Highlights of the concall

The first quarter was challenging for the company and the performance has been subdued due to various factors, which included, lower demand for TAN from mining and infrastructure sectors due to negative growth in the sectors, temporary constraint in propylene supply and abrupt stoppage of gas supply

The company's net sales for Q1 FY15 has increased by 27% to Rs 945 crore on back of significant growth in trading while net profit declined by 7% to Rs 39.85 crore. The fall in profit is mainly due to higher cost of production.

The performance of the Company during the quarter was adversely affected on account of abrupt stoppage of gas supply to its plant at Taloja consequent to a decision by Ministry of Petroleum and Natural Gas. The Company was compelled to shut down some of its plants, like Ammonia, ANP & CO2 due to non-availability of natural gas. Being an integrated plant, the gas stoppage also affected the utilities plants, thereby increasing the operating costs.

For the quarter, the Chemicals segment registered a growth of 26% to Rs. 677.03 crores, riding on the back of 124% growth in trading operations. During the quarter, Propylene plant of one of the key raw material supplier was under planned shut down for around 40 days affecting the IPA production. Further subdued demand for Technical Ammonium Nitrate (TAN) impacted the segment results.

Growth in the Agri-business was also largely driven by a rise in trading activity which grew by 72%. Amongst the manufactured fertilizers, Bensulf recorded a growth of 49% whereas Ammonium Nitro Phosphate production was affected by stoppage of gas supply and recorded a drop in volume by 15%. With these, the segment revenue registered an overall growth of 27% to Rs. 286.69 crore.

The mgmt said that if the gas cut continues, in that case, ammonium nitrate or nitrophosphate production will suffer. Today the company is importing fair amount of ammonia for TAN. It has got facilities at the port and at the plant. But if it was to handle additional ammonia for its fertilizer unit as well, then that would pose some infrastructure challenges. Its technical team is actually evaluating options to see how these challenges can be overcome. Meanwhile, in Q2, it will try and optimize the ammonia usage between the fertilizers and TAN production

Ammonia international price is around Rs 32300 per ton.

It is more expensive to make fertilizer from bought out LNG than from bought out ammonia.

The increase in margin of trading fertilizer is due to trading of 2 new products which it was not used to do earlier.

For the quarter, the margin in nitric acids has been around 10%, IPA at 15% and TAN around 17-18%.

For the quarter, the sale of TAN is Rs 185 crore, all kinds of acids at Rs 62 crore, IPA own manufacture was at Rs 149 crore, methanol at Rs 23 crore, ANP at Rs 120 crore and bentonite sulphur was about Rs19 crore.

The production of ANP was around 40000 -- 42000 tons for the quarter.

The company is exploring its options regarding acquisition of Mangalore Chemicals where open offer is awaiting Competition Commission of India (CCI) approval.