GNFC - Gujarat Narmada Valley Fert.Co.Ltd Share Price

Management provided an outlook indicating that the fertilizer segment is expected to recover in the upcoming quarters, particularly around Q3 of FY'25-'26. They anticipate revised energy norms, which should enhance operational efficiency and reduce losses. The company reported losses in the fertilizer segment of approximately Rs. 100 crores due to higher energy consumption, a decrease in urea volume by approximately 40,000 tons, and increased repairs and maintenance costs.

For TDI production, management expects to reach around 67,000 tons for FY'26 if operations run smoothly. They noted a total TDI production of approximately 16,000 metric tons for Q1 FY'25-'26. The company has recently increased TDI prices by Rs. 12,000 as of August 1, and is observing the market for further adjustments, although domestic demand appears to be currently subdued.

The management outlined that projects are generally on schedule, with ongoing monitoring of the coal-fired power and steam generation plant. They expect that improvements from strategic initiatives undertaken with consulting firm Kearney will begin to materialize soon, especially concerning cost-cutting measures and investment pathways.

Overall, the management expresses cautious optimism, anticipating a combination of operational efficiencies and external support to improve financial performance moving forward.

1. Question: "So, I just wanted to understand how much we have achieved in Q1 put together both the plans for TDI close to around 67,000 tons?"

Answer: Our total TDI production for Q1 was around 16,000 metric tons. This is lower than our previous guidance. We continue to aim for closer to 67,000 tons for FY'26, provided that operations run smoothly without unforeseen breakdowns.

2. Question: "How do we see the fertilizer segment performing for the rest of this financial year?"

Answer: The current energy norm of 6.20 is under revision, and we hope for a reasonable increase. We expect that losses will reduce significantly from Rs. 180 crores last year, with Rs. 100 crores in Q1 already showing improvement. This outlook is contingent on favorable adjustments in energy consumption norms and effective product optimization strategies.

3. Question: "What are we currently doing regarding the implementation of the suggestions from our strategic management consultants?"

Answer: We are at an advanced stage in discussions with Kearney, focusing on investment pathways and cost-reduction strategies. We plan to formalize an implementation plan by Q2, with expectation for financial benefits emerging from this strategy.

4. Question: "What has been the recent pricing increase for TDI, and is there more scope for further increases?"

Answer: On 1st August, we increased TDI prices by Rs. 12,000. We are observing the market closely; demand has been slightly weak due to the rains. Future price adjustments will depend on market conditions, which may allow for additional increases.

5. Question: "What was our ammonia production through oil, and how does it reflect in our cost structures, considering we purchase externally sometimes?"

Answer: Our ammonia production through oil accounted for around 47%, totaling approximately 138,000 metric tons, with 81,000 being gas-based. The requirement sometimes leads to shortfalls, leading us to purchase externally when necessary, although costs remain favorable compared to our production costs.