Ladies and gentlemen,
It is with great pleasure that I welcome you all to the 35th Annual General Meeting of your Company. The annual report of your Company for 2004-05 has been with you for sometime now and I am sure you would have reviewed its performance. I take the annual report as read with your permission.

AGRICULTURE AND FOOD SECURITY
We take justifiable pride in the fact that our country ranks high globally in terms of food production that at present is over 2000 million metric tonnes annually. India is the fourth largest producer of food grains. We need to know, however, that the current national production level is far below the top three producers – USA, the EU and China – where production is in the range of 350 to 400 million metric tonnes individually.

Taken with the fact that agriculture’s share in the Indian economy still is significantly high, at 25 per cent, as against the world average of no more than five per cent, low comparative production level means that many issues remain yet to be addressed on the agricultural front. Many challenges need to be met to ensure that the country ever remains self-sufficient in food grain production – challenges like increasing production volume, farm productivity and produce quality.

The greater challenge is to make these achievements while reducing the over-dependence of the economy on agriculture. When they happen, these achievements would signal India’s sustainable food and security and its continued overall prosperity.

CRITICAL FARM INPUTS
The importance of water and chemical fertilizers as the most critical farm inputs in the global context deserves to be understood in all its dimensions. Since the world is already living under the shadow of acute water scarcity for agriculture, it is important to demonstrate the ways in which the proper use of fertilizers can actually improve water use efficiency. Experience in several water scarce areas has shown that the right fertility management methods lead to higher efficiency in the use of other inputs, including water.

It is, however, difficult to generalize situations and solutions in a country of continental dimensions as India. There is a need, therefore, to adapt water and fertilizer use to local conditions that include soil, crop and climate. Most agriculture is rain-fed in India and with irrigation covering only about 40 per cent of arable India, water availability becomes an important determinant not only of food production but consumption of fertilizers too.

In this light, the renewed efforts to link rivers, for instance, the Betwa and Ken, are a good indication that steps are being taken to address the challenge thrown up by water. The southern rivers too should be linked on priority to make more water available to farmers, obviating the dependence on rains to practise agriculture successfully.

The challenge before fertilizer industry is to develop technologies in good time that are cost-effective, in addition to being supportive of efficient water and fertilizer use, and make Indian agriculture viable and sustainable in the long term. These are challenges alright, but so are they opportunities.

India ranks third globally, behind China and the US, in consumption of nutrients. However, when it comes to the per hectare consumption of fertilizers, India lags behind even its neighbours, Pakistan, Bangladesh and Sri Lanka.

Moreover, there is a great disparity in the intra-national fertilizer consumption. Out of nearly 600 districts in the country, 250 consume nearly 85 per cent of fertilizer nutrients. The remaining 350 districts consume a mere 15 per cent. The disparity more glaring with some districts consuming less than 10 kilograms per hectare. Very clearly, there is ample scope to increase fertilizer consumption on Indian farms and optimise it.

It is assuring to note that fertilizer demand is picking up this year after being stagnant for nearly three years across all Indian states. If this trend continues, which it hopefully will, the present national average consumption of about 100 kilograms per hectare will go up 130 kilograms by the end of this decade. This will go a long way in improving our food grain production and upgrading the agriculture sector’s place in the national economy.

INDIAN ECONOMY
The second advance estimates of the Central Statistical Organization put India’s growth at 6.9 per cent in 2004-05. Manufacturing is estimated to show a growth of 8.9 per cent. India’s foreign exchange reserves crossed USD 140 billion during the year mainly because of foreign direct investment. The core sectors – steel, cement and power – achieved good overall growth.

FERTILIZER POLICY
Spiralling input prices on the one hand and the compulsions of retaining statutory prices of fertilizers on the other have been forcing the Government to look at all possible ways of cutting fertilizer subsidy, at times, even at the cost of jeopardising the performance and health of the indigenous fertilizer industry. With the process of liberalization gaining momentum in the country, the industry has been obliged to follow new fertilizer pricing policies. The latest in this series in the Group Pricing Scheme for urea. The inherent anomalies in the scheme have impaired the performance and growth of a number of fertilizer units.

THE FUTURE
Through the recent years, I have been reiterating your company’s commitment to its fertilizer business. While there is no change in that commitment, your Company will need to start planning to meet the era of total decontrol of fertilizer prices and movement. We will have to take a fresh and focused look at all costs, including financial, in order to sustain and then achieve growth in the new policy regime. Only then can issues and plans like feedstock conversion and greater energy saving be taken up and carried to successful conclusion.

ACKNOWLEDGEMENTS
Before I conclude, may I thank and heartily appreciate the sincere efforts of all employees of the Company, resulting in the Company returning to profits. Another reason for this happy outcome is the dependable support I have received from my colleagues on the Board, the central and state governments, the Tamilnadu Industrial Development Corporation Limited, financial institutions and banks.

But you, dear shareholders, and your trust in me and my Board are the real reason behind the Company’s turnaround. That trust together with our hard work, I am sure, will ensure our stay in the profit mode for long years.

Thank you.