-IV 20.8:20.8, 20:20 75.1 2.6 35.0 3.5 46.6

RCF:Trombay-V Urea 151.8 141.2 157.0 93.0 103.4

RCF:Thal Urea 785.1 819.8 810.3 104.4 103.2

TOTAL (RCF): 1057.0 1037.2 1068.5 98.1 101.1

MFL:Chennai Urea / 17:17:17 366.7 200.5 216.2 54.7 59.0

SAIL:Roulkela CAN 120.0 0.0 0.0 0.0 0.0

By Product A/S 38.4 18.9 18.9 49.2 49.2

Total (Public): 3497.5 3118.2 3087.8 89.2 88.3

Cooperative Sector

IFFCO:Kandla 10:26:26 / 12:32:16 / DAP 351.5 304.5 282.3 86.6 80.3

IFFCO:Kalol Urea 250.5 276.6 273.7 110.4 109.3

IFFCO:Phulpur-I Urea 253.5 332.4 337.8 131.1 133.3

IFFCO:Phulpur-II Urea 397.7 460.0 470.0 115.7 118.2

IFFCO:Aonla-I Urea 397.7 460.1 434.8 115.7 109.3

IFFCO:Aonla-II Urea 397.7 460.1 479.7 115.7 120.6

IFFCO:Paradeep DAP / 10:26:26 / 20:20 / 325.2 291.9 312.4 89.8 96.112:32:16

TOTAL(IFFCO): 2373.8 2585.6 2590.7 108.9 109.1

KRIBHCO:Hazira Urea 795.4 818.6 843.8 102.9 106.1

Total (Co-operative): 3169.2 3404.2 3434.5 107.4 108.4

Total (Pub.+Coop.): 6666.7 6522.4 6522.3 97.8 97.8

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Name of Name of Annual Installed Production Percentage capacityCompany/Plant Products Capacity (‘000 MT) utilization

(As on 1-04-09)(in ‘000’ MTs) 2009-2010 2010-11 2009-2010 2010-2011

(Estimated) (Estimated)

Private Sector

GSFC:Vadodara Urea / DAP / 20:20 / A/S 248.1 240.1 231.2 96.8 93.2

GSFC:Sikka-I DAP / 12:32:16 105.8 72.3 69.9 68.3 66.1

GSFC:Sikka-II DAP / 12:32:16 71.3 93.7 73.3 131.4 102.8

TOTAL(GSFC-Sikka): 177.1 166.0 143.2 93.7 80.9

GNFC:Bharuch Urea / CAN / 20:20 356.7 335.7 348.0 94.1 97.6

KSFL:Shahjahanpur Urea 397.7 447.5 477.3 112.5 120.0

CFL:Vizag 28:28 / 14:35:14 / 20:20 / 124.0 221.0 233.1 178.2 188.016:20 / 10:26:26

CFL:Ennore 16:20 / 20:20 41.2 34.0 45.6 82.5 110.7

CFL:Kakinada DAP / 10:26:26 / 20:20 / 120.6 187.2 219.1 155.2 181.714:35:14 / 12:32:16

SFC:Kota Urea 174.3 175.8 175.5 100.9 100.7

DIL:Kanpur Urea 332.1 0.0 0.0 0.0 0.0

ZIL:Goa Urea / DAP / 19:19:19 / 288.7 283.2 263.6 98.1 91.310:26:26 / 12:32:16

SPIC:Tuticorin Urea / DAP / 20:20 / 370.7 34.9 166.9 9.4 45.017:17:17

MCF:Mangalore Urea / DAP / 20:20 / 16:20 207.2 227.0 227.4 109.6 109.7

TAC:Tuticorin A/C 16.0 0.0 8.3 0.0 51.9

TCL:Haldia DAP / 10:26:26 / 12:32:16/ 121.5 73.1 82.9 60.2 68.214:35:14 / 15:15:15

IGCL:Jagdishpur Urea 397.7 504.2 513.1 126.8 129.0

Hin.Ind.Ltd.:Dahej DAP / 10:26:26 / 12:32:16 72.0 32.7 39.5 45.4 54.9

DFPCL:Taloja 23:23 52.9 23.1 33.8 43.7 63.9

NFCL:Kakinada-I Urea 274.8 348.2 389.9 126.7 141.9

NFCL:Kakinada-II Urea 274.8 332.6 379.0 121.0 137.9

TOTAL(NFCL): 549.6 680.8 768.9 123.9 139.9

CFCL:Gadepan-I Urea 397.7 469.0 468.9 117.9 117.9

CFCL:Gadepan-II Urea 397.7 465.2 491.1 117.0 123.5

TOTAL(CFCL): 795.4 934.2 960.0 117.5 120.7

TCL:Babrala Urea 397.7 566.6 507.3 142.5 127.6

PPL:Paradeep DAP / 14:35:14 / 20:20 / 129.6 207.1 202.9 159.8 156.612:32:16 / 10:26:26 / 28:28

By Product A/S 7.5 3.8 5.3 50.7 70.7

Total (Private Sector): 5378.3 5378.0 5652.9 100.0 105.1

Total (Pub+Coop+Pvt): 12045.0 11900.4 12175.2 98.8 101.1

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PHOSPHATE

Name of Name of Annual Installed Production Percentage capacityCompany/Plant Products Capacity (‘000 MT) utilization

(As on 1-04-09)(in ‘000’ MTs) 2009-2010 2010-11 2009-2010 2010-2011

(Estimated) (Estimated)

Public Sector:

FACT:Udyogamandal 20:20 29.7 36.3 29.8 122.2 100.3

FACT:Cochin-II 20:20 97.0 115.4 95.7 119.0 98.7

Total (FACT): 126.7 151.7 125.5 119.7 99.1

RCF:Trombay 15:15:15 45.0 73.6 66.2 163.6 147.1

RCF:Trombay-IV 20.8:20.8/ 20:20 75.1 2.6 35.0 3.5 46.6

Total (RCF): 120.1 76.2 101.2 63.4 84.3

MFL:Chennai 20:20 / 19:19:19 / 17:17:17 142.8 0.0 10.7 0.0 7.5

SSP Units SSP 12.8 0.0 0.0 0.0 0.0

Total (Public): 402.4 227.9 237.4 56.6 59.0

Cooperative Sector

IFFCO:Kandla DAP / 10:26:26 / 12:32:16 910.0 789.5 740.2 86.8 81.3

IFFCO:Paradeep DAP / 10:26:26 / 20:20 / 802.8 404.6 550.3 50.4 68.512:32:16

Total (Co-op.) 1712.8 1194.1 1290.5 69.7 75.3

Total (Pub.+Coop.): 2115.2 1422.0 1527.9 67.2 72.2

Private Sector

GSFC:Vadodara DAP / 20:20 75.9 58.6 55.5 77.2 73.1

GSFC:Sikka-I DAP , 12:32:16 270.5 184.7 179.0 68.3 66.2

GSFC:Sikka-II DAP 182.2 239.4 187.4 131.4 102.9

TOTAL (GSFC-Sikka): 452.7 424.1 366.4 93.7 80.9

GNFC:Bharuch 20:20 28.5 33.3 35.5 116.8 89.2

CFL:Vizag 14:35:14 / 28:28 / 166.0 261.7 281.5 157.7 169.610:26:26 / 20:20

CFL:Ennore 16:20 / 20:20 48.0 42.5 56.4 88.5 117.5

CIL:Kakinada DAP / 12:32:16 / 20:20 / 308.2 474.6 556.4 154.0 180.514:34:14 / 10:26:26

ZIL:Goa DAP / 19:19:19 / 197.4 263.8 230.9 133.6 117.010:26:26 / 12:32:16

SPIC:Tuticorin DAP / 17:17:17 / 20:20 218.5 34.9 87.2 16.0 39.9

MCF:Mangalore DAP / 20:20 / 16:20 82.8 107.9 105.9 130.3 127.9

TCL:Haldia DAP / 10:26:26 / 12:32:16/ 336.9 204.0 224.2 60.6 66.514:35:14

Hin.ind.Ltd.:Dahej DAP / 10:26:26 / 12:32:16 184.0 83.6 100.9 45.4 54.8

DFPCL:Taloja 23:23 52.9 23.1 33.8 43.7 63.9

PPL:Paradeep DAP / 14:35:14 / 20:20 / 331.2 455.0 437.6 137.4 132.112:32:16 / 10:26:26 / 28:28

SSP Units SSP 1030.6 432.0 432.0 41.9 41.9

Total (Private Sector): 3513.6 2899.1 3004.2 82.5 85.5

Total(Pub+Coop+Pvt): 5628.8 4321.1 4532.1 76.8 80.5

* Actual figures have been considered from April 2010- November 2010 and estimated for December 2010 to March 2011* Estimated Production figures have been reported for the year 2010-11.

93

ANNEXURE-V

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

(lakh M.T.)

YEAR CONSUMPTION PRODUCTION* IMPORTS**

N P K TOTAL N P K TOTAL N P K TOTAL

1981-82 40.69 13.22 6.73 60.64 31.44 9.49 0.00 40.93 10.54 3.43 6.44 20.41

1982-83 42.24 14.37 7.27 63.88 34.24 9.80 0.00 44.04 4.25 0.63 6.44 11.32

1983-84 52.86 17.07 7.99 77.92 34.85 10.48 0.00 45.33 6.56 1.43 5.56 13.55

1984-85 54.87 18.86 8.38 82.11 39.17 12.64 0.00 51.81 20.08 7.45 8.71 36.24

1985-86 56.61 20.05 8.08 84.74 43.28 14.28 0.00 57.56 16.80 8.16 9.03 33.99

1986-87 57.16 20.79 8.50 86.45 54.10 16.60 0.00 70.70 11.03 2.55 9.52 23.10

1987-88 57.17 21.87 8.80 87.84 54.66 16.65 0.00 71.31 1.75 0.00 8.09 9.84

1988-89 72.51 27.21 10.68 110.40 67.12 22.52 0.00 89.64 2.19 4.07 9.82 16.08

1989-90 73.86 30.14 11.68 115.68 67.47 17.96 0.00 85.43 5.23 13.11 12.80 31.14

1990-91 79.97 32.21 13.28 125.46 69.93 20.52 0.00 90.45 4.14 10.16 13.28 27.58

1991-92 80.46 33.21 13.61 127.28 73.01 25.62 0.00 98.63 5.66 9.67 12.36 27.69

1992-93 84.27 28.44 8.84 121.55 74.30 23.06 0.00 97.36 11.37 6.89 10.82 29.08

1993-94 87.89 26.69 9.08 123.66 72.31 18.16 0.00 90.47 15.88 7.22 8.57 31.67

1994-95 95.07 29.31 11.25 135.63 79.45 24.93 0.00 104.38 14.76 3.80 11.09 29.65

1995-96 98.23 28.98 11.56 138.77 87.77 25.58 0.00 113.35 19.93 6.47 13.15 39.55

1996-97 103.01 29.77 10.30 143.08 85.99 25.56 0.00 111.55 11.67 2.46 6.13 20.26

1997-98 109.01 39.14 13.73 161.88 100.86 29.76 0.00 130.62 13.62 6.72 11.40 31.74

1998-99 113.54 41.12 13.32 167.98 104.80 31.41 0.00 136.21 6.35 9.68 15.42 31.45

1999-00 115.92 47.99 16.78 180.69 108.90 33.99 0.00 142.89 8.33 15.03 17.39 40.75

2000-01 109.20 42.15 15.67 167.02 109.61 37.43 0.00 147.04 1.54 3.96 15.41 20.91

2001-02 113.10 43.82 16.67 173.59 107.68 38.60 0.00 146.28 2.69 4.29 17.01 23.99

2002-03 104.74 40.19 16.01 160.94 105.64 39.10 0.00 144.74 0.66 1.70 14.38 16.74

2003-04 110.76 41.24 15.98 167.98 106.34 36.32 0.00 142.66 1.32 3.38 15.48 20.18

2004-05 117.14 46.24 20.61 183.99 113.38 40.67 0.00 154.05 4.09 2.96 20.45 27.50

2005-06 127.23 52.04 24.13 203.40 113.54 42.21 0.00 155.75 13.85 11.21 27.47 52.53

2006-07 137.74 55.43 23.34 216.51 115.78 45.17 0.00 160.95 26.88 13.23 20.69 60.80

2007-08 144.19 55.15 26.36 225.70 109.00 38.07 0.00 147.07 36.77 12.53 26.53 75.83

2008-09 150.90 65.06 33.13 249.09 108.7 34.64 0.00 143.34 38.44 29.27 33.80 101.51

2009-10 155.80 72.74 36.32 264.86 119.0 43.21 0.00 162.21 34.47 27.56 29.44 91.47

2010-11 N.A N.A N.A N.A 80.21 29.52 0.00 109.73 34.48 35.15 30.22 99.85

* Actual figures have been considered from April 2010- November 2010** Provisional Import figures are reported upto 30.11.2010

94

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95

ANNEXURE-VII

SECTOR-WISE CAPACITY UTILIZATIONOF NITROGENOUS AND PHOSPHATIC FERTILIZERS

(See Chapter - 5)

(%age)

Nutrient 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Nitrogen(N)

Public Sector: 74.1 78.9 86.7 87.2 84.6 87.1 82.5 83.6 89.2 88.3

Co-operative Sector: 101.0 101.0 99.5 102.0 93.3 94.8 95.6 98.9 107.4 108.4

Private Sector: 95.0 85.8 89.7 94.1 100.8 102.5 92.4 89.5 100.0 105.1

Total(Nitrogen): 89.6 87.2 91.1 94.0 94.1 96.0 90.4 90.2 98.8 101.1

Phosphate(P)

Public Sector: 58.3 64.8 81.7 61.6 68.2 53.8 37.3 44.3 56.6 59.0

Co-operative Sector: 141.4 131.0 94.4 103.1 60.5 60.5 60.5 53.5 69.7 75.3

Private Sector: 69.6 63.6 64.1 66.3 82.3 89.8 76.2 67.1 82.5 85.5

Total(Phosphate): 75.7 72.8 70.1 71.9 74.6 79.8 67.3 61.2 76.8 80.5

96

ANNEXURE-VIII

Annual Plan 2011-2012Department of Fertilizer

(Rs. crores)

S.No. Name of the Annual Plan 2009-10 Annual Plan 2010-11 Annual Pan 2010-11 Annual Pan 2011-12Scheme (Actuals) (BE) (RE) (BE)

GBS IEBR Total GBS IEBR Total GBS IEBR Total Outlay GBS IEBR Total OutlayEar- Ear-

marked markedfor NER for NER

Centally SponsoredSchemes-CSS

Total CSS

Central SectorScheme(CS)

1 RCF 141.02 141.02 622.82 622.82 237.37 237.37 293.30 293.30

2 FAGMIL 0.37 0.37 11.29 11.29 5.89 5.89 4.15 4.15

3 PDIL 7.52 7.52 5.38 5.38 9.45 9.45 9.73 9.73

4 NFL 43.05 43.05 900.5 900.5 655.71 655.71 2363.08 2363.08

5 KRIBHCO 319.61 319.61 1160.00 1160.00 1138.63 1138.63 654.96 654.96

6 Revival of Sick 0.00 0.00CPSEs

6(i) BVFCL 65.00 65.00 45.00 45.00 45.00 45.00 67.80 134.00

6(ii) FACT 34.00 34.00 89.99 89.99 89.99 89.99 60.74 120.00

6(iii) MFL 96.99 96.99 74.50 74.50 74.50 74.50 88.95 410.00

6(iv) FCI 0.00 0.00 0.00 0.00

6(v) HFC 0.00 0.00 0.00 0.00

6(vi) PPCL 0.00

7 Misc. Schemes 3.68 3.68 5.50 5.50 5.50 5.50 7.50 7.50(MIS/IT and R&D)

8 Capital Subsidyfor conversion

9 Investments for 0.00 0.00 0.01 0.01 0.01 0.01 0.01 0.01JVs abroad#

10 Revival of ClosedUnits

Total CS 199.67 511.57 711.24 215.00 2699.99 2914.99 215.00 2047.05 2262.05 225.00 3325.22 3996.73

* The amount earmaked for BVFCL will be utilised for the benefits of North-East Region# DOF is exploring possibilities of JV abroad. Since no firm proposal is at hand right now only a token amount of Rs. 1 Lakh has been provided.

97

ANNEXURE-IX

DETAILS OF HEAD-WISE ALLOCATION OF FUNDS UNDER NON-PLAN AND PLAN FOR BE2010-11 and RE 2010-11

(Rs In Crore)

I NON-PLAN PROVISIONS: BE 2010-11 RE 2010-11

A REVENUE SECTION

1. Sectt. Proper (MH 3451) 17.24 17.24

2. Office of FICC & other Programmes (FICC+MIT) (MH 2852) 1.97 1.97

3. Subsidy on Nitrogenous Fertilizers (MH 2852)

Indigenous Urea including Frieght Subidy (Gross) 15980.73 15080.73

4. Subsidy on Imported Fertilizers (MH 2401)

Gross 8360.00 9255.95

Recovery(-) 2860.00 2860.00

Net 5500.00 6395.95

5. Payment to Manufacturers/ Agencies for concessional sale ofDecontrolled Fertilizers (MH 2401)

(i) Indigenous Decontrolled Fertilizers (Gross) 13000.00 17000.00

(ii) Imported Decontrolled Fertilizers (Gross) 15500.00 16500.00

Total (Decontrolled Fertilizers)-(Gross) 28500.00 33500.00

6. Write off of loans, interest and penal interest on GOI loan outstandingagainst HFCL, FCI, MFL, PDIL and FACT (MH 3475) 0.01 0.01

7. Post closure adjustment liabilities of PPL (MH 3475) 0.01 4.06

TOTAL : (REVENUE SECTION) -Gross 52859.96 57859.96Net 49999.96 54999.96

B. 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-PLANGross 52860.00 57860.00Net 50000.00 55000.00

98

II PLAN PROVISIONS:

A. REVENUE SECTION

1. Grant to PDIL for R&D —- —-

2. S&T Programme of Department (MH 2852) 2.00 2.00

3. Grant in the field of Management Information Technology (MH 2852) 3.50 3.50

4. Capital subsidy for conversion of 4 existing FO/LSHS Plants toNG/LNG (MH 2852) 0.00 0.00

TOTAL (REVENUE SECTION) 5.50 5.50

B. CAPITAL SECTION :

Investment in and loans to PSUs (MH 6855)

1. FACT 89.99 89.99

2. BVFCL 45.00 45.00

3. HFC — —

4. PDIL — —

5. MFL 74.50 74.50

6. FCI — —

7. PPCL — —

Investments for JVs abroad (MH 4855) 0.01 0.01

TOTAL (CAPITAL SECTION) 209.50 209.50

TOTAL PLAN 215.00 215.00

TOTAL-DEPARTMENT OF FERTILIZERS (Gross) 53075.00 58075.00

TOTAL-DEPARTMENT OF FERTILIZERS (Net) 50215.00 55215.00

99

ANNEXURE-X

MONTHLY FINAL RATES OF CONCESSION FOR ANNOUNCEMENT FORAPRIL 2009 TO MARCH 2010.

(Rs. per MT)

Fertilizers 2009

April May June July Aug Sept Oct Nov Dec

Indigenous & 12890 12144 10167 8893 8499 9244 9765 9724 8961Imported DAP

Indigenous & 10226 11963 7948 8893 8499 9085 9765 9724 7915Imported MAP

Indigenous & 9470 8981 8729 8307 7333 7197 5543 5503 5513Imported TSP

MOP 29002 27970 27418 27486 19442 19474 18585 18515 18636

Fertilizers 2010

Jan Feb March

Indigenous & 8393 11840 15868Imported DAP

Indigenous & 7681 7803 7677Imported MAP

Indigenous & 5340 5431 5338Imported TSP

MOP 18287 18545 18260

100

Fertilizers April 2009 May 2009 June 2009

Complex Fertilizers Groups Groups Groups

I II III IV I II III IV I II III IV

15-15-15-0 13731 15398 15686 13524 13129 14934 14769 13171 12397 14588 13819 12322

17-17-17-0 15102 17064 17444 14998 14420 16539 16406 14598 13590 16146 15328 13636

19-19-19-0 16571 18829 19301 16569 15808 18241 18139 16122 14881 17803 16936 15047

20-20-0-0 7488 9893 10412 7538 7033 9623 9537 7415 6235 9339 8448 6461

23-23-0-0 8155 11003 11660 8358 7633 10694 10656 8219 6714 10336 9402 7121

28-28-0-0 9269 12856 13744 9729 8632 12778 12519 9558 7514 12080 10994 8221

10-26-26-0 21237 22165 22222 20773 20192 21213 20968 19894 18924 20202 19554 18549

12-32-16-0 17625 18849 18998 17264 16619 17953 17740 16457 15199 16842 16146 14944

14-28-14-0 15874 17393 17635 15616 14993 16641 16460 14967 13751 15759 15014 13616

14-35-14-0 17300 18819 19061 17042 16261 17909 17728 16235 14739 16747 16002 14604

16-20-0-13 7082 8896 9231 6926 6664 8626 8477 6774 5843 8217 7423 5828

20-20-0-13 7158 9563 10082 7208 6740 9330 9244 7122 5919 9023 8132 6145

10-26-26-0 — — — 20724 — — — 19845 — — — 18500(CFL Vizag/HIL, Dahej)

12-32-16-0 — — — 17215 — — — 16408 — — — 14895(HIL Dahej)

14-35-14-0 — — — 16993 — — — 16186 — — — 14555(CFL Vizag)

20-20-0-13 — — — 9361 — — — 9275 — — — 8298(IFFCO- P)

Fertilizers July 2009 August 2009 September 2009

Complex Fertilizers Groups Groups Groups

I II III IV I II III IV I II III IV

15-15-15-0 12214 14798 13478 11589 10010 12651 11301 9427 10212 13084 11553 9764

17-17-17-0 13383 16384 14943 12805 10884 13950 12474 10353 11112 14440 12759 10734

19-19-19-0 14650 18069 16506 14119 11856 15348 13745 11378 12112 15896 14065 11804

20-20-0-0 5968 9596 7971 5460 5775 9479 7814 5323 6028 10040 8134 5756

23-23-0-0 6407 10661 8854 5969 6185 10527 8672 5812 6477 11173 9042 6310

28-28-0-0 7141 12440 10327 6821 6871 12277 10106 6629 7226 13063 10556 7236

10-26-26-0 18607 20146 19132 17864 14785 16363 15328 14070 15135 16867 15712 14510

12-32-16-0 14791 16748 15612 14095 12285 14288 13127 11623 12703 14891 13586 12149

14-28-14-0 13394 15769 14510 12745 11201 13629 12342 10591 11567 14211 12756 11083

14-35-14-0 14288 16663 15404 13639 12027 14455 13168 11417 12482 15126 13671 11998

16-20-0-13 5578 8370 6990 4976 5347 8201 6787 4790 5609 8709 7103 5196

20-20-0-13 5654 9282 7657 5146 5423 9127 7462 4971 5685 9697 7791 5413

10-26-26-0 — — — 17815 — — — 14021 — — — 14461(CFL Vizag/HIL, Dahej)

12-32-16-0 — — — 14046 — — — 11574 — — — 12100(HIL Dahej)

14-35-14-0 — — — 13590 — — — 11368 — — — 11949(CFL Vizag)

20-20-0-13 — — — 7299 — — — 7124 — — — 7566(IFFCO-P)

101

Fertilizers October 2009 November 2009 December 2009

Complex Fertilizers Groups Groups Groups

I II III IV I II III IV I II III IV

15-15-15-0 10058 12614 11300 9856 9915 12770 11299 10004 9642 12822 11098 9883

17-17-17-0 10939 13909 12474 10841 10777 14085 12472 11008 10467 14144 12245 10870

19-19-19-0 11918 15302 13745 11923 11736 15498 13743 12110 11390 15565 13489 11955

20-20-0-0 6126 9717 8100 6183 5957 9946 8120 6402 5545 9968 7804 6192

23-23-0-0 6589 10801 9002 6801 6394 11064 9024 7052 5922 11091 8663 6812

28-28-0-0 7362 12610 10507 7832 7125 12929 10534 8138 6550 12962 10094 7846

10-26-26-0 14870 16391 15380 14410 14620 16340 15225 14354 14147 16084 14800 13982

12-32-16-0 12617 14552 13420 12260 12328 14502 13244 12204 11709 14143 12683 11706

14-28-14-0 11492 13841 12588 11239 11239 13867 12467 11257 10697 13629 11993 10857

14-35-14-0 12442 14791 13538 12189 12129 14757 13357 12147 11443 14375 12739 11603

16-20-0-13 5729 8492 7117 5579 5579 8660 7119 5739 5209 8638 6826 5531

20-20-0-13 5805 9396 7779 5862 5655 9644 7818 6100 5285 9708 7544 5932

10-26-26-0 — — — 14361 — — — 14305 — — — 13933(CFL Vizag &HIL, Dahej)

12-32-16-0 — — — 12211 — — — 12155 — — — 11657(HIL Dahej)

14-35-14-0 — — — 12140 — — — 12098 — — — 11554(CFL Vizag)

20-20-0-13 — — — 8015 — — — 8253 — — — 8085(IFFCO, Paradeep)

Fertilizers January 2010 February 2010 March 2010

Complex Fertilizers Groups Groups Groups

I II III IV I II III IV I II III IV

15-15-15-0 9402 12631 10787 9554 10573 13647 12000 10781 11686 14838 13198 12220

17-17-17-0 10196 13929 11893 10498 11522 15079 13266 11889 12784 16430 14625 13519

19-19-19-0 11087 15324 13095 11540 12571 16611 14632 13096 13980 18119 16149 14917

20-20-0-0 5345 9833 7509 5873 6814 11076 9034 7418 8396 12782 10730 9433

23-23-0-0 5691 10935 8323 6445 7381 12387 10077 8222 9199 14325 12026 10538

28-28-0-0 6269 12772 9680 7399 8326 14540 11815 9562 10540 16900 14188 12383

10-26-26-0 13733 15703 14339 13509 15762 17628 16396 15575 17691 19610 18381 17721

12-32-16-0 11293 13766 12210 11219 13718 16068 14669 13689 16170 18582 17189 16402

14-28-14-0 10333 13310 11562 10410 12454 15287 13722 12583 14600 17506 15948 15033

14-35-14-0 11009 13986 12238 11086 13644 16477 14912 13773 16344 19250 17692 16777

16-20-0-13 5112 8593 6653 5339 6924 10240 8509 7211 8857 12256 10533 9491

20-20-0-13 5188 9676 7352 5716 7000 11282 9220 7604 8933 13319 11267 9970

10-26-26-0 — — — 13460 — — — 15526 — — — 17672(CFL Vizag &HIL, Dahej)

12-32-16-0 — — — 11170 — — — 13640 — — — 16353(HIL Dahej)

14-35-14-0 — — — 11037 — — — 13724 — — — 16728(CFL Vizag)

20-20-0-13 — — — 7869 — — — 9757 — — — 12123(IFFCO, Paradeep)

102

ANNEXURE-XI

STATEMENT SHOWING THE MRP OF P&K FERTILIZERS, NUTRIENT BASED SUBSIDY ANDPERCENTAGE PAYMENT BY FARMERS DURING 2010-11

(Rs. Per MT)

Sl.No. Products MRP from MRP w.e.f. MRP w.e.f. Subsidy Total %1.4.2002 to 18th June 1.4.2010 under Cost under payment17.6.2008 2008 to under NBS NBS NBS by farmers

31st March (as intimated2010 by Company)

1 2 3 4 5 6 7= 5+6 8=5/7X100

1 DAP 9350 9350 9950 16268 26218 37.95

2 MAP 9350 9350 9950 16219 26169 38.02

3 MOP 4455 4455 5055 14692 19747 25.60

4 TSP 7460 7460 8050 12087 20137 39.98

5 SSP (w.e.f. 1..5.2008) 3400 4600 3200 4400 7600 42.11

6 16-20-00-13 7100 5875 6475 9203 15678 41.30

7 20-20-0-13 7280 6295 6895 10133 17028 40.49

8 20-20-00-00 7280 5343 5943 9901 15844 37.51

9 23-23-00-00 8000 6145 6745 11386 18131 37.20

10 28-28-00-00 9080 7481 8281 13861 22142 37.40

11 10-26-26-00 8360 7197 7897 15521 23418 33.72

12 12-32-16-00 8480 7637 8337 15114 23451 35.55

13 14-28-14-00 8300 7050 7650 14037 21687 35.27

14 14-35-14-00 8660 8185 8785 15877 24662 35.62

15 15-15-15-00 6980 5121 5721 11099 16820 34.01

16 17-17-17-00 8100 5804 6404 12578 18982 33.74

17 19-19-19-00 8300 6487 7287 14058 21345 34.14

18 16-16-16-00 11838

19 Ammonium Sulphate 10350 8500 5195 13695 62.07

Notes:

1 MAP was inducted into the Concession Scheme w.e.f. 1.4.2007

2 TSP was inducted into Concession Scheme w.e.f. 1.4.2008

3 Ammonium Sulphate (Capro Lactum Grade) was inducted into the Concession Scheme w.e.f. 1.7.2008 for FACT and GSFC

4 Nutrient Based Subsidy Policy was announced on 4.3.2010 w.e.f. 1.4.2010 and the MRP was Rs. 30/bag higher than the MRPprevailing as on 31.3.2010.NBS for SSP was introduced on 21.4.2010 w.e.f. 1.5.2010

5 16-16-16-00 was inducted into the NBS on 6.8.2010 w.e.f. 1.7.2010

6 Separate additional subsidy would be paid to FACT/NFL/GNVFC for using Naphtha/FO/LSHS for producing captive Ammonia fora period of two years. (announced on 6.8.2010) - rate to be finalized

7 The above said Nutrient Based Subsidy is based on the per Kg Nutrient Based Subsidy for nutrient ‘N’, ‘P’, ‘K’ & ‘S’ for 2010-11w.e.f. 1.4.2010 is as follows :

Nutrients NBS per Kg of Nutrient (in Rs.)

“N” 23.227

“P” 26.276

“K” 24.487

“S’ 1.784

103

ANNEXURE-XII

DETAILS OF EXPENDITURE ON SUBSIDY/ CONCESSION DURING THE YEAR2001-02 to BUDGET ESTIMATES 2010-11

(Rs In Crores)

Period Amount of Concession disbursed on Decontrolled Amount of subsidy Total for allFertilizers (Indigeneous + Imported) disbursed on urea fertilizers

Indigenous Imported Total Indigenous Imported Total ofP&K P&K Urea Urea Urea

(Gross) (Gross)

2001-02 3759.52 744.00 4503.52 8044.00 147.50 8191.50 12695.02

2002-03 2487.94 736.58 3224.52 7790.00 1.16 7791.16 11015.68

2003-04 2606.00 720.00 3326.00 8521.00 0.82 8521.82 11847.82

2004-05 3977.00 1165.18 5142.18 10243.15 742.37 10985.52 16127.70

2005-06 4499.20 2096.99 6596.19 10652.57 2140.88 12793.45 19389.64

2006-07 6648.17 3649.95 10298.12 12650.37 5071.06 17721.43 28019.55

2007-08(Cash) 7833.80 5100.00 12933.80 12950.37 9934.99 22885.36 35819.16

}10333.80 }6600.00 }16933.80 }16450.37 }9934.99 }26385.36 }43319.16(Bonds) 2500.00 1500.00 4000.00 3500.00 —— 3500.00 7500.00

2008-09(Cash) 24707.10 23847.69 48554.79 17968.74 12971.18 30939.92 79494.71

}32957.10 }32597.69 }65554.79 }20968.74 }12971.18 }33939.92 }99494.71(Bonds) 8250.00 8750.00 17000.00 3000.00 —— 3000.00 20000.00

2009-10 16000.00 23452.06 39452.06 17580.25 6999.98 24580.23 64032.29

Budget Estimates2010-11 13000.00 15500.00 28500.00 15980.73 8360.00 24340.73 52840.73

104

ANNEXURE-XIII

LIST OF THE SPECIFIED ROCK PHOSPHATE NOTIFICATIONS UNDER GUIDELINES DATED5.8.2002 ON CONCESSION SCHEME OF DECONTROLLED P & K FERTILIZERS FOR SSP

MANUFACTURERS (UPDATED ON 24.8.2009)

Notification No.M-19011/33/2001-MPR dated 19th September, 2001

S. Primary Grade of Specification of blending rock Source of originNo. rock phosphate

A Mined rock chips with - Rajasthan State Mines &31.5% and above P2O5 Minerals Limited (RSMML)content by wt.On an average

B Jordan Rock with 30.0% - Rock imported fromand above P2O5 content Jordan.by wt. On an average

C Beneficiated rock - RSMMLphosphate (BRP with33.55% and above P2O5content by wt.On an average.

D Syrian rock with 29.36% - Rock imported from Syriaand above P2O5 contentby wt. On an average.

E Beneficiated rock Jhabua A or B grade rock with 23% P2O5 BRP from RSMML andphosphate (BRP with content by wt. To get a mixture having 31.6% blending rock from Madhya33.55% and above P2O5 and above P2O5 content by wt. On an average. Pradesh State Miningcontent by wt. Corpn. Ltd. (MPSMC)On an average.

F Jordan rock with 31.6% Jhabua rock with 25% P2O5 content by wt to Rock imported from Jordanand above P2O5 content get a mixture having 30% and above P2O5 and blending rock fromby wt. On an average. content by wt. On an average. MPSMC.

Notification No.M-19011/33/2001-MPR dated 8th October, 2001

G Egyptian rock with 32% - Rock imported from Egypt.and above P2O5 contentby wt. On an average.

H Beneficiated rock Lower grade rocks with 25% P2O5 content by BRP from RSMML.phosphate (BRP) with wt. From mines of Madhya Pradesh State Mining Blending rock from33.55% and above P2O5 Coproration Ltd., RSMML, Rajasthan State MPSMC, RSMDC, RSMMLcontent by wt. Mineral Development Corpn. (RSMDC) or 27-31% and Hindustan Zinc. Ltd.On an average. P2O5 content by wt. Of Matton mines to get a (HZL).

mixture having 31.4% and above P2O5 contentby 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 BRP from RSMML.phosphate (BRP) with 25% P2O5 content by wt. Of RSMDC to get a Blending rock from33.55% and above P2O5 mixture having 31.7% and above P2O5 content RSMDC and RSMML.content by wt. by wt. On an average.On an average.

105

(ii) Rocks with 25% and above to 27% P2O5content by wt. From mines of RSMDC to get amixture having 31.4% and above P2O5 contentby wt on an average.

(iii) Rocks with +30% P2O5 content by wt. Frommines of RSMDC to get a mixture having 31.5%P2O5 content by wt. On an average.

(iv) Rock with 23% P2O5 content by wt. Frommines of RSMML to get a mixture having 31.4%P2O5 content by wt. On an average.

J Jordan rock with 32% and Lower grade rock with 25% P2O5 content by wt. Rock imported from Jordanabove P2O5 content by From mines of RSMML to get a mixture having and blending rock fromwt. On an average. 30.66% P2O5 content by wt. On an average. RSMML.

Notification No. 19011/33/2001-MPR dated 13th May, 2002

K Israeli Rock phosphate with Not applicable Rock phosphate imported32% P2O5 content and from Israel.above by wt.On an average.

Notification No. M-19011/33/2001-MPR (Vol.II) dated 23rd April 2003

L Beneficiated rock Lower grade rock with P2O5 content 29% by BRP from RSMML.phosphate with 33.5% wt and above with 2.78% average iron oxide Blending rock fromP2O5 content by wt on content of MPSMC to get a mixture of 31.4% Hirapur Mines of MPSMC.an average. on an average.

Notification NO.19011/33/2001-MPR dated 14.12.2005 –M Beneficiated Rock Phosphate with 30.2% P2O5 produced by M/s. Krishana Phoschem Ltd.,

115-118, AKVN Industrial Area, P.O. Meghnagar, Jhabua, Madhya Pradesh

19011/33/2001-MPR dated 19.9.2006(Notified on 19.9.2006)

N Beneficiated rock - RSMML-phosphate (BRP with33.55% and above P2O5content by wt.On an average.

O 19011/33/2001-MPR (Vol-II) dt. 8.5.2007Primary grade of Rock Phosphate of Vietnam with 34% P205 content by weight on an average.

P 19011/33/2001-MPR (Vol-II) dt. 30.10.2007Primary grade of Rock Phosphate of Algeria with 31.2% P205 content by weight on an average.

Q 19011/33/2001-MPR (Vol-II) dt. 19.11.2007Primary grade of Rock Phosphate of Egypt with 31.02% P205 content by weight on an average.

W Notification No. 19011/33/2001-MPR (Vol.II) dt. 15.6.2009Beneficiated Rock Phosphate with 31% P2O5 produced by M/s. BEC fertilizers Ltd., Bilaspur Chhattisgarh

S. Primary Grade of Specification of blending rock Source of originNo. rock phosphate

106

ANNEXURE-XIV

PROFITABILITY OF THE PUBLIC SECTOR UNDERTAKINGS AND COOPERATIVESUNDER THE DEPARTMENT OF FERTILIZERS.

(See Chapter-7)

(Rupees in Crores)Net Profit(+)/Net loss(-)

Name of Undertaking/ 2006-07 2007-08 2008-09 2009-10 2010-11Cooperative (upto Dec.10)

Fertilizer Corporation of (-)1422.63 (-)1504.83 (-)752.60 (-)585.86 (-)447.57India Limited (FCI)

Hindustan Fertilizer (-)1065.14 (-)1101.98 **4841.16 (-)382.47 (-)286.83Corporation Limit6ed (HFC)

Rashtriya Chemicals & 148.74 158.15 211.58 234.87 149.02Fertilizers Limited (RCF)

National Fertilizers Limited 176.10 109.0 97 171.51 111.78(NFL)

Project & Development 11.20 12.26* 14.82 14.48 12.90India Limited (PDIL)

Fertilizers and Chemicals (-)124.72 8.97 42.95 (-)103.83 (-)14.09*Travancore Limited (FACT)

Madras Fertilizers Limited (-)114.78 (-)134.85 (-)145.38 6.88 66.66(MFL)

Brahamputra Valley Fertilizer (-)62.37 (-)105.83 (-)215.04 (-)133.23 (-)96.44Corporation Ltd. (BVFCL)

FCI Aravali Gypsum & 11.51 7.54 9.04 8.67 3.89Minerals India Limited(FAGMIL)

Cooperative Sector

Krishak Bharti Cooperative 193.24 209.2 250.13 228.17 124.63Limited (KRIBHCO)

*Pre tax profit.**book Profit is due to write back of interest on Govt. of India loan.

107

ANNEXURE-XV

EMPLOYMENT OF SC/ST, EX-SERVICEMEN,PHYSICALLY HANDICAPPED & OTHERBACKWARD CLASSES (OBCs) PERSONS IN PUBLIC SECTOR UNDERTAKING/CO-OPERATIVE

Name of PSU Group Total No. of No. of Employees belonging toEmployees

SC ST Ex.Ser P.Hs OBC

1. KRIBHCO A 1408 36 12 5 2 137B 236 13 13 - 1 47C 359 41 22 9 5 58D 45 2 - - - 21

TOTAL 2048 92 47 14 8 263

2. NFL A 1704 367 83 5 11 83B 1912 500 156 35 21 116C 915 232 43 39 19 116D 142 112 3 2 3 7

TOTAL 4673 1211 285 81 54 322

3. MFL A 226 24 3 — - 11B 229 50 4 — 2 26C 323 103 1 12 3 69D - - - - - -

TOTAL 778 177 8 12 5 106

4. FAGMIL TOTAL 97 13 6 1 Nil 7

5. PDIL A 424 48 21 — — 62B 40 5 — — — 2C 33 10 — — — 6D - - — — — -On contract 77 11 1 —- —- 22

TOTAL 574 74 22 — — 92

6. RCF TOTAL 4235 591 258 8 35 323

7. FACT A 468 79 10 - 4 70B 358 193 55 12 21 334C 748 72 23 24 14 309D 711 101 21 5 33 288D.S. 34 9 - - 1 17

TOTAL 3819 454 109 41 73 1018

8. BVFCL as on01.12.2010 TOTAL 1111 82 167 2 3 344

108

ANNEXURE-XVI

SUMMARY OF AUDIT OBSERVATION PERTAININBG TO DEPARTMENTOF FERTILIZERS

Audit Report No. CA 9 of 2009-10

National Fertilizers Limited

The company paid incentives of Rs. 4.11 crore to workmen in contravention to the Wage agreement withunions and Government of India directions.

(Para 8.1.1)

National Fertilizers Limited made irregular payment of ex-gratia amounting to Rs. 2.03 crore to its employeesin contravention of DPE guidelines.

(Para 8.1.2)

PARAS PERTAINING TO PAC REPORTS –Details of ATNs pending with different Ministries/Departmentsand their disposal status

Name of the Ministry/Department

Ministry of Chemicals & Fertilizers, Department of Fertilizers

Sl. No. & Year of No. of paras/PAC Details of the Paras/PAC Reports on whichNo. the Report reports on which ATN are pending

ATNs have beensubmitted to PACafter vetting byAudit

No. of ATNs not No. of ATNs No. of ATNssent by the send but returned which have beenMinistry even for with observations finally vetted bythe first time and Audit is Audit but have

awaiting their not beenresubmission by submitted bythe Ministry Ministry of PAC

1. 54th Report of Six Paras Nil Nil NilPAC Report for 52, 53, 54, 58,2005-06 59 & 60

GOVERNMENT OF INDIA

MINISTRY OF CHEMICALS & FERTILIZERS

DEPARTMENT OF FERTILIZERS