Gujarat Narmada Valley Fertilizers & Chemicals reported an 8 per cent rise in net profit to ₹194 crore for the September quarter of FY27. Revenue grew 41 per cent to ₹2,773 crore. Higher volumes helped the business, but elevated input and fixed costs weighed on the overall profit growth.
Gujarat Narmada Valley Fertilizers & Chemicals Ltd (GNFC), a Gujarat government-backed joint-sector enterprise, reported an 8 per cent year-on-year increase in consolidated net profit to ₹194 crore for the September quarter of FY27, supported by higher realisations and volumes across its fertilizer and chemicals businesses. However, elevated input and fixed costs, particularly amid higher feedstock and energy prices, partly offset the gains.
Revenue from operations rose 41 per cent to ₹2,773 crore during the quarter. It was aided by revenue from the fertilizer segment which increased 43 per cent year-on-year to ₹1,117 crore, while the chemicals segment reported a 40 per cent growth in revenue to ₹1,631 crore during the quarter.
Commenting on the performance, Managing Director Sanjeev Kumar said revenue growth during the quarter was primarily driven by higher volumes across a majority of products, partly offset by lower realisations on a sequential basis. Profitability was impacted by lower realisations and higher fixed costs, partially offset by increased volumes. Established in 1976 and headquartered at Bharuch in Gujarat, GNFC was promoted jointly by the Government of Gujarat and Gujarat State Fertilizers & Chemicals Ltd (GSFC). The company commenced manufacturing operations in 1982 with an ammonia-urea fertilizer complex and has since diversified into industrial chemicals, petrochemicals, energy and information technology services. Chemicals today constitute a significant part of its business and are also a key contributor to its segment results.
High input costs
On a year-on-year basis, higher realisations and volumes across most products supported revenue growth. Profit increased marginally on account of improved realisations and volumes, partly offset by higher input and fixed costs. The fertilizer segment's loss narrowed sequentially, primarily due to the positive impact of revised urea energy norms and lower input costs, partially offset by higher fixed costs. The chemicals segment, however, reported weaker performance on a quarter-on-quarter basis due to lower realisations and higher fixed costs, despite higher volumes.
On a year-on-year basis, fertilizer segment losses increased marginally due to higher input and fixed costs, partly offset by improved realisations. The chemicals segment's performance improved marginally, supported by higher realisations and volumes.
GNFC said its captive coal-based power plant at Dahej has commenced operations, a development expected to help reduce operating costs. The remaining parallel activities associated with the project are nearing completion. The company also highlighted the revision in energy norms for neem-coated urea from 6.20 Gcal per metric tonne to 6.37 Gcal per metric tonne, effective April 1, 2025, saying the change augurs well for the company. It is also pursuing a revision in fixed costs for its neem-coated urea unit with the government at the industry level, with the task assigned to NITI Aayog.
Profitable operations
The announcement of nutrient-based subsidy rates for complex fertilizers, which will be effective from the rabi season, is awaited. GNFC said subsidy receipts have remained regular, but higher feedstock and fuel prices amid geopolitical tensions and the ongoing war have increased working capital requirements. Elevated energy prices and their consequential impact on downstream products have also exerted pressure on operating costs. Despite these challenges, the company said it has been able to maintain profitable operations. The September quarter also witnessed the liquidation of a substantial portion of the inventory accumulated at the beginning of the quarter.
Separately, GNFC reiterated its position on an adjusted gross revenue (AGR) demand of ₹21,370 crore raised by the Department of Telecommunications (DoT) in connection with its very small aperture terminal (VSAT) and Category A internet service provider (ISP) licences. The demand, which includes interest and penalties, relates to the period from FY06 to FY20 and follows the Supreme Court's October 24, 2019 judgment on AGR. The company said it has submitted representations to the DoT seeking reconsideration of the demand, arguing that revenues from its fertilizer and chemicals businesses, which are unrelated to the VSAT and ISP licences, should not be included while calculating AGR and the associated licence fees. GNFC said it had not received any further communication from the DoT as of the reporting date.
Based on legal and regulatory developments, advice obtained from senior advocates and management's assessment, the company believes it has strong grounds to contest the demand. "Management has concluded that the likelihood of an unfavourable outcome against the company is remote," the filing said, adding that no adjustments were considered necessary in the unaudited standalone and consolidated financial results.