Gujarat Narmada Valley Fertilizers and Chemicals Limited (NSE: GNFC) Q1 2026 Earnings Call dated Aug. 07, 2025
Corporate Participants:
Unidentified Speaker
D.V. Parekh — Chief Financial Officer
T. Natarajan — Managing Director, Director
Analysts:
Unidentified Participant
Arthur Anderson — Analyst
Vaibhav Badjatya — Analyst
Nirav Jimudia — Analyst
Presentation:
operator
Sat. SA. Sat Sam. Ladies and gentlemen, you’re connected to Gujarat Narmatavadi Fertilizers and Chemicals Ltd. Q1FR26 earnings conference call. The conference call will begin shortly. Please stay connected. Ladies and gentlemen, you’re connected to Gujarat Narmata Valley Fertilizers and Chemicals Limited Q1FY26 earnings conference call. The conference call begins shortly. Please stay connected. Sam Foreign. Ladies and gentlemen, good day and welcome to Gujarat Nanmada Valley Fertilizers and Chemicals Ltd. Quarter 1 Financial Year 2020 05:26 Earnings Conference Call this call is hosted by Anurag Services LLP on behalf of GNFC. From the management we have Mr. T.V. parikh, Executive Director and Chief Financial Officer, Mr. Nitin Patel, Executive Director, Mr. M.I. shamsi, Executive Director, Mr. Rajesh Pillai, Company Secretary and other senior members from the management. As a reminder, all participant lines will be in the lesson only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. D.V. parekh. Thank you. And over to you sir.
D.V. Parekh — Chief Financial Officer
Thank you. Good afternoon and thank you again to Anurag Services and good afternoon to all the participants on this Q1 FY 2526 conference call. Earnings Conference Call as you know, the company has published the results yesterday and also uploaded the investor presentation. So most of you must have gone through the details of presentation as well as results for the for the Q1 apart from investor presentation there is a press release also which is given. So for the Q1 basically the numbers are not comparable for the two period which is a sequential quarter as well as yoy quarter.
Although in all the three quarters there have been some outages and shutdown. So the longest shutdown was in the period of Q1FY 2526. If we compare it with the previous quarter which is quarter it was Q4FY 2425 there was some outage not the as such but the some outage due to the electric blackout and on a yoy basis q1 2425 there was not at Baruch complex but at the hedge complex so TKI2 production was down last year. So therefore although these numbers are not comparable, there is a quantification done in this regard as to what are the impacts on the revenue and PBT side.
The revenue side if we consider for the last quarter Q1 is impacted by a figure of around 375 crore on the top line basis and around 148 crore on a bottom line basis. Similar numbers for the sequential quarter which is 242425 it is around 40 crore and 20 crore respectively. And same is the case as compared to the the Q1 last year going from P and L to the segment results the results have not much change in the chemicals segment Although the turnover has changed mainly because of the TDI reason. Last year and this year there have been impact of various chemical in terms of the volume.
But still the profitability on a yoy basis is maintained because last year it was more subdued than this year. As far as the balance sheet part is concerned, I will first touch the fertilizer segment. Also the losses in fertilizer segment have increased to around 100 crore rupees. This is again mainly because of the under recovery of energy because as of now the energy norms are still not revised. The effect of that is around 13 crore rupees. Aside from that there are two other factors. The volume of urea has been lower by a factor of around 40,000 tons and the higher repairs and maintenance cost which is contributing to cumulatively to the impact on the fertilizer segment.
Going from P and L to other comprehensive income. The main reason of other comprehensive income improvement is because of the fair value improvement in the investment which we are carrying both in the quoted and unquoted shares. As far as balance sheet is concerned, the position there is no significant change except some capitalization which is part of work in process in respect of the ongoing projects and the value attributable is around 225 crore during the quarter. So this is what is the broad overview in terms of P and L and balance sheet Coming to the business side there are two important aspects to be covered.
On the fertilizer side both energy as well as fixed cost revision are in the offing. They are expected we expect it to be out by Q3 of this financial year. As far as chemical is concerned, in terms of the plant operations we have two plants which is methanol and aniline. Methanol is stranded because of the cost economics and aniline we are operating based on the need for prioritization based on the production planning we do on a regular basis. Aside from this, there is an update on the antidumping duty in respect of aniline which was Valid up to 2027 is mid of 2027 which is now extended up to mid of 2030.
So these are the broad updates on both fertilizer and chemical as far as projects are concerned. Our colleagues will tell more specifically about the projects, but by and large they are on schedule. Barring some changes in case of. Especially in case of the coal fired power and steam generation plant. The rest are all on schedule. So with this I now leave the floor open for the question and answer. Thank you very much.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Nirav Jamodia from Anne Wilwilth. Please go ahead.
Nirav Jimudia
Yes sir. Thanks for the opportunity and good afternoon to the entire team. So I have a few questions. Sir, last time you guided that despite of a shutdown in the month of April, possibly we could be near to the peak production in TDI close to around 67,000 tons. So just wanted to understand like how much we have achieved in Q1 put together both the plans and just to add here like we have seen the strengthening of TDI prices globally but similar price adjustment have yet not happened in India. So though there is some price increases, so just wanted to understand here like do we sell our TDI entirely on spot basis or there is some element of contractual volumes.
Also.
D.V. Parekh
Total TDI production taken for both the plant together is around 16,000 metric tonnes for quarter one. And the second question on this price is see we have increased the prices recently but globally if you see the report of icis, it is not matching exactly with those prices. As far as the arrangement of contract is concerned, it’s a mix of both spot and contract. We do. In fact our discount scheme is like that. If people pick up certain volume for a quarter for a year, then there are certain incentives. So accordingly people enter into a contract mainly on a spot basis.
But they also do indicate on a quarterly basis. This is what is the understanding on the TDI offtake?
Nirav Jimudia
Correct answer. Do we still stick to the plans of closer to 67,000 tons of volumes for TDI in FY26?
T. Natarajan
Going forward we expect smooth running of both TDI plants unless some unforeseen breakdown occurs. And if you see Q1 we have closed around 16,000. So the answer is yes,
Nirav Jimudia
correct? Correct. Sir, given the kind of tolling prices, I think you also mentioned in the presentation that there is some moderation in the input cost also and that have slightly further gone down in terms of tolling prices. Given the kind of tolling prices and CNF prices currently, what should be the breakeven price for our TDI sales in rupees per kg. If you can throw some understanding here.
D.V. Parekh
Breakeven price in terms of what?
Nirav Jimudia
Like at the EBITDA level what is the breakeven price at which our EBITDA is neutral? Sir,
D.V. Parekh
I think that’s not the way to look at like that because all are moving parts from time to time. Whether you take TDI price, you take darling price or you take CNA price.
Nirav Jimudia
I’m talking about the current situation. Like even the kind of current price is what we have for both input.
D.V. Parekh
See there is a positive contribution in both TDI 1 and TDI 2. At TDI 2 the fixed cost is not fully recovered. That is the situation and that has been the situation since quite some time because the TDI prices have not gone up substantially over last few years. Yes from 2016-17 and what has happened after 2022 the prices of output prices have come down but the corresponding impact we have not witnessed in case of other petrochemical products. So that is the situation and Therefore we at TDI2 there is no full recovery of the fixed overheads.
Nirav Jimudia
Got it, Got it. So second question is on the fertilizer you rightly explained that there were twin effects of urea loss and the energy recovery was slightly on the or the energy consumption was slightly on the higher side which impacted close to around 13 crores. So just wanted to understand like if we see last year our fertilizer losses were close to 180 crores, this quarter was 100 crores due to the loss in both the factors what you mentioned. So how do we see the fertilizer segment performing for rest of this financial year A and B as against the energy consumption what is being granted by the government like close to around 6.2.
If I’m not wrong, where are we in terms of the energy consumption? And once this is revised further which you mentioned by Q3 of FY26 whether we will be able to come closer to that norms or what would be the situation? If you can just explain your thoughts. Here,
D.V. Parekh
you are right. The prescribed energy norm as prevalent as of date is 6.20. It is under revision and given our energy mix which includes coal, we expect this energy norm to be reasonably higher which is expected to come now as far as the losses of energy are concerned. We hope that we should be in a comfortable position once these are announced. We have been in dialogue earlier and there have been certain indication but it is yet to get formalized in terms of announcement of energy norms. So on energy front we expect that there should not be any recovery.
On the contrary, we should be gaining something. The energy levels have become higher mainly because of the shutdown. Unproductive energies and lower base of production etc. Are the main contributors. As far as fixed cost is concerned. There is no guess as of now as to what will be the level at which it will be revised. So it is difficult to say. But both are expected to coincide in this financial year. So this losses must reduce which you said as compared to 180 crore full blown last year. 100 crore is in Q1 itself. Secondly, what happens in fertilizer also there is some product optimization we do when it comes to the complex fertilizer we are manufacturing.
So it all depends upon what kind of opportunity is there on the other side which is the an melt side. So dynamic is like that. Apparently there a loss. But then because of the product optimization at times we try to see that these losses are minimized at an overall company level.
Nirav Jimudia
So is it possible to quantify like what would be the unproductive fixed cost repairs and maintenance sitting in the hundred crores? Pbit what we have reported just wanted to understand like what could be the steady state run rate in terms of the numbers going forward. So what what could be the number out of this hundred crores which could be considered as one off.
D.V. Parekh
Okay, one of see this 100 crore is like we said because of three predominant reason. One is the volume of around 40,000 metric ton of urea which which is lower as compared to 48 as compared to the corresponding period. The second is 13 crore of energy loss and there is some element of total repairs and maintenance cost this time is around 45 crore rupees incrementally we have incurred now in terms of product level breakup in urea specifically as of now it is not with that how much is the repairs and maintenance attributable to urea plan.
But that can be given on a separate communication through company secretary.
Nirav Jimudia
Got it? Got it sir. So third question is because we had a shutdown this quarter was our ammonia production through oil was affected? Because we normally after consuming internally for WNA and N melt, we sell close to around 20,000 tons of ammonia in the outside market on a quarterly basis. So what was the situation this quarter? If you can share your thoughts.
T. Natarajan
The complex was totally under shutdown including oil based ammonia production. What we ensure that ammonia is not a constraint for the production of downstream consumers except urea, whether it is with nitric acid or iron melt. So accordingly, the stock buildup or to arrange a bought out ammonia to sustain these production levels. Because each plant has a different time zone of the shutdown periodicity, few plants are for X days, few are for X plus delta X and few are for X minus delta X. So depending upon that, we see that the plants which are ready for shutdown does not suffer for the want of major raw material ammonia.
Nirav Jimudia
So safe to assume that this quarter possibly we would have purchased some ammonia from the outside market, which has also led to some increased cost and which should not happen in the subsequent quarters.
T. Natarajan
See ammonia requirement. There is always a slight shortfall in our total captive ammonia requirement. This is comparison to what we can produce. So that cost is a dynamic thing. Sometime it is equal, sometime it is marginally lower, sometime it is marginally up.
D.V. Parekh
To further add see, there are two things. One is to answer your question, how much is the lower production of ammonia? It is around 42,000 metric ton. Is the lower production as far as oil based ammonia is concerned on an overall basis it is around 36,000 metric tons. As far as cost is concerned in Q1, both this time, which is this financial and last financial, we did not purchase anything in Q2. We have started purchasing but the costs are lower than our cost of production. So that’s a benefit.
Nirav Jimudia
Got it, Got it, Got it, sir. Next question is on any thoughts we can share on the benefits which should accrue to GNFC because we have appointed the consultants and I think they have submitted their report. So if you can help us understand like where are we currently in terms of implementation Part for the suggestions being given by them, some short term or medium term benefits which could accrue to us and which would be the areas where these benefits could be coming on.
D.V. Parekh
Okay, you are talking about the Strategic Management Consultant which is currently which we have appointed. They have worked predominantly on two things. There are other areas also, but predominantly if you see, they have worked on two things. One is the the pathway for the investment next investment. And second is transformation part which is basically how do we reduce our cost? And they have identified various areas, both digital and otherwise and we are at an advanced stage of discussion with them to formalize the implementation plan of that Sometime in quarter two this exercise would be rolling in and then depending upon the schedule this will start the benefits will start coming into the system.
It is both. One is financial benefit, second is certain strategic aspects and third is which products to choose for the investment and the ticket size thereof. So these are the three things which they have covered and now they have been. They are being appointed for the handholding and implementation.
Nirav Jimudia
Any specific area which would be be taken up first just to get a flavor of the kind of rolling out of this benefits or to get some idea over here like what could be the agenda first. Like it would it be related to power or to over some of the raw materials which we procure where, where the benefits could be there visible on.
D.V. Parekh
See they have given various areas power, fuel is one of them. Feedstock is another. Okay. On marketing side they have certain suggestion. On digital side they have certain suggestion. So all taken together they have quantified certain projected saving and based on that we are discussing with them.
Nirav Jimudia
Thank you so much sir, I’ll join back in the queue. A few more to ask but I’ll join back in the queue. Thank you so much.
operator
Thank you. The next question is from the line of Atur from ICICI Prudential Mutual Fund. Please go ahead.
Arthur Anderson
Yeah, sir, thank you for the opportunity. Sir, on tdi, this price increase which you were talking about, if you can just possible to quantify how much increase we have taken and is there any further scope in the near term to increase prices further?
Unidentified Speaker
I am Tejas, sir. From our marketing side, on the 1st of August we have increased TDI price by 12,000 rupees. We are looking after the market and presently just because of the rain, Indian demand is slightly weak. It is under improvement stage and we will review price based on the market condition.
Arthur Anderson
Your answer, Would exports prices be better now versus domestic?
D.V. Parekh
Yes, yes. We have locked certain export orders where the price realization is better than domestic as of now.
Arthur Anderson
Okay. And generally we don’t export, right? But. But current scenario we can. We are open to export
D.V. Parekh
since last about two years. The domestic market is enough in fact. And our focus is also to serve the domestic industry rather than exporting. Because export the business happens mainly through intermediaries, number one. Number two, the cost of logistics is also high. And number three, this feedstock advantage which these people, other people have around is not working out so favorably for us as compared to the concentration on the domestic industry.
Arthur Anderson
Okay, got it, got it sir. And just on this kernel part which you were mentioning, one was cost benefit and other on the investment side, etc, apart from what you mentioned last quarter and in the ppt, any further updates that you Would like to share with us.
D.V. Parekh
Yeah. See, this is what we covered basically earlier. The engagement was for examination. Okay. As to what can be done, what is doable given our indication to them about the investment size or kitty which we have. And the second aspect is the areas of improvements in terms of bringing more efficiency, alternate sourcing and other possibilities. So now we are discussing with them about the handholding and implementation thereof where they have projected certain set of financial savings which will get locked up over a period of time. So our engagement is under discussion about the periodicity and other terms.
So very soon, maybe around this month itself, we should be finalizing those terms of reference as well as terms of engagement.
Arthur Anderson
Sure. In this one last. Any update regarding the professional CEO announcement across entities. Any. Any update that you have received on that which you can share.
D.V. Parekh
This will be little information which is inside to the organization. I’m not sure whether sharing is right because the each organization you are saying we have engaged some other G entity has engaged. So what is the level of fees is what your question is that understanding, right?
Arthur Anderson
No, no, no. On the CEO appointment, like the professionalization which Gujarat entities like. I was talking more from a. Like the recent news that we saw that professional CEOs across Gujarat entities.
D.V. Parekh
Okay, I overheard somehow fee, not the CEO.
Arthur Anderson
No, no, no, not the fees, not the CEO sir, which
D.V. Parekh
request our company. Secretary if he has any awareness about that.
Unidentified Speaker
As of now, we do not have any. Any information in this regard.
Arthur Anderson
Okay, thank you so much. Thanks. Thanks a lot.
operator
Thank you. The next question is from the line of Viber from Honesty and Integrity Investment. Please go ahead.
Vaibhav Badjatya
Yeah. Sir, can you hear me?
D.V. Parekh
Yes, we are. Yes, you are audible.
Vaibhav Badjatya
Yes. Yeah, thanks a lot for providing the opportunity, sir. On. On TDI again. So on what is our revenue in. Or maybe you know, what is a volume mix between spot prices and the contract prices? That’s the first question. And. And in terms of revision in contract prices. So does it happen on a monthly basis or it is. It happens on a quarterly basis. How does it happen?
Unidentified Speaker
I’m Tejas, sir. As far as the contract and sport sales is concerned, mostly all the foam manufacturers are connected with us on contracts. We have a 90% sales on contract basis, 10% sales on sport basis. And as far as the pricing is concerned, it is purely depends on the market conditions. It is not whether to do pricing on monthly or quarterly based on the market condition. We are reviewing the prices.
Vaibhav Badjatya
Got it. And when you say market condition because you know a lot of imports also happen for tdi. I mean, so so is it like mostly benchmark to the imports or. Or how it’s benchmark. Benchmark in terms of, you know what prices we should. We should pick. How do we determine that? Is it to do with imports or it has to do with something else?
Unidentified Speaker
There are many parameters. Whatever the global prices is going on. What is the import offers receiving in Indian market, at what price import is receiving in Indian market, How is the Indian demand, what the customer quantity lifting there all the parameters we are going through and reviewing at the time of pricing.
Vaibhav Badjatya
Got it? Understood. And you know apart from. Apart from TDI for our other you know let’s say two major chemical products. If you can help us understand how do you. How do you look at profitability over next one year or two year or maybe six months. How do you see spreads moving for the next two next two products apart from TDI in chemical division.
D.V. Parekh
Chemical prices.
Unidentified Speaker
Somewhat. As far as our opinion is concerned, almost all the chemical products prices are.
Vaibhav Badjatya
Hello. Sorry I missed you in between. Sir, Can. Can you just repeat there was some network issues.
Unidentified Speaker
If you see all the prices, it is part. So we see prices, we may see improvement in the chemicals the next quarter. Because normally the H2 in India normally in H2 demand going to be improved. So we hope the prices may also improve.
Vaibhav Badjatya
Understand? That’s it. From asset. Thank you.
operator
Thank you. The next question is from the line of Neera Jamodia from Anvil Wealth. Please go ahead.
Nirav Jimudia
Yes sir. Thanks for the opportunity again sir. Just wanted to understand more on the fertilizer part. Like you mentioned that we fall in a category of group where coal based urea or the urea is produced through ammonia through coal based. So if my understanding is correct like we have been entirely on gas for our ammonia production for the urea or how. How is the situation here? Because possibly have missed out something in between for our conversation. So if you can help us highlight.
D.V. Parekh
That urea has two components. One is feed and fuel. As far as feed is concerned, it is hundred percent on gas.
Nirav Jimudia
Okay.
D.V. Parekh
As far as fuel is concerned we have a fuel mix both of gas as well as coal. This is where the coal comes into picture.
Nirav Jimudia
Correct? Correct. Correct. And normally through gas we produce close to around 3 70,000 tons of ammonia. Right?
D.V. Parekh
11 lakh. Hello.
Unidentified Speaker
So you were your line got disc or some. There was some disturbance in the n.
D.V. Parekh
You can take one the capacity which we use for the purpose of ammonia production.
Nirav Jimudia
Okay.
D.V. Parekh
Okay. And specific consumption of ammonia in urea is 0.58.
Nirav Jimudia
Okay? Correct. Correct sir. Secondly, if you can just Help us understand like what was the production for wna, cna, iron melt and formic acid for this quarter. And if it’s not possible for this quarter, even if you can share for FY25, that would be very helpful.
T. Natarajan
Was close to 97,000 both plants put together. And CNA was close to 30 to 32,000 all together. Formic acid was 6,500. The volumes are less considering the shutdown.
Nirav Jimudia
Correct. Sir, 97 you mentioned for WNA and CNA put together, so.
T. Natarajan
No, we. We have two WNA plants and four CNA plants.
Nirav Jimudia
Okay. Okay. So 97,000 was for WNA, 32,000. Four CNA and 6,000 for 500 and four formic acid.
T. Natarajan
Yeah. These are approximate figures. Missing the last digits.
Nirav Jimudia
And sir, two more things here. If you can share the ammonia production through oil and an melt production for Q1.
T. Natarajan
See, ammonia production through oil is around 47%. And from gas is around rest 53%. We had a total ammonia production of 1:38,000. Out of which close to 81,000 was gas and balance oil and an melt.
Nirav Jimudia
Sir.
T. Natarajan
An melt one minute. Yes, we had close to 37,000.
Nirav Jimudia
Got it. Sir, last. Just a clarification. After this shutdown there won’t be any need for further shutdowns for the rest of the year. Is it a correct assumption to me?
T. Natarajan
Yeah. Yeah. It is expected. There is no planned outage.
Nirav Jimudia
Got it. Got it. Thank you so much, sir and wish you all the best.
T. Natarajan
Thank you.
operator
Thank you. Participants who wish to ask questions may press star n1 now. Participants who wish to ask questions can press star n1 at this time. As there are no further questions. I would now like to hand the conference over to the management for closing comments.
Unidentified Speaker
Yeah, this is Rajesh here. Company secretary. Thank you to all the participants for joining this investor call. I would also like to express my. Gratitude to the moderator as well as Anurag Services llp. Thank you. So we close this. Thank you.
operator
Thank you on behalf of Gujarat, Narmada Valley fertilizers and Chemical Ltd. And Anurag Services LLP. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.