MEMORANDUM OF UNDERSTANDING
BETWEEN
NATIONAL FERTILIZERS LIMITED
AND
DEPARTMENT OF FERTILIZERS (MINISTRY OF CHEMICALS AND FERTILIZERS)
FOR THE YEAR 2015-2016
MEMORANDUM OF UNDERSTANDING BETWEEN
NATIONAL FERTILIZERS LIMITED AND
DEPARTMENT OF FERTILIZERS MINISTRY OF CHEMICALS & FERTILIZERS
FOR THE YEAR 2015-16 PART-I
Mission / Vision & Objectives of the PSE 1. Mission
NFL’s mission is to be a market leader in Fertilizers and a significant player in all its other business, reputed for customer satisfaction, reasonable reward to shareholders, ethics, professionalism and concern for ecology and the community.
2. Objectives a) To produce and market fertilizers and by-products efficiently and economically
besides achieving a reasonable and consistent growth.
b) To effectively manage the assets and resources of the Company to ensure a reasonable return on investment and to maximize internal resources. As part of diversification and maintaining soil health, to market other Fertilizers in addition to Nitrogenous Fertilizers.
c) To maintain international quality of production & services as per ISO-9001: 2008 & aiming at achieving customer satisfaction & delight.
d) To achieve international standard of excellence in plant & operational safety and maintaining environment as per international standard OHSAS 18001 & ISO-14001 respectively.
e) To carry out R&D activities for increasing plant availability, energy savings, process improvement and utilization efficiency in the application of chemicals and fertilizers and in the R & D activities for application of Fertilizers associating/ networking with other Companies.
f) To work out diversification/expansion schemes to increase the profitability of the Company and promote development of ancillary industries consistent with the Govt. policy.
g) To provide services to the Farming Community by organizing technical training, soil testing facilities etc.
h) To develop and maintain organizational environment for encouraging individual and group initiative, innovation and productivity and by improving employee skill through specialized training.
PART-II
Exercise Of Enhanced Autonomy & Delegation Of Financial Powers There is sufficient autonomy / delegation of powers available with the Board of Directors of NFL for operations of the company.
1 of 9
Excellent (5) V.Good (4) Good (3) Fair (2) Poor (1)
1i.
a) Sales Turnover ` Crore 12 8842 8421 8000 7599 7219b) Gross Operating Margin ` Crore 6 406 387 368 350 332
ii. Profitabilitya) EBIT / Average Capital Employed % 10 17.82 16.97 16.12 15.31 14.55
iii. Cost & Out put Efficiencya) PAT per employee ` Lakh 8 2.44 2.04 1.94 1.84 1.75
iv. Liquidity / Leveragea) Debt Service Coverage Ratio Ratio 8 12.01 11.44 10.84 10.29 9.78
v. Efficency of Asset Usea) Average Number of days of Inventory (Inventory turn over ratio) No. of days 6 8.36 8.80 9.24 9.68 10.12
2i) Corporate Social Responsibility (CSR) & Sustainability
a) Construction of Toilets in Schools (Out of which 10% will be Bio-Toilets) Nos. 2 60 50 45 40 35 External verificationb) Disposal of Fly Ash as % of total Ash Generation % 1 65 60 55 50 45 Self certification
ii) Research & Developmenta) Design of Applicator for Urea Ammonium Nitrate as proposed Date 2 28-02-16 10-03-16 15-03-16 20-03-16 31-03-16 External Agency Certified
Copyb) Preparation of Detailed Feasibility Report (DFR) for use of Petcoke at
Nangal Unit Date 2 31-01-16 15-02-16 25-02-16 15-03-16 31-03-16 Self certification
c) TEFR for Manufacture of Catalyst in collaboration with M/s PDIL/RCF Date 2 31-01-16 15-02-16 25-02-16 15-03-16 31-03-16 Self Certified Copy of the Report
iii) Initiatives for Growtha) Production of Urea LMT 10 36.50 36.41 34.95 33.56 32.21 Self certificationb) Production of Bio-Fertilizers at Vijaipur MT 5 420 400 380 360 340 Self certification
iv.
a) Award of contract for commercial production of MoP (Muriate of Potash) from underground sub soil brine in Little Rann of Kutch Date 4 01-11-15 01-12-15 01-01-16 01-02-16 01-03-16
b) Award of LSTK Contract for setting up Bentonite Sulphur Plant at Panipat Unit Date 4 15-01-16 15-02-16 15-03-16 15-04-16 15-05-16
c) Award of Contract for setting up Packaged Drinking Water Plant Date 2 01-10-15 01-11-15 01-12-15 01-01-16 01-02-16
Evaluation Criteria
Annual Report and self certified working sheets
Growth / Size / ActivitySTATIC / FINANCIAL PARAMETERS
DYNAMIC / NON-FINANCIAL PARAMETERS
Self Certified copy of the Contract
Unit
Project Management & Implementation
PART III NATIONAL FERTILIZERS LIMITED
MoU 2015-16
MoU Target (2015-16)Sr. Wts.
Documentry evidence & source/origin of
documents
2 of 9
Excellent (5) V.Good (4) Good (3) Fair (2) Poor (1)Evaluation Criteria Unit
MoU Target (2015-16)Sr. Wts.
Documentry evidence & source/origin of
documents
v.
a) Installation of Purge Gas Recovery Plant at Vijaipur II Date 3 01-03-16 15-03-16 31-03-16 15-04-16 30-04-16 Self certification
b) Submission of report on customers satisfaction relating to non-Urea fertilizers only through external agency & Action Taken Report for redressal of farmers grievances regarding fertilizers other than Urea
Date 1 31-01-16 15-02-16 25-02-16 15-03-16 31-03-16 Report submitted by external agency
c) Soil Testing for analysis of Micro Nutrients Nos. 1 1500 1400 1300 1200 1100 Self certification
vi.
a) Installation of Vibro Priller at Panipat to improve Prill Quality Date 2 15-02-16 28-02-16 15-03-16 25-03-16 31-03-16 Self Certification
b) Demonstrations of Urease and Nitrification inhibitors Nos. 2 50 45 40 35 30 Self certification
c) Total Quality Management at Panipat Unit Date 1 30-11-15 31-12-15 31-01-16 28-02-16 31-03-16 Self certification
vii Human Resource Management
a) Training to Employees Mandays / Employee 1 2.5 2.4 2.3 2.1 2.0 Self certification
3a) Energy Consumption / MT of Urea Gcal/MT
i) Nangal “ 1 7.08 7.09 7.10 7.11 7.12ii) Bathinda “ 1 7.46 7.47 7.48 7.49 7.50iii) Panipat “ 1 7.59 7.60 7.61 7.62 7.63iv) Vijaipur-I “ 1 5.75 5.76 5.77 5.78 5.79v) Vijaipur-II “ 1 5.42 5.43 5.44 5.45 5.46
Total (1+2+3) 100
Footnotes: The above financial targets are computed based on the following:1) Total no. of employees = 37292) Urea production of 36.50 LMT under "Excellent", 36.41 LMT under "Very Good" and 34.95 LMT under "Good".3) Training to Employees (Mandays / Employee)
a) Executives - 2.79 b) Non-Executives - 2.17
4) All internal documents to be signed atleast by Functional Director of Board.5) Negative marking for CG rating, Non-compliance to DPE guidelines, Entry of MoSPI & Survey data, Non-compliance to MSME guidelines and CSR provisions as per Companies Act.
Productivity and Internal Process
Self certification
Technology, Quality, Innovative Practices
SECTOR / ENTERPRISE SPECIFIC PARAMETERS
3 of 9
` CRORE
2010-11 2011-12 2012-13 2013-14
Actual Actual Actual ActualActual April to Dec 2014
REMoU
ExcellentMOU Very
GoodMoU
ExcellentMOU Very
GoodMOU Good MOU Fair MOU Poor
Gross sales 25 5791.03 7305.29 6720.23 8017.03 6891.11 7951.60 8379 8162 8842.00 8421.00 8000.00 7599.00 7219.00
Expenses consideredStock adjustment 29 -41.28 -56.07 -100.03 67.73 46.53 13.04 1.8 1.8 1.58 1.58 1.58 1.58 1.58Purachse of Traded goods 28 107.42 21.50 28.36 30.75 13.13 13.89 312.52 312.52 476.24 476.24 438.14 403.09 370.84Material consumed and Power and Fuel
27,31 4650.67 6145.02 5814.49 6782.16 5658.04 6505.60 6828.39 6618.13 6842.27 6440.27 6094.95 5764.84 5452.22
Freight and handling 245.51 274.20 305.53 377.92 309.03 419.2 418.88 418.88 464.59 464.59 446.01 428.17 411.04Employee remuneration 30 386.96 407.83 417.89 417.42 337.95 462.07 465.2 465.2 460.53 460.53 460.53 460.53 460.53Repairs and Maintenance 32 74.20 80.31 90.38 67.05 46.56 76.03 87.50 90.76 75.98 75.98 75.98 75.98 75.98Depreciation 34 88.90 91.22 117.67 129.17 63.53 81.19 136.94 136.94 83.33 83.33 83.33 83.33 83.33Other expenses (At Unit Level excluding Corporate Office and Selling Expenses)
35 16.47 25.89 25.57 43.60 34.97 31.31 31.77 31.77 31.48 31.48 31.48 31.48 31.48
Cost of operations 5528.85 6989.90 6699.86 7915.80 6509.74 7602.33 8283.00 8076.00 8436.00 8034.00 7632.00 7249.00 6887.00
Gross operating margin 262.18 315.39 20.37 101.23 381.37 349.27 96.00 86.00 406.00 387.00 368.00 350.00 332.00
Less : Interest 33 9.15 66.24 129.73 203.89 191.33 212.35 179.04 179.04 203.57 203.57 193.39 183.72 174.54Less: Prior period 0.06 0.00 2.99 0.00 0.00 0 0 0 0 0 0 0 0Less: Exceptional items 0.00 0.00 57.41 0.00 -73.61 -73.61 0 0 0 0 0 0 0Less : Corporate Office and Selling Expenses
35 95.17 102.32 97.48 103.79 84.88 117.69 106.1 106.1 124.27 124.27 118.06 112.15 106.55
Add: Other income 26 46.12 37.37 36.62 45.29 26.88 37.34 34.28 34.28 37.17 37.17 34.96 32.81 31.67
Profit before tax 203.92 184.20 -230.62 -161.16 205.65 130.18 -154.86 -164.86 115.33 96.33 91.51 86.94 82.59
Operating Margin 262.18 315.39 20.37 101.23 381.37 349.27 96.00 86.00 406.00 387.00 368.00 350.00 332.00
Less :CO CMO expenses 95.17 102.32 97.48 103.79 84.88 117.69 106.10 106.10 124.27 124.27 118.06 112.15 106.55
Add:Other Income 46.12 37.37 36.62 45.29 26.88 37.34 34.28 34.28 37.17 37.17 34.9615 32.813425 31.6727538
Add Depreciation 88.90 91.22 117.67 129.17 63.53 81.19 136.94 136.94 83.33 83.33 83.33 83.33 83.33
Exceptional item -57.41 0.00 73.61 73.61
Past period -2.99 0.00
EBIDTA 302.03 341.66 16.78 171.90 460.51 423.72 161.12 151.12 402.23 383.23 368.24 353.99 340.46
NATIONAL FERTILIZERS LIMITED
WORKING FOR GROSS OPERATING MARGIN AND RECONCILIATION WITH PROFIT BEFORE TAX
Particulars
Note No. (Annual Report
2013-14)
2014-15 2015-16
5 of 9
Annexure-VI
2015-16 2015-16 2015-16 2015-16 2015-16MOU
ExcellentMoU Very
GoodACTUAL MoU Very
GoodMOU
ExcellentACTUAL MoU Very
GoodMOU
ExcellentACTUAL MoU Very
GoodMOU
ExcellentACTUAL Acutal
upto Dec-2014
Anticipated MoU Excellent MoU very good
MoU (Excellent)
MoU (V.Good)
MoU (Good)
MoU (Fair) MoU (Poor)
Plantwise capacity utilisation
Nangal 100% 105% 99% 83% 118% 100.00% 104.18% 104.18%
Panipat 92% 98% 81% 100% 109% 100.00% 103.91% 103.91%
Bathinda 108% 94% 77% 110% 108% 100.00% 100.00% 100.00%
Vijaipur-I 106% 104% 97% 101% 102% 100.16% 100.01% 100.01%
Vijaipur-II 111% 117% 97% 109% 107% 102.04% 103.96% 103.12%
Production of Urea for Company (in Lakh MT)
32.31 33.00 33.80 32.31 33.00 34.01 32.31 33.00 32.11 35.68 36.00 36.36 28.78 35.91 36.04 35.80 36.50 36.41 34.95 33.56 32.21
Production (in ` crore) 5832.31 7361.36 6820.26 7949.30 6844.58 7938.56 8377.20 8160.20 8840.42 8419.42 7998.42 7597.42 7217.42
Profit and Loss Statement ItemsSales Turnover 4894.00 4950.00 5791.03 5870.00 5940.00 7305.29 6481.92 5940.00 6720.23 7836.00 7931.00 8017.03 6891.11 7951.60 8379.00 8162.00 8842.00 8421.00 8000.00 7599.00 7219.00
Interest and Other Income 46.12 37.37 36.62 45.29 26.88 37.34 34.28 34.28 37.17 37.17 34.96 32.81 31.67
Gross Oerating Margin rate (%)
4.53% 4.32% 0.30% 1.26% 5.53% 4.39% 1.15% 1.05% 4.59% 4.61% 4.60% 4.61% 4.60%
Gross Operating Margin 262.18 315.39 20.37 101.23 381.37 349.27 96.00 86.00 406.00 387.00 368.00 350.00 332.00
EBITDA 250.99 265.43 301.91 285.00 303.00 341.66 325.27 347.52 74.19 385.00 395.00 171.90 460.51 423.72 161.12 151.12 402.23 383.23 368.24 353.99 340.46
Depreciation 91.16 91.16 88.90110.42
110.42 91.22 119.58 119.58 117.67 129.82 129.82 129.17 63.53 81.19 136.94 136.94 83.33 83.33 83.33 83.33 83.33
EBIT (Earnings before interest and taxes)
159.83 174.27 213.01 174.58 192.58 250.44 205.69 227.94 -43.48 255.18 265.18 42.73 396.98 342.53 24.18 14.18 318.90 299.90 284.91 270.66 257.13
Interest expenses 40.00 40.00 9.1536.42
36.42 66.24 76.86 76.86 129.73 143.18 143.18 203.89 191.33 212.35 179.04 179.04 203.57 203.57 193.39 183.72 174.54
Prior period expenses 0.00 0.00 -0.06 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Extra ordinary items 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 57.41 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Any other expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Profit before tax 119.83 134.27 203.92138.16
156.16 184.20 128.83 151.08 -230.62 112.00 122.00 -161.16 205.65 130.18 -154.86 -164.86 115.33 96.33 91.51 86.94 82.59
Tax 40.73 45.64 65.42 45.90 51.88 57.47 42.80 50.19 -59.89 38.07 41.47 -71.45 78.84 0.00 -52.03 -55.39 24.17 20.19 19.18 18.22 17.31
Profit After Tax 79.10 88.63 138.50 92.26 104.28 126.73 86.03 100.89 -170.73 73.93 80.53 -89.71 126.81 130.18 -102.83 -109.47 91.16 76.14 72.33 68.72 65.28
Dividend paid 27.76 31.11 48.46 32.27 36.48 44.48 29.67 34.79 0.00 12.56 13.69 0.00 0.00 46.86 0.00 0.00 24.08 27.41 26.04 24.74 23.50
Profit transferred to Statutory reseves
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Any Other items 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Profit transferred to Balance Sheet
51.34 57.52 90.04 59.99 67.80 82.25 56.36 66.10 -170.73 61.37 66.84 -89.71 126.81 83.32 -102.83 -109.47 67.08 48.73 46.29 43.98 41.78
Balance Sheet Items
Gross Block 2973.46 2973.46 2929.54 3557.03 3557.03 2958.21 3780.08 3780.08 3473.97 3650.00 3650.00 3463.04 3642.58 3551.00 3619.00 3619.00 3561.00 3561.00 3561.00 3561.00 3561.00
Less dep 2352.91 2352.91 2330.53 2462.91 2462.91 2408.59 2542.58 2542.58 2366.65 2650.23 2650.23 2321.88 2603.36 2452.00 2646.45 2646.45 2552.00 2552.00 2552.00 2552.00 2552.00
Net block 620.55 620.55 599.01 1094.12 1094.12 549.62 1237.50 1237.50 1107.32 999.77 999.77 1141.16 1039.22 1099.00 972.55 972.55 1009.00 1009.00 1009.00 1009.00 1009.00
NATIONAL FERTILIZERS LIMITED
` croreParticulars 2010-11 2011-12 2012-13 2013-14 2014-15
6 of 9
Annexure-VI
2015-16 2015-16 2015-16 2015-16 2015-16MOU
ExcellentMoU Very
GoodACTUAL MoU Very
GoodMOU
ExcellentACTUAL MoU Very
GoodMOU
ExcellentACTUAL MoU Very
GoodMOU
ExcellentACTUAL Acutal
upto Dec-2014
Anticipated MoU Excellent MoU very good
MoU (Excellent)
MoU (V.Good)
MoU (Good)
MoU (Fair) MoU (Poor)
NATIONAL FERTILIZERS LIMITED
` croreParticulars 2010-11 2011-12 2012-13 2013-14 2014-15
Share capital of CPSE 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58 490.58
Reserves & surplus of CPSE 1095.81 1101.99 1181.60 1216.49 1224.16 1263.85 1320.60 1330.34 1093.12 1103.73 1109.20 1003.41 1102.15 1058.66 833.66 827.02 1125.74 1107.39 1104.95 1102.64 1100.44
Add : Deferred Income from GOI
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Less Profit & Loss A/c (Dr. balance)
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net worth of CPSE 1586.39 1592.57 1672.18 1707.07 1714.74 1754.43 1811.18 1820.92 1583.70 1594.31 1599.78 1493.99 1592.73 1549.24 1324.24 1317.60 1616.32 1597.97 1595.53 1593.22 1591.02
Investment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Current assets 1439.61 1445.79 1907.04 1484.95 1492.62 2943.36 2188.08 2197.40 3468.24 3405.25 3410.72 5648.82 5375.52 3693.69 2320.15 2313.48 3801.29 3990.57 3956.40 3959.09 3956.89
Total current liabilities & provision
650.00 650.00 901.49 700.00 700.00 1971.62 1000.00 1000.00 2624.82 1500.00 1500.00 4988.09 4582.83 3013.48 1708.43 1708.40 3009.84 3244.47 3210.90 3210.90 3210.90
Net current assets 789.61 795.79 1005.55 784.95 792.62 971.74 1188.08 1197.40 843.42 1905.25 1910.72 660.73 792.69 680.21 611.72 605.08 791.45 746.10 745.50 748.19 745.99
Capital employed ( Net worth+ long term Borrowings less CWIP less Investments)
1410.16 1416.34 1604.56 1879.07 1886.74 1521.36 2425.58 2434.90 1950.74 2905.02 2910.49 1801.89 1831.91 1779.21 1584.27 1577.63 1800.45 1755.10 1754.50 1757.19 1754.99
Total debt (loan funds) 786.40 786.40 41.22 2497.00 2497.00 258.81 4454.40 4454.40 460.59 3475.71 3475.71 438.57 386.84 296.52 270.06 270.06 194.16 167.16 167.16 167.16 167.16
Total assets 1410.16 1416.34 1604.56 1879.07 1886.74 1521.36 2425.58 2434.90 1950.74 2905.02 2910.49 1801.89 1831.91 1779.21 1584.27 1577.63 1800.45 1755.10 1754.50 1757.19 1754.99
Ratios
PAT/ Networth 8.28% 7.22% -10.78% -6.00% 7.96% 8.40% -7.77% -8.31% 5.64% 4.76% 4.53% 4.31% 4.10%
EBITDA/ Net Block 50.40% 62.16% 6.70% 15.06% 44.31% 38.56% 16.57% 15.54% 39.86% 37.98% 36.50% 35.08% 33.74%
EBIT/ Average Capital Employed
11.87% 16.02% -2.50% 2.28% 21.85% 19.13% 1.45% 0.85% 17.82% 16.97% 16.12% 15.31% 14.55%
PAT per employee (` in lakhs)
2.95 2.81 -3.98 -2.21 3.27 3.30 -2.50 -2.66 2.44 2.04 1.94 1.84 1.75
Current ratio 2.12 1.49 1.32 1.13 1.17 1.23 1.36 1.35 1.26 1.23 1.23 1.23 1.23
Debt Service Coverage Ratio
NA NA -2.47 1.24 20.52 10.59 0.83 0.49 12.01 11.44 10.84 10.29 9.78
Sales turnover / Net Block 966.77% 1329.15% 606.89% 702.53% 663.10% 723.53% 861.55% 839.24% 876.31% 834.59% 792.86% 753.12% 715.46%
Average no. of days of Inventory
4.3 5.94 10.45 9.61 4.26 8.76 10.49 10.76 8.36 8.80 9.24 9.68 10.12
Inventory turnover ratio (no. of times)
84.94 61.44 34.93 37.99 42.96 41.67 34.78 33.91 43.66 41.47 39.49 37.69 36.07
7 of 9