GNFC Reveals Expansion in Nitric Acid Production Capacity
- 16-Aug-2024 12:17 PM
- Journalist: Rene Swann
The Gujarat Narmada Valley Fertilizers & Chemicals Limited (GNFC) Board, during its meeting on 13th August 2024, approved a significant investment proposal to establish a 2,00,000 MTPA weak nitric acid production facility. This expansion will boost GNFC's weak nitric acid capacity by approximately 57%, reinforcing the company's production capabilities and market presence. Moreover, the Board has also cleared the path for further investments in Ammonium Nitrate as a downstream product, which aligns with GNFC's strategy to diversify its product portfolio and capitalize on growth opportunities in the chemical sector.
The Board has also approved the appointment of Strategic Management Consultant (SMC), Kearney, to guide the company in setting its strategic direction. With Kearney's expertise, the company will develop and present comprehensive measures for short, medium, and long-term growth to the Board within the next six months. This initiative is aimed at ensuring sustainable future growth, aligning with the company’s vision, and enhancing its competitive edge in the market.
Mr. Pankaj Joshi, IAS, Managing Director of GNFC, highlighted that during Q1 FY 2024-25, improved margins in industrial chemicals contributed to a favorable increase in EBITDA. However, on a quarter-over-quarter basis, the annual turnaround at the Dahej complex reduced available production volumes, which impacted Profit Before Tax (PBT). Production at Dahej is anticipated to resume in August 2024, which will stabilize domestic supply. Additionally, the domestic share of TDI in total production has risen recently, leading to relatively better realizations compared to export markets.
The impact of capital gains on the company's long-held investments, both quoted and unquoted, is reflected in Other Comprehensive Income (OCI). This includes adjustments for any realized or unrealized gains from these investments. As a result, an additional capital gains tax liability of approximately INR 8 crores has been recorded in OCI. This entry captures the financial impact of the capital gains on the company's investments, ensuring that both the gains and associated tax implications are accurately reported and accounted for in the comprehensive income statement.
With the completion of the annual shutdown at the Dahej complex scheduled for August 2024 and the continued stability in operations at the Bharuch facility, the company is optimistic about its performance in the upcoming quarters of FY 2024-25. The resumption of full production capacity at Dahej, combined with the consistent performance at Bharuch, is anticipated to positively impact financial results.
GNFC is a public-private partnership formed in 1976 with the Gujarat government and Gujarat State Fertilizers & Chemicals Ltd. as joint promoters. The company initiated its manufacturing and marketing operations in 1982 from its Bharuch, Gujarat facility, centered around a world-class ammonia-urea fertilizer complex. Over time, GNFC strategically diversified its operations, expanding its footprint into the chemicals domain. This strategic shift has positioned chemicals as a core revenue stream and a pivotal contributor to the company's overall financial performance, underscoring GNFC's evolution into a diversified chemical and fertilizer manufacturer.