Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) has announced a major contract award worth approximately ₹360.00 crores to Toyo Engineering India Private Limited for the supply of an Ammonium Nitrate-II plant. The disclosure, made under Regulation 30 of SEBI Listing Regulations, marks a significant expansion in the company's fertilizer manufacturing capabilities.

Contract Details and Specifications

The awarded contract encompasses the supply of an Ammonium Nitrate-II plant on LEPC (Lump Sum Engineering, Procurement and Construction) basis. Key parameters of this major industrial project are outlined below:

Technology Partnership and Board Approval

The project received board approval during GNFC's meeting. Toyo Engineering India has established a strategic tie-up with INCRO, S.A., Spain, for the supply of process know-how and license for the Ammonium Nitrate-II plant. This international collaboration brings advanced Spanish technology to enhance India's fertilizer manufacturing capabilities.

Capacity Enhancement and Market Impact

The new Ammonium Nitrate-II plant represents a substantial expansion for GNFC, with the company stating that this installation will enhance their capacity by 94%. Currently, GNFC operates an existing Ammonium Nitrate plant, and this additional facility will significantly strengthen their market presence in India's Ammonium Nitrate segment.

Regulatory Compliance and Corporate Governance

The contract award adheres to strict regulatory requirements, with GNFC confirming several key compliance aspects:

• No promoter or group company interest in the contracting entity
• The transaction does not fall within related party transactions
• Full compliance with SEBI Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155

Strategic Alignment with National Initiatives

GNFC emphasized that this plant installation aligns with the Make in India Campaign, demonstrating the company's commitment to supporting domestic manufacturing initiatives. The project also reflects GNFC's dedication to environmental conservation while fulfilling downstream requirements in the fertilizer sector.

The contract award represents a significant milestone in GNFC's expansion strategy, positioning the company to better serve India's growing demand for Ammonium Nitrate while leveraging advanced international technology through the Toyo-INCRO partnership.

Gujarat Narmada Valley Fert & Chem (GNFC) has announced a significant expansion of its Ammonium Nitrate Melt (AN Melt) production capacity, as part of a broader capital expenditure plan totaling INR 2,800 crores. The company's Board of Directors has approved a new 163,000 tonne AN Melt II project worth INR 450 crores, marking a substantial increase in GNFC's chemical production capabilities.

Expansion Details

The AN Melt II project is part of GNFC's strategic growth initiative, which includes several other major projects:

This expansion will nearly double GNFC's AN Melt capacity, bringing the total to approximately 338,000 tonnes per annum when completed.

Financial Performance

GNFC reported improved quarterly results, driven by:

• Reduced input costs
• Better volumes in Weak Nitric Acid (WNA), AN Melt, and Technical Grade Urea (TGU)
• Increased production of ammonia, reaching 155,000 tonnes in Q2

However, the company faced margin pressure in aniline and acetic acid due to import competition and methanol sourcing issues.

Future Prospects

GNFC is actively considering additional investments in bisphenol A and polyol projects, with a potential investment of INR 7,000-8,000 crores. These projects aim to capitalize on the growing market for these chemicals, which is expanding at around 7% annually.

The company is awaiting a potential revision in fixed costs and energy norms for urea production from the Department of Fertilizers, which could help reduce losses in the fertilizer segment.

Challenges and Opportunities

• The recent Iran sanctions have impacted methanol sourcing, affecting acetic acid production.
• GNFC is exploring options to improve profitability in its fertilizer segment.
• The company is working with management consultants to identify cost-saving measures across procurement, operations, and digital deployment.

GNFC's expansion plans and strategic investments demonstrate its commitment to growth in the chemical sector, while also addressing challenges in its fertilizer business. The company's focus on diversification and capacity enhancement positions it to capitalize on market opportunities and improve overall performance in the coming years.