Ladies and gentlemen, good day and welcome to the Gujarat Narmada Valley Fertilizers & Chemicals Limited Q1 FY 2027 Earnings Conference Call, hosted by Anurag Services LLP on behalf of GNFC Limited. From the management, we have with us Mr. D. V. Parikh, Executive Director and Chief Financial Officer, Mr. Nitin Patel, Executive Director, Mr. Pankaj K. Purohit, Executive Director, Mr. Rajesh Pillai, Company Secretary and Compliance Officer, and other senior management members. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. D. V. Parikh, Executive Director and CFO, GNFC Limited. Thank you, and over to you, sir. Thank you. Thank you to moderator as well as the organizer for holding this call on Q1 FY 2026/2027. Apart from the names which are given, we have other members also from procurement and marketing. Investors may direct the query accordingly. Maybe number of participants. We welcome all the investors to the call as well. We'll first start with the business update as to what is happening to the business. Overall, during the quarter one, it has been the situation of escalation and de-escalation as far as war is concerned. That has a ripple effect on the business as well, in terms of, at times, viability issues, at times, realizations which have gone up. Similarly, the input costs have also gone up because of the war situation. During this quarter gone by, there are plants which we could not run for cost economics reason, like acetic acid, ethyl acetate, and to some extent TDI as well. Although in the investor presentation, the spreads seem to be better, but the offtake has not been so good, which has filtered into some increase in the inventory. Overall, the profits for Q1, in our view, has been significantly higher. It is the second highest in the history of the company after the Q1 of 2022. This typically happens in a warlike situation. It can go either side. On the fertilizer front, there is one good news that energy norms have been revised in case of company. It was 6.20 Gcal per metric ton of urea, which is revised to 6.37 Gcal now. This has been revised for a period from FY 2025/2026, and valid for three years period. This is positive. The other positive for the company is now during July, most of the plants which were not operational because of the cost economics reason have resumed the operation. Whether it is ethyl acetate, acetic acid, TDI two is about to start, TDI one has started. Except for the methanol, most of the plants are running now. Coming to the projects, out of the four ongoing projects, the ORV project of Dahej has started providing now. Out of the steam and power, the steam portion has started coming, which is giving substantial relief in terms of the better cost position to TDI-II plant. This is expected to save materially because the gas prices are significantly higher, although relatively coal prices are also higher. The delta is more, which is causing this differential saving. The costly gas will be replaced with the coal. Is actually already replaced as far as steam is concerned. Power, we are expecting to come in a month's time or so, or around 45 days time. Apart from that, most of the projects are on stream. There is slight time change in case of a weak nitric acid plant, but that is being monitored actively. About three months delay is there, which is going to be recouped. In case of AMUGL and AN Melt, it is absolutely online. AN Melt is on positive side. This is what is the update on the project side. Coming to now the other part, which is already there as part of announcement. GNFC has proposed the memorandum of understanding with GMDC. This is for the underground coal gasification. GMDC is already into the mining business, and we are already in the downstream business, so this will augur well. There are certain studies which are ongoing. Very sooner there will be announcement. The similar announcement has gone in the public domain from GMDC as well. Coming to financials, the operating part has remained better more or less, mainly because of the better realization. Although volumes have gone down. Volumes of sales have gone down substantially than the volumes of production has been the situation. There is some change in the overhead part and certain other income, which is on a lower side. On the operational side, it is basically the good realization which has augured well for the company. Most of the stock which was built up by Q1 is getting gradually liquidated in July and now in August as well. As far as segment results are concerned, the results in case of fertilizer has further reiterated by around INR 60 crore or so from around INR 24 crore to INR 85 crore. The majority of that is coming from Urea, around INR 48 crore and INR 12 crore is coming from the ANP side. The rest of the predominant profit is coming from chemical, for which we discussed the reason. With this initial comments, I leave the floor open for question and answer. Thank you very much. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Nirav from Anvil Wealth. Please go ahead. Sir. Good afternoon and congratulations on a very good set of numbers. Sir, two, three questions from my side. First on the oil prices. When we see the investor presentation, the prices have gone up from close to around INR 43, INR 44 to around INR 73. I believe that predominantly this is a raw material for our ammonia production. How has been the situation currently? Have the prices further gone up from these average prices of Q1? Also if you can help us understand on the gas side also, how has been the current situation in terms of gas availability as well as the gas prices? Sorry to interrupt you, sir. May you please speak a little louder and repeat your question? Yeah. Am I audible now? No. We have got the question. There was some disturbance, but we got the question. Okay. We'll request our MM Head, Shri N. B. Desai, to respond on this. Yeah. Good evening. You have indicated that during this Q1 the oil prices have gone up as compared to Q4 of last financial year. Mainly it is due to the Middle East crisis. Slowly and slowly in the month of July and August it has started coming down. Only point is that still the Middle East crisis has not resolved. Going forward, the prices may come down if everything goes well. Otherwise, it is difficult to predict anything. Similarly, on front of the gas, the prices remains volatile and availability of the volume is always a concern. Our operations are not affected on account of availability of the gas. Thank you. Sir, second question is on if you can share the production numbers for ammonia, both through the oil and the gas route in first quarter. Along with it, if you can share the production numbers for WNA, ENA, TDI, TGU and AN Melt. That would be very useful, sir. I am Nitin Patel. Ammonia production was approximately 173,000 and 54% out of that was from oil and 49% was from gas. TDI total production was 12,800 with a breakup of 66% from Dahej unit and 34% from Bharuch unit. Next was WNA, right? Yes. WNA total is 113,000 production with a share of two plant, 70% and 30%. Next was? ENA. ENA the total production was 37,500. Okay. AN Melt? AN Melt was 55,600. Okay. For the TGU, how was the production? Last was formic acid, sir. TGU was 74,800 and formic acid was 8,200. Perfect, sir. Thank you so much, sir. I'll join back again in the queue. I have further questions to ask. Thank you so much. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Aatur from ICICI Prudential Life Insurance. Please go ahead. Yeah. Hi. Thank you for the opportunity. Sir, just wanted to check, we've been reading about rotational maintenance shutdown by Covestro, Wanhua, etc. If you can just help, is that helping in terms of pricing or those are very temporary in nature and you don't see that sustaining beyond Mr. Tejash, are you online? Yes, Nitin bai. Yes, please go ahead and reply. As far as the Covestro and Wanhua shutdown is concerned, they are basically making TDI, right? There are so many other players are there. Overall, globally, TDI production is quite high against the demand. One month shutdown of Covestro and/or Wanhua will not affect the overall pricing of the TDI. Yes, there is a shortage in the Indian market of TDI that will definitely affect the pricing. Sure, sir. Thanks. Thank you so much. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Anyone who wishes to ask a question may press star and one on their touchtone telephone. Next question is from the line of Falguni Dutta from Mansarovar Financials. Please go ahead. Yeah, good afternoon. Sir, I wanted to know the inventory that we are liquidating now. The margins that we are making there are less than what we made in Q1? Okay. I'm Dilip Parikh. I'll answer your question. The inventory which was built up up to June 30th is liquidated to the extent of around 15% by the end of July. There is a mixed bag as far as realization is concerned. Okay? Okay. Initially, the realizations were lower. Of late, the prices have gone up, realizations have gone up. It's a mixed bag. There is no specific realization number for it because it is a mixed one. Okay. sir, lately in last quarter, you had given a rough guidance about directionally how the Q1 would be versus Q4. Can you give me a similar guidance for the chemical sector? How would the Q2 be versus Q1 directionally? We do not recall gentleman having given any guidance of such nature. You had generally mentioned that the realization in Q1 are somewhat lower than in Q4. This is what you had said. similarly, can you give a realization guidance, let's say for Q2 versus Q1? Hi, this is Rajesh here, the Company Secretary. I think we have never given any guidance as such, I think we should not also get into that guidance part because that will also lead to a certain misinterpretation. Okay. such situation. Let me put it this way. Like current realizations, how are they versus the Q1 average for the chemical part, broadly? The current results are not it. No, not current results, sir. Current realization. Our Marketing Head will respond on this. Okay. Ma'am, we are talking about the Q1, so it is difficult to predict about the Q2 because the market is very volatile at present. Okay. Okay, sir. Okay. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Next question is from the line of Jigar Shroff from Financial Research. Please go ahead. Thank you for taking my questions. I have two questions. One is, sir, what is the savings that is anticipated on the coal-based steam and power plant start at Dahej? That is one. Secondly, sir, any update on the A.T. Kearney, that we had signed with them for this advisory in terms of savings, sir, management consultants, sir. These two are my questions. Thank you. Okay. I'm Dilip Parikh. I'll answer your first question. For the next, there are certain initiatives from operations, I'll request my colleague to answer that. The first question is on the likely saving of this steam and power project. This saving is actually fluctuating in nature depending upon the delta between gas and coal. Currently, we are likely to save around INR 30,000-INR 40,000 per metric ton of TDI because of the current prices of gas and coal. The dynamic will keep changing depending upon the price dynamics of these two variables. It's difficult to estimate, sir? No. As far as current position is concerned, we conveyed the current position. It could be higher, it could be somewhat lower depending upon the element-wise change in the prices of gas and coal. Okay? Okay. In current times, it is very difficult to gauge any movement, whether it is coal or gas. They are at an elevated level, but how more elevated it can become is anybody's guess. It will taper down with some resolution coming. It is not so clear as far as future is concerned. If coal prices go down, it will be more beneficial to us. Of course. It is a coal-based plant. Correct. Okay. Yeah. The second question. Looking to second question, I am Nitin Patel, Executive Director. Kearney is handholding us for various initiatives in various verticals for margin improvement and cost saving. Some of the initiatives which are completed, I will just outline. One was about fuel oil, our main raw material negotiation with the supplier for structural reduction in pricing. Second was coal grade change, blend mix optimization for reducing the input cost. Third one was major overhauling of boiler. We have three BHEL-made boilers. One of the boiler was overhauled in Q1, and that has resulted into efficiency improvement, and that is a direct cost saving. We are also into RE short term power purchase agreement for Bharuch and Dahej. We are also exploring alternate supply of fuel oil from another suppliers. As a part of project execution, coal conveyor was to be replaced. While doing that, natural gas was to be used as an alternate fuel. With in-house innovation by project team of GNFC and contractors and operation team, we could complete that job without using NG and continue to use coal. Thereby, there is a saving in the gas costlier fuel usage. Load optimization of our power mix. We have steam turbine, we have gas turbine, we have grid connectivity through state electricity company. Power mix was optimized in order to keep the weighted average cost lowest possible. There was a focus on inventory management of Indian and different other brands of the coal. Inventory control is defined and being executed. There was a focus on inventory management of spare parts. There are a couple of more initiatives which are going on, like purchase of methanol, import methanol, importing acetic acid. We are also trying to make more focus on export. Auction-based price discovery is also being explored. In Dahej also, we have taken several improvements for reliability and consistent operations, better O&M practices and CCPP commissioning, which my colleague, Mr. Parikh, has already outlined. Thank you. Can you quantify, in terms of how much would be the saving? Quantification we have not yet signed off with A.T. Kearney. It is under different stage of evaluation, and maybe by next quarter end, we may have a better picture flowing into P&L. I think they'd initially estimated a planning of over INR 250 crore-INR 300 crore saving. No, sir? That's right. Q2, you'll get a better idea in terms of savings. Yes. The last question, sir. What is the cash on hand in the books? Around INR 4,000 here. That would all be with, I think that financial institution that you must have kept, right? It's a mix, yes. It's a mix across three things: G-Sec, GSFS and bank. Sir, what was the CapEx in this Q1? CapEx incurred was INR 300 crore in CWIP. What is the targeted for the full year? Targeted for the full year is another INR 1,200 crore-INR 1,500 crore. Totally INR 1,800 crore. INR 1,500-INR 1,800 for the full year. Yes. Okay, sir. Thank you very much. This will all majority form part of the capital work in progress because except for the CCPP, which is INR 613 crore worth of project, the rest are going to be commercially operational sometime in the mid of 2027. There will be CapEx, but capitalization will happen only partially this year. Okay, sir. Thank you very much. Thank you. Thank you. We have our next question from the line, Nirav Gandhi from Sunidhi Securities. Please go ahead. Yeah. Hello. Am I audible? Yes, you are audible. Please continue. Yeah. Thank you for the opportunity. Sir, my question is, which capital expenditure projects would be coming on stream in FY 2028 and FY 2029, and FY 2030 as well? Gentlemen, we have already given investor presentation. That contains timeline for all the projects under execution, and also for under consideration. Right, sir. Sir, what was the capacity utilization overall and of the individual products? It is a very exhaustive list because we have many products. Some of the production figure I have spoken. Yes. I will say that except ANP, acetic and ethyl and TDI, which were shut during part of the quarter. Rest all the plants have operated beyond their rated capacity, whether it is ammonia, urea, both with nitric acid. CNA is dependent on market sale as well as internal consumptions. Internal consumptions in TDI was low, so CNA capacity utilization was less than the design capacity. Aniline and nitrobenzene were above the design capacity. Right, sir. Sir, if you can share the capital expenditure amounts for FY 2028 and FY 2029. Okay. The total projects on hand are of INR 2,800 crore. Okay. Over the next two years, around another INR 1,500 crore will also be spent. This is aside from what we undertake freshly, which is under consideration. Right, sir. Right. Okay. That's it from my side. Thank you. Thank you, sir. Thank you. We have our next question from the line of Nirav Jimudia from Anvil Wealth. Please go ahead. Sir, thanks for the opportunity again. Am I audible, sir? Yes, we can hear you. Yes, Nirav. You are audible. Yes, sir. You touched upon that acetic acid, ethyl acetate, and TDI had a lower production this quarter. Has the situation improved currently in terms of, let's say, either the availability of methanol for acetic acid or, let's say, Acetic Acid availability in terms of imports for ethyl acetate production? Also, if you can share your thoughts on the TDI part. Last year, we produced close to around 57,000 tons, if I'm not wrong. How do we see for the balance part of the year in terms of TDI, and if you can share on ethyl acetate and acetic acid, that would be helpful. Far as ethyl acetate is concerned, the plant was down in last quarter, and now the plant is fully operational since August 1st. It was not operational in July. Acetic acid was down from May 6th, and now it is operational from August 1st. TDI Bharuch plant was down in July. All these three plants, we lost some production because of the downtime and viability issue. Now we are back to normal, at our normal rated capacity. We expect plant to run smoothly till the end of financial year, except any global political war situation going up again and creating the viability issues. Far as methanol sourcing is concerned, currently, we have started sourcing for our captive use for acetic acid production. We manage the customer base with import of acetic acid. Currently, we are not importing because captively we have started producing, and we have run ethyl acetate till the threshold of viability on import acetic acid for some period in quarter one. Perfect. Sir, second question is on the TGU. I think last year, if I recollect, we produced close to around 210,000 tons. If I see the run rate this quarter, I think we are close to around 300,000 tons on an annual run rate basis. What has changed? Because I think you have also explained that there is a government regulation in terms of how much we can produce. If you can share your thoughts here. Also, is it a right understanding that a major portion of our profitability in this quarter was driven by the TGU sales? I will first touch upon production part. Production of TGU and NCU. First rule of the game is we are supposed to produce 637,000 minimum of Neem Coated Urea for Department of Fertilizers and fulfill our production target. Rest is TGU, which has a variable portion during the entire period of operation for product mix optimization. On your question of profitability from TGU, yes, it is one of the significant contributor as well. Can we presume, sir, that this run rate of TGU production, what we have seen this quarter, can be extrapolated to the rest of the quarters? It is our expectation of TGU production to be more or less at the same level as that of last FY. Okay. Sir, last clarification from my side. On the WNA, CNA shared the production numbers. If you can also share the sales numbers, that would be very helpful, sir. Thank you so much. In WNA, we sold around 20,800. In case of CNA, the figure was 16,400. Okay. Thank you so much. Wish you all the best. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Next question is from the line of Maanvardhan Baid from Sammaan India PMS. Please go ahead. Good evening, sir. Thank you for taking my question. Sir, I wanted to understand this INR 2,800 crores of CapEx that you are doing. I assume this is for the five items that you have under execution presently. Wanted to understand what will be the incremental turnover out of once this is complete. Can we answer this question as we go closer to the project completion because there is too much of a price differential and volatility as of now. Attaching a number would not be right that it will increase the revenue by so much and profit by so much. Understood. Okay. A ballpark figure, I mean, considering where prices are maybe now or maybe where prices were some time back, maybe a range if you could give us. Okay. Range for the current part or prognosis is difficult to give, but by and large, we foresee the revenue to increase by INR 1,200 crore-INR 1,500 crore and contribution to improve by around INR 500 crore-INR 600 crore. Okay. Got it, sir. That's very useful. Thank you so much, sir. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Anyone who wishes to ask a question may press star and one. We have our next question from the line of Ashok, an individual investor. Please go ahead. Hello? Hello. Yes, Mr. Ashok, please proceed. Sir, thanks for the opportunity. Hello? Yes, Mr. Ashok, please proceed. Sir, thanks for the opportunity. Yeah. Please go ahead. Sir, [Non-English content] Hello? Yes, you are audible. The size is around INR 100 crore as of now. Okay? Yes, sir. Management is working on the plan. Okay, sir. for increasing the presence in the digitization, AI, et cetera. Yes, sir it is yet in a very formative stage. Okay. If you see there are three segments. The other segment already represents (n)Code. Yes. Okay. Both in terms of turnover and in terms of segment result. As far as the detailed plans are concerned, maybe by end of this year, whatever is the finalized situation, we will get back to you with those plans. Okay. [Non-English content] We do not recall any such name specifically. Okay. From where do you get this name? LinkedIn, sir. [Non-English content] Ashok [Non-English content] Okay, sir. Okay. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, that would be the last question of the day, and I now hand the conference over to Mr. D. V. Parikh, Executive Director and CFO, GNFC Limited, for closing comments. Over to you, sir. Rajesh Hi, this is Rajesh here. I would like to thank all the participants as well as the senior executives of the company for joining this call. I would also like to express my gratitude to Mr. Manav, the moderator, as well as Anurag Services for conducting this conference call. Thank you. We close this call as of now. Thank you. Thank you very much. Thank you, sir. On behalf of GNFC Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.