MIRA
INFORM REPORT
|
Report Date : |
02.08.2008 |
IDENTIFICATION
DETAILS
|
Name : |
COROMANDEL FERTILISERS LIMITED |
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Registered Office : |
`Coromandel House’, 1-2-10, Sardar Patel Road, Secunderabad – 500 003, Andhra Pradesh |
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Country : |
India |
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Financials (as on) : |
31.03.2008 |
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Date of Incorporation : |
16.10.1961 |
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Com. Reg. No.: |
01-892 |
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CIN No.: [Company
Identification No.] |
L24120AP1961PLC000892 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
HYDC00011E |
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PAN No.: [Permanent
Account No.] |
AAACC785ZK |
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Legal Form : |
Public Limited Liability company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturing and marketing of fertilisers and ammonium phosphates |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a part of Murugappa Group, a well known and diversified industrial house of Southern India. Available information indicates high financial responsibility of the company. Financial position is good. Trade relations are fair. Payments are usually correct and as per commitments. The company can be considered good for any normal business dealings. |
LOCATIONS
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Registered Office : |
`Coromandel House’, 1-2-10, Sardar Patel Road, Secunderabad – 500 003, Andhra Pradesh, India |
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Tel. No.: |
91-40-2784 2034 / 7212 |
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Fax No.: |
91-40-2784 4117 |
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E-Mail : |
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Website : |
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Factory : |
Fertiliser Plants :
v Sriharipuram, Po Box No. 1116, Malkapuram
Post, Visakhapatnam - 530 011. Andhra Pradesh, India. Fax: 91-891-2577665 v Fertilisers / Pesticides Factory Ranipet -
632 401. Fax :
91-4172-272264 v Compound Fertilisers Factory Ennore,
Chennai - 600 507. Tamilnadu, India. Pesticide Plant :
Plot No. 22/1, TTC Industrial Area, Thane Balapur Road, Ghanasoli
P.O., Navi Mumbai - 400 701, Maharashtra, India. |
DIRECTORS
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Name : |
Mr. K. Anil Nair |
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Designation : |
President and
Whole time Director Godavari
Fertilisers and Chemicals Limited |
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Name : |
Mr. J. Jayaraman |
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Designation : |
Former Chairman
and Managing Director Cochin Refineries
Limited |
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Name : |
Mr. M. M. Murugappan |
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Designation : |
Director-
Technical and HR Murugappa Group |
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Name : |
Mr. T. M. M. Nambiar |
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Designation : |
Former Managing Director Associated Cement
Companies Limited |
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Name : |
Mr. M. K. Tandon |
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Designation : |
Former Chairman
and Managing Director National
Insurance Company Limited |
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Name : |
Mr. D. E. Udwadia |
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Designation : |
Solicitor and
Advocate |
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Name : |
Mr. S. Viswanathan |
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Designation : |
Former Group
Director Finance Murugappa Group |
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Name : |
Mr. V. Ravichandran |
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Designation : |
President and
Wholetime Director |
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Name: |
Mr. A Vellayan |
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Designation: |
Chairman |
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Name: |
Mr. V
Ravichandran |
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Designation: |
President and
Wholetime Director |
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Name: |
Mr. P Nagarajan |
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Designation: |
Chief Financial
Officer |
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Name: |
Mr. Arun leslie
George |
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Designation: |
General Manager |
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Name: |
Mr. S
Govindarajan |
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Designation: |
General Manager |
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Name: |
Mr. S Navaneetham |
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Designation: |
General Manager |
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Name: |
Mr. N Seetaram |
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Designation: |
General Manager |
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Name: |
Mr. G
Veerabhadram |
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Designation: |
General Manager |
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Name: |
Mr. K Warriar |
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Designation: |
General Manager |
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Name : |
Mr. M M.
Venkatachalam |
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Designation : |
Director |
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KEY EXECUTIVES
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Name |
Mr. M. N. Basavarajappa |
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Designation |
General Manager (Marketing) |
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Age |
57 Years |
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Qualification |
B.Sc. (Ag.) PG Diploma in Marketing Management, PG DBA |
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Experience |
36 Years |
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Date of Joining |
20th November, 1992 |
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Previous Employment |
Manager-Marketing Madras Fertilisers Limited |
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Name |
Mr. K. V. Iyer |
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Designation |
Group Vice President- Personnel |
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Age |
55 Years |
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Qualification |
B.E. (Mechanical), M. B. A. |
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Experience |
32 Years |
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Date of Joining |
18th October, 1993 |
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Previous Employment |
Vice President – Marketing Nagarjuna Fertilisers and Chemicals Limited |
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Name |
Mr. P. Nagarajan |
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Designation |
Vice President – Finance and Administration |
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Age |
51 Years |
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Qualification |
B.Com, BGL, ACA |
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Experience |
27 Years |
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Date of Joining |
09th June, 1997 |
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Previous Employment |
Senior Vice President – Visaka IndustriesLimited |
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Name |
Mr. K. A. Nair |
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Designation |
Vice President – Manufacturing & Projects |
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Age |
52 Years |
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Qualification |
B.Technical (Chemical), M.B.A. Business Administration |
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Experience |
28 Years |
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Date of Joining |
02nd September, 1991 |
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Previous Employment |
Sales & Technical Services Manager, ICI (India) Limited (Fertiliser Division), Kanpur |
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Name |
Mr. R. S. Nanda |
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Designation |
President & Managing Director |
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Age |
58 Years |
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Qualification |
B.Sc. Engineering (Mechanical) |
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Experience |
36 Years |
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Date of Joining |
27th April, 1992 |
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Previous Employment |
Cyanamid India Limited, Atul, Bulsar Dist., Gujarat, India – Production Director (Agro-Chemicals Division) |
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Name |
Mr. A. Vellayan |
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Designation |
Senior Manager - Marketing |
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Age |
58 Years |
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Qualification |
B.Sc. (Ag), M.Sc. (Ag) |
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Experience |
30 Years |
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Date of Joining |
03rd November, 1967 |
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Previous Employment |
Managing Director – Tube Investments of India Limited |
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Name |
Mr. E. Chennakesavulu |
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Designation |
Senior Manager – Marketing |
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Age |
58 Years |
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Qualification |
B.Sc. (Ag.),M.Sc. (Ag) |
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Experience |
30 Years |
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Date of Joining |
24th April, 1973 |
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Previous Employment |
Tobacco Research Assistant, Andhra Pradesh Agricultural University, Kavati |
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Name |
Mr. N. V. Jagan Mohan |
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Designation |
Chief Engineer |
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Age |
58 Years |
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Qualification |
B. E. (Mechanical), M. E. (Mechanical Designer) |
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Experience |
34 Years |
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Date of Joining |
03rd November, 1967 |
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Previous Employment |
Associate Lecturer, Andhra University, Waltair |
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Name |
Mr. A. Sambasiva Rao |
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Designation |
Senior Manager – Safety, Health and Enviornment |
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Age |
42 Years |
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Qualification |
B. Tech., PGD in Energy Engineering & Industrial Safety (AU), PGD in Energy Engineering IIT (Delhi) |
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Experience |
20 Years |
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Date of Joining |
01st June, 1996 |
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Previous Employment |
Assistant Manager – Safety, Voltas Limited, Patancheru |
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Name |
Mr. Arun Leslie George |
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Designation |
General Manager |
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Name |
Mr. S Govindarajan |
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Designation |
General Manager |
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Name |
Mr. N Seetaram |
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Designation |
General Manager |
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Name |
Mr. M K Warriar |
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Designation |
General Manager |
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Name |
Mr. M R Rajaram |
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Designation |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As on
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Total number of
shares |
Total
shareholding as a percentage of total number of shares |
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As a percentage
of (A+B)1 |
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Shareholding of Promoter and Promoter Group |
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Indian |
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Individuals/Hindu Undivided Family |
1354305 |
0.97 |
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Central Government/ State Government(s) |
- |
- |
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Bodies Corporate |
87742745 |
62.72 |
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Financial Institutions/ Banks |
- |
- |
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Any Other |
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- Trust |
12570 |
0.01 |
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Foreign |
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Individuals (Non-Resident individuals/Foreign Individuals) |
- |
- |
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Bodies Corporate |
- |
- |
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Institutions |
- |
- |
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Any Other (specify) |
- |
- |
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Total Shareholding of Promoter and Promoter Group |
89109620 |
63.70 |
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Public shareholding |
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Institutions |
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Mutual Funds/UTI |
8932630 |
6.39 |
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Financial Institutions/ Banks |
67683 |
0.05 |
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Central Government/ State Government(s) |
- |
- |
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Venture Capital Funds |
- |
- |
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Insurance Companies |
6557090 |
4.69 |
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Foreign Institutional Investors |
2743076 |
1.96 |
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Foreign Venture Capital Investors |
- |
- |
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Any Other |
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- Foreign Bank |
920 |
0.00 |
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Non-institutions |
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Bodies Corporate |
2663948 |
1.90 |
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Individuals |
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I. Individual shareholders holding nominal share capital up to Rs. 1
lakh. |
15375166 |
10.99 |
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II. Individual shareholders holding nominal share capital in excess of
Rs. 1 lakh. |
7776512 |
5.56 |
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Any Other |
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- Foreign Nationals |
52619 |
0.04 |
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- Foreign Companies |
250 |
0.00 |
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- Overseas Corporate Bodies |
4979280 |
3.56 |
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- Trust |
177648 |
0.13 |
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- NRI's |
1264826 |
0.90 |
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- Clearing Members |
195680 |
0.14 |
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Total Public Shareholding |
50787328 |
36.30 |
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TOTAL |
139896948 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturing and marketing of fertilisers and ammonium phosphates |
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Products : |
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PRODUCTION STATUS
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Particulars |
31.03.2008 Metric Tones |
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Capacity, Production, Sales, Consumption and stocks |
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Quantitative information in respect of goods
manufactured/ purchased |
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(A) Licencensed Capicity per annym |
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I] Fertilisers |
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Amonium Phosphatic Fertilisers |
2310000 |
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Di-Ammonium Phosphate (DAP) |
815000 |
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Single Super Phosphate |
132000 |
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In terms of plant nutrients,
this works out to |
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N (Nitrogen) |
572600 |
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P2O5 (Phosphorus Pentoxide) |
1035770 |
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The above capacities for the
year ended March 31, 2008 include 685,000 MT of Ammonium Phosphatic
Fertilisers and 8,15,000 MT of DAP capacity taken over, pursuant to the
amalgamation of Godavari Fertilisers and Chemicals Limited with the Company.
(Refer Note II on Schedule 17). In terms of plant nutrients these work out to
242,600 MT of N and 614,650 MT of P2O5. |
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II] Plant Protection Products Plant Protection Products are
not covered by the list of industries in respect of which industrial licensing
is compulsory. |
Not Available |
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(B) Installed Capacity per annum |
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(as certified by the management and not verified by the auditors,
being a technical matter) |
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(i) Fertilisers - Phosphatic fertilisers of various grades equivalent
in terms of plant nutrients |
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N (Nitrogen) |
411100 |
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P2O5 (Phosphorus Pentoxide) |
758520 |
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The installed capacity
in terms of products is capable of being varied within the overall capacity
in terms of nutrients shown above. The above capacities for the year ended
March 31, 2008 include 172,600 MT of N and 439,650 MT of P2O5 taken over,
pursuant to the amalgamation of Godavari Fertilisers and Chemicals Limited
with the Company. (Refer Note II on Schedule 17). |
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(ii) Plant Protection Products |
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Technicals |
13905 |
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Formulations - Liquids (in KL) |
10900 |
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Formulations - Others |
5600 |
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(C) Production |
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(i) Fertilisers |
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Ammonium Phosphatic
Fertilisers |
1381524 |
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Di-Ammonium Phosphate
(DAP) |
567785 |
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Single Super Phosphate |
67829 |
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In terms of plant
nutrients, this works out to |
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N (Nitrogen) |
346146 |
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P2O5 (Phosphorus
Pentoxide) |
620679 |
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(ii) Plant Protection Products (including third party
production) |
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Technicals |
6483 |
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Formulations - Liquids
(in KL) |
4916 |
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Formulations - Liquids (in KL) |
2829 |
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Formulations - Others |
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GENERAL
INFORMATION
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No. of Employees : |
2000 |
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Bankers : |
§ State Bank of India § State Bank of Travancore § Standard Chartered Grindlays Bank § Citibank N.A. § IDBI Bank Limited § HDFC Bank Limited § ICICI Bank Limited § Andhra Bank |
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Facilities : |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Price Waterhouse Chartered Accountants |
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Address : |
6-3-550, II Floor, L.B. Bhavan, Somajiguda, Hyderabad-500 082 |
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Name : |
Mr. V
Kalyanaraman Chartered
Accountant |
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Name : |
Mr. Dantu Mitra Chartered
Accountant |
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Associates/Subsidiaries : |
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CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
|
175000000 |
Equity Shares |
Rs.2/-- each |
Rs.350.000 Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
139896948 |
Equity Shares |
Rs.2/- each |
Rs.279.794 Millions |
Notes:
(A) Of the above since inception:
i)
5806100 Equity Shares of Rs. 2/- each fully
paid-up have been allotted pursuant to contacts without payments being received
in cash
ii)
69278790 Equity Shares of Rs. 2/- each fully paid-up
have been issued as Bonus Shares by capitalization of a part of General
Reserve.
iii)
4409440 Equity Shares of Rs. 2/- each fully
paid-up have been issued at a premium of Rs. 2/- per share to the Debenture
Holders and Public Financial Institutions pursuant to the right exercised by
them for converting a part of their Debentures/ Loan amounts into fully paid-up
Equity Sahres.
(B) 4864000 Equity Shares of Rs. 10/- each full paid-up have been brought
back at a price of Rs. 65/- per share from the shareholders pursuant to the
offer for buy back of equity shares made during the year March 31, 2000.
(C) 29749505 Equity Shares of Rs. 2/- each fully paid-up have been allotted
to the shareholders of E.I.D Parry (India) Limited I the ratio of one share of
the Company for every three shares of E.I.D Parry (India) Limited, pursuant to
the scheme of arrangement (demerger) between E.I.D Parry (India) Limited and
the company for the acquisition of Farm Inputs Division of E.I.D Parry (India)
Limited
(D) 831981 Equity Shares of Rs. 2/- each fully paid-up have been allotted to
the shareholders of Ficom Organics Limited in the ratio of 3 shares of the
company for every 11 shares of Ficom Organic Limited pursuant to the Scheme fo
Amalgamation between Ficom Organics Limited and Rasilah Investments Limited and
the Company.
(E) 12037182 Equity Shares of Rs. 2/- each fully padi-up have been allotted
to the shareholders of Godavari Fertilizers and Chemicals Limited in the ratio
of 3 shares of the company for every 2 shares of Godavari Fertilizers and
chemicals Limited pursuant to the shcheme of Amalgamation between Godavari
Fertilisers and Chemicals Limited and the company.
(F) Of the total Equity Shares Capital, as at March 31, 2008, E.I.D. Parry
(India) Limited (Holding Company) holds 87719035 Equity Shares of Rs. 2/- each
fully paid-up ( 2007: 87719035 Equity Shares)
(G)
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
|
31.03.2008 |
31.03.2007 |
31.03.2006 |
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|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
279.794 |
254.056 |
254.056 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
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3] Reserves & Surplus |
7664.556 |
4868.621 |
4125.814 |
|
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4] Capital suspense account |
0.000 |
1.664 |
0.000 |
|
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5] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
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NETWORTH |
7944.350 |
5124.341 |
4379.870 |
|
|
LOAN FUNDS |
|
|
|
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|
1] Secured Loans |
5122.665 |
2664.391 |
2109.306 |
|
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2] Unsecured Loans |
4897.087 |
2825.213 |
2153.293 |
|
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TOTAL BORROWING |
10019.752 |
5489.604 |
4262.599 |
|
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DEFERRED TAX LIABILITIES |
824.671 |
713.434 |
751.641 |
|
|
|
|
|
|
|
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TOTAL |
18788.773 |
11327.379 |
9394.110 |
|
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APPLICATION OF FUNDS |
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|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
7245.480 |
3711.408 |
3580.064 |
|
|
Capital work-in-progress |
108.410 |
112.694 |
56.635 |
|
|
|
|
|
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|
|
INVESTMENT |
3513.371 |
1740.839 |
1618.093 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
8648.683
|
4047.265 |
3953.077 |
|
|
Sundry Debtors |
125.895
|
1605.159 |
1067.501 |
|
|
Cash & Bank Balances |
663.164
|
1694.916 |
243.308 |
|
|
Other Current Assets |
0.000
|
0.000 |
0.000 |
|
|
Loans & Advances |
5939.949
|
4389.333 |
4434.478 |
|
Total
Current Assets |
15377.691
|
11736.673 |
9698.364 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
7319.588
|
5359.884 |
4982.562 |
|
|
Provisions |
1036.591
|
614.351 |
576.484 |
|
Total
Current Liabilities |
8356.179
|
5974.235 |
5559.046 |
|
|
Net Current Assets |
7021.512
|
5762.438 |
4139.318 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
1788.773 |
11327.379 |
9394.110 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
|
Sales Turnover |
21684.535 |
13673.468 |
18747.063 |
|
|
Other Income |
427.703 |
6981.436 |
0.000 |
|
|
Government Subsidies |
15888.869 |
187.349 |
|
|
|
Total Income |
38001.107 |
20842.253 |
18747.063 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
3334.181 |
1463.475 |
1153.632 |
|
|
Provision for Taxation |
1236.581 |
456.110 |
318.168 |
|
|
Profit/(Loss) After Tax |
2097.600 |
1007.365 |
835.464 |
|
|
|
|
|
|
|
|
Earnings in Foreign Currency : |
|
|
|
|
|
|
Export Earnings |
608.552 |
653.977 |
218.546 |
|
Total Earnings |
|
|
|
|
|
|
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|
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Imports : |
|
|
|
|
|
|
Raw Materials |
26275.281 |
13108.371 |
13500.326 |
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Manufacturing Expenses |
33447.363 |
18661.025 |
|
|
|
Interest |
398.311 |
319.327 |
17593.431 |
|
|
Depreciation & Amortization |
521.252 |
398.426 |
|
|
Total Expenditure |
34366.926 |
19378.778 |
17593.431 |
|
QUARTERLY
|
PARTICULARS |
|
|
30.06.2008 1ST
Quarter |
|
Sales Turnover |
|
|
14003.900 |
|
Other Income |
|
|
1721.700 |
|
Total Income |
|
|
15725.600 |
|
Total Expenditure |
|
|
12382.300 |
|
Operating Profit |
|
|
3343.300 |
|
Interest |
|
|
155.500 |
|
Gross Profit |
|
|
3187.800 |
|
Depreciation |
|
|
124.200 |
|
Tax |
|
|
1125.000 |
|
Reported PAT |
|
|
1938.600 |
KEY RATIOS
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
Debt Equity Ratio |
1.19 |
1.03 |
0.85 |
|
Long Term Debt
Equity Ratio |
0.48 |
0.47 |
0.46 |
|
Current Ratio |
1.11 |
1.17 |
1.12 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
4.15 |
3.04 |
2.87 |
|
Inventory |
6.05 |
5.33 |
6.51 |
|
Debtors |
29.18 |
15.95 |
18.46 |
|
Interest Cover
Ratio |
5.77 |
5.58 |
5.80 |
|
Operating Profit
Margin (%) |
11.86 |
10.23 |
9.24 |
|
Profit Before
Interest and Tax Margin (%) |
10.50 |
8.36 |
7.30 |
|
Cash Profit
Margin (%) |
6.82 |
6.59 |
6.32 |
|
Adjusted Net
Profit Margin (%) |
5.46 |
4.73 |
4.38 |
|
Return on Capital
Employed (%) |
28.22 |
18.52 |
18.44 |
|
Return on Net
Worth (%) |
32.11 |
21.20 |
20.45 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY:
Subject is a leading fertilizers manufacturing company. It produces
wide range of fertilizers and pesticides (technical and formulations). CFL is a
subsidiary company of Murugappa group company's EID Parry (India) Limited . EID
Parry (India) Limited, along with its subsidiary companies i.e. Santhanalakshmi
Investments Private Limited holds 69.05% equity of the company.
CFL has production facilities in several places. The company manufactures
Phosphatic Fertilisers of different grades at three plants. The Visakhapatnam
plant is one of India's integrated complex fertilizer unit. This plant has a
sulphuric acid plant, a phosphoric acid plant , a complex granulation plant and
a bagging plant with automatic machines. The Ennore plant has commissioned in
1963, the compound fertilizer unit of this plant was the first integrated
complex fertiliser factory in the private sector. It has two sulphuric acid
plants, a phosphoric acid plant, a complex granulation plant and a bagging
plant. There is a mid-sea facility for loading ammonia and transferring it to
the plant through a submarine pipeline. The Ranipet plant set up in 1906 as
India's first fertilizer plant, this facility is one of India's most modern
'Single Super Phosphate' (SSP) manufacturers today.
The pesticide business of the company encompasses over 35 types of
insecticides, fungicides and herbicides. The company produces pesticides at
Navi Mumbai and Ranipet plant. The first one produces technical-grade
pesticides such as Endosulfan, Monocrotophos, Phenthoate, Cypermethrin,
permethrin and Fenvalarate. The Ranipet plant produces 24 liquid formulations
and 11 powder formulation.
The company is continuously working on to develop its infrastructures and
reduction of operating cost. To achieve this, the company has set up its own 19
MW captive power plant to cater its needs and to reduce dependence on state
power. This facility assures continuous good quality supplies, simultaneously
reducing cost of power. The company has its own jetty. This helps receive cargo
at the plant doorstep and reduces the cost of handling. The jetty is hired out
earning a decent income.
The company quickly identifies opportunities and using the same for their
progress. Looking to the demands of the farmers, when required, the company
imports fertilizers, acting as a trader, and meets market requirement.
The company is managed by top level management
professionals. Their timely decisions have made the organization more efficient
one. The company has exited from high cost operations and stopped running the
urea plant following decontrol of hydrogen prices, the plant having become
unviable. Ammonia plant operations were also suspended after steep increase in
naphtha prices. The company has diversified into manufacturing of cement and
has also commissioned a 1 million TPA cement plant in 1982. However, due to
recurring losses, the unit was sold to India Cements in Nov' 1990.
During the year 2003-04, the company has undergone a merger plan.
According this, the Farm Inputs Division (FIND) consisting of fertilizers and
chemical pesticides business of EID Parry (India) Limited (holding company)
merged with the company. FIND has fertilizer capacity 0.357 million tonnes
including single Super Phosphate (SSP) of 0.132 million tonnes
As part of company's growth plans, it decided to acquire existing
phosphatic fertilizer units, especially in the eastern coast such as Godavari
Fertilisers and Chemicals Limited (GFCL), Madras Fertilisers Limited and
Paradeep Phosphates Limited To give this effect, it has acquired 25.88% of the
equity capital of GFCL from Government of Andhra Pradesh. Further the company
acquired 14.93% of the equity capital from the shareholders of GFCL through a
public offer. The company disinvested 10% of the GFCL in favour of strategic
Partners, viz., M/s Foskor Limited, South Africa (5%) and M/s Group Chimique
Tunisien, Tunisia (5%). GFCL has an installed capacity of 8.32 lakh tonnes of
DAP and complex (NP/NPK) fertilizer at its located in Kakinada, Andhra Pradesh.
This acquisition has enabled both CFL and GFCL to leverage on the combined
strength and reap the synergy benefits in term of raw materials sourcing,
product range, market realization and financing costs.
In the year 2004-05, the company has entered a Business Assistant
Agreement (BAA) with M/s Foskor Limited, a wholly owned subsidiary of
Industrial Development Corporation of South Africa Limited (a state owned
undertaking) and a leading manufacturer of phosphoric acid. According this
agreement, the company will provide technical and managerial assistance to Foskor
for a period of three years. The company will receive fees for the services
partly by way of shares in Foskor and partly in cash, based on results. The
company has, on April 6, 2005, acquired an initial equity stake of 2.5% in
Foskor for an investment of 37.5 million South African Rand equivalent to about
Rs.280.000 millions.
The company voted as one of the ten greenest companies in India, it reflects
the company's commitment to the environment and society.
The results for the current year include those of Godavari
Fertilisers and Chemicals Limited, which has been amalgamated with the Company
pursuant to a Scheme of Amalgamation approved by the Hon'ble High Court of
Andhra Pradesh at Hyderabad. The Company's performance for the year under
review has been satisfactory despite steep increase in the price of key raw
materials especially Sulphur, which resulted in suspension of production of
Sulphur based Complex Fertilisers and Single Super Phosphate, resulting in
lower production and sales volume and lower turnover. The seasonal conditions
remained generally satisfactory in all the addressable markets of the Company.
Operations
The Company continued to improve on its performance. The improved
profitability has been mainly due to improved operating efficiencies, change in
subsidy policy resulting in recognition of raw material prices with one month
lag instead of three months lag and higher freight neutralisation. The higher
contribution from Pesticides and Speciality nutrients divisions also resulted
in improved profitability.
Total sales for the year were Rs.37570.000 Millions compared
to Rs.20650.000 Millions in the previous year. The Profit before Interest and
Taxation for the year was Rs.4032.500 Millions (previous year Rs.1782.800
Millions). The Profit after Tax for the year was Rs.2097.6000 Millions compared
to Rs.1007.400 Millions in the previous year.
Fertiliser Subsidy
The uncertainty on the fertiliser subsidy front continues to
be an area of concern for the Company. This assumes particular importance in
the context of significant increase in the prices of key raw materials and
intermediates like Rock Phosphate, Sulfur and Phosphoric Acid. During the year,
the Government of India has settled a part of the subsidy dues in the form of
Special Bonds. At this juncture, these bonds are being traded at a discount.
The Company had accounted for the potential loss in respect of these Bonds on
'Mark to Market Basis'. The significant increase in the price of all raw
materials and the delay in settlement of the subsidy dues has put a strain on
the Company's Working Capital and will increase the interest cost in the coming
year. Added to these, the Government’s Policy to give part of subsidy in the
form of bonds may affect the liquidity
position of the Company.
Rural Retail Centres
During the year under review, the Company has set up 20
Rural Retail Centres in the name and style of "Mana Gromor Centres"
(MGC) in various District/Mandal Head Quarters of Andhra Pradesh and sold
Fertilisers, Pesticides and other products to the rural customers. The Company
through these MGC also provides services such as Technical Training, Soil Testing
Facilities etc. The response from the rural customers has been encouraging.
Based on the experience from these Centres, the Company proposes to expand the
number of Centres in the Financial Year 2008-09.
Joint Venture Project
The Joint Venture Company 'TIFERT' formed in Tunisia to set
up a phosphoric acid plant has achieved technical closure and work on the
Project is expected to commence soon. The revised Project Cost is estimated at
US $ 515 Million and CFL's equity contribution to this Project is expected to
be US $ 29 Million. The plant is expected to be commissioned by 2010. This
strategic investment is aimed at securing uninterrupted supply of phosphoric
acid for the operations.
Amalgamation of Godavari Fertilisers and Chemicals Limited
The Scheme of Amalgamation of Godavari Fertilisers and
Chemicals Limited (GFCL) with the Company was approved by the Hon'ble High
Court of Andhra Pradesh. Pursuant to the Scheme of Amalgamation, 1,20,37,182
equity shares were issued and allotted to the shareholders of GFCL on a fully
paid up basis, in the ratio of 3 (three) equity shares of Rs.2/- each of the
Company for every 2 (two) equity shares of Rs.10/- each of GFCL. Consequent to
this, the paid up equity capital of Company has become Rs.27.98 Millions. The
current year's result, therefore, incorporates the results of GFCL and to that
extent, is not comparable with previous year's figures.
Subsidiary Company - Parry Chemicals Limited (PCL)
PCL achieved a turnover of Rs.100.68 lakhs for the year
ended March 31, 2008 and the Profit After Tax was Rs.33.66 Lakhs.
Awards/Recognition
The Company continues to receive a number of
awards/accolades from the Government of AP and Industry associations. During
this year the Company received the following awards:
_ FAI's Award for 2006-07
-_ For Consistent Excellent Production of Phosphoric Acid
Plant at Visak, and
_ For Best Production Performance Award for Complex
Fertilisers (P2O5 category) for Kakinada Plant
_ Certificate of Merit for Energy Efficient Practices in Fertiliser
Industry for the year 2007 from Bureau of Energy Efficiency for both Visak and
Kakinada Plants.
_ Certificate of Appreciation by NSC, A.P. Chapter, on the
occasion of National Safety Day for Best Process Safety Management Practices at
Visak and Kakinada Plants.
_ May Day Award - 2007 for Best Management and for
Outstanding Contribution in Maintenance of Industrial Relations, Labour Welfare
and Productivity by Government of Andhra Pradesh.
_ Prestigious CNBC TV 18 Employer of Choice Award for
"Most Engaged Workforce" for erstwhile Godavari Fertilisers and
Chemicals Limited
MANAGEMENT DISCUSSION AND ANALYSIS
ORGANISATION - PROFILE:
Coromandel Fertilisers Limited (CFL), engaged in the
business of Farm Inputs (Fertilisers, Pesticides and Speciality Nutrients) is a
constituent of the Murugappa Group and is a subsidiary of EID Parry (India)
Limited (EIDP), which holds 62.7% of the equity in CFL.
During the year, Godavari Fertilisers and Chemicals Limited
(GFCL) was amalgamated with the Company after obtaining all necessary
approvals. GFCL was a leading Phosphatic Fertiliser manufacturing Company with
the Plant located at Kakinada and CFL was holding 74.92% of the equity in GFCL
just before merger. The merger is expected to bring about greater synergy and
help in consolidation and growth of business of the Company.
The Pesticides Formulation Unit at Jammu was commissioned
during the year. With this, the Company has now 8 manufacturing / formulations
units located in the States of Andhra Pradesh, Tamil Nadu, Maharashtra, Gujarat
and Jammu & Kashmir. The Company's products are marketed all over the
country through a network of over 10,000 dealers, who act as an interface
between the Company and ultimate consumer viz farmer.
During the year, the Company set up 20 Retail Centres in the
various District/Mandal head Quarters of Andhra Pradesh under the name 'Mana
Gromor Centre'.
The Company's Farm inputs Business comprise of three main
divisions viz.
– Phosphatic Fertilisers
– Pesticides and
– Speciality Nutrients
The Management Discussion and Analysis given below discusses
the key issues concerning each of the divisions.
FARM INPUTS:
PHOSPHATIC FERTILISERS:
BUSINESS:
CFL is one of the leading manufacturers of Phosphatic Fertilisers
in India. It produces and sells Phosphatic Fertilisers of various grades of
complex fertilisers and Single Super Phosphate (SSP). The Company also trades
in Potash, another key plant nutrient. These products are sold under the
well-established brand names 'Gromor', 'Godavari', 'Paramfos', 'Parry Gold' and
'Parry Super'. CFL has a strong market presence and dealer network in Andhra
Pradesh, Karnataka, Tamil Nadu, Maharashtra, Orissa, Chattisgarh, parts of
Uttar Pradesh, Madhya Pradesh and West Bengal.
The Company's fertiliser plants are located at Visakhapatnam
and Kakinada in Andhra Pradesh, Ennore and Ranipet in Tamil Nadu and has a
combined production capacity of 23.10 lakh tonnes of complex Fertilisers, 8.15
lakh tonnes of DAP and 1.32 lakh tones of SSP.
INDUSTRY SCENARIO:
After achieving two years of over 9% growth in GDP, India is
expected to record a real GDP growth rate of 8.7% in the fiscal year 2007-08
(2006-07 - 9.6%). Growth rate in agricultural sector fell sharply during the
year to just 2.6% (2006-07 - 3.8%), which is well below the desired level of 4%
per year, deemed pre-requisite for achieving the target GDP growth of 8% CAGR
on a 'sustainable basis'.
In the recent Economic Survey Report submitted to
Parliament, Government of India has admitted that a healthy plant growth is
possible only if all 16 nutrients including Sulphur, Zinc, Calcium, Iron, Boron
and other micronutrients are also available, besides 'N','P' and 'K'.
The Govt. has admitted that though NPK requirements are made
available, micronutrient deficiency continues to affect the productivity of
crops significantly. Government has emphasized that acceleration of growth in
agricultural sector will not only push the overall GDP growth upward, it would
also make the growth more inclusive. Increasing farm incomes is necessary for
an equitable growth. Further, with uncertainties in global markets and
hardening of the international prices of food, fuel and edible oils, domestic
price stability and food security critically
depend on the growth in the agricultural sector. In this
context, food and fertiliser subsidies have supported agriculture sector. The
Government has emphasized on the need for better targeting of these subsidies
with a view to optimize the resource allocation and return therefrom. With area
under cultivation remaining stagnant, improving the productivity of crops is
necessary for strengthening the farm sector.
While there has been an increase in the overall consumption
of chemical fertilisers from a mere 89.63 KG per hectare in 2000-01 to 113.26
KG per hectare in 2006-07, there is still considerable scope for increasing
fertiliser consumption esp. phosphatic fertilisers. In this context, CFL
continued to focus its work on the project 'Green Leap Programme' with a view
to educate the farmer on the need for increasing fertilizer consumption and
providing balanced nutrition to the crops in order to improve the farm yields
and maintain soil health. This programme was extended to 1700 villages in the
States of Andhra Pradesh and Orissa and in the villages covered by the
Programme, the yields have improved by about 15 to 20%.
Fertiliser Industry in India
India's current fertiliser production is 32.7 million MT,
Nitrogen, Phosphates and Potash combined, while the demand is about 37.4
million MT. During 2007-08, the country imported 6.92 million MT of Urea, 2.9
million MT of DAP & MAP and 2.8 million MT of MOP. With a number of units
in the country not producing phosphatic fertilisers to their full capacity for
various reasons including non-availability of raw materials, the volume of DAP
imports is expected to go up further in the year 2008-09.
During the year, the fertiliser consumption showed a growth
of 4.1% compared to the previous year. While the phosphatic fertiliser (DAP
& MAP) usage recorded a growth of 5.9%, the complex fertiliser usage
recorded a drop of 3.36% during the year 2007-08. There is obviously a strong
case for higher usage of chemical fertilisers for improving farm productivity.
COMPANY'S FERTILISER BUSINESS:
CFL's Fertilisers enjoyed a market share of about 65% - 70%,
in the State of Andhra Pradesh. The Company achieved a total fertiliser sale
volume of 21.71 lakh MTs, including 0.78 lakh MT of imported MOP. With a view
to leverage on the relationship and goodwill created with the farmers over the
years and to further strengthen the same, the Company had during the year set
up 'Mana Gromor Centres' - a rural retail centre initiative in 20
District/Mandal head Quarters of Andhra Pradesh. These centres will essentially
sell the Company's fertilisers, pesticides and speciality nutrients besides
other companies' fertilisers and other products directly to the rural
population. These centres will also impart technical training besides providing
soil testing facilities to the farmers. During the year, the Company achieved a
total sales turnover of Rs. 56 Millions through these centres.
PESTICIDES
Industry Scenario:
The global market for crop protection for the first time registered
a real growth since 2004. The sales volume grew by 9% to reach US $ 33.2
billion. The major contributor for this growth was the Latin American market
which grew by almost 18%. Europe also registered a double digit growth. Asia
registered a growth of 5.1%, mainly boosted by a shift from generics to
speciality molecules. NAFTA consisting of USA was the only region which
registered a de-growth in real terms, but this is expected to change this year
with the demand for bio-fuel increasing and the planting of Maize going up by
19%.
The generic molecules saw an upbeat in the price in the last
quarter of the year, mainly due to the increase in the cost of raw materials,
especially those based on sulphur and phosphorous and the constrained supply
from the Chinese manufacturers, being affected by the change in their
government's manufacturing and export policy. Indian pesticides industry is
dominated by MNCs with their new chemistry molecules and Indian companies with
widespread network in different states, serving the varied needs of regional
agriculture. Of the three major product groups, Industry witnessed positive
growth in insecticides, herbicides volumes (but de-growth in value due to
reduction in prices of wheat herbicides) and de-growth in fungicides during the
year.
Adoption of BT cotton reached a new high with 65% of total
acreage cultivated in the country coming under genetically modified varieties.
The year witnessed a bounce back for business especially for insecticides due
to severe attack of sucking pests in BT cotton and growth in volume of
herbicides. However industry faced shortages in supplies of major products like
Monocrotophos, Acephate and Acetaimiprid due to curtailed supplies from China.
Prices of products also increased due to cost escalation reversing the trend
seen in the last 3 years.
COMPANY'S PESTICIDES BUSINESS:
The formulation business achieved a significant growth of
36% in turnover contributed by expanded network through a special accelerated
growth marketing plan launched in Andhra Pradesh and Maharashtra. Co-marketing
tie-ups have been forged with leading MNCs for accessing speciality chemicals
and strengthen portfolio in new crop segments like Wheat.
Commencement of production from Jammu factory helped in
achieving higher turnover and profitability. As regards exports, Endosulfan and
Malathion continue to be the major contributors to the turnover. The growth in
consumption in Latin America helped in improving sales of Endosulfan in the
region. Phenthoate and Terbufos also registered substantial growth, mainly
contributed by sales in the Asian markets. The Company's sales of Endosulfan
and Profenofos registered good growth in domestic market powered by severe
incidence of sucking pests in BT cotton and generally good pesticide season in
the country. Overall the Pesticides division registered a turnover growth of
26% over the previous year.
SPECIALITY NUTRIENTS:
The Company's thrust on Speciality Nutrients including
'Bentonite Sulphur’ (Gromor Sulphur), Water Soluble Fertilisers and other micro
nutrients continued during the year. During the year, the Company could scale
up the volume of 'Bentonite Sulphur' significantly, despite a steep increase in
the price of sulphur. This has been possible due to the various brand building
measures taken up in the market place and improvement in the Plant operations.
During the year, the Company commissioned a 10 TPD and a 3 TPD Water Soluble
Fertilisers (WSF) plant at Visak and Kakinada respectively. The Company also
launched a new product 'Sulpho Zinc' during the year.
Trading in imported 'BORON' a micro nutrient, also commenced
during the year. There was a good market response for all the new products
including the Municipal Compost which has been launched in the market under the
brand name 'Godavari Gold'. The Company also achieved significant sales volume
in Zinc based micro nutrient fertilisers. With these new products, the Company
is able to provide a wide range of farm inputs and service the farming
community through balanced fertilization.
COMPANY'S PERFORMANCE:
The Company continued to improve on its performance and
deliver better results. This has been achieved despite lower production / sales
volume of fertilisers during the year mainly resulting from nonavailability of
raw materials. The Company also had to curtail the production of Sulphur based
Complex fertilisers. viz., Complex 20:20:0:13, 16:20:0:13 and SSP in view of
the steep increase in the price of Sulphur which was not being compensated
under the current subsidy policy.
The Company's performance for the year has been satisfactory
considering the steep increase in the prices of some of the key raw materials
viz., Rock Phosphate and Sulphur. While the Price of Rock Phosphate nearly
doubled by the last quarter of the year, the price of Sulphur went up by nearly
nine times compared to the price prevailing at the beginning of the year. The
improved profitability has been mainly due to improved operating efficiencies,
change in subsidy policy resulting in recognition of raw material prices with
one month lag instead of three months lag and
higher freight cost neutralisation. The higher contribution
from Pesticides and Speciality Nutrients
Divisions also resulted in improved profitability. The
financial results for the year include those of the erstwhile Godavari
Fertilisers and Chemicals Limited which has been merged with CFL effective
April 1, 2007 and hence the figures for the current year are not comparable
with that of the previous year.
STRENGTHS AND OPPORTUNITIES:
CFL's leadership position in the Industry is essentially due
to its efficient cost structure and consumer focus. The Company continues to
focus on improving the infrastructure and supply chain management in order to
reduce the costs further. The tie-ups with M/s Foskor, South Africa and M/s
Groupe Chimique Tunisien, Tunisia and other major raw material suppliers would
enable the Company to maximize the production of Complex Fertilisers from its
existing plants. To support the higher volumes, the Company is expanding its
infrastructural facilities further by investing in material handling
equipments, material storage facilities etc. The Company also continued its
efforts at brand building and expanded its retail network and developed
relationship with ‘Self Help Groups’ (SHG) to strengthen the distribution
channel. The rural retail initiative through Company's 'Mana Gromor Centres’
will help in further strengthening the bond with the farming community. It is
proposed to open more number of such retail centres during the year to
leverage on the relationship and goodwill create with the
farmers.
The Company also plans to expand the product base in the
Speciality Nutrient segments and increase its revenue and profitability from
non-subsidy related activities.
The new Joint Venture Company Tunisian Indian Fertilizer Company S.A (TIFERT) set up in
Tunisia along with Gujarat State Fertilisers & Chemicals Limited (GSFC) and
two leading Tunisian Companies viz., Groupe Chemique Tunisien (GCT) and
Campagnie De Phosphates de Gafsa (CPG) to set up a Phosphoric acid plant in
Tunisia has very recently achieved technical closure and work on the Project is
expected to commence soon. The revised cost of this Joint Venture Project is
estimated at US $ 515 million and CFL's investment in the equity of this Joint
Venture Company will now be US $ 29 million i.e. about Rs.118 Millions. This
project is expected to go on stream by end of 2010.
OUTLOOK:
There has been a steep increase in the prices of almost all
raw materials and intermediaries required for manufacture of phosphatic
fertilisers during the last one year. The increase in the prices of Sulphur,
Rock Phosphate, Potash, Sulpuric Acid and Phosphoric Acid has been alarming.
There is also the issue of short supply with respect to availability of some of
the key raw materials like Sulphur, Rock Phosphate and Phosphoric Acid. With
the farm gate prices of raw materials remaining unchanged, the steep increase
in the prices of raw materials and intermediates and the Govt's proposal to
extend subsidy to micro-nutrients, it is expected that there will be a quantum
jump in the fertiliser subsidy outgo of the Government of India. The initial
allocation made in the current year's Central Budget towards fertiliser subsidy
is inadequate and like in earlier years, the expectation is that the Government
will supplement with further allocations during the year. This is critical to
enable the fertiliser companies to order for the required raw materials in time
and continue the operations. With substantial increase in the price of raw
materials and likely delay in settlement of subsidy dues, the Company's working
capital will go up significantly and this will be a major challenge for the
business. With increased thrust on irrigation and increased water storage
levels in the reservoirs, the demand for phosphatic fertilisers is expected to
go up further in the coming year. The shift in cropping pattern in the country
from traditional food grains to high yielding and profitable crops such as
maize, pulses, oilseeds etc. besides increased usage of BT seeds, will also
lead to increased fertiliser consumption. As regards the Pesticides business,
efforts will be made to improve the productivity and production levels at the
Ankaleswar plant and also introduce new products to meet the market needs and
fill gaps. Latin American market will continue to be the focus area for growth
by improving the presence of Company's existing molecules and also introducing
new molecules.
In respect of formulation business the accelerated growth
Plan Model which was implemented successfully in Andhra Pradesh and Maharashtra
will be repeated in Punjab and Karnataka. Also efforts will be made to
strengthen co-marketing tie ups for new product introduction. The 'Mana Gromor
Centres' will be fully leveraged to scale up the volume of formulations esp.
the speciality products. Further efforts will also be made to enhance service
level to the channel partners through buffer godowns, dedicated van delivery
system and automation of operations in godowns etc.
Amalgamation of
Godavari Fertilisers and Chemicals Limited with the Company
a) Pursuant to the Scheme of Amalgamation ('the Scheme') of the
erstwhile Godavari Fertilisers d
Chemicals Limited (GFCL) with the Company, as approved by the Hon'ble High
Court of Judicature of Andhra Pradesh on December 18, 2007, the entire business
and undertaking of GFCL including all assets, liabilities, duties and
obligations have been transferred to and vested
in the Company with effect from April 1, 2007.
b) GFCL is engaged in the business of manufacture and sale of phosphatic
fertilisers.
c) The Amalgamation has been accounted for under the 'Purchase Method'
as prescribed by ccounting Standard 14, "Accounting for
Amalgamations", notified under Sec 211 (3C) of the Act.]
d) In accordance with the Scheme, the assets and liabilities of GFCL
have been taken over at their fair values as on April 1, 2007, determined by an
independent valuer and Rs.1032.800 Millions being the excess of the fair value
of the net assets over the paidup value of the shares issued to the
shareholders of GFCL and the cost of investment in GFCL, has been credited to
the Capital Reserve in the books of the Company. Further as per the terms of
the scheme , the identity of 'Capital Reserve' and 'Investment allowance
(utilised) Reserve' accounts amounting to Rs.1.497 Millions and Rs.142.842
Millions respectively of erstwhile GFCL is required to be retained in the books
of the company. Accordingly, corresponding amount has been debited to
'Amalgamation Adjustment Account' and the same is disclosed under Reserves and
Surplus (Schedule 2).
e) As per the Scheme, 23,975,212 Equity Shares of Rs.10 each of GFCL
held by the Company, stand cancelled.
f ) In terms of the Scheme, the Company has allotted 12,037,182 Equity
Shares of Rs.2 each as fully paid-up to the shareholders of GFCL in the
proportion of three fully paid-up Equity Shares of Rs.2 each of the Company for
every two fully paid-up Equity Shares of Rs.10 each of GFCL.
g) Investments, assets, liabilities and licenses held in the name of
erstwhile GFCL are in the process of being transferred in the name of the
Company.
h) In view of the aforesaid amalgamation with effect from April 1, 2007,
the figures of the current year are not strictly comparable with those of the
previous year.
Secured Loans
(A) Debentures
525 numbers, 6.10% Privately Placed Secured redeemable Non-Convertible
debentures of face value of Rs.1,000,000 each as at March 31, 2008 are to be
redeemed at par on October 27, 2008.
Security:
The debentures are secured by a first mortgage in English form on the
Company's specified property in the State of Gujarat and further secured by
specified immovable assets in the plant of the Company situated at Visakhapatnam.
(B) Loans
a) The term loans from banks and others are secured by an exclusive
first charge on the specific assets.
b) The term loans from banks taken over pursuant to the amalgamation of
Godavari Fertilisers and Chemicals Limited with the Company, are secured by way
of first charge on fixed assets and current assets ranking pari-passu with
other lending institutions and banks holding first charge and second charge on
their assets.
c) The working capital facilities from banks are secured by a hypothecation
of stock of raw materials, work-in-process, finished goods, stores and spare
parts and book debts of the Company. These are further secured by a second
charge on the movable fixed assets of the Company.
In respect of working capital facilities taken over from GFCL, they are
further secured by second mortgage charge on the company's immovable and
movable properties, both present and future, ranking pari-passu among financing
banksand institutions except short term lenders.
|
(a) Contingent Liabilities |
31.03.2008 (Rs.
In Millions) |
|
In respect of matters under dispute |
|
|
Income Tax |
30.104 |
|
Excise Duty |
25.618 |
|
Sales Tax |
14.089 |
|
Others |
108.642 |
|
(b) Land : Liability for additional compensation payable in respect of land purchased from M/s. Nagarjuna Fertilisers and Chemicals Limited has not been provided for, pending court orders and determination of the amount payable. |
|
Segment Reporting
(A) Business
Segment
The Company has considered business segment as the primary segment for
disclosure. The Company is primarily engaged in the manufacture and trading of
Farm Inputs, which in the context of Accounting Standard 17 notified under Sec
211 (3C) of the Act is considered the only business segment.
(B) Geographical
Segment
The Company sells its products mainly within India where the conditions
prevailing are uniform. Since the sales outside India are below the threshold
limit, no separate geographical segment disclosure is considered necessary.
The Government of India grants price concession on sale of Phosphatic
Fertilisers. Pending announcement of final rates of concession for the period
October 2007 to March 2008, differential subsidy income (in excess of the base
rate) of Rs268.991 Millions has been recognised having regard to the prevailing
concession scheme and according to the management estimates of final price
concession receivable.
Other Matters
(a) Based on the information available with the company, there are no
dues/interest outstanding to Small and Micro enterprises as at March 31, 2008.
(b) Sales are net of discounts, other than usual trade discounts,
Rs.374.426 Millions (2007: Rs.297.585 Millions).
(c) The net difference in foreign exchange (i.e., difference between the
spot rate on the dates of the transactions and the actual rate at which the
transactions are settled / appropriate rates applicable at the year end)
credited to Profit and Loss Account is Rs.3883.060 Millions (2007: Rs.17.946
Millions).
(d) Exchange difference in respect of forward exchange contracts to be
recognised in the Profit and Loss Account in the subsequent accounting period
is Rs.8.176 Millions Debit (2007: Rs.4.874 Millions-debit). The company has
four open swap contracts equivalent to USD 15 million outstanding as at March
31, 2008. Considering that these contracts are specific hedges for converting
dollar liability to fixed rupee liability including interest thereon, mark to
market has not been carried out for these contracts.
(e) Research and Development expenses included under schedule 14 -
Rs.9.990 Millions (2007: Rs.3.425 Millions)
(f ) Land - Lease deed in respect of land admeasuring 9.80 acres taken
on lease from Visakhapatnam Port trust by the erstwhile GFCL, is pending
execution.
(g) During the year, the Government of India, Ministry of Chemicals and
Fertilisers, has issued 'Government of India Special
Bonds' towards the subsidy receivable. These bonds have been treated as
Current Investments (included in Schedule 6).
Disclosures as per
Clause 32 of the listing agreement
|
Particulars |
Name of the Company |
As at March 31, 2008 |
Maximum amount outstanding during the year |
|
Amounts receivable from Subsidiary Company |
Parry Chemicals Limited |
26.984 |
28.462 |
|
|
|
[26.190] |
[63.980] |
MILESTONES:
1959 - Independent India realised that its
largely agrarian economy needed a thrust in the right direction for its people
to benefit and prosper. Prime Minister Jawaharlal Nehru invited the Ford
Foundation to carry out a comprehensive study of India agriculture and give its
recommendations. The study revealed a crucial need to produce indigenous
chemical fertilisers to increase agricultural output to meet the country's ever
increasing food demand.
1961 - An industrial license was granted to
three companies - IMC ((the world's largest producer of fertilisers
then), Chevron Chemical Company (a major American player in fertilisers /
industrial chemicals) and E.I.D.Parry (I) Limited (India's largest private
fertiliser producer with 60 years' standing)) to set up a giant chemical
fertiliser complex.
The first board of Directors was constituted on October 16,
with Mr. H V R Iengar as its Chairman. Others on the Board included J Q
Cope, Charles Dennison, J K John, Dr L Bharat Ram, A W Horton, J T
Gibson, S C Dholakia, V K Rao and Raja Rameswar Rao. L L
Powell and P J Davies were the first Managing Director and Dy. Managing Director
respectively. Donald I Meikle was the first Company Secretary.
1962 - Market development commenced in
the form of a 'seeding programme'. E.I.D.Parry was appointed CFL's principal
sales agent in India for their product aptly
name 'GROMOR' epitomising the idea of GROwing MORe food for the nation.
A sprawling 483.5 acres site was identified at Visakhapatnam
along the 'Coromandel' cost (India's east coast), from where the Company
derived its name. The land, taken under a 50-year lease from
Visakhapatnam Port Trust, has a private jetty just 5 km from the plant
site. With a capital investment of Rs.50 crores, Lumus Company undertook
construction of the plant.
1964 - On March 2, Dr. Bharat Ram
was elected Chairman of CFL's Board of Directors. He was the
longest-serving Chairman, with an innings of 37 years. Addressing the AGM as
Chairman on July 15, 2004, he nostalgically commented, "In my long innings
in public life, business and industry, I have the varied experience. But
I would like to affirm today, the last occasion when I shall address you as the
Chairman of CFL, that no assignment has given me such pleasure and a sense of
fulfillment as working with you all. CFL has been a role model, a
commonwealth, in a co-operative effort to build a great company, anchored in
values and every aspect of what is commonly known today as 'corporate
governance'. You have indeed won many prizes; but the most precious
treasure is the loyalty and sense of belonging of the men and women who were
with you earlier, and who are happily still with you".
1967 - On December 10, Mr. Morarji Desai, the
then Deputy Prime Minister of India, dedicated the fertiliser plant to the
nation, in the presence of Mr. Kasu Brahmananda Reddy, the then Minister of
Andhra Pradesh. Grandhi Ramamurthy, a local farmer, was given the honour
of cutting the ribbon. The 245 ft high Urea prill tower was on of the
tallest industrial structures in India then. Though not operational
today, it still presents a formidable sight, towering against the
skyline, recalling old memories for those who were associated with its
operation.
1970 - The 'GROMOR farmer' was developed as a
marketing symbol and introduced on their
bags to spread the message of 'higher yields, bigger profits'.
Today, farmer households across their
addressable markets identify CFL's brand by this symbol.
1971 - The 'Cormondel Lecture' was instituted
to provide a forum for thinker, economists, social and agricultural research
scientist around the world to share their thoughts on issues of global concern
such as food security, environment and extension activity. The 'Borlaug
Award' , instituted in honour of Nobel Laureate Dr Norman Borlaug (father of
the Wheat revolution), honours eminent men of science and industry for their
distinctive contribution to the cause of agriculture. This reflects CFL's
concern to develop a symbiotic interaction between agriculture, industry and
academia.
1976 - Their fertiliser retail outlet at Secunderabad got a boost with garden
lovers fervently seeking small quantities of fertilisers for bigger and richer
blooms and fruit.
1977 - CFL completed a decade of
participation in augmenting agricultural production for the nation. Its
vital role covered soil nourishment, sharing agronomic expertise, supporting
agricultural education and rewarding research - all of which had progressively
grown in width and depth during the decade.
1980-90 - Plans to diversify were
afoot. A 'groundbreaking' ceremony was performed in November 1980 at
Chilamkur (Andhra Pradesh), which is rich in limestone deposits, to set up a
one million tonne cement plant. The fully computerised plant (designed by
world-renowned cement manufacturer Krupp Polysius of West Germany) was
commissioned in 1984. It was later sold to India Cements in 1990.
1995-99 - Chevron Chemical Company
divested its stake in favour of E.I.D.Parry (I) Limited in 1995, followed by
IMC in 1999. E.I.D.Parry (I) Limited acquired majority shareholding in
CFL, making it a part of Murugappa Group, a highly reputed industrial
conglomerate.
2000 - CFL's growth over the years has been
punctuated with several path-breaking modernisation / upgradation programmes.
Begun in 1975, the programme gathered momentum in 1992-95, when the Sulphuric
Acid, Phosphoric Acid and Complex Granulation plant were debottlenecked.
Production capacity went up from the original 247,000 MT to 400,000 MT.
On September 29, Mr N Chandrababu Naidu, the then Chief Minister of
Andhra Pradesh, inaugurated a new complex granulation train. This further
augmented capacity to 600,000 MT, a boon to the entire farming community.
2003 - On July 12, CFL consolidated its
business by acquiring controlling stake in Godavari Fertilisers & Chemicals
Limited (GFCL).
To optimise synergy of operations in the Group, the Farm
Inputs Division of E.I.D.Parry (I) Limited was merged with CFL on December 1.
2004 - Mr. V Ravichandran took over as
President & WTD on January 22. Mr A Vellayan took over as Chairman on
September 1. Other Directors on the Board are Mr. J Jayaraman, Mr M M
Murugappan, Mr T M M Nambiar, Mr M K Tandon, Mr D E
Udwadia, Mr S Viswanathan and Mr K A Nair. The first post merger
AGM of the company was held on July 15.
Future Plans :-
The company is on the look out for opportunities for growth through
acquisition of existing phosphatic fertiliser units, especially in the eastern
coast. It will consider opportunities for trading in finished fertilisers at
the appropriate time. The members would be informed of further developments in
this regard as and when they materialise.
Awards / Recognition :-
In recognition of the efforts put in by the company towards higher
productivity, energy conservation, better environment and better management
practices, the company was given the following awards during the year :-
·
FAI’s “Best Operating Phosphoric Acid Plant” for the year 2001. This is
the 5th time the company has received this award in the last 7
years.
·
CII’s “National Award for Excellence in Energy Management” for the year
2001. This is the 2nd consecutive year company has received the
award.
·
A. P. Pollution Control Board’s award for “Waste Minimisation at Source
and Adopting Cleaner Technologies.”
·
A. P. Government’s “Best Management Award for Industrial Relations,
Labour and Productivity.
·
CII’s award for “Best Rainwater Harvesting Practices”.
The company imports raw materials, stores & spare parts, capital
goods and trading goods from Europe and Far East against L/C, D/A and D/P
terms.
It employs around 2000 persons in its' set up.
The company’s fixed assets of important value include:
v
Land-Freehold,
v
Leasehold,
v
Buildings, Roads,
v
Railway Siding,
v
Plant & Machinery,
v
Technical know-how,
v
Office Equipment,
v
Furniture & Fittings
v
Vehicles
Promoters belonging to the Murugappa Group:
1EID Parry (India) Limited, and subsidiaries
2Dodavari Fertilisers and Chemicals Limited
3Parry Engineering
and Exports Limited
4 Parry Agro
Industries Limited
5 Parry
Nutraceuticals Limited
6 New Ambadi
Estates Private Limited and subsidiaries
7 Ambadi
Enterprises Limited
8 Tube Investments
of India Limited and subsidiaries
9 Pressmet Private
Limited
10 Carborundum
Universal Limited and subsidiaries
11 Cholamandalam
Investment and Finance Company Limited and subsidiaries
12 The Coromandel
Engineering Company Limited and subsidiaries
13 AMM Educational
Foundation
14 AMM Arunachalam
& Sons P Limited
15 AMM Vellayan
Sons P Limited
16 MM Muthiah Sons
P Limited
17 Murugappa &
Sons
18 Kademane
Estates Company
19 MM Muthiah
Research Foundation
20 A R Lakshmi
Achi Trust
21 AMM Foundations
22 AMM Medical
Foundations
News:
Coromandel Fertilisers Limited to provide Technical and Management
Expertise to South African Major
Murugappa Group’s Fertiliser Forays into South Africa
Coromandel Fertilisers Limited (CFL), a leading manufacturer of
phosphatic fertilisers in India has entered into an agreement with Foskor
Limited, wholly owned subsidiary of Industrial Development Corporation (IDC),
South Africa for acquiring 2.5% of its equity stake. Coromandel Fertilisers
Limited has also entered into a business assistance agreement with Foskor
Limited to provide assistance in the areas of plant performance, procurement,
logistics, etc to improve Foskor’s financial performance.
Foskor Limited is one of the largest producers of phosphoric acid in the
world and exports large quantities of phosphoric acid to India. Foskor Limited
holds 5% equity in Godavari Fertilisers and Chemicals Limited (GFCL), India, a
part of Murugappa Group with an agreement to supply phosphoric acid to CFL and
GFCL. This strategic alliance cum business assistance arrangement entered by
Coromandel Fertilisers Limited with Foskor will lead to improved availability
of phosphoric acid to the Indian sub-continent and especially to CFL &
GFCL. This strategic tie up will also help CFL and GFCL to further consolidate
its market position in South East coast of India. Further the business
assistance arrangement with Foskor gives CFL option to increase its stake up to
16.5% over a period of time.
At the announcement of the agreement at Johannesburg, Mr. Raishibe
Morathi, IDC’s acting Chief Executive and President said, “They are pleased
that they have concluded this agreement with Coromandel Fertilisers Limited who
has a sound track record in turnaround strategies and going forward, they hope
that the relationship will yield mutually beneficial results among all the
stakeholders.
Mr. A Vellayan, Director – Marketing, Murugappa Group and Chairman,
Coromandel Fertilisers Limited, said “This is a culmination of a process of IDC
to seek a strategic equity partner, to inject strategic technical skills and
access to better technology. The capability of Coromandel Fertilisers to manage
a diverse supply chain, and its expertise to increase productivity of quality
products under environmental friendly operations will assist Foskor to improvising
its competitiveness to global best practice.” “This has strengthened the long
standing and proven relationship between the two companies. This agreement will
also help Coromandel and Godavari to further consolidate its market position in
India,” he further added.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.42.37 |
|
UK Pound |
1 |
Rs.84.01 |
|
Euro |
1 |
Rs.65.96 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
9 |
|
OPERATING SCALE |
1~10 |
9 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
10 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
9 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
81 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems comparatively
below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|