CONTENTS - BRAHMAPUTRA VALLEY FERTILIZER CORPORATION LIMITED

					                 6th Annual Report
                     2007-2008




                   Photograph


                   Company logo
BRHAMAPUTRA VALLEY FERTILIZER CORPORATION LIMITED
                        6TH ANNUAL REPORT


                               2007-2008


                              Company logo
BRHAMAPUTRA VALLEY FERTILIZER CORPORATION LIMITED
    Regd. Office : Namrup, P.O.: Parbatpur, Dist Dibrugarh -786623, Assam
CONTENTS

1.    Board of Directors
2.    Management Team
3.    Citizen Charter
4.    Notice of Annual General Meeting
5.    Directors’ Report
6.    Management Discussion and Analysis Report
7.    Annual statement showing representation of SCs, STs and OBCs
8.    Corporate Governance
9.    Declaration of Compliance of Code of Conduct
10.   Management Reply on the observations of Statutory Auditors
11.   Comments of the Comptroller and Auditor General of India on the Accounts
      and Management Reply thereon.
12.   Disclosure of particulars with respect to conservation of energy,
      Technology Absorption and Foreign Exchange Earning and Outgo
13.   Statutory Auditors’ Report
14.   Balance Sheet
15.   Profit & Loss Account
16.   Schedules 1 to 26
17.   Cash Flow Statement
18.   Additional information as per Part-IV Schedule –VI of the Companies Act,
      1956
19.   Performance at glance
BRAHMAPUTRA VALLEY FERTILIZER CORPORATION LIMITED

                         CITIZENS’ CHARTER
Preamble

This Charter is a declaration of our mission, objectives, values, commitments,
standards and our expectations from others.

Mission

   To produce fertilizer efficiently, economically and in environment friendly
    manner.
   To established itself as profit making enterprises
   To work for all round improvement of the strategically important North
    Eastern parts of the country.
   To diversify into production of other industrial products.
   To provide balanced economic growth in the region.

Objective

    BVFCL has the following objectives:

   To take up and implement schemes for energy savings.
   To continuously improve plant operation safety.
   To attain high level of capacity utilisation.
   To continuously upgrade the quality of human resources of the company
    and promote organizational development.

Values

We shall carry out our functions and duty with utmost :

   Sincerity
   Speed
   Equity
   Integrity
   Transparency

    and without any fear or favour.

Standards

  We have set up upon ourselves the standards for all transactions with you.
   We undertake that in case of likely or inevitable delay, we shall promptly
   communicate the same to the party concerned.
Our Commitments

We commit to:

   Produce and distribute quality fertilizers conforming to the specifications.
   Timely distribution of our fertilizers to ensure consumer satisfaction.
   Continual upgradation of Technology and Development of Human
    Resources.
   Strict adherence to the prescribed Safety, Health and environmental
    Protection Standards.
SERVICE EXTENDED TO THE CUSTOMERS/CITIZENS’

Training is imparted to the farmers free of cost by the Company in village/block
level for balanced use of fertilizers for improving productivity.

     FOLLOWING GRIEVANCES REDRESSAL MACHANISM HAS BEEN
                CONSTITUTED IN THE COMPANY.

    1.   Employees Grievance Redressal Committee
    2.   Township Welfare Committee
    3.   Information under the Right to Information Act, 2005
    4.   Customer Grievances Redressal Cell
    5.   Complaints involving redressal for bribes or financial irregularities, public
         may approach to the Chief Vigilance Officer of the Company

     TIME LIMIT FOR DISPOSAL OF GRIEVANCES

     a. Issue of acknowledgement /interim reply to petitioner               2 weeks
     b. Forwarding of the grievance petition to the concerned authority     3 weeks
     c. Final disposal of the grievance petition                            2 months

     EXPECTATION FROM CUSTOMERS/CITIZENS

     We expect from the customers / citizens to be reasonable and prompt in
     exercising your rights and obligations in all your transactions with the
     company without extending inducement of any kind and not raising any
     frivolous issues.

     a. Timely feed back of information about the product purchased by the
        customer, its quality, weight, etc.
     b. Suggestion for further improvement.
                 BRHAMAPUTRA VALLEY FERTILIZER CORPORATION LTD.

BOARD OF DIRECTORS

1.     Shri S. C.Dhawan
       Chairman and Managing Director (Upto 31.01.2008)
2.     Shri U.S.Jha
       Chairman and Managing Director (From 7.02.2008)
3.     Shri Deepak Singhal
       Joint Secretary (Fertilizer), DOF   (Upto 10.03.2008)
4.     Shri Rajesh Agrawal
       Deputy Secretary (Fertilizer), DOF (From 10.03.2008)
5.     Dr. Sri Chandra
       Joint Advisor (Fertilizer), DOF
5.     Shri J.C.Duarah
       Director (Production)              (upto 30.06.2008)
6.     Shri N.K.Ghosh
       Director (Finance)                (From 7.09.2007)

COMPANY SECRETARY

Shri R.K.Gupta

CHIEF VIGILANCE OFFICER

 Shri Ajay Mankotia                  (Upto 11.10.2007)
Shri J.K.Khanna, IPS                 (From 11.10.2007)

NAMRUP UNIT

Shri D.Mahanta, General Manager (HR)
Shri N.K.Saha, General Manager (Unit)
Shri Vinod Gaur, General Manager (Marketing)
Shri M.A. Manann, Dy. General Manager (MM)
Shri P.Malakar, Dy. General Manager (Electricals)
Shri P.Dutta, Dy. General Manager (Management Services)

STATUTORY AUDITORS

M/s. Kanoi Associates, Dibrugarh

COST AUDITORS

M/s. Narasimha Murthy & Co.,
Cost Accountants, Hyderabad

Registered Office

“P.O. : Parbatpur, Namrup -786623, District- Dibrugarh (Assam)
Phone : 0374-2500207;Fax : 0374 –2500317
Email : bvfclnam@vsnl.net
Website address: www.bvfcl.com

UNIT

Namrup (Assam)

LEGAL ADVISORS

M/s. Steel & Hadow, Dibrugarh
BANKERS

State Bank of India
UCO Bank
Syndicate Bank
Punjab National Bank
Bank of India
            NOTICE OF 6TH ANNUAL GENERAL MEETING OF BVFCL


Notice is hereby given that the 6th Annual General Meeting of the shareholders of
Brahmaputra Valley Fertilizer Corporation Limited will be held on Friday, 8th day of
August, 2008 at 4.30 P.M. at the registered office of the company at Namrup, P.O.:
Parbatpur, District : Dibrugarh (Assam) to consider the audited annual accounts for
the financial year ended 31st March, 2008 alongwith Director‟s Report, Auditors
Report, Comments of CAG and remuneration of Statutory Auditors for the financial
year 2008-09 as Ordinary Business, and if thought fit, to pass the following resolution
with or without modification(s) :

ORDINARY BUSINESS :

 1. “RESOLVED THAT the Audited Annual Accounts for the financial year ended 31st
    March, 2008 alongwith the Director‟s Report, Auditors‟ Report and the
    Comments of the C & AG thereon are hereby adopted.”

 2. “RESOLVED THAT in pursuance of the provisions of Article No. 93(2) of Articles
    of Association of the Company, Shri Rajesh Agrawal, Director of the Company be
    and is hereby retires and being eligible, offers himself for re-appointment.”

 3. “RESOLVED THAT in pursuance of the provisions of Article No. 93(2) of Articles
    of Association of the Company, Dr. S.Chandra, Director of the company be and
    is hereby retires and being eligible, offers himself for re-appointment.”

 4.   “RESOLVED THAT the Board / Audit Committee be and is hereby authorised to
      fix such remuneration as it may decide for the Statutory Auditors to be
      appointed by Comptroller and Auditor General of India for the year 2008-09 and
      the Statutory Auditors shall hold office from the conclusion of this Annual
      General Meeting till the conclusion of next Annual general Meeting.”




                                                 By Order of the Board of Directors

                                                                         Sd/-
                                                                    R.K.Gupta
                                                                Company Secretary
Place : Namrup
Date : 4th August, 2008

Note : A member entitled to attend and vote is also entitled to appoint a proxy to attend
      and vote instead of himself and the proxy need not be a member of the Company.
                              DIRECTORS’ REPORT

     To,
     The Members,
     Brahmaputra Valley Fertilizer Corporation Ltd.

     Dear Members,

     Your Directors have great pleasure in presenting the Sixth Annual Report of
     the Company together with the audited statement of annual accounts for the
     financial year ended 31st march, 2008, the report of Statutory and Govt.
     Auditors thereon.

1.   REVIEW OF FINANCIAL PERFORMANCE:

     The financial performance of the Company during the year under review vis-a-
     vis previous year are stated as under :

                                                              (Rs. in Crores)
     Particulars                               For the year For the year
                                               ended        ended
                                               31.03.2008   31.03.2007
     Profit (+) / Loss (-) before Dep.         (+) 6.87     (+) 40.28 (*)
     & Int.
     Depreciation                          39.51                     38.73
     Interest                              71.85                     61.37
     Profit (+) / Loss (-) before prior    (-)104.49             (-) 59.82
     period / extra-ordinary items
     adjustments
     Prior Period Adjustments              (-) 1.35              (-) 2.55
     Net Profit (+) / Loss (-) after       (-) 105.84            (-) 62.37
     prior period / extra-ordinary
     items adjustments
     (*) Including Rs. 40.40 crores subsidy arrears pertaining   to earlier years
     received from GOI.

     During the year, company has recorded cash profit of Rs. 6.87 crores and
     recorded highest urea production since formation of BVFCL. The production of
     urea during the year was 329977 MT (Namrup –II - 77967 MT and Namrup-
     III 2521010 MT) against 308303 MT (Namrup-II - 61001 MT and Namrup –
     III - 247302 MT ) of urea in the previous year increased by 7%.

 2. MANAGEMENT DISCUSSION & ANALYSIS REPORT

     A Report on Management Discussion and Analysis, forming part of this
     report, inter-alia deals with the operations and future prospects of the
     company is enclosed as Annexure to Directors‟ report.

 3. CORPORATE GOVERNANCE
  During the year, company has adopted Guidelines on Corporate
  Governance for CPSUs, 2007 issued by the Department of Public
  Enterprises. A report on Corporate Governance is enclosed as Annexure to
  Directors‟ report.


4. BOARD OF DIRECTORS’

  During the period under review, the following changes took place in the
  Board of Directors:

        Shri S.C.Dhawan, Chairman and Managing Director of the
         Company retired on attaining the age of superannuation on
         31.01.2008. In his place, Shri U.S.Jha, CMD, RCFL was assigned
         the additional charge of CMD, BVFCL for the period of six months
         by the Govt. of India. Shri U.S.Jha took over the charges of CMD,
         BVFCL from Shri S.C.Dhawan on 7.02.2008.

        Shri Rajesh Agarwal, Deputy Secretary (F), Department of
         Fertilizers has been appointed as part time official Director on the
         Board of BVFCL in place of Shri Deepak Singhal, Joint Secretary
         (F), Department of Fertilizers.

        Shri Nisith Kumar Ghosh has joined the Company as Director
         (Finance) w.e.f. 7.09.2007.
        Shri J.C.Duarah, Director (Production) retired on attaining the age
         of superannuation on 30.06.2008.

     Board of Directors place on record its sincere appreciation for the
     contributions made by the outgoing Directors.

5. DIRECTORS’ RESPONSIBILITY STATEMENT:

  Pursuant to the provisions of Section 217(2AA) of the Companies Act,
  1956 with respect to the Directors‟ Responsibility Statement, the Directors
  hereby confirm :

  (A) That in the preparation of annual accounts, the applicable accounting
       standards have been followed along with proper explanation relating
       to material departures.

  (B) That the Directors have selected such accounting policies and
      applied them consistently and made judgments and estimates that
      are reasonable and prudent so as to give a true and fair view of the
      state of affairs of the Company as at 31st March 2008 and of profit
      and loss account for the period ended 31st March, 2008.
  (C) That the Directors have taken proper and sufficient care for the
      maintenance of adequate accounting records in accordance with the
      provisions of the Companies Act, 1956 for safeguarding the assets of
      the Company and for preventing and detecting fraud and other
      irregularities.
     (D) That the Directors have prepared the Annual Accounts on a going
     concern basis.

6.   AUDITORS :

     M/s. Kanoi Associates, Chartered Accountants, Central Chowkidinghee,
     Dibrugarh has been appointed as Statutory Auditors of the Company by
     the Comptroller & Auditor General of India to audit the accounts of the
     Company for the financial year 2007-08.

7.   AUDITORS’ REPORT :

     The management replies on the observations of Statutory Auditors‟ report
     and the comments of the Comptroller & Auditor General of India on the
     accounts of the company for the year ended 31st march, 2008 are
     enclosed as Annexure to the Director‟s Report.

8.   COST AUDIT:

     In compliance of the provisions of Section 233B of the Companies Act,
     1956, the Board of Directors of your company have appointed M/s.
     Narasimha Murthy & Co., Cost Accountants, Hyderabad to carry out the
     audit of cost accounts of the Company for the financial year ending 31 st
     March, 2008.

9.   CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
     FOREIGN EXCHANGE EARNING AND OUTGO.

     The Disclosure in terms of Companies (Disclosure of particulars in the
     Report of Board of Directors) Rules, 1988 in respect of conservation of
     energy, technology absorption and foreign exchange earning and outgo
     are as per annexure and form part of this report.

10. PROGRESSIVE USE OF OFFICIAL LANGUAGE:

     All instructions issued by the Official Language Department, Government
     of India for complying with the rules of 1976 of Official Language Act,
     1963 are being followed.

11. PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A):

     There is no employee in the company covered under Section 217(2A) of
     the Companies Act.1956.

12. ACKNOWLEDGEMENT:

     The Board of Directors acknowledges the valuable guidance and
     continued support extended by the various Departments and Ministries of
     the Govt. of India viz. Ministry of Chemicals & Fertilizers, Department of
     Fertilizers, Fertilizer Industry Co-ordination Committee (FICC), Ministry of
     Agriculture, Indian Council for Agricultural Research, Ministry of
Petroleum & Natural Gas, Ministry of Railways, Ministry of Finance,
Ministry of Home, Department of Public Enterprises, Statutory Auditors,
Cost Auditors, Comptroller & Auditor General of India, Assam Gas
Company Limited, Oil India Limited, valued Dealers and Customers.

The Board of Directors places on record its sincere appreciation to the
State Government of National Capital Territory, Uttar Pradesh, Assam,
Bihar, West Bengal, Jharkhand and the Reserve Bank of India, Punjab
National Bank, UCO Bank, State Bank of Patiala, Syndicate Bank and Bank
of India for their valued co-operation.

The Board of Directors also acknowledges and appreciates the efforts put
in by the employees of the Corporation for improving production
performance of Namrup-II and III plants.

                                      For and on behalf of the Board


                                                   Sd/-
                                                 U.S.Jha
                                    Chairman & Managing Director
Date : 4.08.2008
Place : Namrup
                                                ANNEXURE TO DIRECTOR’S REPORT

                 MANAGEMENT DISCUSSION AND ANALYSIS REPORT

     The predecessor in interest of BVFCL i.e., HFCL‟s and FCI‟s Namrup Unit started
     nourishing the soils of Eastern India since 1969. It continued till date to be the major
     source of Urea Fertilizer to all 7 (seven) states of North-east India and parts of West
     Bengal and old Bihar. The company even supplied urea to complex manufacturers as far
     as Chennai and Goa and exported urea to Nepal. Its „Mukta‟ brand is a household name in
     the Eastern India and the same is a reputed brand image in terms of quality of prill. In
     spite harsh weather condition (excessive rain), abnormal situation and remoteness from
     the mainland, the company is striving through dedication of its employees and active
     support from the Government.

1.   Overview:

     Its Namrup-III Plant produced 93.34% of its capacity and had there been no gas
     shortages it could have achieved higher capacity utilization. However Namrup-III could
     achieve highest annual production since formation of BVFCL. The overall specific energy
     consumption for Namrup-III was 12.52 Gcal/MT of urea during the year, which was also
     lowest since formation of the company. Only one stream of Namrup-II was in operation
     due to gas limitation from the supplier M/s Oil India Limited. Performance of Namrup-II
     remained sub-optimal due to breakdown of equipments. Unreliability in supply of Natural
     Gas also led to lower production. There have been restrictions in plant load and
     production stoppages due to Natural Gas limitations from M/s Oil India Ltd caused due to
     miscreant activities. Besides, the production loss, these sudden tripping of plants creates
     thermal shock in old equipments/ machineries which lead to further breakdowns of
     machineries.

     Your directors are regularly following up at different levels with Oil India Ltd and
     concerned ministries for steady supply of Natural Gas. A tripartite meeting was held with
     Oil India Ltd. & ONGC on 8th November 2007 to discuss the gap in supply of natural gas
     to BVFCL. M/s ONGC expressed their inability to supply gas to BVFCL. M/s Oil India Ltd
     assured supply of 1.72 MMSCMD gas to BVFCL in winter months and 1.60 MMSCMD in
     summer months only due to supply constrains (eg Tea Gardens). They were non-
     committal on supplying gas beyond 1.72 MMSCMD.

     The existing plants operating in Namrup are of vintage design and belongs to the genre of
     low capacity and high energy consumption. A proposal was initiated in 2006 to set up a
     new brown field Ammonia-Urea Plant which would have replaced the existing plants and
     increased the production from 3.9 Lakh MT of Urea to around 8.5 Lakh MT of urea per
     annum consuming same amount of gas as on today. An alternate proposal for retrofitting/
     renovating the existing plants for capacity augmentation and lowering of energy
     consumption also remains under consideration.

     Pending any decision on the above proposals, maintenance of the existing plants is
     necessary for continuation of production for another 4-5 years. There is shortage of
     spares for the equipments leading to frequent breakdowns and no reliability of the
     equipments. Being low capacity with high energy consumption, the revenue generated is
     just enough to meet running expenses. For investment in renovation and replacement,
     the company requires to borrow money from the Government. But due to high interest
     rates of such loans, the company‟s balance sheet becomes negative. The company is
     avoiding further loans in view of the liability of interest which is already around Rs.188
     crores. However, unless some critical equipments are attended, the capacity utilization of
     Namrup-III will further go down. The company in 2007-08, has borrowed Rs.7.47 crores
     plan loan and Rs.20.96 crores non-plan loan from Government at an interest rate of
     11.5%. Rs.20.96 crores will be spent to attend two critical limitations i.e. Retrofitting
     Synthesis Gas Turbine and Replacement of Synthesis Converter Baskets of Namrup-III.
     Similarly, Namrup-II also requires investment for the equipments and systems which were
     not revamped. In 2008-09, the Government is willing to give a plan loan of Rs.19.98
     crores at an interest rate of 11.5%. Thus during 2008-09, about 40 crores will be
     committed for investment which will be financed from these loans. Since the loans carry
     high rate of interest and the company is already carrying liability of huge interest, a
     request has been made to the Government to convert these loans into Grant-in-Aid to
     make operations profitable.

2. Industry Structure & Government policy:

     Fertilizers have been a major contributing factor to the growth of Indian
     agriculture over the last five decades. The overall fertilizer consumption in the
     country has recorded phenomenal growth in last few years. The consumption of
     urea which was 19.8 million tones in 2003-04 has risen to above 26 million tones
     in 2007-08. With indigenous fertilizer production stagnating, the imports of
     finished fertilizers have increased significantly in the past four years. No major
     investment has taken place for creation of additional fertilizer capacities in the
     country for more than a decade. The current supply demand gap is about 10
     million tones of fertilizer which is likely to increase further and cross 16 million
     tones by the end of the 11th Five Year Plan. Addition to domestic capacity by way
     of new projects and through revamp, retrofit etc of existing urea plants is urgently
     needed. The investment policy to encourage capacity addition with reasonable
     rate of return on investment is required from the Government.

     The Government of India has approved the New Pricing Scheme (NPS) stage – III
     for Urea Units in the country. Under NPS-III notification concession rate of Urea
     produced from Namrup-III has been reduced by Rs.488 per MT w.e.f 01.10.2006
     from the existing rate of Rs.6097 per MT of Urea under NPS-II. The decrease in
     concession rate is mainly due to non-recognition of Capital Expenditure incurred
     beyond March 2003 in Namrup Revamp Project pertaining to Namrup-III. This will
     lead to huge recovery to the tune of Rs.15 crores for past periods. With the
     implementation of NPS notified price even after achieving the target production for
     Namrup-III, the company will incur cash loss. This will further deteriorate financial
     position of the company. The company will not be able to generate even the
     working capital for operation of the plants. A request has been made to the
     Department of Fertilizers to recognize existing concession rate of Rs.6097 per MT
     of Urea (as per NPS-II) for Namrup-III till approval of the Cabinet Note for Second
     Revised Project Cost & Time of Namrup Revamp Project.

3.   Production Review:

     The Company produced 3,29,977 MT of Urea during the year. Urea production
     from Namrup-III was 2,52,010 MT. This is the highest annual urea production so
     far achieved since the formation of BVFCL and an increase of 7.03% over previous
     year‟s production. There was 27% increase in production of Urea from Namrup-II
     against preceding years. The production was 77,967 MT of Urea for 2007-08.

     One of the constraints for higher production was lower availability of gas which
     resulted in production loss of 22,929 MT of Urea during the year. Apart from gas
     shortage, performance of Namrup-II suffered mainly due to repeated failures in
     Electrical Systems, Reformed Gas Boiler tube sheet failure, Flue Gas Boiler
     leakage, tube leakage in 3rd Superheater in Waste Heat Recovery Section.
     Production from Namrup-II ammonia plant was restricted due to low efficiency of
     condensers of Process Refrigeration Compressor. Action for Condenser tube
     bundles replacement have been taken. Namrup-III production was limited due to
     high vibration in EMG turbine of Synthesis Gas Compressor, high axial
     displacement in HP barrel of Process Air Compressor.
     During the year the company produced 19.34 MT of Bio-fertilizer.

4.   MARKETING REVIEW

     During the year under review, sale of urea increased from 314670 MTs in 2006-07
     to 333,191 MTs in 2007-08 including 4894 MT urea export to Nepal. Sale of Bio-
     fertilizers also increased from 4.80 MT in 2006-07 to 15.15 MT in 2007-08.
     Company has started trading of seeds and sold 718 MT of paddy seeds valued Rs.
     1.04 crores and 595 MT of wheat seeds valued 1.05 crores with the total turnover
     of Rs. 2.90 crores. To reduce the marketing cost, various steps were taken such
     as freight rationalization, introduction of two-point rakes & mini-rakes, sales
     through private godowns and rationalization of rebates through private godowns
     and rationalization of rebates were also continued this year and made operative in
     the marketing territory. Company is also exploring the possibility of trading
     Pesticides, Organic manure, Micro nutrients and Fertilizers viz. Urea, MOP, SSP,
     etc. from other companies.

5. FUTURE OUTLOOK AND INITIATIVE FOR THE CURRENT YEAR.

     The company has to maximize urea production consuming minimum energy. Weak
     spots hindering sustained production has been identified and efforts are being
     made to overcome them, as stated below:

     1. EMG Turbine of Synthesis Gas Compressor of Ammonia-III: The plant load
        remains restricted due to high vibration in EMG Turbine. As short term solution,
        rotor of EMG turbine will be replaced with reconditioned rotor in annual
        shutdown in 2008-09. Retrofitting of EMG Turbine with new designed rotor
        along with other internals is the long term solution. As rotor of existing design is
        no more manufactured, a new designed rotor has to be procured and retrofitted
        to existing turbine. Order for new rotor is under processing.
     2. Synthesis reactor catalyst basket (S-100) of Namrup-III is very old, presently
        leaking with catalyst coming out. Present basket requires to be replaced with
        new energy efficient S-200 basket. Action has been initiated for its
        procurement.
     3. Replacement of 1st compartment of RG Boiler of Namrup-II
     4. Renovation of Electrical System: Procurement action of spares have been
        initiated.
     5. Overhauling of Compressors and replacement of intercoolers, vacuum systems
        etc. of Namrup-III
     6. Repair of Cooling Tower Pumps and renovation of Cooling Tower of Namrup-III.
     7. Replacement of Primary Reformer catalyst of Namrup-III.
     8. Condensers of Process Refrigeration Compressor: Tube bundles require
        replacement.

     The company plans to implement further energy conservation schemes in future.

     The Plant performance is adversely affected due to shortage of technically
     qualified and competent manpower in almost all the disciplines of the company.
     Difficulties has been experienced in meeting the requirement of in-house technical
     expertise in remote place like Namrup due to non-availability of technically
     competent outside agencies and reluctance on the part of good contractors to
     come to Namrup. Efforts are being made to employ qualified, competent and
     experienced persons from outside. Management has taken suitable actions for
     engagement of retired employees of Fertilizer PSUs on contract basis.
      VIABILITY PLAN

      Company has submitted viability proposal prepared by PDIL to the Department of
      Fertilizers for submission to the Board for Reconstruction of Public Sector
      Enterprises (BRPSE). The proposal carries following waiver, reliefs, dispensation
      and concessions to the BVFCL :
                Conversion of Loan portion (Rs. 317.77 crores) of total revamp project
                 cost (Rs. 635.53 crores) into Equity. ;
                Waiver of earlier loan and interest (Rs. 248.30 crores)
                Continuation of special dispensation in pricing mechanism under New
                 Pricing Scheme stage – III (NPS-III) for Namrup- III as provided in NPS
                 –II and recognition of effect of capitalization made beyond 2002-03
                 under Namrup Revamp Scheme.
                Pricing of Namrup-II as per the erstwhile Retention Price Scheme (RPS)
                De-rating of production capacity for Namrup-II to at least 50% of rated
                 capacity due to non-availability of gas presently.

              It was also recommended to BRPSE for a new Brown Field Plant for
               better utilization of natural resources in the long run.

 6.   IT ADOPTION / UP-GRADATION

      The company has progressively gone IT savvy and LAN with broad-band Internet
      facilities is now available at 50 work stations. Not much could be done during the
      bygone year in terms of investment in IT to upgrade or augment resources.
      Company desires to make progressive and pragmatic investment for upgrading the
      existing IT infrastructure aiming at an Enterprise Level IT solution in the near
      future. Guidance of RCF‟s IT Experts has been sought to make detailed study and
      recommend action plan considering company‟s IT expansion goal. Company‟s
      website is regularly updated and all provisions of the Right to Information Act and
      Corporate Governance have been kept uploaded.

7.    STATUS OF ISO 9001 & 14001 CERTIFICATE

      Namrup-III plants of the company have been Quality Management System (QMS)
      ISO 9001:2000 and Environment System Management (EMS) ISO 14001:1996
      compliant. Both the certificates are expired in April, 2008 and May, 2008
      respectively. The re-certification audits are being planned so that Namrup –III
      plants remain ISO compliant, both in QMS (ISO 9001:2000) and EMS (ISO
      14001:2004).

8.    INTERNAL CONTROL SYSTEM:

      The company has adequate internal control system in the respective areas of
      Finance & Accounts supported by Internal Audit and regular management reviews.
      In the accounting, internal control is exercised right from the preparation of
      vouchers where each voucher is checked and countersigned by respective senior
      officers as per delegation of power. The daily cashbook balance on manual basis is
      physically counted and checked with the book. Similarly, all bank accounts are also
      reconciled periodically. Internal control is also exercised for accounting where
      vouchers including journal vouchers entered into the system are checked and
      validated before those are accounted for. Every proposal for purchase/works
      contract or others having monetary involvement are examined as per policy and
      procedures and reviewed by a committee in many cases considering materiality of
      the quantum before taking appropriate decision. System is reviewed from time to
     time and action taken for improvement. Internal Audit is conducted by the outside
     qualified agency supported by the in-house internal audit cell. Internal Audit
     examines documents / records / procedures and submit periodical reports for
     compliance. The Internal Audit Reports and follow up actions thereon are regularly
     placed before the Audit Committee. Audit Committee regularly reviews the internal
     audit and adequacy of internal control.

9.   HUMAN RESOURCE DEVELOPMENT

     A. MANPOWER POSITION:

        The total manpower status of the Corporation as on 31st March 2008 was
        1248. Reservation of SC/ST/OBC/Ex- Serviceman and Physically handicapped
        categories in the service are being maintained as per the government
        directives. The manpower position as on 31.03.2008 was as under: -


                          Categories                    Nos.                         %
                     1. Scheduled Caste                 -   90                 -      7.21
                     2. Scheduled Tribe                 - 181                  -    14.50
                     3. Ex-Servicemen                   -   17                 -     1.36
                     4. Physically Handicapped          -    5                 -     0.41
                     5. OBC                             - 579                  -    46.39
                      6. General                        - 376                  -    30.13
                                                          1248                     100.00
     B. TRAINING :

        During the year ended on 31st March 2008, total 22 training programme both
        external and internal were conducted. Employees participated in the training
        programmes are as under :

        I. Internal Training Programmes

         Subjects                                              Participants
                                                       Executives       Non-
                                                                        Executives
         Energy Management                             21
         Demo on energy Audit & Energy                 27
         Saving Schemes
         Seminar           cum-demo           on       27
         Instrumentation
         Introduction Training to Management           49
         Trainees
         Introduction Training to OT/TTs                                  82
         Seminar on Energy Conservation                45                 24
         Training for fire fighting equipments                            53
         Programme             on        Process                          25
         Intrumentation
         Programme on productivity                                        35
         Programme on productivity                                        45
                                           Total       169                264

        (*) Marketing Department has conducted training programme for 25 nos. of
        Dealer
       II.     External (outside the organization) Training Programmes

             Department        Subjects                                      Participants
                                                                             Executives     Non-
                                                                                            Executives
             Fire              19th External Sub-Officers Course                              1
             Mechanical        International Conference on Fertilizer          3
             Production        Technology
             Personnel         Disciplinary proceedings for Officers           1
                               of PSUs
             Mechanical        Vibration analysis In-situ balancing            2
             Training          Direct Trainers Skills                          1
                                                                 Total         7              1

      C. INDUSTRIAL RELATIONS REPORT:

             The Industrial Relations Scenario during the year was by and large peaceful.

      D. VOLUNTARY RETIREMENT

        During the year, company has re-introduced Voluntary Retirement Scheme
        (VRS). Total 9 employees were separated under the above scheme during the
        year ended on 31st March, 2008.

      E. ACTIVITIES OF THE COMPANY FOR WELFARE AND ADVANCEMENT OF
         SCHEDULED CASTES (SCs), SCHEDULED TRIBES (STs) AND OTHER
         BACKWARD CLASSES (OBCs)

        The company has been following the presidential directive and guidelines/
        orders issued by the Government of India from time to time in the matter of
        reservation in services for SCs, STs and OBCs. Candidates belonging to SC and
        ST are fully exempted from payment of fee applying for any post in the
        corporation. SC/ ST candidates are paid TA for appearing in both the written
        test and interview for recruitment of any post in the company.

        The Corporation is having one SC/ST/OBC Cell under one Liaison Officer. The
        Liaison Officer initiates necessary action to settle the grievances of the
        employees belonging to SC/ ST community on priority basis and in
        consultation with the SC/ST Associations. Corporation is providing company
        accommodation to all its employees including SC/ST employees.

        All the welfare facilities of the corporation also extended to the employees of
        SC/ST community alongwith other employees. The company do not received
        any allocation of fund under tribal sub-plan from the Govt. of India.

        The Annual statement in the prescribed format showing the representation of
        SCs, STs and OBCs as on 1.01.2008 and No. of appointments made during the
        preceding calendar year i.e. 2006-2007 as furnished to the Govt. is enclosed
        as Annexure to the Directors‟ Report.

10.    VIGILANCE

       The vigilance is considered to be an integral pat of the management function.
       The Chief Vigilance Officer provides direction, guidance and supervision over the
       vigilance efforts of the Corporation. One Assistant Vigilance Officer and one
       Senior Vigilance Officers are posted at Namrup Corporate Office.
      The Corporation has adopted preventive vigilance as the main theme. The stress
      is on transparency and accountability in the working of the corporation. Vigilance
      Notice Boards have been installed in all the offices including liaison offices of
      BVFCL, displaying the address and telephone numbers of the CMD, Chief
      Vigilance Officer and Central Vigilance Commission, who can be approached for
      complaints of corruption.

      „Agreed List of suspected officers‟ and List of Officers of Doubtful Integrity‟ for
      the year 2008 were prepared in time and a close watch is being kept on the
      listed officers. System of rotation of employees posted on sensitive posts for
      more than five years is being followed. Surprise and regular inspections (22 Nos)
      were carried out during the financial year 2007-08. On the basis of findings of
      Inspections, important suggestions were given to the Management for remedial
      action. 9 complaints / cases detected through inspection were taken up for
      investigation. Out of these, 8 cases have been completed and disposed off.
      Remaining one case is under investigation. During the year, two departmental
      proceedings were initiated for major penalty and two for minor penalty. Out of a
      total of 2 major penalty proceedings, one is pending with the DOF for final
      order. The other major penalty proceedings is pending against four employees.
      This is also pending with the DOF. In case of minor penalty proceedings,
      „Censure‟ was awarded to five delinquent officials.

      To sensitize the employees and the public about the evil consequences of
      corruption, vigilance awareness week was celebrated by BVFCL from 12 to 16
      November, 2007. During the week, group discussions, slogan competition and
      seminar were organised by the Vigilance Department of BVFCL to highlight the
      harmful effects of corruption in addition to pledge ceremonies. Pamphlets
      containing (i) the name, address and phone nos. CMD, CVO and CVC; (ii)
      Government Resolution on Public interest disclosure and protection of informer
      were distributed were amongst the public during the vigilance awareness week.

11.   KEY OPPORTUNITIES

      a. Scope for marketing of urea to complex fertilizer manufacturers and export.
      b. Scope for diversification into hydro-carbon based chemicals and generation of
      power.
      c. Scope for eco-friendly agriculture based business development.

12.   KEY THREATS:

      1. Competition from other urea manufacturing companies having lower energy
         consumption and lower cost of production.
      2. Threat of closure of production facilities of company due to high cost of
         production and economic non-viability.
      3. Low urea consumption growth rate in the North Eastern States.
      4. Uncertainty of steady and continual supply of Natural Gas by the supplier
         M/s. Oil India Limited. Against requirement of 1.95 MMSCMD of NG, M/s. Oil
         India Limited has been able to supply only around 1.72 MMSCMD.
      5. Disturbed socio-political scenario – an impediment to economic development.

13.    RISK MANAGEMENT:

        The company had laid down Risk Management Policy for Assessment &
        Minimisation procedures to be reviewed by the Board of Directors on quarterly
        basis. The identified risks were grouped under various types viz. Feed/Fuel,
        Plant Operations, Utilities, Environment, Project implementation, Regulatory,
       Business competition, Market, Assets, Finance, Human Resources, Information
       Technology, Legal and Internal Control risks. The above policy has been
       circulated to all the employees of the company. The workshop/ seminars are
       being organised at every level of employees to make them aware and sensitize
       about the risks.

14.   MOU RATING:

      Company has started signing MOU with the Ministry of Chemicals and Fertilizers
      since 2004-05. For the financial year 2007-08, “average” rating is expected from
      the Department of Public Enterprises.
                                                   ANNEXURE TO DIRECTORS’ REPORT

                        CORPORATE GOVERNANCE


        COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE


  Corporate Governance has been a continuous endeavor at BVFCL that cares for
  the overall well-being and welfare of all constituent of the system and takes into
  account the stakeholders interest at every business decision. The company is
  committed to pursue growth by adhering to the highest standards of corporate
  governance. The primary objective is to create and adhere to a corporate culture
  of consciousness, transparency and openness in creating awareness of corporate
  vision and spark dynamism and entrepreneurship at all levels. Company believes
  that governance must balance individual interest with corporate goals and
  operate within accepted norms of propriety, equity, fair play and a sense of
  justice. At BVFCL, accountability and transparency are key drivers to improve
  decision making and rationale behind such decisions to create stakeholders
  confidence.

I. BOARD OF DIRECTORS:

  A.    CONSTITUTION OF BOARD

  Pursuant to the provisions of Section 617 of the Companies Act, 1956, BVFCL is
  a “Government Company” holding 100% of its paid up share capital by the
  President of India. Members of the Board are appointed by the President of
  India.

  B.    RESPONSIBILITIES

  The responsibilities of Board is to oversee the company‟s strategic policies,
  review and monitor corporate performance, ensure regulatory compliance and
  reviewing the risk minimizing efforts of Executive Management in the operation
  of Company.

  C.    BOARD MEETINGS.

  The meetings of the Board are normally held at the registered office of the
  company at Namrup but during the year, due to pre-occupation of Govt.
  Directors, the Board meeting were held at the Liaison Office of the BVFCL/ RCFL
  at Noida/ New Delhi. It is scheduled well in advance. The Company Secretary, in
  consultation with Director (Finance) / Chairman and Managing Director, send
  notice of every Board meeting in writing to each Director of the company.

  All the Departments in the Company communicates to the Company Secretary
  well in advance with regard to matters requiring approval of the Board / Audit
  Committee of the company to enable him to include the same in the agenda for
  the Board/ Audit Committee Meeting(s).
The Board agenda are circulated to the Directors well in advance. The members
of the Board are entitled to access all the information of the company and are
free to recommend inclusion of any matter in agenda for discussion. In case of
need, the senior management is invited to attend the Board Meetings to provide
additional inputs relating to the items being discussed and / or giving
presentation to the Board.

During the financial year 2007-08, four meetings of Board of Directors were held
for transaction of the business of the Company.

    Board Meeting No.                                Date     No. of Directors
                                                                 attended
             39                        8.06.2007                      4
             40                        25.09.2007                     5
             41                        14.12.2007                     5
             42                        10.03.2008                     5

D. COMPOSITION OF BOARD

There are four Directors on the Board of the Company at present, comprises Shri
U.S.Jha, Chairman and Managing Director, Shri N.K.Ghosh, Director (Finance)
Dr. S. Chandra, Joint Advisor (Fertilizer), DOF and Shri Rajesh Agrawal, Deputy
Secretary (Fertilizer), DOF.
The details of composition and category of Directors, attendance of each
Director at the Board Meetings and the last AGM, directorship and membership
in committees of other companies for each director of the company are given
below.

Name S/Shri                Attendance particulars   Details of Directorship and
                                                    committee members/ chairman
                           Board      Last AGM      Details        of Details       of
                           meetings   Held       on Directorships in committee
                           (from      14.09.2007    other       public memberships
                           1.04.07 to               limited            and committee
                           31.03.08)                companies          Chairmanship
Functional Directors
S.C.Dhawan, CMD (Upto 3                  Present        FAI                Chairman of Audit
31.01.2008) (*)                                                            Committee
                                                                           Upto 19.12.2006.
Shri U.S.Jha, CMD (from 1                N.A.           RCFL, FAI,         Member      Audit
7.02.2008) (*)1                                         Indian Potash      Committee
                                                        Ltd., RRCFL
 Shri N.K.Ghosh,(**)       3             Present        Nil                Observer of Audit
Director (Finance)                                                         Committee
J.C.Duarah (***)           4             Present        Nil                Nil
Director (Production)
Part Time Official Directors
Shri Deepak Singhal, Joint 03            Absent          The     Fertilizer Member    Audit
Secretary (F), DOF(****)                                  Corporation of Committee
                                                          India Ltd.
                                                         Hindustan
                                                           Fertilizer
                                                           Corporation Ltd.
                                                          KRIBHCO
                                                          Madras
                                                           Fertilizer Ltd.

Dr. S. Chandra             4              Absent          -                   Chairman of Audit
Joint Advisor(F), DOF                                                         Committee
Shri Rajesh Agarwal, Dy. 1                N.A.             HFCL              Member      Audit
Secretary             (F),                                 FACT              Committee
DOF(*****)
 (*)      Superannuated w.e.f. 31.01.2008.
(*)1      Take over the additional charge of CMD, BVFCL w.e.f. 7.02.2008
(**)      Joined BVFCL on 7.09.2007
(***)     Superannuated on 30.06.2008
(****)    Ceased from Directorship w.e.f.10.03.2008.
(*****)   Appointed Director on the Board w.e.f. 10.03.2008

No Director of the company is a member in more than 10 (ten) committee or is
a Chairman of more than five (5) committees across all companies in which he is
a Director.

For the appointment of Part-time non-official (Independent) Directors on the
Board, company has taken up the matter with the Ministry of Chemicals and
Fertilizers as per the Govt. Policy contained in DPE OM No. 18(6)/2000 – GM
dated 26.11.2001.

In the absence of any Part-time non-official (Independent) Director on the
Board, Dr. S.Chandra, Joint Advisor (F), Department of Fertilizers was appointed
Chairman of Audit Committee.

E. CODE OF CONDUCT

Board has approved a code of conduct for all members of the Board and Senior
Management Executives of the company. The code of conduct has been posted
on the company‟s web site www.bvfcl.com.

All the members of the Board and Senior Management Executives shall affirm
compliance with the code on annual basis. Declaration to this effect is enclosed
at Annexure to the Directors‟ Report.

F. INFORMATION PLACED BEFORE THE BOARD OF DIRECTORS

Executive Management shall present following information before the Board of
Directors, either as part of the agenda papers or are tabled/ presented during
the course of Board meeting :

       Annual operating plans and budgets and any updates.
       Capital budgets and any updates.
       Quarterly results for the company and its operating divisions or business
        segments.
       Minutes of meetings of audit committee and other committees of the
        Board.
    The information on recruitment and remuneration of senior officers just
     below the board level, including appointment or removal of Chief
     Financial Officer and the Company Secretary.
    Shows cause, demand, prosecution notices and penalty notices which are
     materially important.
    Fatal or serious accidents, dangerous occurrences, any material effluent
     or pollution problems.
    Any material default in financial obligations to and by the company or
     substantial non-payment for goods sold by the company.
    Any issue, which involves possible public or product liability claims of
     substantial nature, including any judgement or order which, may have
     passed strictures on the conduct of the company or taken an adverse
     view regarding another enterprise that can have negative implications on
     the company.
    Details of any joint venture or collaboration agreement.
    Transactions that involve substantial payment towards goodwill, brand
     equity, or intellectual property.
    Significant labour problems and their proposed solutions. Any significant
     development in human resources/industrial relations front like signing of
     wage agreement, implementation of Voluntary Retirement Scheme etc.
    Sale of material nature, of investments, subsidiaries, assets, which is not
     in normal course of business.
    Quarterly details of foreign exchange exposures and the steps taken by
     management to limit the risks of adverse exchange rate movement, if
     material.
    Non-compliance of any regulatory, statutory or listing requirements and
     shareholders service such as non-payment of dividend, delay in share
     transfer etc.

G. DISCLOSURES :
     1. No related parties transactions have been executed by the
        company during the financial year 2007-08.
     2. Company is complying all the applicable statutory liabilities and the
        guidelines issued by the Govt. from time to time.
     3. Company has adequate mechanism of whistle blowing policy in the
        organisation and affirms that no personnel have been denied
        access to the Audit Committee.
     4. All the Presidential Directives issued by the Central Govt. have
        been complied with, by the company.
     5. No items of expenditure debited in the books of accounts, which
        are not for the purpose of the business.
     6. No expenditure incurred which are personal in nature and incurred
        for the Board of Directors and top Management.
     7. Details of Administrative and Office expenses as a percentage of
        total expenses vis – a vis financial expenses and reasons for
        increase are as under :
                             2007-08                               2006-07
                     %       of   % of Total   % of Total   % of Total       Remarks
                     Total        Finance      Exp.         Finance
                     Exp.         Exp.(Int.)                Exp.(Int.)

    Administrative   0.74         3.91         0.72         4.28             The increase in
         Office Exp.      0.02       0.10        0.03       0.15            exp. is very
                                                                            nominal, due to
                                                                            inflationary
                                                                            effect.
II. AUDIT COMMITTEE:

   During the year, Audit Committee has considered draft annual accounts for the
   financial year ending 31st March, 2008 before recommending the same for the
   approval of Board of Directors. At present, Audit Committee comprises three
   members i.e. Shri U.S.Jha, Chairman and Managing Director, Dr. S. Chandra,
   Joint Advisor (Fertilizer), DOF, Shri Rajesh Agrawal, Deputy Secretary (Fertilizer),
   DOF.

   A. TERMS OF REFERENCE FOR AUDIT COMMITTEE OF BVFCL

      The company agrees that the role of the audit committee shall include the
      following in addition to the role prescribed under Section 292A of the
      Companies Act, 1956 :

        1. Oversight of the company‟s financial reporting process and the
           disclosure of its financial information to ensure that the financial
           statement is correct, sufficient and credible.
        2. Recommending the audit fee of statutory auditors / Internal Auditors /
           Cost Auditors and also approval of payment for any other services.
        3. Reviewing the annual financial statements before submission to the
           Board, focusing primarily on;

                      Any changes in accounting policies and practices.
                      Major transactions of financial irregularities based on exercise of
                       judgement by management.
                      Review of draft audit report.
                      Significant adjustments arising out of audit.
                      The going concern assumption.
                      Compliance with Accounting Standards of ICAI.
                      Any related party transactions i.e. transactions of the company
                       of material nature, with promoters or the management, their
                       subsidiaries or relatives etc. that may have potential conflict
                       with the interests of the company at large.

        4. Reviewing with the management, Statutory Auditors and Internal
           Auditors, and the adequacy of internal control systems.
        5. Reviewing the adequacy of internal audit function, including the
           structure of the internal audit department, staffing and seniority of the
           official heading the department, reporting structure coverage and
           frequency of internal audit.
        6. Discussion with internal auditors any significant findings and follow up
           thereon.
        7. Reviewing the findings of any internal audit by the internal auditors into
           matters where there is suspected fraud or irregularity or a failure of
           internal control systems of a material nature and reporting the matter to
           the board.
  8.    Reviewing the company‟s financial and risk management policies.
  9.    To look into the reasons for substantial defaults in the payment to the
        shareholders (in case of non payment of declared dividends) and
        creditors.

B. ATTENDANCE OF AUDIT COMMITTEE MEETINGS

   During the year under review, four Audit Committee Meetings were held.

   S.No.       Name of the Directors            No. of Audit Committee
                                                Meeting attended.
   1           Shri S.C.Dhawan (*)              3
   2.          Shri U.S.Jha                     1
   2           Dr. S.Chandra                    4
   5           Shri Rajesh Agarwal (*)          1
   6           Shri Deepak Singhal (**)         3

C) Company Secretary of the Company acts as the Secretary to the Audit
   Committee.
                                            ANNEXURE TO DIRECTORS’ REPORT

            DECLARATION OF COMPLIANCE OF CODE OF CONDUCT


In compliance with the clause 3.4.2 of guidelines of Corporate Governance for CPSUs
issued by the Department of Public Enterprises, Board has approved the Code of
Conduct Rules for all members of Board of Directors and Senior Management of the
company, which has been posted on company‟s website www.bvfcl.com.

All the members of Board of Directors and the Senior Management Executives do
hereby affirms the compliance with the above Code of Conduct Rules.


                                         For and on behalf of Board of
                                         Directors of Brahmaputra Valley
                                         Fertilizer Corporation Ltd.


                                                             Sd/-
                                                           U.S.Jha
                                              Chairman and Managing Director

Date : 4.08.2008
Place : Namrup
                                               ANNEXURE TO DIRECTORS’ REPORT


                                  FORM A
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF
ENERGY


A.   POWER AND FUEL CONSUMPTION.
     1. ELECTRICITY                         Unit   2007-08      2006-07
      (a) Purchase:
             Total Unit                MWH         1045800      9505990
             Total amount              Rs. in Lakh 265.45       556.38
            Average Rate               Rs./ KWH    25.38 (*)    5.82
      (b) Own Generation:
       (i) Through captive Power Plant
            Unit                       MWH         179624100    160179400
            Total Cost                 Rs. in Lakh 1826.15      1712.86
            Cost / Unit                Rs./ KWH    1.02         1.07
       2. NATURAL GAS
          Quantity                      „ooo SM3   536443       526367
          Total Cost                   Rs. in Lakh 13485        13247
     Cost / Unit Production            Rs/ MT      4087         4297
B.   CONSUMPTION PER UNIT OF PRODUCTION
                                                                2006-07

     1) Electricity                  KWH/ MT      547.52        550.385
                                       3
     2) Natural Gas                  SM / MT      1625          1707
                               (* ) Average rate is higher due to fixed minimum demand charges.
                                                            ANNEXURE TO DIRECTORS’ REPORT
                                          FORM B
DISCLOSURE OF PARTICULARS WITH REPECT TO TECHNOLOGY
ABSORPTION, FOREIGH EXCHANGE EARNINGS AND OUTGO.

A.   ENERGY CONSERVATION MEASURES :
     Following energy conservation schemes have been implemented based on Energy Audit
     Report of M/s. TERI, New Delhi.

     1. Reduction of Steam to Carbon (S/C) ratio in Primary Reformer of Ammonia –III to 3.8
       from 4.1 at present after checking all parameters.
     2. Optimization of excess air in primary reformer of Ammonia-III Plant resulting in saving
       of energy of 0.07 Gcal/MT of Ammonia.
                a) Inefficient / damaged burners leading to consumption of higher combustion
                      air. The new burner are being procured for replacement.
                b) Stop other air ingress sources to Primary Reformer of Ammonia -III Plant.
     3. Prevention of Air ingress in Service Boiler & reduction of blow down in service boiler and
       auxiliary boiler resulting saving in energy of 0.014 Gcal/ MT of urea.
     4. Reduction of the speed of the Benefield solution pump and reduction of pressure drop
           across flow control valve resulting saving in energy of 0.016 Gcal/ MT of Ammonia.
     5. Reduction of speed of steam turbine of Boiler Feed Water Pump in Ammonia Plant
           which would result in reduction of pressure drop across flow control valve. Saving in
           energy of 0.04 Gcal/ MT of Ammonia has been achieved when turbine driven pump
           is in line.

     Following energy conservation measures are under implementation :

       1. Prevention of passing of 24 ata steam from vent valve by replacing control valve PIC
          23 in Urea –III plant. An expected saving in energy of 0.1 Gcal/MT of urea will be
          achieved.
       2. Reducing steam consumption and increasing turbine efficiency by maintaining proper
          vacuum condition in condensing steam turbines of Compressors and Pumps.
          Expected saving in energy of 0.63 Gcal/ MT of ammonia.
       3. Lighting System : Replace 40 W FTL with Copper ballast by T5 28 W lamps, replace
          125 W mercury lamps with 70 W metal halide lamps, replace 400 W mercury lamps
          with 250 W metal halide lamps. Expected saving of Rs. 16.4 lacs per year.
       4. Procurement of improved steam traps and changing faulty steam traps. Expected
          saving in energy of 0.0007 Gcal/ MT of urea.
       5. Replacement of damaged Refractory in Primary Reformer of Ammonia-III Plant.
          Expected saving in energy of 0.017 Gcal/ MT of urea.
       6. Prevention of air ingress to Auxiliary Super Heater through its dampeners by
          overhauling dampeners.
B    Technology Absorption :

       1.    The synthesis converter of Namrup –III has S-100 type basket. The present
             converter is planned to be retrofitted with latest design S -200 basket
             thereby increasing conversion efficiency and reduction in energy
             consumption.
       2.    EMG Turbine of Ammonia Synthesis Gas Compressor is planned to be
             retrofitted with rotor of new design along with internals and electronic
             governing system as rotor of existing design is no more manufactured and
             has became obsolete.
       3.    Control system of both Ammonia-II and III plant have been converted from
             pneumatic system to DCS & ESDS systems thereby increasing operational
             efficiency and reliability.
       4.   The synthesis converter of Namrup –II changed to latest design S -200
            converter of Holder Topsoe, resulting increase in conversion efficiency and
            reduction in energy consumption.
       5. Reciprocating natural gas booster compressor of Namrup –II changed to
            latest design centrifugal compressor along with PLC control and electronic
            governing system, resulting increase in reliability and reduction in
            maintenance cost.
       6. The pneumatic control system of all the centrifugal compressors of Namrup-
            II changed to digital control system and electronic governing system,
            resulting operational reliability and online monitoring of operation and
            diagnosis of problems.
       7. A new centrifugal carbamate pump was installed in Namrup-III urea plant,
            increasing reliability and smooth operation.
       8. The catalyst beds of secondary reformers (Namrup-II & III) changed from
            arched type to fixed bed type, resulting breakdowns reduced in catalyst bed
            support.
       9. The arsenic based acid gas removal system of Namrup-II (CO2 removal) has
            been replaced by Giammerco Vetrocoke system. Thus eliminating arsenic
            pollution and increase in efficiency of the system.
       10. Segmented pollution control system of each plant has been changed to an
            integrated system for over all pollution control of the entire complex.
       11. For monitoring of air pollution ambient air monitoring systems of both fixed
            station type and mobile type have been installed.
       12. Reforming tubes of Namrup –III changed from HK40 to Micro alloy to
            increase reformation efficiency and more throughput.
       13. Trays have introduced in urea reactors of both Namrup-II and III, resulting
            saving in steam consumption.
C.     R & D Efforts                             : Nil
D.     Benefit derived as result of R & D          : Nil
E.     Foreign Exchange Earning and Outgo :
     The Corporation exported 4895 MT of urea to Nepal in 2007-08. At the international market
     rate of urea the price of above quantity is equivalent to about $ 1.2 million. Company‟s
     purchase of foreign goods for spares for the year was Rs. 21.68 lacs.
                                           ANNEXURE TO DIRECTORS’REPORT

REPLIES OF THE MANAGEMENT ON THE COMMENTS/OBSERVATIONS OF THE
STATUTORY AUDITORS ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH,
2008
i) SUBSIDY CLAIMS :


  (a) We draw attention to the accounts           This is as per accounting policy of the Company
      regarding the claim of Escalation           disclosed in Schedule -25, at Serial No. 5. This
      Price (Subsidy) amounting to Rs.            has already been adequately disclosed in Notes
      355.66 Lacs accounted for on „claim         Forming Parts of Accounts at Sl. No. 10,
      lodged‟ basis for the financial year        Schedule – 26. The system is consistently
      2007-08. Pending final settlement of        followed by the company since previous years.
      such claims, the effect arising out of
      this, if any, is unascertainable, (Refer
      Note 10 Schedule 26 )

ii) FIXED ASSETS :


  (a) According to the information and Major portion of Title Deed (2143B-0K-12.5L)
      explanations given to us, the made in the name of BVFCL. For the rest action
      Company possesses land measuring is in process.
      840.66 acres, out of which patta for
      131.02 acres are yet to be received.
      Further, all the lands are required to
      be mutated in the name of the
      Company.

  (b) Further,   the   leasehold     land For renewal of lease, prayer has been made to
      measuring 1B-2K-7L is also required Govt. which is in process.
      to be renewed.

  (c) Refer Note 14 of Schedule 26 of the         Charging of Depreciation @ 6.33 % for
      Notes forming part of the Balance           Revamped Assets is being followed since
      Sheet, higher rate of depreciation @        inception of BVFCL. The same has been
      6.33% has been charged instead of           adequately disclosed with reasons for such
      5.28% for plant & machinery to keep         deviation.
      parity with the FICC pricing policy as
      well as the project feasibility report of
      M/s. PDIL which has the effect of
      increasing the loss of the year by Rs.
      601.50 lakhs and cumulative effect to
      the extent of loss of Rs. 1584.13
      lakhs from F.Y. 2002-03 onwards.

iii) INVENTORIES :
   (a) In case of items of Capital Stores and The classification of stores & spares as
       Other Stores and Spares ascertained surplus/dead surplus and disposal of such
       and declared by the management as inventory is a continuous process. For possible
   Surplus or Dead Surplus aggregation      losses on disposal of such inventory adequate
   to Rs. 354.22 lacs(Previous Year-Rs.     provisions has been made in the account.
   364.16 Lacs), the extent of possible     Further, if any losses, shall be adjusted in the
   loss on disposal of the same has not     year of disposal.
   been assessed and hence, we are
   unable to comment on the adequacy
   of the provision kept. However, the
   provision on this account as at
   31.03.2008 stands at Rs. 229.20 Lacs
   (Previous Year-Rs. 237.12 Lacs) on
   estimate.

(b) The Company further kept a provision                         -Do-
    of Rs. 452.11 Lacs (Previous Year-Rs.
    177.25 Lacs) on items identified to
    have not moved for more than 20
    years amounting to Rs. 695.56 Lacs
    (Previous Year-    Rs. 272.69 Lacs)
    being 65% thereof.

(c) During the year under audit, the        Accounting entries were passed to give effect to
    company had written-back provision      the write off of stores & spares, for which
    for obsolete stores & spares            provision was made in the previous year. This is
    amounting to Rs. 1.40 Lacs by           not a case of written back of provision for
    crediting   materials    consumption    obsolete stores & spares as observed by Audit.
    account for which a provision was
    made in earlier year accounts.

(d) There is a Stock of Slow-moving /       Adequate provision for obsolete stores & spares
    Non-moving Stores & Spares held for     has been made as deemed necessary for items
    more than 10 years but less than 20     not moved for more than 20 years, as a policy of
    years amounting to Rs. 894.06 Lacs      consistency in the accounts.
    as at 31.03.2008 on which no
    provision for obsolescence has been
    made.

(e) Stock of Stores & Spares related to Adequate disclosure has already been made vide
    Namrup-I (Ammonia-I) Plant valued item No. 6 of Schedule – 26.
    at Rs. 157.38 Lacs has been held by
    the Company for which realizable
    value has been ascertained at Rs.
    67.35 Lacs by an Approved Valuer.
    Suitable provision of Rs. 90.03 Lacs
    has been kept in the accounts (Refer
    item No.6 of Schedule-26).

(f) With regard to the stock of Capital                      No comments.
    Stores and other Stores & Spares the                          .
    management has furnished the
    following information:

   Moving      (within     the     year)
       576.98 Lacs (Previous Year-Rs.

       493.85 Lacs)
       Slow-moving (between 1 & 3 yrs).
       357.77 Lacs (Previous Year-Rs.
       640.32 Lacs)
       Non-moving (3 yrs. and above)
       3196.10 Lacs (Previous Year-Rs.
       3043.71 Lacs)

  (g) The Company has further informed us                       No comments.
      that stores directly related to Namrup-
      I, II and III were identified and
      valued at Rs. 2740.19 Lacs (Previous
      Year-Rs. 2827.44 Lacs). The age-wise
      break-up is as under:
      Moved          upto        3       year
      459.99 Lacs (Previous Year-
      Rs. 635.87 Lacs)
      Moved within 3 yrs. To 10 yrs.
      714.13 Lacs (Previous Year-
      Rs. 635.17 Lacs)
      Moved within 10 yrs. To 20 yrs.
      894.06 Lacs (Previous Year-
      Rs. 1256.86 Lacs)
      Not moved for more than 20 yrs.
      672.01 Lacs (Previous Year-
      Rs. 299.54 Lacs)

iv)    CURRENT LIABILITIES-SUNDRY
      CREDITORS:

      During the year under review No comments
      confirmation of Accounts from Oil India
      Ltd. and Assam Gas Co. as on
      31.03.2008 were obtained and the
      balances were reconciled. However,
      due    to     the    non-availability   of
      confirmations     from    few       Sundry
      Creditors, the disclosure made by the
      Company in Note No. 4 of Schedule-26
      has to be relied upon.

v) LOANS & ADVANCES :

  Balances of Sundry Debtors, Loans &           The reconciliation and confirmation of balances
  Advances and various other debit/credit       is a perpetual system and the advances are
  balances as per the financial statement       generally confirmed at the time of final
  are subject to confirmation and               settlement of the dues.
  adjustments       necessary        upon
  reconciliation.
vi) The Namrup-I (Ammonia-I) Plant has Adequate disclosure has been made in note No.
    been closed since September, 2002 and -6 of schedule-26.
    a sum of Rs. 3819.61 Lacs has been
    debited in the Accounts as under:-
     (1)In           Fixed           Assets
    Rs. 1444.34 Lacs
    (2)Capital     Work-in-progress     Rs.
    2375.27 Lacs
    Since this plant is considered non-
    viable/uneconomical,    there    is   a
    possibility of Impairment loss to the
    extent of difference of book value and
    its value under redundant conditions, if
    declared (Refer Note No. 6 Schedule
    26).

vii) RECOVERY OF RENT :

    In most cases the Lease Agreements         Action for renewal / vacation is in process. Legal
    are time barred. Although, no Legal        action shall be taken in cases wherever deemed
    action has been taken against the          necessary.
    defaulters for non – payment of rent so    The Audit committee has already suggested for
    far, the management has taken some         strengthening of present system of rent
    action constructive steps during the       collection. Action is in hand for the same in
    year for recovery of dues. (Refer para     compliance of Audit Committee suggestion.
    19 of schedule 26 )

  viii) We further invite attention to Para-                    No comments.
     2(a) of Notes of Schedule “4” relating
     to Fixed Assets, with regard to land
     booked at provisional cost and its
     consequential effect on Capitalization.

 ix) The computer operating system is          The computer operating system in the company
    found to be weak and obsolete. Ancient     though old is still supportive of accounting
    programs like Cobol etc. are still being   system. Steps are being taken to replace old
    used. Though the reports generated         Cobol based system with Oracle based system,
    from these systems are not supportive      which is economical and suitable to company‟s
    to some extent, steps should be taken      requirements.
    to update the same.

  x) Since the company have accumulated A viability proposal has been submitted by the
  losses at the end of the financial year company to DOF for the consideration of BRPSE.
  ending on 31-03-2008 exceeding fifty
  percent of its net worth, it comes within
  the purview of Sick Industrial Undertaking
  as per section 2 (46AA) of the Companies
  Act, 1956.

5. Subject to all of our above observations                    No comments.
and further to our comments in Annexure
referred to above, we report that ;
(a) We have obtained all the information        No comments.
    and explanations, which to the best of
    our knowledge and belief were
    necessary for the purposes of our
    audit.
(b) In our opinion, apart from the              No comments.
    accounting of (i) Scrap/Salvage/Waste
    Materials (Refer para-6(iii) of Schedule
    25), (ii) Payment under Company‟s
    Family Pension Scheme (Refer para-11
    of Schedule 25) on cash basis and (iii)
    Accounting of Interest of Advances to
    employees after recovery of principal
    amount (Refer para-6(ii) of Schedule
    25), proper books of accounts as
    required by law have been kept by the
    Company as it appears from our
    examination of those books.

(c) The Balance Sheet, Profit & Loss            No comments.
    Account and Cash Flow Statement
    dealt with by this report are in
    agreement with the Books of Account.

(d) In our opinion, the Balance Sheet and       No comments.
    Profit and Loss Account dealt with by
    this report have been prepared in
    compliance with the accounting
    standards    referred    to    in    sub-
    section(3C) of section 211 Companies
    Act, 1956, to the extent applicable.

(e) The Central Government has directed         No comments.
    vide notification no G.S.R.829(E),                .
    dated 21.10.2003 that clause (g) of
    sub-section (1) of section 274 of the
    Companies Act, 1956 is not applicable
    to a Government Company.

(f) Subject to our Comments I para 4            No comments.
    above, in our opinion and to the best
    of our information and according to the
    explanations given to us, the said
    accounts, read together with the
    Significant Accounting Policies and the
    Notes forming part of accounts, give
    the information required by the
    Companies Act, 1956, in the manner so
    required, and also give a true and fair
    view in conformity with the accounting
    principles generally accepted
(i) in the case of the Balance Sheet of the
     state of affairs of the company as at
     31st March‟ 2008 ;
(ii) in the case of Profit & Loss
     Account of the Loss of the company
     for the year ended on that date; and
(iii) in the case of the Cash Flow
     Statement of the cash flows for the
     year ended on that date.
                              ANNEXURE TO AUDITORS REPORT
             (Referred to in Paragraph (3) of our Report of even date to the Members of
                         Brahmaputra Valley fertilizer Corporation Limited
                       On the Accounts for the year ended 31st March’ 2008 )


As required by the Companies (Auditors‟
Report) Order 2003
(as amended) issued by the Central
Government of India in term of Section 227
(4A) of the Companies Act, 1956 and as per
the information and explanation given to us
and the books and records examined by us
in the normal course of audit and to the best
of our knowledge and belief, we further
report that:

(i)     (a) The company has generally                                  No comments.
          maintained proper records showing
          full particulars including quantitative
          details and location of it‟s fixed assets.

         (b) The fixed assets of the company                           No comments.
          have been physically verified by the
          Management during the year which in
          our opinion is reasonable having
          regard to the size of the Company and
          the nature of its fixed assets. No
          material discrepancies have been
          noticed on such verification.

      (c) During the year the Company has not                          No comments.
         disposed off a substantial part of its
         fixed assets.

        (ii)(a) The stock of finished goods and        In the event of shortage, provision for the
            packing materials were physically          same is created without disturbing the book
            verified   by    the    Management.        balance till such time approval for write off is
            However, physical stock of stores and      obtained form the Board.
            spare parts are considered for
            valuation on the basis of their
            balance as per records.

        (b) In our opinion, and according to the                       No comments.
           information and explanations given
           to us, the procedures for physical
           verification of inventory followed by                              .
           the company, wherever such physical
           verification had been conducted,
           were found reasonable in relation to
          the size of the company and the
          nature of its business.

    (c)     The company has generally             No comments.
          maintained proper records of the
          inventory. The Physical verification
          of stores and spares as on
          31.03.2007 was completed during
          the year under review and a
          provision of Rs. 27.61 Lacs has been
          made in the accounts towards loss
          after considering shortage/excesses
          etc.

(iii) (a) As per the information furnished, the   No comments.
         company has not granted any loans,
         secured or unsecured, to companies,
         firms or other parties covered in the
         Register maintained under section
         301 of the Companies Act, 1956.
         Accordingly, provisions as per sub -
         clauses 4(iii)(b)(c)(d) of the Order
         are not applicable to the Company.

 (b) The Company has not taken any loans,         No comments.
     secured or unsecured, from companies,
     firms or other parties covered in the
     Register maintained under section 301
     of    the     Companies     Act,   1956.
     Accordingly, provisions as per sub -
     clauses 4(iii)(f) & (g) of the Order are
     not applicable to the Company.


 (iv) In our opinion and according to the         No comments.
      information and explanations given to
      us, there are adequate internal
      control procedures commensurate
      with the size of the company and the
      nature of its business, with regard to
      purchase of inventory, fixed assets
      and with regard to sale of goods and
      services. Further, during the course of
      our audit, we have neither come
      across nor have we been informed of
      any continuing failure to correct major
      weaknesses in the internal control
      system.

(v) On the basis of our examinations of the       No comments.
    books of account and according to the
    information and explanations given to
       us, the company has not entered into
       any contracts or arrangements that need
       to be entered into the register
       maintained under section 301 of the
       Companies Act, 1956. Accordingly,
       provision of sub - clause 4(v)(b) of the
       Order is not applicable to the company.

(vi)    According to the information and          No comments.
       explanations given to us, the company
       has not accepted deposits from the
       public. Hence the provisions of Section
       58A, 58AA or any other relevant
       provision of the Companies Act, 1956
       and Companies (Acceptance of Deposits)
       Rules 1975 are not applicable to the
       company.

(vii) The company has an established in           No comments.
     house Internal Audit Cell commensurate
     with its size and nature of its business.
     Further, the company has also engaged
     a firm of Chartered Accountants for
     conducting Internal Audit for the year
     2007-08.

(viii) We have broadly reviewed the records       No comments.
      maintained by the Company in respect
      of products where, pursuant to be Rules
      made by the Central Government of
      India, the maintenance of cost records
      has been prescribed under clause (d) of
      sub-section (1) of Section 209 of the
      Act. We are of the opinion that prima
      facie, the prescribed accounts and
      records have been made and were
      maintained. We have not, however,
      carried out a detailed examination of
      these records with a view to determine
      whether they are accurate or complete.
(ix) According to the information and             No comments.
      explanations given to us and according
      to the records produced before us, in
      respect of statutory and other dues.
  (a) (i) The company has been regular in         No comments.
         depositing                 undisputed
         statutory dues including Provident
         Fund, Income Tax, Sales Tax, Wealth
         Tax, Service Tax, Custom Duty, Excise
         Duty and cess with the appropriate
         authorities during the year. The
         company is not covered under the
        Employees‟ State Insurance Act. The
        company is also not required to make
        a deposit in the Investor Education
        and Protection Fund.

 (ii) According to the information and                      No comments.
     explanations given to us, no
     undisputed amounts payable in
     respect of Income Tax, FBT, Wealth
     Tax, Sales Tax, Custom Duty, Excise
     Duty and cess were in arrear, as at
     31.03.2008 for a period of more than
     six months from the date they
     became payable. However, a demand
     raised by the Commissioner of Central
     Excise regarding Service Tax for Rs.
     75.37 Lacs including Interest and
     Penalty has been contested by the
     Company in the CEST Tribunal,
     Kolkata. (Refer item No. 1 of Schedule
     26)

(b)     According to the information and                    No comments.
         explanations         given        to
         us and according to the records
         produced before us, there are no
         dues     of    Sales     Tax/Income
         Tax/Custom Duty/Wealth Duty/Excise
         Duty/Cess/Service Tax which have
         not been deposited on account of
         any dispute.

 (x)      The company have accumulated                      No comments.
          losses at the end of the financial
          year    ending     on    31.03.2008
          exceeding fifty percent of its net
          worth and it has incurred cash
          losses in the current financial year
          and in the immediately preceding
          financial year also.

 (xi)     According to the information and A viability proposal has been submitted by the
          explanations given to us and based company to DOF for the consideration of
          on the documents and records BRPSE.
          produced to us, the company has
          not been defaulted in payment of
          dues to the Financial Institution or
          Bank, except the loan taken from
          Government of India. Further, the
          Company has not issued any
          debentures during the year.
     (xii)   Based on our examination of the         No comments.
             records and the information and
             explanations given to us, the
             company has not granted any
             loans and advances on the basis of
             securities by way of pledge of
             Shares, Debentures or other
             securities.

 (xiii) In our opinion, the company is not a         No comments.
        chit fund or a nidhi/mutual benefit
        fund/society. Therefore, the provisions
        of Clauses 4(xiii) of the Order are not
        applicable to the Company.


 (xiv) According to the information and              No comments.
       explanations given to us, In our
       opinion, the company is not dealing in
       or trading in shares, securities,
       debentures and other investments.
       Therefore, the provision of clause
       4(xiv) of the Order is not applicable to
       the company.

 (xv)     According to the information and           No comments.
         explanations given to us, the company
         has not given any guarantee for loans
         taken by others from banks or financial
         institutions. Therefore, the provision of
         clause 4(xv) of the Order is not
         applicable to the company.

 (xvi) According to the information and              No comments.
       explanations given to us, the company
       has taken a term loan of Rs. 7.47
       Crores towards Plan Loan and Rs.
       20.96 Crores towards Non – Plan Loan
       both from Government of India for
       purchase of Plant and Machinery. Since
       the   amount     was     received   on
       31.03.2008.

(xvii)     According to the information and          No comments.
         explanations given to us and on an
         overall examination of the Balance
         Sheet of the company, we report that
         no funds raised on short term basis
         have been used for long term
         investment.

 (xviii)The company has not issued any               No comments.
        preferential allotment of shares during
        the year. Therefore, the provision of
        clause 4(xviii) of the Order is not
        applicable to the company.

(xix)      The company has not issued any         No comments.
        debentures during the year under
        audit. Therefore, the provision of
        clause 4(xix) of the Order is not
        applicable to the company.

(xx) The company has not raised money by          No comments.
     way of public issue during the year.
     Therefore, the provision of clause 4(xx)
     of the Order is not applicable to the
     company.

(xxi) To the best of our knowledge and belief     No comments.
     and according to the information and
     explanations given to us, no fraud on or
     by the company was noticed or reported
     during the year.
           BRAHMAPUTRA VALLEY FERTILIZER CORPORATION LTD.,
                              NAMRUP

   COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
   UNDER SECTION 619 ( 4 ) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS
   OF BRAHAMAPYTRA VALLEY FERTILIZER CORPORATION LIMITED FOR THE
   YEAR ENDED 31ST MARCH 2008 & THE MANAGEMENT REPLY THEREON

               CAG Comments                                   Management Reply
The preparation of financial statements of         The gas requirement for achieving the
Brahmaputra Valley Fertilizer Corporation          desired level of production is 2.17
Limited for the year ended 31st March, 2008 in     MSCMD, but the total natural gas
accordance with the financial reporting            available at present is only 1.72
framework prescribed under the Companies           MMSCMD. M/s. Oil India Ltd. informed in
Act, 1956 is the responsibility of the             July 2006 that high volume gas above
management of the company. The statutory           1.72 MMSCMD will not be available for
auditor appointed by the Comptroller and           supply to BVFCL in near future. The
Auditor General of India under Section 619 (2)     supply is also erratic. Due to uncertainties
of the Companies Act, 1956 is responsible for      in gas supply, BVFCL has to priorities gas
expressing opinion on these financial statement    distribution among Namrup-I, II and III
under Section 227 of the Companies Act, 1956       based on plant performance and energy
based on independent audit in accordance with      contribution level. Namrup-I is a very old
the auditing and assurance standard prescribed     plant with high energy consumption and
by their professional body the Institute of        cost of production. Gas is also not
Chartered Accountants of India. This is stated     available to operate this plant. Hence it
to have been done by them vide their Audit         has been decided to suspend operations
Report dated 07.06.2008.                           of this plant.

I, on the behalf of the Comptroller and Auditor    Further, adequate disclosure has been
General     of    India  have    conducted    a    made in note No. 6 of Schedule-26, the
supplementary audit under Section 619 (3) (b)      relevant extract of which is reproduced
of the Companies Act, 1956 of the financial        below.
statements of Brahmaputra Valley Fertilizer
Corporation Limited for the year ended 31st        Pending decision of GOI about further
March, 2008. This supplementary audit has          operation or otherwise for alternative use
been carried out independent without access to     or closure of Namrup-I (Ammonia-I) as
the working papers of the statutory auditors       found fit, market valuation under
and is limited primarily to inquiries of the       Accounting Standard (AS)-28 with regard
statutory auditors and company personnel and       to impairment of assets has been done by
a selective examination of some of the             M/s K.D. Kohli Associates, New Delhi,
accounting      records.    Based     on     my    approved valuers. As per their report, the
supplementary audit. I would like to highlight     market value of the Namrup-I Plant
the following significant matter under Section     (Ammonia-I) has been assessed at Rs.
619 (4) of the Companies Act, 1956 which has       4361.95 lacs against book value of Rs.
come to my attention and which in my view is       3657.89 lacs (Rs. 3450.87 lacs as at
necessary for enabling a better understanding      31.03.2008) and Accounting Standard
of the financial statement and the related Audit   (AS)-28 valuation under redundant
Report.                                            condition of Namrup-I Plant (Ammonia-I)
                                                   has been fixed at Rs. 1308.59 lacs. As the
Profit & Loss Account                              book value is less than the market value
Loss for the year Rs. 10449.04 Lakh                and Namrup-I Plant (Ammonia-I) has not
                                                been declared redundant to date, no
The above was understated to the extent of Rs. provision as required by Accounting
2142.28 lakh due to non recognition of Standard (AS)-28 has been considered in
impairment loss of assets of Namrup-I plant in the accounts.
accordance with Accounting Standard 28. This
has resulted in understatement of provisions of Since the decision of Govt. about the
Rs. 2142.28 lakh and overstatement of Fixed future of Namrup-I Plant is not yet
Assets as well as Capital Work-in-Progress by received, the status quo remains the
Rs. 147.64 lakh and Rs. 1994.64 lakh same.
respectively.
                                                However, as pointed out by Govt. Audit,
Despite the matter being reported on the necessary adjustment will be made in the
Annual Accounts for the year 2006-07 no Accounts during the year 2008-09.
adjustment was carried out by the Company in
the Accounts for the year 2007-08.
                                                 ANNEXURE TO DIRECTORS’ REPORT

  ANNUAL STATEMENT SHOWING THE REPRESENTATION OF SCs, STs , OBC
  and PHs AS ON FIRST JANUARY, 2008 AND NUMBER OF APPOINTMENTS
            MADE DURING THE PRECEDING CALENDAR YEAR

NAME OF THE PUBLIC ENTEPRISES: BRAHMAPUTRA VALLEY FERTILIZER
CORPORATION LIMITED, NAMRUP.

Groups        Representation of                  Number of appointments made during the calendar year 2006
              SCs/STs/OBCs / as on
              1.1.2008
                                                 By Direct Recruitment Method                     By Promotion  B
                                                                                                                M
              Total No.     SCs STs OBCs Total                 SCs        STs         OBCs        Total SCs STs T
              of
              employees
1             2             3      4     5       6             7          8           9           10    11   12   1
Group A       228           21     13    65      49(MT)*       3(MT)      6(MT)       16(MT)      22    4    2    3
Group B       395           35     56    185     -             -          -           -           91    6    4    1
Group C       595           31     101   304     81(O/TT)**    7(O/TT)    10(O/TT)    23(O/TT)    170   5    2    -
Group D       64            3      14    31      -             -          -           -           4     3    -    -
(Excluding
Safai
Karmachari)
Group D     5               5      -     -       -             -          -           -           -     -    -    -
(Safai
Karmachari)

Total          1287            95    184 585         130            10          16     39         287   18   8    4
* 49 Management Trainees (MT), to be regularized in group –A as Asstt. Engineers in their
  respective discipline after 1 1/2year of training, recruited during the year 2007.
** 81 Operator/ Technician trainees (O/TT), to be regularized in group –C as Grade –II Operator
/Technician after 2 years of training, recruited during the year 2007.

The representation of physically handicapped manpower are as under (this manpower is included
in the above statement):
Group                  Total               SCs           STs              OBCs
Group C                2                                                  1
Group D                3                                                  2
                     PERFOMANCE OF BVFCL AT A GLANCE
                                                                                            Rs. in Lacs
Sl. No.                                                 2007-08 2006-07 2005-06 2004-05       2003-04

  1       SALES                                         15994    15317     9946    12469          12170
  2       Subsidy                                       9381     13158     3469     2364           2312
  3       TOTAL (1+2)                                   25375    28475    13415    14833          14482
  4       Other income                                  946      930        820     1030            326
  5       Stock: accretion (+) decretion (-)            -228     -153      1132    -2226            588
  6       TOTAL INCOME                                  26093    29252    15367    13637          15396
  7       Raw materials (Feed Stock)                    5767     5472      3828     3210           3153
          Packing materials etc.
   8      Salaries & Allowances                         3868     4213      3426     2686            2650
   9      Repairs & Maintenance                         1245     1164        667      448            474
  10      Power & Fuel                                  9551     9560      6957     4672            4891
  11      Other Manufacturing Expenses                  5110     5070      5868     2905            7396
  12      TOTAL EXPENDITURE                             25541    25479    20746    13921          18564
  13      Gross margin(6-12)                            552      3773     -5379      -284          -3168
  14      Interest & Finance                            7185     6137      2698       774            625
  15      Depreciation                                  3951     3873      1900       709            624
  16      Profit before taxation                        -10584   -6237    -9977    -1767           -4417
  17      Provision for taxation                        ~            ~     ~        ~            ~
  18      Extra Ordinary Income                         ~            ~     ~        4021         ~
  19      NET PROFIT/LOSS                               -10584   6237     -9977     2254           -4417
  20      Transfer to investment                            ~        ~     ~        ~            ~
          Allowance Reserve                                 ~        ~
  21      Transfer from investment                          ~        ~     ~       ~             ~
          Allowance Reserve                                 ~        ~
  22      Provision for dividend                            ~        ~     ~        ~            ~
  23      Corporate tax on propose dividend                 ~        ~     ~        ~            ~
  24      Net block                                     52711    56587    58800    14215          10290
  25      Capital work in progress                      2807     2783      3496    42585          38382
  26      Current assets, Loan & Advance                20321    17244    12926    14400          24832
  27      Current Liabilities & Provision               11658    11797    14687    12622          17527
  28      Investments                                       ~        ~     ~        ~            ~
  29      Misc. expenditure                                 ~        ~       40       80            120
          (To the extent not written off or adjusted)
  30      Accumulated Losses                            32168    21584    15347     5369           7623
  31      Total Utilization                             96349    86401    75922    64027          63720
  32      WORKING CAPITAL (26-27)                       8663     5447     -1761     1778           7305
  33      Long Term Borrowings                          59687    49818    42425    32879          33017
  34      Short Term Borrowings                            79       100    0        0            0
  35      Share Capital                                 36583    36583    33497    31148          30703
  36      Deferred Tax Liability                            ~        ~     ~        ~            ~
  37      Reserve & Surplus                                 ~        ~     ~        ~            ~
  38      Total Sources                                 96349    86401    75922    64027          63720
  39      NET WORTH (35-30)                             4415     14999    18150    25779          23080
  40      Capital Employed (24+32)                      61374    62034    57039    15993          17595
  41       Finished Goods                               926      1182      1355       195          2446
  42      Work Progress                                 53       26            5       35             9
  43      Stores & Spares etc.                          3023     3353      3444     3463           3944
  44      Sundry Debtors                                3659     4684      1567     2087           2486
  45      Cash & Bank Balance                           11765    7288      5719     8049          15490
  46      Other Current Assets                          581      436         142       98           105
47   Loans & Advances                      314      275        694      473      352
48   Total (41 to 47)                      20321    17244    12926    14400    24832
49   Less: Current Liabilities             8147     8226     10925     8969    14104
50   Provisions                            3511     3571      3762     3653     3423
51   Total (49+50)                         11658    11797    14687    12622    17527
52   NET WORKING CAPITA (46-49)            8663     5447     -1761     1778     7305
53   Gross Internal Resources (15+19)      -6633    -2364    -8077     2963    -3793
54   Cumulative Gross Internal Resources   12866    19640    22004    30081    27973
55   INSTALLED CAPACITY (N)
     Urea     (MT)                         510000   510000   351320   315000   315000
     Total                                 510000   510000   351320   315000   315000
56   PRODUCTION (N)
     Urea     (MT)                         329977   308303   234578   203060   240590
     Total                                 329977   308303   234578   203060   240590
57   Capacity Utilisation (%) UREA         64.70    60.45     66.77    64.46    76.37
58   SALES QUANTITY (MT)
     Urea                                  333473   314676   213700   247572   234623
     Total                                 333473   314676   213700   247572   234623

				
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