💰 Financial Performance

Revenue Growth by Segment

Consolidated sales revenue for Q2 FY26 grew 10% YoY to INR 1,063 Cr from INR 966 Cr. Standalone revenue for FY23 grew 20% YoY, though 9M FY24 saw a decline due to lower caustic soda realisations.

Profitability Margins

FY23 PBILDT margin was 24.56% (down from 26.38% in FY22) and PAT margin was 9.10% (down from 14.91% in FY22). FY25 standalone PBT improved to INR 9.72 Cr from a loss of INR 195.88 Cr in FY24.

EBITDA Margin

FY23 PBILDT margin was 24.56%, a decrease of 182 bps YoY. FY25 EBITDA increased 100.1% to INR 452.56 Cr from INR 226.10 Cr in FY24, reflecting a recovery in core operational profitability.

Capital Expenditure

Major ongoing capital expenditure projects were completed in FY23. GNAL (JV) completed its project with significant delays, impacting initial ramp-up and cash flows.

Credit Rating & Borrowing

Long-term rating revised to CARE AA; Stable from CARE AA+; Stable in February 2024. Short-term rating reaffirmed at CARE A1+. Finance costs rose 13.4% to INR 50.54 Cr in FY25 due to interest on CCDs issued by the GNAL JV.

⚙️ Operational Drivers

Raw Materials

Power, Fuel, and Natural Gas are the primary inputs, with power and fuel costs accounting for approximately 30-34% of the total cost structure.

Key Suppliers

Gujarat State Financial Services (GSFS) provides term loans (INR 75 Cr in FY25). Sanghvi Organics Pvt Ltd acts as a contract manufacturer.

Capacity Expansion

GNAL JV is currently ramping up operations with a target to achieve 85-90% capacity utilization in the near to medium term, up from 65% in FY24.

Raw Material Costs

Power and fuel costs increased in FY23, contributing to margin compression. Electrolysis is energy-intensive, making the company highly sensitive to utility price volatility.

Manufacturing Efficiency

Plants operated at optimum capacity utilization in 9M FY24 despite industry headwinds. GNAL utilization improved from 49% in Q1 FY24 to 82% in Q4 FY24.

📈 Strategic Growth

Expected Growth Rate

10%

Growth Strategy

Growth will be driven by ramping up the GNAL JV to 85-90% capacity and diversifying the product mix into value-added chemicals to insulate the company from the inherent cyclicality of the chlor-alkali industry.

Products & Services

Caustic Soda (Lye and Flakes), Chlorine, Hydrogen, Chloromethanes, and other value-added chemical products.

Brand Portfolio

GACL (Gujarat Alkalies and Chemicals Limited).

New Products/Services

Expansion into value-added chemical products is planned to increase resilience against chlor-alkali price cycles, though specific revenue contribution percentages are not disclosed.

Market Share & Ranking

Ranked as the 2nd or 3rd largest player in the domestic caustic chlorine industry in India.

Strategic Alliances

GACL-NALCO Alkalies & Chemicals Pvt Ltd (GNAL), a 60:40 joint venture with NALCO, is a material subsidiary focused on caustic soda production.

🌍 External Factors

Industry Trends

The industry is currently facing a period of oversupply and subdued prices. Future direction involves a shift toward green technology and captive renewable energy to manage high power costs.

Competitive Landscape

Key dynamics include competition from large domestic integrated players and the threat of cheaper imports during global downturns.

Competitive Moat

Moat is derived from integrated operations, state-of-the-art technology, and strong promoter backing from the Government of Gujarat (46.28% stake).

Macro Economic Sensitivity

Highly sensitive to the chlor-alkali cycle and GDP growth, as end-use industries for caustic soda and chlorine are diversified across the manufacturing sector.

Geopolitical Risks

Threat of heavy dumping of caustic soda from international markets significantly impacts domestic ECU realisations and profitability.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to stringent environmental and safety regulations regarding the handling and disposal of hazardous chemicals like chlorine.

Environmental Compliance

Waste is disposed of at TSDF or CHWIF facilities. Compliance is critical as tightening pollution norms or regulatory bans on specific chemicals could halt production.

Taxation Policy Impact

The company utilizes MAT (Minimum Alternate Tax) credit entitlements and manages deferred tax liabilities, with a current income tax provision of INR 0.91 Cr in FY25.

Legal Contingencies

A provision of INR 15.49 Cr was made in Q2 FY26 for goods damaged due to a fire at the premises of contract manufacturer Sanghvi Organics Pvt Ltd.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the financial performance of the GNAL JV, which reported a net loss of INR 174 Cr in FY24, potentially requiring further financial support from GACL.

Geographic Concentration Risk

Operations are primarily concentrated in Gujarat, with major works located in Vadodara (Ranoli) and Dahej.

Third Party Dependencies

Dependency on contract manufacturers like Sanghvi Organics for specific product lines, as evidenced by the fire-related loss provision.

Technology Obsolescence Risk

Low risk due to the use of state-of-the-art membrane cell technology for electrolysis.