Gujarat Narmada Valley Fertilizers & Chemicals Limited (GNFC) has reported a significant decrease in its financial performance for the first quarter, primarily due to a planned annual shutdown at its Bharuch complex.

Financial Highlights

• Revenue from operations fell to ₹1,601.00 crore, compared to ₹2,021.00 crore in the same quarter last year.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) dropped to ₹310.00 crore from ₹1,530.00 crore year-over-year.
• EBITDA margin contracted to 1.94% from 7.57% in the comparable period.
• Net profit decreased to ₹78.00 crore from ₹115.00 crore in the previous year's corresponding quarter.

Segment Performance

The company's performance was affected across both its major segments:

In the corresponding quarter of the previous year:

• Fertilizers segment revenue was ₹701.00 crore with a loss of ₹44.00 crore.
• Chemicals segment revenue was ₹1,304.00 crore with a profit of ₹150.00 crore.

Factors Affecting Performance

Dr. T. Natarajan, Managing Director of GNFC, attributed the decline in financial results to several factors:

1. Annual Turnaround: The company underwent a planned annual shutdown at its Bharuch complex for 18 days (April 1-18), impacting production volumes.
2. Lower Volume Availability: This affected revenue in both Fertilizer and Chemical segments.
3. Unproductive Costs: The shutdown led to increased unproductive costs.
4. Higher Fixed Costs: Mainly due to repairs and maintenance during the turnaround period.
5. Market Conditions: Tough market conditions prevailed for products like Aniline and TDI, affecting realizations in the chemical segment.

Positive Developments

Despite the challenges, GNFC reported some positive developments:

• Successfully extended the Anti-Dumping Duty on Aniline until July 2030.
• Experienced significant cash flow improvement due to timely receipt of subsidies from the Government of India.
• The company is pursuing revision in both energy and fixed costs with the government, with an expected announcement by the end of the calendar year.

Future Outlook

GNFC remains optimistic about its future prospects:

• The company expects better operational costs for TDI at its Dahej Plant with the likely operationalization of a power plant, potentially improving margins at the Dahej complex.
• At the Bharuch Complex, throughput has stabilized following the annual turnaround.
• GNFC is working on operational improvements and a capex roadmap, with feasibility studies underway for various identified options.

The company continues to work closely with government bodies to ensure fertilizer availability as per allocated priorities. While the Q1 results show a significant decline, GNFC's management emphasizes that these figures are not directly comparable to previous periods due to the impact of the annual turnaround.

Gujarat Narmada Valley Fert & Chem (GNFC) is poised to gain from a recent trade protection measure implemented by the Indian government. The Directorate General of Trade Remedies (DGTR) has announced an extension of anti-dumping duties on aniline imports from China for a period of five years, a move aimed at safeguarding the interests of domestic producers.

Extended Protection for Domestic Industry

The decision to extend the anti-dumping duty is expected to have a positive impact on Indian manufacturers of aniline, with GNFC being a notable beneficiary. Aniline, an important organic compound used in various industries including rubber processing chemicals, dyes, and pharmaceuticals, has been subject to dumping practices by Chinese exporters, potentially harming the competitiveness of Indian producers.

Implications for GNFC

As one of the key players in the domestic aniline market, GNFC stands to benefit significantly from this trade protection measure. The extended anti-dumping duty is designed to level the playing field by imposing additional tariffs on Chinese aniline imports, thereby making domestically produced aniline more competitive in the Indian market.

Market Outlook

The five-year extension of the anti-dumping duty signals a long-term commitment from the government to protect and nurture the domestic aniline industry. For GNFC, this could translate into:

• Improved market share in the domestic aniline segment
• Potential for better pricing power
• Enhanced capacity utilization of its aniline production facilities
• Increased profitability in its chemical business vertical

While the specific financial impact on GNFC remains to be seen, the extended trade protection is expected to create a more favorable operating environment for the company in the aniline market.

Investors and industry observers will be keenly watching how GNFC capitalizes on this opportunity to strengthen its position in the aniline segment and potentially improve its overall business performance in the coming years.