Annual Report 2004 - Nagarjuna Fertilizers

NFCL
steps to reduce its logistics costs through systematic
planning. Your company proposes to constantly
refurbish the Plant so as to maintain it in good
operating condition.
The discovery of natural gas reserves in Andhra
Pradesh by various agencies is encouraging news
for your company which help your company being
able to fully operate on natural gas and maximise its
operations more efficiently.
4. RISKS AND CONCERNS
Frequent changes in Government Policy aimed at
tightening margins, efficiency norms, under recoveries
and introduction of the concept of mopping up a
large portion of profits from extra production is
continuing to be detrimental to your company’s
operations.
Your company perceives the shortfall in the availability
of natural gas as a major concern.
5. COMPANY’S SUBSIDIARIES
Nagarjuna Palma India Limited (NPIL), that became
a subsidiary of your company during the year was
amalgamated with the company with effect from
October 01, 2004 pursuant to the Order of the High
Court of Andhra Pradesh.
Your company has made substantial investments in
its subsidiaries which investments are yet to yield
dividend. These projects being long gestation projects
are expected to yield results only in the long run.
6. FUTURE STRATEGIC DIRECTIONS
Your company is evaluating options for higher returns
through either capacity expansion or diversify the
product mix. Urea, the main stay business of your
company continues to be heavily regulated stifling
returns. Hence, in the long-term interest it is proposed
to manage business risk through a diversified
business portfolio.
Your company also plans to leverage its soft assets,
and provide consultancy and development services
in areas of fertilizer operations and supply chain
management. These initiatives shall utilize the
company’s soft assets significantly and add new
streams of revenue.
7. INTERNAL CONTROL
Your company has adequate internal control systems,
commensurate with its size of operations and works
in a highly-automated environment.
8. HUMAN RESOURCES / INDUSTRIAL RELATIONS :
Your company continues to enjoy cordial relations
with employees at all levels.
Your company, with a view to attract and retain the
best of talent and to have state-of-art people
management practices, comparable with the best in
the industry, had hired the services of a global
consulting firm to evolve a good people management
policy, to redefine the organisation structure with clear
focus on staffing, retention, performance orientation,
succession planning etc, so as to make your company,
a preferred organisation to be associated with.
19
CERTIFICATE ON CORPORATE GOVERNANCE
To the Members of
NAGARJUNA FERTILIZERS AND CHEMICALS
LIMITED
We have examined the compliance of conditions of
Corporate Governance by NAGARJUNA FERTILIZERS
AND CHEMICALS LIMITED for the year ended on 31 st
March, 2005, as stipulated in Clause 49 of the Listing
Agreement of the said company with Stock Exchange.
The Compliance of conditions of Corporate Governance is
the responsibility of the management. Our examination
has been in the manner described in the Guidance Note on
Certification of Corporate Governance issued by the
Chartered Accountants of India and has been limited to a
review of the procedures and implementation thereof
adopted by the company for ensuring compliance with the
conditions of Corporate Governance as stipulated in the
said Clause. It is neither an audit nor an expression of
opinion on the financial Statements of the company.
In our opinion and to the best of our information and
according to the explanations given to us, and based on
our reliance upon the representations made by the
management there were no transactions of material nature
with the management or by relatives that may have potential
conflict with the Interest of the company at large, as stated
under Serial No.X of the company’s report on Corporate
Governance.
The Share Transfer Agent of the company has certified the
number of complaints received from the investors and the
number of complaints resolved during the financial year
and that there are no complaints pending as at the year
end as stated under serial No.I and J of the company’s
report on Corporate Governance.
We certify that the company has complied in all material
respects with the conditions of Corporate Governance as
stipulated in the above mentioned Listing Agreement.
We further state that such compliance is neither an
assurance as to the future viability of the company nor the
efficiency or effectiveness with which the management has
conducted the affairs of the company.
Hyderabad
April 21, 2005
for M. BHASKARA RAO & CO.,
CHARTERED ACCOUNTANTS
Anilkumar Mehta
Partner