ANNUAL REPORT

2011-2012

GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS

DEPARTMENT OF FERTILIZERS

CONTENTS

S.No. Subjects Page No.

1. Introduction

2. Organizational Set up and Functions

3. Development & Growth of Fertilizer Industry

4. Availability of Major Fertilizers during 2011-12

5. Plan Performance

6. Measures of Support for Fertilizers

7. Public Sector Undertakings

8. Fertilizer Education Projects

9. Information Technology (IT)

10. Vigilance Activities

11. Rights to Information Act, 2005

12. Progressive Use of Official Language (Hindi)

13. Welfare of SCs, STs, OBCs and Physically Handicapped persons

14. Woman Empowerment

15. Citizen Charter/Grievance Redressal Mechanism

16. Annexure I to XIV

1-3

4-5

6-14

15-16

17-18

19-37

38-60

61-63

64-67

68-68

69-69

70-72

73-74

75-77

78-78

79-104

Presenting the dividend cheque for the year 2010-11 to the Hon'ble Minister (Chemicals & Fertilizers)

Shri M.K. Alagiri by Dr. S.K. Das, CMD, FAGMIL. Shri Sutanu Behuria, former Secretary (Fertilizers),

Shri S C Gupta, Joint Secretary, DoF, Shri Deepak Kumar, Director (Movement), DoF are also

present along with others.

3

CHAPTER -1

1.1 INTRODUCTION

1.1.1. Agriculture which accounts for one fifth of GDP,

provides sustenance to two-thirds of our

population. Besides, it provides crucial

backward and forward linkages to the rest of the

economy. Successive five-year plan have laid

stress on self-sufficiency and self-reliance in

food grains production and concerted efforts in

this direction have resulted in substantial

increase in agriculture production and

productivity. This is clear from the fact that from

a very modest level of 52 million MT in 1951-52,

food grain production rose to about 235.88

million MT in 2010-11. In India's success

in agriculture sector, not only in terms of

meeting total requirement of food grains but

also generating exportable surpluses the

significant role played by chemical fertilizers is

well recognized and established.

1.1.2 Keeping in view the vital role played by

chemical fertilizers in the success of India's

green revolution and consequent self-reliance

in food-grain production, the Government of

India has been consistently pursuing policies

conducive to increased availability and

consumption of fertilizers in the country. As a

result, the annual consumption of fertilizers in

nutrient terms (N, P & K ), has increased from

0.7 lakh MT in 1951-52 to 281.22 lakh MT

2010-11, while per hectare consumption of

fertilizers, which was less than 1 Kg in 1951-52

has risen to the level of 144.14 Kg (estimated )

in 2010-11.

1.1.3 As of now, the country has achieved near self-

sufficiency in production capacity of urea with

the result that India could substantially manage

its requirement of nitrogenous fertilizers

through the indigenous industry. Similarly,

adequate indigenous capacity has been

developed in respect of phosphatic fertilizers to

meet domestic requirements. However the raw

materials and intermediates for the same are

largely imported. As for potash (K) since there

are no viable sources/reserves in the country,

its entire requirement is met through imports.

1.2 GROWTH OF FERTILIZER INDUSTRY

1.2.1. The industry made a very humble beginning in

1906, when the first manufacturing unit of

Single Super Phosphate (SSP) was set up in

Ranipet near Chennai with an annual capacity

of 6000 MT. The Fertilizer & Chemicals

Travancore of India Ltd. (FACT) at Cochin in

Kerala and the Fertilizers Corporation of India

(FCI) in Sindri in Bihar ( now Jharkhand) were

the first large sized -fertilizer plants set up in the

forties and fifties with a view to establish an

industrial base to achieve self-sufficiency in

food-grains. Subsequently, green revolution in

the late sixties gave an impetus to the growth of

fertilizer industry in India and the seventies and

eighties then witnessed a significant addition to

the fertilizer production capacity.

1.2.2 The installed capacity as on 31.03.2010 has

reached a level of 120.61 lakh MT of nitrogen

and 56.59 lakh MT of phosphatic nutrient,

making India the 3rd

largest fertilizer producer in

the world. The rapid build-up of fertilizer

production capacity in the country has been

achieved as a result of a favourable policy

environment facilitating large investments in the

public, co-operative and private sectors.

1.2.3 Presently, there are 30 large size fertilizer

plants in the country manufacturing urea (as on

date 29 are functioning) 21 units produce DAP

and complex fertilizers, 5 units produce low

analysis straight nitrogenous fertilizers and the

9 manufacture ammonium sulphate as by-

ANNUAL REPORT 1

product. Besides, there are about 84 medium

and small-scale units in operation producing

SSP. The sector-wise installed capacity is given

in the table below: -

SECTOR-WISE, NUTRIENT-WISE INSTALLED

CAPACITY OF FERTILIZER MANUFACTURING

UNITS AS ON 31.03.2010

Sr

No

Sector Capacity

(lakh MT)

Percentage Share

N P N P

1

2

3

Public Sector

Cooperative Sector

Private Sector

34.98

31.69

53.94

4. 33

17.13

35.13

29.0

26.27

44.73

7.65

30.27

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 for

various crops, indigenous raw materials are

available mainly for nitrogenous fertilizers. The

Government's policy has hence aimed at

achieving the maximum possible degree of self-

sufficiency in the production of nitrogenous

fertilizers based on utilization of indigenous

feedstock. Prior to 1980, nitrogenous fertilizer

plants were mainly based on naphtha as

feedstock. A number of fuel oil/LSHS based

ammonia-urea plants were also set up during

1978 to 1982. In 1980, two coal-based plants

were set up for the first time in the country at

Talcher, (Orissa) and Ramagundam, (Andhra

Pradesh). 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 becoming

available from offshore Bombay High and South

Basin, a number of gas based ammonia-urea

plants have been set up since 1985. As the

usage of gas increased and its available supply

dwindled, a number of expansion projects came

up in the last few years with duel feed facility

using both naphtha and gas. Feasibility of

making available Liquefied Natural Gas (LNG)

to meet the demand of existing fertilizer plant

and/or for their expansion projects along with

the possibility for utilising newly discovered gas

reserves, is also being explored by various

fertilizer companies in India.

1.3.2. In case of phosphates, the paucity of domestic

raw material has been a constraint in the

attainment of self-sufficiency in the country.

Indigenous rock phosphate supplies meet only

5-10% of the total requirement of P2O5. A policy

has therefore been adopted which involves mix

of three options, viz, domestic production based

on indigenous/imported rock phosphate,

imported sulphur and ammonia; domestic

production based on indigenous / imported

intermediates, viz. ammonia and phosphoric

acid; and third, import of finished fertilizers.

During 2010-11 roughly 70% of the requirement

of phosphatic fertilizers was met through the

first two options.

1.3.3. In the absence of commercially exploitable

potash sources in the country, the entire

demand of potassic fertilizers for direct

application as well as for production of complex

fertilizers is met through imports.

1.3.4. Given the volatility in international market for

fertilizer in general and urea market in

particular, marginal provision through imports

could be used to the country's strategic

advantage. This is also desirable as the

international market, especially in case of urea,

is very sensitive to demand supply scenario.

Under the new pricing regime for urea units

applicable from 01.04.2003, for securing

additional indigenous supply of urea,

economically efficient units are being permitted

to produce beyond their re-assessed capacity

to substitute/ minimize imports.

1.4 FERTILIZER SUBSIDY

1.4.1. The subsidy on fertilizers is passed on to the

farmers in the form of subsidized MRPs. The

selling prices as notified by Government for the

subsidized fertilizers are much lower than the

normative delivered cost of these fertilizers at

farm gate level. The difference between the

2 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

normative delivered cost at farm gate level and

the notified selling prices is paid as subsidy to

manufacturers/importers on sale of fertilizers to

the farmers at the subsidized prices.

1.4.2 The increase in rate of subsidy on fertilizers

combined with increase in consumption of

fertilizes has led to a substantial increase in

requirement of subsidy. In spite of increase in

cost of fertilizes, the Government has

completely kept the farmers insulated from this

increase in cost and have increased the subsidy

allocations to meet the consumption needs of

the farmers at subsidized level of prices. The

subsidy on fertilizers has been increased

sharply over the last few years. The details of

fertilizer subsidy over the last few years are as

below:-

sulphur, ammonia, phosphoric acid, electricity,

etc., as also the cost of transportation, went up

significantly during the eighties. The gas-based

fertilizer units commissioned during this period

also involved higher capital investment per

tonne of installed capacity, necessitating

constant upward revision in the retention prices.

The selling prices of fertilizers to the farmers,

however, remained almost at the same level

between July, 1981 and July 1991. The

Government effected an increase of 30% in the

issue prices of fertilizers in August, 1991 after a

gap of a decade. The selling price of urea,

which was reduced by 10% in August 1992, was

revised upwards by 20% in June 1994 followed

by another increase by 10% with effect from

21.2.97. The prices of urea were again revised

in February 2002 by 5% and by Rs. 240 PMT of

DETAILS OF EXPENDITURE ON SUBSIDY/CONCESSION

Period Amount of concession disbursed on Decontrolled Fertilizers

(Indigenous + imported)

Amount of Subsidy

disbursed on Urea

Total for all fertilizers

Indigenous

P&K

Imported

1P&K

Total

(P&K)

Indigenous

Urea

Imported

Urea

Total

(Urea)

2007-08 10333.80 6600.00 16933.80 16450.37 9934.99 26385.36 43319.16

2008-09 32957.10 32597.69 65554.79 20968.74 12971.18 33939.92 99494.71

2009-10 16000.00 23452.06 39452.06 17580.25 6999.98 24580.23 64032.29

2010-11 20650.00 20850.00 41500.00 15080.73 9255.95 24336.68 65836.68

2011-12 (RE)

19832.00 14954.87 34786.87 19308.00 17475.00 36783.00 71569.87

2012-13 (BE)

16000.01 12576.11 28576.12 19000.01 18016.00 37016.01 65592.13

1.4.3 The steady increase in fertilizer subsidies over urea w.e.f. 28.2.2003. The price increase made

the years has largely been the result of effective from 28.2.2003 was, however, later

increasing production / consumption and withdrawn w.e.f. 12.3.2003. The MRP of urea i.

increases in the costs of inputs of indigenous e. Rs. 4830 per tonne exclusive of local levies

fertilizers and prices of imported fertilizers from continued upto 31-03-2010. With effect from 1-

time to time. The cost of various inputs / utilities, 04-2010, MRP of urea increased by 10% i. e.

such as coal, gas, naphtha, rock phosphate, from Rs. 4830 per MT to Rs. 5310 per MT.

*****

ANNUAL REPORT 3

CHAPTER -2

4 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

*****

ANNUAL REPORT 5

Year of Comm.

Unit Feedstock and Sector

Installed Capacity (lakh/MT)

1967 GSFC-Baroda Gas-Private 3.706 1969 SFC-Kota Naphtha-Private 3.790 1970 DIL-Kanpur Naphtha-Private 7.220 1971 MFL-Madras Naphtha-Public 4.868 @ 1973 ZIL -Goa Naphtha-Private 3.993 1975 SPIC-Tuticorin Naphtha-Private 6.200 1976 MCFL-Mangalore Naphtha-Private 3.800 1978 NFL-Nangal FO/LSHS-Public 4.785 1978 IFFCO-Kalol Gas-Coop. 5.445 @ 1979 NFL-Bhatinda FO/LSHS-Public 5.115 1979 NFL-Panipat FO/LSHS-Public 5.115 1981 IFFCO-Phulpur Gas--Coop. 5.511 1982 RCF-Trombay-V Gas-Public 3.30 1982 GNFC-Bharuch FO/LSHS-Private 6.360 1985 RCF-Thal Gas-Public 17.068 1986 KRIBHCO-Hazira Gas-Coop. 17.292 1987 BVFCL-Namrup-III

(Formerly HFC) Gas-Public 3.150

1988 NFL-Vijaipur Gas-Public 8.646 1988 IFFCO-Aonla Gas-Coop. 8.646 1988 Indogulf-Jagdishpur Gas-Private 8.646 1992 NFCL-Kakinada Gas-Private 5.970 1993 CFCL-Gadepan Gas-Private 8.646 1994 TCL-Babrala Gas-Private 8.646 1995 KRIBHCO SHYAM -

Shahja- hanpur (Formerly OCFL)

Gas-Private 8.646

1996 IFFCO-Aonla expansion

Gas-Cooperative 8.646

1997 NFL-Vijaipur expansion

Gas-Public 8.646

1997 IFFCO-Phulpur expansion

Gas--Cooperative 8.646

1998 NFCL-Kakinada expansion

Naphtha-Private 5.970

1999 CFCL-Gadepan expansion

Naphtha/Gas- Private

8.646

2005 BVFCL:Namrup-II Gas-Public 2.400 @

3.1 D E V E L O P M E N T A N D G R O W T H O F FERTILIZER INDUSTRY

3.1.1 CAPACITY BUILD-UP

At present, there are 30 large size fertilizer

plants in the country manufacturing urea (as on

date 29 are functioning) 21 units produce DAP

and complex fertilizers, 5 units produce low

analysis straight nitrogenous fertilizers and the

9 manufacture ammonium sulphate as by-

product. Besides, there are about 84 medium

and small-scale units in operation producing

SSP. The total installed capacity of fertilizer

production which was 119.60 lakh MT of

nitrogen and 53.60 lakh MT of phosphate as on

31.03.2004 has marginally increased to120.61

lakh MT of nitrogen and 56.59 lakh MT of

phosphate as on 01.04.2010.

3.2 PRODUCTION CAPACITY AND CAPACITY

UTILISATION

3.2.1. The production of fertilizers during 2010-11

was 121.56 lakh MT of nitrogen and 42.22 lakh

MT of phosphate. The production target for

2011-12 was 127.56 Lakh MT of nitrogen and

49.24 Lakh MT of Phosphate, representing a

growth rate of 4.9% in nitrogen and 13.9% in

Phosphate as compared to production in 2010-

11. Production target for nitrogenous fertilizer is

more than the installed capacity. The production

target for phospahtic fertilizer is less than

installed capacity due to constraints in

availability of raw materials/ intermediates

which are substantially imported. However,

taken together, the production of 'N' and 'P'

during the year is very nearer to the

corresponding period of last year

3.2.2. The production performance of both

nitrogenous and phosphatic fertilizers during

the year 2010-11 was satisfactory. Production of

nitrogenous fertilizers was less than target by

2.97 Lakh MT, as there was no production by

SPIC. The production of phosphatic fertilizers

was more than target by 6.22 Lakh MT.

3.2.3. The installed capacity of urea units in the country is as follows:-

UREA UNITS SET UP BETWEEN 1967-2005 WITH

REASSESSED CAPACITY

Note: @ After revamp

6 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

3.2.4 The following 9 urea plants of the companies

are presently closed/under shutdown due to

various reasons, inter-alia, on account of

t e c h n o l o g i c a l o b s o l e s c e n c e , f e e d s t o c k

limitation, non-viability of unit/company and

heavy financial losses.

Sl.

No. Name of the

Company/Unit Date of

closures Annual

Installed

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 due

to financial constraints.

· E x p a n s i o n a n d c a p a c i t y a d d i t i o n /

e f f i c i e n c y e n h a n c e m e n t t h r o u g h

retrofitting / revamping of existing

fertilizer plants.

· Setting up joint venture projects in

countries having abundant and cheaper

raw material resources.

· Working out the possibility of using

alternative sources like liquefied natural

gas, coal gasification, etc., to overcome

t h e c o n s t r a i n t s i n t h e d o m e s t i c

a v a i l a b i l i t y o f c h e a p a n d c l e a n

feedstock, particularly for the production

of urea.

· Looking at possibilities of revival of

some of the closed units by setting up

brownfield units subject to availability of

gas.

3.2.5. The domestic fertilizer industry has by and

large attained the levels of capacity utilisation

comparable with others in the world. The

capacity utilisation during 2010-11 was 100.9%

for nitrogen and 75% for phosphate. The

estimated capacity utilisation during 2011-12 is

104.4% of nitrogen and 78.7% of phosphate.

Within this gross capacity utilization, the

capacity utilisation in terms of the urea plants

was 109.2% in 2010-11 and 107.4% in 2011-12.

As for phosphate fertilizers, apart from the

constraints mentioned earlier, the actual

production capacity utilisation has also been

influenced by the demand trends.

3.2.6. The capacity utilisation of the fertilizer industry,

particularly in respect of urea, is expected to

i m p r o v e f u r t h e r t h r o u g h r e v a m p i n g /

modernisation of the existing plants..

3.2.7 The unit-wise details of installed capacity,

production and capacity utilisation during 2010-

11 and 2011-12 are given in Annexure-IV.

3.3 STRATEGY FOR GROWTH

3.3.1 The following strategy has been adopted to

increase fertilizer production:

3.4 FEED STOCK POLICY

3.4.1 At present, natural gas based plants account for

more than 66% of urea capacity, naphtha is

used for less than 30% urea production and the

balance capacity is based on fuel oil and LSHS

as feedstock. The two coal based plants at

Ramagundam and Talcher were closed down

due to technological obsolescence and non-

viability.

3.4.2 Natural gas has been the preferred feedstock

for the manufacture of urea over other

feedstocks viz. naphtha and FO/LSHS, firstly,

because it is clean and efficient source of

energy and secondly, it is considerably cheaper

a n d m o r e c o s t e ff e c t i v e i n t e r m s o f

manufacturing cost of urea which also has a

direct impact on the quantum of subsidy on

urea.

3.4.3 Accordingly, the pricing policy, announced in

January 2004, provides that new urea projects,

expansion of existing urea units and capacity

i n c r e a s e t h r o u g h d e - b o t t l e n e c k i n g /

r e v a m p / m o d e r n i z a t i o n w i l l b e a l s o

allowed/recognized if the production comes

ANNUAL REPORT 7

from using natural gas/LNG as feedstock.

For the same reasons, a policy for conversion

of the existing naphtha/FO/LSHS based urea

units to natural gas/LNG as feedstock has

also been formulated in January 2004, which

encourages early conversion to natural

gas/LNG. Pursuant to formulation of policy

for conversion of non-gas urea units to gas,

three naphtha based plants namely, Chambal

Fertilizers & Chemicals Limited (CFCL),

Gadepan-II and IFFCO-Phulpur-I & II have

already converted to NG/LNG. Shriram

Fertilizers & Chemicals Limited (SFC-Kota)

has also started using gas w.e.f. 22nd

September 2007.

3.5 REQUIREMENT AND AVAILABILITY OF

GAS TO FERTILIZER SECTOR

3.5.1 Allocation of Natural Gas for FY 2011-12

Ministry of Petroleum & Natural Gas on 30th

September 2011 has allocated 3.021

mmscmd of gas as against the demand of

3.732 mmscmd of gas during the current year

2011-12, from the additional gas available

from ONGC's nominated blocks. However,

no allocation has been made to IFFCO-

Phulpur (0.3 mmscmd) and IGFL-Jagdishpur

(0.338 mmscmd). Department of Fertilizers

has therefore requested Ministry of Petroleum

& Natural Gas (MoPNG) to include the above

demand. In addition DOF has also requested

MoPNG for meeting the requirement of 1.28

mmscmd of gas by the ZIL, Goa who will

complete the pipeline connectivity by the first

week of Feb 2012 and the requirement of 0.10

mmscmd of NFCL-Kakinada because of lean

gas supply to the unit.

3.6. ALLOCATION OF NATURAL GAS FOR FY

2012-13 ONWARDS

3.6.1 DOF has already communicated year-wise

requirement of Natural Gas to Ministry of

Petroleum & Natural Gas (MoPNG). DOF has

requested MoP&NG that a minimum firm

allocation of 24.2 mmscmd gas is required to

be allocated by MOPNG for setting up of

seven expansion units, two Greenfield units

and revival of at least two closed urea units of

FCIL/HFCL on gas, so that the country can

become self sufficient in Urea production in

next three to four years. Further, a firm

allocation of 3.75 mmscmd of gas by MOPNG

should be made for FO/LSHS based urea

units converting to gas and 8.52 mmscmd of

gas for conversion of naphtha based units.

3.6.2 Allocation and pricing of CBM – MOPNG has

been requested to take immediate action for

allocation of the required CBM to the urea unit

being setup by MATIX at Burdwan. MOPNG

has also been requested for deciding the price

of CBM as soon as possible, since the unit is

under construction and any delay in allocation

of CBM and discovery of its price may impact

the viability and production from the said urea

unit.

3.6.3 Gas pipeline connectivity - Connectivity to all

FO/LSHS and Naphtha based urea units

converting to gas, revival of closed urea units

of FCIL and HFCL and proposed Greenfield

units need to be provided on priority basis.

The required pipeline connectivity through

various pipelines for the aforesaid urea units

is indicated below:

· The units of NFL at Bhatinda, Nangal (Punjab)

and Panipat (Haryana) are to be connected by

Dadri-Bawana-Nangal pipeline.

· Indian Farmers Fertilizers Cooperative Ltd

(IFFCO), Phulpur and Indo-Gulf Fertilizers

Limited (IGFL), Jagdishpur were allocated only

half of their additional requirement of gas from

KG-D6 due to capacity constraint in the

pipeline. MoPNG indicated that the remaining

gas will be supplied after the enhancement of

pipeline capacity by 2011-12.

· Connectivity to DIL-Kanpur can be through

adjacent pipeline network.

· Construction of Jagdishpur-Haldia pipeline

may be expedited for providing gas to units in

eastern sector (Halida, Baruni, Gorakhpur,

Durgapur, Burdwar, Kanpur).

8 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

S.No. Name of Unit Status of pipeline connectivity

1 HFCL/ FCIL a Durgapur Proposed to be

connected to GAIL‟s proposed Haldia- Jagdishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant.

b Barauni Proposed to be connected to GAIL‟s proposed Haldia- Jadishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant.

c Ramagundam No plans to connect this unit to any GAIL‟s upcoming pipeline but may be connected to Mallavaram-Bhilwara pipeline for which bids have been submitted to PNGRB

d Gorakhpur Proposed to be connected to GAIL‟s proposed Haldia- Jadishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant.

e Haldia Proposed to be connected to GAIL‟s proposed Haldia- Jadishpur pipeline authorized by GoI but the laying of the pipeline is being firmed up based on confirmation regarding schedule for revival of the plant.

· New pipeline to connect the closed units of

HFCL-Durgapur, HFCL-Barauni, HFCL-Haldia,

FCIL-Sindri & FCIL-Gorakhpur should be

targeted for completion by 2013-14.

· Early gas connectivity to naphtha units viz MFL-

Chennai, ZIL-Goa, MCFL-New Mangalore and

SPIC-Tuticorin will lead to a substantial subsidy

savings.

Revival

3.6.4 Status of Pipeline connectivity for Fertilizer Plants.

Expansion

S.No. Name of Unit Status of pipeline connectivity

1 KRIBHCO-

Hazira(Gujarat) The plant has been connected through

newly laid DUPL connectivity wherein capacity exists.

2 RCF- Thal(Maharashtra)

Presently capacity does not exist in DULP pipeline but the same is planned to augmented.

3 Chambal Gadepan(Kota) Rajasthan

Presently limited

capacity exists in Kota- Vijaipur segment, however, the same is planned to be augmented

4 TCL-Babrala Presently capacity of HVJ/DVPL has been

augmented but in the downstream segment there is capacity constraint in the

Auraiya-Dadri segment which is planned to be augmented.

5 IGFL-

Jagdishpur(UP) Presently capacity of

HVJ/DVPL has been augmented but in the in the downstream segment there is capacity constraint in the Auraiya-Dadri segment which is planned to be augmented.

ANNUAL REPORT 9

New Plants

S.No. Name of Unit Status of pipeline connectivity

1 Matix- Burdwan(WB)

This may be connected to GAIL‟s proposed Haldia-Jagdishpur pipeline authorized by GoI

2 JP Industries- Kanpur (UP)

Presently capacity of HVJ/DAVP has been augmented but in the downsteam segment there is capacity constraint in the Auraiya-Jadishpur segment which is planned to be augmented.

Ministry of Petroleum & Natural Gas has

further stated that the fertilizer units need to

enter into commercial agreements with GAIL

relating to sale and transportation (GSA/GTA)

s o t h a t a c t i o n c a n b e i n i t i a t e d f o r

augmentation/booking of capacity in the

relevant pipelines.

3.7 REVIVAL OF CLOSED UREA UNITS OF FCIL & HFCL

3.7.1 In order to make the country self sufficiency in

the indigenous production of Urea, the

Government has decided to revive the eight

closed fertilizer units of Fertilizer Corporation of

India Limited (FCIL) and Hindustan Fertilizer

Corporation Limited. An Empowered

Committee of Secretaries (ECOS) was

c o n s t i t u t e d t o s u b m i t s u g g e s t i o n s

/recommendations for revival of the closed

units of these two PSUs. Based on the

recommendations of the ECOS, a proposal for

revival of these units of HFCL & FCIL alongwith

a Draft Rehabilitation Scheme was submitted

for consideration of Cabinet Committee on

Economic Affairs (CCEA). It was proposed to

revive the three closed units namely Sindri,

Ramagundam, Talcher units of FCIL through

Nomination route to the consortium of the

Public Sector Undertakings (PSUs) and five

closed units namely Gorakhpur, Korba of FCIL

and Durgapur, Haldia and Barauni of HFCL

through Bidding route. The CCEA has approved

the proposal. Revival of each fertilizer unit will

result in increase of indigenous production of

urea by approximately 1.2 Million Metric tonne

per annum.

3.8 JOINT VENTURES ABROAD

3.8.1 Due to constraints in the availability of Gas in

the country, which is the preferred feed stock for

production of nitrogenous fertilizers, a near total

dependence on imports for Phosphatic fertilizer

and its raw materials and full import

dependence for MOP, the Government has

been encouraging Indian companies to

establish Joint Ventures abroad in Countries

which are rich in fertilizer resources for

p r o d u c t i o n f a c i l i t i e s w i t h b u y b a c k

arrangements and to enter into long term

agreements for supply of fertilizers and fertilizer

inputs to India. Further, the Department is also

working with the goal of having access to /

acquisition of the fertilizer raw materials abroad.

3.8.2 The details of the existing joint ventures abroad

in the fertilizer sector are:

A. OMIFCO OMAN

Krishak Bharati Cooperative Ltd. (KRIBHCO),

Indian Farmers Fertilizers Cooperatives Ltd.

(IFFCO) and Oman Oil Company with

respective share holding of 25%, 25% and 50%

have collaborated and set up a world class

urea-ammonia fertilizer plant 'Oman India

Fertilizer Company (OMIFCO), in Oman at a

cost of US $ 892 million. It consists of 5060

MTPD granular urea and 3500 MTPD Ammonia

plants along with utilities in the coastal town of

Sur in Oman. The annual capacity of the

fertilizer complex is 16.52 lakh MT of granular

Urea. The entire quantity of Urea is taken by the

Government of India as per Urea Off-Take

Agreement (UOTA) at pre determined prices.

Government of India also off takes surplus

quantity of Urea, if any, as per price agreed for

the additional quantity. In addition, 2.5 lakh MT

of surplus Ammonia per year is also produced

by the Plant for which IFFCO has Ammonia Off-

10 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Take Agreement (AOTA). OMIFCO is

examining possibility of expansion and increase

in production of Urea and Ammonia.

B. ICS SENEGAL

The Government of India (GoI), Indian Farmers

Fertilizer Cooperative Ltd. (IFFCO) and

S o u t h e r n P e t r o c h e m i c a l s I n d u s t r i e s

Corporation Ltd. (SPIC) formed a joint venture

company in Senegal named Industries

Chimiques du Senegal (ICS). Later on SPIC

withdrew from the project. In recent past, the

company suffered financial losses. However,

ICS Senegal has been restructured in 2008 with

Government of India, IFFCO and other Indian

c o n s o r t i u m p a r t n e r s h a v i n g 8 5 % a n d

Government of Senegal having 15% share.

The restructuring plan after having been

approved by the Regional High Court of Dakar

(Senegal) on 27.3.2008 has come into effect

and ICS Senegal, as restructured is in

operation.

ICS Senegal has a capacity to produce 6.60

lakh tones of phosphoric acid per annum and

also finished phosphate fertilizer such as DAP

and Complex fertilizers. A major portion of the

phosphoric acid, about 5.5 LMT produced in the

ICS plant is off-taken by IFFCO as per a long

term buy back arrangement and utilized for

production of phosphate fertilizers in India. The

finished fertilizers DAP and complex fertilizers,

produced by ICS Senegal is for domestic

consumption in Senegal.

C. IJC JORDAN

SPIC, Jordan Phosphates Mines Company Ltd.

(JPMC) and Arab Investment Company (AIC)

set up a joint venture project, Indo-Jordan

Chemicals Company Limited (IJC) in Jordan in

May 1997 with a capacity of 2.24 lakh tonnes of

phosphoric acid production per annum. 52.17%

of the equity of the joint venture is held by SPIC,

34.86% by JPMC and 12.97% by AIC.

Phosphoric Acid produced by IJC is off-taken

by SPIC and other fertilizer units in India.

D. IMACID MOROCCO

IMACID, a joint venture between Office

Cherifien des Phosphates (OCP), Morocco,

and Chambal Fertilizers & Chemicals Ltd.

(CFCL), India to produce 3.60 lakh MT of

phosphoric acid per annum was commissioned

in Morocco in October 1999. After subsequent

joining of Tata Chemicals Limited (TCL),

capacity of the plant has been increased to 4.30

LMT per annum. Initially, equity of US$ 65

million in the venture was held by OCP & CFCL

equally. Subsequently, in May 2005, both OCP

& CFCL have sold one-third of their equity stake

in IMACID to TATA Chemicals Limited.

3.8.3 OVERSEAS JOINT VENTURES UNDER

IMPLEMENTATION / CONSIDERATION

A. JIFCO JORDAN

Indian farmers Fertilizers Cooperative Ltd

(IFFCO) and Jordan Phosphate Mining

Company (JPMC) have agreed for setting up of

a joint-venture Phosphoric Acid production

plant, Jordan India Fertilizer Company (JIFCO)

in Jordan with an installed capacity of 1500 MT

of phosphoric acid per day (MTPD) or 4.3 Million

Tonne Per Annum . Equity holding in the project

is 52:48 between IFFCO and JPMC,

respectively. The plant is expected to be

commissioned by 2013.

B. TIFERT TUNISIA

Gujarat State Fertilizers & Chemicals Ltd

(GSFC) and Coromandel International Ltd

(CIL), formerly Coromandel Fertilizers

Ltd.(CFL) both Indian entities alongwith Groupe

Chimique Tunisien (GCT) & Compagnie Des

Phosphates De Gafsa (CPG), both Tunisian

entities are setting up a joint venture project,

Tunisian Indian Fertilisers S.A. (TIFERT) at

Skhira in Tunisia for production of 3.6 lakh MT of

Phosphoric Acid per annum. The entire

production of phosphoric acid would be for off

take by GSFC and CIL. An MOU to this effect

was signed in October, 2005 between parties.

Estimated cost of the project is approx. US $

165 million + 5% with equity of US $66 million

ANNUAL REPORT 11

and borrowings of US $99 million. The project is

expected to be commissioned by end of the

year 2011-12.

C. COOPERATION IN SYRIA

The India-Syrian Joint Commission in its

meeting held in January 2008 took note of the

mutual interest of both countries in the field of

Phosphatic raw-materials and products. It was

agreed that both countries would work for

cooperation in the fertilizer sector in Syria.

Accordingly, a consortium of Indian entities

including MECON, RITES and PDIL (All central

Government PSUs), having expertise in the

fields of mining, beneficiation, processing,

setting-up and running the phosphatic plants

and logistic aspects are undertaking capacity

e n h a n c e m e n t c o n s u l t a n c y s t u d y w i t h

GECOPHAM in Syria. Government of India is

funding the study. As per the MOU signed

between this Department and GECOPHAM in

May 2009, the Indian consortium undertook the

feasibility studies, which have now been

completed and the Pre-Feasibility Report has

been submitted to the Syrian Authorities. A

Government level MOU spelling out broad

frame work of cooperation in Phosphate sector

between the Countries has also been signed in

Oct' 2010. The consortium has submitted the

Feasibility Report to GECOPHAM. The

authorities concerned in Syria have to consider

the report. For the reason of ongoing socio-

political situation in Syria, matter is stand still at

present, however, the DOF is keeping a close

watch in the matter.

D. COOPERATION WITH RUSSIA

On 12.03.2010 an MOU has been signed

between the Government of India and the

Government of Russia, during the visit of Prime

Minister of Russia to India, envisaging inter-alia

encouraging collaboration in the areas of trade,

production, possible establishment of Joint

Ventures, investment and R&D activities,

exchange of information and holding of

consultations on the issues of production and

consumption of mineral fertilizers, exchange

experience encourage contacts between the

specialists, organization of Joint Conferences,

symposia and business events on the issues of

Co-operations in the sector of mineral fertilizers.

In the follow-up a senior level officers visited

Russia in November'2011 to discuss with the

various Russian entities about possibilities of

Joint Ventures for production of Potash in

Russia. Some proposals have been received,

which are being examined in the Department.

E. COOPERATION IN INDONESIA

A team led by the Secretary (F) visited

Indonesia during 30.10.2010 to 02.11.2010 to

hold preliminary discussions with the

Indonesian Authority to ascertain the technical

feasibility of putting up of an Ammonia Urea

plant based on Coal Gasification Technology.

During the visit of the President of Indonesia as

Chief Guest on occasion of the Republic Day is

January 2011 following two documents have

been signed:

(i) MOU for setting up an Ammonia Urea Plant in

Indonesia and agreement for off-take of surplus

urea produced in the plant.

(ii) Agreement for supply of 3 L MT of Urea and 2.5

LMT of NPK Complex fertilizer in designated

grades.

M/s Rashtriya Chemicals & Fertilizers Ltd.

(RCFL) is pursuing with the Indonesian

Authorities about the proposal for JV Ammonia

– Urea Plant in Indonesia. The Indonesian

Authorities have assured for the full cooperation

to RCFL in this regard.

F. COOPERATION IN AUSTRALIA

Indian Farmers Fertilizer Cooperative Ltd

(IFFCO) has entered into a 'Principles of Off-

take Agreement' with Legend International

Holdings of Australia to undertake joint mining

of rock phosphate in Lady Annie mines

(Georgina Basins in Queens land) along with an

assured three million MT annual off-take. A total

of US $800 million investment has been

envisaged for undertaking rock phosphate

12 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

mining in Australia. IFFCO would provide both

technical and financial facilitation to Legend

International Holdings in the development of its

and the Government of Belarus on 27.08.2011.

As per Protocol follow up action are in progress

regarding long term agreement for supply of

phosphate mining and shipment of its product to potash from Belarus to India at concessional

India. price and the possible equity acquisition in

G. COOPERATION IN GHANA OJSC Belaruskali by Indian entities. Firm

quantities of Potash for off-take to India over the Given its gas reserves, Ghana is considered a next 7 years beginning from the year 2012, have

rich source of nitrogenous feedstock. Chairman been communicated to Belarusian company

of Ghana National Petroleum Corporation and the negotiations on prices are going on. As

(GNPC), Ghana during his visit to India, in regards, exploring possible equity acquisition in

September 2009 and discussed with the Belaruskali, this Department is pursuing the

Secretary (F) the possibility of cooperation in matter with the concerned authorities in Belarus

Fertilizer sector was discussed. It was proposed in consultation with MEA and the Indian Mission

to set-up a Ammonia-Urea plant (Gas based) in in the Country.

Ghana. To give proper shape to the project I.

CO-OPERATION WITH MALI proposal, an MOU has been signed in July 2010 at the Government level between the Countries. The President of Mali was scheduled to visit

As per MOU, to proceed further a technical India during 11th

– 12th

of January, 2012.

team comprising of Officers from RCF & PDIL Keeping in view the availability of Phosphate

visited Ghana. Site selection Report and the resources in the country, DOF proposed to

Pre-feasibility reports were prepared by RCF enter into an MOU with Mali. Accordingly, a

and PDIL, which were provided to Ghanaian copy of the draft MOU was sent to MEA on 2nd

Authorities. In January'2011 a team led by January, 2012 with a request to consider the

Secretary (F) visited Ghana to discuss further same in consultation with the L&T Division of

modalities in the matter. Ghanaian Authorities

have been requested for an early decision on

pricing of Gas.

MEA and also for pursuing the same with the

Government of Mali. The response from Mali is

awaited.

The Government of Ghana has conveyed that 3. 8.4 DISCUSSIONS FOR COOPERATION IN

their Cabinet has formally given its approval for FERTILIZER SECTOR

formation of the Ghana-India Joint Venture Discussion are on with the fertilizer and mining Fertilizer Company (with 1 million tone entities in following resource rich countries for

production capacity). The Share Structure as

approved by the Cabinet of Ghana is 48% for

RCF (India) and 52% for the Government of

Ghana. RCF has prepared the draft Joint

Venture Agreement and a copy of the same has

b e e n c o m m u n i c a t e d t o t h e G h a n a i a n

Authorities for their consideration. It is likely to

finalize the JV Agreement by both the sides at

an early date.

H. CO-OPERATION WITH BELARUS

During the visit of a delegation led by Secretary

(East), Ministry of External Affairs a Protocol

was signed between the Government of India

long term cooperation for setting up of projects

for production and off take of fertilizers:

(i) Discussion at Government level is underway

w i t h t h e G o v e r n m e n t o f S e n e g a l f o r

development of Matam phosphate mines.

(ii) Two separate consortia of Indian entities

comprising IPL & IFFCO and MMTC & RCF are

in discussion with M/s Potash One and M/s

Athabasca Inc respectively of Saskatchewan

province for setting up Joint Venture projects in

mining of Potash and off take to India.

Consortium of RCF and MMTC, which is

pursuing with Athabasca, have signed an MOU

ANNUAL REPORT 13

for JV project with Athabasca for evaluation and

assessment in technical, marketing and

financial aspect. They have also signed a

confidentiality agreement for sharing related

information. Consortium of IFFCO and IPL have

requested PotashOne for providing detailed

costing and other economic parameters

involved in the project.

(iii) RCF and IDC/FOSKOR of South Africa are

exploring the possibilities to set up a Phosphoric

Acid and Ammonia-Urea fertilizer project near

Maputo Port, the capital city of Mozambique.

The project proposes to source Rock from the

new mines of Foskor in Phalaborwa, South

Africa. An MOU has been signed between RCF

and IDC/FOSKOR. Department of Fertilizers

has been pursuing with M/s SASOL, for

allocation of gas in Mozambique for setting up a

JV ammonia-urea project.

(iv) Discussions are also going on for exploring

possibilities for an Ammonia-Urea project Qatar

with buy back by India. IFFCO and QUAFCO

(Public sector entity of Qatar) have signed

'Agreement of Intention' on 24.2.2009 for the

same.

(v) M/s Nagarjuna Fertilizers & Chemicals Ltd.

(NFCL) is pursuing with the Government of

Nigeria for setting up of Ammonia – Urea Joint

Venture Fertilizer Project in Nigeria. The

Nigerian Government has assured about

supply of adequate quantity of gas for the

project. The prices of the gas for the project

have also been finalized.

*****

14 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

3

CHAPTER -4

4.1 AVAILABILITY OF MAJOR FERTILIZERS DURING 2011-12

CONTROLLED FERTILIZER – UREA

4.1.1 The availability of urea, which is the only

fertilizer under price and partial movement

control of Government, remained satisfactory

throughout the Kharif 2011 season as well as

during the current Rabi 2011-12 (upto

December, 2011).

KHARIF 2011

4.1.2 The field opening stock of 4.25 LMT as on

1.4.2011 coupled with indigenous production

of 108.16 LMT and imports of 33.82 LMT

helped in progressively ensuring adequate

availability to the States throughout the

season. The cumulative availability of urea at

the end of the season was nearly 146.23

LMT against the assessed requirement of

142.16 LMT. The sales were of 139.21 LMT

urea during Kharif 2011.

anywhere in the country at notified maximum

retail price.

4.2 DECONTROLLED FERTILIZERS – DAP &

MOP

KHARIF 2011

4.2.1 In case of fertilizers other than the urea, which

are decontrolled, no allocation is made under

Essential Commodities Act (ECA) by the

Central Government. Assessment of

requirement of Urea, DAP and MOP is being

made by the Department of Agriculture &

Cooperation to enable better monitoring of

availability at the national level.

4.2.2 DAP and MOP are the two major decontrolled

and decanalised fertilizers, which may be

imported freely.

DAP

4.2.3 The imports of 40.23 LMT of DAP coupled

with indigenous production of 19.67 LMT and

the opening stock of 0.90 LMT of DAP as on

RABI 2011-12 1st

April, 2011 resulted slightly less

4.1.3 The requirement of urea for Rabi 2011-12 has

been assessed at 162.80 LMT envisaging a

growth of about 4.31% over the sales of

156.08 LMT in Rabi 2010-11. The

requirement is being met from the opening

stocks taken together with estimated

production of 112.97 LMT and imports of

about 45,00 LMT during the season. Thus

the cumulative availability of urea for Rabi

2011-12 has been estimated to be about

157.97 LMT by the end of 31st

March, 2012.

4.1.4 Allocation of urea was restricted to 50% of

production of installed capacity of each

manufacturer during Kharif 2011 and Rabi

2011-12. The manufacturers are free to sell

the remaining quantity of urea to the farmers

availability of about 60.80 LMT DAP during

Kharif 2011 season against the assessed

requirement of 71.38 LMT. The sales of DAP

in Kharif 2011 were about 48.71 LMT.

MOP

4.2.4 The imports of 5.51 LMT of MOP taken

together with opening stock of 5.22 LMT as

on 1st

April, 2011 resulted in availability of

about 10.73 LMT during Kharif 2011 season

against the assessed requirement of 22.54

LMT. The sales of MOP were reported as

about 7.00 LMT.

RABI 2011-12

DAP

4.2.5 The production of DAP during Rabi 2011-12 is

ANNUAL REPORT 15

estimated to be about 22.83 LMT. Stocks as

on 1.10.2011 coupled with estimated imports

will be adequate in meeting the country's

requirement of DAP assessed at 54.79 LMT

during Rabi 2011-12, considering that about

4.04 LMT of DAP will be surplus towards the

requirement of Rabi 2011-12.

During the current year, there is a shortage of

DAP because of the political disturbances in

the Middle East and gulf countries which is

main source of DAP import. During the Zonal

Conference organized by Department of

Agriculture and Cooperation (DAC), it was

clearly indicated to all the State Governments

that there will be a shortage of DAP fertilizer

during current year.

MOP

4.2.6 Stocks of MOP as on 1.10.2011 coupled with

adequate imports till March 2012 will ensure

that the country's requirement of MOP during

Rabi 2011-12 is fully met.

As regards MOP, there is tightness in

availability of MOP during current year.

There is no viable source of Potash in the

country as such the entire demand of MOP is

met through imports. During the current year

up to the month of July, contracting for import

of MOP could not be materialized due to

s u b s t a n t i a l i n c r e a s e o f p r i c e s a n d

cartelization by MOP producers in the

International market. The contracting of MOP

took place only in the month of August. As a

result, MOP availability for direct application

as well as for indigenous production of NPK

fertilizers will be comfortable in Rabi 2011-12.

Following table summarizes the season-

wise position in respect of the availability and

sales of the major fertilizer i.e. Urea, DAP &

MOP during the last three seasons:

Crop season Demand

Assessment Cumulative

Availability Cumulative

Sales % age of

availability to assessed demand

Kharif 2010 Urea DAP MOP

136.65 68.75 22.98

132.16 79.01 27.51

126.02 65.05 19.63

96.71 114.92 119.71

Rabi 2010-11 Urea DAP MOP

154.14 52.17 24.82

165.77 46.64 20.22

156.08 47.63 19.27

107.54 89.40 81.46

Kharif 2011 Urea DAP MOP

142.16 71.38 22.54

146.23 60.80 10.73

139.21 48.71

7.00

102.86 85.17 47.60

4.3 MOVEMENT OF FERTILIZERS

4.3.1 Under the Allocation of Business Rules, the

Department of Fertilizers has been entrusted

the responsibility of ensuring movement,

distribution and allocation of controlled

fertilizer, i.e. urea, from various fertilizer

plants and ports in accordance with the State-

w i s e r e q u i r e m e n t a s s e s s e d b y t h e

Department of Agriculture & Co-operation

(DAC). The distribution of imported urea is

made keeping in view the requirements of

each of the States.

4.3.2 The major share in transportation of fertilizers

is of the Railways. During 2011-12, Railways

had moved about 75% of the fertilizers

produced and/or imported in the country.

4.3.3 Judicious management of the demand-

supply balance has helped in maintaining the

average lead of fertilizer movement by rail.

During 2010-11 the average lead was 827

KMs. During the current year the average

lead for the period April-November, 2011

would also be almost same.

*****

16 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

3

CHAPTER -5

5.1 PLAN PERFORMANCE

5.1.1 The installed capacity and production of

fertilizers in the country at the end of eighth

five year plan, in the terminal year of the ninth

plan and at the beginning of 5th

year of tenth

plan (2006-07) are indicated below:

5.1.3 Year-wise consumption, production and

imports of fertilizers in nutrients terms are

given in Annexure-V

5.1.4 The production of fertilizers in nutrient terms

during 2010-11 was 121.56 LMT of nitrogen

and 42.22 LMT of phosphate. The estimated

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

(In lakh MT(LMT))

Sr. No

Particulars At the end of Eighth Five Year Plan

(1996-97)

At the end of Ninth Plan ( 2001-02).

At the beginning of 5th

year of Tenth Plan (2006-07)

1 Capacity i ) Nitrogen ii) Phosphates

97.77 29.05

120.58 52.31

120.61 56.59

2 Production

i ) Nitrogen

ii) Phosphates

85.99

25.56

107.68

38.60

115.78}

45.17}

5.1. 2 The installed capacity of nitrogen and

phosphate in the terminal year (1996-97) of

the eighth plan was 97.77 LMT and 29.05

LMT, respectively. Three major phosphatic

fertilizer plants were commissioned during

the ninth five year plan period, namely, Oswal

Chemicals & Fertilizers Ltd.-Paradeep ( since

t a k e n o v e r b y I F F C O ) , I n d o - G u l f

Corporation-Dahej and Gujarat State

F e r t i l i z e r s C o m p a n y L t d . - S i k k a - I I .

Consequent upon reassessment of urea

capacity on the basis of Dr. Y.K. Alagh

Committee and DAP capacity by Tariff

Commission, despite phasing out of 10 urea

units due to closure, the installed capacity of

nitrogen and phosphate has increased from

97.77 LMT at the end of eighth plan to 120.61

LMT and 29.05 LMT to 56.59 LMT

respectively during the same period.

production for 2011-12 is 125.76 LMT of

nitrogen and 44.32 LMT of phosphate.

Sector-wise targets and achievements in

respect of production and capacity utilization

from 2003-04 onwards are given in

Annexures-VI & VII respectively.

5.2 Plan Outlays

5.2.1 For the Eleventh Five Year Plan (2007-12),

Planning Commission has approved an

outlay of Rs.20627.87 crore consisting of

Rs.1492.00 crore as Domestic Budgetary

Support and Rs.19135.87 crore as Internal &

Extra Budgetary Resources (IEBR).

5.2.2 For the year 2011-12, a plan outlay of

Rs.3550.22 crore was approved by the

Planning Commission with Rs.3325.22 crore

to be met out of IEBR and balance amount of

Rs.225.00 crore as budgetary support. The

ANNUAL REPORT 17

details of Plan outlays are given at made to three loss making PSUs, namely

Annexure-VIII. The gross outlay of BVFCL, FACT and MFL for meeting their

R s . 3 5 5 0 . 2 2 c r o r e i s f o r R a s h t r i y a

Chemicals & Fertilizers Limited (Rs.293.30

crore), FAGMIL (Rs.4.15 crore), Project &

Development India Limited (Rs.9.73 crore),

National Fertilizers Limited (Rs.2363.08

crore), Krishak Bharati Cooperative Limited

(Rs.654.96 crore), Brahmaputra Valley

Fertilizer Corporation Limited (Rs.67.80

crore), Fertilizers & Chemicals Travancore

Limited (Rs.60.74 crore), Madras

Fertilizers Limited (Rs.88.95 crore), and

o t h e r M i s c e l l a n e o u s D e p a r t m e n t a l

schemes such (MIS/IT and R&D) Rs.7.50

crore. Department of Fertilizers is exploring

possibilities of joint ventures abroad. Since

there is no firm proposal in hand right now,

only a token provision of Rs.0.01 crore has

been provided.

5.2.3 Out of the budgetary support provided by

the Government, bulk of allocation was

urgent capital expenditure requirement. A

small amount of Rs.2.00 crore was

earmarked for Grants-in-Aid to various

research institutes for carrying out relevant

research which may be beneficial to the

fertilizer industry in the field of fertilizer

sector under “S&T” Head. Similarly,

another small amount of Rs.5.50 crore was

earmarked for Management Information

Technology (MIT) scheme.

5.2.4 For the year 2011-12, there was net

Budgetary Provision (BE) of Rs 50,245

crore. Rs 225 crore under Plan and Rs 50,020

crore under Non-Plan. In the Revised

Estimates (RE) for 2011-12 the net provision

is Rs 68,225 crore, Rs 225 crore under Plan

and Rs 68,000 crore under Non-Plan. The

details of Non-Plan and Plan provisions in

FY 2011-12 (BE) and (RE) are given in

Annexure-IX.

*****

18 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

3

CHAPTER -6

6.1 MEASURES OF SUPPORT FOR technology, feedstock used, the level of

FERTILIZERS capacity utilization, energy consumption,

6.1.1 For sustained agricultural growth and to

promote balanced nutrient application, it is

imperative that fertilizers are made available

to farmers at affordable prices. With this

objective, urea being the only controlled

fertilizer, is sold at statutorily notified uniform

sale price, and decontrolled phosphatic and

potassic fertilizers are sold at indicative

maximum retail prices (MRPs). The problems

faced by the manufacturers in earning a

reasonable return on their investment with

reference to controlled prices, are mitigated

by providing support under the New Pricing

Scheme for urea units and the Concession

Scheme for decontrolled phosphatic and

potassic fertilizers. The statutorily notified

sale price and indicative MRP is generally

less than the cost of production of the

respective manufacturing unit. The

difference between the cost of production and

t h e s e l l i n g p r i c e / M R P i s p a i d a s

subsidy/concession to manufacturers. As the

consumer prices of both indigenous and

imported fertilizers are fixed uniformly,

financial support is also given on imported

urea and decontrolled phosphatic and

potassic fertilizers.

6.2 MEASURES OF SUPPORT FOR UREA

6.2.1 Until 31.3.2003, the subsidy to urea

manufacturers was being regulated in terms

of the provisions of the erstwhile Retention

Price Scheme (RPS). Under RPS, the

difference between retention price (cost of

production as assessed by the Government

plus 12% post tax return on networth) and the

statutorily notified sale price was paid as

subsidy to each urea unit. Retention price

used to be determined unit wise, which

differed from unit to unit, depending upon the

distance from the source of feedstock/raw

materials, etc. Though the RPS did achieve

its objective of increasing investment in the

fertilizer industry, and thereby creating new

capacities and enhanced fertilizer production

along with increasing use of chemical

fertilizers, the scheme had been criticized for

being cost plus in nature and not providing

incentives for encouraging efficiency.

6.2.2 Given the importance of fertilizer pricing and

s u b s i d i z a t i o n i n t h e o v e r a l l p o l i c y

environment, which has direct implications

with reference to the growth and development

of agriculture and sustainability of the fertilizer

industry, the need for streamlining the subsidy

scheme in respect of urea producing units

had been felt for a long time. A High Powered

Fertilizer Pricing Policy Review Committee

( H P C ) w a s c o n s t i t u t e d , u n d e r t h e

chairmanship of Prof. C.H. Hanumantha Rao,

to review the existing system of subsidization

of urea, suggest an alternative broad-based,

scientific and transparent methodology, and

r e c o m m e n d m e a s u r e s f o r g r e a t e r

cohesiveness in the policies applicable to

different segments of the industry. The HPC,

in its report submitted to the Government on

3rd

April 1998, inter-alia, recommended that

unit-wise RPS for urea may be discontinued

and, instead, a uniform Normative Referral

Price be fixed for existing gas based urea

units and also for DAP and a Feedstock

Differential Cost Reimbursement (FDCR) be

given for a period of five years for non-gas

based urea units.

6.2.3 The Expenditure Reforms Commission

(ERC), headed by Shri K.P. Geethakrishnan,

had also examined the issue of rationalizing

fertilizer subsidies. In its report submitted on

ANNUAL REPORT 19

2 0

t h S e p t e m b e r 2 0 0 0 , t h e E R C power and water. Under the scheme, no

recommended, inter-alia, dismantling of

existing RPS and in its place the introduction

of a Concession Scheme for urea units based

on feedstock used and the vintage of plants.

6.2.4 The recommendations of ERC were

examined in consultation with the concerned

Ministries/Departments. The views of the

f e r t i l i z e r i n d u s t r y a n d t h e S t a t e

G o v e r n m e n t s / U n i o n t e r r i t o r i e s , a n d

economists/research institutes were also

obtained. After due examination of all these

views, a New Pricing Scheme (NPS) for urea

units for replacing the RPS was formulated

and notified on 30.1.2003. The new scheme

took effect from 1.4.2003. It aims at inducing

the urea units to achieve internationally

competitive levels of efficiency, besides

bringing in greater transparency and

simplification in subsidy administration.

6.2.5 New Pricing Scheme (NPS) for urea was

introduced 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

reimbursement is allowed in respect of

investment made by a unit for improvement in

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 scheme

that the concession rates during Stage-II shall

be adjusted for reduction in capital related

charges and enforcement of efficient energy

norms. Pre-set energy norms for urea units

during Stage-II of NPS have already been

notified and intimated to urea units.

Reduction in rates of concession during

Stage-II of NPS for urea units on account of

reduction in capital related charges have also

been notified and intimated to urea units.

6.3 PHASED DECONTROL OF UREA

DISTRIBUTION

6.3.1 As per the New Pricing Scheme for urea

units, it was also envisaged that decontrol of

urea distribution/movement will be carried out

in a phased manner. During Stage-I, i.e.

from 1.4.2003 to 31.3.2004, the allocation of

two year duration from 1st

April 2004 to urea under the Essential Commodities Act

31st

March, 2006. With the Stage-III of NPS

being implemented w.e.f. 1st

October, 2006,

the Stage-II of NPS stands extended upto 31st

September, 2006.

6.2.6 Under NPS, the existing urea units have been

divided into six groups based on vintage and

feedstock for determining the group based

concession. These groups are : Pre-1992

gas based units, post-1992 gas based units,

pre-1992 naphtha based units, post-1992

naphtha based units, fuel oil/low sulphur

heavy stock (FO/LSHS) based units and

mixed energy based units. The mixed energy

based group shall include such gas based

units that use alternative feedstock/fuel to the

extent of more than 25% as admissible on

1.4.2002.

6.2.7 Under NPS, escalation/de-escalation is given

in respect of variable cost related to changes

in the price of feedstock, fuel, purchased

1955 (ECA) was restricted up to 75% and

50% of installed capacity (as reassessed) of

each unit in Kharif 2003 and Rabi 2003-04,

respectively. It was further envisaged that

during Stage-II commencing from 1.4.2004,

urea distribution will be totally decontrolled

after evaluation of Stage-I and with the

concurrence of the Ministry of Agriculture.

6.3.2 The total decontrol of urea distribution was

deferred initially for a period of six months

w.e.f. 1.4.2004 i.e., up to Kharif 2004, which

has been subsequently deferred up to Rabi

2005-06 i.e., up to 31.3.2006. The existing

system of 50% ECA allocation and 50%

outside ECA allocation has been extended

upto 31-3-2010.

6.3.3 The pricing policy for urea units for Stage-III

of New Pricing Schemes (NPS) which is

effective from 1.10.2006 to 31.3.2010 has

been formulated keeping in view the

20 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

recommendations of the Working Group set

up under the Chairmanship of Dr. Y.K.

Alagh. The salient features of Stage-III

Policy which is aimed at promoting further

investment in the urea sector, are to

maximize urea production from the Urea

units including through conversion of non-

gas based Units to gas, incentivizing

additional urea production and encourage

investment in Joint Venture (JV) projects

abroad. It is also aimed at establishing a

more efficient urea distribution and

movement system in order to ensure

availability of urea in the remotest corners of

the country.

6.3.4 The Stage-III policy seeks to promote

usage of most efficient and comparatively

cheaper feed stock natural gas/LNG for

production of urea in the country. The policy

lays down a definite plan for conversion of

all non-gas based urea units to gas. At

present, there are 8 urea units (MFL,SPIC,

ZIL, MCFL, GNFC, NFL-Nangal, NFL-

Bhatinda, NFL-Panipat) in the country

which are based on naphtha or FO/LSHS as

feed stock. All these 8 units are required to

switch over to natural gas/LNG within a

period of next three years. Beyond this time

limit, the high cost urea produced by these

non-gas based units will not be entitled to

subsidy at the existing levels and it will be

restricted to import parity price of urea. The

units, which are unable to tie up gas will

have to explore alternative feedstocks like

Coal Bed Methane (CBM) and coal gas.

SFC has started using gas w.e.f.

22.9.2007.

6.3.5 The availability of gas is critical to the

growth of urea industry in the country.

Presently, the indigenous availability is not

sufficient to meet the demand of existing

gas based urea units in the country. To this

end, the Department of Fertilizers

constituted a Committee under the

chairmanship of Secretary(P&NG) with

S e c r e t a r y ( F e r t i l i z e r s ) , S e c r e t a r y

( E x p e n d i t u r e ) , S e c r e t a r y ( P l a n n i n g

Commission) as its members to deliberate

upon various issues relating to connectivity

and assured supply of gas to the fertilizer

sector. The Committee will also develop an

appropriate mechanism for fixing the price

of the gas in a transparent manner. It was

expected that the availability of gas in the

country will improve from 2008-09 onwards

and the new policy, taking into account the

above fact, has laid down specific timelines

for conversion of all non-gas based units in

the country to gas.

6.3.6 In order to incentivize conversion of non gas

based units to gas, the policy provides for a

regime where there will be no mopping up of

energy efficiency for a fixed period of five

years for naphtha based as well as

FO/LSHS based units. The policy also

recognizes the comparative higher cost of

conversion of FO/LSHS based units to gas

and provides for one time capital investment

assistance to these units for conversion to

gas during the next three years. A specific

policy to this effect has been announced by

the Government on 6th

March 2009..

6.3.7 The policy also lays down a formulation to

dis-incentivize high cost production from the

non-gas based units and to facilitate their

early conversion to gas. It is proposed that

these units may be allowed to produce

100% of capacity should they adhere to an

agreed timetable for conversion to Gas and

tie up requisite Gas/CBM/Coal gas. If they

do not, they will be given only 75% of the

fixed costs beyond 93% of capacity

utilization in the 1st

year (1.4.2007) and 50%

of the fixed cost beyond 93% capacity

utilization from 2nd

year (1.4.2008) onwards.

6.3.8 C o n s i d e r i n g t h e l i k e l y g r o w t h i n

consumption of urea in the years to come,

the policy seeks to encourage the existing

urea units to produce beyond 100% of their

installed capacities by introducing a system

of incentives for additional urea production

ANNUAL REPORT 21

subject to merit order procurement. The

policy of requiring prior Government

permission for additional urea production

has been dispensed with. All production

between 100% and 110% of the existing

reassessed capacity will be incentivized on

the existing net gain sharing formula

between the Government and the unit in the

ratio of 65:35 respectively with the proviso

that the total amount paid to the units after

including the component of variable cost will

be capped at the units own concession rate.

The units increasing production beyond

110% will be compensated at their

concession rate subject to the over all cap of

Import Parity Price (IPP). To the extent

Government does not require any quantities

o f a d d i t i o n a l p r o d u c t i o n , t h e u r e a

companies would be free to dispose of the

remaining quantities by way of export or

sale to complex manufacturers without any

permission. The policy also encourages

setting up of Joint Venture projects abroad

where gas is readily available at reasonable

p r i c e s . I t r e c o g n i z e s o u r h e a v y

dependence on imported raw materials/

intermediates and feedstock in the fertilizer

sector and to properly leverage this

position, the policy seeks to create

s p e c i a l i z e d a g e n c y t o c o o r d i n a t e

investments abroad in fertilizer sector.

6.3.9 The policy seeks to rationalize distribution

and movement of urea and the system of

freight reimbursement with the objective of

ensuring availability of urea in all parts of the

country. The Government will continue to

regulate movement of urea up to 50% of

production depending upon the exigency of

the situation. The State Governments will

be required to allocate the entire quantity of

planned urea arrivals including both

regulated and de-regulated urea in district-

wise, month-wise and supplier-wise format.

The units will be required to maintain a

district level stock point and the subsidy will

be paid only when the urea reaches the

district. The monitoring of movement and

distribution of urea throughout the country

up to the district level will be done by an On

line Web based monitoring system. To

facilitate movement of fertilizers to far flung

area, the reimbursement of freight will be

based on actual leads for rail and road

movement. The rail freight will be

reimbursed as per the actual expenditure

and the road freight will be escalated as per

composite road transport index every year.

One time enhancement of 33% will be

granted on the road component of primary

freight to offset the impact of Supreme Court

directive regarding maximum truck load

limit of 9 MT on road vehicles. The existing

special freight subsidy scheme will continue

for supply of urea to the North Eastern

States except Assam and Jammu &

Kashmir. In addition, the Department will

operate a buffer stock through the state

institutional agencies/fertilizer companies in

major urea consuming States up to a limit of

5% of the seasonal requirement.

6.3.10 The Stage-III of NPS seeks to carry on the

existing 6 group classification of urea

manufacturing units in the country with

updation of all costs upto 31st

March, 2003.

The respective pre-set energy consumption

norm of each urea units during Stage-II of

NPS or the actual energy consumption

achieved during the year 2003, whichever is

lower, will be recognized as the norm for

Stage-III of NPS. The policy also provides

for updation of costs on account of cost of

bags through 3 year moving weighted

average cost of bags to compensate for the

rise in prices for the last three years. It also

provides for payment of sales tax on input

and other taxes recognized under erstwhile

Retention Price Scheme, on actual basis.

6.3.11 NPS Stage-III seeks to take forward the

principles of uniformity and efficiency in

22 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

urea production as enunciated during Stage I

and II of NPS and also aims at bringing in

more transparency in distribution of fertilizers

across the country. It is expected that the

policy will encourage increase in indigenous

production from the existing urea units in the

country and facilitate early conversion of non-

gas based units to gas leading to substantial

savings in subsidy. It is also expected that

with the launch of Fertilizer Monitoring

System (FMS) to monitor movement of

fertilizers upto district level and the freight

rationalization proposed in the new policy, the

distribution of fertilizers in remote corners of

the country will improve considerably without

any complaints of shortages in future. The

Department of Fertilizers will continue its

endeavour to promote the growth of fertilizer

industry in the country and ensure adequate

availability of fertilizers to the farmers.

6.4 AMENDMENTS TO STAGE – III OF NEW

PRICING SCHEME (NPS)

6.4.1 The Stage-III of New Pricing Scheme (NPS)

is being implemented w.e.f. 1st

October, 2006

and will be effective till March, 2010. In the

Policy proposal approved by CCEA, it was

mentioned that some urea units such as

Nagarjuna Fertilizers & Chemicals Ltd.

(NFCL), Kakinada, Southern Petrochemicals

Industries Corporation Ltd. (SPIC), Tuticorin

etc. has represented that the implementation

of group based NPS in place of unit specific

cost plus Retention Price Scheme (RPS) has

resulted in certain under recoveries of their

individual costs of production. It was

proposed to take appropriate action in these

cases on merits in consultation with

Department of Expenditure (DoE).

6.4.2 Accordingly, after notification of NPS-III on

8th March, 2007, a number of units have

represented to Department of Fertilizers

indicating the under recoveries on account of

various provisions of the group based NPS.

The issues raised by the units have been

examined within the Department and these

can be divided into two categories. The first

issue relates to losses due to group

averaging, and the second issue relates to

increase in capacity utilization norms for NPS

Stage-III.

6.4.3 It was found that some of the companies are

losing upto 85% of their fixed cost due to the

group averaging principle followed under

N P S - I I I , m a k i n g t h e i r o p e r a t i o n s

unsustainable from day one. Thus, there was

a need to limit the reduction due to averaging

procedure for various units so as to ensure

sustainability of production while encouraging

efficiency. It has been, therefore, decided to

restrict the reduction in fixed costs of a unit

due to group averaging under NPS-III to 10%

of the total fixed cost of the unit, w.e.f 1st April

2009 onwards.

6.4.4 It was also found that for all the companies

the capacity utilization norms have been

increased by 3% from NPS-II stage to NPS-

III. However, for post-92 Naphtha based

group it has been increased by 8% on the

pretext that the units have converted to gas.

But since the cost of conversion is not borne

by GOI, an indiscriminate increase by 8% for

this group has put the units under this group at

a disadvantage. It was thus decided to take

capacity utilization for post 1992 naphtha

group at 95%, instead of earlier approved

98% under NPS-III, for calculation of notional

retention price of the units within the group, if

there has been no recognition of cost of

conversion under NPS-III.

6.5 UREA POLICY BEYOND NPS-III

6.5.1 The tenure of NPS Stage-III policy expired on

31st

March 2010. The provisions of the NPS-

III policy has since been extended

provisionally till further order. Now the policy

beyond NPS-III is under consideration of

ANNUAL REPORT 23

Government. The Group of Ministers (GoM)

constituted to review the fertilizer policy has

decided in its meeting held on 5th

January

2011 to constitute a Committee under the

Chairmanship of Dr. Saumitra Chaudhuri,

Member Planning Commission to examine

the proposal for introduction of NBS in urea,

including various options therefore, and make

suitable recommendations. The committee

has also to examine the issues relating

to investment policy and amendments

proposed therein, and make appropriate

recommendations.

6.5.2 The Committee constituted under the

Chairmanship of Dr. Saumitra Chaudhuri,

Member Planning Commission has submitted

its report on 26-04-2011 on the proposal for

Nutrient Based Subsidy in Urea sector. The

Group of Ministers, considered the report of

the Committee of Secretary in its meeting

held on 5th

August 2011 and directed that the

proposal on Nutrient Based Subsidy (NBS)

for Urea may be placed before CCEA along

with the proposal of Department of Fertilizers

and the views of Minister of Chemicals &

Fertilizers and sought directions of CCEA.

Draft Note for consideration of CCEA was

circulated on 25-11-2011 for Inter-Ministerial

comments. Final CCEA Note, incorporating

comments of all Ministries/Departments, is

being finalised.

6.6 MRP OF UREA

6.6.1 The MRP of urea since 2003 was Rs. 4830/-

per tonne. The MRP of urea has increased to

Rs. 5310/- per tonne w.e.f. 1st

April 2010. The

MRP fixed is exclusive of CST, Sales Tax and

Central Excise Duty. There has been no

further increase in MRP of urea.

6.7 PRICING POLICY FOR INVESTMENT IN

FERTILIZER SECTOR

UREA

6.7.1 A pricing policy was announced on 29.1.2004

for setting up new urea projects and

expansion of existing urea projects for

augmenting the domestic production capacity

of urea to meet the growing demand for

enhancing the agricultural production in the

country. The new policy aimed at enabling

the entrepreneurs to decide about their

investment plans in the fertilizer sector. The

new policy was expected to encourage

setting up of plants with international

efficiency standards for fresh investment in

new projects and expansion of existing units.

The policy was based on the principle of Long

Run Average Cost (LRAC).

6.7.2 The above policy was not successful in

attracting investment in this sector. The non-

availability of natural gas, which is the critical

feedstock for production of urea, has also

been one of the major constraints in further

addition of indigenous capacity for production

of urea. However with the projected

improved availability of gas from 2009

onwards, it is expected that investment in

fertilizer sector will also take place. The

Government has recently announced on 4th

September 2008, a new investment policy for

urea sector to attract the much required

investment in this sector. The policy is based

on IPP benchmark and has been finalized in

consultation with the industry.

6.7.3 The New Investment Policy aims at revamp,

expansion, revival of existing urea units and

setting up of Greenfield/ Brownfield projects.

The policy was notified keeping in view

adequate availability of gas at reasonable

prices for new investments, which may result

in bridging the gap between the consumption

and domestic consumption. The policy has to

lead to savings to the Government in the form

of availability of Urea at a price below IPP. The

salient features of the new investment policy

are as under :-

I. The policy is based on Import Parity Price

(IPP) benchmarked with suitable floor

24 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

and ceiling prices of USD 250/MT and VII. Allocation of Gas: Only non-APM gas

USD 425/MT respectively. will be considered for the new investment

in urea sector. II. Revamp project: Any improvement in

capacity of existing plants through

investment upto Rs. 1000 crore, in the

existing train of ammonia-urea production

will be treated as revamp of existing units.

The additional urea from the revamp of

existing units will be recognized at 85% of

IPP with the floor and ceiling price as

indicated above.

VIII. Coal gasification based Urea Projects:

The Coal gasification based urea projects

will also be treated on par with a revival or

a Greenfield project as the case may be.

In addition, any other incentives or tax

benefits as provided by Government for

encouraging coal gasification technology

will also be extended to these projects.

IX. Joint Ventures abroad: The Joint III. Expansion projects: Setting up of a Venture projects abroad in gas rich

IV.

new ammonia-urea plant (a separate new

ammonia-urea train) in the premises of

the existing fertilizer plants, utilizing some

of the common utilities will qualify for

being treated as expansion project. The

investment should exceed a minimum

limit of Rs.3000 crore. The urea from the

expansion of existing units will be

recognized at 90% of IPP, with the floor

and ceiling price as indicated above.

Revival/Brownfield projects: The urea

from the revived units of Hindustan

Fertilizer Corporation Limited(HFCL) and

Fertilizer Corporation of India Limited

(FCIL) will be recognized at 95% of IPP

countries are also proposed to be

e n c o u r a g e d t h r o u g h f i r m o ff t a k e

contracts with pricing decided on the

basis of prevailing market conditions and

in mutual consultation with the joint

venture company. However, the principle

for deciding upon the maximum price will

be the price achieved under Greenfield

projects or 95% of IPP as proposed for

revival projects (in absence of any

Greenfield projects) with a cap of USD

405 CIF India per MT and a floor of USD

225 CIF India per MT (inclusive of

handling and bagging costs)

X. Time period for proposed investment

with prescribed floor & ceiling price, if the policy: Only those revamp projects

revival of closed units takes placed in

public sector.

which start production of additional

capacities within four years of notification

of the new policy would qualify for the

V. Greenfield projects: The pricing of dispensation recommended above.

Greenfield projects will be decided based

on a bidding process which will be for a

discount over IPP, after firming up of the

location (States) of the proposed new

plants.

Similarly production from expansion and

revival (brownfield) units that come about

within five years of notification of the new

policy would qualify for dispensation

provided in the policy. If the production

does not come through within the

VI. Gas transportation charges: An stipulated time period, such brownfield

additional gas transportation cost will be

paid to units undertaking expansion and

revival on the basis of actuals (upto 5.2

Gcal per MT of urea) as decided by the

Regulator(Gas) subject to a maximum

ceiling of USD 25 per MT of urea.

projects will be treated similar to a

Greenfield projects wherein price will be

decided through limited bidding options.

The time period for setting up of new Joint

Ventures would also be five years under

the new investment policy.

ANNUAL REPORT 25

6.8 IMPACT OF INVESTMENT POLICY ON

FERTILIZER SECTOR 6.9 NUTRIENT BASED PRICING REGIME FOR

ALL SUBSIDIZED FERTILIZERS

6.8.1 The fertilizer Industry has responded 6.9.1 Keeping in view the interests of the farmers

positively towards the New Investment Policy

by initiating investment decision for revamp of and to promote balanced use of fertilizers, the

Department of Fertilizers has notified on 17th

existing capacities. The fertilizer units like June 2008 a nutrient based pricing regime for

IFFCO-Aonla – I & II, IFFCO-Phulpur – I & II, all subsidized fertilizers. It has been further

Chambal Fertilizers and Chemicals Limited decided to fix the farmgate price of nutrients

(CFCL) – Gadepan – I&II, Nagarjuna at the level of their existing price in straight

Fertilizers and Chemicals Limited (NFCL) – fertilizers viz. Urea, DAP, MOP and SSP. This

Kakinada – I & II and the unit of Tata will lead to significant reduction in existing

Chemicals Limited - Babrala have informed Maximum Retail Prices (MRPs) of complex

regarding availability of additional production

of urea after revamp. Further, RCF, Thal;

KRIBHCO- Hazira and NFL, Vijaipur have

undertaken revamp of their units. As regards

expansion projects, six companies viz.

IFFCO, KRIBHCO, Rashtriya Chemicals

a n d F e r t i l i z e r s L i m i t e d , I N D O - G U L F

Fertilizers Limited, TATA Chemicals Limited

and Chambal Fertilizers and Chemicals

Limited have proposed to undertake

expansion of their units. However, these

units have expressed concern regarding

pricing and firm availability of gas before

taking final investment decision to undertake

expansion of their existing units

6.8.2 The Group of Ministers(GoM) constituted to

review the fertilizer policy has decided in its

fertilizers. Under this regime, the farm gate

price of each nutrient will be uniform across

all subsidized fertilizers. The selling price of

subsidized fertilizers will be determined on

the basis of the nutrients contained therein

6.9.2 Under existing pricing regime, the price of

nutrients in complex fertilizers were higher

than the price of same nutrients in other

straight fertilizers like Urea, DAP, MOP and

SSP. This led to comparatively higher usage

of straight fertilizers vis-à-vis complex

fertilizers, which are agronomically better

fertilizer products. The nutrient based pricing

will lead to parity in price of complex fertilizers

with other straight fertilizers and, thus, is

expected to promote balanced fertilization by

encouraging usage of complex fertilizers.

meeting held on 5th

January 2011 to

6.9.3 POLICY FOR ENCOURAGING PRODUC- c o n s t i t u t e a C o m m i t t e e u n d e r t h e

Chairmanship of Dr. Saumitra Chaudhary,

Member Planning Commission to examine

the proposal for introduction of NBS in urea,

including various options therefore, and

make suitable recommendations. The

committee has also to examine the issues

r e l a t i n g t o i n v e s t m e n t p o l i c y a n d

amendments proposed therein, and make

appropriate recommendations. The report of

the Committee on Investment Policy in Urea

sector has been finalised and signed on 7th

January 2012. The report is being placed

before the GoM for directions. A proposal to

amend the New Investment policy is under

consideration of Government.

TION AND AVAILABILITY OF FORTIFIED

AND COATED FERTILIZERS IN THE

COUNTRY

Department of Fertilizers has notified on 2nd

June 2008 a policy for encouraging

production and availability of fortified and

coated fertilizers in the country. In terms of

this policy, the indigenous manufacturers/

producers of the subsidized fertilizers are

a l l o w e d t o p r o d u c e f o r t i f i e d / c o a t e d

subsidized fertilizers up to a maximum of 20%

of their total production of respective

subsidized fertilizers. The manufacturers/

producers are allowed to sell all the FCO

a p p r o v e d f o r t i f i e d / c o a t e d s u b s i d i z e d

26 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

fertilizers, except for Zincated Urea and

Boronated SSP at a price up to 5% above the

MRP of the subsidized fertilizer as indicated

in the table above. For Zincated Urea and

Boronated SSP, the manufacturers are

allowed to charge up to 10% above MRP of

Urea and SSP respectively. In January 2011,

report to Department of Fertilizers on

Finalizing Per KM Per Tonne Rate for

Transportation of Fertilizers by road. These

rates will be escalated by WPI (composite

road transport index) every year. As per the

recommendations made by the Tariff

Commission in their report, the Government

the ceiling of production of Neem Coated has issued a notification on 1st

September

urea which has been incorporated in

Schedule 1 of the Fertilizer Control Order,

1985 has been increased from the existing

limit of 20% to a maximum of 35% of their

total production, company wise of their

respective subsidized fertilizers.

6.9.4 P O L I C Y F O R U N I F O R M F R E I G H T

SUBSIDY ON ALL FERTILIZERS UNDER

THE FERTILIZER SUBSIDY REGIME

To ensure easy availability of fertilizers in all

parts of the country, the Department of

2011 notifying the district wise revised road

transportation rates for UREA dispatches by

all the units with effect from 1st

April 2008.

The normative PTPK rate is to be annually

e s c a l a t e d / d e - e s c a l a t e d b a s e d o n a

composite road transport index as per NPS-

III policy dated 8th

March 2007. In case of

Jammu and Kashmir the rates recommended

by Tariff Commission for Jammu region (Rs

5.29 per km per metric tonne) will be treated

for all the districts in Jammu as well as

Srinagar in J&K. The ad hoc PTPK

Fertilizers has notified on 17th

July 2008 a transportation rates for Himachal Pradesh

uniform freight subsidy regime for all

subsidized fertilizers, wherein freight

subsidy will be paid separately on receipt of

all subsidized fertilizers in the districts/blocks.

The freight subsidy will constitute of two

components, namely, rail freight and road

freight. The rail freight will be paid on actual,

and the road freight will be paid on a

normative average district lead (average of

the actual leads of block headquarters from

the nearest rail rake point) and a normative

per KM rate.

6.9.5 ROAD FREIGHT RATES FOR UREA

MANUFACTURING/IMPORTING UNITS

U N D E R T H E U N I F O R M F R E I G H T

SUBSIDY SCHEME

It was decided in the policy for Stage-III of

New Pricing Scheme for urea manufacturing

units notified on 8th

March 2007 that “Tariff

Commission will be requested to fix Per

Tonne Per Km (PTPK) base rates for road

transportation in the case of secondary

movement of fertilizers from unloading Rake

Point to retail points”. The Tariff Commission

has conducted the study and submitted the

Rs. 4.13 and North-Eastern States ( i.e. Rs.

2.22 PTPK for Arunachal Pradesh, Rs. 4.38

PTPK for Manipur, Rs. 6.39 PTPK for

Meghalaya, Rs. 3.44 PTPK for Mizoram, Rs.

3.50 PTPK for Nagaland, Rs.7.07 PTPK for

Sikkim and Rs. 4.27 for Tripura) will continue

to be as notified earlier.

6.9.6 POLICY FOR CONVERSION OF EXISTING

NON-GAS BASED UREA UNITS TO

NATURAL GAS/LNG FOR FEEDSTOCK/

FUEL

At present there are 8 units in this country

which is based on Naphtha (4) and FOLHS

(4) as feedstock/fuel. Under New Pricing

Policy Stage-III, specific time schedule of

three years has been laid down for

conversion of the non gas based units to gas.

To incentivise conversion of non gas based

units to gas, it has been decided that units will

be allowed to keep the savings on account of

improved energy efficiency after conversion

for first five year of commercial production.

Further to compensate for the higher cost of

conversion of FO/LHS based units to gas,

ANNUAL REPORT 27

the scheme for capital assistance to these

units has also been agreed to under New

Pricing Scheme Stage-III.

The 4 FO/LHS based units have already

started work on conversion of units to gas.

The feasibility report has been prepared for

all 4 units and the 'in principle' approval of

Planning Commission has also been

provided for all the four units.

Assured availability of gas is main constraint

for expediting conversion process. The units

are in regular touch with gas suppliers for

confirm commitment towards supply of gas,

after which conversion process will be

expedited. To encourage the conversion of

existing Fuel Oil/Low Sulphur Heavy Stock

(FO/LSHS) based urea units to gas. The

Department of Fertilizers has notified on 6th

March, 2009, the policy for conversion and

restart of existing urea units to increase

indigenous production and also efficiency in

production of fertilizers. The policy provides

f o r a S p e c i a l F i x e d C o s t t o w a r d s

reimbursement of the cost of conversion to

the urea unit after its conversion to gas is

6.9.7 RECOVERY OF THE INCIDENCE OF NON-

REIMBURSABLE INPUT TAXATION

LEVIED BY STATE GOVERNMENTS FROM

TIME TO TIME IN SUBSIDY REGIME

Under the New Pricing Scheme (NPS) for

urea policy, additional VAT is not considered

for reimbursement. Therefore there is no

provision for reimbursement of additional VAT

levied by State Government in subsidy.

Department of Fertilizers has submitted a

p r o p o s a l o n 11 t h

J a n u a r y 2 0 11 f o r

consideration of the Cabinet Committee on

Economic Affairs (CCEA) to resolve the long

pending issue of non-reimbursable input

taxation levied by the State Government. It

has been proposed to allow the companies to

recover the incidence of non-reimbursable

State levies under subsidy regime, from the

sale of subsidized Urea within that State in

the form of additional cost over and above the

MRP. The CCEA in its meeting held on 03-

03-2011 has approved the above proposal

projects in the CCEA Note. Department of

Fertilizers has implemented the decision of

CCEA and notification issued vide letter No.

completed. The conversion of these units will 12014/4/2009-FPP, dated 29th

March 2011

lead to increase in efficiency of urea and dated 31st

March 2011. Under this production in the country and also add to

usage of natural gas, which is the most

efficient and cleaner fuel/feedstock for

p r o d u c t i o n o f u r e a i n t h e c o u n t r y.

The policy also approved a special

dispensation under New Pricing Scheme,

Stage-III, to enable restart of production of

urea from the Trombay-V unit of M/s

Rashtriya Chemical Limited which has

remained closed for last more than 4 years.

The restart of RCF Trombay will add to

indigenous production of urea and reduce

import dependence towards meeting the

requirement of urea in the country. Besides,

the policy has provision to restart of existing

Naphtha based units which are under

shutdown, on naphtha, provided they convert

to gas before March, 2010, as is necessary

for other operational Naphtha based units.

scheme, the urea units are allowed to recover

additional incidence of non-reimbursable

taxes on the urea sold in the States levying

additional VAT by levying additional MRP in

these States and deposit the same with

Government. Thereafter, the same will be

redistributed on quarterly basis to the

concerned urea producing units. As regards

the impact of non-reimbursed additional

taxation for the period from 1-10-2006 to 31-

03-2011, the fertilizer companies have to

intimate to Department of Fertilizers, the

amount of ACTN (Additional Cost due to Non-

Recognized input taxation) due to additional

VAT, levied by the State Governments for

urea sold in the States from 1-10-2006 to 31-

03-2011. The Government will take up the

matter with concerned State Governments

for reimbursement.

28 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

6.10 CONCESSION SCHEME AND NUTRIENT

BASED SUBSIDY POLICY (NBS) FOR

D E C O N T R O L L E D P H O S P H AT I C &

POTASSIC (P&K) FERTILIZERS

6.10.1. C O N C E S S I O N S C H E M E F O R T H E

D E C O N T R O L L E D P H O S P H AT I C &

POTASSIC FERTILIZERS:

Government of India decontrolled Phosphatic

and Potassic (P&K) fertilizers with effect from

25th

August 1992 on the recommendations of

Joint Parliamentary Committee. Consequent

upon the decontrol, the prices of the P&K

fertilizers registered a sharp increase in the

market, which exercised an adverse impact

on the demand and consumption of the same.

It led to an imbalance in the usage of the

nutrients of N, P & K (Nitrogen, Phosphate

and Potash) and the productivity of the soil.

Keeping in view the adverse impact of the

decontrol of the P&K fertilizers, Department

of Agriculture & Cooperation introduced

Concession Scheme for decontrolled

Phosphatic & Potassic (P&K) fertilizers on

ad-hoc basis w.e.f. 1.10.1992, which has

been allowed to continue by the Government

of India upto 31.3.2010 with changed

parameters from time to time.

T h e b a s i c p u r p o s e / o b j e c t i v e o f t h e

Concession Scheme for P&K fertilizers has

been to provide P&K fertilizers to the farmers

at affordable prices so as to increase the food

productivity in the country through balanced

use of fertilizers. The concession scheme

was also aimed at ensuring reasonable rate

of return on the investments made by the

entrepreneurs in the fertilizer sector.

Initially, the ad-hoc Concession Scheme was

applicable on DAP, MOP, NPK Complex

fertilizers. This scheme was also extended to

SSP from 1993-94. Concession was

disbursed to the manufacturers/importers by

the State Governments during 1992-93 and

1993-94 based on the grants provided by

Department of Agriculture & Cooperation.

Subsequently, DAC started releasing

payment of concession to the fertilizer

companies based on the certificate of sales

issued by the State Governments. During

1997-98, Department of Agriculture &

Cooperation also started indicating an all

India uniform Maximum Retail Price (MRP)

for DAP/NPK/MOP. The responsibility of

indicating MRP in respect of SSP rested with

the State Governments. The Special Freight

Subsidy Reimbursement Scheme was also

introduced in 1997 for supply of fertilizers in

the difficult areas of J&K and North-eastern

States, which continued upto 31.3.2008.

Based on the cost price study of DAP and

MOP conducted by Bureau of Industrial

Costs & Prices (BICP - now called Tariff

Commission), Department of Agriculture &

Cooperation announced rates of concession

based on the cost plus approach on quarterly

basis w.e.f. 1.4.1999. The total delivered cost

of fertilizers being invariably higher than the

MRP indicated by the Government, the

difference in the delivered price of fertilizers

at the farm gate and the MRP was

compensated by the Government as subsidy

to the manufacturers/importers. The

administration of the scheme was transferred

f r o m D e p a r t m e n t o f A g r i c u l t u r e &

Cooperation to Department of Fertilizers

w. e . f . 1 . 1 0 . 2 0 0 0 . T h e G o v e r n m e n t

introduced a new methodology for working

out subsidy to complex fertilizers w.e.f.

1.4.2002 based on the recommendations of

the Tariff Commission. The complex

manufacturers were divided into groups

based on feedstock for sourcing Nitrogen,

such as gas, naphtha, imported ammonia.

With the passage of time, the structure of

DAP industry also changed as some of the

new DAP manufacturing plants were

established using the Rock Phosphate for

manufacturing indigenous Phosphoric

acid/DAP. Accordingly, the Tariff Commission

made a fresh Cost Price Study and submitted

its report in February 2003. Payment of

ANNUAL REPORT 29

concession to the DAP manufacturing units

from 2003-04 to 2007-08 was made as per

two groups depending upon the source of the

raw materials (Rock Phosphate/Phosphoric

acid). Based on the decisions of the

Government in 2004-05, Department of

Fertilizers framed a proposal suggesting

methodology to link phosphoric acid price

with 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. The

recommendations of the Expert Group were

considered by an Inter-Ministerial Group

(IMG). Tariff Commission conducted fresh

cost price study of DAP/MOP and NPK

complexes and submitted its report in

December 2007. Based on the examination

of the Tariff Commission Report and the long-

term approach suggested by the Expert

Group under the Chairmanship of Prof. Abhijit

Sen, the Government approved the

Concession Scheme with effect from

1.4.2008 for DAP/MOP/NPK Complexes

/MAP, which continued upto 31.3.2010 with

certain modifications. The final rates of

concession were worked out on monthly

basis. Concession for indigenous DAP was

the same as that of imported DAP (on the

basis of import parity price). Concession on

complex fertilizers was based on the

methodology recommended by Tariff

Commission with certain modifications. The

NPK complex industry was divided into 4

groups, depending upon the source of

Nitrogen, vis-à-vis, Group-I (Natural Gas),

Group-II (naphtha), Group-III (imported Urea-

ammonia mixture) and Group-IV (imported

Ammonia). A separate cost of 'S' for Sulphur

c o n t a i n i n g c o m p l e x f e r t i l i z e r s w a s

recognized w.e.f. 1.4.2008.

The input/fertilizer prices for Concession

Scheme ware derived on the basis of an

outlier methodology. The Buffer Stocking

Scheme was allowed to continue with 3.5

LMTs for DAP and 1 LMTs for MOP as buffer.

The MRPs of the P&K fertilizers, which had

been indicated by the Government/State

Government, had been constant since 2002

till 31.3.2010. The MRPs of the NPK

complexes were reduced w.e.f. 18.6.2008

which was based on nutrient content. In order

to enhance the basket of fertilizers in the

Concession Scheme, Mono-Ammonium

Phosphate (MAP) was included into the

Concession Scheme w.e.f. 1.4.2007, Triple

Super Phosphate (TSP) was inducted into

the Concession Scheme w.e.f. 1.4.2008 and

Ammonium Sulphate (AS) manufactured by

M/s FACT and M/s GSFC was inducted w.e.f.

1.7.2008.

6.10.2 CONCESSION SCHEME FOR SINGLE

SUPER PHOSPHATE (SSP)

SSP, a popular Phosphatic fertilizers, is a

source of not only phosphate and sulphur but

also calcium. SSP contains 16% P2O5, 11%

S and 16% Ca. SSP is agronomically suitable

for dry land oil seeds crop. After decontrol of

P&K fertilizers, Concession Scheme for SSP

was introduced w.e.f. 1993-94, which

continued on ad-hoc basis for concession

upto 30.4.2008.

Based on the report of the Cost Accounts

Branch (CAB) 2004, the Government vide its

notification dated 25.8.2008 revised the

Concession Scheme for SSP w.e.f. 1.5.2008,

which was continued upto 30.9.2009. As per

this policy, Department of Fertilizers

announced All India MRP at Rs. 3400 PMT in

place of the earlier system of indicating MRP

by each State. As per the policy-dated

25.8.2008, the concession rates were

announced month-wise separately for SSP

produced on the use of imported Rock

Phosphate and on indigenous Rock

Phosphate. The Concession rate of SSP was

escalated/de-escalated based on the rise/fall

of the prices of the raw materials of Rock

30 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Phosphate, Sulphur and also the exchange

rate. The rates of concession for SSP from

May 2008 to October 2009 were as under:

Month/year Rates of Concession based on Imported Rock Phosphate (Rs. PMT)

Rates of Concession based on Indigenous Rock Phosphate (Rs. PMT)

May, 2008 6406 4587 June, 2008 8942 5383 July, 2008 9160 5674 August, 2008 10391 6776 September, 2008 11661 6990 October, 2008 13003 5823 November,2008 7914 3070 December, 2008 8965 2012 January, 2009 8075 1967 February, 2009 7503 1961 March, 2009 5870 1944 April, 2009 2927 1873 May, 2009 2709 2006 June, 2009 2453 1982 July, 2009 2510 1986 August 2009 1951 2331 September 2009 2251 2295

Then, DOF announced further revised policy

on 13.8.2009 w.e.f. 1.10.2009, which

continued upto 30.4.2010. As per this policy,

the Government decided to leave the selling

price of SSP open w.e.f. 1.10.2009 instead of

the earlier MRP of Rs. 3400 PMT on all India

basis. The Government provided ad-hoc

concession for an amount of Rs. 2000 PMT

for powdered, granulated and boronated

SSP. As per revised policy dated 13.8.2009,

the manufacturers were required to produce

50% of the annual installed capacity or

40,000 Mts per annum during this period in

order to be eligible for subsidy.

6.10.3 NUTRIENT BASED SUBSIDY POLICY FOR

D E C O N T R O L L E D P H O S P H AT I C &

P O T A S S I C ( P & K ) F E R T I L I Z E R S

INCLUDING SSP

(A) During the implementation of Concession Scheme upto 31.3.2010, it has been experienced that no investment has taken place in last decade, the subsidy outgo

increased exponentially by 530% during 2004 to 2009 with about 90% of the increase due to rise in the international prices of fertilizers & its inputs and constant MPR of fertilizers from the year 2002 onwards, Agricultural productivity did not increase commensurately with the subsidy bill. The marginal response of agricultural productivity to additional fertilizer usage in the country has fallen sharply, leading to near stagnation in agricultural productivity and consequently agricultural production. The unbalanced NPK application, rising multi-nutrient deficiency and lack of application of organic manures leading to reduction in carbon content of the soil, was attributed to the stagnating agricultural productivity. The innovation in fertilizer sector had also suffered, as very few products are introduced by fertilizer companies, since they get outpriced by subsidized fertilizers. The industry has no incentive to focus on farmers leading to poor farm extension services, which were necessary to educate farmers about the modern fertilizer application techniques, soil health and promote soil test based application of soil and crop specific fertilizers.

To consider all the issues relating to agriculture productivity, balanced fertilization and growth of indigenous fertilizer industry, and to overcome the deficiency of concession scheme, a Group of Ministers (GoM) was c o n s t i t u t e d w h i c h r e c o m m e n d e d f o r introduction of Nutrient Based Subsidy (NBS) scheme which to be based on the contents of the nutrients in the subsidized fertilizers. The Hon'ble Finance Minister in its Budget Speech 2009 announced for introduction of Nutrient Based Subsidy Policy for Phosphatic & Potassic fertilizers with the objective of ensuring Nation's food security, improving agricultural productivity and ensuring the balanced application of fertilizers. The Government introduced the Nutrient Based Subsidy (NBS) Policy w.e.f. 1.4.2010 in continuation of the erstwhile Concession Scheme for decontrolled P & K fertilizers (w.e.f. 1.5.2010 for SSP). The details of Nutrient Based Subsidy Policy for the year 2010-11 and 2011-12 are as under:

ANNUAL REPORT 31

(I) NBS is applicable for Di-Ammonium

Phosphate (DAP, 18-46-0), Muriate of

P o t a s h ( M O P ) , M o n o A m m o n i u m

Phosphate (MAP, 11-52-0), Triple Super

Phosphate (TSP, 0-46-0), 12 grades of

complex fertilizers and Ammonium

Sulphate (AS - (Caprolactum grade by

GSFC and FACT), which were covered

under the earlier Concession Scheme for

Phosphatic and Potassic (P&K) fertilizers

up to 31st

March 2010 and Single Super

Phosphate (SSP). Primary nutrients,

namely Nitrogen 'N', Phosphate 'P' and

Potash 'K' and nutrient Sulphur 'S'

contained in the fertilizers mentioned

above are eligible for NBS. At present, 25

grades of P&K fertilizers are covered

under the NBS scheme. List of these

fertilizers is at para (C) below.

(ii) Any variant of the fertilizers mentioned

above with secondary and micronutrients

(except Sulphur 'S'), as provided for

under FCO, is also eligible for subsidy.

The secondary and micro-nutrients

(except 'S') in such fertilizers attracts a

separate per tonne subsidy to encourage

their application along with primary

nutrients.

(iii) An Inter-Ministerial Committee (IMC) has b e e n c o n s t i t u t e d w i t h S e c r e t a r y (Fertilizers) as Chairperson and Joint Secretary level representatives of Department of Agriculture & Cooperation (DAC), Department of Expenditure (DOE), Planning Commission and Department of Agricultural Research and Education (DARE). This Committee recommends per nutrient subsidy for 'N', 'P', 'K' and 'S' before the start of the financial year for decision by the Government (Department of Fertilizers). The IMC also recommends a per tonne additional subsidy on fortified subsidized fertilizers carrying secondary (other than 'S') and micro- nutrients. The Committee considers and recommends inclusion of new fertilizers under the subsidy regime based on application of manufacturers/ importers and its need appraisal by the

Indian Council for Agricultural Research (ICAR), for decision by the Government.

(iv) As per the Government decision, NBS rates are to be announced on annual basis on each nutrient namely, 'N', 'P', 'K' and 'S' based on the recommendation of IMC.

(v) Distribution and movement of fertilizers along with import of finished fertilizers, fertilizer inputs and production by indigenous units continues to be monitored through the online web based “Fertilizer Monitoring System (FMS)” as b e i n g d o n e u n d e r t h e o u t g o i n g Concession Scheme for P&K fertilizers.

(vi) 20% of the price decontrolled fertilizers produced/imported in India is now in the movement control under the Essential C o m m o d i t i e s A c t 1 9 5 5 ( E C A ) . Department of Fertilizers will regulate the movement of these fertilizers to bridge the supplies in under-served areas.

(vii) In addition to NBS, freight for the movement and distribution of the decontrolled fertilizers by rail and road is being provided to enable wider availability of fertilizers in the country.

(viii) Import of all the subsidized P&K fertilizers, including complex fertilizers have been placed under Open General License (OGL). Earlier, no concession was available for imported complex fertilizers. Now, NBS is available for imported complex fertilizers also. However, in case of Ammonium Sulphate (AS), as NBS is applicable only if it is produced by M/s FACT and M/s GSFC.

(ix) Though the market price of subsidized

fertilizers, except Urea, is determined

based on demand-supply balance, the

fertilizer companies are required to print

Maximum Retail Price (MRP) along with

applicable subsidy on the fertilizer bags

clearly. Any sale above the printed net

MRP is punishable under the Essential

Commodities (EC) Act.

32 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

NBS rates (Rs. per MT)

Sl. No.

Fertilizer Grades(FG) (N P K S nutrient)

2010-11

2011-12

1st Apr to 31st Dec 2010

1st Jan to 31st Mar 2011

FG already under CS carried under NBS w.e.f. 1.4.2010 1. DAP (18-46-0-0) 16268 15968 19763

2. MAP (11-52-0-0) (w.e.f. 1.4.2007) 16219 15897 19803

3. TSP (0-46-0-0 (w.e.f. 1.4.2008) 12087 11787 14875

4. MOP (0-0-60-0) 14692 14392 16054 5. SSP (0-16-0-11) 4400 4296+200 5359 6. 16-20-0-13 9203 9073 11030 7. 20-20-0-13 10133 10002 12116 8. 20-20-0-0 9901 9770 11898 9. 23-23-0-0 11386 11236 13686 10. 28-28-0-0 13861 11678 16657 11. 10-26-26-0 15521 15222 18080 12. 12-32-16-0 15114 14825 17887 13. 14-28-14-0 14037 13785 16602 14. 14-35-14-0 15877 15578 18866 15. 15-15-15-0 11099 10926 12937 16. 17-17-17-0 12578 12383 14662 17. 19-19-19-0 14058 13839 16387

18.

Ammonium Sulphate (20.6-0-0-23) (w.e.f. 1.7.2008)

5195

5195

5979

New fertilizers included under NBS after 1.4.2010

19. 16-16-16-0 (w.e.f. 1.7.2010) 11838 11654 13800

20. 15-15-15-9 (w.e.f. 1.10.2010) 11259 11086 13088

21. 24-24-0-0 (w.e.f. 1.10.2010) 11881 11724 14278

22. DAP Lite(16-44-0-0) (w.e.f. 1.2. 2011) ------- 14991 18573

23.

DAP Lite Grade (II) (14-46-0-0) (for one year w.e.f.. 30.8.2011 to 30.8.2012)

-------

-------

18677

24.

MAP Lite (11-44-0-0) (for one year w.e.f.. 30.8.2011 to 30.8.2012

-----

------

17276

25.

13-33-0-6 (for one year w.e.f.. 30.8.2011 to 30.8.2012)

-----

-------

14302

(x) Manufacturers of customized fertilizers

and mixture fertilizers are eligible to

source subsidized fertilizers from the

manufacturers/ importers after their

receipt in the districts as inputs for

manufacturing customized fertilizers and

mixture fertilizers for agricultural purpose.

There is no separate subsidy on sale of

customized fertilizers and mixture

fertilizers.

(xi) A separate additional subsidy is provided

t o t h e i n d i g e n o u s m a n u f a c t u r e r s

producing complex fertilizers using

Naphtha based captive Ammonia to

compensate for the higher cost of

production of 'N'. However, this will be for

a maximum period of two years during

which the units will have to convert to gas

or use imported Ammonia. The quantum

of additional subsidy will be finalized by

Department of Fertilizers in consultation

w i t h D O E , b a s e d o n s t u d y a n d

r e c o m m e n d a t i o n s b y t h e Ta r i f f

Commission.

(xii) The NBS is being released through the

industry during the first phase. The

payment of NBS to the manufacturers

/ i m p o r t e r s o f D A P / M O P / C o m p l e x

Fertilizers/ MAP/TSP, SSP and AS is

released as per the procedure notified by

the Department.

NBS rates (Rs. per Kg) Nutrients 1st Apr -

31st Dec

2010 *

1st Jan-

31st Mar

2011**

2011-12

„N‟ (Nitrogen) 23.227 23.227 27.153 „P‟ Phosphate) 26.276 25.624 32.338 „K‟ (Potash) 24.487 23.987 26.756 „S‟ (Sulphur) 1.784 1.784 1.677

* Including Rs. 300/- per MT for secondary freight from rake point to retail points. ** Excluding the secondary freight of Rs. 300/- PMT, which is being paid separately on per

Ton per KM basis.

(C) The Per MT Nutrient Based Subsidy

during 2010-11 and 2011-12 is as follows:

(B) Nutrient Based Subsidy Per Kilogram of

Nutrients

Based on the recommendations of the Inter

Ministerial Committee constituted under the

N u tri e n t Ba se d Su b si d y Po l i cy, th e

Government has allowed the per Kg NBS for

'N', 'P', 'K' & 'S' (Nitrogen, Phosphate, Potash

and Sulphur) and the amount of subsidy per

MT on the Phosphatic & Potassic fertilizers

for 2010-11 and 2011-12 is as follows:

ANNUAL REPORT 33

(D) Subsidy for fortified fertilizers

Per MT additional subsidy for fortified

fertilizers with secondary and micro-nutrients

as per FCO has also been allowed by

Department during 2010-11 and 2011-12

under NBS as follows:

Sl. No.

Nutrients for fortification as per FCO

Additional subsidy per MT of fortified fertilizers (in Rs. PMT)

1. Boron „B‟ 300

2. Zinc „Zn‟ 500

(E) Department of Fertilizers has also provided the

following amount of separate additional subsidy

to the indigenous manufacturers producing

complex fertilizers using Naphtha/Fuel Oil based

captive Ammonia to compensate for their higher

cost of production of 'N' subject to final

recommendation of the Tariff Commission. This

compensation is allowed for a maximum period of

two years (w.e.f. 1.4.2010 to 31.3.2012) during

which the units will have to convert to gas or use

imported Ammonia.

Name of the company

Grades of Fertilizers

Amount (Rs. PMT) of additional compensation (Provisional)

FACT(Cochin)

20-20-0-13 (APS) (Udyogmandal and Cochin)

3121

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

3658

MFL, Manali 20-20-0-13 (APS) 5434 17-17-17-0 4640

GNVFC, Bharuch

20-20-0-0(ANP) 2534

(F) Procedure for Payment of subsidy under

NBS

Department of Fertilizers releases 85% (90%

with Bank Guarantee) 'On Account' payment

o f s u b s i d y m o n t h - w i s e t o t h e

manufacturers/importers of P&K fertilizers

(SSP) based on receipt of fertilizers in the

d i s t r i c t s / S t a t e s . T h e m a n u f a c t u r e r s / I

mporters claim the 'On Account' payment in

prescribed Proforma 'A' duly certified by the

authorized signatory as well as the statutory

auditor of the company. The balance

payment of subsidy is also claimed by the

fertilizer companies based on information in

prescribed Proforma 'D' duly certified by the

authorized signatory as well as the statutory

auditor of the company. The State

Governments are required to submit

certificate to DOF in receipt of the fertilizers in

prescribed Proforma 'B'. The payment of

subsidy to SSP is released on sales basis.

Accordingly, the eligible units are allowed to

claim 85% 'On Account' payment of subsidy

based on the information in respect of sale of

SSP duly certified by the authorized

signatory as well as the statutory auditor of

the company. The balance payment is

released by DOF based on the certification of

sales issued by the State Governments in

prescribed Proforma 'B'. At present, 46

manufacturers/importers of P&K fertilizers

and 84 SSP manufacturers are covered

under the Nutrient Based Subsidy Policy.

(G) Freight subsidy Policy for distribution/

movement of fertilizers

With effect from 1.4.2008, Uniform Freight

Policy (UFP) for all subsidized fertilizes was

announced by the Department on 17.7.2008.

As per this policy, freight for distribution of

P&K fertilizers (except SSP) became

reimbursable on the basis of actual Rail

Freight as per Railway Receipt for Rail

Movement (Primary Movement) and on the

basis of average district lead (average leads

from the nearest rake point to block

headquarters) and provisional per KM per

MT road movement (secondary movement)

from the nearest rake point to the various

retail points. For direct road movement from

manufacturing units/ports to retail points,

freight was reimbursable on the basis of

provisional per KM per MT rate.

The UFP for P&K fertilizers (except SSP)

announced by the Department was

34 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

applicable from 1.4.2008 to 31.3.2010. As

per this policy, the secondary fright to P&K

fertilizers (except SSP) was given as per UFP

as applicable to Urea.

W.e.f. 1.4.2010 to 31.12.2010, UFP

applicable upto 31.3.2010 was done away

with for P&K fertilizers while it continued for

Urea. Instead, freight subsidy on subsidized

fertilizers (except SSP) was restricted to the

rail freight. The road freight was assumed to

be part of the fixed subsidy and the retail

prices. Accordingly, the road freight was

merged in subsidy by adding lump sum Rs.

300 per MT in the computation of subsidy

rates of DAP and MOP. The freight subsidy

on P&K fertilizers (except SSP) was

announced on 19.4.2010 according to which

freight subsidy on P&K fertilizers (except

SSP) for rail movement would be as per

actual expenditure as per Railway Receipt

and for direct road movement, it would be

subject to actual expenditure or equivalent

rail freight, whichever is lower. For the

purpose of admissibility of equivalent rail

freight for direct road movement, the

following rates were applicable:

Movement(K.M.) Rates Rs. per MT

Upto 100 108

101-200 183

201-300 256

301-400 327

401-500 400

W.e.f. 1.1.2011, freight subsidy for P&K

fertilizers (except SSP) was revised as

under:

(a) Freight subsidy for rail movement would be

paid as per actual claim;

(b) Secondary freight for P&K fertilizers (except

SSP) will be paid as per UFP as applicable for

Urea;

(c) Freight for direct movement would be subject

to lower of actual expenditure and equivalent

rail freight. Direct road movement will be

allowed to a maximum distance of 500 KM.

for the purpose of admissibility of equivalent

rail freight for direct road movement the

above mentioned slabs were applicable.

(H) Impact of Nutrient Based Subsidy

(i) Maximum Retail Price (MRP) of fertilizers

under Nutrient Based Subsidy Policy

Prior to 1.4.2010, i.e., before the introduction

of NBS Policy, the MRPs of the P&K fertilizers

were fixed by the Government of India at

below the actual cost of the P&K fertilizers

and the difference between the actual cost

and the MRPs was reimbursed by the

Government to the manufacturers/importers

in the form of subsidy. Under the NBS Policy

w.e.f. 1.4.2010, the MRPs of the P&K

fertilizers have been left open and the

manufacturers/importers/marketers are

allowed to fix the MRP of P&K fertilizers at

reasonable level. As our country is fully

dependent on imports for Potassic (K)

fertilizers and to the extent of 90% in

Phosphatic (P) fertilizers, any rise or fall in

international prices of P&K fertilizers and

fertilizer inputs has direct bearing on the

prices of fertilizers.

D u r i n g t h e f i r s t y e a r ( 2 0 1 0 - 11 ) o f

implementation of NBS policy, the MRP of

P&K fertilizers was registered an increase of

Rs. 30 per bag( 50Kg) . The MRP of SSP was

reduced by Rs. 70 per bag. In the year 2011-

12, due to the increase in the international

prices of the finished/ intermediate/raw

materials of P&K fertilizers, the MPRs of P&K

fertilizer has registered sharp increase due to

which the farmers may not be able to avail the

benefit of the price which was enjoyed by

them earlier under the concession scheme,

as the increase in international prices was

earlier absorbed by the Government.

However, the farmers are still paying

approximately 50% of the delivered cost of

the P&K fertilizers and the rest of the cost is

ANNUAL REPORT 35

Fertilizer grades (N-P-K-S nutrient)

Included in NBS with effect from

Reasons for inclusion

Inclusion of new fertilizers under the NBS were based on the principle of diversification of sources of nutrients particularly to reduce dependence on DAP and other such fertilizers as main source of „P‟. Inclusion of these fertilizers is expected to bridge the gap between requirement and availability of P&K fertilizers.

1 16-16-16-0 1.7.2010

2 24-24-0-0 1.10.2010

3 15-15-15-9 1.10.2010

4 DAP Lite (16-44-0-0)

1.2.2011

5 DAP Lite grade-II (14-46-0-0)

30.8.2011 (valid for one year)

6 MAP Lite (11-44-0-0) -do-

7 13-33-0-6 -do-

borne by the Government of India in the form

of subsidy.

(ii) Inclusion of new fertilizers under the

NBS Policy

In the initial year of implementation of NBS

Policy (2010-11), there were 18 grades of

fertilizers under the NBS policy. Thereafter,

with the objective of providing a variety of

subsidized fertilizers to the farmers

depending upon the requirement of the soil

and crops, the Government has included the

following 7 new grades of NPKS complex

fertilizers under the NBS regime.

It is expected that the farmers shall be able to

purchase the desired quantity of fertilizers

and may choose the fertilizers of his choice

depending upon the soil specific/crop

specific/season specific requirement.

6.10.4 SUBSIDY RELEASED

The amount of subsidy provided by the

Government during 2001-02 was Rs. 12695.02

crore, which has increased upto Rs. 99494.71

crore in 2008-09. It was decreased to Rs.

65836.68 crore during 2010-11. Actual

expenditure on subsidy , as on 28.2.2012, is Rs

66060.82 crore. The budget estimate for

fertilizer subsidy for 2012-13 is Rs. 65592.13

crore. The statement showing subsidy released

by the DOF on Urea and P&K fertilizer is at

Annexure-X.

6.10.5 C O S T P R I C E S T U D Y B Y TA R I F F COMMISSION

In order to update/finalize provisional rates of

subsidy for Ammonium Sulphate and

Naphtha based NPK complex fertilizer, Tariff

Commission has been requested to

undertake Cost Price Study and give its

recommendations. The report of the Tariff

Commission on the above issues has been

r e c e i v e d a n d t h e s a m e i s u n d e r

consideration in the Department.

6.10.6 QUALITY OF FERTILIZERS

Government of India has declared fertilizer as

an essential commodity under the Essential

Commodities Act, 1955 (ECA) and has

notified Fertilizer Control Order, 1985 (FCO)

under this Act. Accordingly, it is the

responsibility of the State Governments to

ensure the supply of quality of fertilizers by

the manufacturers/importers of fertilizers as

prescribed under the FCO under the ECA.

As per the provision of the FCO, the

fertilizers, which meet the standard of quality

laid down in the order can only be sold to the

farmers. There are 71 fertilizer testing

laboratories including four laboratories of the

Government of India at Faridabad, Kalyani,

Mumbai and Chennai with an annual

analyzing capacity of 1.34 lakh samples. The

quality of the fertilizers imported in the

36 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Country is invariably checked by the fertilizer

q u a l i t y c o n t r o l l a b o r a t o r i e s o f t h e

G o v e r n m e n t o f I n d i a . T h e S t a t e

Governments are adequately empowered to

draw samples of the fertilizers anywhere in

the Country and take appropriate action

against the sellers of Non- Standard

fertilizers. The penal provision includes

prosecution of offenders and sentence if

convicted up to seven years imprisonment

under the ECA, 1955 besides cancellation of

a u t h o r i z a t i o n c e r t i f i c a t e a n d o t h e r

administrative action. The Department of

Fertilizers make deductions alongwith penal

interest on the quantity of the fertilizers for

which the State Governments have reported

to be Non- Standard. During the year 2006-

07, 2007-08 and 2008-09, the percentage of

samples of fertilizers declared Non- Standard

at all India level were 6.0%, 6.2% and 5.5%

respectively. Payment of concession for P&K

fertilizers and for Single Super Phosphate

(SSP) is made by the Department taking into

account the certificate of quality given by the

respective State Governments in Proforma

'B' for the fertilizers received and sold in the

State. Further, SSP units are required to

produce month-wise 'Quality Certificates'

issued by the State Governments of the State

in which the units are located. The units are

required to have well equipped laboratory to

test the sample of its SSP. The SSP units are

also required to print 'Quality Certified' on

each bag released in the market. DOF also

deputes PDIL to conduct first time technical

inspection of the new SSP units. PDIL

conducts six monthly inspections of the SSP

units to check the quantity and quality of the

fertilizers for which the units are claiming

payment of subsidy. The units are also

required to use only those grades of Rock

Phosphate as inputs for manufacturing SSP

under the NBS, which are notified by DOF

from time to time. A statement showing the

notified grades is at Annexure-XI. DOF has

also asked the State Government to

constitute teams with that of PDIL to test

samples of Single Super Phosphate (SSP) at

the retailer level. The marketers of the SSP

are also responsible for he quality of the

fertilizer marketed by them. Department of

Fertilizers has also constituted vigilance

teams of the Officers of the Department to

check the availability and quality of the

fertilizers in the States.

6.10.7 R E S T R I C T I O N O N E X P O R T O F

FERTILIZER

The Government has received complaints of

smuggling of subsidized fertilizers to the

neighboring countries. Keeping in view the

availability of the fertilizers in the country and

the subsidy paid thereon, in addition to urea,

the Government has decided to put the

export of DAP/MOP in the restrictive category

in order to discourage the exports and

smuggling. The DGFT has been requested to

place all other subsidized fertilizers also in

the restricted category.

*****

ANNUAL REPORT 37

CHAPTER -7

PUBLIC SECTOR UNDERTAKINGS

There are nine Public Enterprises under the

administrative control of the Department. A

statement indicating profitability of these

organizations has been given at Annexure-XII

7.1 FCI ARAVALI GYPSUM & MINERALS

INDIA LIMITED (FAGMIL)

7.1.1 Introduction

The FCI Aravali Gypsum and Minerals India

Limited was incorporated under the

Companies Act, 1956 as a Public Sector

Undertaking on 14.02.2003 after being hived

off the Jodhpur Mining Organization (JMO) of

Fertilizer Corporation of India Ltd. (FCIL).

The authorized share capital of the Company

is Rs.10 Crore and the paid up capital is Rs.

7.33 Crore as on 31-03-2011.

7.1.2 Production Performance

During the year 2010-11, the company has

produced 8.84 LMT of Gypsum, utilizing its

97% capacity. In the current year 2011-12

(Up to December 2011), Company has

produced 3.85 LMT of Gypsum against the

targeted annual production of 9.05 LMT. Due

to non-clearance of mining leases from the

State Government, company is facing

problem in achieving target.

7.1.3 Financial Performance

During the year 2010-11, Company has

registered a profit (after tax) of Rs. 24.05

Crore (including the Minimum Alternative Tax

entitlement of Rs. 11.82 crore) in the year.

Company paid a dividend of Rs. 245.55 lakh

@ Rs. 3.35 per share of Rs. 10/- each. In the

current year 2011-12 ( up to Dec. 2011), the

provisional profit (before tax) of the company

is Rs. 8.21 crore.

7.1.4 Grievance Cell

Grievance Cell is functioning to redress the

public and staff grievances and no grievance

is pending as on date.

(I) For Public grievance

Head Office at Jodhpur receives the

public grievances, which are redressed

by the Grievance Cell. At present, no

grievance is pending.

(ii) For Staff Grievance

1. The employees who are working in

various Mines are advised to submit

t h e i r g r i e v a n c e s t h r o u g h t h e

respective Area Managers to General

Manager.

2. The employees working at Head

O f f i c e , J o d h p u r, r o u t e t h e i r

grievances through Sectional Heads

to General Manager. At present, no

grievance is pending.

7.1.5 Employment of SC/ST, Ex-servicemen,

P h y s i c a l l y H a n d i c a p p e d & O t h e r

Backward Classes (OBCs) persons.

Company has total man-power of 86 as on

31.3.2011, 14 belong to scheduled caste, 4 to

scheduled tribes, and 7 to OBCs categories.

7.1.6 Corporate Social Responsibility (CSR)

FAGMIL has earmarked 2% of its profits

before tax for providing assistance for public

health and medical relief, education etc. and

accordingly made a provision of Rs. 39.79

lakh (previous year Rs.31.75 lakh) in the

books of accounts during the year 2010-11.

The Company has installed a mobile soil

testing van for testing the soil of villages near

by its mines to make the farmers aware about

38 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

the type of crops which could be shown in that

climatic conditions and for that what type of

fertilizers are required.

7.2 BRAHMAPUTRA VALLEY FERTILIAZER

CORPORATION LIMITED (BVFCL)

7.2.1 Introduction

Brahmaputra Valley Fertilizer Corporation

L i m i t e d ( B V F C L ) w a s f o r m e d a f t e r

segregation of Namrup Units in Assam from

Hindustan Fertilizer Corporation Ltd. w.e.f.

1.04.2002. The Namrup complex of BVFCL

comprise of three separate units designated

as Namrup-I, Namrup-II and Namrup-III.

Presently only Namrup-II and Namrup-III are

in operation.

The Corporate Office of the company is

s i t u a t e d a t N a m r u p . T h e o t h e r

establishments of the company are Liaison

Offices at NOIDA & Kolkata and Marketing

Offices at Guwahati, Siliguri & Patna. The

authorized share capital and paid up capital of

the company as on 31.03.2011 were Rs. 510

Crores and Rs. 365.83 Crores respectively.

7.2.2 Physical Performance

During the year 2010-11, Company has

produced 2.85 LMT of Urea, utilizing its

55.91% capacity. In the current year 2011-12

( upto Dec. 2011), the actual production of

urea is 2.01 LMT. The targeted (RE)

production for the year 2011-12 is 3,18,021

MT of Urea. The Company is operating its

Namrup-II Unit with 50% load due to limitation

in availability of Natural gas and obsolete

technology. Similarly its Namrup–III plant has

restricted the load due to low conversion in

synthesis converter in Ammonia III.

7.2.3 Financial Performance

During the year 2010-11 Company incurred

net loss of Rs. 85.09 crore. However the

operating profit of the company was Rs. 30.36

crore. In the current year 2011-12 ( upto Dec.

2011, the estimated loss is Rs. 71.28 crore.

7.2.4. Measures taken for Financial Restruc-

turing of the Company

Company had appointed M/s. Haldor Topsoe

as Process Licensor for comprehensive study

of Ammonia plants and M/s PDIL for Urea

plant and offsites/utilities, situated at

Namrup-II and Namrup III plant. After a

thorough study at the existing Namrup-II and

Namrup-III plants, Process licensor have

submitted their reports to the company.

Based on the technical study report of

Process Licensor, BVFCL has submitted a

comprehensive proposal for revival of the

company. The proposal is under examination

in Department of Fertilizers.

7.2.5 Public/Staff grievance redressal mach-

inery and Status of Grievances

A Grievance Redressal Committee chaired

by an Officer of the level of Dy. General

Manager in place for redressal of grievances

of the staff. Numbers of Grievance Boxes are

placed in different places within and outside

the precinct of the factory.

For addressing the problems relating to

harassment of women employees, a

committee headed by a lady officer is

constituted.

7.2.6 Employment of SC/ST, Ex-Servicemen,

P h y s i c a l l y H a n d i c a p p e d & o t h e r

backward classes persons

The matter of employment of persons

belonging to SC/ST, Ex-servicemen,

Physically handicapped & other backward

classes are taken care at the time of

recruitment and promotions, Reservation

policy has been followed as per Government

guidelines.

Out of strength of 1087, there are 86 SCs, 164

STs, 339 OBCs, 3 Ex-servicemen and 3

PHPs on the rolls of the Company.

ANNUAL REPORT 39

7.2.7 Welfare of minorities and reservation in

dealership

Welfare of minorities are well looked after and

directive of Prime Minister's 15 Point

Programme relating to welfare of minorities

are followed during recruitment and

promotion. At the time of promotion and

recruitment, a representative of the minority is

included in the Selection Committee.

In the reservation of dealership, the policy laid

down by the Government of India is being

followed at the time of appointment.

Category-wise details of SC/ST dealers are

as follows:

ST Category: 57

SC Category: 14

Total Dealers: 588

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-commissioned

project at Korba (Chhattisgarh). Against the

authorized share capital of the Company of

Rs.800 crore, the paid up share capital was

Rs. 750.92 crore as on 31.3.2011.

7.3.2 Reference to BIFR

The Corporation was declared sick in

November, 1992 by the Board for Industrial

and Financial Reconstruction (BIFR).

7.3.3 Closure of the Company

In view of the continuing losses of the

Company, stemming from technical and

financial non-viability of operations, the

Government decided to close down FCI in

September 2002. Consequently, a Voluntary

Separation Scheme (VSS) was offered to all

its 5712 employees. All the employees, who

opted for VSS have since been released,

except 27 employees who are engaged in

discharging statutory obligations, including

safety & security of properties/ assets of the

various units of the Company.

BIFR in their meeting held on 2.4.2004

confirmed their prima facie opinion regarding

winding up of the Company. BIFR vide their

orders dated 17.5.2004 conveyed their

opinion to High Court of Delhi. This reference

was registered as Company Petition (C.P.)

No.183/2004 in the High Court. Pursuant to

the prayer of the Department of Fertilizers

and the Company, the High Court in its

hearing held on 20.8.2010 has remitted the

matter back to BIFR for revival of the fertilizer

units of the Company.

7.3.4 Revival of the Company

Considering the shortage of domestic

production of urea in order to meet its growing

demand in the country and availability of well-

developed infrastructure in the various closed

units of the Company, the Cabinet has

decided in April 2007 to explore the feasibility

of reviving the fertilizer units of Fertilizer

Corporation of India Limited. Subsequently,

the Cabinet constituted and an Empowered

Committee of Secretaries (ECOS) on

30.10.2008 to consider various options of

revival and further approved 'in principle' to

consider waiver of GoI Loan & Interest, in

case of availability of viable fully tied up

revival proposal. After detailed study and

recommendations for a revival option, ECOS

on 24.8.2009 selected a suitable Revival

Model and recommended the same for

seeking the approval of GoI.

Following PSUs have shown interest in the

revival of some Units of the Company:

a. GAIL-RCF-CIL for Talcher Unit

b. EIL-NFL for Ramagundam Unit

c. SAIL-NFL for Sindri Unit

40 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Considering the above, ECOS in their 4th

meeting held on 4.3.2011 recommended

permitting revival by these PSUs on

nomination basis on offering and Equity

Participation to FCIL by 11% against the

usage of the assets and land of FCIL, subject

to approval of CCEA.

The process of revival and the Draft

R e h a b i l i t a t i o n S c h e m e ( D R S ) , a s

recommended by ECOS, has been

approved by CCEA on 4.8.2011. The

proposal is under consideration of BIFR.

7.3.5 Progress of proceedings before BIFR

Hon'ble BIFR in its hearing held on

12.11.2010 on deliberations of the progress

made :

(i) Appointed State Bank of India as the

Operating Agency;

(ii) Advised the Company/DoF to obtain the

approval of the Cabinet for the proposed

Revival Scheme and suggested that the

waiver of liabilities of FCIL towards CPSUs

and Government agencies through One

Time Settlement (OTS) also be taken up.

Accordingly the proposal for revival of closed

units of FCIL was placed before Cabinet

Committee on Economic Affairs (CCEA).

CCEA in its meeting held on 4.8.2011

approved the same. The BIFR has

considered the revival proposal in the

hearing held on 18.8.2011, 15.11.2011 &

10.1.2012. The operating agency and FCIL

is taking necessary action as per the

direction of BIFR. The next date of BIFR

hearing is scheduled for 29.3.2012.

7.3.6 Financial Results

During the year 2010-11, the Company

incurred a book loss of Rs. 508.09 crore,

which includes Rs. 554.10 crore as interest

on GOI Loan and Rs. 0.29 crore towards

depreciation. In the current year 2011-12

company would incur an approximate loss of

Rs. 554.10 crore.

7.4 MADRAS FERTILIZERS LIMITED (MFL)

7.4.1 Introduction

Madras Fertilizers Limited (MFL) was

incorporated in December 1966 as a Joint

Venture between GOI and AMOCO India

Incorporation of USA (AMOCO) with GOI

holding 51% of the equity share capital. In

the year 1972, NIOC (National Iranian Oil

Company) acquired 50% of the AMOCO's

share and the shareholding become 51%

GOI and 24.5% each of AMOCO and NIOC.

In 1985, AMOCO disinvested their shares,

which were purchased by GOI and NIOC in

their respective proportions on 22.07.1985.

The revised share holding pattern was GOI

67.55% and NIOC 32.45%. Subsequent to

the Issue of Rights shares in 1994 for part

financing the Project, the holding of GOI &

NIOC stands at 69.78% and 30.22%.

During 1997, MFL has gone for Public Issue

of 2, 86, 30,000 shares with face value of Rs.

10 and a premium of Rs. 5 per share. Of

these, 2, 58, 09,700 shares were subscribed.

At present Sector-wise Paid up share capital

and the shareholding pattern are as follows:

Shareholder Rs in Cr %

Govt. of India 95.85 59.50

Naftrian Intertrade

Company Ltd.(NICO),

affiliate of NIOC

41.52 25.77

Public 23.73 14.73

Total 161.10 100.00

Though the Company has an authorized

share capital of Rs. 365 Cr comprising of

Rs.175 Cr as equity and Rs. 190 Cr as

preference share capital, the preference

share capital is yet to be issued and

subscribed. As on 30.11.2011, the paid up

equity was Rs. 161.10 Cr.

ANNUAL REPORT 41

Annual Capacity (MT) Production Details (MT

Pre-Revamp Post-Revamp 2010-11 2011-12 @

Ammonia 2,47,500 3,46,500 2,80,408 2,05,846

Urea 2,92,050 4,86,750 4,78,834 3,55,935

NPK 5,40,000 8,40,000 - 16,835

MFL commenced commercial production in

1971, with an annual installed capacity of 2,

47,500 MT of Ammonia, 2, 92,050 MT of Urea

and 5, 40,000 MT of NPK. A major revamp /

expansion was carried out in 1998 at a cost of

Rs. 601 Cr, enhancing the annual installed

capacity to 3, 46,500 MT of Ammonia,

4,86,750 MT of Urea and 8, 40,000 MT of

NPK. With effect from 01.04.2003, GOI

introduced a New Pricing Scheme I and

adopted Tariff Committee Recommendations

for the Complex fertilizers. In the year 2003-

04, the accumulated loss eroded the total net

worth and therefore the Company was

referred to BIFR. On account of better

production performance and lower energy

consumption in urea operation coupled with

One Time Settlement benefit from Financial

Institutions, the Company's operation for the

financial year 2010-11 ended with a profit of

Rs. 169.86 Cr. During the year 2010-11, the

Company produced 4, 78,834 MT of Urea

with capacity utilization of 98.4%.

7.4.2 Reference to BIFR

The Company has been referred to Board for

Industrial and Financial Reconstruction

(BIFR) on the total erosion of net worth. BIFR

declared the Company as Sick under Section

15 of SICA in its hearing held on April 2, 2009

and appointed State Bank of India

(Commercial Branch, Chennai) as the

Operating Agency (OA) to prepare a Draft

Revival Scheme (DRS).

OA earlier engaged SBI CAPS for preparing

financial rehabilitation proposal and SBI

CAPS accordingly prepared and forwarded

the same to OA and the Company, who in turn

forwarded the report to DOF after obtaining

approval from Board, for further proceedings.

SBICAPS in their report recommended that

Write-off of GOI outstanding principal and

interest appears to be the most suitable

option for the Company to come out of BIFR

with the understanding that GOI would

recommend waiver of the tax incidence

under the option.

The Financial restructuring proposal

prepared by DOF, based on the above

recommendation, was circulated to the stake

holder Ministries. The comments from the

concerned Ministries/Departments have

been received and considered in the DoF.

Department of Expenditure and Planning

Commission have been requested to submit

the fresh comments considering the views of

DoF. Meanwhile BIFR in its hearing held on

25th August 2011 has directed the Operating

Agency (State Bank of India) to workout

financial restructuring of MFL considering the

conversion of GOI loan into equity.

7.4.3 Production Performance

The capacity and production details of MFL are

as follows:

@ up to November 2011

The Company so far produced 355935 MT of

Urea with the capacity utilization of 109.7%

and is hopeful of producing 4,64,401 MT of

Urea with capacity utilization of 95.4%. The

Company is taking Annual Turnaround

during January 2012. The Company

resumed production of NPK Complex

fertilizers on October 20, 2011 where NPK ̀ A'

Train was started and produced 16385 MT of

Vijay 20:20:0:13 till Nov 30, 2011. On receipt

of MOP (Muriat of Potash), Company would

commence production of Vijay 17-17-17.

The Company is hopeful of producing 81,585

MT of NPK Complex during the year 2011-12.

During the year 2011-12, the Company shall

achieve Bio-fertilizer production of 450 MT.

42 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Program Plan for 2011-12 (NOs.)

Actuals Upto

Nov’11 (NOs.)

Plan for Dec’11

to Mar’12 (NOs.)

Annual

Budget

(in Rs.)

Actuals Upto

Nov’11 (in Rs.)

Soil Sample Collection- Macro Nutrient(NPK)

5500 5070 430

55000

31360

Micro Nutrient 550 427 123 Bio Demo 72 50 22 43200 13131 Bio Special Campaign

11 4 7 55000 15080

Farmers Contacted

71000 55436 15564 - -

Exhibitions 11 - 11 33000 -

7.4.4 Sales Performance

Product

2010-11

Actuals

2011-12

Actuals

Apr-

Nov’11

Projections

Dec’11-

Mar’12

Anticipate

d sales for

2011-12 Vijay Urea(MT) 473782 353767 106233 460000

Vijay Biofertilizers(MT) 452.60 342.32 153.00 495.32

Vijay Neem(KL) 100.34 97.67 22.53 120.20

Vijay Organic(MT) - 2712 1000 3712

7.4.5 Financial Performance

During the year 2010-11, the company earned

a profit of Rs. 169.86 Cr and the total

accumulated loss was brought down to Rs.

617.19 Cr as on 31st

March, 2011 During the

period April –December 2011, the Company

has estimated to earn a profit of Rs. 111.43 Cr.

7.4.6 Information relating to welfare of

Minorities and reservation in Dealership

The company has been following GOI

guidelines on inclusion of representative

from minorities in selection committee for

Recruitment of more than ten candidates.

The Company has network of 5903 dealers.

There are 1614 SC/ST dealers which

represents 27.34%. The SC / ST dealers are

allowed waiver or Security Deposit of Rs.

5,000 and exemption from minimum sales

7.4.8 Efforts and initiatives taken by the PSU for

t h e W e l f a r e , D e v e l o p m e n t a n d

Empowerment of Women and for

mainstreaming gender issues

MFL do not have any problems for

mainstreaming gender issues and all the

women employees are being involved in all

the activities. Further, MFL is having a

separate Women's Forum affiliated to

“Women in Public Sector (WIPS)” and there

is a women coordinator from MFL nominated

for this purpose for coordinating the activities

and promoting the interests of women

employees in their welfare, development

and empowerment. Every year, MFL is

conducting “Women's Day” and almost all the

women employees are participating in the

programme /event. Last year 2010-11, on

March 15, MFL conducted Women's Day in a

grand manner.

7.5 PROJECTS & DEVELOPMENT INDIA

LIMITED (PDIL)

7.5.1 Introduction

Projects & Development India Limited (PDIL)

an erstwhile Division of the Fertilizer

Corporation of India (FCI) was registered as

a separate company in March 1978. The

company has its registered office at Noida,

Uttar Pradesh. Company has been granted

norms. M i n i - r a t n a C a t e g o r y - 1 s t a t u s . T h e

7.4.7 Corporate Social Responsibility

The budget provision towards corporate

social responsibility is detailed as under:

authorized share capital of the company is

Rs.60 crores and paid up capital is Rs.17.30

crores as on 31.3.2011. As an ISO 9001:2008

C e r t i f i e d p r e m i e r c o n s u l t a n c y a n d

engineering organization, PDIL played a

pivotal role for the growth of Indian Fertilizer

Industry. It has over six decades of

experience and expertise in providing

design, engineering and related project

execution services from concept to

commissioning of various Projects. PDIL

provides the services mainly in the following

five sectors viz. Fertilizers, Oil & Gas and

Refinery, Chemicals, Infrastructure, Offsite

and Utilities.

ANNUAL REPORT 43

PDIL is the prime mover of most of the

fertilizer projects, especially Ammonia, Urea

and Offsites & Utilities established in India in

the last four decades. It has engineered and

successfully executed so far 25 Ammonia

Units (Grass Root / Expansions) and 38 Urea

organizations in India. The facilities include

LPG Import Terminals, POL Terminals/

Depots/Storages, Crude/Gas/ Petroleum

Products Pipelines, Gas Gathering Stations,

Mounded Storages for LPG, Atmospheric

Cryogenic Storages for Petroleum Products,

LPG Bottling Plants, City Gas Distribution Units (Grass Root / Expansions) in the including CNG Stations, Skid Mounted/ Re- country. Our esteemed clients are almost all locatable Refinery. PDIL has undertaken the major Fertilizer Manufacturers in India in Revamp Jobs for Refineries covering Public, Co-operative and Private Sectors. Atmospheric Distillation Unit, Sulphur Apart from the projects in India, PDIL Recovery Unit, Lube Oil Complex, Crude

provided Detailed Engineering and other Distillation Unit, Crude Topping Unit. etc.

Associated Consultancy Services for the PDIL provided detailed engineering services

then world's largest single stream gas based for three large Hydrogen Plants for ESSAR

2200 MTPD Ammonia Plant of M/s Burrup Engineering Centre for their Refinery

7.5.2 Operating Results

PDIL had earned Profit(after tax) of Rs. 21.02

crores for the year 2010-11 out of the total

turnover of Rs. 111.20 crores. During the

period April to November, 2011, a profit of Rs.

21.19 crores (before Tax) has been earned

out of the total turnover of Rs 70.48 crores.

The estimated net profit for the year 2011-12

is Rs. 29.85 crores.

7.5.3 Declaration of Dividend

Dividend is being paid continuously since

2007-08. A dividend of 22% of the paid up

capital of the company amounting to Rs.3.81

crores has been paid in the year 2010-11.

7.5.4 'Excellent' Ranking In MOU

PDIL has secured Excellent rating in MoU

since the first year of its singing MoU in 2006-

07. PDIL got 'Excellent' MoU rating for 2009-

10 and 'Excellent' rating is expected in 2010-

11 also. PDIL won prestigious MoU

Excellence Award for 2008-09 for top

performing CPSE's in the Consultancy

Sector, which was conferred by Hon'ble

Prime Minister of India, Dr. Manmohan Singh

on 15.12.2010.

7.5.5 Engineering & Consultancy Division.

i Fertilizer Sector

Fertilizer Pvt. Ltd., Australia. The Project was

commissioned successfully in 2006. PDIL

tied up with M/s MHI, Japan for associating its

engineers for their ammonia projects in

Russia. PDIL is also currently providing PMC

Services for Brownfield project of Algeria

Oman Fertilizer Projects at Arzew, Algeria

and Engineering Consultancy Services for

several assignments of M/s Jordan India

Fertilizer Company (JIFCO) in Eshidiya,

Jordan. PDIL is providing engineering

services for many Revamp / Modernization /

Energy Saving Schemes for its clients viz.

KRIBHCO at Surat, NFL at Vijaipur, RCF at

Thal, GSFC at Vadodara, etc. PDIL is working

on a prestigious order from M/s Matix

Fertilizers & Chemicals Ltd. for providing

Detailed Engineering Consultancy Services

for a 2200 MTPD Ammonia Plant at

Panagarh, West Bengal, which is the first

plant in India based on Coal Bed (CBM)

Methane feedstock. Besides, PDIL secured

orders for PMC services for Feedstock

Changeover Projects at Panipat, Bathinda

and Nangal from NFL, at Bharuch from

GNFC and at Chennai for MFL.

ii Oil & Gas and Refinery Sector

PDIL has provided services for Projects in Oil,

Gas & Refinery Sector owned by all the major

44 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

expansion Project at Vadinar, PMC services

for installation of Hydrogen unit of IOCL

Barauni and Sulphur Recovery Unit for IOCL

Mathura. PMC services for installation of

Hydrogen Unit at CPCL Chennai, for

Debottlenecking of FCCU-I & GCU for HPCL

Vizag refinery, for installation of H2 & N2 unit

on BOO basis at Paradeep for IOCL, for Flue

Gas Desulphurization system & Purge Gas

treatment unit for HPCL of Vizag, etc. are

under progress.

iii Chemical Sectors

PDIL has undertaken many projects in

Chemical sector such as Methanol Plant,

Hydrogen Plant, Methyl Amines, Sulphuric

Acid, Phosphoric Acid, Nitric Acid, Sodium

Nitrite/Nitrate, Ammonium Nitrate and

Ammonium Bi-Carbonate. PDIL is currently

providing consultancy services to GAIL for

GSU & GPU modification job at their Pata

P e t r o c h e m i c a l P l a n t a n d D e t a i l e d

Engineering Services to GSFC, Baroda for

Methanol Plant. M/s Shriram EPC has

associated PDIL for providing Basic Design

Engineering for Ammonium Sulphate Plant

and Ammonia Liquor Treatment Plant of

Rourkela Steel Plant at Rourkela.

iv Infrastructure sector

PDIL has established credentials in

infrastructure sector also and has provided

PMC services/ Review consultant services

for Housing projects of the Ministry of

Defence, City Water Distribution system.

v Offsites and Utilities

PDIL has designed, engineered, tendered

and procured many Offsites and Utilities

packages for a large number of clients. These

include DM Water Plants, Effluent Treatment

Plants, Captive Power Plants, Material

handling Plants, and Atmospheric Ammonia

Storage and Handling facilities.

vi Assignments Abroad

PDIL is striving hard to make a breakthrough

in securing assignments from abroad.

Presently PDIL is providing PMC Services for

Algeria Oman Fertilizer Project at Arzew,

Algeria for AOA, Algeria. During the current

year, PDIL secured the jobs of preparation of

Pre-Feasibility Reports (PFRs) for Coal

based Ammonia plant for M/s MEC,

Indonesia and for Phosphatic fertilizer

complex in Andhra Pradesh for M/s Industies

Chimiques du Senegal.

vii Third Party Inspection & NDT Services

PDIL is a recognized Third Party Inspection

Agency for Inspection & Quality Assurance

Services and undertakes TPI Services for

many projects of organizations like IOCL,

RINL/VSP, BHEL, BPCL, HPCL, NDMC,

PWD, State PHEDs, ONGC, DTL etc. It

provides services for Shop & Field Inspection

of Equipment & Machinery, Electricals,

I n s t r u m e n t s , E l e c t r i c a l S a f e t y A u d i t

Inspections, Terminal Automation System of

Oil Terminals, Depots & Retail outlets and

Work Assessment & Evaluation of Vendors. It

provides NDT services for plants in various

sectors like Fertilizer, Chemical, Refineries,

Oil & Gas, Cross Country pipeline etc. PDIL

specialized NDT services include Automatic

Ultrasonic scanning, Infra-Red Thermo-

Vision/imaging, Eddy current testing,

Vibration signature analysis etc. PDIL

undertakes Inspection, statutory testing &

safety Certification of storage tanks for

petroleum products as well as ammonia.

viii Technical Audit

Department of Fertilizers (DoF) continued to

engage PDIL for Techno-commercial Audit of

SSP Plants located throughout India. The

Audits were undertaken and the reports with

TAC observation and comments have

already been submitted to DoF.

ix Manufacturing of Catalysts

PDIL's Catalysts Division located at Sindri

ANNUAL REPORT 45

EMPLOYEE STRENGTH AS ON 30.11.11 (REGULAR INCLUDING MANAGEMENT

TRAINEES AND CONTRACT) Category Total MIP SC ST OBC A 413 48 20 62 B 33 4 0 2 C 32 9 0 7 D Nil Nil Nil Nil On contract 67 9 3 13 Total 545 70 23 84

(Jharkhand) manufactures and supplies a

wide range of commercially proven catalysts

used in Ammonia Plants and other Industries.

Catalysts manufactured by PDIL are Primary

Gas Reforming, Secondary Reforming, Iron-

Chromia, High Temperature CO Shift,

Copper Promoted High Temperature Shift,

Conventional Low Temperature Shift, High

Copper Low Temperature Shift, Methanation

& Super Methanation, De-Sulphurization,

and Vanadium Pentoxide.

PDIL's Catalysts are in use in almost all the

old and new generation Ammonia Plants in

India in the Public, Cooperative and Private

Sector. Besides Fertilizer Plants, PDIL's

Catalysts are used in Refineries also. PDIL's

Vanadium Pentoxide Catalysts have been

supplied to many Sulphuric Acid Plants in

India as well as abroad.

7.5.6 In-house strengths of PDIL

i IT & Other Infrastructure Facilities

PDIL has two full fledged Design Engineering

Centers situated at NOIDA and Baroda. Both

the design engineering centers are equipped

with State-of-the-Art computer and software

f a c i l i t i e s s u c h a s A u t o C A D 2 0 1 2 ,

Microstation, Plant Design System (PDS),

Smart Plant Electrical, Smart Plant

Instrumentation, Smart Plant P&ID, Frame

Work Plus, Smart Plant Review, CAESAR II,

PV Elite, Mocroprotal, STAAD Pro, Aspen

Plus, Syner GEE Gas, ASD Pipe Router, ASD

Pipe Support Optimizer, PHA-Pro, Safeti

Micro, Conval, ETAP, Primavera, MS Project

and work specific softwares for carrying out

design engineering works. PDIL, being a

member of Heat Transfer Research INC.

USA, has the right to use Xchanger Suite of

Software.

All the offices of PDIL are connected through

VPN (Virtual Private Network).

ii Enterprise Resource Planning (ERP)

Project

With the implementation of SAP ERP, PDIL

has been able to integrate its activities on a

single platform. Go live of SAP was done on

February 8, 2011 and in use since then, which

has further strengthened MIS.

DMS Project

PDIL is contemplating to implement

“Documentum” of EMC2 as its Electronic

D o c u m e n t M a n a g e m e n t S y s t e m f o r

preserving all its documents in electronic

form.

iii Human Resources

PDIL is having highly competent and

experienced technical manpower. At present,

PDIL is having more than 500 technical

employees of various disciplines such as

C h e m i c a l E n g i n e e r i n g , M e c h a n i c a l

Engineering, Civil & Structural Engineering,

Electrical Engineering, Instrumentation

E n g i n e e r i n g , C o m p u t e r S c i e n c e &

Information Technology, etc. from reputed

Engineering Institutes. With the vast

experience & technical expertise of these

resources, PDIL is having annually more than

1.1 Million Man-Hours which are sufficient to

execute a number of mega projects

simultaneously.

7.5.7 Employment to SC/ST/OBC/ PH persons

In line with Government Guidelines issued

from time to time, your company continues to

extend required number of facilities to

SC/ST/OBC employees. The details of

employees as on 30.11.11 is as follows:-

46 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

C o m p l a i n t s / G r i e v a n c e s r e d r e s s a l

m e c h a n i s m i s i n p l a c e . R e g a r d i n g

implementation of National Policy for

Persons with Disabilities, for easy/ hassle

free mobility of employee with disability, ramp

has been constructed and in respect of

welfare, development and empowerment of

women and for mainstreaming gender

issues, there is complete equality gender in

PDIL.

alleviate the social imbalances and helping

the community in which it operates.

Accordingly, PDIL Board has approved the

CSR policy on the basis of guidelines issued

by DPE. During the year 2010-11, an amount

of Rs. 13.78 lakhs has been spent on CSR

activities towards education of slum children,

Animal Hospital, Orphanages etc &

contribute to NCSR Hub thru' Tata Institute of

Social Science.

Celebration of Hindi Fortnight at PDIL in September, 2011

7.5.8 Corporate Social Responsibility

PDIL has been pursuing CSR activities as per

policy duly approved by the Board as well as

directives issued by Govt. of India from time

to time. As per the Govt. Guidelines on CSR

activities, the CSR fund has also been

created. The objective of CSR policy is to

7.6 HINDUSTAN FERTILIZER CORPORATION

LIMITED (HFCL)

7.6.1 Introduction

Hindustan Fertilizer Corporation Limited

(HFCL) has its units located at Barauni

(Bihar), Durgapur (West Bengal). It also has

ANNUAL REPORT 47

an un-commission project at Haldia (West

Bengal). Against the authorized share capital

of the company of Rs.1200 crore, the paid up

share capital was Rs. 686.54 crore as on

31.3.2011.

7.6.2 Status of Company's case with BIFR

The Company was referred to BIFR in the

year 1992 and since then it is still under BIFR.

The Govt. of India had decided to close down

Barauni and Durgapur Units and Haldia

Division along with other offices and

Establishments of the Company in the year

2002. Now, Cabinet Committee of Economic

Affairs (CCEA) in its meeting held on

04.08.2011 has approved the proposal for

revival of closed Units of HFCL. A copy of

Draft Rehabilitation Scheme (DRS) of the

company was submitted to BIFR.

Reduction in manpower by 7 during the year

was due to superannuation.

Due to the decision taken by the Govt. of India

to close down the Company, there was no

activity on promotion, recruitment, etc. during

the year.

7.7 R A S H T R I Y A C H E M I C A L S A N D

FERTILIZERS LIMITED (RCF)

7.7.1 Introduction

Rashtriya Chemicals and Fertilizers Limited

(RCF) was incorporated as a separate

company on 6th

March 1978 as a result of

reorganization of the erstwhile Fertilizer

Corporation of India Limited (FCI). At the time

of its inception, there was only one unit of

company at Trombay. In 1985, another unit of

RCF was established at Thal which is about

The BIFR has considered the revival 100 KM from Trombay. As on 31st

March

proposal in the hearing held on 18.8.2011,

15.11.2011 & 10.1.2012. The operating

agency and HFCL is taking necessary action

as per the direction of BIFR. The next date of

BIFR hearing is scheduled on 1.3.2012.

7.6.2 Revival of Units/Divisions of HFCL –

status thereof

CCEA, in its meeting held on 04.08.2011, has

approved the proposal for revival of closed

Units of HFCL, viz. Barauni, Durgapur and

Haldia for setting up a 1.15 MTPA Urea Plant

at each of these locations and approved DRS

as per the recommendation of ECOS. DRS

has been submitted before BIFR for

approval.

7.6.3 Financial Performance

During the year 2010-11, the Company

incurred a book loss of Rs. 382.28 crore

(after considering prior period adjustments

and tax) as compared to previous year's net

loss of Rs. 382.47 crore.

7.6.4 Manpower

The manpower as on 31.03.2011 was 23 as

compared to 30 as on 31.03.2010.

2011, the company had an authorized share

capital of Rs.800 crore and a subscribed and

paid up capital of Rs.551.69 crore.

7.7.2 Production Performance

The annual installed capacity of all the units of

RCF is about 10.36 LMT of nitrogen and 1.17

LMT of phosphate (as P2O5). The production

of nitrogen & phosphate during 2010-11 was,

10.759 LMT and 0.986 LMT respectively.

Besides fertilizers, the company also

produces a number of industrial products

such as Methanol, Concentrated Nitric Acid,

Methylamines, Ammonium Bicarbonate,

Sodium Nitrate, Sodium Nitrite, Dimethyl

F o r m a m i d e , D i m e t h y l A c e t a m i d e ,

Ammonium Nitrate, Argon, etc.

During April-November 2011, RCF produced

6.615 LMT of nitrogen as against 7.026 LMT

during the same period of the previous year.

Company also produced 0.663 LMT of

phosphate (as P2 O5 ) as against the

production of 0.614 LMT of the previous year.

During the year 2011-12, the Company is

likely to produce 10.69 LMT of nitrogen and

1.140 LMT of phosphate.

48 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

7.7.3 Sales Performance

The sales turnover during the year 2010-11

was Rs.5574.10 crore compared to

Rs.5697.18 crore in the previous year. The

sales turnover of industrial products division

of the Company was Rs. 726.25 crore for

the year 2010-11. During the period Apr- Nov

2011 sales turnover of industrial production

division was Rs.537.42 crore.

7.7.4 Financial Results

During the year 2010-11, the company

reported a net profit (after tax) of Rs. 245.12

crore. During the period April – November

2011, the Company has made a net profit

(before tax) of Rs.157.37 crore & net profit

after tax of Rs.106.30 crore.

7.7.5 Modernization/expansion Schemes

Thal Ammonia/Urea Revamp

Thal Ammonia Revamp Project is being

implemented by the Company to enhance capacity of existing Thal Ammonia Plants

from 2 x 1500 MTPD to 2 x 1750 MTPD and to reduce specific energy consumption from 9.0

MKcal/MT to 8.15 MKcal/MT. Under Thal

ammonia revamp project Urea capacity will enhance from present 17.07 to 20 LMT per

annum after it's commissioning in 2011-12. This revamp is being carried out, by the

company, in three phases. So far two phases

have been completed and this has resulted in the increase of 400 MTPD of Urea

production. Last phase of the revamp will be completed in March 2012.

Shri Ajay Bhattacharya, Secretary (Fert) (2nd from right), Shri R.G. Rajan, CMD, RCF Ltd. (centre), Dr. V. Rajagopalan, Additional Secretary & FA, DoF (extreme right), Shri Sham Lal Goyal, Joint Secretary, DoF (left) on the occasion of signing of MOU between Department of Fertilizers and Rashtriya Chemicals & Fertilizers Limited (RCF)

ANNUAL REPORT 49

Thal Ammonia Revamp: Phase-II

Erection of S-50 Convertor

7.7.6 Grievance Redressal

Public / Staff grievance redress machinery

and status of Grievances of company and its

field agencies / unit / attached office

The Company has a good grievance address

and redressal system. Any citizen having

complaints in respect of the production or

services rendered may approach the

Company. Similarly any aggrieved customer

/ dealer or other citizen can approach the

Company for any failure of the quality / price

charged / conduct of any officer / employee

and will be dealt as under.

The grievances can be addressed to a

special officer of the Company not below the

rank of Dy. General Manager who will act as

the Nodal Officer for redressal. The name,

address and telephone No. of the officers is

available on Internet on Company's website

www.rcfltd.com. It is assured that the Nodal

Officer will immediately take up the issue with

the concerned department and appropriate

action will be taken within seven days from

the date of receipt of the complaint or an

appropriate reply is sent within seven days as

the case may warrant.

A similar grievance address and redressal

system procedure is followed by the

Company in issues related to staff also.

7.7.7 Employment Of Sc/st, Ex-service Men,

P h y s i c a l l y H a n d i c a p p e d & O t h e r

Backward Classes

The guidelines regarding reservation in

Recruitment and Promotion for SC, ST, OBC,

Ex-Servicemen and Physically Handicapped

Persons (PHP) are followed.

Out of total strength of 4,144, there are 576

SCs, 257 STs, 341 OBCs, 7 Ex-Servicemen

and 35 PHPs on the rolls of the Company.

7.7.8 Welfare of Minorities & Reservation In

Dealership:

RCF as a policy includes representative of

the minorities in the recruitment selection

50 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

boards to ensure that the minorities get an

adequate share in the services and benefit of

developments.

7.7.9 Corporate Social Responsibility

The company continued with its Fertilizer

Promotion Programmes to educate the

farmers in the scientific and balanced use of

fertilizers. RCF has two Farmer Training

Institutes, one at Nagpur and other at Thal to

impart training to farmers and farm labourers

in integrated development and new farming

techniques etc.

T h e I n t e g r a t e d R u r a l D e v e l o p m e n t

Programme is implemented in various

villages of the country. Overall development

of these villages is the focal point. Some of

the programmes carried out under Integrated

Rural Development Programme (IRDP) are

as under:

a) Meeting Basic Needs of Rural Community –

The scheme covers providing essential

amenities like drinking water supply, school

buildings, community centers, development

of irrigation systems etc.

b) Agricultural Development Programme - This

f o c u s e s o n e c o n o m i c u p l i f t m e n t o f

small/marginal farmers and landless

labourers through training and education.

c) Subsidiary Occupation- Artisan Development

Programme This provides a platform for

training and making available financial

facilities to rural artisans and entrepreneurs

which enable them to revive and develop

their skill for commercial use.

d) S o c i a l F o r e s t r y a n d W a s t e L a n d

Development Programme - This focuses on

development of sericulture, social forestry,

waste land use, dry land farming and biogas

development.

e) P u b l i c H e a l t h & V i l l a g e S a n i t a t i o n

Programme – This covers health care, village

sanitation, health camps, and veterinary

camps.

f) Youth and Women Skill Development

Programme - Rural sports and cultural

activities are organized in different villages to

encourage participation by youths.

g) Soil Testing - The Company places

tremendous importance on empowering

farmer to increase the yield. Soil diagnostics

form a major part of determining which

fertilizer needs to be used for each soil and

crop. The Company has also mobile soil

testing laboratories across its major

marketing territories which undertakes soil

sample analysis. About 70,000 soil samples

are analyzed every year.

h) Micronutrient Analysis - To increase crop yield

the presence of micronutrients in adequate

proportion is necessary. Micronutrients

analysis identifies the deficiency in the soil

and prescribes doses of micronutrients that

need to be applied to ensure optimum yield.

About 1,000 samples are analyzed every

year.

7.7.10 Adoption of New Technology

a) Clean Development Programme

Under Clean Development Mechanism

(CDM), RCF has taken up N2O abatement

programme in its Nitric Acid plants at

Trombay unit. By reducing N2O emission,

which is a greenhouse gas having a global

warming potential of 310, company will be

awarded tradable Certified Emission

Reduction (CER). The Nitric Acid CDM

projects have been successfully registered

with UNFCCC in November 2009. Also in

January 2011, RCF has received first tranche

of 1,55,115 CER's from UNFCCC.

b) STP Plant

In its efforts towards conservation and

recycling, RCF has set up a highly

sophisticated Sewage Treatment Plant which

is one of its kind with an in built capacity to

treat 5 million gallons (MGD) of sewage

received from the Mumbai Municipal

Corporation. After treating the sewage, plant

ANNUAL REPORT 51

generates 3.5 (MGD) of pure water each day,

and saves the equivalent amount of potable

water for the city. Further RCF is planning to

set up another STP plant and become totally

Consequent upon reorganization of FCI, the

Nangal unit (including Nangal expansion

project) of FCI was transferred to NFL w.e.f.

1.4.1978.

self sufficient in its day to day industrial water

A gas based ammonia and urea fertilizer requirement.

project on the HBJ popeline at Vijaipur in

7.8 NATIONAL FERTILIZERS LIMITED (NFL) Guna district of Madhya Pradesh, with an

annual installed capacity of 7.26 lakh tones 7.8.1 Introduction Urea commenced commercial production on

NFL is a Schedule 'A' and Mini Ratna 1.7.1988. The urea capacity was doubled

Company, which was incorporated on 23rd

August, 1974 for setting up of two

Nitrogenous fertilizer plants, at Bathinda

from 7.26 LMT to 14.52LMT per annum on

commissioning of its expansion unit on

31.3.1997. The production capacity of gas

based plants in the country has been re- (Punjab) and Panipat (Haryana) with LSHS assessed w.e.f. 1

st april, 2000 resulting in

as feedstock, each having an installed

capacity of 5.11 lakh MT of Urea per annum. capacity revision from 7.26LMT to 8.64LMT

for both Vijaipur-I and Vijaipur-II.

NFL VIJAIPUR PLANT

*****

52 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Group Total number of employees

Number of SC/ST/OBC/EXSM/PH

SC ST OBC *EXSM **PH

A 1623 356 81 81 4 9

B 1938 508 157 113 31 23

C 827 210 41 110 32 15 D 137 108 3 7 1 3

Total 4525 1182 282 311 68 50

A revamp of urea plant at Nangal was

successfully completed three months ahead

of schedule and commercial production

commenced w.e.f. 1st

Feb.2001. With this, the

installed capacity of urea at Nangal Unit

tones per annum raising the company's total

installed capacity to 32.31 LMT of urea

corresponding to 14.86 LMT of 'N' (Nitrogen)

in terms of fertilizer nutrient.

The company also produces various

industrial products like nitric acid, ammonium

nitrate, sodium nitrite/nitrate, sulphur,

metenol, liquid nitrogen, liquid oxygen etc.

besides bio-fertilizers. The company

commissioned an argon gas plant designed

to produce 120 NM3/hr. of Argon gas at the

Panipat Unit in October 1997. A Methanol

Augmentation Scheme at Nangal Unit was

commissioned in October 1998 thereby

enhancing the daily production capacity of

Methanol from 50 tonnes to 67 tonnes. The

company's bio fertilizers plant at Indore

produces three strains of bio fertilizers with

an installed capacity of 100 MT per annum.

The authorized capital of the company as on

31.3.2011 stood at Rs.1000 crore and the

paid up capital at Rs.490.58 crore,

comprising Govt. of India share of 479 crore

(97.64%) and the remaining Rs.11.58 crore

(2.36%) held by financial institutions and

others.

The sales turnover including subsidy for the

year was Rs.5791 crore. During the year,

sales turnover for industrial products was

Rs.115 crore.

7.8.4 Financial Performance

NFL registered a Profit before tax (PBT) of

Rs.204 crore and Profit after tax (PAT) of

Rs.139 crore during 2010-11. The company

has maintained its trend of paying dividend

since last 26 years. The total dividend payout

during 2010-11 was Rs. 48.46 crore

(including dividend tax of Rs. 6.76 crore)

which is 30% of the Profit after Tax (PAT).

7.8.5 Employment of SC/ST, Ex-Servicemen,

P h y s i c a l l y H a n d i c a p p e d & O t h e r

Backward Classes (OBCs) Persons in

Public Sector Undertakings (As on

30.09.2011).

* EXSM – Ex- Servicemen ** - PH – Physically Handicapped

7.8.2 Production Performance

7.8.6 P u b l i c

/ S t a ff G r i e v a n c e R e d r e s s

During the year 2010-11 the company

produced 33.80 LMT of Urea (104% of

installed capacity). The company achieved

ever best production of 231 tonnes of Bio-

fertilizers and 120067 tonnes of Neem

Coated Urea. The percentage share of NFL in

Urea production in the country has been

estimated at 15.4%.

7.8.3 Sales Performance

The company, during 2010-11, sold 33.59

lakh tonnes of Urea. Company achieved

ever best Bio-fertilizers sales of 219 tonnes.

Machinery

Based on the model grievance procedure

notified by DPE, company has framed a

'Grievance Redressal Procedure' for

employees of NFL. The objective of the

Procedure is to provide easily accessible

machinery for settlement of grievances and

to adopt measures as would ensure

expeditious settlement of grievances of

employees leading to increased satisfaction

on the job and resulting in improved

p r o d u c t i v i t y a n d e f f i c i e n c y o f t h e

organization.

ANNUAL REPORT 53

For systematic monitoring and supervision of Public Grievances, Head of Corporate HR

Department has been nominated as Director

(Grievance). In addition to this, the company has also set up a “Public Grievances

Cell” at the Units which is headed by a Grievance Officer, who generally belongs

to senior management cadre. Apart from

t h i s o n t h e C o m p a n y ' s w e b s i t e "www.nationalfertilizers.com”, a feedback

form has been created for posting of query / grievances by the public.

7.8.7 Information relating to welfare of Minorities and reservation in dealership

representation of the minority communities

on interview boards in Group C & D. As on 30-

09-2011, the percentage share in NFL

dealership under SC/ST category is 26.79%.

7.8.8 Corporate Social Responsibility and

Agriculture Extension Activities

The Company is committed towards

upliftment of under privileged Section of the

Society and has supported various social and

communities initiatives touching the lives of

large number of people. The Company has

identified CSR Activities in economic,

environmental, health and social areas and

All the employees at Units & Offices celebrate had earmarked Rs. 3 crore towards CSR

the festivals of various communities with a

sense of brotherhood. The organization

believes in equality of all communities and

follows all Government regulations on

empowerment of minorities such as

activities during the financial year 2010-11.

Separate budgets and achievement targets

have been fixed for each CSR initiative. The

unspent budget from 2010-11 has been

carried forward to the next financial year.

Vocational Training program for women

54 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Roadmap was developed to undertake

integrated development of 9 villages situated

in the vicinity of our Plants/Offices. Baseline

survey has been completed in all the Units/

Offices of the Company. Activities identified

under CSR like digging of tube well for

supplying of potable water, laying pipelines

for distribution of water, Construction of

concrete approach roads, Anganwadies,

kitchen sheds, toilets, overhead water tanks,

carrying out various civil jobs in nearby

villages, construction of boundary wall,

Preparation of Volley ball play ground,

installation of submersible tube well,

procurement of furniture for distribution in

nearby schools etc. are Bathinda. Further,

procurement of 35 nos. of solar lights for

installation in nearby villages is under

process.

100519 saplings have been planted during

the year in the vicinity of Company's plants

and units. Company's manufacturing units at

Vijaipur, Panipat, Bathinda and Nangal also

carried out various useful activities for the

benefit of socially and economically weaker

sections of the society in the surrounding

areas of the respective unit. Health

awareness Programs / Medical Camps were

organized. In addition, financial aid, ceiling

fans, sewing machines etc. were also

provided to the poor and needy persons of

nearby villages.

In addition, Company extended financial

assistance to Bitnoti College, Orissa for

construction of one Auditorium-cum-Gallery

Class Room. Mayurbhanj is a tribal

dominated backward district of Odisha. The

objective of construction of auditorium is to

prepare students of backward tribal areas to

face the competitive world by developing

their presentation skills, public speaking and

entrepreneurship.

Balasore is a tribal dominated backward

district of Orissa and Utkal Bal Ashram is one

of the oldest and reputed orphanage of

Balasore. This Ashram was established in the

year 1944 and has been rendering valuable

services to about 250 orphan children.

Company is extending a contribution for

construction and renovation of Utkal Bal

Ashram.

Frontiline demonstration of Kisan Urea on paddy crop

ANNUAL REPORT 55

58

2009-10 2010-11 2011-12

(Projected) 1 Production / in Tonnes

Factamfos 20:20 753744 644454 635284

Ammonium Sulphate 179546 200311 187218

Caprolactam 42006 44345 42353 2 Sales / in Tonnes

Fertilisers 1044893 932878 915252

Caprolactam 38253 44136 43422 3 Financial / Rs. lakh

Turnover 214161 251183 313850

Profit / Loss (-) before

Interest, Depreciation

and tax

3654 13439 436

Profit/Loss after tax (-)10383 (-)4933 --

As in the past, the Company continued to

facilitate the farming community in improving

the crop productivity. The Company also

continued its efforts to improve the living

standard of socio-economically weaker

sections of the society.

7.9 THE FERTILIZERS AND CHEMICALS

TRAVANCORE LIMITED (FACT)

7.9.1 Introduction

The Fertilizers And Chemicals Travancore

Limited (FACT) was incorporated in the year

1943 and as the first large scale fertilizer plant

in India located at Udyogamandal, Kerala

started production in 1947. Initially in the

private sector promoted by the Seshasayee

Brothers, FACT became a PSU in the year

1960 and towards the end of 1962,

Government of India became the major

shareholder of FACT.

From a modest beginning, FACT has grown

and diversified into a multi-division/

multifunction Organization with core activities

in manufacture and marketing of Fertilisers

and Petrochemicals, Design, Engineering &

Consultancy and in Fabrication & Erection of

Industrial Equipment.

7.9.2 Performance

During the Financial Year 2010-11 FACT was

able to maintain an impressive level in the

overall performance and made an upsurge in

Turn over. The Turn over of the company

touched an all time record of Rs.2512 Crore.

During the year 2010-11, the company has

achieved considerable improvement in the

p r o d u c t i o n o f A m m o n i u m S u l p h a t e .

Production, Sales and profitability of the

company for the year 2010-11 compared to

2009-10 is given below:

7.9.3 Performance Highlights

During the current year up to November 2011,

the company produced 395144 MT of NP

which is 76 % of the target as compared to

442749 MT during the corresponding period

of the previous year. Production of

Ammonium Sulphate upto November 2011

was 118083 MT which is 87% of the target as

against 125897 MT during the corresponding

period of the previous year.

During the financial year up to November

2011, the total sale of Fertilizers is 556608

MT as against 717892 MT during the same

period of the previous year.

During the year 2011-12 upto November

2011, the company has sold 386697 MT of

Factamfos and 135580 MT of Ammonium

Sulphate.

During the financial year till November 2011,

19930 MT of Zincated Factamfos, the

commercial production of which began last

year, has been sold in the market. This

product provides higher returns to FACT and

will also serve to promote the balanced use of

fertilizer nutrients in the country.

In order to improve the turnover and

profitability, the company is concentrating in

increasing volume of traded products.

56 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

During the year 2011-12, FACT has already

handled a Urea ship of 32996 MT at Cochin

Port. To promote Integrated Plant Nutrient

Management, FACT is expanding the sale of

organic manure to the State of Tamil Nadu.

During the year 2011-12, FACT has

considerably increased the sale of bulk

Gypsum and plans to sell 50,000 MT of

bagged Gypsum. The sale of bulk Gypsum is

set to touch an all time record of 6 to 7 lakh MT

during the year 2011-12. Sale of Gypsum

reached 492500 MT upto November 2011 as

against 252050 MT during the same period

last year. New fertilizer products, Zinc fortified

Gypsum, FACT Organic, and Zincated

factamfos are also being promoted in the

market.

The production and financial performance of

the company for the year 2011-12 upto

November 2011 has not been encouraging

as compared to the corresponding figures of

the same period of the previous year.

Shortage of phosphoric acid and extended

shut down has affected the production

performance of the company during the first

quarter of the current year. The production

and profitability of the company have

improved from November 2011. During the

second and third quarter, the company has

been able to achieve satisfactory level of

production. The company has made

arrangement for tie-up of raw materials and

hopeful of make good of the production loss

of the 1st

quarter and end up the financial year

2011-12 with a marginal profit.

7.9.4 Crop Specific Fertilizers/FACTMIX

FACT has developed its proprietary

formulation branded known as FACTMIX.

This formulation has been found very

successful for important crops of Kerala such

a s R u b b e r, Ba n a n a , R i ce , Ta p i o ca ,

Vegetables, Cardamom, Coconut etc. as

proved in research experiments and in field

trials conducted at FACT (R&D) and Kerala

Agricultural University. In order to broaden

the product base and extend geographical

coverage, FACT has undertaken research on

development of Customized Fertilizer –

Granulated (CFG) on important crops of

Tamil Nadu namely Rice, Maize, Banana and

Sugarcane in association with Tamil Nadu

Agricultural University (TNAU), Coimbatore.

This project has been undertaken as per the

guidelines of Ministry of Agriculture,

Government of India.

7.9.5 FACTMIX for Paddy

After successfully launching crop specific

fertilizer mixtures for Rubber, Coconut,

Cardamom and Banana under the brand

name of FACTMIX, during the year 2011-12,

FACT has launched crop specific fertilizer

mixture for Paddy under the same brand

name, FACTMIX. This highly beneficial

fertilizer mixture has been developed after

i n t e n s i v e i n - h o u s e R e s e a r c h a n d

Development study and field study by Kerala

Agricultural University.

7.9.6 MOU with Coir Board

FACT and Coir Board have entered into a

Memorandum of Understanding (MOU) for

conducting research studies for developing a

technology to convert coir pith (a waste in the

production of coir from coconut husk) into

value added products like organic fertilizer

and filler for fertilizer mixtures. FACT

Research and Development wing will carry

out the research studies.

7.9.7 Vision Plan

In line with the long term Vision plan approved

by the Board of Directors of FACT certain

projects and schemes have been identified

ANNUAL REPORT 57

a n d a r e u n d e r v a r i o u s s t a g e s o f

consideration and approval/ implementation.

A brief outline of these projects is given

below.

A. Under Implementation

1. Feed Stock conversion of Ammonia Plant

to LNG

LNG is expected to be available at Kochi by

end of 2012. FACT is carrying out

modifications in the Ammonia Plant for using

cheaper LNG as feed stock and fuel for

Ammonia manufacture as soon as it is

available. The Project will bring an energy

saving in the Ammonia Plant to the tune of 0.3

Gcal / MT Ammonia. The total cost of the

project is estimated as Rs.31.57 crore. The

pay back period of this project on account of

energy savings alone is just six months.

2. Automation of Mixing Centre at Cochin

Division

FACT is setting up a granulated fertilizer m i x i n g p l a n t a t C o c h i n D i v i s i o n , Ambalamedu. The project is proposed to be executed on a Lumpsum Turnkey (LSTK) mode with the Project Management Contract (PMC) handled by FEDO.

3. Sulphuric Acid Storage Facility at

Willington Island

The company has decided to set up its own

Sulphuric acid storage facility at Willington

Island to enable receipt of Bulk Acid

shipments of above 5000 MT. It is proposed

to set up 2 storages of 8200 MT each. The

total cost of this project is Rs.12 Crore. The

benefits of this project are the availability of

Bulk quantities of Sulphuric Acid which will

facilitate increasing captive production of

phosphoric acid.

B. Proposed

1. New Urea Plant at Udyogamandal

FACT intends to set up a new Urea plant of

1500 MT capacity per day at Udyogamandal

Ammonia Plant at a Project cost of Rs.940

Crore. A pre Feasibility report has been

prepared by FACT Engineering And Design

Organisation (FEDO). Bids were invited for

selection of process licensors. The DPR is

being prepared by FEDO.

2. A New 1000 TPD NP Plant

FACT is considering to set up an additional

NP Plant of 1000 TPD capacity at Cochin

Division along with revamp of Willingdon

Island Facilities for handling increased

volumes of Raw-materials utilising modern

equipments to increase the discharge rates

from shipments. The estimated project cost is

Rs.283 Crore (including Port improvement

schemes) distributed over 3 years.

3. Revamp of Phosphoric Acid Plant at

Cochin Division

One of the major problems being faced by the

company to sustain higher levels of

production at present is the non availability of

sufficient quantities of imported phosphoric

acid. In order to meet the challenge posed by

this problem, FACT intends to revamp its

phosphoric acid plant at Cochin Division to

increase the capacity from 360 Tonnes per

day to 550 to 600 Tonnes per day. The

r e v a m p w o u l d m e e t t h e c o m p a n y ' s

requirements for producing 2500 MT of NP

complex fertilizer on a daily basis.

4. Marketing of SSP

FACT has plans to enter into the area of SSP

marketing from existing SSP plants in the

southern region through a tie up with the

owners of the existing plants.

7.9.8 Redressal of Public Grievances and

Welfare Measures

A Public Grievance Cell is functioning in the

Company, as per norms laid down by utilising the CO2 being vented from the Government of India. At present, no

58 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

grievance received from public is pending for

redressal.

7.9.9. E m p l o y e e G r i e v a n c e R e d r e s s a l

Machinery

A machinery for redressal of employee

grievances exists in the Company. Generally

the grievances are related to work, work

place, shift arrangement, grant of increment,

promotion, salary fixation, transfer, etc. An

aggrieved employee may submit a complaint

/ request for settling the grievance in the

Division and if still aggrieved with the decision

of the Division Head, it may be submitted

b e f o r e t h e a p p r o p r i a t e G r i e v a n c e

Committee. Separate grievance committees

exist for examining and redressal of

grievances of managerial and non-

Category of Dealership As on 31.03.2011

Total Dealership 7983

SC / ST 615

No security deposit is collected from SC/ST

Dealers and they are encouraged to do

business by constant advice/follow up. All

efforts will be made to ensure that maximum

representation is given for SCs/STs in Dealer

a p p o i n t m e n t s w h e r e v e r a d d i t i o n a l

dealerships are provided.

7.9.12 Corporate Social Responsibility

FACT is giving prime importance for fulfilling

its Corporate Social Responsibility. As part of

Corporate Social Responsibility, FACT has

managerial employees. The individual undertaken the following activities.

concerned is given an opportunity to present

his grievance in person before the

committee, if required. The respective

Committee will deliberate on the grievance

and give their recommendations to the

management for appropriate action. In

addition, there is an SC/ST Grievance Cell

that looks into complaints received from

SC/ST Employees.

7.9.10 Employment of SC/ST, Ex-servicemen,

Physically Handicapped and Other

B a c k w a r d C l a s s e s ( O B C s ) a s o n

30.11.2011

Company has total man-power of 3198, out of

which 430 belong to Schedule Caste, 99 to

Schedule Tribes, 1000 to OBC, 1668 to

General, 228 to women, 36 to ex-servicemen

and 72 from Physically Handicapped

categories.

7.9.11 Reservation in Dealership

FACT has always followed a policy of

encouraging SC/ST Candidates to take up

dealership. Details of dealership allotted to

SC/ST are given below:

Village Adoption Programme

Under the Village Adoption Programme,10

progressive farmers having at least one acre

of land, in a village is identified. The soils of

the plots are analyzed for major, secondary

and micro nutrients.. Based on the soil test

results, soil and crop specific nutrients as per

the respective State Agricultural University

recommendations in the form of a proprietary

fertilizer mixture developed by FACT are

g i v e n t o t h e f a r m e r s . I n a d d i t i o n ,

micronutrients specified by the University

were supplied free of cost. FACT has

c o n d u c t e d 7 s u c h Vi l l a g e A d o p t i o n

Programmes (VAP) in Kerala, Tamil Nadu,

Andhrapradesh and Karnataka.

Farmer Training Programme

The Farmer Training Programme is intended

to impart training to limited group of 20-25

farmers on balanced use of fertilizers based

on soil test results. The objectives of this

programme are to create awareness on soil

ANNUAL REPORT 59

sampling methodology and use of balanced

fertilizer based on soil test results. FACT has

conducted 13 two day Farmer Training

Programmes in all the four southern states.

Field Demonstration

This Field Demonstration Programme aims to

demonstrate the effectiveness of correct

fertilizer application at farmer level. For this

one acre of plot of the farmer is divided into 2

equal 50 cents plots, control plot and

treatment plot. In control plot, farmer's

practice is followed. In treated plot,

University recommendation by way of

FACATMIX is given based on soil test

results. The yield difference between

treated plot and control plot are

compared. FACT has conducted 9 Field

demonstrations during the year 2010-11.

During the year a farmer's fair was

organized and effectiveness of balanced

fertilizer application was explained to the

farmers.

Drinking Water supply to residents of

EloorMunicipality

FACT is supplying drinking water for

more than 3000 households of Eloor

Municipality.

Farm level demonstration to educate farmers regarding scientific farming with optimum use of fertilizers. Shri Sham Lal Goyal, IAS & CMD, FACT along with senior FACT officers and farmers on his farm visit in Kerala

60 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

3

CHAPTER -8

8.1 FERTILIZER EDUCATION PROJECTS

8.1.1 The basic purpose of the application of

fertilizer is to enhance the crop productivity in

the country. The Fertilizer companies launch

their fertilizer projects for educating the

farmers about the quality/contents of the soil

for crops. Resultantly, the farmers are

encouraged by the companies to use the

balanced fertilizers based on the quality of

the soil nutrient wise and apply fertilizers

accordingly. Department of Fertilizers does

not implement Fertilizer Education Projects.

S u c h p r o j e c t s a r e a d m i n i s t e r e d b y

Department of Agriculture & Cooperation,

I C A R , S t a t e G o v e r n m e n t s a n d t h e

agriculture universities. However, some

fertilizer companies including PSUs do

undertake such projects as part of their

extension and marketing activities. The

PSUs under the administrative control of

Department of Fertilizers are encouraged to

launch fertilizer education projects for the

8.1.2

benefit of farming community as per the

MOUs signed with the Department of

Fertilizers in this regard. The main activities

undertaken by various fertilizer companies

under the Fertilizers Education Projects are

agricultural seminars, dealers meetings and

t r a i n i n g s , s o i l s a m p l e a n a l y s i s ,

demonstration, soil test recommendations,

exhibitions, orientation programmes, R&D

trials, field trials of fortified fertilizers, bio

fertilizers, distribution of crop literature,

organizing Krishi Melas etc, media publicity.

In order to promote balanced and integrated

use of fertilizers, Department of Agriculture &

Cooperation has introduced a new scheme

“National Project on Management of Soil

Health & Fertility” (NPMSHF) to promote

balanced and judicious use of fertilizer in

conjunction with Organic Manure on soil test

basis. The Scheme has been taken up from

2008-09 with on outlay of Rs. 429.85 crore

during 11th

Plan period.

Shri Satish Chandra, IAS, Joint Secretary DoF and CMD MFL is replying to farmer's queries on availability of fertilizers during the visit of Parliamentary Standing Committee on Chemical & Fertilizers to Kanakammal Chatram Village, Thiruvallur District, Tamil Nadu.

ANNUAL REPORT 61

8.1.3

So far, cumulative physical achievement

under this scheme in respect of Static Soil

Te s t i n g L a b o r a t o r i e s ( S T L s ) / M o b i l e

STLs/FQCLs set up/strengthened are 1049.

During 2010-11, 85.06 lakh soil samples

were analyzed against 106.95 lakh analyzing

capacity and a total of Rs. 408.19 lakh soil

health cards (SHC) issued to farmers .Funds

amounting Rs. 16.90 crore has been

released to implementing agencies during

2010-11 for different components under

NPMSF Scheme.

Government is also encouraging use of

fortified fertilizers. So far 10 (ten) such

fertilizers have been included in Fertilizer

Control Order (FCO). Customized fertilizers

f o r p r o m o t i n g s i t e s p e c i f i c n u t r i e n t

management to achieve maximum fertilizer

use efficiency of applied nutrient in a cost

effective manner are also being encouraged.

These fertilizers are soil specific and crop

specific and are formulated on the basis of

soil testing results. So far, 36 such fertilizers

have been notified under Clause 20B of FCO.

To ensure quality of organic inputs, 5 bio-

fertilizers viz. Rhizobium, Azotobacter,

Azospirillum, Phosphate Solubilising micro-

organism and Mycorrhizal Bio-fertilizer and

two organic fertilizers, namely city compost,

vermin-compost and de-oiled castor cake

were notified under FCO. 1,228 samples of

bio fertilizers and 271 samples of organic

manures were analyzed for quality control.

1,465 mother culture strains of different

microorganisms were supplied to various bio-

fertilizers production units in the country. To

ensure access of organic quality assurance

system to small and marginal farmers (at

practically no cost), a farmers group centric

organic guarantee system known as

Participatory Guarantee System (PGS) has

been launched. Government is also

educating farmers through training and field

demonstrations on balanced use of fertilizers

for improving soil fertility and its productivity.

It also aims at strengthening soil testing

facilities, upgrading the skill of staff working in

soil testing laboratory and strengthening the

fertilizer quality control facilities. As per the

above said scheme, the following amounts of

subsidy is to be provided by Department of

Agriculture & Cooperation for STL.

Sl. No.

Particulars

Policy

1.

For Setting up of additional Soil Testing Labora tories by Agri clinics/NGOs /Cooperative, entrepreneurs, etc.under Private partnership mode.

@50% of project cost limited to maximum of „ 30 lakh as one time subsidy.

2. For Adoption of village by Soil Testing Laborato ries through Frontline Field Demonstration.

@ Rs. 20000 per Frontline Field Demonstration.

3. For Setting up of Mobile Soil Testing Laboratori es by Agri Laboratories by Agri clinics/NGOs/Cooperative, Private entrepreneurs, etc. under Pvt. partnership mode.

@ 75%of project cost limited to maximum of „ 30 lakh as one time subsidy.

62 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Year New

Static STLs (Nos)

New

Mobile STLs (Nos)

Strengthening of

existing STLs (Nos)

New

FQCLs (Nos)

Strengthening of

existing FQCLs (Nos)

2008-09 42 44 39 2 19

2009-10 66 62 107 11 19

2010-11 16 10 9 1 1

2011-12 (as

on 13/12/2011 0 2 10 1 0

Total 124 118 165 15 39

Sl. No Fertilizer Company Year 2009-10

1. FCI Arawali Gypsum and Minerals India Ltd. 2. Gujarat Narmada Valley Fertilizers Company Ltd. 3. Gujarat State Fertilizers & Chemicals Ltd. 4. Indian Potash Ltd. 5. Krishak Bharati Cooperative Ltd. 6. Mangalore Chemicals & Fertilizers Ltd. 7. Rashtriya Chemicals & Fertilizers Ltd. 8. Southern Petrochemical Corpn. Ltd. 9. Zuari Industries Ltd.

Year 2010-11 10. Indo Gulf Fertilizers 11. National Fertilizers Limited 12. The Fertilizers & Chemicals Travancore Ltd.

8.1.4 Up to 2010-11, 4.08 crore soil health cards submitted proposals of fertilizer companies

have been issued by the State Governments for setting up soil testing laboratories, training

for balanced and judicious use of fertilizers. and demonstration on balanced use of

Ye a r - w i s e n u m b e r o f S o i l Te s t i n g fertilizers to the Department of Agriculture &

Laboratories (STLs) and Fertilizer Quality Cooperation. The proposals of the following

Control Laboratories (FQCLs) sanctioned twelve fertilizer companies have been

under the scheme are given in table below:- approved by the Department of Agriculture &

Cooperation during 2009-10 and 2010-11:

8.1.5 As a follow up on the recommendation of the

Standing Committee on Chemicals &

Fertilizers (2009-10) on Fertilizer Education

Projects, the Department of Fertilizers

*****

ANNUAL REPORT 63

CHAPTER -9

9.1 INFORMATION TECHNOLOGY (IT) Urea manufacturers to the consumption

centers across the country. The processing 9.1.1 E-DELIVERY FOR FERTILIZER MANAGEMENT

Fertilizer Managemenlt On-line has been

developed in Department of Fertilizers in

close collaboration with National Informatics

Centre to meet the nation objective of making

fertilizers available timely, adequately in good

quality and at affordable price to the farmers

by maintaining growth of fertilizer industry

through subsidies/concession. Proper

planning and monitoring of various aspects

like fertilize production, imports, quality

control, distribution, movement, sales,

stocks, subsidies and concessions has been

felt essential. In order to manage these

issues effectively, the following applications

systems have been developed /upgraded in

order to pace with the IT enhancements and

change in fertiizer policy:-

9.1.4

of monthly claims through application system

helps in timely release of subsidy to the urea

manufacturers. The system helps in

monitoring various activities pertaining to the

payment of subsidy by generating various

periodic reports as well as query retrieval.

APPLICATION SYSTEM FOR MONITORING

ENERGY CONSUMPTION NORMS

The system is used to calculate the overall

energy consumption in urea production by

plants based on various inputs and their

calorific values purchased from various

sources and consumed in ammonia

production. The system provides information

support to monitor operational performance

of the plants viz., daily reassessed capacity,

average productive hours, and daily

production rate and capacity utilization of

9.1.2 WEB BASED FERTILIZER PRODUCTION

MONITORING SYSTEM

The application system facilitates On-line

data entry and provides information support

for planning and monitoring the fertilizer

production I the form of material as well as

nutrients. The system provides analysis in

identifying the macro and micro level factors

responsible for deviations in production in the

country. The system cover various aspects

viz., installed capacity, production targets,

actual production, capacity utilization,

requirement and consumption of raw

materials/intermediates for fertilizer plants.

9.1.3 F E R T I L I Z E R S U B S I D Y PAY M E N T

INFORMATION SYSTEM

The system is used to compute the subsidy

amount based on the subsidy rates, equated

freight rates and sales tax rates notified by the

Government for the quantity moved by the

ammonia / Urea. The system also maintains

consumption and balance of ammonia for

each quarter.

9.1.5 APPLICATION SYSTEM FOR REVISION IN

UREA CONCESSION RATES

The System facilitates in quarterly revision of

concession rates for urea manufacturing

units in each group under group concession

scheme on account of escalation/de-

escalation in the variable cost of various

inputs and utilities consumed in urea

production. The software derives energy

consumption proportions of various inputs

w.r.t. the total normative energy and

computes input wise proportional costs. The

total input energy cost, normative costs of

various utilities and fixed cost are then

summed to arrive at the rate of concession.

The total financial impact is exercised w.r.t.

the previous rate of concession and

dispatched quantities.

64 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

9.1.6 WEB BASED FERTILIZER DISTRIBUTION

AND MOVEMENT INFORMATION SYSTEM

The system maintains the data related to ECA

supply plan, fertilizer requirements in

Sates/UTs, opening stocks with state

i n s t i t u t i o n a l a g e n c i e s a n d f e r t i l i z e r

companies, monthly movement orders,

i m p o r t s , d i s p a t c h e s ( r e g u l a t e d / d e -

regulated/imported by rail/road), availability

and sales of different fertilizers.

9.1.7 WEB BASED FERTILIZER CONCESSION

SCHEME MONITORING SYSTEM

The computer based application system is

the major integral process of Fertilizer

Concession Scheme for timely release of

concession payments to the fertilizer

manufacturers and importers for the sales of

indigenous/ imported phosphatic and

Potassic fertilizers in Stats/UTs. The monthly

claims at various stages i.e. 'On Account',

'Differential' and 'Balance' are processed

using the software based on base/final rates,

regist4ration for sales, certification. The

computerized noting for approval and

sanctions for payments to PAO, Expenditure

and Control Register (ECR) and various

queries/reports are generated to make and

monitor the concession payments.

9.1.8 W E B B A S E D F E R T I L I Z E R I M P O R T

MANAGEMENT SYSTEM

The system assists in monitoring the fertilizer

Import Plan based on actual imports against

targets, status of FOB and C&F import

contracts for prilled urea on Government

account under ECA demand and import of

granular urea from OMIFCO under UOTA.

The system also maintains details of

Department of Fertilizer's authorization to

State Trading Enterprises (STES)/ Handling

& Marketing Agents for import of urea during a

scheduled period.

9.1.9 WEB BASED HANDLING & PAYMENTS

SYSTEM FOR FERTILIZER IMPORTS

The application system provides decision support to the Department of Fertilizers in selecting handling agents, fixation of handling

rates and monitoring of expenditure. The system processes the claims from handling/ marketing agents towards making payments of inland freight and handling charges after adjusting the recovery of cost of cargo at Pool Issue price (PIP) from handling/ marketing a g e n c i e s , s e t t l e m e n t o f t h e p o r t dues/ICC/other charges and demurrage /dispatch with handling/marketing agencies.

9.1.10 FERTILIZER PROJECT MONITORING

SYSTEM

The system facilitates in monitoring monthly

expenditure incurred through Internal and

Extra-budgetary resources (IEBR) and

Budgetary Support on various schemes/

projects approved by DoF during Five Year

Plans w.r.t. plan outlays and yearly outlays.

9.2 EXECUTIVE VIDEO CONFERENCING

SYSTEM (EVCS)

N I C N E T B a s e d E x e c u t i v e V i d e o

conferencing system (EVCS) has been made

operational in the desk of Secretary,

Department of Fertilizers and is being used as

an effective mode of communication for inter-

Ministerial consultations and quick decision

making. Point-to-Point Video conferencing

can be initiated by anyone connected to

EVCS and multi-point Video conferencing

can be organized through NIC, Delhi.

9.3 INFORMATION & COMMUNICATION

TECHNOLOGY (ICT) INFRASTRUCTURE

DoF's intranet consisting of 270 nodes is

operational in Departments' offices located in

Shastri Bhawan, Udyog Bhawan, Janpath

Bhawan and Sewa Bhawan. NIC's iNoc

(Integrated Network Operation centres) at

Shastri Bhavan, Udyog Bhavan and Sewa

Bhavan protect computer systems of DoF's

intranet from network security attacks.

The clients systems in the Department have been provided upto LDC level with internet connectivity to make wider use of IT services. For accessing and internet through RF link of NICNET, all the computers are connected through NIC's proxy server where built-in firewall capabilities are enabled.

ANNUAL REPORT 65

9.4 WEB SITE/WEB APPLICATIONS HOSTING

The website of DoF and fertilizer PSUs are

hosted at Internet Data Center(IDC), NIC

Hqrs. In a secured ICT environment to bring

citizen interface and transparency in

Government functioning. The web based

applications for fertilizer production,

movement, concessions payment, imports &

handling are operational from IDC. The

remote facility through secured Virtual Private

Network (VPN) connection of NIC is being

used in DoF and Fertilizer PSUs for instant

updations in the websites.

Cabinet Secretary to the Government of India

directed all Government Ministries /

Departments to have their websites as per the

g u i d e l i n e s a d o p t e d b y D A R & P G .

Accordingly, the website of Department of

Fertilizers has been redesigned and enriched

in order to make it compliant to the guidelines.

The website has been made more qualitative,

informative and user friendly to bring

transparency in Government functioning and

citizen interface.

9.5 INTRAFERT PORTAL

IntraFERT, an Intranet portal has been

developed to provide comprehensive,

accurate, reliable and one stop source of

information to the staff and officers of the

Department of Fertilizers. The portal aims in

bringing less paper office environment in the

department. It facilitates a common

information platform whereby, all office

orders, circulars, critical news-updates,

downloading of standard forms, telephone

directory of DoF, electronic pay-slip

generation, personal profile, GPF details,

income tax statement etc. and links to useful

w e b s i t e s a r e a v a i l a b l e e q u a l l y a n d

instantaneously to all employees. This

eliminates the requirements of personal visits

to HR, Cash and Administration Sections.

9.6 MOBILE BASED FERTILIZER MONITORING SYSTEM (mFMS)

Consequent to the budget announcement of the

Finance Minister regarding the transfer of

direct subsidy to the farmer , the DOF had

initiated action for tracking the sale of fertilizers

to the farmers. The National Informatics Centre

( NIC) has been mandated with the task of

development of the software to track further

movement of the fertilizers from the district as is

available in the FMS to the retailers, so that the

information availability at the last point of sale to

the farmer is visible in the public domain.

Thereafter, the system will be extended to

capture the sales to the farmer. The

Government has also appointed a Task Force,

under the Chairmanship of Shri Nandan

Nilekani, Chairman,UIDAI, to suggest an

implementable solution for the transfer of direct

subsidy to the farmer. The mandate of the Task

Force is to recommend and implement a

mechanism for transfer of direct subsidy in

fertilizers, including, inter-alia, to identify and

suggest the required changes in the existing

systems, processes and procedures, IT

frameworks and supply chain management.

The Task Force is also to oversee and evaluate

the implementation of the solutions proposed

on pilot basis through the concerned

implementing Ministries.

T h e Ta s k F o r c e h a s r e c o m m e n d e d

implementation of examining the feasibility of

direct subsidy to intended beneficiaries in three

phases. Phase-I on information flow would

extend the information collection to the retailer

level on both , receipt and sales. Phase-II on

subsidy to the retailer would deal with the

transfer of subsidy directly to the retailer on

receipt of fertilizers. Phase-III on subsidy to the

farmer deals with the transfer of subsidy to the

farmer and will be done only after the

stabilization of Phase-II and on the availability of

policy details on the intended beneficiaries.

9.7 E-GOVERNANCE

9.7.1 Department of Fertilizers has taken various

measures to bring e-Governance:

· Office Automation Packages: CompDDO

(Comprehensive Function Management of

Drawing & Disbursing Officer) Payroll System

66 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

for Central Government Offices, Web based

File Tracking System, Application Monitoring

System under RTI Act, Leave Management

System, CPGRAMS (Centralized Public

Grievances Redress and Monitoring System)

and CPENGRAMS (Centralized Pension

Grievance Redress and Monitoring System)

developed by NIC in collaboration with

DARPG are operational in the Department of

Fertilizes.

· To strengthen further the Office Automation in

Department of Fertilizers, an IT based system

“Office Notifications Management System”

has been developed and implemented to

generate, store and manage different kinds of

official letters viz. Office Memorandum,

Letters, Office Orders, Orders, D.O. Letters,

Resolutions, Inter-Departmental Notes,

Press Communiqués etc in compliance of

Manual of Office Procedures (MOP).

· The facility of work processing in Hindi is

available in all the computers in the

Department.

· E-mail service is being extensively used by

the officials of Department of Fertilizers for i n f o r m a t i o n e x c h a n g e w i t h f e r t i l i z e r companies and other agencies.

9.7.2 I M P L E M E N TAT I O N O F E - O F F I C E

MISSION MODE PROJECT IN THE

DEPARTMENT

` The Department of Administrative Reforms

and Public Grievances has taken up a project

for implementation of e-office (paperless

office) in Government Departments. The

Department of Fertilizers has been identified

as one of the Departments for implementing

e-office. Under the Project the DARPG is

providing technical support and training to

staff through IC and the Department is

p r o v i d i n g i n f r a s t r u c t u r e r e q u i r e d f o r

implementation of the project. It is expected

that the E-office project will function in the 1st

month of next financial year. With the

implementation of the E-office mission mode

project there will be considerable reduction in

the paper work, expedite decision making

and transparency.

*****

ANNUAL REPORT 67

CHAPTER -10

VIGILANCE ACTIVITIES C E L E B R A T I O N S O F V I G I L A N C E

10.1 The vigilance activities of the Department AWARENESS WEEK

extend not only to the Department but also to 10.3 The 'Vigilance Awareness Week' was

that of 7 Public Sector Undertakings and 1 celebrated in this Department from 31st

Multi State Cooperative Society. The

Vigilance Division of the Department is

headed by the Joint Secretary who is

designated as the Chief Vigilance Officer

October 2011 to 5th

November 2011. Banners

were displayed in the Department to create

vigilance awareness among the staff A

pledge was administered to the staff by

10.2

(CVO) in the Department. The CVO is

assisted by Deputy Secretary, Under

Secretary and other vigilance staff. The

Department supervises the vigilance

activities within the framework provided by

the Central Vigilance Commission (CVC).

The Department plays pro-active role in

ensuring the prompt disposal and in framing

preventive guidelines. This helps in

minimizing the occurrence of vigilance cases.

Efforts are being made by the Department to

simplify the procedures in the PSUs to

promote transparency in their working. This

reduces the chance of corruption

VIGILANCE ACTIVITIES DURING 2011

T h e n u m b e r o f p e n d i n g v i g i l a n c e

(Disciplinary Proceeding) cases in the PSUs

was 34 as on 31.12.2011. The Department

has been regularly monitoring the pending

complaints/investigations by having close

inter-action with the concerned CVOs of

PSUs and constant efforts are being made to

e n s u r e t h e d i s p o s a l o f d i s c i p l i n a r y

proceedings.

10.4

10.5

Secretary (Fertilizers) and an essay

competition was held thereafter. There was

active and enthusiastic participation of the

officers and employees of the Department in

this Essay Competition. The 'Vigilance

Awareness Week' was also celebrated with

great gusto in the PSUs and KRIBHCO and

various competitions like slogan writing,

Essay, Debate, Quiz, Workshops etc. were

held.

SURVEILLANCE AND DETECTION

Agreed list of public servants as well as List of

Public Servants of Doubtful Integrity for the

year 2011 have been finalized.

PUNITIVE ACTION

As on 1st

January 2011, 35 complaints from

various sources against the officials of PSU's

were under examination. During the period

from 1st

January 2011 to 31st

December 2011,

17 complaints were received in the

Department. A total of 18 complaints were got

investigated/ examined and disposed off.

*****

68 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -11

11.1 RIGHT TO INFORMATION ACT, 2005 B. Orders designating PIOs, with required

11.1.1

The Right to Information /act, 2005 (RTI) was

assented by the President of India on

15.6.2005 and notified on 21.6.2005. Some

of the /Sections of the Act, namely, Sections

4(1), 5(1) & (2),12,13,15,16,24,27 & 28

relating to obligations of Public Authorities for

maintenance and computerization of

record/information, designation of Public

Information Officers(CPIO), constitution of

Central Information commission and State

information Commission, exclusion of certain

details, placed on website, which are up

dated from time to time.

C. Counter opened at Public Information Centre

of DoF at Shastri Bhavan for application as

well as prescribed fee under RTI.

D. Appointment of Nodal Officer intimated to

Department of Post enabling providing of

services by that Department as CAPIOs

across the country.

o r g a n i z a t i o n e t c . c a m e i n t o f o r c e

immediately. The remaining provision of the

RTI act came into force on the 120th

day of its

enactment i.e. 12th

October 2005.

11.1.2 In compliance of the RTI Act the Department

has designated CPIOs and CAPIO. The

respective PSUs under the administrative

control of the Department have been directed

to ensure compliance of the RTI Act. Some of

the important steps taken by the Department

in compliance of the Act are:-

A. Created a separate link for RTI Act on its

website http://fert.nic.in placing a handbook

on RTI giving general information about the

Department required under the Act.

11.1.3

11.1.4

The Department has started registration of

applications and appeals under the RTI Act on

the Management Information System (RTI-

RAMIS) software available on the Web-Site of

CIC.

During the year 2011-2012, 195 applications

and 8 appeals were received of which 181

applications and 7 appeals were disposed of,

in time, during the said year. 9 applications

were rejected for not being accompanied by

requisite fees in the prescribed manner, as

per the RTI Act. Remaining applications and

appeal are under process and reply would be

sent to the applicants in time.

*****

ANNUAL REPORT 69

CHAPTER -12

12.1 PROGRESSIVE USE OF OFFICIAL

LANGUAGE HINDI

in Hindi to Central Government offices

located in Region 'A', 'B' and 'C', action plan

12.1.1

12.1.2

Department of Fertilizers continued its efforts

towards greater use of Hindi in official work

during 2011-2012 keeping in view the Annual

Programme issued by the Department of

Official Language, Ministry of Home Affairs

for implementation of the Official language

policy of the Union. The work pertaining to

the progressive use of Hindi in the

Department is under the administrative

control of Joint Secretary (Administration),

assisted by a Deputy Director (OL). The Hindi

Section consists of one Assistant Director

(OL), a Senior Translator, three Junior

Translators and one Assistant.

All the 205 Computers (PCs) and 10 Laptops

in the Department are equipped with bilingual

facility. Adequate reading material in Hindi

has been made available in the library of the

Ministry of Chemicals & Fertilizers. Continue

Efforts are being made to promote the use of

Hindi in the correspondence. During the year

Two Assistants and one lower Division Clerk

of the Department have been trained in Hindi

Typing. Besides, a number of measures

have been taken for the promotion of

progressive use of Hindi in the Department,

its attached office of FICC and PSU's under

its administrative control. Details of these

measures are summarized below:-

based on the checkpoints identified in the

Department has been prepared to ensure

compliance of the official language policy. All

the letters received in Hindi are invariably

replied to in Hindi. Efforts are also being

made to reply the letters in Hindi which are

received in English from region 'A' & 'B'

Original correspondence in Hindi with the

state govt. is also being increased.

12.3 OFFICIAL LANGUAGE IMPLEMENTATION

COMMITTEE (OLIC)

There is an Official Language Implemen-

t a t i o n C o m m i t t e e ( O L I C ) u n d e r t h e

Chairmanship of Joint Secretary (Adm.) in the

Department. This committee regularly

reviews the progress made in the use of Hindi

in the Department, its attached offices, FICC

and PSUs on quarterly basis. It gives

appropriate suggestions and recommends

measures to be taken for the effective

implementation of the official language policy.

12.4 HINDI SALAHKAR SAMITI

With a view to render advice for effective

implementation of the official language policy

of the Government, the Hindi Salahkar Samiti

(Advisory Committee) of the Ministry of

Chemicals and Fertilizers (Department of

Chemicals, Deptt. of Pharmaceuticals and

the Department of Fertilizer has been 12.2 IMPLEMENTATION OF SECTION 3(3) OF

THE OFFICIAL LANGUAGE ACT

In pursuance of the official language policy of

the Govt. of India, all documents covered

under section 3(3) of the Official Language

Act, 1963 are being issued both in English

and Hindi. In order to ensure correspondence

reconstituted. Joint Secretary (A&M)

Department of Fertilizers, is the Joint Member

Secretary of this committee. The Meeting of

the Committee held on 10t October, 2011 in

Port Blair under the Chairmanship of the

Minister of State for Chemical and Fertilizers.

The members of Parliament, Non-Official

70 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Members, Government officer Members and

the Heads of the PSU's under the

Department were present in the Meeting.

The Hon'ble Minister expressed his pleasure

for the work of Official Language Hindi being

done in all the three Deptts. of the Ministry viz.

Chemicals and Petro-Chemicals, Deptt. of

Pharmaceuticals and Deptt. of Fertilizers and

all the PSU,s under them. He also advised to

Language is continued. This scheme carries

One prize of Rs.1000/- each, Two second

prizes of Rs.600/-600/- each and Two third

prizes of Rs.300/- 300/-each.

12.6 HINDI DAY/HINDI FORTNIGHT

In order to encourage the use of Hindi in

official work amongst officers/employees of

the Department, an appeal was made by the use simple and day-to-day used words and Honourable Minister on 12

th September,

take forward the work of dissemination of the

Official language Hindi: 2011. During the Hindi fortnight, which

wasorganised in the Department from 12th

Hon'ble Union Miniter of State for Chemicals & Fertilizers, Shri Srikant Kumar Jena presiding over the meeting of the Hindi Salahkar Samiti of the Ministry of Chemical & of Fertilizers.

12.5 INCENTIVE SCHEME FOR ORIGINAL

NOTING/DRAFTING WORK IN HINDI

The incentive scheme for noting/drafting in

Hindi introduced by the Department of Official

September, 2011 to 26th

September, 2011,

various competitions such as Hindi

Essay writing, Hindi typing, short

extempore speech in Hindi, noting and

ANNUAL REPORT 71

drafting in Hindi, Hindi general knowledge

and poem recitation competitions in Hindi

were organised. On 14th November, 2011

p r i z e s w e r e a w a r d e d b y S e c r e t a r y

(Fertilizers) to those participants who scored

first, second, third prizes and consolation

prizes viz. Rs. 2500/-, Rs. 2000/-, Rs. 1500/-

& Rs. 1000/- in these competitions (Three

consolation prizes each in Hindi Essay &

Hindi Noting & Drafting competitions, two

prizes each in Hindi Typing, Poem recitation,

Hindi Stenography and General Knowledge

Competitions) alongwith certificates.

12.7 PRATI DIN EK SHABD

The Scheme named 'Prati Din Ek Shabd', is

being run in the Department, that continued

this year also Under this scheme, one

word/phrase in Hindi and its English

equivalent was being displayed on the White

Board installed on the second floor 'A' wing

Shastri Bhavan. These words/phrases are

generally of administrative and technical in

nature which are used in day-to-day official

work.

12.8 HINDI WORKSHOPS

During the year, 3 Hindi workshops, one for

Section Officers, one for Assistants and

Stenographers and one for LDC's & UDC's,

were organised in the Department to

encourage the officials to do more and more

w o r k i n H i n d i a n d a l t o g e t h e r 3 0

officers/employees participated in these

workshops. One of these workshop included

officers/employees trained to do their work in

Hindi on computed based system.

12.9 INSPECTIONS REGARDING PROGRES-

SIVE USE OF HINDI

In order to oversee the implementation of the

official language policy of the 4 PSUs under

the administrative control of this Department

were inspected by the Deputy Director (O.L.)

of the Department during the year. In addition,

the first Sub-Committee of the Parliamentary

Committee on Official Language inspected

six office under the administrative control of

the Department.

*****

72 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -13

13.1 WELFARE OF SCS, STS, OBCS AND

PHYSICALLY HANDICAPPED PERSONS

Due care has been exercised during the year

under review to implement Government's

instructions regarding recruitment and

promotion of candidates belonging to the

Scheduled Castes (SCs), Scheduled Tribe

(STs), Other Backward Classes (OBCs) and

Physically Handicapped (PHPs) categories

in various groups of services in the

Department. The representation of these

categories in the Department as on date is as

under:-

Group Total No. of

Officers/Staff

SC ST OBC PH

A 39 03 01 01 -

B 105 17 05 07 01

C 105 27 05 11 01

Total 249 47 11 19 02

13.2 REPRESENTATION OF SCS, STS, OBCS

A N D P H Y S I C A L LY H A N D I C A P P E D

PERSONS IN PSUS

Presidential Directives on reservation for the

concerted efforts are being made to fill up the

vacancies for the reserved categories. The

representation of SCs, STs, ex-servicemen,

physical handicapped persons and OBCs in

the PSUs is given in the Annexure-XIII.

Besides providing employment, PSUs have

been advised to prepare and implement

special programmes/schemes for education

of tribal in scientific use of fertilizers, building

up of dealer/retailer network in the tribal

areas, and making fertilizers available in

small packs in the tribal predominated area.

13.3 WELFARE OF MINORITIES

The PSUs under the Department have further

been advised to provide facility of pre-

examination coaching to the candidates of

minority community, wherever feasible, and

to take steps to increase awareness of

candidates belonging to the communities

about employment opportunities. They have

also been advised to include a representative

of the minorities in the recruitment selection

boards to ensure that the minorities get an

adequate share in the services and benefit

from development schemes.

13.4 RESERVATION IN DEALERSHIP

candidates belonging to the SCs and STs

issued from time to time by the Department of

Public Enterprises (DPE), have been

implemented in all the PSUs under the

administrative control of the Department.

The Presidential Directives regarding

reservation for OBCs have also been made

applicable w.e.f. 8.9.93 in the Department.

13.4.1

The Department had instructed all the PSUs

under its administrative control to reserve at

least 25% of dealerships of fertilizers for the

members belonging to SCs/STs. To ensure

availability of sufficient numbers of suitable

SC/ST candidates, the following concession

are generally given by the undertakings:

The implementation of these directives is

being monitored in the Department and

· Exemption/relaxation from security

deposits.

ANNUAL REPORT 73

· Preference in supply of fast moving · Free training for handling of fertilizers.

materials.

13.4.2

The PSUs have also been advised to reserve

· Higher rate of dealership margin as

compared to that allowed to general

dealers; and

10% of fertilizer dealerships for ex-

servicemen.

*****

74 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

CHAPTER -14

14.1 WOMEN EMPOWERMENT

The principle of gender equality is enshrined

in the Indian constitution in the Preamble,

Fundamental Rights, Fundamental Duties

and Directive Principles. The constitution not

only grants equality to women but also

empowers the State to adopt measures of

positive discrimination in favour of women.

The Department of Fertilizers is committed

towards giving importance to women in

different spheres. Though there is not

specific scheme, as such, for women, the

PSUs under its administrative control are

involved in year long activities to create large

scale awareness among women with their

active participation. These programmes are

aimed towards enabling women to realize

their full potential and involvement in decision

making. Department of Fertilizers has a

“Complaints Committee” to attend to

grievances of its women employees.

Department has also allocated a separate

room for women to serve as common room.

The Department takes pride in providing

c o n g e n i a l e n v i r o n m e n t t o w o m e n

employees.

14.2 RCF

14.2.3

Ø

Ø

Ø

14.2.4

14.2.5

All the welfare and employee benefit

schemes are equally applicable to male and

female employees of RCF.

Under the special schemes and policies for

women employees RCF has set up –

Special Cell for Women Employees (as per

Communication from National Commission

on Women)

Committee for Sexual Harassment Cases (as

per Supreme Court Guidelines)

Special Medical check-ups/camps.

All the benefits under legal requirements

such as Maternity Benefits, Nursing Breaks,

etc. are given to women employees.

RCF is one of the pioneer members in the

Forum of Women in Public Sector (WIPS)

since its inception (1990). It is a corporate

member of this forum and has been

representing in all activities of the forum with

total support and participation in all activities.

Some RCF women officers have been

working with the forum as heads of

taskforces, members of committees and

have contributed in policy making and

development of women to a great extent.

14.2.1 RCF as an organization has always been fair

in treating employees without any gender

bias. Opportunities for growth, training,

challenging jobs, learning are equally

available to both men and women employees

of RCF. Women represent in fair numbers in

14.2.6

As a part of regular training, RCF

incorporates awareness building for all

officers (Men and Women) on the Sexual

Harassment Guidelines and also covers

gender sensitization issues.

the batch of apprentice trainees in technical 14.3 NFL 14.2.2

areas.

Women are working in technical / non-

technical / managerial positions and some of

them have risen to the level of top

management positions in the organization.

14.3.1

Female employees comprise 5.3% of the

total workforce of the Company. The

Company has a female Full-time Functional

Director on its Board. The Company has

adopted adequate measures to facilitate a

ANNUAL REPORT 75

14.3.2

congenial work atmosphere for its women

employees.

There is no instance of any Gender inequality

and both men and women employees are

e n j o y i n g e q u a l r i g h t s . T h e w o r k i n g

atmosphere is very cordial and harmonious.

e m p o w e r m e n t o f w o m e n a n d f o r

mainstreaming gender issues.

14.7 FACT

14.7.1 Employment of women employees in

FACT and their profile

14.4 MFL

MFL do not have any problems for

mainstreaming gender issues and all the

women employees are being involved in all

the activities. Further, MFL is having a

separate Women's Forum affiliated to

“Women in Public Sector (WIPS)” and there

is a women coordinator from MFL nominated

for this purpose for coordinating the activities

and promoting the interests of women

employees relating to their welfare ,

development and empowerment. Every year,

MFL is conducting “Women's Day” and

almost all the women employees are

participating in the programmes / events.

Last year 2010-11, on March 15, MFL

conducted Women's Day in a grand manner.

14.5 BVFCL

Equal opportunity has been provided to

women in recruitment to posts both in

technical and administrative disciplines.

Exception has been made only for jobs

involving shift-work round the clock. Equal

remuneration is paid to employees of both

genders doing the same type of work. There

is no discrimination on grounds of gender.

This has enabled some of our women officers

to excel in their respective field of activities

leading to their being chosen for the coveted

M e r i t A w a r d g i v e n f o r o u t s t a n d i n g

performance and achievements.

Women executives occupy key positions in

the Management cadre as Deputy General

Managers/ Chief Managers/ Chief Engineers

& Dy. Chief Managers/ Dy. Chief Engineers in

v a r i o u s E n g i n e e r i n g d i s c i p l i n e s l i k e

14.5.1

14.5.2

BVFCL lays emphasis in development of

e m p l o y e e s w i t h o u t a n y g e n d e r

discrimination. There is no discrimination

against Women employees. Adequate

healthcare provided for the welfare of the

Women.

Emphasis is given at the time of recruitment

and many women candidates have been

recruited in recent past. As per the directives

of the Controlling Ministry, a committee

headed by a Lady Officer is constituted to

address any problem related to sexual

harassment. Till date no such case has been

received.

Chemical, Electrical, Civil, Computer,

Industrial Engineering etc. and administrative

disciplines like Finance, Human Resources,

Materials, Marketing etc.

14.7.2 Statutory Welfare Measures implemented

for Women employees.

Under the Maternity Benefit Act, women

employees are entitled for maternity leave of

90 days and medical benefits associated with

pregnancy, delivery, miscarriage etc. Under

the provisions of the Factories Act, the

working hours of women employees covered

under the Act is restricted between 6 am and

7 pm. Nursing mothers are given two 14.6 FAGMIL

As such, the company is a new Company and

is engaged in the business of mining in the

desert areas of Rajasthan. Suitable

measures will be taken for the welfare and the

*****

intervals of 15 minutes each as feeding time,

or alternatively as a working arrangement of

30 minutes at a stretch, for feeding their

infants, up to a maximum of fifteen months

after confinement.

76 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

As per GOI Orders, women employees

undergoing family planning operation are

given special leave up to 2 weeks. A crèche is

also provided for the welfare of women

employees.

14.7.3 Non-statutory Welfare measures imple-

mented

The Company sponsors a Ladies Club for the

recreational activities of women employees

and wives of male employees. There is also

an association of women employees, by the

name FACT Women' Welfare Association,

whose activities are welfare oriented.

14.7.4 Security at Work

Based on the GoI Orders, there is a full

fledged and active complaints Committee to

look into complaints of atrocities/harassment

meted out to women employees at work

place. Not less than half the members are

women including an external member who is

a lady Professor of a reputed Social Work

College.

*****

ANNUAL REPORT 77

CHAPTER -15

CITIZEN CHARTER/GRIEVANCE REDRESSAL

MECHANISM

Citizen Charter

Department of Fertilizer has created a

Sevottam complaint Citizens'/Clients'

Charter for the year 2011-12 as well as

Sevottam Complaint Grievance Redress

Mechanism under Results Framework

Document (RFD) of the Department. The

Citizen Charter of Fertilizer Industries

Coordination Committee (FICC), which is an

attached office of Department of Fertilizers, is

under preparation.

Our Mission

Achieving fertilizer security for the country for

sustainable agricultural growth supported by

a robust domestic fertilizer industry.

Our Vision

Ensuring adequate and timely availability of

fertilizers to the farmers at affordable prices

through planned production and imports and

distribution of fertilizers in the country and

planning for self-sufficiency in Urea

production.

Stake Holders

The following are our stake holders;

· All PSUs under the Administrative Control of

DoF

· All other Fertilizer Producing Companies

· Department of Agriculture and Cooperation

· State Governments

· Importers of Fertilizers (Urea, MOP,

Complexes)

· Importers/Raw material suppliers · Other Ministries (Ministry of Finance, Ministry

of Petroleum and Natural Gas, Ministry of

Railways, Ministry of Surface Transport,

Planning Commission, Department of Public

Enterprise, Public Enterprises Selection

Board, Tariff Commission, DGFT etc.

Grievance Redressal Mechanism

With an objective of speedy redressal,

e ff e c t i v e m o n i t o r i n g o f g r i e v a n c e s ,

Department of Fertilizers (DOF) has

implemented an integrated application

system based on web-technology prepared

a n d d e v e l o p e d b y D e p a r t m e n t o f

A d m i n i s t r a t i v e R e f o r m s a n d P u b l i c

Grievances and national Informatics Centre

called Centralized Public Grievance Redress

and Monitoring System (CPGRAMS) through

which citizens can submit their grievances

from anywhere and anytime for easy

communication between DoF and citizens.

The system provides the on-line facility to the

citizen to monitor the progress of redressal

process in respect of grievance lodged by

them. The system provides link between

DoF and offices under its control. The

grievances are forwarded to concerned

division of DoF, its attached office and PSUs

under the control of the Department for action

in a time-bound manner. Disposal of

grievances is followed up by sending

reminders at various levels at regular

intervals. The grievances received by post

are also properly recorded and redressed in a

time bound manner.

*****

78 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

ANNEXURES

ANNEXURE-1

LIST OF ACTIVITIES BEING CARRIED OUT BY DEPARTMENT OF FERTILIZERS

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

made by the Department of Agriculture & Cooperation.

3. Administration of concession schemes and management of subsidy for controlled as well as

decontrolled fertilizer including quantum of concession of decontrolled fertilizers, costing of such fertilisers and pricing of Phosphatic and Potassic fertilizers.

4. Administration of the Fertilizer (movement Control) Order, 1960.

5. Policy and pricing matters relating to urea.

6. All matters pertaining to fertilizer PSUs including matter related to their disinvestment.

7. All matters pertaining to Fertilizer Projects, Joint Venture/Joint Sector companies.

8. External assistance for new fertilizer projects.

9. Matters relating to Fertilizer Industry Coordination Committee (FICC), an attached office of

DoF, which is concerned with cost aspects of urea production and disbursement of subsidy on indigenous urea.

10. Matters connected with supply and availability of fertilizer raw material and marketing of

fertilizers.

11. Fixation of remuneration rate for handling imported fertilizers.

12. Work relating to planning, monitoring and valuation of fertilizer production.

13. All matters relating to WTO in the fertilizer sector.

ANNUAL REPORT 81

ANNEXURE-II

LIST CONTAINING THE NAMES OF MINISTER-IN-CHARGE AND THE OFFICERS OF THE LEVEL OF DEPUTY SECRETARY AND ABOVE, WHO HAVE WORKED IN THE DEPARTMENT DURING 2011-2012

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

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

Secretary : Dr. Sutanu Behuria (upto 01.11.2011)

Sh. Ajay Bhattacharya (w.e.f. 02.11.2011)

Additional Secretary & Financial Adviser : Dr. V. Rajagopalan

Joint Secretary : Shri Sham Lal Goyal

Shri Satish Chandra

Shri S. C. Gupta (w.e.f. 17.05.2011)

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

: Shri M.P. Johnson, DDG

Directors : Shri Deepak Kumar

Shri B.B. Mehtani (upto 31.10.2011)

Shri Sanjay Kumar Sinha

Director Level Officer : Smt. T.C.A Kalayaani (Director of Accounts)

Shri T.A. Basil (FICC) (upto 06.04.2011 )

Shri Umesh Dongre (FICC) (upto 30.11.2011 )

Shri A.S. Sandhu (FICC)

Shri Gobinda Gopal Mitra, Jt. Director (FICC)

(w.e.f. 09.12.2011)

Deputy Secretary : Shri H. Abbas (upto 18.05.2011)

Shri Manish Tripathi

Smt. Lalitha Das

Shri Rajiva Kumar, FICC

Shri S. Anandan,

Shri R. Selvam, PS to Minister

Shri Tapan Dutta, DC (POP)

Sh. Anand Kumar Pal (w.e.f 17.08.2011)

Controller of Accounts : Shri Akhilesh Jha

82 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

ANNEXURE – III

LIST OF PUBLIC SECTOR UNDERTAKINGS UNDER THE ADMINISTRATIVE

CONTROL OF DEPARTMENT OF FERTILIZERS

Sl. No.

Name of the Company Headquarters Incorporation in

1. The Fertilizers and Chemicals Travancore Ltd. (FACT)

Udyogamandal September, 1943

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

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

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

5. Madras Fertilizers Limited (MFL) Chennai Decembe r, 1966

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

7. Hindustan Fertilizer Corporation Limited (HFC)

New Delhi March, 1978

8. Brahmaputra Valley Fertilizer Corporation

Limited (BVFCL)

Guwahati April, 2002

9. FCI Aravali Gypsum And Minerals India Limited (FAGMIL)

Jodhpur February, 2003

ANNUAL REPORT 83

84

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Nitrogen

UNIT-WISE INSTALLED CAPACITY, PRODUCTION

AND CAPACITY UTILIZATION FOR THE YEARS 2010-11 & 2011-12

ANNEXURE – IV

Name of Company/

Plant

Name of Products Annual Installed Capacity

(As on 1-04-10)

Production (’000 MT) Percentage capacity utilization

2010-11 2011-12 2010-11 2011-12 ( in ‟000‟ MTs)

Public Sector: NFL:Nangal-II Urea 220.1 220.1 217.9 100.0 99.0 NFL:Bhatinda Urea 235.3 254.4 209.3 108.1 89.0 NFL:Panipat Urea 235.3 216.2 245.7 91.9 104.4 NFL:Vijaipur Urea 397.7 421.6 433.5 106.0 109.0 NFL:Vijaipur Expn. Urea 397.7 442.3 471.8 111.2 118 .6

TOTAL (NFL): 1486.1 1554.6 1578.2 104.6 106.2 BVFCL:Namrup-II Urea 110.4 39.6 50.4 35.9 45.7 BVFCL:Namrup-III Urea 144.9 91.5 89.0 63.1 61.4

TOTAL (BVFCL): 255.3 131.1 139.4 51.4 54.6 FACT:Udyogamandal A/S , 20:20 77.0 67.3 63.0 87.4 8 1.8 FACT:Cochin-II 20:20 97.0 99.2 90.4 102.3 93.2

TOTAL (FACT): 174.0 166.5 153.4 95.7 88.2 RCF:Trombay 15:15:15 45.0 66.9 55.5 148.7 123.3 RCF:Trombay-IV 20.8:20.8, 20:20 75.1 31.6 44.6 42. 1 59.4 RCF:Trombay-V Urea 151.8 156.9 142.9 103.4 94.1 RCF:Thal Urea 785.1 820.4 826.9 104.5 105.3

TOTAL (RCF): 1057.0 1075.8 1069.9 101.8 101.2 MFL:Chennai Urea / 17:17:17 366.7 219.9 273.8 60.0 74.7 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 3166.8 3233.6 90.5 92.5 Cooperative Sector

IFFCO:Kandla 10:26:26 / 12:32:16 /

DAP

351.5

273.3

317.1

77.8

90.2

IFFCO:Kalol Urea 250.5 276.0 268.4 110.2 107.1 IFFCO:Phulpur-I Urea 253.5 342.8 321.5 135.2 126.8 IFFCO:Phulpur-II Urea 397.7 472.0 484.6 118.7 121.9 IFFCO:Aonla-I Urea 397.7 454.7 475.7 114.3 119.6 IFFCO:Aonla-II Urea 397.7 479.6 479.6 120.6 120.6

IFFCO:Paradeep DAP / 10:26:26 / 20:20 /

12:32:16

325.2

314.1

343.8

96.6

105.7

TOTAL(IFFCO): 2373.8 2612.5 2690.7 110.1 113.3 KRIBHCO:Hazira Urea 795.4 846.5 795.1 106.4 100.0 Total(Co -operative): 3169.2 3459.0 3485.8 109.1 110.0 Total(Pub.+Coop.): 6666.7 6625.8 6719.4 99.4 100.8

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Private Sector GSFC:Vadodara Urea / DAP / 20:20 / A/S 248.1 227.4 250.6 91.7 101.0 GSFC:Sikka-I DAP / 12:32:16 105.8 52.4 51.2 49.5 4 8.4 GSFC:Sikka-II DAP / 12:32:16 71.3 74.7 60.1 104.8 84.3 TOTAL(GSFC-Sikka): 177.1 127.1 111.3 71.8 62.8 GNFC:Bharuch Urea / CAN / 20:20 356.7 353.8 382.5 99.2 107.2 KSFL:Shahjahanpur Urea 397.7 474.0 446.2 119.2 112.2 Private Sector

CIL:Vizag

28:28 / 14:35:14 /

20:20 / 16:20 / 10:26:26

/ DAP

124.0

179.6

231.3

144.8

186.5

CIL:Ennore 16:20 / 20:20 41.2 42.2 46.9 102.4 113.8

CIL:Kakinada DAP / 10:26:26 / 20:20 /

14:35:14 / 12:32:16

120.6

189.7

189.9

157.3

157.5

SFC:Kota Urea 174.3 185.6 176.6 106.5 101.3 DIL:Kanpur Urea 332.1 0.0 110.4 0.0 33.2

ZIL:Goa Urea / DAP / 19:19:19 / 10:26:26 / 12:32:16

288.7

264.3

213.6

91.5

74.0

SPIC:Tuticorin Urea / DAP / 20:20 /

17:17:17

370.7

179.0

359.6

48.3

97.0

MCF:Mangalore Urea / DAP / 20:20 /

16:20

207.2

215.7

220.8

104.1

106.6

TAC:Tuticorin A/C 16.0 0.0 8.3 0.0 51.9 TCL:Haldia

DAP / 10:26:26 / 12:32:16/ 14:35:14 /

15:15:15

121.5

70.6

91.0

58.1

74.9

IGL:Jagdishpur Urea 397.7 505.3 546.0 127.1 137.3

Hin.Ind.Ltd.:Dahej DAP / 10:26:26 / 12:32:16

72.0

38.6

40.0

53.6

55.6

DFPCL:Taloja 23:23 52.9 28.4 44.9 53.7 84.9 NFCL:Kakinada-I Urea 274.8 382.5 364.0 139.2 132.5 NFCL:Kakinada-II Urea 274.8 379.0 356.3 137.9 129.7

TOTAL(NFCL): 549.6 761.5 720.3 138.6 131.1 CFCL:Gadepan-I Urea 397.7 474.8 496.7 119.4 124.9 CFCL:Gadepan-II Urea 397.7 491.3 477.6 123.5 120.1

TOTAL(CFCL): 795.4 966.1 974.3 121.5 122.5 TCL:Babrala Urea 397.7 513.7 494.3 129.2 124.3

PPL:Paradeep

DAP / 14:35:14 / 20:20 /

12:32:16 / 10:26:26 /

28:28

129.6

204.5

192.8

157.8

148.8

By Product A/S 7.5 3.7 5.3 49.3 70.7 Total (Private Sector): 5378.3 5530.8 5856.9 102.8 108.9 Total(Pub+Coop+Pvt): 12045.0 12156.6 12576.3 100.9 104.4

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Phosphate

Name of Company/Plant

Name of Products Annual

Installed

Production (‘000’ MT)

Percentage capacity utilisation

Capacity 2010-11 2011-12 2010-11 2011-12

(1-04-09)

Public Sector:

FACT:Udyogamandal 20:20 29.7 29.6 30.2 99.7 101.7

FACT:Cochin-II 20:20 97.0 99.2 90.4 102.3 93.2

Total(FACT): 126.7 128.8 120.6 101.7 95.2

RCF:Trombay 15:15:15 45.0 66.9 55.5 148.7 123.3

RCF:Trombay-IV 20.8:20.8/ 20:20 75.1 31.6 44.6 42.1 59.4

Total(RCF): 120.1 98.5 100.1 82.0 83.3

MFL:Chennai 20:20 / 19:19:19 / 17:17:17

142.8

0.0

28.3

0.0

19.8

SSP Units SSP 12.8 0.0 0.0 0.0 0.0

Total(Public): 402.4 227.3 249.0 56.5 61.9

Cooperative Sector

IFFCO:Kandla DAP / 10:26:26 / 12:32:16

910.0

717.0

764.6

78.8

84.0

IFFCO:Paradeep DAP / 10:26:26 / 20:20 /

12:32:16

802.8

570.7

601.1

71.1

74.9

Total( Co -op.) 1712.8 1287.7 1365.7 75.2 79.7

Total(Pub.+Coop.): 2115.2 1515.0 1614.7 71.6 76.3

Private Sector

GSFC:Vadodara DAP / 20:20 75.9 56.1 59.8 73.9 78.8

GSFC:Sikka-I DAP , 12:32:16 270.5 134.0 131.0 49.5 48.4

GSFC:Sikka-II DAP 182.2 190.8 153.5 104.7 84.2

TOTAL(GSFC-Sikka): 452.7 324.8 284.5 71.7 62.8

GNFC:Bharuch 20:20 28.5 33.2 39.9 116.5 100.3

CFL:Vizag 14:35:14 / 28:28 / 166.0 217.3 270.3 130.9 162.8

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10:26:26 / 20:20 / DAP

CFL:Ennore 16:20 / 20:20 48.0 52.2 58.6 108.8 122.1

CIL:Kakinada DAP / 12:32:16 / 20:20 / 14:34:14 / 10:26:26

308.2

483.0

434.9

156.7

141.1

ZIL:Goa DAP / 19:19:19 / 10:26:26 / 12:32:16

197.4

212.8

205.5

107.8

104.1

SPIC:Tuticorin DAP / 17:17:17 / 20:20 218.5 49.1 1 48.5 22.5 68.0

MCF:Mangalore DAP / 20:20 / 16:20 82.8 90.9 89.3 109.8 107.9

TCL:Haldia DAP / 10:26:26 / 12:32:16/ 14:35:14

336.9

200.6

238.8

59.5

70.9

Hin.ind.Ltd.:Dahej DAP / 10:26:26 / 12:32:16

184.0

98.5

102.3

53.5

55.6

DFPCL:Taloja 23:23 52.9 28.4 44.9 53.7 84.9

PPL:Paradeep

DAP / 14:35:14 / 20:20 / 12:32:16 / 10:26:26 / 28:28

331.2

428.9

407.6

129.5

123.1

SSP Units SSP 1030.6 432.0 432.0 41.9 41.9

Total (Private Sector): 3513.6 2707.8 2816.9 77.1 80.2

Total(Pub+Coop+Pvt): 5628.8 4222.8 4431.6 75.0 78.7

* Actual figures have been considered from April 2011- November 2011 and estimated for December 2011 to March 2012

* Estimated Production figures have been reported for the year 2011 -12.

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

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YEAR-WISE, NUTRIENTS-WISE CONSUMPTION,

PRODUCTION AND IMPORTS OF FERTILIZERS

ANNEXURE-V

(lakh M.T.)

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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 2010-11 165.58 80.50 35.14 281.22 121.56 42.22 0.00 163.78 44.92 38.02 40.69 123.63 2011-12 N.A. N.A. N.A. N.A. 81.23 27.79 0.00 109.02 38.83 34.71 22.48 96.02 * Actual figures have been considered from April 2011- Nov 2011

** Provisional Import figures are reported upto 30.11.2011

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ANNEXURE-VI

SECTOR-WISE PRODUCTION OF NITROGENOUS

AND PHOSPHATIC FERTILIZERS (’000’ MT)

Nutrient 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 *

Target Actual Target Actual Target Actual Target Actual Target Actual Target Actual Target Actual Target Actual Target Estt.

Nitrogen(N)

Public Sector 3106.2 3007.9 3091.5 3051.0 3141.8 2958.6 3117.0 3046.7 3119.7 2887.0 3053.5 2925.2 3054.8 3118.1 3079.8 3166.7 3200.9 3233.5

Co-operative

Sector

2672.7

2797.3

2812.3

2901.7

2832.5

2958.3

3106.4

3004.3

3303.4

3031.0

3260.7

3133.0

3280.8

3404.3

3363.5

3459.1

3359.8 3485.8

Private Sector 5401.9 5130.5 5502.0 5382.5 5837.0 5437.6 5224.9 5526.9 5485.0 4982.0 5583.6 4811.5 5749.0 5378.0 6010.0 5530.8 6197.7 5857.0

Total(Nitrogen): 11180.8 10935.7 11405.8 11335.2 11811.3 11354.5 11448.3 11577.9 11908.1 10900.0 11897.8 10869.7 12084.6 11900.4 12453.3 12156.6 12758.4 12576.3

Phosphate(P)

Public Sector 399.8 353.3 402.7 266.3 383.0 294.9 387.3 232.7 234.0 161.4 241.8 191.7 207.3 227.7 236.5 227.2 292.4 248.9

Co-operative

Sector

776.0

778.7

875.1

938.3

880.0

1035.8

1461.5

1129.7

1496.2

969.2

1104.8

916.2

937.0

1194.1

1242.2

1287.7

1311.8 1365.7

Private Sector 3464.8 2668.4 3648.1 2862.7 3400.0 2890.6 2972.0 3154.8 3184.2 2676.7 3087.7 2356.4 2986.8 2899.1 3366.2 2707.8 3321.9 2817.0

Total(Phosphate): 4640.6 3800.4 4925.9 4067.3 4663.0 4221.3 4820.8 4517.2 4914.4 3807.3 4434.3 3464.3 4131.1 4320.9 4844.9 4222.7 4926.1 4431.6

Grand Total: 15821.4 14736.1 16331.7 15402.5 16474.3 15575.8 16269.1 16095.1 16822.5 14707.3 16332.1 14334.0 16215.7 16221.3 17298.2 16379.3 17684.5 17007.9

* Estimated Production figures have been reported for the year 2011 -12.

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SECTOR-WISE CAPACITY UTILIZATION ANNEXURE-VII

OF NITROGENOUS AND PHOSPHATIC FERTILIZERS (%age)

Nutrient

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Nitrogen(N)

Public Sector:

86.7

87.2

84.6

87.1

82.5

83.6

89.2

90.5

92.5

Co-operative Sector:

99.5

102.0

93.3

94.8

95.6

98.9

107.4

109.1

110.0

Private Sector:

89.7

94.1

100.8

102.5

92.4

89.5

100.0

105.1

108.9

Total(Nitrogen):

91.1

94.0

94.1

96.0

90.4

90.2

98.8

100.9

104.4

Phosphate(P)

Public Sector:

81.7

61.6

68.2

53.8

37.3

44.3

56.6

56.5

61.9

Co-operative Sector:

94.4

103.1

60.5

60.5

60.5

53.5

69.7

75.2

79.7

Private Sector:

64.1

66.3

82.3

89.8

76.2

67.1

82.5

77.1

80.2

Total(Phosphate):

70.1

71.9

74.6

79.8

67.3

61.2

76. 8

75.0

78.7

* Estimated ( Actual Production have been considered from April, 2008-October, 2008)

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ANNEXURE-VIII

Department of Fertilizers

ANNUAL PLAN 2011-12

(Rs. crore)

Sl.

No. Name of the

Scheme Annual Plan 2009-10 (Actual) Annual Plan 2010-11 (BE) Annual Plan 2010-11 (RE) Annual Plan 2011 -12 (BE)

GBS IEBR Total GBS IEBR Total GBS IEBR Total GBS IEBR Total Outlay

Earmarked for

NER

Centrally

Sponsored

Scheme (CSS)

Total CSS Central Sector

Scheme (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 43.05 900.50 900.50 655.71 655.71 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

CPSEs

6(i) BVFCL 65.00* 65.00* 45.00* 45.00* 45.00* 45.00* 67.80* 67.80* 6(ii) FACT 34.00 34.00 89.99 89.99 89.99 89.99 60.74 60.74 6(iii) MFL 96.99 96.99 74.50 74.50 74.50 74.50 88.95 88.95 6(iv) FCI 0 0 0 6(v) HFC 0 0 0 6(vi) PPCL 7 Misc. Schemes

(MIS/IT and R&D) 3.68 3.68 5.50 5.50 5.50 5.50 7.50 7.50

8 Capital Subsidy

for conversion

9 Investments for

JVs abroad# 0.01 0.01 0.01 0.01 0.01 0.01

10 Revival of Closed

Units 0

TOTAL CS: 199.67 511.57 711.24 215.00 2699.99 2914.99 215.00 2047.05 2262.05 225.00 3325.22 3550.22 *The amount earmarked for BVFCL will be utilized for the benefits of North Eastern Region #DoF is exploring possibilities of JVs abroad. Since no firm proposal is at hand right now, only a token amount of Rs.01.00 lakh has been provided.

ANNEXURE-IX

DETAILS OF HEAD -WISE ALLOCATION OF FUNDS UNDER NON -PLAN AND PLAN FOR BE 2011-12 and RE 2011-12

(Rs In Crore) I NON-PLAN PROVISIONS: BE 2011-12 RE 2011-12

A REVENUE SECTION

1. Sectt. Proper (MH 3451) 20.00 20.00

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

2.07

2.07

3. Subsidy on Nitrogenous Fertilizers (MH 2852)

(a)Indigenous Urea including Frieght Subidy (Gross) 13308.00 19108.00

(b)Compensation on account of loss due to sale of fertilizers bonds 0.00 200.00

4. Subsidy on Imported Fertilizers (MH 2401)

Gross 10575.00 17475.00

Recovery(-) 3592.00 3592.00

Net 6983.00 13883.00

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

(i) (a) Indigenous Decontrolled Fertilizers (Gross) 14343.00 19543.00

(b)Compensation on account of loss due to sale of fertilizers bonds 0.00 289.00

(ii) (a) Imported Decontrolled Fertilizers (Gross) 15363.87 14664.94

(b) Compensation on account of loss due to sale of fertilizers bonds 0.00 289.93

Total (Decontrolled Fertilizers) -(Gross) 29706.87 34786.87

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

0.01

0.01

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

TOTAL : (REVENUE SECTION) - Gross 53611.96 71591.96

Net 50019.96 67999.96

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 -PLAN) - Gross 53612.00 71592.00

Net 50020.00 68000.00

II PLAN PROVISIONS:

A. REVENUE SECTION

ANNUAL REPORT 93

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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)

5.50

5.50

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

0.00

0.00

TOTAL (REVENUE SECTION) 7.50 7.50 B. CAPITAL SECTION :

Investment in and loans to PSUs (MH 6855) 1. FACT 60.74 60.74

2. BVFCL 67.80 67.80

3. HFC ---- ----

4. PDIL ---- ----

5. MFL 88.95 88.95

6. FCI ---- ----

7. PPCL ---- ----

Investments for JVs abroad (MH 4855) 0.01 0.01

TOTAL (CAPITAL SECTION) 217.50 217.50

TOTAL PLAN 225.00 225.00

TOTAL -DEPARTMENT OF FERTILIZERS (Gross) 53837.00 71817.00

TOTAL -DEPARTMENT OF FERTILIZERS (Net) 50245.00 68225.00

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DETAILS OF EXPENDITURE ON SUBSIDY/ CONCESSION DURING ANNEXURE-X THE YEAR 2001-02 to 2010-11 AND BUDGET ESTIMATES 20 12-13

Period

Amount of Concession disbursed on Decontrolled

Fertilizers (Indigeneous + Imported)

Amount of subsidy

disbursed on urea

Total for all

fertilizers Indigenous

P&K Imported

P&K

Total Indigenous

Urea Imported

Urea Total of

Urea(Gross) (Rs In Crores)

(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

}10333.80

5100.00

}6600.00

12933.80

}16933.80

12950.37

}16450.37

9934.99

}9934.99

22885.36

}26385.36

35819.16

}43319.16 (Bonds) 2500.00 1500.00 4000.00 3500.00 ---- 3500.00 7500.00

2008-09

(Cash)

24707.10

}32957.10

23847.69

}32597.69

48554.79

}65554.79

17968.74

}20968.74

12971.18

}12971.18

30939.92

}33939.92

79494.71

}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 2010-11

20650.00

20850.00

41500.00

15080.73

9255.95

24336.68

65836.68

BE 2011-12

14343.00

15363.87

29706.87

13308.00

10575.00

23883.00

53589.87

RE 2011-12

19832.00

14954.87

34786.87

19308.00

17475.00

36783.00

71569.87*

Actual Booked

Expenditure as on 28-02-2012 * *

19539.84

12662.82

32202.66

16796.96

17061.20

33858.16

66060.82

BE 2012-13

16000.01

12576.11

28576.12

19000.01

18016.00

37016.01

65592.13

* Including Rs.13778.93 Crore allocated under 2nd Supplementary Demands for Grants for 2011 -12 under which Rs.778.93 Crore have been allocated towards compensation on account of loss due to sale of Fertilizers Bonds. Additional allocation of Rs.4201.07 Crore have also been made in RE 2011-12 which will be available for expenditu re only in 3rd Supplementary. Besides, Ministry of Finance has p roposed to allocate Rs.3,000 Crore under 3rd Supplementary. ** As per PAO’sProgressive Expenditure Statement

ANNEXURE XI

List of the grades of Rock Phosphate notified by Department of Fertilizers for manufacturing/selling SSP under

Concession Scheme/ Nutrient Based Subsidy Policy of decontrolled P & K fertilizers

Notification No.M-19011/33/2001-MPR dated 19th

September, 2001 S.No. Primary Grade of

rock phosphate Specification of blending rock Source of origin

A Mined rock chips with 31.5% and

above P2O5

content by wt. On

an average

- Rajasthan State Mines & Minerals Limited

(RSMML)

B Jordan Rock with 30.0% and above

P2O5 content by

wt. On an average

- Rock imported from Jordan.

C Beneficiated rock

phosphate (BRP

with 33.55% and

above P2O5

content by wt. On

an average.

- RSMML

D Syrian rock with 29.36% and above

P2O5 content by

wt. On an average.

- Rock imported from Syria

E Beneficiated rock phosphate (BRP

with 33.55% and

above P2O5

content by wt. On

an average.

Jhabua A or B grade rock with 23% P2O5 content by wt. To get a mixture having 31.6% and above P2O5 conten t

by wt. On an average.

BRP from RSMML and blending rock from

Madhya Pradesh State

Mining Corpn. Ltd.

(MPSMC)

F Jordan rock with 31.6% and above

P2O5 content by

wt. On an average.

Jhabua rock with 25% P2O5 content by wt to get a mixture having 30% and above P2O5 content by wt. On

an average.

Rock imported from Jordan and blending

rock from MPSMC.

Notification No.M-19011/33/2001-MPR dated 8th

October, 2001 G Egyptian rock

with 32% and

above P2O5

content by wt. On

an average.

- Rock imported from Egypt.

H Beneficiated rock

phosphate (BRP)

with 33.55% and

above P2O5

content by wt. On

an average.

Lower grade rocks with 25% P2O5 content by wt. From

mines of Madhya Pradesh State Mining Coproration

Ltd., RSMML, Rajasthan State Mineral Development

Corpn. (RSMDC) or 27-31% P2O5 content by wt. Of

Matton mines to get a mixture having 31.4% and above

P2O5 content by wt. On an average.

BRP from RSMML.

Blending rock from

MPSMC, RSMDC,

RSMML and Hindustan

Zinc. Ltd. (HZL).

Notification No. M -19011/33/2001-MPR dated 31st

January, 2002 I Beneficiated rock

phosphate (BRP)

with 33.55% and

above P2O5 content

by wt. On an

average.

(i) Lower grade rocks with +22% but less than 25% P2O5 content by wt. Of RSMDC to get a mixture

having 31.7% and above P2O5 content by wt. On an

average.

(ii) Rocks with 25% and above to 27% P2O5 content by

wt. From mines of RSMDC to get a mixture having

31.4% and above P2O5 content by wt on an average.

(iii) Rocks with +30% P2O5 content by wt. From mines

of RSMDC to get a mixture having 31.5% P2O5 content

by wt. On an average.

(iv) Rock with 23% P2O5 content by wt. From mines of

RSMML to get a mixture having 31.4% P2O5 content

by wt. On an average.

BRP from RSMML. Blending rock from

RSMDC and RSMML.

J Jordan rock with 32% and above

P2O5 content by wt.

On an average.

Lower grade rock with 25% P2O5 content by wt. From mines of RSMML to get a mixture having 30.66% P2O5

content by wt. On an average.

Rock imported from Jordan and blending

rock from RSMML.

Notification No. 19011/33/2001-MPR dated 13th

May, 2002 K Israeli Rock

phosphate with

32% P2O5 content

and above by wt.

On an average.

Not applicable Rock phosphate

imported from Israel.

96 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

Notification No. M-19011/33/2001-MPR (Vol.II) dated 23 rd April 2003

L

Beneficiated rock phosphate with

33.5% P2O5 content by wt on an average.

Lower grade rock with P2O5 content 29% by wt and above with 2.78% average iron oxide content of MPSMC to get a mixture of 31.4% on an average.

BRP from RSMML. Blending rock from Hirapur Mines of MPSMC.

M

Notification NO.19011/33/2001-MPR dated 14.12.2005 – Beneficiated Rock Phosphate with 30.2% P2O5 produced by M/s. Krishana Phoschem Ltd., 115-118, AKVN

Industrial Area, P.O. Meghnagar, Jhabua, Madhya Pr adesh

19011/33/2001-MPR dated 19.9.2006 (Notified on 19.9.2006)

N

Beneficiated rock phosphate (BRP with 33.55% and above P2O5 content by wt. On an average.

- RSMML-

O 19011/33/2001-MPR (Vol -II) dt. 8.5.2007 Primary grade of Rock Phosphate of Vietnam with 34% P205 content by weight on an average.

P 19011/33/2001-MPR (Vol -II) dt. 30.10.2007 Primary grade of Rock Phosphate of Algeria with 31. 2% P205 content by weight on an average.

Q 19011/33/2001-MPR (Vol -II) dt. 19.11.2007 Primary grade of Rock Phosphate of Egypt with 31.02 % P205 content by weight on an average.

R

Notification No. 19011/33/2001-MPR (Vol.II) dt. 15.6.2009 Beneficiated Rock Phosphate with 31% P2O5 produced by M/s. BEC fertilizers Ltd., Bilaspur Chhattisgarh

S

F.No. 19011/33/2001 -MPR dated 3.1.2011

(i) Blend of primary Rock Phosphate of Nauru of 37.70% P2O5 with secondary Rock Phosphate of Egypt of 28.02% P2O5, in the ratio of 30% minimum P( rimary Rock Phosphate) and 70% maximum (Secondary Rock Phosphate).

(ii) Blend of primary Rock Phosphate of Togo of 36. 16% P2O5 with secondary Rock Phosphate of

Vietnam with 26.8-27.13% P2O5 in the ratio of 50% minimum (Primary Rock Phosphate) and 50% maximum (Secondary Rock Phosphate).

(iii) Rock Phosphate of Israel with 31% P2O5.

(iv) Blend of primary Rock Phosphate of RSMML of 31.5% P2O5 with secondary Rock Phosphate of

Egypt with 30% P2O5 in the ratio of 60% minimum (Primary Rock Phosphate) and 40% maximum (Secondary Rock Phosphate).

(v) Blend of primary Rock Phosphate of Nauru containing 38.5-39% P2O5 with secondary Rock

Phosphate of Vietnam with 26-28% P2O5 in the ratio of 30% minimum (Primary Rock Phosphate) and 70% maximum (Secondary Rock Phosphate).

T Beneficiated Rock Phosphate having 31% P2O5 contentproduced by M/s Shiva Fertilizers Ltd. Nanded, Maharashtra (now known as Shiva Global Agro Industr ies Ltd.)

U

F.No. 19011/33/2001 -MPR dated 29.4.2011

Primary grade of Rock Phosphate of Maton Mines of Hindustan Zinc Ltd., Udaipur with 31.5% P2O5 content by weight on an average.

….

ANNUAL REPORT 97

92

ANNEXURE-XII

PROFITABILITY OF THE PUBLIC SECTOR UNDERTAKINGS UND ER THE

ADMINISTRATIVE CONTROL OF DEPARTMENT OF FERTILIZERS

Net Profit (+)/ Net Loss (-)

(in Rs crores)

Name of Undertaking 2007-08 2008-09 2009-10 2010-11 2011-12 (upto Dec’11)

Fertilizer Corporation of India limited (FCI)

(-) 1504.83 (-) 752.60 (-) 585.86 (-)508.09 (-)443.74

Hindustan Fertilizer Corporation Ltd (HFCL)

(-)1101.98 **4841.16 (-)382.47 (-)382.28 ***(-)300.19

Rashtriya Chemicals and Fertilizers Limited (RCF)

158.15 211.58 234.87 245.12 135.73

National Fertilizers Limited (NFL) 109.00 97.00 171.51 139.00 69.88

Project and Development India Limited (PDIL)

12.26* 14.82 14.48 21.02 15.70

The Fertilizers and Chemicals Travancore Limited (FACT)

8.97 42.95 (-)103.83 (-)49.33 (-)14.42

Madras Fertilizers Limited (MFL) (-)134.85 (-)145.38 6.88 169.86 111.43

Brahmaputra Valley Fertilizer Corporation Limited (BVFCL)

(-)105.83 (-)215.04 (-) 27.86 (-)85.09 (-)78.28

FCI- Aravali Gypsum and Minerals India Limited (FAGMIL)

7.54 9.04 8.67 24.05 8.21

*Pre-Tax Profit

**Book Profit is due to write back of interest on Government of India loan

***Unaudited

98 DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

ANNEXURE-XIII

EMPLOYMENT OF SC/ST, EX- SERVICEMENT, PHYSICALLY HANDICAPPED & OTHER BACKWARD CLASSES (OBCs) PERSONS IN PUBLIC SEC TOR

UNDERTAKING/CO-OPERATIVE

SL. NO.

NAME OF PSU

GROUP TOTAL NO. OF EMPLOYEE S

NO.OFEMPLOYEES BELONGING TO

SC ST EX.SE R

WO MEN

GEN P.Hs OBC

1. NFL A B C D

1623 1938

827 137

356 508 210 108

81 157 41

3

81 113 110

7

- - - -

- - - -

4 31 32

1

9 23 15

3

TOTAL 4525 1182 282 282 NIL NIL 68 50 2. MFL A

B C D

297 178 266

-

39 35 98

3 3 1

- -

12

- - -

- - -

1 1 3 -

26 9

68

TOTAL 741 172 7 12 NIL NIL 5 103 3. FAGMIL TOTAL 86 14 4 NIL NIL NIL NIL 7 4. PDIL A

B C D ON CONTR ACT

413 33 32

NIL 67

48 4 9

NIL 9

20 0 0

NIL 3

62 2 7

NIL 13

TOTAL 545 70 23 84 5. RCF A

B C D

1472 1276 1275

121

224 164 171

17

47 78

121 11

1 3 1 2

8 6

17 4

111 8

175 47

TOTAL 4144 576 257 7 35 341 6. FACT A

B C D D-S

471 1441

653 612

21

76 183

78 86

7

10 54 18 17

0

0 12 20

4 0

47 121

40 6

14

317 807 289 251

4

4 27

9 31

1

68 396 268 258

10

TOTAL 3198 430 99 36 228 1668 72 1000 7. BVFCL A

B C D

306 287 472

22

28 26 28

4

26 49 86

3

2 1 - -

- - - -

- - - -

- - 3 -

80 92

164 3

TOTAL 1087 86 164 3 - - 3 339

ANNUAL REPORT 99

SUMMARY OF AUDIT OBSEVATIONS PERTAINING TO DEPARTMENT OF FERTILIZERS Audit Report No. CA 3 of 2011-12

National Fertilizers Limited

ANNEXURE-XIV

Para 8.1 Marketing of products

Though the Company ranks as the second

largest producer of urea in the country with a

market share of 16.8 per cent of total urea

p r o d u c t i o n , t h e r e i s s t i l l s c o p e f o r

i m p r o v e m e n t . E ff i c i e n c y a n d c o s t

effectiveness was not visible where

marketing and sale of its products was

concerned as marketing expenses on sale of

urea led to under recovery of Rs. 15.04 crore

during 2007-08 to 2009-10, while untimely

import of Muriate of Potash led to a loss of Rs.

86 lakh with stocks remaining unsold till

February 2010. Also sale of industrial

products below their cost of production led to

a loss of Rs. 7.06 crore during the period

under review. Further, where marketing

operations like handling, transportation,

warehousing etc. were concerned the

Company continued to incur secondary

freight expenditure in violation of the New

Policy of “ Uniform Freight Subsidy” which

resulted in non-recovery of Rs 8.34 crore.

Also, allowing credit in excess of limits and

without obtaining security resulted in blocking

of funds. Non-renewal of handling and

transportation contract on aregular basis

resulted in delay in awa4d of contact and

award of contracts on a single tender basis.

Rashtriya Chemicals and Fertilizers

Limited

Para 8.2 Project implementation

Audit examined the projects implemented by

Rashtriya Chemical and Fertilizers Limited

during 2007-08 to 2009-10. Delays were

observed at different stages of the project

starting from tendering to award of contract in

each of the contract and resulting in cost over

run despite a creation of a dedicated cell to

monitor the progress of the projects. The

delay had resulted in cost over run of Rs.

68.35 crore (March 2010). Moreover the

slippages in the project schedule also

affected the marketability of the project due to

change in the market conditions. Besides

there were deficiencies in the selection of the

vendor, non-evaluation of capability of

vendor, non-conducting of market study, non-

identification of viable associate, non-

compliance with Board directive on tendering

and unproven technology. Thus the project

deliverables envisaged during conceptual

stage could not be realised due to inadequate

monitoring.

Summary of important audit observations

printed in the report of the CAG of India

Union Government (Civil)-No. 8 of 2011-

12-Peformance Audit of Fertilizer Subsidy

1. Assessment of Fertilizer Requirements

We found that the process of detailed

assessment of fertilizer requirements was

flawed. No minutes of the deliberations of the

s e a s o n a l A g r i c u l t u r e Z o n a l I n p u t s

Conferences were maintained by the

Department of Agriculture and Co-operation,

in the absence of which the justification for the

State-wise and month-wise requirement of

major fertilizers could not be ascertained.

This was further confirmed by the State-

specific audit findings, which revealed that

requirements of fertilizers were generally

projected by an increase of 5 to 10 per cent

over the previous season's / year's

requirements, and indicated that no scientific

method was followed for assessing the

requirement of fertilizers. In most States, the

requirement of various types of fertilizers

were projected at the level of the State

Directorate of Agriculture only (without input

from the District and lower levels) and not

100

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

95

based on the availability of irrigation facilities

soil health and other local factors. Further, in

most States, testing of soil health, which

would facilitate determination of the correct

dosage of fertilizer nutrients, covered only a

fraction of the agricultural land holdings.

2. F e r t i l i z e r p r o j e c t i o n , i m p o r t a n d

Consumption

We found that the assessed requirement of

fertilizers went up by more than 70 per cent

during the 11 year period from 1998-99 to

2008-09, total production went up by just 11

per cent, while imports went up by nearly 236

per cent. Despite the huge amount of

subsidy (increasing from Rs. 11,387 crore in

1998-99 to Rs. 96,603 crore in 2008-09), the

production of fertilizers increased only

marginally from 269 lakh MT to 298 MT.

Changes in the subsidy regime, including

States I to III of the New Pricing Scheme

(NPS), have failed incentivize increase in

domestic production of fertilizer. Increased

consumption of fertilizer is, thus, largely met

through increased fertilizer import. This

leaves the country dependent on imports,

whose pricing is volatile. The subsidy/

concession on imported fertilizers over 1998-

99 to 2008-09 increased from 3 per cent to 47

per cent of the total subsidy.

The production of urea during the 11 yea

period from 1998-99 to 2008-09 registered a

negligible increase of just 3 per cent.

Although the change in urea subsidy policy

from individual unit-based pricing under the

Retention Price Scheme (RPS) to group

based pricing under the new Pricing Scheme

(NPS) resulted in a substantial shift from

naphtha-based urea production to gas-based

urea production. It did not result in a

significant increase in either capacity or

production of urea. Increased consumption

of urea was met primarily through imports.

Further, the weighted average cost of

production of urea increases substantially by

81 per cent to 120 per cent, post the NPS.

Even the conversion of naphtha units to gas-

based units did not result in a reduction in the

cost of production. Also, despite the group

approach of NPS, the pre-set norms for

energy consumption (which represents the

single larges component of the cost of

production of urea) varied from unit to unit

within the same group.

As regards phosphatic fertilizers, although

the capacity nearly doubled from 1998-99 to

2008-09, actual production of DAP and NPK

complexes increased by only 30 per cent. In

fact, the production of DAP came down

substantially. However, the indigenous

production of phosphatic fertilizers is largely

b a s e d o n i m p o r t e d r a w m a t e r i a l s /

intermediates. The increase in consumption

of DAP/ MAP/ NPK complexes was met

primarily through imports fat very high prices,

which led to multi-fold increase in the subsidy

burden.

As regards Potassic fertilizers, the country's

requirement is met fully through imports. We

found that, instead of curbing further imports

and drawing down on available stock as of

March 2008, the Ministry imported an

additional 57 lakh MT of MOP (43 lakh MT as

per expenditure figures), with an avoidable

addition to the subsidy burden of about Rs.

10,000 crore.

On the consumption front, while there was a

consistent gap between consumption of

assessed requirements, the consumption

figures broadly tracked the total availability of

fertilizers (production + import), indicating

that whatever fertilizer was available was

readily consumed. While this is most likely on

account of the highly subsidised price, this

also confirms the lack of assessment of

requirement on a scientific basis.

While fertilizer consumption increased by 46

per cent from 2003-08 to 2008-09, the major

ANNUAL REPORT 101

components of agricultural production

(foodgrains, oilseeds and sugarcane)

increased by just 16 per cent over the same

period, indicating a relatively weak

correlation. Also, the pattern of fertilizer

consumption across different States was

highly skewed, with States like Andhra

Pradesh, Punjab, Haryana and Bihar having

high consumption rates while Madhya

Pradesh, Orissa, Assam and Jharkhand had

very low consumption rates. There was a

fairly high degree of correlation between the

consumption rates and the proportion of

irrigated area; the higher the proportion of

irrigated area, the higher the rate of

consumption of fertilizers. For example,

Punjab with 98 per cent irrigated area

consumed 221 Kg/ha in 2008-09, while

Jharkhand with 10 per cent irrigated area

consumed only 56 kg/ha. It may be noted

that data on fertilizer consumption is based

only on first point sales at the district levels

and does not taken note of actual

consumption (let alone purchases) by

individual farmers for agricultural purpose; to

that extent, the fertilizer consumption data is

unreliable. Also, despite huge amounts of

subsidy/ concession, we found numerous

instances of non-availability/shortage of

f e r t i l i z e r s a s w e l l a s i n s t a n c e s o f

overstocking/excess availability of fertilizers,

confirming a mismatch between supply and

requirement at the grassroot level. We also

found several instances of diversion of

fertilizers for non-agricultural purposes, as

well as smuggling of fertilizers in border

districts in the Eastern/North-eastern States.

3. Payment of Subsidy Claims

Fertilizer units/importers are eligible for

subsidy payments when fertilizers are

despatched to the first stocking points in the

district, and details of despat6ch are

uploaded onto the web-based Fertilizer

Management System (FMS). However,

there is no mechanism for reconciliation of

unit-wise and district-wise despatch data with

corresponding data on receipts at the first

stocking point in the districts. We attempted

a limited reconciliation exercise on a sample

basis for 2008-09 (April 2008 to December

2008) which revealed that 48624 MT of

fertilizers valuing Rs.83 crore stated to have

been despatched by the manufacturing units

were not recorded a received at the 1st

stocking points in various states.

In our opinion, the requirement for

certification in Performa 'B' by the State

governments of sales of decontrolled

f e r t i l i z e r s f o r a g r i c u l t u r a l p u r p o s e s

(notwithstanding the inadequacies in the

certification process) is the only major control

over end-use of fertilizers.

Linking certification with release of balance

payment of 10/15 per cent (with the penal

clause providing for bank guarantee for 100

per cent of unadjusted concession) provided

clear incentive/disincentives for ensuring

timely submission of Performa 'B'. With the

removal of such a linkage from June 2007,

there is no longer adequate incentive to

ensure certification by the competent

authorities (viz. the State Governments) of

end-use of decontrolled fertilizers for

agricultural purposes. This resulted in

accu7mlation of outstanding Performa 'B' for

the years 2007-08 to 2009-10 of Rs. 50,587

crore.

Further, in most of the States, verification of

sales for agricultural purposes (which would

provide assurance of proper end-use of

subsidy) was non-existent or inadequate, as

it did not involve physical verification of stocks

or sales beyond the 1st

point sales,. And in

many cases not even verification of receipts,

invoices etc. Further, although the subsidy

was released on the basis of the receipt of

fertilizers at district level and the freight

102

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS

subsidy was paid upto block level, there was

no state level mechanism for physical

verification of the confirmation of receipt at

district, block and consumer levels. We also

found deficiencies in licensing and other

arrangements for sale of fertilizers.

Records relating to the import of urea on

Government account for the period 2005-06

to 2008-09 from the Department of Fertilizers

and import of DAP by IPL on Government

instructions during 2007-08 from IPL were not

provided to audit. Based on the records

relating to fertilizer imports provided to us, we

found certain irregularities in import of DAP

by IPL, as well as certain discrepancies

between imports and corresponding supply

of DAP by IPL.

We found a disturbing trend of increasing

consumption of subsidised fertilizers (urea,

DAP, MOP etc.) by mixing units in several

States. This resulted in breaking of the

subsidy chain, since the prices of mixtures

fare generally higher and subject to varying

levels of license and regulation/ self-

regulation in different States. Further, the

fertilizer consumed by these mixing units is at

the expense of the ordinary farmer. Control

over quality of fertilizer mixtures is also

minimal, exposing unsuspecting farmers to

the risk of sub-standard quality mixtures.

4. Quality Control

We found that the fertilizer quality testing

infrastructure in the country was grossly

inadequate. The annual capacity of the

existing quality control laboratories was only

25 per cent of the required capacity for testing

of samples from all sales outlets twice a year

(i.e. once each for rabi and kharif). Further,

many of the laboratories were deficient in

terms of both physical and human

infrastructure. Consequently, there was

significant shortfall in the actual number of

samples tested vis-à-vis both the target as

well as the capacity of the laboratories. Also,

the stipulated time limits for sending of

samples to the quality control laboratories,

sending of analysis reports by the

laboratories to the concerned authorities and

corrective faction thereon were not adhered

to in most States, with huge delays. As a

result, even when sub-standard quality

fertilizer was detected, by the time the

analysis reports reached the concerned

authorities and action was initiated, the

balance stock of the fertilizer lot(pertaining to

the sub-standard sample) had already been

s o l d t o u n s u s p e c t i n g f a r m e r s , w h o

unknowingly used such sub-standard

fertilizers.

5. Results of Surveys of Farmers and

Dealers

The survey of 1092 fertilizer dealers revealed

several significant findings. 57 per cent of the

dealers indicated that they were not getting

the required quantity and type of fertilizers in

time. 37 per cent indicated that they were

facing problems in transportation in lifting

their requirement. Only 51 per cent

indicated that they were able to supply

fertilizers as pr demand to the farmers in time.

As many as 40 per cent of the dealers

indicated that samples had not been selected

in any of the last three years from their stock

for fertilizer quality testing.

The survey of 5498 farmers also threw up

important findings. 45 per cent of the

surveyed farmers indicated that they6 had

bought fertilizers at prices higher than the

MRPs, while 56 per cent indicated that they

did not know that MRPs for fertilizers fixed by

the Government. 59 per cent of the farmers

faced problems for getting their full

requirement of fertilizers in a timely fashion.

55 per cent of the surveyed farmers

expressed their need for fertilizers in small

quantity bags (contrarily, only 40 per cent of

ANNUAL REPORT 103

the surveyed dealers indicated that farmers

were demanding small quantity bags); 51 per

cent indicated that they did not have enough

money to buy their full requirement of

fertilizers.76 per cent of the surveyed farmers

had not got their soil tested for scientifically

ascertaining the requirement of fertilizers.

6. Conclusion

In spite of massive amounts of expenditure by

Gol on fertilizer subsidy/ concession, annual

production of fertilizers increased only

marginally from 284 lakh MT in 2003-04 to

298 lakh MT in 2008-09. Changes in the

subsidy regime, have failed to incentivize

significant increase in domestic production of

fertilizer. Overall, the increased consumption

of fertilizer is, thus, largely met through

increased fertilizer import.

The process for detailed assessment of

fertilizer requirements was flawed, with the

general practice being merely projections of

increases of 5 to 10 per cent over the previous

season's/ year's requirement. Further, first

p o i n t s a l e s w e r e b e i n g t r e a t e d a s

consumption for purposes of passing on

fertilizer subsidy.

There were significant deficiencies in

planning of fertilizer supplies, with several

instances of both over-supply and under-

supply at the district and lower levels, with

consequential excesses/shortages of the

required fertilizers at the time when the

farmers needed the same. Even the

prescribed checks for verification of sales of

decontrolled fertilizers by the State

Government sere largely restricted to first

point sales, and were not performed at block

and lower levels and to the ultimate

consumers i.e., the farmers. There was no

physical verification of sales and stocks (even

on a sample/percentage basis). The

consumption of subsidized fertilizers by

“mixing units” in different States represents a

major flaw in the “subsidy chain”, since these

units consu8me subsidized fertilizers, but sell

mixtures at higher rates and are subject to

v a r y i n g l e v e l s o f l i c e n s e / r e g u l a t i o n /

self=regulation in different States(without any

Central control).

We also found significant deficiencies in

quality control over subsidized fertilizers in

terms of inadequate/ poor infrastructure, lack

of adequate skilled manpower, and huge

shortfalls in testing of fertilizer samples.

Consequently, we find it difficult to derive

assurance that the huge expenditure incurred

o n f e r t i l i z e r s u b s i d y p a y m e n t t o

manufactures/ importers of fertilizers actually

result in full availability of high quality

fertilizers as per requirement at the stipulate

subsidized prices in a timely manner to the

farmers.

*****

104

DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIFERS