GNFC races far ahead of peers in financial performance

The Gujarat Narmada Valley Fertilisers and Chemicals Ltd (GNFC) –the State-owned company has left a trail blazer with its steller financial results while leaving all its peers far behind on a wide set of key financial parameters during FY 2016-17.

The proof of the company’s remarkable performance lay in ICRA upgrading the long term rating of the company to [ICRA]AA (pronounced as ICRA double A) from [ICRA]AA-(pronounced as ICRA double A minus) as on August 16, 2017 for the Rs 792 crore term loans (reduced from Rs 1263 crore) and the Rs 1500 crore fund based limits of GNFC while reporting that the outlook on the long-term rating is Stable.

ICRA has also reaffirmed the [ICRA]A1+ (pronounced ICRA A one plus) rating to the Rs 900 crore non-fund based limits and the Rs 1000 crore commercial paper programme of GNFC.

The  rating  upgrade  factors in  an improvement  in  the  financial risk  profile  of the company  supported  by healthy  performance  of the  Chemical  division, driven  largely  by healthy  capacity  utilization  and  healthy contribution  margins  from  Chemicals  and  turnaround  of  the  TDI  (Toluene  Di-isocyanate)  segment .

Supported  by  the  healthy internal  accruals,  the  company  has  also  pre-paid  some  of  its  long- term  debt  and  is  expected  to  get  de-leveraged further in FY2018.

The ratings  continue to factor in established market position in the fertilisers business (with its fertilizer brand -Narmada  being  well  entrenched  within  the  farmer  community  especially  in  Gujarat),  market leadership in chemicals business for products including Acetic acid, Aniline and TDI, diverse chemicals product portfolio with vertical integration benefits and the stable demand outlook for key chemicals.

As per ICRA report, GNFC’s non urea operations (chemical and IT division) registered a healthy growth of 15% during FY 2017,  largely  driven  by  higher  realizations  and  healthy  capacity  utilization  levels  at  its  TDI  plant  in Dahej.

Chemicals division registered a PBIT of Rs 818 crore as compared to a PBIT of Rs 270 crore in FY 2016 while the other products division registered a PBIT of Rs. 44 crore in FY2017 vis-à-vis Rs.26  crore  in  FY2016.

On  the  hand, as per ICRA report,  the company’s  urea  segment  registered  PBIT  of  Rs  6  crore  in  FY2017  as compared  to  a  PBIT  of  Rs.88  crore  in  FY  2016.

Healthy  cash  accruals  driven  by  improvement  in profitability  coupled  with  on-going  disbursement  of  capital  subsidy  has  helped  in  prepaying  part  of  the long term debt in FY2017 resulting in a drop in overall debt levels as on March 31, 2017 to Rs.1959 crore vis-à-vis  Rs.3101  crore  as  on  March  31,  2016.

Notably, GNFC headed by 1986 batch IAS officer Dr Rajiv Kumar Gupta has been awarded with the ‘India’s Best Company of the Year Award 2017.’ Further consolidating its place as one of the best fertilizers & chemicals companies in the country, IBC Infomedia Pvt. Ltd., a division of International Brand Consulting Corporation, USA, conferred the award to GNFC Ltd.

GNFC was adjudged as one of the India’s Best Companies of the year, based on a comprehensive research conducted across several organizations to benchmark against the best companies across the country, region and globe. The study aimed at identifying as an unique recognition of success as the fastest growing company with innovative practices and unique brains behind them, by Media Research Group (MRG) for the year 2017.

The company played a significant role in the success of the country’s economy, and have unambiguously unveiled itself as the next set of game changers serving through various business verticals. This company is a market leader in the chemical and fertiliser sector, and was awarded for its innovative strategy, that has positively impacted both business and society. The Company has been rapidly expanding and diversifying its operations.

GNFC had declared highest ever Q3 Profit Before Tax (PBT) of Rs 371 crores. GNFC is also aiming to be debt free by the end of this financial year March 2018. GNFC has also reported Profit before Tax of Rs 715 crores for the 2016-17, which is higher by 167 % than the previous year.

During the year, GNFC posted highest ever quarterly and yearly PBT, highest ever exports and the highest ever dividend of Rs 5 per share @ 50%. The highly successful financial year could be attributed to ingenious business process re-engineering, supply chain innovations and synergy with government initiatives.GNFC’s revenue in the third quarter of 2017-18 grew by 30% to Rs 1,591 crore as compared to Rs 1,221 crore in the corresponding period in 2016-17.