Gujarat State Fertilizers and Chemicals showed a weak performance in its second quarter FY18. Margins were under pressure in both the chemical and fertilizer segments. Revenue growth too was subdued.
Revenues were down 3 percent at Rs 1540.3 crore and EBITDA was down 50 percent at Rs 97 crore. Year on Year (YoY) Q2 margins came in at 6.3 percent versus 12.2 percent.
Throwing more light on the earnings, VD Nanavaty, Exec Director & CFO, GSFC said the margins were impacted because the government had reduced urea subsidy from April 15. However, he clarified that the impact of that is only for one-time effect and will not be there in Q3. The overall performance was better YoY, he said.
The volume growth in fertilizer for the quarter came in at 15 percent and in Q3 also it is expected to grow at similar pace. So, going forward he is not worried about the margin performance.
Moreover, crude prices have also firmed up to around USD 60 per barrel, so the capro-benzy, which was around USD 900 has gone to USD 1200 from November. Therefore, Q3 is expected to be good.
The caprolactum prices which had surged earlier in the year were not so not good during in Q2 and in July they had an emergency Amonia-IV plant shut down for a month, which impacted production of industrial products, resulting in lower volumes and value, said Nanavaty.
Nanavaty is confident of maintaining Rs 6000 crore revenue guidance for FY18.
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