Gujarat State Fertilizers & Chemicals Limited (GSFC) has reported a robust financial performance for the first quarter, with a significant increase in profitability despite marginal revenue growth. The company's strategic focus on its fertilizer segment and improved operational efficiency have contributed to this strong start to the fiscal year.

Key Financial Highlights

• Revenue from operations grew marginally by 1% year-on-year to Rs 2,184.00 crores
• Profit Before Tax (PBT) surged by 63% to Rs 184.00 crores
• Profit After Tax (PAT) increased by 59% to Rs 139.00 crores, compared to Rs 87.00 crores in the same quarter last year
• Earnings Per Share (EPS) jumped to Rs 3.48, marking a 58.90% increase from the previous year

Segment Performance

Fertilizer Segment

The fertilizer segment emerged as the star performer for GSFC this quarter:

• EBIT (Earnings Before Interest and Taxes) from the fertilizer segment rose to Rs 137.00 crores, up from Rs 86.00 crores in the corresponding quarter last year
• Strong performance was supported by robust trading volumes in NPK fertilizers
• Higher manufactured Ammonium Phosphate Sulphate (APS) and Ammonium Sulphate (AS) sales contributed to the segment's growth

However, fertilizer production saw a reduction of approximately 10% due to the ongoing urea plant revamping project. This includes a one-time transfer of 14,435 metric tons of urea towards the revamping project.

Industrial Products Segment

The industrial products segment showed a turnaround:

• Reported an EBIT of Rs 25.00 crores, moving into profitable territory
• Improved realization in ammonia and HX crystals contributed to the segment's positive performance

Operational Highlights

• Commissioned three major projects during the quarter:
  1. A 15 MW solar power project
  2. Urea energy revamp facilities
  3. Participation in GIPCL's 75 MW solar project (GSFC's share: 37.5 MW)
• These projects are expected to enhance cost efficiency and sustainability in the long term

Raw Material Dynamics

The company faced mixed trends in raw material costs:

• Natural gas and ammonia prices softened, offering some relief
• Phosphoric acid and sulphuric acid costs increased sharply, impacting P&K fertilizer cost economics

Management Outlook

GSFC's management has provided insights into their expectations for the full year:

• Anticipates fertilizer volumes of 23-24 lakh tons
• Expects a government subsidy revision from October 1st due to rising input costs

Financial Position

GSFC continues to maintain a strong balance sheet:

• No long-term debt
• Healthy net worth
• Adequate liquidity, supported by timely disbursement of government subsidies

Conclusion

Gujarat State Fertilizers & Chemicals Limited has demonstrated resilience and adaptability in a challenging market environment. The company's focus on operational efficiency, strategic project commissioning, and a strong fertilizer segment performance have contributed to its impressive Q1 results. As GSFC navigates through fluctuating raw material costs and anticipates potential subsidy revisions, it remains well-positioned to capitalize on opportunities in both the fertilizer and industrial products segments.

Gujarat Narmada Valley Fertilizers and Chemicals Ltd (GNFC) has reported a significant decline in its financial performance for the first quarter of the fiscal year 2024. The company's consolidated net profit dropped by 30% to ₹83.00 crore, down from ₹118.00 crore in the corresponding quarter of the previous year.

Financial Highlights

The company's total income for the quarter decreased to ₹1,751.00 crore from ₹2,120.00 crore year-on-year, marking a 17.40% decline. Both major business segments of GNFC witnessed revenue contractions, with fertilizer revenues falling to ₹577.00 crore from ₹701.00 crore, and chemical revenues dropping to ₹1,005.00 crore from ₹1,304.00 crore.

Factors Affecting Performance

The Managing Director of GNFC attributed the decline in financial performance to several factors:

1. Lower Volume Availability: This affected both the fertilizer and chemical segments.
2. Tough Market Conditions: Products like Aniline and TDI faced challenging market conditions, impacting realizations.
3. Shutdown Effects: Operating results were influenced by shutdown activities.
4. Urea Segment Challenges: Higher energy costs compared to allowable energy led to widened losses in the urea segment.
5. Chemical Margin Erosion: Some chemicals experienced margin erosion due to lower realizations.

Board Approval for Director Re-appointment

In a separate development, the board of GNFC has approved the re-appointment of Bhadresh Mehta as an Independent Non-Executive Director. The proposed term is for three years, from September 2025 to September 2028, subject to shareholder approval.

GNFC faces challenges in both its fertilizer and chemical businesses. The company will need to navigate through the current market conditions and operational challenges to improve its performance in the coming quarters.