GNFC is the largest producer of Toulene Di-Isocyanate (TDI) in India with a production capacity of 65,000 tonnes per annum
As TDI prices have soared, so has the Company’s revenues and profits resulting in the stock price increasing by 5x in the last two years.
Conversely,consumers of TDI have borne the brunt of the price increase.
Now as the conference call transcripts of Sheela Foam indicates, a relief for them is around the corner.
3 replies on “GNFC Shareholders: Time for caution?”
There is 30% import duty in place which insulates gnfc in the domestic market.
Tdi manufacturing being a highly unstable process, it will take a few quarters for the sadara plant to stabilize.
By then gnfc wud have used this windfall to pay off its debt and turn cash rich.
Tdi at peak realizations is sub 50% of chemical biz topline.
There r other avenues that will suppoort growth in h2fy19 – capex in dp plant and neem initiative.
But your point is taken.
I think more pertinent point would be the ‘global demand-supply situation’ rather than some big plant coming into production in Saudi Arabia. Looking at precarious financial situation of Saudi Arabia, it is assumed that they would not resort to predatory pricing in the global market. Thirdly, there is a 30% import duty insulating GNFC from drastic cut in its profitability immediately.
Isnt BASF one of the biggest producers? I read that their plant is shut for now?