GNFC sets new benchmark, remains most profitable player in 2016-17

Gujarat Narmada Valley Fertilizers and Chemicals Ltd is breaking all barriers and is heading on a dreamful journey of triumph. The state-run company is outsmarting peers on a number of key financial parameters in 2016-2017.

Gujarat Narmada Valley Fertilizers and Chemicals Ltd is breaking all barriers and is heading on a dreamful journey of triumph. The state-run company is outsmarting peers on a number of key financial parameters in 2016-2017. Not only GNFC recorded the maximum growth in profit after tax (PAT) but also revived the fertilizer industry trend by achieving growth in revenues largely, shows comparative analysis by rating agency ICRA and advisory firm RBSA Advisors.

The variety of its product mix, high operational excellence and diminution of debt level has helped GNFC to outperform several peers in the industry, say the independent agencies.

According to ICRA report, GNFC achieved the highest growth in profit after tax (PAT) among all the fertilizer companies, including those which also operate in a chemical domain. While GNFC’s PAT surged 11%, other players such as Gujarat State Fertilizers and Chemicals Ltd (GSFC), Indian Farmers Fertilisers  Co-operative Ltd (IFFCO), Indian Potash Ltd (IPL) and Coromandel International Ltd (CIL) saw their PAT rise in the range of 3%- 8%.

“GNFC remains the most profitable player in the industry with operating profitability (EBITDA) at 14% in FY16 and 17% in FY 17, while other competitors have reported margins from 4% to 12%,” the reporters say.

PAT as percentage of operating income, source ICRA

At a time when average revenues across fertilizers industry declined by 17% with almost all players recorded a dip in revenues, GNFC posted a growth, albeit on a much smaller base at 1%, in FY17. Except for Madras Fertilizers Limited, all other industry players’ revenues witnessed negative growth, ICRA report added.

“GNFC historically grew at the compound annual growth rate (GACR) of 5% in last five years (FY12- 17). On the other hand, PAT rose at CAGR of 13% for the same period. This implies that whilst the company grew more or less in line with the broad industry, but it has improved its operational efficiency”, says RBSA report.

The company has been focusing strongly on repaying its debt, which came down to Rs 1959 crores in FY2017 from Rs 3832 crores in FY15. “ Consequent to steps of continuous debt reduction, the company has been able to reduce its finance cost in last three fiscals, which has resulted in impressive PAT margins,” the report adds. GNFc’s overall indebtedness dropped 37% in FY 2017, the sharpest debt reduction in the industry.

According to ICRA report, GNFC posted one of the highest returns on capital employed (RoCE) in the industry at 14% while most of the other peer reported RoCE in the range of 5%- 10%.


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