Gujarat State Fertilizers & Chemicals Limited (GSFC), a Fortune 500 company promoted by the Government of Gujarat, announced its Q1 24-25 result.

Compared to Q1 23–24, performance in Q1 24–25 was muted. Operating profitability got squeezed even though Revenues from Operations increased by 6%. In terms of value, fertilizer sales climbed by Rs. 101 crore (7%) and in terms of volume, by 102,058 MT (30%).

There was drastic reduction in P&K subsidy rates YoY, whereas raw material rates did not taper in the same proportion. The Industrial Products segment faced external headwinds including reduction of capro-benzene spread in Q1'24–25 ($582 per MT compared to $730 per MT in Q1'23–24).

Outlook:

As of July 24, 2024, the nation has experienced favorable rainfall, which has facilitated the acceleration of Kharif sowing. Improved seasonal prospects will likely continue supporting healthy demand for fertilizers during Q2-24/25.

Globally, DAP prices are expected to remain elevated in the forthcoming quarter, which will complicate the import process and restrict the availability of PA supplies for Indian manufacturers. The market anticipates a significant increase in the NBS subsidy rates in order to accumulate sufficient inventory of DAP for the forthcoming Rabi season. It is probable that the MRP of critical fertilizers will remain consistent throughout the second quarter.

The company plans to follow production with a mix of DAP and Non – DAP products to optimize costs and maximize sales.

On the Industrial Products front, the domestic prices are expected to be challenged by the influx of surplus Chinese Caprolactam, Melamine, and Basic Nylon crystals at low prices. Capro-Benzene spread could remain under strain. Demand from some downstream sectors like Laminates, plywood, textiles, paints is likely to stay muted. However, the demand from automotive, electrical & electronics sectors is anticipated to increase due to the upcoming festive season. Overall industrial products turnover is likely to grow as compared to the current quarter.

GSFC pioneered the manufacturing of DAP complex fertilizer in India, is the sole producer of Melamine HX Sulphate Crystal and amongst the major producers of Caprolactam, Nylon 6 and Methanol in the country.