Gujarat State Fertilizers & Chemicals Ltd
BSE:500690
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
180.75
317.8
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Gujarat State Fertilizers & Chemicals Ltd
Earnings Call Analysis
Q2-2024 Analysis
Gujarat State Fertilizers & Chemicals Ltd
The company holds a modest 1% of the urea market with an annual production of around 370,000 tonnes, addressing a sliver of the country's demand. However, in the products where it has an oligopoly, such as ammonium sulfate, caprolactam, and melamine, the company dominates with more than a 50% market share in ammonium sulfate and is the sole producer of melamine in India, supplying 40% of the national demand.
Changes in government policies significantly influence the company's operations. The Indian government, which has moved towards promoting Nano urea, can impact traditional urea producers like the company which is not currently in the Nano space but has a strong presence in liquid fertilizers. In terms of financial subsidies, the company relies on government support to mitigate costs and maintain profitability. Recently, the company faced reductions in fertilizer subsidies based on lower input costs earlier in the year, which does not reflect the current increases in input costs such as ammonia and phosphoric acid.
Despite pressures such as reduced subsidies and fluctuations in input costs, the company managed a marginal increase in profits from INR 285 crores in September 2022 to INR 309 crores in September 2023. They have sustained profitability with prudent measures and recognize a potential saving of INR 75,000 crores to INR 1 lakh crore expected by the government due to rising revenues and declining subsidies. The company has outlined an expansive investment plan of INR 8,000 crores, aiming to set up new projects at different stages of development, including a significant portion allocated for a setup in Dahej.
The company anticipates that the third-quarter margins will be impacted by reduced subsidies, while there is a prediction of regaining reasonable margins by the fourth quarter. The expectation is built on the assumption that either input prices will come down, or the government will increase the subsidy. This hinges on maintaining consistent fertilizer production and import levels, crucial for the upcoming agricultural season starting from April-May 2024.
In alignment with sustainability initiatives, the company is commissioning a 15-megawatt solar power plant next year, which could cater to around a portion of its power requirements, contributing to reduced power and fuel costs. Currently, the company consumes 17-megawatt hour power, with about 40% coming from renewable sources, pointing towards an increased dependency on renewable energy sources.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Gujarat State Fertilizers & Chemicals Ltd. Investors con call meet to discuss the financial performance for the Q2 FY 2023/'24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitesh Vaghela from Anurag Services LLP. Thank you, and over to you, sir.
Thank you, and good afternoon. Welcome to the quarter 2 FY '23/'24 Earnings Conference Call of Gujarat State Fertilizers & Chemicals Ltd, hosted by Anurag Services LLP. From the management, we have Mr. V.D. Nanavaty, Executive Director, Finance and CFO; and other senior members from the management.
I would like to thank the management for giving us the opportunity to hold this call. We will begin the call with opening remarks from the management, post which will be held a question-and-answer session. Thank you, and over to you, sir.
Good afternoon, and welcome to the participants. Thank you for joining the GSFC Q2 post-results con call. To give you some brief about the agriculture and economic scenario prevailing in context of the Q2 performance, I would request our Executive Director, Marketing, Agri business to summarize the situation, please.
Good afternoon, all. Just to give a brief on the agriculture, the monsoon was onset, a little delayed by a week's time. But the [ sowing ] is same as last year, the area of sowing is the same as the last year this year also. We saw a drier [ sell ] in August, where the rainfall is very scanty. This is the driest [ sell ] in the last 5 years time.
Our business [ stayed ] where the rainfall was there for parts of the Bihar, U.P., West Bengal and Karnataka. In Gujarat, which is our prime market, we have -- we were fortunate to have 18% excess rain, so there is no dry [ sell in Punjab ]. August was a concern, which resulted in shifting of the crop to soybean lot.
And agriculture started the current [indiscernible] with a positive note already [ concerned ], with MSP increased by 7% to 10% of different crops by the government. And the MRP of also the fertilizer remains as last year, except where in case of ammonium phosphate sulfate, which is again a prime product for [indiscernible], went down to INR 1,200, which was lower than the DAP -- MRP of [ INR 13 increase ].
Overall, [ sowing ], as I already said, was nearly the same as last year, only 1% change as they are changing the cropping pattern both across the country and in our primary market of Gujarat. In Gujarat, we have shifted towards [indiscernible] asset and [indiscernible] these two things are less paid. A dry [ sell ] can sustain these crops. Also, the [indiscernible] reduced, there was a slight increase in cotton also, 5%.
So consumption of fertilizer also remains the same. I do [ need to see ] that. Like from GSFC also, we were producing for Fertilizer, [indiscernible], urea and ammonium sulfate at Baroda, and the plants are running at capacity. And we -- our Sikka plants were also running and producing DAP and [ APS ]. We also have imported DAP to fulfill the need of the country.
The prices were stable till late August. Thereafter, there were certain rises international price of fertilizers. Like DAP went up from $450 to $590, and even urea went from $280 to $400, which has resulted into hike in prices -- net prices to other companies because raw materials has also increased. Like sulfuric acid increased from $970 -- $850 to $970 and $980; and ammonia today is at $540, which was in the range of $370 -- $280 to $370 in August.
So within this scenario, we could perform better because of the good rain and support to agriculture from the government. Over to you, Nanavaty, sir.
Thank you. With this background, now we will have a company-specific summary. So having seen the numbers, they were our highest quarter to sales of [ INR 3,000 crores]. And Fertilizer also, sales were at the highest level. If we talk about the volumes, I think Q2 over Q2 last year, [ 62% ] rise in volume terms [ record ] production that was backed by the higher production of -- in our plant. In value terms also, the Fertilizer sales increased by 35%.
Reduction in all major raw materials during Q1 and Q2, like sulfuric acid and ammonia, sulfur, [ nickel ], all this can help in improving or sustaining our [ margin]. So they have seen less compared to last year. But as we have said a number of times, last year was a highest result for the GSFC, historical year, so sustaining that kind of performance is difficult. So there was expected to be some reduction in turnover and margin.
For our subsidiary, [ collections ] are confirmed. The government is regular in providing the subsidy support. We have received subsidy up to September '23. Fertilizer volume, as far as we are concerned, we have seen the H1 volume. For the next H2 and overall, for the year as a whole, we hope that we will start [ 15% ] growth in volume as compared to last year, supported by higher production and [indiscernible] the opportunity arises for [ DAP ] and other fertilizers.
You must have seen the balance sheet and cash flow. Cash and bank balances are at around INR 2,300 crores, and this is after the dividend payment of INR 400 crores in late September, early October. Capro-benzene's trade remained low during the quarter, but it has started some improvement, more than $700 from October onwards. And on the early pages, we see $700 to $750 of average paid throughout the year.
As you might have noted in the notes to our accounts that reduction in quarter -- I mean subsidy from October onwards has been provided by the company, for that [ had to ] roll support because the stock that was lying with us on 30th September.
We have also provided INR 100 crores for salary reasons, which was due from 1st January '23. So this quarter, that accommodated a large provision, still the results are comparatively good.
As you are aware, government -- as per government of Gujarat [ GR ], companies have increased their dividend. So we had a good dividend income in Q2 of INR 147 crores, which is almost INR 95 crores higher than last year. Similarly with the comfortable cash position, we'll continue to have better interest income in H2 also, so there will be additional support for the profitability of the company.
CapEx, we have been talking regularly. So we have total CapEx of around INR 4,000 crores at different stages, and that will give -- whenever they will be working it at 100% capacity, they will provide good top line and bottom line support, going forward.
We also have -- thereafter, we also have plans for expansion at Dahej, for which DPR is under way, and we hope that detailed project reports will be available by March '24, with some technology, identification of [ tech ] supplier and all. So we will take the matter forward in a concrete way thereafter.
So the growth story of the GSFC remains intact, and we are poised to grow in top line and bottom line together for years to come. Thank you.
[Operator Instructions] The first question is from the line of Vaibhav Seth, retail shareholder.
Yes. I'm Vaibhav Seth from Jamnagar, Gujarat. I would like to ask two questions. First question is that after the announcement of [ GR ] of Gujarat government in the month of April, there are rumors in market that they are looking at the case of GSFC and stand-alone company. GSFC can do holding company plus GSFC stand-alone case -- GSFC can do INR 35 to INR 50 per dividend, whether it is correct or not, over a period of time?
And second question is in the AGM, Mr. Chairman sir has informed that what is he is looking for various [indiscernible] for ForEx as per the [ GR ] of the Gujarat government. What is the [ sense ] for the same?
Yes. So as you heard during the AGM also, and you would be knowing that Gujarat Narmada Valley Fertilizers for which we are promoters, GSFC, is having Board meeting today to deliberate on the buyback offer by the company. So that will be first the issue to start the -- exercising the option of mentioning [ GR ]. So they have already declared good dividend and paid in September. Now they are deliberating the buyback offer today.
So all the PSUs will be taking up this exercise at the appropriate time. So GSFC will also be doing that exercise. So when GNFC goes through, that will be kind of a torchbearer for us. And rest assured that we are here to follow government [ GR ] for higher dividend and other capital restructuring options.
Dividend, as you said, we are -- there is a formula for dividend distribution, minimum dividend distribution. So that, we will be following in any case. So -- as far as we are making profits, the network will keep on increasing. So the 5% of network is one criteria. So you can assume some dividend, going forward. Rest is rumor as you rightly [ pointed out ].
And sorry to interpret you, sir, I would like to add something that as you said, at the appropriate time, all the [ confrontation ] will be coming. So can we expect by this financial year, we can expect it?
I do not know but -- I mean, there has to be some time-bound exercise. One cannot say that I will think over it after 3 years kind of thing. It will be taken up one by one. No unnecessary time will be spent delaying.
[Operator Instructions] The next question is from the line of [ Mayur Liman ] from Profitmart Securities.
Yes. Good afternoon, everyone. Sir, I just want to understand about the market share about the chemical fertilizers. Could you please help me in that?
For different products, we have different share. Like Fertilizer, as far as urea is concerned, urea is a very small player. So more than 3 crore tonne of urea sold in the country, while we produce 370,000 tonnes. So it is around 1% in the country's demand.
But we had a good all over ammonium sulfate, which is produced by capacity that is made in [ Kochi ] and GSFC, only 2 producers, and government don't give subsidy on imported ammonium sulfate. So there, our market share is more than 50% -- 60% market is led by GSFC.
For DAP and NPK, we have around 8% market share in the whole country. Of course, we have strong share in our primary market at Gujarat, Maharashtra, Madhya Pradesh, about speaking the demand for the country as a whole, so this is the share.
Chemicals also, we produce monopoly or oligopoly type of production. So caprolactam, GSFC and [ FSD ], only 2 producers. So most of the market is enjoyed by us, and it is imported from various countries.
Similarly, melamine, we are the only producer, so we cater to 40% of the Indian demand that is imported. And other [indiscernible] also, we are the only producer in the country. The -- after -- I mean, after we sell out our quantities, the rest is imported into India. So from a market perspective, we enjoy good share and we don't have any problem from the demand side.
Okay, sir. And sir, now the government is moved to the Nano urea side. So what do you think about it? I just want to understand the company perspective about the government initiatives.
Just to answer your question, yes, government is promoting moves towards the Nano fertilizers, Nano urea and Nano -- we are still in the market development stages because the country is a large country, large agriculture base, so -- and these are the products, things which can be spread only once you have the [ lease ]. They have a limited usage.
Time will just tell the usage because in the basin, still the [ pharma, liquid ] fertilizers goes away. But yes, it is a good move going ahead, and let's see how the market takes away [indiscernible]. As far as GSFC is concerned, GSFC is currently not in Nano but in many other liquid fertilizers. So we have quite a good hold in the market for liquid fertilizers. Thank you.
Okay, sir. And my next question is about the El Nino. Now we are seeing the huge effect about the El Nino.Now there are some rumors going on, the Super El Nino, which has come next year -- which will come next year. What do you think about it? Is there -- do some effect on the company performance?
As we said, Indian agricultural economy, which highly depends on the rainfall. Last year, also similar rumors were there. And today, the rainfall is normal, as a whole, across the country, except [ definitely ], in some of the states.
Fortunately, Gujarat being our prime market, it's 18% higher. And our share in Gujarat has also increased during H1, and we are hoping to maintain the same in the coming quarter also. As you rightly said, it is a rumor at present. Yes, there is a delayed monsoon, delayed [indiscernible]. Also, cropping pattern has changed. But we are prepared because we have a basket of products which can help in all the cases.
[Operator Instructions] The next question is from line of Shrenik Mehta, retail shareholder.
Mr. Nanavaty, myself Shrenik Mehta, senior citizen from port city of Jamnagar; by profession, an advocate. And I earn my bread and butter from dividend income from the share market. That is my short introduction. And I'm the founder shareholder since the inception of our company. And at present, I'm presiding over as Chairman of Expert Committee on Capital Market, Jamnagar Chamber of Commerce & Industry.
So sir, shall I ask all the questions at the time or shall I ask the first question, then you reply, and then I will ask second question? What is -- what will you prefer, sir?
No, I would like to reply one by one. I mean...
I will also like that. Sir, first of all, Nanavaty, sir, I would like to know, what is net worth per share of our company, GSFC? Please let me know.
Yes. So the total net worth as on March '23 was around [ INR 7,800 crores ]. We have some 40 crores shares outstanding. For simplification, we can say 8,000 crores divided by 40 crores. So it is INR 200 per share that is the net worth.
Yes. Good. My next question, sir, there are major changes in Fertilizer Subsidy Policy of the central government. Actually, what are the changes? And how negatively it will impact on the profitability of our company? And how we shall [ match ] with this? Please throw some light.
Yes. So government -- for urea, it is a pass-through subsidy mechanism. So all costs are borne by the government, and some profit is allowed to fertilizer companies. For making urea, there is no [ tender ] or any problem with up and down in the input cost.
But phosphatic and potassic fertilizers are borne under Nutrient Based Subsidy scheme. For that, they declare subsidy at the beginning of financial year, and it is mostly fixed for 6 months or 1 year. So whatever price changes happen during the year, subsidy remains the same, and they also control the MRP of fertilizers, so that farmers don't have to pay more.
So all the -- any increase in the input cost has to be borne by the fertilizer companies, most of the time. So this time also, from October, they reduced the subsidy because they looked at the past input and cost data during April '23 to September '23. Input cost like ammonia, phosphoric acid, natural gas, sulfur, they were quite low. So using their data, they reduced the subsidy from October '23. But really, price of all this product sales increased from October '23.
So government will have to think something, going forward, say, from January '24. [ They ] have to increase the subsidy or input prices should come down. Something or the other should happen. Otherwise this -- next election year, government cannot afford a shortage of fertilizer.
So if the companies don't make, looking to the cost economy, government can be in trouble. And government has already saved a huge subsidy as compared to last year, the subsidy budget. I mean their actual spending in 2022, '23 was around INR 2.5 lakh crore. Now they may end up this year, I would say, 150,000 crores or INR 175,000 crores.
So there is a saving of INR 75,000 crores to INR 1 lakh crore is expected by government. But their revenues are rising, as you must be reading the GST collections, income tax [indiscernible]. So government has a double benefit. Their revenues are rising, and their subsidies are coming down.
So sir, what is the future expense and plan of GSFC? You mentioned INR 4,000 crores. Some newspaper said expense in plan is about INR 8,000 crores. So what is correct? And when it is going to start, and when it will get completed, sir?
Yes. So INR 4,000 crores will happen in 3, 4 years. Those projects are at various stages of implementation or technology tie-up for the then states like that. So they have kind of performed to get INR 4,000 crores. And another INR 4,000 crores is planned at Dahej because in Vadodara, most of the lands are now occupied, so -- and its in the city, so no more expansion is possible.
So another INR 4,000 crores will come in Dahej, for which detailed project report work is going on. And in March '24, it will be submitted. Then we'll take a further call with products that are profitable and should be taken up for setting up this plant. So this is how the two, INR 4,000 crores of each, are at [ different stages ].
Sir, now regarding finance. September '22, profit was about, say, INR 285 crores. September '23, profit is around INR 309 crores. Profit during June '23 quarter was INR 112 crores. So there is a wide variation in the profitability. So market -- I think since last 4 days, price of our company, share company, in market are going down and down. So can you throw some light on it, sir?
So we explained during the quarter 1, this post results con call that before the -- not a normal performance, it was a kind of lower performance for GSFC than normal. We had just plant shutdown, then subsidy reduction effect and all those together. So we promised at that time that Q2 will be much more higher performance, better in top line bottom line, that we've already [ hit ].
So Q2 kind of performance is normal. 106 PBT in Q1 -- I mean [ CAT ] of Q1 was not -- it was a lesser performance, I would say, exceptional kind of thing.
And sir, GNFC is about to declare a buyback today. Still, I think it has not come. So if you can -- can I say is our company going to participate in buyback? Or GSFC is not going to participate in buyback?
So there is -- when the GNFC Board meeting is over, they will declare that to SEBI. We have our one board member in the GNFC Board looking to the deliberation because GNFC has not, so far, declared at what price they will do buyback, how much share they are offering, so that GSFC also cannot decide whether to participate or not.
So both things will come together, what GNFC's share price, quantity of shares, [ effects sum ] of our participation. All answers will come together by [indiscernible].
By when you think can we get these answers, sir?
I think, yes, they will have to submit to SEBI and stock exchanges.
Yes. Yes. Correct. And sir, last, what -- when can the shareholder of GSFC will expect buybacks, split, bonus?
Now GNFC is taking delay in buybacks, so other companies have to examine either, buyback or bonus because our [ immediate ] share was INR 100, it was split to INR 10, then it was against paid to INR 2. So now [indiscernible] is not there for splitting. So -- but the bonus and buyback could be on the table, maybe, going forward.
Thank you very much for the nice reply. And as a minority shareholder, I'm quite satisfied with your answer. And sir, wish you best of luck. As a shareholder, we expect our value of share to go up as and when our performance grows up.
[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.
Sir, firstly, as you yourself mentioned in your opening remarks that this quarter has also many of one-offs, if we take the higher other income that is getting negative with the higher employee provision. And then there is a net of -- also the subsidy negative impact has also been built into.
So on the subsidy and the inventory front, can you quantify the number for this quarter in terms of this -- the impact of the lower subsidy amount, which we have taken in this quarter?
It is around INR 300 crores.
Okay. This include -- including the reduction in the month of October also?
Yes, that is mainly October because even if we have booked September sales with the -- I mean, up to September subsidy. But when we are going to do sales through cost machines from October onwards, it will get us a lower subsidy only.
So all the inventory that you are taking, I am not talking of inventory not sold but with inventory which is already sold as a first-point sale by us through dealers and other processes. But when they really sell it to farmers through cost machines, that machine will throw up subsidy amount.
So that, I have to provide because if you have [ reduced ] sale to happen in October, November, December and providing lower subsidy at that time, all companies are providing it upfront right away in the September, so that next quarter remains clean and on some other share of lower subsidy. So this is also -- GSFC has also done the same.
Sir, what has been our volume growth for the first half, if we compare this H1 with the previous year?
Volume growth in terms of [ quantity sold ], it is around 34%, quantity, [ H1 ].
As you mentioned earlier that we are expecting a 15% growth over last-year numbers, so how -- what should we expect in terms of the volume for H2, going forward?
Same. We did some 10 lakh-some-odd sales during H1. So we will do 10 lakh, 11 lakh again in H2.
Okay. Similar number we will have?
Yes. So -- but last year was INR 18 lakhs, so this will be around INR 21 lakhs.
Okay. Last year, full-year numbers were INR 18 lakhs?
INR 18 lakhs, yes.
Okay. And we have done 10 lakhs for H1?
Yes, we did 10 lakhs for H1, so same 10 lakhs, 11 lakhs for H2.
Okay. That translates into a 15% growth. And sir, now with the factoring of the lower subsidiary rates and the losses on account of that, what should be the margin EBIT number, sir, we can look for the Fertilizer segment?
So as I said, Q3 will be impacted margin because subsidy [ there ] will be reduced when the prices are high. So while this situation cannot last long, so we expect that as the prices should come down, our government should increase the subsidy because otherwise, there are lower production, particularly P&K fertilizer, than this -- maybe this financial year may be okay.
But then going forward, when the next current season starts in April, May '24, there will be very low inventory in the channel. So that can impact the next year [ vulnerability ] fertilizers in the market. So it cannot be, I mean, tolerated.
So fertilizer production imports, everything has to be consistent. You can't allow that [ stock ], so I will not [ alleviate ] my producing. If people don't produce, I don't get. Government cannot have that kind of effort because even if you don't suffer till March '24, your suffering will start immediately from April, May '24.
And these are irreversible things. The volumes are so large that you cannot think of importing that in 1 lakh or 1 crore metric ton, 2 months' time. And it will include -- I mean, increase the price very high international market. Logistically, it is also not possible. So things have to move smoothly on month-to-month basis. The government knows all these things, so hopefully, from Q4, we should have reasonable margin again in place.
Then you mentioned prices are up. You were speaking about the raw material prices [indiscernible].
Yes, yes. Like ammonia, [indiscernible] was $280 to $350 in, say, H1 period. Based on this, government reduced the subsidy from October. But the same ammonia is $540 now. Similarly, phosphoric acid was lower. Now it has peaked to $985. So one side government reduced the subsidy, but other side, input price are going up. This is contradictory situation.
So one [ correction ] either on input price or on subsidy front, one correction has to happen to sustain production, domestic production.
And we have updated the government about these changes in the raw material basket? Or you have made any presentation to the Ministry of fertilizers?
They themselves collect all the data. They have more data than us because they have direct connection to the customs and in Commerce Ministry. So they get all the data of imports and prices directly -- I mean, the actual prices, plus they also subscribe to various magazines, international magazines.
So they themselves compile monthly data for various price, volumes and prevailing price in other countries. So many data they have with them, so nobody need to tell them anything.
Correct. Sir, when we look at the key input cost movement part on Slide #8, bearing, wherein we see a strong declining trend for ammonia prices, [indiscernible] from [ 43 ] to 24. What are currently the prices, sir?
Now [ 48,000 ], double.
So what could have led to this doubling of prices just in a month's time, sir? We have prepared this for closing price as of September and we are in the month of November, first week of November.
Yes. So these ammonia prices were abnormally low. I mean because they were very high up to March '23. All these input prices crashed from April '23 onwards, [indiscernible] ammonia processes because this very high prices were not sustainable. So they reduced drastically. But those drastic reductions were also not sustainable. Prices have to be at a reasonable level for anybody to produce and sell.
So the prices remained for 3, 4 months at those low levels. Then again, they starting rising. Some plants announced during this COVID and this Ukraine war and so many geopolitical situation, some plants get shut down. So the immediate effect on [indiscernible] quantity is there, and that shoot some of the prices.
Sir, a small point, when you mentioned that INR 300 crore impact, that is net of from the revenue of from operations itself?
Subsidy is a part of my revenue, so I reduced revenue as well as profit.
And sir, now coming to the industrial chemicals segment -- industrial product, the segment has reported negative numbers to the June, closer to INR 35 crores. So if you could explain the contribution, sir, which products have -- and also, do we have any inventory impact also, sir?
When we look at the volume data on a Q-on-Q basis, that has gone up from -- for caprolactam, melamine, nylon 6. All the products we have sold more -- produced and sold more sequentially. But -- and we have incurred losses on the same. So if you could explain the reason.
Secondly, thank you for the presentation change. Now we have the volume data for the preceding quarter also. Thank you for adhering to the requirements.
Yes. Like fertilizer, IPP, I mean, the [ steel ] products are [ IPPs ]. So whatever international price [ changes ], of course, they get immediately reflected in the next month, the prices. So there, such inventory losses are frequently occurring because we have produced something at a higher cost, and then prices go down. But I don't keep inventory to get better price. I'll get something better next month, so I don't sell this month. We don't do like this.
So ups and downs in inventory, sometimes profitable, sometimes not profitable. That will be frequently happening in industry [indiscernible] product. Fertilizer prices, MRP are quite stable, say, for -- if you talk of DAP.
DAP price from January '23 are same, INR 1,200 for DAP and 13, 15 -- 1-3-5-0 per DAP since last 6 months or more than 6 months. And subsidy also remains, more or less, stable for at 6 months. So there, inventory losses for once in a while, particularly when the finance changes or when the subsidies change, of course. But in industrial products, this happens very frequently.
Sir, earlier, we used to provide the revenue line item, along with the production in the sales. But this time, I think, we have -- in the presentation and in the press release, we have omitted the lines of the revenue part. So kindly -- that would give us the realization, how the realization have [ saved ] us.
But any -- just to conclude on the Industrial segment, could you provide which product was -- has contributed to the negative EBITDA? And what are the -- with now the crude prices currently even declining more, the situation has turned more grim for the industrial products segment for the current quarter also?
Yes, some improvement from October has started. But no, all the crude price coming up or going down. In fact, the raw material like benzene is a direct derivative of crude. So if crude goes down, benzene also sometimes goes down. But the overall finished products like caprolactam, their price won't move in line with crude prices. They are not directly correlated.
So benzene may come down, capro also may come down. Benzene may go up, capro may remain stable. So all these things happen. So most of the major products, as you know, the whole chemical business, not only GSFC, all over country, chemical industry is not doing well. So GSFC also is not an exception. So that was the picture so far. Some improvement has taken place but not very -- not worthy, sustainable kind of thing.
Sir, in your presentation, you have mentioned 1,545 as the closing prices for caprolactam as on September. So what are the current price trends?
I think it is around INR 1,700 or so.
Okay. The prices have moved up from 1,545?
Yes, it has improved in October.
And sir, do you have the figures -- if you take the breakup for the INR 35 crores loss for the investor segment, which products have contributed out of major 3, caprolactam, melamine and nylon 6? If you could give...
All are contributing to this loss because nylon 6 is further in the value chain of caprolactam. So when caprolactam is costly, then nylon 6 will also be costly in terms of cost of production. So they go together. And melamine also, prices are subdued, resold as higher, more than INR 250,000 per tonne last year or year before last. Now it's less than INR 1 lakh per ton. So this keeps happening. So hope, it improves in [ Q3 ].
These are the nylon 6 prices that are currently lower to 1 lakh?
No. Melamine price.
What are the nylon 6 prices, currently?
We have so many [ derivatives ], so many grades of nylon and compounding-grade nylon. So yes, so like 170,000 to more than 2 lakh premium grade. That is the part on price.
Last point in the power and fuel mix. You did mention that currently, the ammonia prices have moved up or doubled rather than in a month time. So if you take the raw material consumption and the power and fuel, how are these two line items going to shape up, sir, going ahead? But the major -- if you break up between the -- per the cost of material consumed, if you could give me a percentage-wise breakup? And how are they trending currently?
[ Diesel ] prices are quite stable. They rise a little bit here and there. Sulfur prices are also now -- derivative of crude, so they are ranged down. [ Raw phosphate ] prices are also ranged down. Overall prices are flying within some ranges.
There is no likelihood of major increase in the raw material [ list ] that we use in Baroda, that is sulfur, natural gas, [ raw phosphate ], benzene, sulfuric acid. All those prices are ranged down, not likely to increase substantially, going forward. Only what we import for [ sulfur ] and ammonia for Sikka, they have gone up high. That is affecting the Sikka production and Sikka economy. Otherwise, for Baroda, things are stable.
Okay, sir. And for the power and fuel, is the natural gas is a major component there?
Natural gas is stable. So power and fuel, as you see there is reduction in cost. So that will keep on happening. And when we set up our -- and more solar power plants and all, it will keep on coming down.
Just to conclude on the Fertilizer part. So this is the major segment that will contribute both to the top line and the bottom line. So taking into account the -- since we have taken the reduced subsidy impact in this quarter and also going ahead, since the raw material prices are also on the upwards trajectory, so we have -- for the first quarter, our PBT numbers were INR 100 crores; the second quarter, after taking into impact, was 224.
So taking all these impacts, what should -- in what ballpark numbers can we expect the Fertilizer product segment to be at, going ahead, for the coming quarters?
Yes, right now, we don't have the number, but Q3 is little impacted because as I said, import prices are high and subsidies have been reduced. So Q3 will have some impact. But hopefully, Q4 -- because government has [ lagged ], government don't act in a real-time manner. So they have a lag of a quarter before they take any collective action. So that will have effect in Q3. But hopefully, Q4, normal kind of situation would come.
And going ahead, what should be the quarterly employee benefit expense numbers as we have made INR 100 crores provision this quarter? So what should be the run rate going ahead?
So based on '23, '24 being the first year of wage [ reasons ] it will have more impact, but it will taper down. We have 4-year settlement period, '23, '24, '25 and '26. So for next year, it will taper down. The onetime effect will not be seen. But we had [ INR 656 crores ] employee cost last year for the full year. So maybe, some INR 850 crores to INR 900 crores may be the employee cost.
[ INR 656 crores ] was for the first half, I think. For the year...
'22, '23...
[indiscernible] add this 1200, I think, sir -- sorry, [ 2000 ]. It's 668 will go around to...
It'll be around INR 800 crores on the normal, I guess.
Okay. The first half, we have done already INR 409 crores. So now, it will be at INR 200 crores for the new basis?
Yes, yes, [indiscernible] INR 200 crores.
That is a significant jump, sir.
Yes, yes. But to run all this all this whole plant, we need to pay a good salary to employees.
Sir. So we can conclude that Q3 will be negative since the Industrial products segment is already in bad shape and also the impacts of the subsidy and the raw material input prices running in [ invert ] direction will impact the profitability for the next quarter?
Yes. Some pressure on margins, yes, yes.
So when you mention some pressure, what should be in [ work ]? If we have any -- if we have worked out some numbers, give a ballpark understanding that this 224 crores can go to 160, 170, that should be the likely numbers?
No. Really, we don't have worked out the numbers.
And we hope for the government resolution part of the -- will get implemented and how the Board bears -- what understanding the Board takes on today's GNFC's buyback. And lastly, on the P205 prices, sir, what are the current -- sorry, I missed your number you mentioned, post the September quarter...
$985.
Okay. And September quarter end was?
$850.
Thank you, sir, and all the best. And we hope that this revenue included in the presentation, sir. And we will have -- for the next quarter, we will have all the 3 quarters data in the same in the same presentation, so that we can do a comparative number easily.
The next question is from the line of Madhur Rathi form Counter Cyclical Investments.
Solar power plant that's coming next year, so what portion of power and fuel cost that will serve us?
[indiscernible].
Sir, the solar power plant that is coming up next year, so what portion of the more power and fuel costs that will help us from the [indiscernible], what portion of that will save us?
This is a 15-megawatt power plant, and it's a 20% [ PLF ] factor, so it will put 3 megawatts of power per hour. So to that extent, from INR 4, 5 differential cost between utility power and solar power. That will be the saving to us.
And sir, what percentage of power requirement will that be?
So right now, we use 17-megawatt hour power, and we are already having some 40% power from renewable sources. So we will start to increase renewable power more and more, going forward.
The next question is from the line of Rohan Gupta. Rohan Gupta is not answering the call. As there are no further questions, I would now like to hand the conference over to Mr. V.D. Nanavaty for closing comments.
Yes. Thank you for the participation and patient clearing. So as you are all aware, business ups and down keeps coming. So that is what Q3 is representing. But on overall basis, company will keep on growing on top line and bottom line. And we'll also be implementing government [ PR ] at the appropriate time and so rewarding the shareholders in different manners. So thank you for joining and keep association with GSFC for a long time to come. Thank you.
On behalf of GSFC, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.