Capacity addition, fertilizer sale to aid revenue: GSFC

Dip in industrial chemicals volume and low crude prices impacted the June quarter topline, SK Nanda, Chairman & Managing Director of Gujarat State Fertilizers & Chemicals (GSFC) told CNBC-TV18.

The company’s June quarter revenue declined 12.77 percent to Rs 1,084 crore and profit fell 6.77 percent to Rs 109.9 crore. However, GSFC’s margins grew to 17 percent from 9.7 percent last year.

Nanda expects the company’s topline to improve from the second quarter onwards. Production of chemicals like Di Ammonium Phosphate (DAP), ammonia, additional capacity and better fertiliser sale will be reflected in the next quarter, he said.   

He expects demand to pick up with better monsoon.Below is the transcript of SK Nanda’s interview with Sumaira Abidi & Nigel D'Souza on CNBC-TV18.Nigel: Though there was a bit of a dip on the topline your margins continue to expand could you tell us what exactly cost that topline dip?A: The topline has little bit been on the lesser side because of volume of the trade that was taking in the industrial chemicals and the crude oil prices going down that explains the topline dumbing down.Nigel: Do you expect the topline, I mean the number to pick up in the next quarter both in terms of volumes and in fact that could boost the topline or do you expect sluggishness to continue in the next couple of quarters?A: We are very piped up because of the fact that we have been able to touch our production or the DAP with the constant and consistent supply of the phosphoric acid and the ammonia which was absolutely depleted during the last quarter and so the sales of the fertilisers in terms of complex fertilisers, in terms of DAP is going to continue at the higher space. In terms of the industrial we have added a capacity of the nylon 6, we are adding also the capacity of the water soluble fertiliser and we are also adding to the productivity of the caprolactam. So all this is going to be reflected in the next quarter. Therefore, we are very optimistic over the fact that we are going to touch a good turnover as well as the margin has been continuing to be on the higher side though the total topline data shows sluggishness but the margins are not gone down.Sumaira: Are you expecting demand to go up given the way the monsoon has shaped up?A: Surely, because the winter crop is on our doorstep.Nigel: Talking about a segmental performance then, your industrial product revenues, there we saw a bit of a dip. It was down close to around 17 percent, but big margin expansion over there. It went from around 9.7 percent to around 17 percent. How did you manage that? is it sustainable?A: In fact, in the industrial segmental, the category we have done astoundingly, we have gone up by more that 25 percent compared to the last quarter and also compared the March quarter, the reason being is that we had been able to keep our margins very high and we have been able to have consistent supply of the methanol, of the capro, or the nylon and melamine and we heightened our mills and the factories have been producing more than the optimum capacity. So, everywhere we have touched the last five years record. So, that explains why we have been able to sell more. Of course, we sell margins and in terms of the top-line have gone down, but in terms of the profit margin we have been able to do a good job.