Gujarat Narmada Valley Fertilizers and Chemicals Limited (NSE: GNFC) Q4 2025 Earnings Call dated May. 26, 2025
Corporate Participants:
Unidentified Speaker
D. V. Parikh — Chief Financial Officer
Y N Patel — Head of Operations and Maintenance Department
Analysts:
Unidentified Participant
Neerav Jimodia — Analyst
Atur — Analyst
mehul Panjwani — Analyst
Nidav — Analyst
Presentation:
operator
Ladies and Gentlemen, Good day and welcome to Gujarat Narmada Valley Fertilisers and Chemical Ltd. Quarter 4 Financial Year 2425 Earnings Conference Call Hosted by Anurag Services LLP on behalf of GNFC from the management we have Mr. D.V. parikh, Executive Director and Chief Financial Officer, Mr. Vayan Patel, Head of Department ONM, Mr. Rajesh Pillai, Company Secretary in charge and other senior members of the management. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the 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. parikh. Thank you and over to you Mr. Parikh.
D. V. Parikh — Chief Financial Officer
Thank you. Good afternoon all and very warm welcome to all the participants on this Q4 as well as full year FY2425 financial results con call I would first update you about some of the business updates and thereafter touch upon the financial results part and then we will take the question and answer on the business part like we have updated the investor presentation apart from the financial results on the website as well as with the Stock exchange which most of you must have gone through in terms of the key update, the basically Board of Directors has recommended a dividend of 180% which is 18 per share which augurs well as compared to the last one which was at 165% similar 16.5 rupees per share.
As far as capital expenditure plans of the company are concerned, total capex of around 2,900 crore is at different stages of execution as well as approval. Some of the capex is already part of the presentation whereas others are in the nature of maintenance capex which aim to improve the efficiency either efficiency or cost saving part of it. As you know, company has appointed Kearney and the final outcome of the recommendations has been debated in the last board meeting and now the company will be working on some of the chosen opportunities in respect of the capital expenditure investment.
The broad profile of Kearney has been into three parts. One is the organization structure, the second was the transformation which is pertaining to the existing operations and third is the expansion part of it. The expansion and transformation parts are already cleared and now the company will be working towards the execution thereof as far as fertilizer is concerned, as you know, effective 1st of April the NBS subsidies have been revised in case of GNFC the impact is roughly 2,600 rupees per metric ton. 2560 to be precise. Where only the P factor updated industry wide N factor is not updated somehow.
So these are the broad updates from our side on the capital expenditure and other aspects. I’ll touch upon the financial part of it. The company has clocked a turnover more or less equal to that of last year. This turnover reflects the elongated shutdown of TDI2 which otherwise would have added to to the top line of roughly 300 crore and profits of roughly 100 crore. When we are talking about profits we take into consideration two part One is the contribution loss and second is the extra cost which happens because of the shutdown. Mainly the variable cost on account of the shutdown.
Of course due to shutdown there are certain other fixed costs also like higher repairs and maintenance which account for it. So if you see barring for that elongated shutdown the results would have been higher by roughly 300 crore in terms of the top line and about 100 crore in terms of the bottom line. The Q4 has been quite good with the top line of roughly 2055 crore and the bottom line of 287 crore. PBTI I am talking about and out of the 790 crore of PBT 287 crore pertains to quarter four which is because of the very good contribution from the chemical side of it.
Overall if we see the losses on account of fertilizer has come down come down by a factor of around 64 crore rupees in spite of the fact that the volumes and the overall revenue has. Whereas in case of chemical the volumes have been higher, the profitability has also improved and some of the chemicals like an melt, technical grade, urea and annealing they have contributed positively towards the performance of the company. When you go to the segment assets and liabilities there is a net change of roughly 250 crore in the overall net worth of the company.
Mainly emanating out of two important reasons. One is the outgo of dividend which is accounted for on as it goes basis and second is the accrual of the profit. So this is how the 250 crore is the net impact which is coming to the net worth of the company. Talking about the other comprehensive income there is a net loss of roughly 100 crore. It emanates predominantly out of the listed investment which the company has where the prices have gone down. The overall effect of like 585 which is the pat minus the comprehensive other comprehensive income is now going to the net worth.
So this is the overall on the. On the P and L coming to balance sheet. There is no major change in the balance sheet except if you go towards the investment side. There is a liquidation of government securities during the year and which adds up to the cash flow. If you see the cash flow part of it. The profit and operating cash flow are more or less touching each other, which means there is no incremental working capital which is called for during the year. So with this I would like to end the opening remark and leave open the floor for Q and A.
Thank you very much.
Questions and Answers:
operator
Thank you. 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 will wait for a moment while the question queue assembles. The first question comes from the line of Neerav with Anvil Welt. Please go by.
Neerav Jimodia
Yes, sir, Good afternoon. I have a few questions to ask, sir. First of all, if you can let us know what was the sales volume growth? Hello, Am I audible, sir?
D. V. Parikh
Yes, you are audible but there is some background.
Neerav Jimodia
Not much popular now. I. No, I think it’s not from my disconnect.
operator
Yep, just give me a moment, let me check. It is coming from the line of the management.
D. V. Parikh
He’s also one of independent directors, you know. You know, throughout this tenure we have not heard of name technical. So from DFC management, you know, we are keeping finger cross management.
operator
Hold on, hold on for a while. We are making it good.
operator
Okay. All right, mister, please come back to you.
D. V. Parikh
We feel, you know, we are taking little bit risk, you know, in avoiding a job to like the other name like or technique and. But that’s okay. Ultimately what we are looking for is, you know, our estimated cost and your puted cost. We are much, you know, offsetting, you know, estimated rent. We are not in the range of plus or minus 20 or plus or minus 30 by you know, any standard. We are on very high side. So actually we are looking for, you know, and some discount, you know, from company like yours. And there are some seasoned players also, you know, we can very well talk to them.
But we feel that, you know, if you want to penetrate. So in a fertilizer industry, the GRMC is, you know, leading player in fertilizer industry. Apart from chemicals. We have a range of chemicals.
operator
Please go ahead.
Neerav Jimodia
Yeah, so my first question is on the sales volume growth in terms of volumes in FY25 versus FY24 basis. So if you can just walk us through what was the sales volume growth and also help in terms of which of the products have would have contributed to this sales volume growth in FY25.
D. V. Parikh
Yes, I am Tejas Shah, head marketing. As far as the sales volume is concerned the acetic acid sales was 7% higher than 23 24. An mill sales was also high by 9%. Annealin sales was high by 15%. TG urea sales was high by 52% and CNSLS was high by 15%. Formic acid cells was also high by 6.7%. Methanol by 73%. Methanol by 73% okay sir, in terms.
Neerav Jimodia
Of FY26 would there be any plan shutdown for any of our plants? And if you can also let us know which of the products within our product basket could see a volume growth in FY26 over FY25 basis.
Y N Patel
I am Nitin Patel. I look after operations and technical services. We already had a shutdown in the beginning of current financial year for about three weeks. So volume growth possibility is very less because of the factory shutdown for three weeks more or less. And we do not have any further shutdown till the end of fy.
Neerav Jimodia
Correct sir. For the products you have mentioned that we had registered a volume growth but I think we had a shutdown for the TDI plant for which the impact on the sales and profitability was explained on the opening remarks. So if you can guide us like what was the production for TDI in FY25 and how we are looking FY26 so far as TDI is concerned, combining.
D. V. Parikh
With the plants, Combining both the plants, the Production is down by 31%. TDI Baruch is more or less on the plus side plus 9% whereas TDI DH because of the extended shutdown we are down by 44% in the volume. And looking forward to current financial year, we do not foresee any major issue in achieving the installed capacity production. We will be close to that mark.
Y N Patel
Got it sir. Got it sir. Second question is so far as the input prices are concerned predominantly on the toluene side, we have seen good correction in the prices of toluene from March and onwards. So when can we see the benefit of this reduction in toll toluene prices in our numbers? Like it’s a major raw material for us. So have we also started seeing the reduction in tolling prices in our purchase Orders from the suppliers.
Unidentified Speaker
Yes, I am Dilip Parikh. Yes, tolling. In fact many petrochemicals are going down including tolling. But the issue is it also has an impact as of now on the TDI which is under pricing pressure since last couple of months. So that advantage is actually taken away when it comes to the input cost advantage because the output prices are also under pressure.
Neerav Jimodia
Correct. And sir, with reference to this I think in. In the presentation it is showing that we are going to commission the boiler in FY26. So with reference to its commissioning and benefit accruing out of it. If you can again refresh it in terms of the latest update that would be very helpful.
Unidentified Speaker
Yeah, I am Jagdish Thakkar looking after projects and present status of that CCPP plant which boiler plus power plant we are expecting to be completed by maybe September. September this year. The. Okay. I am Dilip Parikh. Actually your other part of the question was on the impact. See we foresee as of now impact which might range between 12 to 18,000 rupees per metric ton. It’s an interplay between the two prices of gas and coal. So. So one may say that effective first October, assuming that it all goes well and it is commissioned. This is the advantage we foresee in.
Our contribution and possibly it would help us to narrow down our losses in the TD at the PBT level.
D. V. Parikh
Yes, it depends upon the total value coming because on the other side there will be depreciation also on this investment which is which is having the capex size of 613 crore.
Neerav Jimodia
So next question is on the. On your opening remarks about the debate which you had with Atikarni for the reduction in the variable cost. So like this is more towards the power cost or the other operating cost or would also be extended towards improvement in our input output ratios or norms for most of the chemicals what we produce. And if you can share some insights that would be very helpful.
D. V. Parikh
See there were couple of initiatives. Number one is procurement optimization initiatives. We buy major raw material and fuel. Major raw material are benzene, toll wheel fuel oil, natural gas and other is power optimization increasing the portion of RE and substituting part of the captive power by re. Then third is digital initiatives. Management has insight to some extent on all these initiatives. But now on a concrete way forward we will move ahead with the handholding of third parties.
Neerav Jimodia
And sir, if I may ask like the benefit of this initiatives would be visible in FY26 or we would see the benefit coming next year.
D. V. Parikh
See they have defined short term Medium term and long term. If we talk about the oil then it’s a three to four year exercise. If we talk about other initiatives then it’s a one year to two year exercise. Some small initiatives are having a span of 6 to 12 months. So the effect on the balance sheet would be slow and grade fuel.
Neerav Jimodia
And sir, last from my side is if you can share the production numbers for ammonia and weak nitric acid for FY26 for ammonia, if you can share both for gas as well as from oil.
D. V. Parikh
Ammonia from oil we produce 3,36,000. From gas we produce 3,69,000. Having a ratio of around 48 and 52 respectively. With nitric acid we produce close to 4,43,000.
Neerav Jimodia
Okay. And of this possibly we would have sold 75,80,000 tonnes in the outside market is a safe assumption.
Neerav Jimodia
Yeah, more or less like that.
Neerav Jimodia
Got it sir. Thank you so much and wish the entire team all the best.
D. V. Parikh
Thank you.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Atur with ICICI Prudential Mutual Fund. Please go by.
Atur
Yeah, thank you for the opportunity. Just on this expansion which you highlighted that Kearney has given recommendation etc. Any in terms of size etc. You can share with us or in terms of product line, existing products, new drugs. If you can help us get some better understanding.
D. V. Parikh
Are you talking about new projects which are shown in the presentation?
Atur
No, that is given weak nitric acid, that is there. I’m saying in terms of the recommendation from Kearney for the next phase of expansion, is there a particular size which you are looking at in terms of the recommendation? Are there new products, existing products? What is the kind of expansion recommendations? If you can share.
D. V. Parikh
Okay. I am Dilip Parikh, I will tell you about this. First about the investment size. When we started with Kearney we took around 15,000 crore worth of kitty which we may look at for the purpose of investment. They have given few options which with an investment size which goes up to around 22,000 crore rupees. Coming to the question whether they are existing line, they are different products, not what we are manufacturing. However, they are more or less sort of import substitutes. So this is what broadly we can share. As of now, once the detailed feasibility report is out, we will be in a position to tell better about which particular products we are going in for.
Atur
Sure. So it could be part or it could be entirely. So it is right now that is not decided. It could be in parts also or in entirety also. Is that a better understanding?
D. V. Parikh
It will depend upon the attractiveness of the products which are suggested by them. When we do the detailed feasibility report, it will come out that what is the written profile of each of the product as against that, what is the investment size. So based on that, the project committee and board may decide.
Atur
Got it. Sir, thank you so much. Thanks.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of mehul Panjwani with 40 cents. Please go ahead.
mehul Panjwani
So thank you so much for the opportunity. I had a question because I’m new to the company and I have not gone through the investor presentation. Can you please help us? Help me who are messaged Karni and what is the. Can you just throw some light on the discussion which is going on about Kearney.
D. V. Parikh
See, Carney is one of the top four or top six management consultant globally for any company. Growth or improvement, performance improvement, future roadmap. It is very customary that this type of companies are hired and accordingly based on the directive of board. Kearney was on the board for all these activities. So they are managing management consultants.
mehul Panjwani
Right. So sir, have they completed their due diligence and furnished a report or they are in the process.
D. V. Parikh
Due diligence is completed. Report was presented to the board and it was debated in the last board meeting.
mehul Panjwani
Right. And sir, when do we think the board will finalize the. How do you want to go about with this?
D. V. Parikh
See the report. Report is presented and further line of actions are decided. For the margin improvement which was discussed in the first question and for detailed feasibility report. As our CFO has highlighted. For the new investment and new projects, all activities will begin now on a defined road. Road map.
mehul Panjwani
Right. And sir, where are these? Where is this management company from? Kerni? Is it from India or abroad?
D. V. Parikh
I think they are stationed in Bangalore. Bangalore or basically it is a multinational company.
mehul Panjwani
Right? Right. Right. Okay. Thank you so much. Appreciate your answers. Thank you.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask questions. Once again, a reminder to all the participants that you may press Star and one to ask a question. Ladies and gentlemen, as there are no further questions we have reached the end of question and answer session. We have a question. It’s from the line of Mehul Panjwani. Once again from 40 cents. Please go ahead.
mehul Panjwani
Thank you so much for the follow up. Sir, one question regarding the management consultant Kearney. Is it an initiative of the government of India or is it a initiative which was as part of the board initiatives.
D. V. Parikh
It is a board initiative.
mehul Panjwani
So sir, because GNFC is such a old company, have these kind of initiatives been done before also? Or this is just a first kind of initiative in terms of improving the margins and efficiency before.
D. V. Parikh
Before 17 years this kind of initiative was taken for the first time. And this is second exercise.
mehul Panjwani
Right sir. Okay. Thank you so much. Sir, help us.
operator
Thank you. Reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Nidav with Anvil Wealth. Please go ahead.
Nidav
Yes sir. Thanks for the opportunity again. Sir, one thing on the methanol part you mentioned that we had registered some close to around 73% volume growth. Sir, was the economics favoring in terms of the pricing of methanol for us to produce and sell in the market? Because I guess in some of the commentary last time or before that you mentioned that the pricing is the main criteria for us to produce methanol. So if you can share your thoughts here.
D. V. Parikh
Yes, you are right. Up to November we had that advantage of contracting gas at competitive price and about seven to eight months plant. Okay, that is normal cycle. We internally anticipated that we require so much time and it ran well. But from effective December again the prices of gas have gone up and are not competitive manufacturing. So the plant is stopped. As of now it’s not in operation. And for the 78 months when we rent the plant, the plant was profitable or the product was profitable in our old product basket portfolio.
Nidav
Yes, yes, got it. And sir, any outlook on the oil prices? Because even in the presentation when we see. I think the prices have been not correcting despite of crude prices correcting a bit. So are we seeing on a forward curve basis the prices of oil which we use for our ammonia production is seeing some sign of correction or some kind of softness?
D. V. Parikh
See, the pricing for oil is not directly correlated with this crude crude even if it comes down. This is a special category of oil which is procured from Indian oil. And like what we referred in terms of inputs from the strategic management consultant, we are using those levers to bring it down and hopefully it should come down as compared to what it used to be. Of course we have a formula based price mechanism with iocl. But somehow the different components therein are such that it does not have a direct correlationship with the. With the crude which.
Which you are referring to correct.
Nidav
And last thing from my side is on the ammonia through oil route we have produced close to around 36000 tonnes. So was there any opportunity for us in FY25 or more predominantly in Q4 of FY25 to sell some excess ammonia in the market to capitalize the benefits?
D. V. Parikh
Actually when we produce more of oil based ammonia in if the downstream products value added products are not working out then we think of selling the ammonia provide is profitable. In this case the downstream products worked Quite well in Q4 as you see from the chemical segment result also and the overall Q4 results also. So the ammonia was more valorized in terms of value added product rather than selling it out. So we did not sell any ammonia during Q4 or rather for the entire year.
Nidav
And so last question from my side is on weak nitric acid. I think in FY26 we are in the second half. We are seeing some of the capacities of WNA coming up more predominantly for CNA as well as for CN melt. So if you can shape share your thoughts here. A four for the demand for an melt in India and how do we opt to participate in that demand growth for an melt in FY26a and B? Do we also produce some sort of value added products for an mill like LDN or hdan which is a slightly better realization than an melt.
Thank you so much.
Unidentified Speaker
I’m Tejas Shah. If you see the Indian market now, ammonium nitrate import in FY24 25 is around 4.2 lakh tons. So no doubt additional capacity is coming. Chambal is coming up with additional 2 lakh tons. But Indian demand growth is also good compared for the ammonium nitrad. So that will slowly all the capacity will be absorbed in the Indian market.
D. V. Parikh
Correct?
Nidav
Correct. Got it.
Unidentified Speaker
Answer with your second question was about LDPN and other form of solid ammonium nitrate. We do not manufacture that. We manufacture only in the melt form.
Nidav
Okay? Okay. And sir, any plants over a period of time we may foray into or think of because like what could or in other words if I can ask like which is which factors are stopping us in terms of those value added products.
D. V. Parikh
If you can share see LDPN or solid form of ammonium nitrate. That itself is a separate plant drilling tower and downstream solid handling and product conditioning units. So that’s a higher capital investment. Melt is front end and solidification and conditioning is this rear end of the entire end product basket. If we talk that is why we are not into it and only producing the front end product that is made. One of the reason like of course there is some value addition but if you compare it with the incremental capex it really did not work out for the company and therefore we change back our mind from those kinds which is a kind of a flake size to continue to produce in the melt form only.
Nidav
And sir, given the kind of volumes and the plants we manage across both the location what one should consider in terms of an annual maintenance capex which we need to spend in order to keep the plants up and running.
D. V. Parikh
Okay. If you see the total R and M normally when the shutdown is there touches to 200 crore per annum.
Nidav
Okay.
D. V. Parikh
Taken together for both the complexes.
Nidav
Okay. And sir if you can guide in terms of what should be the capex for FY26.
D. V. Parikh
Capex maybe for this year we will be able to complete power plant that is around 600 crores. And that is 600 crores around completion expenditure you are talking about.
Nidav
Yeah.
D. V. Parikh
It will be around 300 crores.
Nidav
Okay. And this 300 crores also includes our maintenance capex also.
D. V. Parikh
No, no, no no. It’s a different. It does not include maintenance capex as such. See the capex which this was referring to is out of around 2,200 crore which is part of the presentation which predominantly consists of three three different nature which is weak nitric acid of roughly 1420 crore. 225 crore which is undergoing certain cost as creation. And the the third is CCPP which is 613 crore as of now.
Nidav
So in an ideal scenario we should work with this 300 crores plus 200 crores of maintenance capex in order to keep the plant.
D. V. Parikh
It will be more than that. Maintenance capex will be more than that. Okay, then it has its own spread of time like one of the maintenance capex which we which pertain to the effluent treatment plant. It will go over more than two years which is to the tune of roughly what 130 crore. So. So it is like that. Whereas there are certain capex like retrofit of turbines which will happen over a period of 16 months or so. So the spread would be over 2 financial year. Probably it depends upon when it starts and when it ends.
But the spread would be over two financial years at least.
Nidav
Thank you so much and all the best.
D. V. Parikh
Thank you.
operator
Ladies and gentlemen, as there are no further questions we have reached the end of question and answer session. I would now like to hand the conference over to Mr. D V Parikh for closing comments.
D. V. Parikh
I will request Rajesh to talk about the vote of thanks.
Unidentified Speaker
Thank you to all the participants for joining this call and I would like to express my gratitude to all the senior executives of the company, as well as the moderator and the team of Anurag Services llp. Thank you.
operator
Thank you on behalf of Anurag Services llp. That concludes this conference. Thank you for joining us. You may now disconnect your lines.