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GNFC's Board has approved the Ammonium Nitrate Melt II project, adding 163,000 tonnes of capacity, which is a downstream project complementing prior upstream approvals. This project is part of a larger capex pipeline totaling INR2,800 crores, encompassing four ongoing initiatives: AN Melt (INR450 crores), Weak Nitric Acid (INR1,420 crores), Dahej Power & Steam Plant (INR613 crores), and Ammonia Loop Expansion (INR331 crores). Additionally, the company is evaluating new investments in Bisphenol A and Polyol, with a ballpark capex of INR7,000-8,000 crores, including an upstream phenol plant, targeting import substitution and addressing market growth rates of approximately 7%.

Q2 FY26 saw smooth operations, with improved production volumes for TDI and CNA. Key Q2 production figures include 97,000 tonnes of WNA, 40,000 tonnes of CNA, 36,000 tonnes of AN Melt, 15,600 tonnes of TDI, and 73,000 tonnes of Acetic Acid. However, the acetic acid segment faces challenges due to methanol feedstock availability and cost aberrations, while aniline is impacted by severe bidding, affecting both volumes and margins. TDI production experienced 'technical issues' in H1, leading to some deficit, though plants are now running well and expected to cover the shortfall in H2 FY26.

The government has recommended a 5-year extension of antidumping duties on products from the EU, Saudi Arabia, Middle East, and Taiwan, expected to be operative until 2030, providing market stability. Furthermore, an upward revision in fertilizer subsidy rates will benefit the company by INR872 per metric tonne, aiding in absorbing raw material price increases. Discussions are ongoing for a favorable upward revision of urea fixed costs and energy rates, with internal approval for energy revision already received, which is expected to significantly reduce losses in the fertilizer segment.

GNFC has engaged A.T. Kearney for cost savings initiatives, with Phase 2 now in progress. These initiatives, covering procurement, operations (steam power), and digital deployment, are projected to generate 'a couple of hundred crores' in annualized savings over a 12-month period. The company anticipates these benefits to start flowing into the P&L from the second half of next year (FY27), contributing to improved profitability.

The company's cash and bank balances decreased from INR2,300 crores to INR800 crores, primarily due to a dividend payout of INR18 per share and an increase of approximately INR350 crores in work-in-process. The remaining funds are strategically parked with GSFS for better rates. Management defends its investments in other Gujarat government companies as strategic, citing capital appreciation and long-term value, despite analyst concerns regarding the low yield of these assets relative to the company's market capitalization.

GNFC is facing a demand notice of INR21,370 crores from the Department of Telecommunication, dating back to 2021. The matter is currently under litigation at the TDSAT (appellate tribunal level). Management expresses strong confidence in their legal position, asserting that the demand is 'very remote and unreasonable' given the company's minimal involvement in the telecom business, and does not expect it to materialize.