2.0.0 MANAGEMENT DISCUSSION AND ANALYSIS:

2.1.0 OPERATIONAL RESULTS:

2.1.1 PRODUCTION:

2.1.2 Fertilizers:

Your Company produced 28.64 lakh MT of fertilizers (23.47 lakh MT of Urea, 3.33 lakh MT of Suphala15:15:15 and 1.84 lakh MT of Suphala 20:20:0) during the year as against 29.45 lakh MT of fertilizers (23.35 lakh MT of Urea, 4.75 lakh MT of Suphala15:15:15 and 1.35 lakh MT of Suphala 20:20:0) produced in the brvious year. In terms of nutrients, your Company produced 11.66 lakh MT of Nitrogen (N), 0.87 lakh MT of Phosphate (P2O5) and 0.50 lakh MT of Potassium (K2O) during the year as compared to 11.70 lakh MT of Nitrogen (N), 0.96 lakh MT of Phosphate (P2O5) and 0.69 lakh MT of Potassium (K2O) during the brvious year. The performance of the two units was as under:

2.1.2.1 Thal Unit:

Despite two major annual shutdowns for replacement of S-300 synthesis converter baskets in both Ammonia streams, Thal Unit achieved highest ever Urea production record and also achieved lowest yearly energy consumption for Ammonia and Urea plants. The unit produced 19.94 lakh MT of Urea during the year compared to 19.51 lakh MT produced in the brvious year. The energy consumption of Urea was 6.10 Gcal/MT (6.22 Gcal/ MT in the brvious year). In terms of nutrients in the fertilisers, the unit produced 9.17 lakh MT of N during the year, compared to 8.98 lakh MT in brvious year. The production was higher consequent to the revamp of Thal plants.

2.1.2.2 Trombay Unit:

The Trombay Unit produced 3.53 lakh MT of Urea, 3.33 lakh MT of Suphala 15:15:15 and 1.84 lakh MT of Suphala 20:20:0 during the year compared to 3.84 lakh MT of Urea, 4.74 lakh MT of Suphala 15:15:15 and 1.35 lakh MT of Suphala 20:20:0 produced during the brvious year. In terms of Nutrient values, the unit produced 2.49 lakh MT of N, 0.87 lakh MT of P2O5 and 0.50 lakh MT of K2O during the year compared to 2.72 lakh MT of N, 0.96 lakh MT of P2O5 and 0.69 lakh MT of K2O respectively in the brvious year. The energy consumption of Urea was lower at 7.07 Gcal/MT compared to 7.096 Gcal/MT in the brvious year.

2.1.3 Industrial Products:

Your Company produces industrial chemicals at its two units. During the year, your Company produced 1.54 lakh MT of various major industrial chemical products compared to 1.64 lakh MT during the brvious year. Your Company produces, amongst others, Methanol, Methylamines and derivatives, Sodium Nitrate/Nitrite, Ammonium Bi-Carbonate, Formic Acid etc.

2.2.0 MARKETING PERFORMANCE:

2.2.1 Fertilizer Division:

Your Company achieved sales volume of 31.61 lakh MT during 2013-14 as compared to 33.30 lakh MT in the brvious year. Your Company sold 24.45 lakh MT of Urea, 3.61 lakh MT of Suphala 15:15:15, 1.89 lakh MT of Suphala 20:20:0 and 1.66 lakh MT of other bought out products such as DAP, MOP, SSP, Rajphos, NPK etc., compared to 23.70 lakh MT of Urea, 4.62 lakh MT of Suphala 15:15:15, 1.55 lakh MT of Suphala 20:20:0 and 3.43 lakh MT of other bought out products such as DAP, MOP, SSP, Rajphos, NPK etc., during the brvious year. The total sale of manufactured fertilizers during 2013­14 was 29.64 lakh MT as against 28.84 lakh MT in 2012-13.

Though, the sale of own manufactured fertilizers was higher by 0.80 lakh MT on account of higher Urea and ANP, due to reduction in imports of Urea on government account, glut in the market for P&K fertilizers, volatility in imported prices of DAP and MOP and weakening of the Rupee, your Company could not aggressively resort to trading activity. The sale of bought out fertilizers during 2013-14 was thus lower by 2.49 lakh MT compared to that in the brvious year which resulted in overall reduction in sales volume by 1.69 lakh MT.

2.2.2 Industrial Products Division:

Despite various constraints due to global recession during the second half of the financial year, Industrial Products Division achieved turnover of Rs. 987.47 Crore as against Rs. 1080.89 Crore during the brvious year. Ammonia, Ammonium Nitrate (Melt), Methanol, Methylamines, conc. Nitric Acid, Formic acid, etc., contributed significantly to the turnover.

2.2.3 Exports:

Considering the nature of products manufactured by your Company, the scope for exporting and earning foreign exchange is very limited. During the year under report, your Company exported 564 MT of Suphala 15:15:15, worth Rs. 1.68 crore, to Oman>**4

2.2.4 FUTURE PLANS OF FERTILIZER MARKETING:

Your Company has set itself an ambitious target of achieving a total turnover of Rs. 8000 crore in the current year (including Industrial Chemicals). Your Company also intends to import and market complex fertilizers, water soluble fertilizers, Sulphate of Potash, Ammonium Sulphate, Zinc Sulphate, city compost, etc. Your company is also planning to go in for developing soil specific grades, like Boronated Urea and Zincated urea, as NBS facilitates production and sale of fortified fertilizers.

2.3.0 The Fertilizer Industry:

2.3.1 Impact of Nutrient Based Subsidy

This was the fourth year since implementation of the nutrient based subsidy scheme for P & K fertilizers. Due to the announcement of subsidy rates in advance, companies normally are able to plan and schedule their imports. However, in 2013­14, announcements of NBS rates came in May 2013 to be implemented with retrospective effect with a reduction in subsidy rates. Also, for the first time since the implementation of NBS, referral selling prices for different grades were announced, again, to be effected retrospectively. The reduced prices were to be communicated to farmers and all unsold stock of the Company including stocks lying with retailers were also to be sold at the reduced prices. This has affected your Company's margin in respect of P&K fertilizers.

2.3.2 Introduction Of Mfms Concept:

The DOF has taken the first step towards passing on subsidy direct to beneficiary farmers. A Task Force was set up to study the modalities of the same. Under this, the first stage was to provide information visibility up-to retail level by way of a mobile based Fertilizer Monitoring System (mFMS). The supply chain and the transactions from manufacturer/ importer to retailer is now visible in public domain. Part of the subsidy to the companies has been linked to acknowledgement of receipts from retailer w.e.f. 1.11.2012. As the retailer is not directly under the control of the Company, getting acknowledgements from him on time is challenging. Phase II of mFMS was to build up a database of buyers of fertilizers. This has been rolled out in six pilot districts to be extended further to another six districts. This phase is expected to capture retailer sales information which will subsequently be an input for creating beneficiary database and move towards direct benefit transfer.

Pricing Policy

Urea: In case of urea, the farmgate price is notified by the Government from time to time. So also the trade margins are indicated. The pricing policy for urea is in line with the notified policy. P&K fertilizers: Under the NBS, the subsidy rates are notified by the Government. But prices are determined by the Company depending on costs of production, seasonal conditions, demand in field, competitors' pricing, etc.

2.4.0 Strength and Weakness:

2.4.1 Strengths:

(i) Your Company's strength lies in its skilled manpower, high Brand Equity for its manufactured Products such as Ujjwala, Suphala, Microla, Biola, and Sujala. (ii) The wide sbrad marketing network ensures that your Company has country wide reach. (iii) The Farmer's Training Institute and R&D Centre ensure that quality services are provided to the farmers/dealers by educating them and providing inputs for better crop realisation. (iv) Your Company has a wide portfolio of chemical products and can withstand difficult economic situations by adopting optimal mix of production. (v) The well maintained plants and equipment ensure uninterrupted production.

2.4.2 Weaknesses:

(i) The Plants have been in operation for a very long time, some of them since 1965. A regular upkeep, maintenance and up-gradation of the plants has ensured that production is not affected. (ii) As the ultimate customers are the farmers, Agro-climatic conditions have a large effect on the performance of your Company. (iii) The complex fertilizers are based on imported raw materials which are subject to severe volatility in global raw material prices and foreign currency exchange rate, affecting the profitability of the Company.

2.4.3 Opportunities:

(i) Due to your Company's good reputation, several opportunities exist overseas, for Collaborations/ Diversification in the field of manufacturing and mining of raw materials and fertilisers and thus affords opportunity for marketing of varieties of products. (ii) The increased demand-supply gap in the Country provides for opportunity to expand its Urea base at Thal. (iii) Alternate feedstock like Coal gasification gives an opportunity for undertaking .' Fertilizer Projects in other parts of the country closer to coal mines. (iv) Experienced and Skilled Manpower of your Company has been in demand for rendering O&M service in India and abroad. In view of your Company's Training facilities, as . well* as the available skilled Engineers and Technicians, your Company is in position to impart training to many foreign and Indian Companies. All these opportunities would lead to substantial increase in turnover of your Company.

2.4.4 Threats:

(i) Manufacturing and marketing of Fertilizers is the core business of your Company. In the recent years, there has been high volatility in the prices of raw material resulting in creation of scarcity, impeding production and marketing plans. The profitability is susceptible to the input costs of major raw materials, such as Rock Phosphate, Sulphur, DAP, MOP, MAP etc. (ii) Production of Urea, Complexes and chemicals are susceptible to availability of feedstock gas and its economic pricing. (iii) The chemicals business is also exposed to cut throat global market competition. (iv) Department of Fertilizers, Government of India, (DOF) is in the process of implementing a move to mop up the unintended gains that the Fertilizer units are making in nutrient "N" by use of APM/RIL gas for manufacturing P&K fertilizers with retrospective effect from 1.4.2010. This, if implemented, will adversely affect the profitability as well as the operational viability of the Company. Your Company has suitably rebrsented to DOF against this move. (v) Uncertainty in government policies in respect of supply of feed stock gas, pricing of fertilizers and subsidy thereon also affect the performance and competitiveness of the Company.

2.5.0 Risk Management:

Risk Management System, developed with the objective of having a balanced approach towards business plan and mitigating the associated risks, is in place. The system identifies better management practices to ensure greater degree of confidence amongst various stakeholders and facilitates good Corporate Governance practice. All risks associated with Operations, Environment, Finance, Human Resource, legal, Information security etc., are continuously monitored. The degree of impact of  the perceived risks financially, their likely effect on the assets, facilities and third parties are assessed regularly. In order to mitigate losses arising out of such perceived risks, appropriate procedures are being adopted to contain the risks. Also the practices adopted during emergencies, including the communication system and mode of disseminating information are periodically reviewed and updated to minimise the impact on the Company.

2.6.0 MAJOR EXPANSION AND DIVERSIFICATIONS:

Your Company is planning to undertake major projects as under:

2.6.1 Additional Ammonia Urea project at Thal

Your Company has plans to expand the capacity of Urea at Thal by setting up one single stream ammonia plant of capacity 2200 MTPD and one single stream urea plant of capacity 3850 MTPD at the existing site at apprx. cost of Rs. 4500 crore. The selection process for lump sum turnkey contractors (LSTK) for main plants had been completed last year and subsequently proposal for approval of PIB/ CCEA was already submitted. In view of delay in policy notifications and considerable lapse of time thereof, LSTK bidder has not agreed for extension of bid validity beyond 31.03.2014. Your Company will make fresh proposal after seeking fresh bids from LSTK vendors.

2.6.2 Coal Based Fertilizer Plant at Talcher:

Your Company, along with Coal India Limited (CIL), GAIL and Fertilizer Corporation of India Ltd (FCIL), is contemplating to set up a fertilizer complex, comprising of 2700 MTPD ammonia plant, 3850 MTPD Urea plant, 850 MTPD Nitric Acid plant and 1000 MTPD ammonium nitrate plant at Talcher, Odisha through coal gasification route as feed stock. Coal will be made available by CIL from nearby coalfields of its subsidiary, Mahanadi Coal Fields. Land and certain facilities needed for the project will be provided by FCIL. The project will utilize state-of-the-art Coal Gasification Technology.

The Ammonia Synthesis, Urea, Nitric acid and Ammonium Nitrate plants will be built on lump sum turnkey basis for which brqualification bids have been invited and br-qualified parties have been shortlisted. Tender has been issued to br-qualified

LSTK vendors. Project capital cost is estimated to be approx. Rs. 9000 crore. An MOU amongst the proposed promoters has been signed. Apart from being a project for feedstock diversification, it will also aid much needed urea production capacity for the eastern part of the Country.

2.6.3 Sewage Treatment Plant (STP) at Trombay:

Water is becoming scarce day by day. Ensuring water availability has become critical for the smooth functioning of the Trombay unit given the competing demand for water in the city. Recognising this, your Company intends to set up a new Sewage Treatment Plant (STP) adjacent to the existing STP plant of same 5 MGD capacity. Project cost for the same is estimated at approximately Rs. 200 Crore. Your Company has identified the LSTK contractor and is in the process of obtaining necessary approvals. A portion of the treated process water will be supplied to BPCL on mutually agreed terms.

2.7.0 Subsidiary and other Joint Venture Companies:

2.7.1 FACT-RCF Building Products Ltd., Kochi

Your Company has formed a Joint Venture Company with Fertilizers and Chemicals Travancore Limited (FACT) by incorporating FACT-RCF Building Products Ltd to set up a Rapidwall project at Kochi. Both RCF and FACT have 50:50 equity holding in the Company. The plant has been commissioned last year and is in operation. The Company is building up its customer base and is in the process of stabilising its operations by putting special effort on marketing of the product.

2.7.2 Urvarak Videsh Limited

The JV Company, formed by your Company with National Fertilizers Ltd and KRIBHCO, with equal equity participation, is exploring various opportunities abroad in the field of fertilizers. Your Company has contributed Rs. 18 lakh towards the equity. The Company has not started any business so far.

2.7.3 Other Companies:

Your Company has wound up RCF-HM Construction Solutions Pvt. Ltd and has initiated steps to wind up the subsidiary Company, Rajasthan Rashtriya Chemicals and Fertilizers Ltd.

Your Company had to take the action as the two companies are non-operational and there is no scope for establishing the intended business for which they were formed.

2.7.4 Consolidated Statement

Your Company has made full provision in value of investments made in respect of the Subsidiary, Rajasthan Rashtriya Chemicals and Fertilizers Ltd and JVC RCF-HM Construction Solutions Pvt. Ltd. As there have been no transactions, consolidated  financial statements have been brpared excluding the two Companies. Statement pursuant to section 212 of the Act is attached to the accounts.

2.8.0 RESEARCH AND DEVELOPMENT:

Your Company has taken up several Research and Development projects, some of which taken up for commercial scale design and engineering, are as under:

2.8.1 Lab scale development of Potassium (K) mobilizers as Bio fertilizer

Microorganisms play a key role in the natural K cycle and are capable of mobilizing available K in the soils. They are functionally more useful and environmentally more feasible than soluble K. The special focus on K mobilizers/solubilizers is due to the fact that K is one of the major nutrients required by all crops. The biofertilizer with K mobilizing bacteria is developed in laboratory and is sent to Madurai University for field trials. Your Company will take further steps to commercialise the product after successfully completing the field trials.

2.8.2 Pilot scale production of value added Gypsum (Gypsum Sona)

The R & D department of your Company has developed a new product for enhancing organic matter in sodiac and saline soils by using Phosphogypsum. The product, named as 'Gypsum-Sona" is found to have soil rejuvenating characteristics and also increases crop yield manifold. Pilot scale production is completed and is sent for field trials. The field trials have shown promising results and the product is expected to be commercialized in the coming year.

2.8.3 Micro propagation of Stevia through Tissue Culture Technique

Micro propagation requires relatively shorter time as compared to conventional practice of propagation. Therefore, tissue culture offers tremendous potential for the large scale production of Stevia. The protocol for micro-propagation (multiplication) of Stevia through tissue culture techniques has been successfully developed by R &D. The manufacturing and sale of uniform and disease free Stevia saplings will be done after field testing experiments. The technique will make available the uniform and disease free Stevia saplings to the farming community for large scale cultivation.

2.8.4 New formulations for manufacturing specialized products using Calcined Gypsum:

The R & D department of your Company has developed, in consultation with Institute of Chemical Technology, a formulation for manufacturing an ecofriendly "External wall plaster" from Calcined Gypsum. The product is undergoing further tests and after successful trials, would be taken up for commercial production. Your Company has also developed another formulation using the Calcined Gypsum, for manufacturing a 'Cement Bonding Material, similar to Cement mortar, which can be used on roads etc., to fill potholes.

2.9.0 CONSERVATION OF ENERGY:

In order to save and conserve energy, your Company undertook various steps during the year 2013-14. Several modifications in the plants have resulted in significant reduction in the energy consumption. A few of the measures undertaken are as follows:

At Trombay unit, air brheater coil of new design was installed to recover the waste energy from flue gas of reformer in Ammonia V plant. Similarly, a new MP stripper was installed in place of LP stripper thus saving significant amount of steam in Ammonia I. Besides, several equipment such as new MP stripper, improved energy efficient motors, unloading combrssors at ammonia storage, semi-lean MDEA solution pump, etc., have been installed which have helped the unit in reducing the energy consumption.

Some of the energy conservation measures undertaken at Thal unit include replacement of 6 no. of MP turbines with LP turbines, resulting into MP steam saving of 25 MT/Hr, replacement of old S-200 converter basket with new S-300 basket which improved conservation of energy to the extent of 0.02 Gcal/MT of ammonia, retubing of water cooler in Ammonia stream -I with resultant benefit in energy saving of 0.03 Gcal/MT of ammonia, installation of roof top grid synchronised Solar Power Generation facility of 10 KWp on Administration Building, etc.

The particulars with regard to Conservation of Energy, Technology Absorption, Foreign Exchange outgo as required under Section 217 (i) (e) of the Companies Act, 1956 are enclosed as Annexure I.

ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL:

Your Company is committed to ensuring clean environment, beyond satisfying all stipulated requirements laid down by the statutory authorities, around its operating units.

Your Company has established ISO 14001 compliant Environment Management System (EMS) at its two manufacturing units. The Systems are constantly upgraded and regular internal audits and Management Reviews are carried out to ensure compliance and continually improve the system. Apart from Stack monitors, which continuously monitor the emissions, four fixed ambient air quality monitoring stations are in place, at both Trombay and Thal, to monitor ammonia, NOx, SO , Particulate matter (PM10 & PM2.5) & metrological parameters.

The Effluent Treatment plants at Trombay and Thal have ensured that the environment in and around the Units are fully protected. Various schemes are implanted to reduce wastages of the scarce natural resources. The waste streams from the plants are recycled/reused for useful purpose.

Sludge generated in Effluent Treatment Plant, Sulphur Sludge Generated in Sulphuric Acid plant, waste streams of effluents from complex fertilizer plants are recycled back in the processes. The integrated Effluent Treatment Plant ensures that whatever effluent is discharged from the factory meets the statutory requirements laid down by the Pollution Control Board.For increasing awareness regarding environment, public awareness campaign programmes are arranged by Trombay and Thal units.

4.0.0  CSR Activities:

4.1.0 In line with the CSR philosophy adopted, your Company undertook several activities, aimed for the benefit of needy and for general good of the society, during the financial year 2013-14. Your Company carried out many activities under CSR policy and spent/committed about Rs. 15.28 crore which are briefly stated as under:

4.1.1 Education:

4.1.1.1 Schools:

Your Company supports schools, at the two units, which impart education in Marathi, Hindi and English mediums to students from Nursery to 10th Standard. Your Company undertakes the upkeep, maintenance and bears the deficit expenditure incurred by the schools, located in Company's residential colonies, which are run by reputed Educational Institutions.

4.1.1.2 Scholarship to meritorious students:

Your Company offers a number of scholarships to students of SC/ST/OBC communities for pursuing higher studies. Your Company's scholarship project for sending every year, 10 students to 6th Standard in Shivaji Military school in Pune and supporting the earlier batches in their march to higher standards thereafter has received goodwill from all.

4.1.1.3 Supply of Mid-Day Meal:

Your Company started Mid-Day Meal Scheme for providing nutritious food to children studying in seven unaided schools, providing education to poor children, in and around Trombay area. The scheme is operated through an NGO,'ISKCON Food Relief Foundation' which supplies good and healthy meal to the children on behalf of RCF. In all 10,000 students have availed the benefit of this nutritious meal.

4.1.1.4 Programme for underprivileged Children

Your Company has adopted the "Khel Khel Main" programme of Wockhardt Foundation for under privileged children of age group of 5 to 10 years, by setting up six centres of edu-recreation with parallel learning in slums of Vashi Naka area near Trombay unit.

4.1.1.5 RCF SUPER- 30 programme

Your Company, in association with Centre for Social Responsibility and Leadership (CSRL), has established a unit of Abhayanand Super 30 in Mumbai where about 30 underprivileged talented students of Maharashtra state are provided 11 months of free residential coaching to enable them get admission in IIT/NIT and other brmier engineering colleges. 29 of these students were successful in the entrance examination.

4.1.1.6 Farmers' Education:

More than 30000 farmers attended & benefited  from the training programmes conducted at the two Farmers Training Centre in the last half decade and have used the knowledge to upgrade their farm practices and have succeeded in reducing their overheads and increase their wealth. Special programmes designed for women farmers and the scheduled caste and scheduled tribes are also organized on a regular basis so that they too join the bandwagon of the country's agricultural renaissance.

Your Company's efforts in rendering advisory services to farmers by conducting Soil diagnostics to optimize soil productivity, are well apbrciated. Based on the analysis, farmers are advised on soil fertility management through rational use of manure, fertilizers and other inputs to make agriculture more productive and sustainable. During the year, more than 95,000 soil samples were analyzed and recommendations given through the twelve static and six mobile soil testing laboratories.

4.1.2 Supply of drinking water to the villages:

Your Company has been providing drinking water since more than 20 years to seven villages around Thal unit through pipelines laid down from the water reservoir in the unit and spent about Rs. 80 lakh on this account during the year. About 16000 residents of the villages got benefit of the scheme.

4.1.3 Community Medical Facility

Your Company has engaged Wockhardt Foundation and administered free primary health care through mobile Medical Vans. On an average 7 Villages are covered in weekly cycles by a mobile van and patients are benefited from free medical services including supply of medicines. Through this facility, ailments like Blood brssure, low Haemoglobin Levels, Oxygen saturation, Malaria, Hepatitis, Dengue, Typhoid, Diabetes, etc., are treated on regular basis, through qualified Doctors. One medical van attends to approx. 25000 patients per annum. Total of four such vans are operating in Thal and Trombay areas.

4.1.4 Chembur Green Project:

Your Company continued to support the Chembur Green project, launched to establish greenery in the eastern suburb of Mumbai, by joining hands with Chembur Citizens' Forum an NGO to develop, beautify and maintain Diamond Garden, at Chembur for a period of 5 years. Your Company continued distribution of free saplings and rendering advice to various co-op. societies and also to individuals.

5.0.0 Micro, Small- and Medium Enterprises.

Government of India, Ministry of Micro, Small and Medium Enterprises, vide order dated 23rd March, 2012, notified the public procurement policy in respect of procurement of goods and services produced and provided by Micro, Small and Medium Enterprises. As per this directive, every Central Ministry or Department or Public Sector Undertaking shall set an annual goal of procurement from Micro, Small and Medium Enterprises from the Financial Year 2012-13 and onwards with the objective of achieving an overall procurement of products produced and services rendered by Micro, Small and Medium Enterprises to the extent of minimum 20% of total annual purchases in a period of three years. There are about 358 items/services stated in the directive. After a period of three years, i.e. from 1st April, 2015, overall procurement goal of minimum 20% shall be made mandatory. The directive also provides that the goals set with respect to procurement to be met from Micro, Small and Medium Enterprises and achievement made thereto be incorporated in their respective Annual Reports. To comply with the directive, your Company, for the year 2013-14, has set a goal of 15% and has achieved a higher level of 19.53% excluding natural gas, bulk raw materials and proprietary items. The Company is sure to achieve 20% during 2014-15.

6.0.0 Sustainable Development

Your Company has taken up several Sustainable development activities including the following:

[i] Improvement of Road infrastructure-construction and repairs.

[ii] Building of Check Dams.

[iii] Prevention of soil erosion and watershed management.

The Rapidwall project, which has been implemented, is an example of Company's faith in sustainable development wherein a waste product generated from Phosphoric Acid Plant is converted into useful building material by adopting a novel technology.

As already stated, Your Company is planning to put up a new Sewage treatment plant of similar capacity as that of the existing one at Trombay unit as a part of sustainable development plan to enable Mumbai city to have additional potable water for its citizens as your Company would be recycling the sewage water supplied by BMC and would be using that water in place of clean water supplied by BMC.

In its bid towards India's vision of achieving ecologically sustainable growth, your Company plans to venture into setting up Solar based power generation facilities. The Company has already set up rooftop solar power generation facilities to the tune of 34 KW atop of its offices at five locations in Maharashtra. It has plans for setting up 2 MW Solar Power generation facility at its Trombay Unit.

Your Company is also considering several major activities connected with Green House Gas, sustainable electricity distribution based on solar energy etc. Your Company is targeting to take up many more sustainable development activities in the near future.

6.1.0 Annual Sustainability Report :

RCF has published, during the year, its maiden Sustainability Report for the year 2012-13 based on Global Reporting Initiative (GRI) guidelines and National Voluntary Guidelines (NVG) on 'Social, Environmental and Economic Responsibilities of Business' issued by Ministry of Corporate Affairs, Govt. of India. The Report has been posted on the Company's website.

The report provides Company's economic, environmental, and social performance. Sustainability reporting is about organization's progress vis-a-vis performance goals, not only for economic achievements, but for environmental protection and social well being. The report for 2013-14 would also be published soon.

7.0.0 Vigilance

Vigilance department is headed by a full time Chief Vigilance Officer (CVO), deputed from the All India Services by the Government of India. The position of CVO is at par with the Functional Directors. CVO is assisted by a team of Officers drawn from various functional departments. The activities of Vigilance department cover Corporate office, Trombay unit, Thal unit and all the marketing offices situated throughout the country. In line with the CVC guidelines, the thrust of Vigilance in your Company is to bring greater transparency, integrity and efficiency. The focus of Vigilance department is on Preventive and Participative Vigilance.

This is done by keeping careful watch on various activities through regular inspections and surprise checks. System improvements and corrective actions are taken wherever necessary. The theme that "All Officers are Vigilance Officers" is implemented in your Company and alertness and support of all officers is taken in the management of Vigilance. Vigilance has focused on sbrading awareness on rules/regulations, procedures and soliciting information/complaints from all regarding malpractices/corruption.

During the year, Vigilance department has actively contributed towards implementing e-governance in RCF, in making the tender documents more transparent and relevant, enhanced transparency in the existing system of dealing with our dealers/ vendors and accrued savings to your Company by implementing systems for reduction in wastages in handling bulk raw material. With persistent efforts from Vigilance department, your Company has implemented the system of e-procurement for ensuring more transparency in procurements.

8.0.0 HUMAN RESOURCES:

8.1.0 Training and Development:

One of the strengths of your Company is its skilled and professional man power. This could be achieved by adopting good HR policies and undertaking training and development of all employees. Training imparted includes enhancing General Management skills of the employees in various functions viz. Marketing, Finance, Commercial and Health Services disciplines.

Quality Management Systems, Environment Management Systems, Occupational Health and Safety Systems and 5 S Systems are given focused attention. The work culture of your Company has been enhanced by introducing the Six Sigma and Lean Quality Circles. System of Mentorship for newly recruited Management Trainees is in place.

Training and Development programmes were conducted, in-house for the employees of your Company at various levels. Besides this, combrhensive Safety Management Programmes jt were carried out for officers in Technical disciplines. Special emphasis has been laid on Process Safety Management. The following awards have been won by employees of your Company for the year under report:

1. OSH India 2013 Safety Hero Gold Medal awarded to Shri Kishan Singh Kathayat, Sr. Engg (Safety) for accomplishment in making safe workplace.

2. Shri Shantanu Shinde, Sr. Grade Operator,Urea V has been conferred with Prestigious Prime Minister's Shram Vir Award for the year 2012.

Industrial Relations:

Your Company maintained cordial Industrial Relations with all its employees. All the issues are settled through regular discussions, meetings and dialogues with the employees. Your Company had 3967 employees comprising of 1508 Officers and 2459 workmen, as on 31st March, 2014 compared to 4048 employees (1548 officers and 2500 workmen) as on the corresponding date of the brvious year.

8.3.0. Welfare and Sports

Your Company undertakes several welfare schemes like education, medical, transport, housing etc., according to the needs of the employees. In regards to sports, your Company is a prominent patron and sponsored various sports events. Your Company's Football, Cricket, Hockey, Kabaddi and other teams continue to show excellent performance at District, State and National levels and have brought laurels to your Company by winning several prizes.

8.4.0. Welfare/Employment opportunity to weaker section:

The guidelines in respect of reservation in recruitment and promotion of SC/ST, OBC, Ex-servicemen and Persons with Disabilities are followed by your Company. As on 31st March 2014, your Company had on its rolls, 542 employees belonging to Scheduled Caste, 257 Scheduled Tribe and 396 Other backward castes.

Your Company is committed to the welfare of the backward classes in general and SC/ST employees in particular. Regular meetings are held with SC/ST Employees Welfare Association to address grievances, if any, and for providing guidance for development.

Medical Camp is organized every year at Chaitya Bhoomi, Dadar on 6th December, on the occasion of 'Mahaparinirvan Day'. Financial assistance for making arrangement for medical camp and for medicines along with the vehicles and Doctors are made available by the Company.

Your Company's Thal Unit provides various amenities like water, road etc, for the nearby villages e.g. Thal, Navgaon, Boris, Gunjis etc., where the majority of the population belongs to the SC/ST categories. The facility continued during the year. Scholarships were given to meritorious students of SC/ST community in the nearby villages of Thal.Large number of SC/ST farmers have been trained in the programmes conducted at the Company's Farmers' Training Centres at Nagpur and Thal.

9.0.0 PARTICULARS OF EMPLOYEES:  

A statement providing the information as required under section 217 (2A) of the Companies Act, 1956 is attached to this report as Annexure II.

10.0.0 OFFICIAL LANGUAGE POLICY:

Your Company has fully endeavoured to implement the provisions of Official Language Act, 1963 and the policy of the Government. Publicity material and literature for employees and farmers are made available in Hindi and other regional languages.

11.0.0 INTERNAL CONTROL SYSTEM:

The Company has a well-defined Internal Control System that is adequate and commensurate with the size and nature of its business comprising of an in-house Audit Department, which conducts internal audit of various operational and financial matters on on-going basis. Internal Audit group consists of adequate number of financial and technical personnel and is headed by a Chartered Accountant in the rank of General Manager. The recommendation and observations of the Internal Audit Department are reviewed regularly by the Audit Committee constituted by the Board of Directors. The performance of the corporation is regularly monitored by the Board of Directors.

The Company has an effective budgetary control mechanism in place to take care of the detailed capex and operational budget. Appropriate monitoring mechanism to compare the actual performance with the budget ensures that necessary review is periodically undertaken.

12.0.0 COST AUDIT

Your Company has appointed Shri S.D.Shenoy, Cost Accountant and M/s V.J.Talati & Co, Cost Accountants for conducting Audit of the Cost Records for the financial year 2013-14. The Cost Audit Reports for 2012-13 were filed in XBRL form, within due date, with the Ministry of Company Affairs on 26.9.2013 and even for 2013-14 also, the Report will be filed within the due date.

13.0.0 DIRECTORS' RESPONSIBILITY STATEMENT:

In terms of section 217 (2AA) of the Companies Act, 1956, your Directors state that:

i] in brparing the annual accounts, the applicable accounting standards have been followed;

ii] the accounting policies adopted have been consistently applied and, wherever necessary, judgements and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit or loss of the Company for the year;

iii)proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safe guarding the assets of your Company and for brventing and detecting fraud and other irregularities; and

iv] the annual accounts have been brpared on a going concern basis.

14.0.0 CORPORATE GOVERNANCE:

14.1.0 As per Clause 49 of the listing Agreement with the Stock Exchanges, a separate section on Corporate Governance along with a certificate of Compliance is annexed and forms part of this report.

14.2.0 COMPLIANCE OF CORPORATE GOVERNANCE GUIDELINES ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISES

Government of India, Department of Public Enterprises, has laid down certain parameters for the purpose of grading the Central Public Sector Enterprises on the basis of their compliance of guidelines on Corporate Governance and this report needs to be submitted to the Government on quarterly/annual basis. Your Company has been complying with the Guidelines on Corporate Governance for Central Public Sector Enterprises laid down by DPE and regularly submits reports to the Government.

15.0.0 CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' and actual result^ may or may not be in accordance therewith. The Company's performance is dependent on several external factors such as performance of monsoon, significant changes in economic environment, Government Policies, fluctuations in prices of raw material and finished products and also their availability etc., which could adversely affect the operations of your Company.

16.0.0 AUDITORS:

The Comptroller and Auditor General of India (CAG) has appointed, M/s M.M. Nissim & Co. and M/s NBS & Co as Joint Statutory Auditors of your Company for the Financial Year 2013-14. The Auditors would be retiring at the conclusion of the Thirty sixth Annual General Meeting.

The Statutory Auditors for the Financial Year 2014­15 will be appointed by the CAG. However, their remuneration is to be fixed at the AGM by the members. Shri S. D. Shenoy and M/s. V. J. Talati & Co., have been appointed, by the Board, as Cost Auditors for the year 2014-15 and the remuneration payable is to be approved at the AGM by the members.

17.0.0 DIRECTORS:

President of India appointed Prof. Damodar Acharya as Director of your Company w.e.f. 30.01.2014. Shri S.K. Lohani I.A.S, has been appointed as an Additional Director on 02.07.2014. Shri Suresh Warior has been appointed as an Additional Director on 18.07.2014, Shri Gautam Sen, Director (Finance) has demitted his Office on 31.01.2014 on attaining the age of superannuation. The contribution of Shri Gautam Sen to your Company has been immense. His guidance, suggestions and advice have greatly benefited the Company. Your Directors place on record their apbrciation of the contribution of Shri Sen to your Company. Notice under section 160 of the Companies Act has been received proposing the candidature of Prof. Damodar Acharya, Shri S.K. Lohani and Shri Suresh Warior as Directors of the Company.

As per Section 152 of the Companies Act, Shri Ashok Ghasghase, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

18.0.0 ACKNOWLEDGMENT:

Your Directors wish to gratefully acknowledge the valuable guidance and continued support extended by Government of India and in particular, the Department of Fertilizers and the Office of Fertilizer Industry Co-ordination Committee (FICC), Railways, DPE, members of MOU Task force, and other Central Government departments and Agencies.

The Board also wishes to acknowledge with sincere gratitude, the help and unstinted support from the State Governments, MSEB, MIDC, various media, Municipal authorities, Maharashtra Pollution Control Board, Bankers to your Company, Financial Institutions, Dealers and Customers.

Your Board wishes to acknowledge gratefully, the confidence posed, unstinted support and suggestions made to the Board by the esteemed share Owners  of the Company. The Board also wishes to place on record the positive suggestions and guidance provided by the Statutory Auditors, Cost Auditors and the Office of the Principal Director of Commercial Audit.

Last but not the least, your Directors take pleasure in placing on record their deep apbrciation of the excellent contribution made by the employees of your Company at all levels, without which your Company would not have achieved such good performance.

By order of the Board of Directors

[R.G. Rajan]

Chairman and Managing Director.

Place : Mumbai

Date : 19.07.2014