Gujarat Narmada Valley Fertilizers & Chemicals Ltd (GNFC) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Your passcode has been confirmed. Please wait while you are joined to the conference. The conference is now being recorded.
Moderator: Ladies and gentlemen, good day, and welcome to Gujarat
Moderator: Narmada Valley Fertilizer and Chemical Limited, GNFC Q2 and FY27 earnings conference call. This call is hosted by Anurag Service LLP on behalf of GNFC Limited. From the management, we have Mr. D.V. Parikh, Executive Director and Chief Financial Officer, Mr. Nitin Patil, Executive Director, Mr. P.K. Purohit, Executive Director, Mr. Rajesh Pillai, Company Secretary and Compliance Officer, and the other senior members from the management. As a reminder, all the participants' line will be in the listen-only mode. There will be an opportunity for you to ask a question after the presentation concludes. Should you need assist during the conference call, you may signal an operator by pressing '*' then '0' on your touchtone phone. I now hand over the conference to Mr. D.V. Parikh, Executive Director and CFO from GNFC. Thank you and over to you, sir.
D.V. Parikh (Gujarat Narmada Valley Fertilizers & Chemicals Ltd): Thank you, ma'am. And thank you, Anurag Services for organizing this call. Good afternoon to moderator and all the participants, investors, prospect investors, and analyst. GNFC welcomes you all to this conference call. Joined along with me are two other gentlemen, one from the fertilizer marketing and one from the industrial product marketing. So, they will take your questions related to marketing. The quarter two results, investor presentation, press release among other things have already been shared yesterday in the public domain. I'll first start with the business overview and then go to financials. Business in general is witnessing the times of resilience during the war-driven turbulent times where the only certainty as of now is the uncertainty. Company has been in a position to wither away the uncertainty by balancing out with its multiple product portfolio maintaining the profitability. Especially, the energy prices in general from period to period have witnessed a very sharp upturns. Like, oil has been on the boil. Gas is having its pricier glitters, coal costing its dark net on the utility cost. Period-to-period impacts have been different, but in general, energy prices are on an escalated level across the board. This has a ripple effect on the feed and fuel cost soaring, and it affects the fertilizer sector too badly with very high cost of loading on the government subsidy. Companies in turn are also bearing the burden of soaring input cost not becoming a full pass-through due to the open fronts available to competitors like China. Overall inflationary effect of high energy prices have become apparent in various forms as high labor and maintenance cost as well. Against these steep headwinds, the business is navigating its ship in a manner. It sweats its assets for the maximum possible positive results. On the front of government support and policy-related initiatives, in spite of the issues on the energy sector, the Government of India has been successful in ensuring the adequate availability of both feed and fuel at industry level and at country level. Subsidy payouts have been timely. So, liquidity is in place. The nutrient-based subsidy rates are yet to get announced for the rabi season. And in respect of the fertilizer sector, the NITI Aayog has been assigned the task of reviewing the fixed cost of urea industry. Coming to the financial performance, we start with the P&L first. While the YoY performance has been significantly better as compared to the previous year, as well as compared to the YoY Q2, the sequential quarter has witnessed margin pressures mainly because of the lower margins on the finished product and also because of certain energy prices going abnormally high. While the sales volumes in general have been improved on a YoY basis, prices have played a key role in the turnover.
D.V. Parikh (Gujarat Narmada Valley Fertilizers & Chemicals Ltd): Impact on some of the chemicals like TGU, technical grade urea, ammonium nitrate melt, weak nitric acid, and so on. Coming to the balance sheet, it continues to be in the healthy shape. CapEx for H1 amounts to about 500 crores. Captive coal based plant is now operational and ongoing projects by and large are on execution schedule in spite of certain impact of geopolit- political effects. Going over to cash flow for H1, there is a healthy operating cash flow generated. Working capital levels in general have gone up mainly due to the subsidy receivables where the energy prices are of the previous period and therefore the concession rates are pegged to those periods. Dividend declared has been paid out during the quarter. And given this situation, a highly fluid situation will call navigating the situation as it comes has been the way forward for the short term. Although for medium term to long term the focus has been running the fair operations as well as adding meaningful products to the pipeline. With this, we open the floor to Q&A. Thank you very much.
Moderator: Thank you very much. Now we begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a headset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. As soon as someone press star and one to ask a question, the lead operator will enter the conference and announce the participants in this way. The first question is from the line of Nirav, Anvil Wealth. Please go ahead.
Nirav (Anvil Wealth): Yeah. Good afternoon, sir, and thanks for the brief presentation. Sir, you touched upon a few aspects in terms of various products impacting the profitability, but when we see your presentation and the products what you have shown, I think spreads for most of the products were either steady or were on the higher side in this quarter. Also, the major raw material which is oil for us, which is used for ammonia, it is also down on a Q-on-Q basis. So, and when we see the operating profit on a sequential basis, we were down by close to around 200 crores. So, if you can slightly explain much in detail about this sharp fall in the profitability on Q-on-Q basis, that would be very helpful.
Moderator: The next question is from the Ashish Agarwal, on the den cap. Please go ahead.
Nirav (Anvil Wealth): Hello. Hello. No, no. It is yet being answered, ma'am.
Rajesh Pillai (Gujarat Narmada Valley Fertilizers & Chemicals Ltd): Mansha, what we'll do is like we will take up the question and and questions and along with that we will also provide the management will reply. And then we go to the next investors. This is this is how we will follow. So let us let us first give the answer to Mr. Nirav and then we will proceed.
D.V. Parikh (Gujarat Narmada Valley Fertilizers & Chemicals Ltd): So I will answer. See, Mr. Nirav, right?
Nirav (Anvil Wealth): Yes sir.
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