GNFC now a debt-free com­pany, says Gupta

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Ra­jiv Ku­mar Gupta, man­ag­ing di­rec­tor of Gu­jarat Nar­mada Val­ley Fer­til­iz­ers and Chem­i­cals Ltd (GNFC), ex­pects rev­enue to rise to Rs500 crore in the next three years and is fo­cused on cut­ting costs and in­creas­ing op­er­a­tional ef­fi­ciency. Edited ex­cerpts from an in­ter­view: Tell us more about Toluene Di­iso­cyanate (TDI) pric­ing?

TDI prices have been sta­ble and they have been hov­er­ing in the range of about $4,200$4,500 dur­ing the last three months but more im­por­tantly the de­mand has been pick­ing up. There have been more ex­port in­quiries with us and we have ob­served new trend that coun­tries from Africa have been de­mand­ing more and more TDI.

So we are ex­port­ing to all con­ti­nents. From an ex­port to six coun­tries we are now ex­port­ing to 66 coun­tries and from an ex­port in terms of value of about Rs10-12 crore, we hope­fully are ex­pect­ing to achieve al­most Rs600 crore but more im­por­tantly, the de­mand trend has been very pos­i­tive and very sig­nif­i­cant. What was the to­tal debt in the books? What was the work­ing cap­i­tal and what has it come down to?

When I joined this com­pany we used to take away about Rs1.5 crore per day by way of in­ter­est. From that level of al­most Rs4,000 crore we are a debt-free com­pany as far as long-term debt is con­cerned at the end of 31 March 2018. Work­ing cap­i­tal uti­liza­tion used to be over Rs1,700 crore and that has come below Rs300 crore. So from level of debt of al­most Rs4,000 crore, the com­pany is now prac­ti­cally debt free.

What is GNFC go­ing to do with the cash it is go­ing to gen­er­ate?

As far as div­i­dend is con­cerned, it is for the board to de­cide. We are do­ing well. The board may take a call on that and we are go­ing to have the board meet­ing in a cou­ple of weeks from now, but as far as the com­pany’s growth is con­cerned we would def­i­nitely like to con­sider a few op­tions of grow­ing in cer­tain known ar­eas. We would not like to go into un­known ter­ri­to­ries. We are very strong in acetic acid, we are very strong in formic acid, we are very strong in weak ni­tric acid and con­cen­trated ni­tric acid.

But is there a pos­si­bil­ity that share­hold­ers could be ex­pect­ing a big­ger div­i­dend payout? Could there be some value re­turn to share­hold­ers?

We are a listed com­pany, we are a gov­ern­ment com­pany so I would not like to com­ment on that but def­i­nitely our board has full au­thor­ity to con­sider that and since we are do­ing very well the board might take a call.

For the next year, the Street wants to un­der­stand, is Rs45-50 earn­ings per share (EPS) pos­si­ble given that now you are say­ing that you are vir­tu­ally debt free?

I would like to com­ment that how much of EPS we will end up with is still not cer­tain but we are do­ing very well and we should do bet­ter.

You are men­tion­ing formic acid. Re­port sug­gests that maybe Rashtriya Chem­i­cals and Fer­til­iz­ers (RCF), one of their units was not func­tion­ing...maybe there is a pos­si­bil­ity that they will sell out. Will GNFC be in­ter­ested in that par­tic­u­lar unit? Is that a pos­si­bil­ity?

It is not only a pos­si­bil­ity, we have asked them many a times to take over their formic acid plant. Now they have to take a call.

Since we are the largest player in formic acid and since their formic acid plant has been closed for a long pe­riod and they have not been do­ing very well, their op­er­a­tional cost of pro­duc­tion of formic acid is very high, so we had made a de­mand to them.

Now be­ing a gov­ern­ment com­pany they have to fol­low a process and at the end of the day if things turn out pos­i­tively, we would def­i­nitely be in­ter­ested in that.

The other big fac­tor that the Street is look­ing for­ward to in FY19 is the Ecophos joint ven­ture (JV). Cur­rently there is money be­ing spent on tak­ing out the hy­drochlo­ric acid. In the com­ing year when­ever that gets com­mis­sioned is there go­ing to be a big delta over there? Cur­rently we are pay­ing neg­a­tive premium of any­thing be­tween $50 and $80 on hy­drochlo­ric acid and with the com­mis­sion­ing of this JV def­i­nitely that will be­come a pos­i­tive con­tri­bu­tion. As far as progress is con­cerned, we are plan­ning to com­mis­sion that plant to­wards the se­cond half of 2019.

The other big area has been the Neem Project. Last year you did around Rs40 crore-odd. What is the vi­sion there? Hon­ourable Prime Min­is­ter took a his­tor­i­cal de­ci­sion of 100% coat­ing of neem on urea and we em­barked on a mas­sive back­ward and for­ward in­te­gra­tion project just to ful­fil that vi­sion... by not only col­lect­ing neem seeds but pro­duc­ing neem oil, and not only pro­duc­ing neem oil to coat our urea but also to use that neem oil to pro­duce var­i­ous kinds of prod­ucts and right now al­most every fort­night we have been adding one more prod­uct to our bas­ket. This year our tar­get had been about Rs40-50 crore which we should rea­son­ably achieve.

Fy20—what kind of a num­ber are you look­ing at?

It has a po­ten­tial for achiev­ing Rs500 crore turnover in next three years. So we are grad­u­ally in­creas­ing. We can­not fix up any fig­ures of Rs100 crore or Rs200 crore for one fi­nan­cial year but def­i­nitely once it picks up it will pick up very fast.

You have been at the helm of GNFC for the last few years. If you could tell us your most sat­is­fy­ing ex­pe­ri­ence?

From a com­pany which was com­pletely writ­ten off with the first ever and high­est ever net loss of Rs450 crore with al­most Rs2,500 crore of as­sets—with time over­run and cost over­runs just ly­ing idle, rust­ing—to some­thing which we have achieved now: com­pletely debt-free sta­tus, high­est ever prof­its, high­est ever div­i­dends, high­est ever bonus to our em­ploy­ees. It has been a very sat­is­fy­ing jour­ney.

IN­TER­VIEW

Ra­jiv Ku­mar Gupta, man­ag­ing di­rec­tor of Gu­jarat Nar­mada Val­ley Fer­til­iz­ers and Chem­i­cals Ltd.

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