Gujarat Narmada Valley Fertilizers and Chemicals Limited (GNFC) Q3 FY23 Earnings Concall Transcript

Gujarat Narmada Valley Fertilizers and Chemicals Limited (NSE:GNFC) Q3 FY23 Earnings Concall dated Feb. 08, 2023.

Corporate Participants:

Unidentified Speaker —

Y. N. Patel — Head of Operation and Maintenance

Tejas Shah — IP Marketing

A.C. Shah — Company Secretary and General Manager

D.V. Parikh — Chief Financial Officer & General Manager

Analysts:

Nitesh Vaghela — Anurag Services LLP — Analyst

Nirav Jimudia — Anvil Research — Analyst

Unidentified Participant — — Analyst

Ashish Agarwal — Individual Investor — Analyst

Bhavesh — Individual Investor — Analyst

Yash Dantewadia — Dante Equity — Analyst

Ankur Tanwar — Individual Investor — Analyst

Akshat Mehta — Sameeksha Capital — Analyst

Saket Kapoor — Kapoor Company — Analyst

Nishith Shah — Aequitas Investments — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Gujarat Narmada Valley Fertilizers and Chemicals Limited Q3 FY ’23 Earnings Conference Call. [Operator Instructions]. Note that this conference is being recorded. I now hand the conference over to Mr. Nitesh Vaghela from Anurag Services LLP. Thank you and over to you, sir.

Nitesh Vaghela — Anurag Services LLP — Analyst

Thank you and good afternoon. Welcome to the Third Quarter Earning Conference Call of Gujarat Narmada Valley Fertilizers and Chemicals Limited, hosted by Anurag Services LLP. From the management, we have Mr. D. V. Parikh, Executive Director and CFO; Mr. Y. N. Patel, Head of Operation and Maintenance; Mr. A.C. Shah, General Manager and Company Secretary; Mr. Tejas Shah, IP Marketing; and other similar dignitaries from the management. I would like to thank the management for giving us the opportunity to host this call. We will begin the call with opening remarks from the management, post which we will have a question-and-answer session. Thank you and over to you, sir.

Operator

Ladies and gentlemen, this is the operator. Due to some reason, the line of the management has been disconnected. Please stand by. Ladies and gentlemen, we have the line of the management connected. Sir, please proceed.

Unidentified Speaker —

Yeah, good afternoon, everybody, and thank you, Anurag Services, for holding this call and welcome to all the investors and analysts who have joined this call. First of all, we will touch up on some of the general points of the environment. In terms of the economic environment, the prices on both the sides, both input as well as outputs are softening in general, that is considering the less aggression of the war, which is going on. Secondly, at the beginning of the month, there has been [Technical Issues] budget, where the momentum has been that of more on the emphasis on capital expenditure. If we talk about the impact on the Company in terms of the budget proposal, there are no significant changes in corporate rate, [Technical Issues] rate as well as indirect tax, which is GST. So, from the budget perspective, there are no major impacts, which is coming on the Company as such. While we talk about the operating performance, the production and sales levels mainly, the production for the quarter, if you look at on a sequential quarter basis, has been up by around 24% and sales has been up by around 18% in case of chemical, whereas it is down by 8% and 10% respectively in case of production and sales respectively for fertilizers. On a Y-o-Y basis, on a nine-month basis, also the production and sales have improved. The production has marginally improved by 2%, whereas the sales have improved by 6% in case of chemicals. Now, some of the major products, where there has been an issue of increasing inventory, are basically [Technical Issues], which is contributing apart from ammonium nitrophosphate, which is a complex fertilizer, where the stock levels have been high during the quarter as compared to the last quarter. In terms of the production rate also, there are a few products where we did not produce mainly because of the market reason in case of aniline and methanol as well as at times, the complex fertilizer. From the operating perspective, the [Indecipherable] plant has been affected because of the operational issues. So, this is on the operating side of it. Overall, there is an increase, which is reflected in the P&L of around INR40 crores mainly because of the chemicals I narrated. While you go to the profit and loss account, like things are only now in the public domain in terms of financials that we ended the quarter with around INR2,673 crores of revenue, which is the highest ever for the quarter and for the nine months also, the revenue and profits are high. The PBT is around INR1,515 crores [Phonetic] apart from the topline of around INR709,000 crores rounded, so this is on the profit and loss. Apart from that, within the groups, which are there in the reporting lines of profit and loss, there are two important line items where expenses have had significant variance. One is the personnel cost and second is the other expenses. Personnel cost has gone up as you know because there is a note also in the foot note to the results there, because of the wage settlement, there are certain provisions, which are made and which is creating an impact on the personnel cost. There is a onetime impact also, which is there because of the past service cost. So going forward at least from April onwards, it will be annualized effect of the normal wage revision because all the past service cost will be accounted by end of this financial year. As far as other expenses are concerned, there are certain provisions, which are made for the contingent part of the liabilities in line with our [Technical Issues] last year, because of which the other expenses are higher. When we go to the second part of the profit and loss, which is other comprehensive income, there are two significant changes, which are there. One is because of the past service liability relating to gratuity, the other comprehensive income is affected. And second is the valuation gap in respect of the mainly unquoted shares, which is impacting the OCI. Going to the balance sheet, there are two significant changes. One is in respect of [Technical Issues], which has increased mainly because of a change in the investment pattern as per the approved policy [Technical Issues] and the second is the overall cash accumulation with the accrual of the profits. In terms of contingent liability, there are no major changes in the contingent liability as such and Company continues to recognize the same contingent liability as before. This is on the balance sheet side. In terms of the cash flow like with the accrual of cash profit as well as depreciation [Phonetic] accruing, there is a significant cash, which is [Technical Issues] during the quarter to the tune of around INR500 crore plus. There is one major announcement in the budget with respect to subsidy. As compared to the last year subsidy, which was budgeted subsidy of INR1,53,000 crores, it is now at a level of INR2,25,000 crores. This year, the subsidy [Technical Issues] expected to be around INR2,50,000 crores. As you know, the initial budget was INR105,000 cores and the revised estimate is around INR2,25,000 crores of budget. So, we would like to take [Technical Issues] the contribution of government of India in releasing the subsidy because normally, subsidy used to be in urea [Phonetic] except for the last two years and in spite of the increasing fleet cost, the subsidy is being released and liquidity is maintained for the Company as well as the players in the industry. This is on the cash flow part. Apart from that, there are mixed segment, assets and liabilities, if you go by, which are reported. There is significant change in case of fertilizer as such mainly because the fertilizer subsidy related areas, if we compare on a Y-o-Y basis and if we compare on a sequential quarter basis, there is an improvement because of the liquidity. There are no significant changes in the assets and liabilities otherwise of chemical as well as fertilizer. In terms of unallocable assets, the assets have increased mainly because of the cash accrual. So, this is what all [Technical Issues].

Questions and Answers:

Operator

Thank you. [Operator Instructions]. First question comes from the line of Nirav Jimudia from Anvil Research. Please go ahead.

Nirav Jimudia — Anvil Research — Analyst

Yeah, good afternoon [Technical Issues], I have two, three questions to ask, sir, first is on the ammonia side, so if you can help us — explain what is our ammonia production for the chemicals business because we could use ammonia, one through [Technical Issues] and one through [Technical Issues] if you can guide us in terms of — or help us explain how much you have produced ammonia for the chemical business for nine months and what was the figure for FY ’23?

Y. N. Patel — Head of Operation and Maintenance

See. I am Y.N. Patel answering your question. Normally, we produce around [Technical Issues] metric ton of ammonia for producing [Technical Issues] and around 800 metric tons being produced for oil-based IP products, which contributes to [Technical Issues] also.

Unidentified Speaker —

Capacity [Technical Issues] for this year is around [Technical Issues] of ammonia we have achieved, which is in the ratio of 60:40, you can say.

Nirav Jimudia — Anvil Research — Analyst

Sir, the 155%, you mentioned this for oil based or [Technical Issues] combined together.

Unidentified Speaker —

This is combined together, but if you want individual figure, I can give you. This cumulative production for gas-based ammonia. You are interested in ammonia, right?

Nirav Jimudia — Anvil Research — Analyst

Yes sir, yes sir.

Unidentified Speaker —

Yeah, so ammonia [Technical Issues] this year is 6,07000 [Phonetic] is for this total figure, out of this, 3,53,000 is gas-based ammonia and balance is oil-based ammonia, so it will be around 2,50,000.

Nirav Jimudia — Anvil Research — Analyst

And this 2,50,000?

Unidentified Speaker —

I will give you the exact number, see, normally 800 metric tons like Y.N. Patel said, per day we manufacture. On a nine-month basis, we are producing oil-based ammonia, which is mainly for [Technical Issues] of 2,24,000 metric ton is the figure for the nine month ending December ’22.

Nirav Jimudia — Anvil Research — Analyst

Correct. And sir, this also includes what ammonia goes for your [Technical Issues] right?

Unidentified Speaker —

Yeah, Yeah, you are right.

Nirav Jimudia — Anvil Research — Analyst

Correct. Sir, when [Technical Issues] the oil requirement for this ammonia is roughly [Technical Issues] crores per the total ammonia production or it is slightly lesser.

Unidentified Participant — — Analyst

It will consume 250,000 metric ton per annum of [Technical Issues], which is meant for supporting the oil-based ammonia.

Nirav Jimudia — Anvil Research — Analyst

Correct

Unidentified Speaker —

We normally don’t use this as a fuel. This is a feed.

Nirav Jimudia — Anvil Research — Analyst

Okay. Correct.

Unidentified Speaker —

It is not actually a furnace oil. It is fuel oil.

Nirav Jimudia — Anvil Research — Analyst

Yeah, it is fuel oil. Sorry, my apology. So, proportionately for nine months, we have used the fuel oil [Technical Issues] right?

Unidentified Speaker —

Yeah, yeah. See, [Technical Issues] for oil is [Technical Issues] 0.72 to 0.75 roughly.

Nirav Jimudia — Anvil Research — Analyst

Correct.

Unidentified Speaker —

[Technical Issues] our consumption of oil based on oil-based ammonia we produce.

Nirav Jimudia — Anvil Research — Analyst

Got it, sir. Got it. Sir, second question on [Technical Issues]. Sir, this [Technical Issues] is produced as a byproduct of [Technical Issues] or we had a separate production process for [Technical Issues].

Unidentified Speaker —

See we have two streams. Around 400 metric ton we produce as a byproduct and about 165 or so, we have additional capacity where we can additionally produce ammonium nitrate melt [Phonetic].

Unidentified Speaker —

We can also produce independently the AN melt in case nitrophosphate complex, especially the complex fertilizer is down.

Nirav Jimudia — Anvil Research — Analyst

Correct.

Unidentified Speaker —

[Technical Issues] as far as operating process is concerned. Overall we can manufacture, like Mr. Patel said, where 400 is the normal one, roughly 61% of the total ANP, we get AN melt. Apart from that, we get around 160 metric tons to 165 metric tons on a regular basis, even when the ammonium nitrophosphate plant is on. Suppose [Technical Issues] down, then our AN melt would be higher even after the total of these two factors of 70 metric tons to 80 metric tons per day.

Nirav Jimudia — Anvil Research — Analyst

Correct. Correct and WNA goes for our ANP, right?

Unidentified Speaker —

As well as weak nitric acid goes for concentrated nitric acid, absolutely.

Nirav Jimudia — Anvil Research — Analyst

Absolutely, so our CNA plant is supposed to start in a few quarters per our recommendation? So [Speech Overlap].

Unidentified Speaker —

Yeah.

Nirav Jimudia — Anvil Research — Analyst

Last year, in one of our calls, you mentioned that we sold something around [Technical Issues] 1,15,000 tons of WNA in the market. So if you can walk us through what was the similar [Technical Issues] nine months of FY ’23 and once this 50,000 tons of CNA gets commissioned, how much this WNA, which is getting sold in the market will be consumed internally?

Unidentified Speaker —

When the CNA [Technical Issues] coming up is 50,000 metric tons per annum and there is a plan to manage the WNA so as to produce concentrated nitric acid not to lose the market. In case there are any difficulties, the plant will be operated based on the contribution margin on a part time basis based on the product mix priority.

Nirav Jimudia — Anvil Research — Analyst

Correct. Correct. And sir, if you can walk us through how much WNA and CNA [Technical Issues] nine months of FY ’23, that would be helpful, sir.

Tejas Shah — IP Marketing

I am Tejas Shah from marketing. In FY ’22-’23, we sold WNA 54,500 [Phonetic] tons on 100% basis and CNA 28,200 tons in the market.

Nirav Jimudia — Anvil Research — Analyst

This is also a 100% commission based right.

Tejas Shah — IP Marketing

Oh, yes.

Nirav Jimudia — Anvil Research — Analyst

Okay. This is for nine months, right?

Tejas Shah — IP Marketing

Nine months.

Nirav Jimudia — Anvil Research — Analyst

Sir, the last question is on the [Technical Issues] part, so until the prices have slightly improved, vis-a-vis Q3, so last quarter you mentioned that we were incurring the losses on the [Technical Issues] so we incurred loss in FY ’22 also and for the first half also, so what is the capacity utilization in Q3, had we also incurred the loss in Q3 and if yes, what is the situation currently? So, are we making profit on [Technical Issues] Q4, so if you can just help us with this.

Unidentified Speaker —

No. There are two production facilities. At Bharuch complex, yes we are making profit. At Dahej complex, no, we are not making profit. We supported the market even at the cost of contribution losses, but with the improved situation, there are positive margins in the TDI-II.

Nirav Jimudia — Anvil Research — Analyst

Okay. Sir, what was the capacity utilization for Q3 for both the complexes, sir, for TDI.

Unidentified Speaker —

Capacity utilization for the year, it is [Technical Issues] for Bharuch complex, it is 130% and the TDI-II, Dahej, it is 67%.

Nirav Jimudia — Anvil Research — Analyst

This is on the increased capacity of 10,000 tons recently increased last time, so the 67% is on the increased capacity of 10,000 tons, sir?

Unidentified Speaker —

No. The water capacity [Technical Issues] based on the capacity, which was earlier, which is 50,000 metric tons. The 10,000 tons, which was added because of the introduction of the new unit of [Technical Issues] is not part of this.

Nirav Jimudia — Anvil Research — Analyst

Thank you sir and all the best.

Unidentified Speaker —

Thank you.

Operator

Thank you. Our next question comes from the line Ashish Agarwal, an individual investor. Please go ahead.

Ashish Agarwal — Individual Investor — Analyst

Hello. Am I audible?

Unidentified Speaker —

Yes, yes, really.

Ashish Agarwal — Individual Investor — Analyst

Sir, [Technical Issues] congratulations on a great set of numbers. Basically, the first question is on the gas prices. While I see that there is a lot of reduction, which has happened in the international market on the gas bid, when does it reflect in our [Technical Issues] and how does the gas bid go for [Technical Issues] as to the procurement process, the price, etc. Hello?

Unidentified Speaker —

Yes. See gas prices have started coming down recently.

Ashish Agarwal — Individual Investor — Analyst

Yeah.

Unidentified Speaker —

Okay. So, Q3, as compared to Q2, yes, it has tapered down, both oil as well as gas, not coal, but the reflection actually if you see is also getting — it is showing up in the P&L, when you look at the numbers of the sequential quarter Q2 versus Q3, but as it is continuously moving down, the further betterment should get reflected in Q4.

Ashish Agarwal — Individual Investor — Analyst

So, sir, how much can we expect there? Can we have some numbers like what was it at the end of Q2, what was it as an average in Q3 and what it is running today as a unit only? I do not want amount because it is price sensitive, maybe a tougher unit with the price on [Technical Issues] as an average and what was it in Q3 as an average and what it is [Technical Issues]?

Unidentified Speaker —

See gas, as you know, we procure on a spot basis for chemical, okay. Like, the last month December, it had raised [Phonetic] around INR57 per standard cubic meter and every month it changes, okay. Currently also like January also, we bought it more or less the same price with INR2, INR3 here and there.

Ashish Agarwal — Individual Investor — Analyst

Okay. What is — was it in Q3 as an average?

Unidentified Speaker —

Q3 average, immediately I do not have the average number of gas price on Q3 basis. At the December and January is what I have immediately.

Ashish Agarwal — Individual Investor — Analyst

Okay. Okay. Like someone said earlier on the TDI prices, while I understand that it takes time, what I could see is in international market like China, the prices have surged from the base of TDI to about say 20% to 25% higher, while Indian prices, what I can see have surged only around [Technical Issues] so how does it translate between international prices and our prices in India?

Tejas Shah — IP Marketing

I am Tejas. You are right. China market is improved a lot, but it shows around 20% increase, but other international markets are improved just like 10%. Earlier, Indian market was around $2,300 per metric ton, now it reached up to $2,700 per metric ton, so slowly effect is coming in all other markets.

Ashish Agarwal — Individual Investor — Analyst

Okay. Okay. So, you are saying in coming days, we might see the effect [Phonetic]?

Tejas Shah — IP Marketing

It depends on the supply demand side, if the demand is weak in particularly China, because China is the major producer of TDI, so they will throw the [Technical Issues] international market. So all depends on the supply demand side. No doubt, presently the market is in the improving trend.

Unidentified Speaker —

Another way of looking at answer to your question is if you look at the normal spread between toluene to TDI, it is one of the lowest over last 12 months, that is December ’21 to December ’22.

Ashish Agarwal — Individual Investor — Analyst

Okay. Okay.

Unidentified Speaker —

So, there is a potential, but finally like as Tejas Shah explained, it is a market driven by more than one factor, but if you go by the key factor, which is [Technical Issues] then it is one of the lowest as of now standing at around 60%.

Ashish Agarwal — Individual Investor — Analyst

Okay. Got it. Got it. Last [Technical Issues] capex, while we have done a lot of announcement in the last quarter as well last to last quarter that we are working on polycarbonate and other capex projects. What is the real progress, which has happened in last six to three months on these projects?

Unidentified Speaker —

See, regarding [Speech Overlap].

Unidentified Speaker —

See. Okay. We made various announcements, you are right. We made quantified announcement with respect to [Indecipherable] and polycarbonate. As far as polycarbonate, which was around INR2,700 crores of project and cracker, which was INR5000-plus crores of project, [Technical Issues] work is already on with Engineers India Limited. They are working on and this calendar year, they are going to submit the report on both the products. As far as rest of the projects are concerned,[Technical Issues] like we already said, it is going to be commissioned sometime in the mid of this calendar year. As far as [Technical Issues] project is concerned, which is to the tune of INR613 crores of investment, the [Technical Issues] already awarded, work has started. As far as other investment proposals are concerned, which is the ammonia makeup loop, the order is already given and they are in the final phase of arriving to the formal agreement. Weak nitric acid and AN melt, which is an investment of around roughly INR1,100 crores, which is also on schedule and the TEFR is expected to come by June ’23, so these are the major ones, which we captured and which we announced last time. As far as the green hydrogen and solar capacity for supporting the green hydrogen is concerned, we are awaiting certain clearance in terms of the [Technical Issues] policy initiatives. While that happens, we will decide about our investment, although in principle, we have committed ourselves that we will definitely invest in green hydrogen as well as green ammonia, so these are the major ones, which are on the cards.

Ashish Agarwal — Individual Investor — Analyst

Okay, so if I may ask my last question, which is around [Technical Issues] that we earn from the investment that we will do with the financial [Technical Issues] Gujarat is, earlier from two quarters, but we said that we make out investment at 5.5% or 6%, while the rates have increased a lot, does that number also increase?

Unidentified Speaker —

Yeah, see, finally, we decide about the investment looking to two aspects, one is safety and second is the yield. So Gujarat state financial service is just one of the avenues out of many avenues we have in our approved investment policies. So as long as the safety is concerned, safety is not compromised, we do optimize the returns. To answer your question, yes, we have invested in higher yield securities.

Ashish Agarwal — Individual Investor — Analyst

Okay. Thank you. That answers my question. Thank you for taking all the questions.

Operator

Thank you. Next question comes from the line of Bhavesh, an Individual Investor. Please go ahead.

Bhavesh — Individual Investor — Analyst

Yeah. Sir, thank you for the opportunity. My question is partly answered. So, just wanted to elaborate on the — sir, what is the cash in hand at this moment [Technical Issues], how much is the cash in the books?

Unidentified Speaker —

Yes. [Technical Issues] INR3,400 crores.

Bhavesh — Individual Investor — Analyst

INR3,400 crores. Okay. And sir, particularly I am seeing that the margin had been [Technical Issues] with many reasons, is — one of the reason is also because of our inventory like we have more inventory than…

Unidentified Speaker —

No, no. It is not like that. First of all, the absolute margins are definitely higher as are apparent in the profit. We you all looking in terms of percentage is lower because the top line has substantially increased. So if you look at the margins, it is overall higher in ex PBT level, now let us [Technical Issues] clear further into the chemical as well as fertilizer. Fertilizer has improved, whereas chemical has gone down, okay, but overall [Technical Issues] margins are improved in absolute terms. This is in spite of the fact of the accruals, which we stated at the beginning in the opening remark.

Bhavesh — Individual Investor — Analyst

Okay and I need specific detail for declining the margin for [Technical Issues].

Unidentified Speaker —

As you said, on a nine-monthly basis, the margins are still better, have improved. If you look at the tapering down effect on a sequential quarter basis, which is Q3 versus Q2, Q3 margins have gone down because of the general price reductions across the product more or less. The main ones are like acetic acid and weak nitric acid, technical grade urea. These are the three particular products, where it has gone down substantially and if you look at the last year also or the first six months, the realizations were way above the normal realizations, which are supposed to be there. So they are tapering down, so we got a lead there, but if you look at the input cost also, which is of oil and gas particularly, coal has gone up, these two otherwise have gone down, which has made up the margin and this is how on a sequential basis, the margins have improved. On a nine-monthly basis also, the margins have improved, where as if you look at on a Y-o-Y Q3 basis, the margin and chemicals have reduced mainly because of the tapering effect in these three chemicals, weak nitric acid, technical grade urea and acetic acid.

Bhavesh — Individual Investor — Analyst

Okay. Understood. Yeah. That’s all from my side. Thank you, sir.

Operator

Thank you. Our next question comes from the line of Yash Dantewadia from Dante Equity. Please go ahead.

Yash Dantewadia — Dante Equity — Analyst

Yes, sir, my first question is what is the asset turnover that you are expecting on the nitric acid plant that is coming up [Technical Issues] financial year?

Unidentified Speaker —

[Technical Issues] see your question, we first put in context, you are asking that what will be the turnover from the new nitric acid plant, which we are putting up. Is that a right understanding of your question?

Yash Dantewadia — Dante Equity — Analyst

Yes sir, yes sir, yes.

Unidentified Speaker —

Okay. I will request Shri Y. N. Patel to respond on this meanwhile let me clarify. We are putting up 2,00,000 metric tons of weak nitric acid plant. Mainly, this will cater to the other plant requirement, which is coming up of around 1,35,000 equivalent of AN melt, so there will be a captive convention there. There will be a further captive convention in the concentrated nitric acid for where we are falling short of the nitric acid, the rest will be sold in the market. Now, I hand it over to Shri Y. N. Patel to quantify the number on the expected phase.

Y. N. Patel — Head of Operation and Maintenance

See, sell, it depends on the price.

Yash Dantewadia — Dante Equity — Analyst

[Speech Overlap] so what I just understand is what — how much value addition the capex is going to do on our books?

Unidentified Speaker —

Okay. See you can take the broad number like this that we would be selling in the market additionally around 35 to 40 metric tons of weak nitric acid if everything goes well, which means all the two plants run at full throttle, which is concentrated nitric acid IV and new AN melt plant equivalent to around 135, so it will spare around 35,000 to 40,000 metric tons more of weak nitric acid, which we can sell.

Yash Dantewadia — Dante Equity — Analyst

Yes sir, so what is the asset — what kind of turnover will we get on that?

Unidentified Speaker —

If you take a price of around INR40,000 [Phonetic], you multiply by INR40,000 per metric ton, that is the normal one, so INR160 crores, INR170 crores

Yash Dantewadia — Dante Equity — Analyst

Sir, my next question, what is our cash in books right now as of today?

Unidentified Speaker —

Somebody already asked it, I said INR3,400 crores.

Yash Dantewadia — Dante Equity — Analyst

Also, sir, do you let [Phonetic] the management realize that they are trading [Technical Issues] trading below book value, which is very [Technical Issues] generating the sort of cash that you do?

Unidentified Speaker —

Okay. See, we cannot comment on whether the price is fairly reflective of it or not, what we can comment is, you can take your judgment on the fact that balance sheet is absolutely clean. There are no skeletons hanging in the balance sheet. Okay, now based on that, investor may take [Technical Issues] invest or not.

Yash Dantewadia — Dante Equity — Analyst

Yeah, but why does not the management [Technical Issues] discipline [Technical Issues] because if you are able to buy that with some below book value, doesn’t that make sense?

Unidentified Speaker —

See, we try and offer various options. These are deliberated at a board level, so these are board level discussions and these are privy to us, so we cannot say more than what is there in the public domain. Your point is already noted, we already acted upon it. Okay.

Yash Dantewadia — Dante Equity — Analyst

Okay. Thank you so much, sir. Thank you.

Operator

Thank you. Our next question comes from the line of Ankur Tanwar, an individual investor. Please go ahead.

Ankur Tanwar — Individual Investor — Analyst

My question is regarding nanofertilizer, which our company is not producing and Government of India is emphasizing on nanofertilizer, so what quantum of effect it could have on our fertilizer business?

Unidentified Speaker —

Okay, see nanofertilizer as you may have seen is mainly by the IFFCO, number one. It has also licensed — and it is in the process of talking to other bigger companies, mainly the public sector one like NFL, etc., for licensing the technology. We have initiated dialogue with them for licensing the technology to us. Now if you look at how the replacement is going to happen, the urea demand overall is around 35 million tons in India, out of which around 9 million tons are imported, so even if they replace the marketing — and we are holding around less than 3% of the market, so we don’t see any adverse impact on our urea market of nanofertilizer. Nanofertilizer will help our country to replace the imported urea, if it really becomes successful on a pan India basis.

Ankur Tanwar — Individual Investor — Analyst

Got it sir. Just a suggestion that we can so actively put up a presentation to L.I.C. because they have been constantly selling our shares for last two years. I know management do not have anything to do with their prices, but it would be more better if we put a presentation to L.I.C.

Unidentified Speaker —

You see, presentation and all, we regularly remain in touch in terms of conference call, in terms of certain physical conference is — we cannot go to somebody that you don’t sell our salary [Phonetic], buy our shares, it is purely their domain whether they require cash or not, we also do not know that why they are selling, whether they are in need of cash, therefore they are selling or they do not see a value, therefore they are selling, so we cannot get into any of these initiatives.

Ankur Tanwar — Individual Investor — Analyst

I agree. Thanks a lot sir.

Operator

Thank you. Our next question comes from the line of Akshat Mehta from Sameeksha Capital. Please go ahead. Mr. Akshat Mehta, your line has been unmated. Please proceed with your question.

Akshat Mehta — Sameeksha Capital — Analyst

[Speech Overlap]. I think the question was answered on the nanofertilizer [Technical Issues]. Yeah, sir, I think one of my questions was answered on the nanofertilizer part. Secondly, I just want to understand in this fertilizer [Technical Issues], what is the kind of ideal margins that your company can make [Technical Issues] fertilizer?

Unidentified Speaker —

Less than 5%.

Akshat Mehta — Sameeksha Capital — Analyst

Less than 5% [Technical Issues] both domestic prices and the import prices, correct?

Unidentified Speaker —

No, no. It has nothing to do with domestic or import prices. See, we manufacture roughly 1 million tons of fertilizer, okay, at full rate. Now, these are the controlled fertilizers. Both the fertilizers are controlled fertilizer. As far as international prices are concerned, the internal prices [Technical Issues] to the extent of urea production, which is close to 65% of the 1 million tons. [Technical Issues] by inputs, which is on the [Technical Issues] by subsidy basis, so direct international prices have more or less no impact except the input prices of international prices.

Akshat Mehta — Sameeksha Capital — Analyst

Okay. Thank you sir.

Operator

Thank you. Next question comes from the line of Saket Kapoor from Kapoor Company. Please go ahead.

Saket Kapoor — Kapoor Company — Analyst

Namaskar, sir, and thank you for the opportunity. Sir, firstly, you did mention about the reason for higher power, fuel and fuel prices on Q-on-Q basis, so taking into account the current trend, how is this line item going to shape going ahead?

Unidentified Speaker —

Okay. See, there are like say [Technical Issues] energy basket, there are two main products, one is gas, another is coal, [Technical Issues] very lesser extent around 10% extended purchase power. Now, If you look at the prices on a start, they have receded substantially of late. Okay, like somebody was asking when I say [Technical Issues] and somebody also asked the question what has been the average of the quarter, which figure I did not immediately have, but now I have it around INR85 rupees per 100 cubic meters. Now, to your question of how it will further [Technical Issues] at what level, coal, we see some tapering down and gas also expected to remain tapering down as [Technical Issues], but these are just base estimates, we don’t know much about how it will unravel, but as of now, we think that our Q4 should be at least stable enough.

Saket Kapoor — Kapoor Company — Analyst

Okay. So, there is a tapering effect that we will get going there?”

Unidentified Speaker —

Which effect? [Speech Overlap]. Okay okay. [Technical Issues].

Unidentified Speaker —

Yeah. It is a likelihood, I mean this is what we foresee. [Technical Issues]. It is of course judgment, but there are many factors, see tomorrow again something happens and then they shoot through the roof. [Technical Issues] when it comes to — see as far as the international market of coal, gas and oil is concerned, as of now, there is complete uncertainty. [Technical Issues] various things like a few months back people were saying when it crossed 100 for a standard cubic meter, that even if it comes down in the near term, it is going to remain at an elevated level because of the continued war signals they are getting in respect of this Russia and Ukraine war.

Saket Kapoor — Kapoor Company — Analyst

[Technical Issues], but still we are already [Technical Issues] into the quarter, so the trend line must have shaped up [Speech Overlap]. Okay, sir now coming to our [Speech Overlap].

Unidentified Speaker —

See what we think should be the way forward and therefore, we feel Q4 should be stable.

Saket Kapoor — Kapoor Company — Analyst

Correct, sir. Sir, and sir, now coming to our end product prices, sir, when we look at our presentation Page Number 3, when you have mentioned about the chemicals and the fertilizers and the installed capacity, so sir, as per the turnover basis, what should be the order for our chemical segment?

Unidentified Speaker —

Order of?

Saket Kapoor — Kapoor Company — Analyst

As per the turnover basis, ascending order of turnover basis, we have mentioned it alphabetically for the chemical segment [Speech Overlap].

Unidentified Speaker —

What is the highest turnover contributing product is what you mean to say?

Saket Kapoor — Kapoor Company — Analyst

Yes, yes, the highest to lowest.

Unidentified Speaker —

Okay. Okay. We have our — the chemical marketing gentleman, [Technical Issues] respond on this.

Unidentified Speaker —

[Technical Issues], if we compare to these nine months of this ’22-’23, [Technical Issues] generated more revenue, [Technical Issues] of GNFC, second one is TDI, third one is technical grade urea, fourth is weak nitric acid and fifth one is acetic acid [Technical Issues].

Saket Kapoor — Kapoor Company — Analyst

What was the first line item, sir?

Unidentified Speaker —

First line item is ammonium nitrate meld.

Saket Kapoor — Kapoor Company — Analyst

Hello? Yes, sir. When we look at the capacity that we are emphasizing going ahead, if you could given an understanding of how much capex is going for backward integration so that the product, which we are going to enhance the capacity, would be capably consumed.

Unidentified Speaker —

See. Capex, we are putting INR225 crores for additional capacity of ammonia that is 150 metric ton per day will be arranged and WNA III and AN meld put together, it will be [Technical Issues], so this is for backward integration if you call it backward integration. Other projects will be new investment and there will be additional capacity, we will be building up.

Saket Kapoor — Kapoor Company — Analyst

Right, sir. Sir, when you mentioned that out of that extra cash generated, we are also putting into high yielding, what are you trying to convey, sir, by high yielding other than the Gujarat State Finance Company.

Unidentified Speaker —

No, no. See, somebody asked a question, that would be change in interest rate on a higher side, whether your rate of interest has gone up or not, so response to that question, yes, it has gone up because we first select the instrument based on the safety and second is on the yield one. It will be [Technical Issues] investment in the time we make our actual investment for the beginners.

Saket Kapoor — Kapoor Company — Analyst

Sir, what is our exposure currently to Gujarat State Finance, how much have been invested and what is the yield, blended yield currently?

Unidentified Speaker —

See, yield is like somebody already mentioned goes around 5.25% and the [Technical Issues] investment is to the tune of around INR1,600 crores.

Saket Kapoor — Kapoor Company — Analyst

Okay and other instrument where we have invested, it is the whole investment we have done?

Unidentified Speaker —

No, we normally place [Indecipherable] as well as banks.

Saket Kapoor — Kapoor Company — Analyst

So, what is the yielding on them?

Unidentified Speaker —

It is little higher than [Technical Issues] as of now.

Saket Kapoor — Kapoor Company — Analyst

Okay. Sir, is there any other commitment that we have from the government that we have to invest in Gujarat state finance Corporations only or it will be prudent choice that the management is making on the basis of the rate criteria, which we have already mentioned.

Unidentified Speaker —

No, see we have an approved investment policy based on which we make different choices considering these two criteria of safety and yield. There is no particular [Technical Issues], because it is a board approved policy.

Saket Kapoor — Kapoor Company — Analyst

And also the tenure, sir, can you give an understanding what is a tenure for which [Technical Issues]?

Unidentified Speaker —

There are different maturity profiles depending upon the plan of capex as well as the opportunity needs, so that is decided based on the internal cash front and changes between one year to three years.

Saket Kapoor — Kapoor Company — Analyst

Okay. Because currently the program — our government security is [Technical Issues] for 2 years or 4 years, 5 years and even 10 years, are quoting well above 7 points to 2%. They have the highest [Technical Issues] the Indian domicile, so [Technical Issues] investment can be passed in the highest [Technical Issues] of defect keeping in mind that the yield to maturity, we have to hold the instrument till it matures, so [Technical Issues] extra interest income could be generated just on deploying the fund to government [Technical Issues].

Unidentified Speaker —

See, your point is noted, see we have our own systems, which are well calibrated, top of it, there is an audit committee, which is watching out as to what is happening to the investments and cash surpluses, but in spite of that, your point is noted regarding getting some 100 to 200 basis points above the normal one, which we are getting as of now. Just for your information, we are also investing into government [Technical Issues] since last three, four months.

Saket Kapoor — Kapoor Company — Analyst

Right.

Unidentified Speaker —

Okay, but what happens is the ticket size is not the same as you want.

Saket Kapoor — Kapoor Company — Analyst

Yes, sir, now the market has opened up very well, so [Technical Issues] we can deliberate about that. Yeah, thank you.

Unidentified Speaker —

Yeah, but ticket size is running into less than INR50 crores at a time more or less and by the time we go to the market, that also evaporates, but in spite of that, we keep our try on. We invest in both G-Secs as well as SBLs.

Saket Kapoor — Kapoor Company — Analyst

Right. Thank you, sir. Thank you.

Operator

Thank you. Our next question comes from the line of Nirav Jimudia from Anvil Research. Please go ahead.

Nirav Jimudia — Anvil Research — Analyst

Thanks for the followup. Sir, to the previous question, you mentioned that the top revenue generator for our chemical business was AN meld, so for nine months FY ’23, you can tell the percentage breakup also for all those [Technical Issues] products, that would be very helpful, sir.

Unidentified Speaker —

See, these are like — some of the questions like your question is quite internal to the working of the Company and we don’t reveal to the extent of the individual product level, the margins and percentages, so we stay away from this question.

Nirav Jimudia — Anvil Research — Analyst

Sir, second question is on the capex, what you mentioned for WNA and AN meld, so when these capacities will be commissioned to ammonia, WNA, AN meld, so if you can share the schedule of the capacities, which [Technical Issues].

Unidentified Speaker —

All these projects will be commissioned by end of Q3, Q4 of year ’25-’26.

Nirav Jimudia — Anvil Research — Analyst

[Technical Issues] and sir, just a small clarification on the WNA volume, what you mentioned, what we sold for 9 months, which you mentioned was 54,500 [Phonetic] for 100% right? So, generally, we sell in a concentration of 70%, 72% [Technical Issues] it is like 76,000 tons if we take 72% concentration. Am I correct?

Unidentified Speaker —

See, [Technical Issues] I have indicated a volume of weak nitric acid of around 85,000 tons, which is sold, so that is 100% sold, if you divide by 0.61, it will give you the ratio of total tonnage sold.

Nirav Jimudia — Anvil Research — Analyst

Correct. Sir, last year, what we sold, 1,12,000 was also on 100%?

Unidentified Speaker —

Yes, right, we report on 100% basis only.

Nirav Jimudia — Anvil Research — Analyst

Got it, sir. Thanks a lot, sir. Thank you for answering the questions.

Operator

Thank you. Our next question comes from the line of [Indecipherable] Asset Management. Please go ahead.

Unidentified Participant — — Analyst

Hello. Thank you for the opportunity sir. Sir, to the prior questions where you mentioned the split of revenue, possible to give us decreasing orders where contribution on the EBIT also, [Technical Issues] I mean vertical wise, just a directional which one in nine months, like you have given for turnover?

Unidentified Speaker —

Okay, I will broadly answer this question. See if you take like our marketing person, [Technical Issues] explain what is the order. Like he said, it started with AN meld first, right?

Unidentified Participant — — Analyst

Yeah.

Unidentified Speaker —

So in terms of contribution also, as of now it is the number one product. Okay.

Unidentified Participant — — Analyst

So you are saying contribution from TDI is positive because I remember, sir, in the last call, you said that it is loss making.

Unidentified Speaker —

No, no, no. [Technical Issues] from TDI, one positive, contribution in the quarter even from TDI-II is negative.

Unidentified Participant — — Analyst

Okay. Okay. And sir, the second question is a more forward-looking question, you mentioned that you expect stability given that now we have cost deflation as an advantage to us and as you mentioned that TDI prices and other chemical prices are also moving up. Safe to say that we can maintain run rate earnings for the next three to six months in your view?

Unidentified Speaker —

We can talk about an outlook, we cannot quantify a number.

Unidentified Participant — — Analyst

Yeah.

Unidentified Speaker —

Okay and we already responded on that, that we are already somewhere in early February, so we see the outlook stable for Q4. Now for stable, you can derive the meaning the way you want.

Unidentified Participant — — Analyst

Right. Fine sir. Fine. Thank you. Thank you so much.

Operator

Thank you. Our next question comes from the line of Bhavesh, an individual investor. Please go ahead.

Bhavesh — Individual Investor — Analyst

Thank you for the opportunity again sir. I just wanted to check the contingent liability, what is that and any update on the time [Technical Issues] open?

Unidentified Speaker —

You are talking about the department of telecom related contingent liability.

Bhavesh — Individual Investor — Analyst

Yes. Yes.

Unidentified Speaker —

There is no change in terms of the status.

Bhavesh — Individual Investor — Analyst

Okay. And we also made some provision for that, right? I mean provision for contingent liability, what was that?

Unidentified Speaker —

Okay. If you see, DOT liability is not the part of contingent liability at all. There are liabilities other than DOT liabilities, which are part of the contingent liability. For example, urea divergent case, for example, natural gas issue going on with GAIL. The third example is issue of insurance going on with NIA. These are the three major ones in the contingent liabilities.

Bhavesh — Individual Investor — Analyst

Okay, sir. Thank you for that.

Operator

Thank you. Our next question comes from the line of Nishith Shah from Aequitas Investments. Please go ahead.

Nishith Shah — Aequitas Investments — Analyst

Good evening, sir. Sir, I would like to understand how was the import standing in terms of volumes and price.

Unidentified Speaker —

Of which product?

Nishith Shah — Aequitas Investments — Analyst

For our major products.

Unidentified Speaker —

Okay. Shri Tejas Shah from marketing will respond on these industrial products.

Tejas Shah — IP Marketing

As you might be knowing, we are only manufacturing acetic acid in India, so if you consider acetic acid around Indian demand is 12 lakh tons and we are producing 1,50,000 tons, so we are only catering to 15% market, same way in the formic acid also, we are the only manufacture of formic acid, so 41% market, we cater and rest is import. Same way in [Technical Issues] also around 31% market, we cater, and 69% is import. TDI also, we are catering 65% market, TDI also, we are the only producer and 35% is import. [Technical Issues] four major products are getting imported. Rest of the couple of them like aniline, we hold a market share around 28 to 30% and in the technical grade urea almost around 45%, so your question was on the import scenario up to nine months, but more or less, these are the numbers on an annualized basis, so the figures can be derived based on our responses for each of the product. And the last one is methanol. Methanol [Technical Issues] manufactures considering the gas prices, so around 2.3 million tons of methanol is the requirement of the country, which is met with import.

Nishith Shah — Aequitas Investments — Analyst

Okay. So sir, the rest of the volumes, which are imported, are we seeing any significant price reduction and [Technical Issues] realizations going down?

Tejas Shah — IP Marketing

See all our products except [Technical Issues] based on the import parity price only.

Nishith Shah — Aequitas Investments — Analyst

Okay.

Tejas Shah — IP Marketing

Okay. So, if you see the performance reasonable better, then we have no choice but to compete with these people.

Nishith Shah — Aequitas Investments — Analyst

Okay. Okay.

Tejas Shah — IP Marketing

And we are the companies of much wider standings. You take [Indecipherable] for example, TDI, they are [Technical Issues] etc., who bring the product here, either through China or through Malaysia or at times even through Europe.

Nishith Shah — Aequitas Investments — Analyst

Okay. And sir, last time, I made a request on the conference call itself for a management [Indecipherable] and I was in touch with investor relation department, but I didn’t get any response. If there is any mail ID or somewhere possible where I can discuss my [Technical Issues].

A.C. Shah — Company Secretary and General Manager

Yes, you can put your request to me acshah@gnfc.in.

Nishith Shah — Aequitas Investments — Analyst

Okay, I will do that sir. That’s it, sir. Thank you.

Operator

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I now hand the conference over to Mr. D. V. Parikh for closing comments.

D.V. Parikh — Chief Financial Officer & General Manager

I’ll request Shri A.C. Shah, the Company Secretary and General Manager to take it further.

A.C. Shah — Company Secretary and General Manager

Yeah. We thank the participants to make this [Technical Issues] concall meet very bright success and as we all know that the performance of the Company is on the improving trajectory over a period of time and we expect the trend to continue in the times to come. At the same time, we thank Anurag Services [Indecipherable] for arranging this — arrangements for this concall meet and also my colleagues who participated and attended and addressed all the queries of the participants. So wish you all the very best. Thank you once again.

Operator

[Operator Closing Remarks].