Deepakfrtlsrsandptrchmcl Ltd — Q2 FY26

Deepak Frtlsrs and Ptrchmcls Corp Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=gY4xV2NrnIU Published: 6 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Deeper Fertilizers and Prochemicals Corporation Limited Q2 FY26 0:10 10 seconds conference call hosted by LK Global Financial Services Limited. As a reminder, all participant lines will be 0:18 18 seconds in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. Should 0:25 25 seconds you need assistance during the conference call, please signal an operator by pressing star then zero on 0:32 32 seconds your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vit Mora 0:41 41 seconds from NK Global Financial Services Limited. Thank you and over to you sir. 0:47 47 seconds Thank you Sophali. Good afternoon and thank you for joining us on Deepak Fertilizers and Prochemicals Corporation Limited Q2 and H1 FI26 earnings 0:56 56 seconds conference call from the company we have with us Mr. SC Meta Chairman and management director Mr. Subash an 1:03 1 minute, 3 seconds president and chief financial officer Mr. Tarun Sina president technical ammonium nitrate and Mr. Superas Jang, executive vice president, corporate 1:12 1 minute, 12 seconds finance. We would like to begin the call with a brief opening remarks from the management following which we'll have the forum open for a Q&A session. I 1:21 1 minute, 21 seconds would now like to invite Mr. SC Meta, chairman and managing director to make the initial remarks. Thank you and over to you sir. 1:29 1 minute, 29 seconds Thank you. Uh [clears throat] very warm welcome to everyone uh for the Q2 FI26 earnings conference call of Deepak Fertilizers. 1:42 1 minute, 42 seconds Our earnings presentation and press release are available on our website and the stock exchanges and I do hope you have had an opportunity to review them. 1:54 1 minute, 54 seconds Now prime of AC Q2 results in a sense indicate a bit of tough going looking at 2:02 2 minutes, 2 seconds the operating AITA margins dropping from 18 to 15%. 2:07 2 minutes, 7 seconds But it is essential to go a little deeper and granular to understand the true picture and the 2:15 2 minutes, 15 seconds resilience the businesses have shown in the context of the global geopolitical headwinds. 2:24 2 minutes, 24 seconds So now as we consider the granular details, we do need to keep in mind the strong 2:31 2 minutes, 31 seconds headwinds from Trump's tariffs that triggered sudden and chaotic 2:38 2 minutes, 38 seconds repercussions in many markets and in many countries as the world slowly came to terms with you know these sudden changes. 2:49 2 minutes, 49 seconds some places the extended monsoons have also had multiple impacts positive and negative on the different sectors of India as well as the fertilizers businesses. 3:01 3 minutes, 1 second So now keeping the above in view, I am happy to share the positive resilience 3:07 3 minutes, 7 seconds shown by our tan business with almost a 29% volume growth and our crop nutrition business growing at 54%. 3:19 3 minutes, 19 seconds Resulting into an overall topline growth of 9%. 3:23 3 minutes, 23 seconds Our journey from commodity to specialty or holistic solutions 3:31 3 minutes, 31 seconds stayed steadfast and now contributes to almost 22% share in our H1 revenues 3:38 3 minutes, 38 seconds with crop nutrition leading with crop specific NPK grades. 3:45 3 minutes, 45 seconds Now taking a little larger perspective the H1 topline grew by 13% with PAT growing by 11%. 3:54 3 minutes, 54 seconds Now for the quarter what hit us were only IPA and ammonia. 3:59 3 minutes, 59 seconds Rest of the sectors I think uh you know have shown very positive growth and both uh IPA and ammonia some 4:08 4 minutes, 8 seconds readjustment in the global trade winds is something that we are awaiting. 4:14 4 minutes, 14 seconds So on the IPA front as we await the realignments our focus on specialty pharma grid and 4:22 4 minutes, 22 seconds also other cost optimizations will continue to help us 4:28 4 minutes, 28 seconds on the ammonia front too. Uh we have already begun seeing a market price correction 4:36 4 minutes, 36 seconds while our efforts to unlock some capacity and efficiency gains are underway. 4:43 4 minutes, 43 seconds Also, our attractive LNG gas contract with Equinor will kick in by middle of next year to bring further positivity. 4:54 4 minutes, 54 seconds The other development that happened was that we completed a full acquisition of Platinum Blasting Services, our 5:02 5 minutes, 2 seconds Australian subsidiary at an attractive AITA multiple. 5:07 5 minutes, 7 seconds Now this is strategic in nature because it strengthens our footprint in the high potential Australian market 5:17 5 minutes, 17 seconds and will also reinforce our forward integration strategy learnings from you know the best practices in Australia to be brought to India. 5:26 5 minutes, 26 seconds So now DMSL is very well positioned to lead mining solutions across India to Australia. 5:38 5 minutes, 38 seconds As regards our growth projects, they are progressing steadily well despite all the challenges. 5:44 5 minutes, 44 seconds The tan project at Gopalpur is almost 87% complete and the nitric acid project at Bay has reached almost 70% completion. 5:54 5 minutes, 54 seconds And both these projects are not only central to our growth and long-term value creation but as you're aware they 6:02 6 minutes, 2 seconds are built on our 40 years of proven capabilities right from raw material safety health 6:10 6 minutes, 10 seconds environment market customer reach in comparison to anyone else. 6:17 6 minutes, 17 seconds So as we see the rest of the year pan out, the above normal monsoon will provide a very good foundation for the 6:25 6 minutes, 25 seconds rubby demand for our crop tech the uh crop nutrition business 6:32 6 minutes, 32 seconds and the mining activities also which will then support the tan market will also be something that we will see an 6:40 6 minutes, 40 seconds upswing post the monsoons for the coal and infrastructure activities. 6:47 6 minutes, 47 seconds uh the key aspect I was wanting to leave behind was that our transformation journey 6:53 6 minutes, 53 seconds is definitely something that is on a clear strong path and is continuing on a 7:00 7 minutes strong manner and that is uh you know somewhere where the focus on value added products and 7:09 7 minutes, 9 seconds services to our end consumers in each of our sectors is yielding seeing better and better results. So that is something 7:18 7 minutes, 18 seconds that we will see pan out in a stronger way as the second half and the next year emerges. 7:26 7 minutes, 26 seconds So with these broad thoughts, let me hand you over to Subash Anand, our CFO who will take you through all the 7:33 7 minutes, 33 seconds detailed financial performance for the quarter and H1. Subash. 7:38 7 minutes, 38 seconds Uh thank you and thank you Mr. Ma. Good afternoon ladies and gentlemen. Thank you for joining us today for Deepak 7:47 7 minutes, 47 seconds Fertilizers and Prochemicals Limited Prochemical Corporations Limited Q2 FI26 earning call. 7:55 7 minutes, 55 seconds We are pleased to share another quarter of resilient performance underscoring the strength of heart diversified business model and discipline execution. 8:05 8 minutes, 5 seconds Our strategic priorities focus on specialtity product, customer engagement and operational agility are translating 8:14 8 minutes, 14 seconds into tangible outcomes across segments. We continue to reinforce our balance sheet and maintain 8:22 8 minutes, 22 seconds sharp operational control laying a strong foundation for sustainable growth. 8:30 8 minutes, 30 seconds Let me walk you through the key financials and operational highlights. 8:36 8 minutes, 36 seconds on operating revenue fund Q2 sto 3,6 cr reflecting in healthy 9% yi growth 8:46 8 minutes, 46 seconds this was driven by strong contribution from our specialtity product portfolio in crop nutrition business which now 8:54 8 minutes, 54 seconds accounts for 28% of segment revenue up from 22% previous year 9:02 9 minutes, 2 seconds the B2C seg segment of our time business also gained momentum contributing 14% to total revenue 9:10 9 minutes, 10 seconds for H1 FI26 operating revenue grew at 13% YUI to 5,665 9:18 9 minutes, 18 seconds cr on the VITA front the quarter stood 464 cr on half yearly basis a bit grew 2% 9:28 9 minutes, 28 seconds valuewide to 977 cr the fertilizer segment and continued its 9:35 9 minutes, 35 seconds strong trajectory delivering a robust 36% YI growth. While tan maintained its momentum, the chemical segment was 9:44 9 minutes, 44 seconds impacted by subdued performance in IPA and ammonia resulting chemical segment showing 21% Y decline. 9:57 9 minutes, 57 seconds On net profit front, Q2 remained stable at 214 cr margin of 7.1%. 10:05 10 minutes, 5 seconds For H1, net profit rose 11% yi to 458 cr 10:13 10 minutes, 13 seconds on a growth project as Mr. Ma highlighted the tan project in Gopalur has reached 87% completion while nitric acid project in the h is at 70%. 10:25 10 minutes, 25 seconds Both projects are on track for commissioning towards end of Q4 FI26 with focus executions to ensure timely delivery. 10:36 10 minutes, 36 seconds On cash flow and leverage front in H1 we generated 782 cr cash from operations 10:44 10 minutes, 44 seconds despite a capex outlay of 870 cr net borrowing increase only marginal to to 10:51 10 minutes, 51 seconds 3,42 cr. Our net zita stands at healthy 1.74x 10:58 10 minutes, 58 seconds supported by improved operational performance and capital infusion through CCD. 11:06 11 minutes, 6 seconds Net debt to equity was at 0.548x as of September 2025. 11:15 11 minutes, 15 seconds I'm pleased to inform that we have completed the full acquisition of platinum blasting services at an attractive valuation of 6.7x EITA 11:25 11 minutes, 25 seconds and enter with an enterprise value of 537 crate move strengthen our mining solutions 11:33 11 minutes, 33 seconds footprint across AC Australia and India enhancing forward integrations and long-term value creation. 11:42 11 minutes, 42 seconds Let me now take you through the performance of our key business segments in crop nutrition business. 11:51 11 minutes, 51 seconds Uh this segment deliver another strong quarter. The manufactured B bulk fertilizers sales to date 1.85 12:00 12 minutes LMT down 31% YI due to limited availability of key raw materials. However, this was 12:09 12 minutes, 9 seconds uh well compensated by trading uh work volume what what we were able to import and uh sell. 12:17 12 minutes, 17 seconds Our flagship specialtity product crop tech recorded a remarkable 54% y growth 12:23 12 minutes, 23 seconds reflecting strong market acceptance and increasing farmer adoptions. 12:30 12 minutes, 30 seconds On outlook front with a favorable monsoon rising adoptions of crop tech and solid tech also a focused marketing 12:38 12 minutes, 38 seconds approach we anticipate robust demand for mahazan products and strong 2025 season in our mining chemical tan business. 12:50 12 minutes, 50 seconds Uh the business sustained it continue to sustain it strong momentum. 10 sales 12:56 12 minutes, 56 seconds volume grew 29% YI to 137 KT with full capacity utilization. 13:04 13 minutes, 4 seconds the export kota which were enhanced in June 2025 to 50,000 metric ton a year uh 13:12 13 minutes, 12 seconds now start showing uh into the results and our export now started reflecting uh increasing trend uh in terms of volume 13:21 13 minutes, 21 seconds on in export market volume stood at 18 KT down 3% Y due to 13:29 13 minutes, 29 seconds monsoon related disruptions in mining activities our B2C business grew 33% YUI supported by 13:38 13 minutes, 38 seconds deeper market penetration and product diversification. 13:42 13 minutes, 42 seconds On outlook front, we expect a strong post monsoon recovery in this demand driven by increased mining and infrastructure activity. 13:51 13 minutes, 51 seconds Our focus remain on expanding export, enhancing direct sales and delivering value through reliable supply, product 13:58 13 minutes, 58 seconds flexibility and tailored solutions for the mining sector. 14:05 14 minutes, 5 seconds In the industrial chemical segment, nitric acid volume remains steady at 70 KT supported by stable plant operations 14:13 14 minutes, 13 seconds and consistent demand across key sectors. 14:17 14 minutes, 17 seconds IPA volume were flat Y at 17 KT but impacted by a sharp decline in 14:25 14 minutes, 25 seconds asseton and IPA prices. The segment continue to face margin pressures due to global over supply. 14:32 14 minutes, 32 seconds A steep drop in acetone prices. 14:35 14 minutes, 35 seconds Additionally, a surge in US import following anti-dubbing duty on China has intensified competi competitive pressures in the domestic market. 14:47 14 minutes, 47 seconds Our specialtity product portfolio continue to gain traction. Pigbride is showing promising result in ongoing 14:55 14 minutes, 55 seconds pickling trials with stainless steel customers. 14:59 14 minutes, 59 seconds While Cororide has expanded its presence to over 250 hospitals across 16 state 15:06 15 minutes, 6 seconds on outlook front while the near-term environment for IPA remain challenging we are encouraged by early sign of price 15:15 15 minutes, 15 seconds stabilization driven by global trade realignment and tensions. 15:21 15 minutes, 21 seconds We are actively pursuing opportunities in farmer grade export and technical grade applications along with cost 15:28 15 minutes, 28 seconds optimization activities to enhance competitiveness and margin recovery. 15:35 15 minutes, 35 seconds Nitric asset prices expected to remain stable influenced by increased import. Our 15:43 15 minutes, 43 seconds strategic focus on market segment and customer centric innovation continue to support resilience in this segment. 15:52 15 minutes, 52 seconds On ammonia front, the segment experienced a challenging quarter impacted by global price volatility and operational constraint. 16:02 16 minutes, 2 seconds Therefore, the Middle East ammonia prices average around $300 per metric ton significantly lower below the last 16:09 16 minutes, 9 seconds year level resulting in a material revenue and a bit impact. 16:14 16 minutes, 14 seconds Higher natural gas consumptions due to startup and shutdown cycle. lower incentive income due to GST rate cuts 16:21 16 minutes, 21 seconds along with elevated natural gas rates further weigh on on the margin in this quarter. 16:30 16 minutes, 30 seconds On an outlook front, ammonia prices have rebounded above 400 already. A planned shutdown in Q4 is 16:38 16 minutes, 38 seconds expected to enhance capacity while the NG saving from infrastructure 16:45 16 minutes, 45 seconds upgrade ongoing advocacy to strengthen incentive scheme and secure EUN econ. 16:54 16 minutes, 54 seconds We are well positioned for a robust turnaround in the coming quarters. 17:01 17 minutes, 1 second In conclusion, our performance this quarter reflects the strength of our diversified portfolio. The discipline execution of our strategic road map. 17:12 17 minutes, 12 seconds Each business segment is aligned with India broader growth drivers agriculture, infrastructure, mining and healthcare, positioning us to deliver 17:20 17 minutes, 20 seconds both near-term results and long-term value. We remain committed to operational excellence, capital discipline and stakeholder value creations. 17:31 17 minutes, 31 seconds Thanks. Thank you once again for your continued support. Now I welcome your questions. 17:38 17 minutes, 38 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 17:46 17 minutes, 46 seconds star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you 17:53 17 minutes, 53 seconds may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will 18:02 18 minutes, 2 seconds wait for a moment while the question assembles. 18:12 18 minutes, 12 seconds The first question is from the line of Bhagavia Sha and individual investor. Please go ahead. Hi, thanks for the opportunity. 18:21 18 minutes, 21 seconds My first question is regarding the tech business. 18:25 18 minutes, 25 seconds In recent months, international 10 sizes seems to have gone up by 20%. 18:32 18 minutes, 32 seconds So, uh have domestic 10 sizes moved up as well and reason for spike in international tank prices. 18:47 18 minutes, 47 seconds Uh-huh. Your second part of the question is not clear. Can you just repeat it? 18:52 18 minutes, 52 seconds So uh I wanted to confirm that have domestic prices more as well. Any 18:59 18 minutes, 59 seconds specific reason for spike in international 10 practice? 19:09 19 minutes, 9 seconds Huh? You take Yeah, this is we we we've had some challenges in uh understanding your question. 19:24 19 minutes, 24 seconds Sorry to interrupt in between, sir. Uh Mr. Bhavia, can you please come closer to your handset and then speak as your voice is not audible. 19:34 19 minutes, 34 seconds No sir, you're not audible. 19:42 19 minutes, 42 seconds Hello Mr. Bhagavesha. Can you please repeat your question again? Hello. 19:49 19 minutes, 49 seconds I'm so sorry sir, your voice is not audible. I would request you to rejoin the queue again. 19:58 19 minutes, 58 seconds The next question is from the line of Shabha from Asive Kocha family office. Please go ahead. 20:06 20 minutes, 6 seconds Hello. Can you hear me? Yes, we can hear you. 20:10 20 minutes, 10 seconds So, can you see the level more on the IP market? 20:20 20 minutes, 20 seconds Hello, we only hear sentence on IPA market. 20:27 20 minutes, 27 seconds What is the situation right now with the market? If you can elaborate, I'm sorry to interrupt in between Mr. 20:34 20 minutes, 34 seconds Can you please close come closer to the handset and then speak? 20:38 20 minutes, 38 seconds Actually I am closer to the no that's fine are we we understood the question on IPA market. Now uh couple of 20:46 20 minutes, 46 seconds things which are which is I say in progress when it comes to IPA market. Uh one uh there are few sanctions has 20:55 20 minutes, 55 seconds happened uh uh can okay uh there are few tensions which has which has happened that has 21:02 21 minutes, 2 seconds resulted uh some form of crisis of IP in the in the domestic market. Uh second thing uh a lot of this uh IPO 21:12 21 minutes, 12 seconds disturbance is actually led by tariff uh uh which US Trump has announced and lot 21:20 21 minutes, 20 seconds of supply uh because of those tariff and anti-dumping on China uh the US market 21:27 21 minutes, 27 seconds is started supplying it back in India uh uh that's where the lot of import of IP has started coming to India uh from US 21:36 21 minutes, 36 seconds now with tariffs between China getting settled uh US China and US India getting 21:42 21 minutes, 42 seconds settled uh things will expected to go back to normal level and we expect uh 21:49 21 minutes, 49 seconds again back to normaly uh now yes uh it may take uh couple of months definitely uh it will not happen immediately in 21:58 21 minutes, 58 seconds this quarter but uh now there are early sign of things going back to norm normaly and we expect it to be back in 22:06 22 minutes, 6 seconds business in coming quarters Okay. And second question is cases are 22:14 22 minutes, 14 seconds we doing? So we are expecting commissioning MQ4 FI26. So how much re how much utilization are we expecting for FI27 and FI28? 22:27 22 minutes, 27 seconds Yeah. uh normally uh the way we expect uh FI27 we expect around 70% capacity 22:34 22 minutes, 34 seconds utilization and uh FI28 will be 80% plus uh and after that it will be a normal capacity 22:42 22 minutes, 42 seconds utilization okay thank you 22:50 22 minutes, 50 seconds thank you the next question is from the live of Vira Mahadevia from Maloney please go ahead 22:59 22 minutes, 59 seconds Hi, congratulations to the management team for staying on course. A quick question is with the uh lower gas integration into the manufacturing next 23:08 23 minutes, 8 seconds year, how much do we expect gross margins to expand by in FY27? 23:15 23 minutes, 15 seconds Uh okay. uh basically with our new uh LG contract which will uh which will be 23:22 23 minutes, 22 seconds effective from or the supply will start from May 26 onwards. Uh we expect the 23:29 23 minutes, 29 seconds gas prices will come down. Uh now in terms of margin expansions uh let's wait for the uh for some more time. Uh we 23:37 23 minutes, 37 seconds still not gone and then communicated but uh the cost saving is material in nature. It's it's not a small thing what 23:45 23 minutes, 45 seconds we are expecting. Uh the if everything remains same where our gas prices are today, we expect significant uh 23:54 23 minutes, 54 seconds reduction in our gas prices, basket gas prices to happen because of new contract and that will bring down our uh break even a bit level for ammonia much lower. 24:05 24 minutes, 5 seconds So, so we we expect this this will be a significant impact uh in our turnaround of ammonia business in the coming year 24:14 24 minutes, 14 seconds apart from increase in ammonia prices for which early signs are already there. 24:20 24 minutes, 20 seconds Understood. And once this capex underway is completed, is there any other capex planned or will uh cash flows from FY27 24:28 24 minutes, 28 seconds be used to delever the balance sheet? uh at this point of time we are reaching uh in fact the uh the current stage of 24:36 24 minutes, 36 seconds capex cycle we started few years back uh now we are reaching towards completion of that uh capex cycle immediate if you 24:46 24 minutes, 46 seconds ask me do we have something sanctions in in in in light no nothing immediately so there will be some cooling period that's 24:53 24 minutes, 53 seconds what we expect in terms of next cycle to kick in but we are also 25:01 25 minutes, 1 second any good but we are open any good opportunity if it makes business case uh we'll look into that. 25:07 25 minutes, 7 seconds Understood. So the absence of incremental capex or any suitable acquisition the c the cash flows will be used for debt uh payown. 25:17 25 minutes, 17 seconds Yes. If there's nothing else then definitely uh this will delever our balance sheet more and more. Okay. Great. Thank you. All the best. 25:25 25 minutes, 25 seconds Yeah. Thank you. 25:30 25 minutes, 30 seconds Thank you. The next question is from the line of Arman from Blue Sky Fintech. Please go ahead. 25:37 25 minutes, 37 seconds Uh yeah. Uh am I audible? 25:40 25 minutes, 40 seconds Yes. Yeah. First of all uh congratulations on uh uh decent set of numbers despite this volatility. My 25:49 25 minutes, 49 seconds question is just on a broader perspective as we have been hearing that India and China getting along with talks 25:56 25 minutes, 56 seconds of importing fertilizers also on a broader contour with Russia we are talking with import of fertilizers. 26:05 26 minutes, 5 seconds How's the overall broader scenario you are seeing for our company? If these talks go through, what kind of outlook 26:13 26 minutes, 13 seconds you have impact [clears throat] you could estimate of this uh uh this this meeting is going through. 26:24 26 minutes, 24 seconds Okay. Now, uh in fact, uh uh the way we operate uh uh our entire focus is on 26:31 26 minutes, 31 seconds value at product when it comes to fertilizers. uh we are not in need two fertilizers in this market uh whether 26:40 26 minutes, 40 seconds it's a our crop tech business which is a crop focus fertilizers or uh water soluble business or even the smart tech 26:48 26 minutes, 48 seconds which is also not pure pure NPK it's a nutrient coated NPK fertilizer so so we 26:55 26 minutes, 55 seconds don't have a fertilizers which is readily comparable in the market compared to uh other products which are 27:02 27 minutes, 2 seconds available so we are creating our own niche space and making our journey which is slightly more I say customized or we 27:11 27 minutes, 11 seconds spoke for our kind of a portfolio and and this journey started not not last year of few but we are on this track 27:18 27 minutes, 18 seconds from last few years it started now showing into the results and started reflecting into our bottom line so what 27:26 27 minutes, 26 seconds you are seeing in our uh cross nutrition's business portfolio actually the result of hard work over the product 27:34 27 minutes, 34 seconds differentiation strategy which we started uh at the chairman says from commodity to specialtity. Uh this is a 27:42 27 minutes, 42 seconds uh journey which we started few years back started with into uh results and we'll continue with that strategy 27:50 27 minutes, 50 seconds bringing more and more value added product for Indian market for farmers and creating our own space. 27:58 27 minutes, 58 seconds Uh uh just a followup because few years back uh some years back we had an issue with ammonia right when Russia even 28:07 28 minutes, 7 seconds covid I guess when Russia Russia dumped in India. So now what the costal cost the cost level cost 28:16 28 minutes, 16 seconds competitive level of producing what we are producing and what is being produced in Russia. Okay. 28:25 28 minutes, 25 seconds Okay. Thank you. 28:28 28 minutes, 28 seconds Uh okay in fact I'll just pass on to Tarum. Uh this is basically uh what the competition from Russia is more on 28:35 28 minutes, 35 seconds ammonia nitrate that's a tan business afghan what we call it uh that that's what gets imported from Russia which 28:42 28 minutes, 42 seconds compete with our tan business in India you want to impact of Russia. 28:48 28 minutes, 48 seconds Yes. So largely as because in covid time we had a large impact what is our reality now? 28:54 28 minutes, 54 seconds Absolutely. So as Subash mentioned uh the only business in in our group which does get impacted through material 29:03 29 minutes, 3 seconds coming from Russia is the MSL business, the mining solutions business because uh Russia exports uh ammonium nitrate into 29:11 29 minutes, 11 seconds India and that has been uh a little bit controlled over the last 6 months or so of this financial year and uh hopefully 29:20 29 minutes, 20 seconds that will remain so because now government of India is slowly is starting to realize that all the additional capacities of uh domestic 29:29 29 minutes, 29 seconds capacities of ammonium nitrate that are coming up in a very short span of time from now will actually make India self-reliant in terms of its ammonium 29:38 29 minutes, 38 seconds nitrate needs over the years to come and therefore there is no need to import so why to waste foreign exchange you know 29:45 29 minutes, 45 seconds reserves on a product uh which is insufficiency in in the country itself so that good sense slowly slowly is 29:53 29 minutes, 53 seconds seeping in in the minds of u the various ministries and hopefully over the period of time we will see further slowdown of 30:01 30 minutes, 1 second United imports in India and uh just to add to what Kum says last few uh quarters or few years if you say uh okay 30:09 30 minutes, 9 seconds there was a time when uh Russia Ukraine was started and all of a sudden there was a disturbance but after that uh 30:18 30 minutes, 18 seconds things stabilizes uh it's not the Russia import is zero no it's we are still having an import from Russia but the 30:26 30 minutes, 26 seconds price war or a price disturbance is not happening. So things are normalized and business is going where everybody now is 30:35 30 minutes, 35 seconds settled down uh in terms of the margin expectancy and the way things are happening. Okay. Got it. Got it. Thanks a lot. 30:43 30 minutes, 43 seconds Thank you. That's all from my Okay. Thank you. 30:49 30 minutes, 49 seconds Thank you. The next question is from the line of Adar Shen an individual investor. Please go ahead. 30:57 30 minutes, 57 seconds Yeah, thank you. 30:58 30 minutes, 58 seconds My question is am on ammonia plant I think some shutdown is planned in Q4. So how much capacity can be and can be increased for this plant in Q4? 31:11 31 minutes, 11 seconds Uh okay we are expecting around 10% increase in capacity in this shutdown. 31:16 31 minutes, 16 seconds Okay. And how come this shutdown would persist? 31:20 31 minutes, 20 seconds uh it will be a few week shutter uh so definitely Q4 we we are planned for that uh with that uh it will bring capacity 31:29 31 minutes, 29 seconds expansion and and some efficiency or some of the efficiency things which actions which we kept pending uh will get completed during that shutdown. So 31:37 31 minutes, 37 seconds we'll have far more efficient plant uh after that. 31:42 31 minutes, 42 seconds Okay. So 10% will be actually expecting the capability to be increased. Okay. Correct. 31:49 31 minutes, 49 seconds Yeah. Another question is 10 export kota. Uh how much we have exported till now on the 15? 32:00 32 minutes Uh so again here thanks for the question. The export kota was removed uh only in the month of June which means uh 32:08 32 minutes, 8 seconds Q1 was uh was from an export point of view. So we started to and this this was after a long gap of couple of years. As 32:17 32 minutes, 17 seconds one would imagine if any company or any business is out of the international market for a number of years uh certainly to get back to the market 32:26 32 minutes, 26 seconds international market it takes time but we've made some good progress in Q3 and we have exported reasonable quantities 32:33 32 minutes, 33 seconds as we used to do in the past and uh sorry in Q2 I should say July or September quarter and we are very 32:41 32 minutes, 41 seconds hopeful that in Q3 it will be a higher volume compared to Q2 as well as far as export goes. 32:48 32 minutes, 48 seconds So we will be able to execute the kota by Q3 or it will take Q4 also. 32:56 32 minutes, 56 seconds See uh if it was only to meet the volumes to satisfy the Kota requirements that is not a problem but as a 33:05 33 minutes, 5 seconds responsible company what we have to keep in mind is that you know as long as it makes financial sense to export 33:14 33 minutes, 14 seconds compared to you know what we can generate in the domestic market then so be it. So it's always that balanced decision we make how much to export and 33:22 33 minutes, 22 seconds how much not to export. Also keeping in mind is one of one of the answers I gave earlier. We have given commitment to government of India that we are going to 33:31 33 minutes, 31 seconds make India self-reliant for its own united demands. So obviously domestic market is the first priority for us. So 33:38 33 minutes, 38 seconds only if there is surplus left and if it can be you know sent out in in a reasonable uh at a reasonable you know 33:45 33 minutes, 45 seconds financial number then we take those decisions as we go by. So it's hard to say how much number how many numbers of terms we'll export. in this stage. 33:54 33 minutes, 54 seconds No, thanks Karum. I'll just add into that currently uh we are in short supply 34:01 34 minutes, 1 second of pan. In fact, whatever we produce everything is getting sold uh in domestic market. We don't have excess 34:08 34 minutes, 8 seconds capacity available to uh to supply anywhere else. Export Kota and export market is important for us for the newer 34:16 34 minutes, 16 seconds capacity which is getting added and that's what the lot of market development activity is happening currently to ensure we have that market available by the time we add up to the 34:25 34 minutes, 25 seconds new capacities and as was mentioned one of the questions in Q2 we operated at 100% of 34:33 34 minutes, 33 seconds correct like is operating at 100% capacity so we don't have anything left for any any market we are doing He used 34:42 34 minutes, 42 seconds to actually we used to run the plant at 110 or 108% capacity I think 34:51 34 minutes, 51 seconds okay that's that's not always possible to run at 1105 I call it that might and 34:58 34 minutes, 58 seconds even in monsoon time and that's the time when time business is not its peak time always business 35:06 35 minutes, 6 seconds slows down during monsoon always and even in that period if you're running 100% naturally you and see the demand in domestic market. 35:15 35 minutes, 15 seconds Okay. So do we create any additional margin if you export 10 or the margin is 10 that that's what we continue to 35:22 35 minutes, 22 seconds explore. Uh it's a margin maximization decisions which we uh dynamically keep taking wherever we we find better 35:30 35 minutes, 30 seconds opportunity we'll take that market in all priority. 35:34 35 minutes, 34 seconds Okay. And last question is about the joint or the collaboration which we had done with the hip from uh what are the 35:43 35 minutes, 43 seconds updates on that front? Uh uh no that's a uh ongoing uh in fact uh 35:52 35 minutes, 52 seconds uh collaboration with them. we continue to see what what are the product which we can uh bring from their portfolio and 36:01 36 minutes, 1 second introduce in into India and uh we take their help on some of the product development activity in India. So so 36:07 36 minutes, 7 seconds it's a it's an act it's a uh long-term collaborations which we have entered with them and and we are looking at 36:14 36 minutes, 14 seconds market development in collaboration with them. Okay. Thank you. Thank you very much. 36:22 36 minutes, 22 seconds Okay. Thank you. 36:25 36 minutes, 25 seconds Thank you. A reminder to all the participants. You may press star and one to ask a question. 36:34 36 minutes, 34 seconds The next question is from the line of publisher and individual investor. Please go ahead. Hello. Yeah, thanks for the opportunity. 36:43 36 minutes, 43 seconds Uh can you hear me? Yes, now we can hear you. 36:47 36 minutes, 47 seconds Okay. Okay. So my first question is regarding the 10 business in recent months international 10 crisis seem to have moved up by 20%. 36:58 36 minutes, 58 seconds So uh have domestic 10 prices moved up as well and any specific reason for spiking international 10 prices? 37:09 37 minutes, 9 seconds Okay. Yes sir. Thank you. Thank you for the question. uh so I was looking at uh three actually 37:16 37 minutes, 16 seconds data and uh as I mentioned in one of the answers earlier that most of the monitor 37:23 37 minutes, 23 seconds coming into India is from Russia. So which means the index particular index that applies to in our case uh is the 37:32 37 minutes, 32 seconds Baltic Fand index and if one were to look at uh you know the the index rise 37:41 37 minutes, 41 seconds uh I'm looking at it now as we speak. So when we started Q2 in the month of July, 37:47 37 minutes, 47 seconds the average verticorn index for Baltic FOB was uh 313 US in July. Come 37:57 37 minutes, 57 seconds September, end of the quarter, it became 275. It's gone down. It's not gone up. 38:02 38 minutes, 2 seconds That's the first thing. Come October because we are now sitting in November, it has gone down further to 246. 38:10 38 minutes, 10 seconds So therefore it be it's the contrary to what probably you have as an information in other words the international prices 38:17 38 minutes, 17 seconds that apply to the Indian situation uh have gone down consistently and yet we have been able to maintain our margins. 38:26 38 minutes, 26 seconds Okay. Understood. Okay. Uh my second question is regarding the upcoming tan and nitric acid kex. 38:36 38 minutes, 36 seconds We estimate to spend around 4,650 cr in capeex put together but however a CWIP till now has been 38:45 38 minutes, 45 seconds around 2200 crores uh both the capeex being around 6 months away from commissioning maximum 38:55 38 minutes, 55 seconds uh like why is there a gap between CWIP and the total capeex can you explain this gap 39:02 39 minutes, 2 seconds no it's a phasing of payment uh payment doesn't happen immediately the moment uh things happen. Uh so so it's it's in 39:12 39 minutes, 12 seconds plan that way. Uh we expect capex to get staggered even after commissioning certain certain payments uh remain as a 39:21 39 minutes, 21 seconds performance uh guarantee or performance commitment and that still remain on hold for some time even after uh operation gets started. 39:30 39 minutes, 30 seconds So, so I'll not say uh we will be spending everything at the time of CO. 39:36 39 minutes, 36 seconds No, it's a page manual spending happen and that's the cash per plan. 39:41 39 minutes, 41 seconds So on a cash flow basis, how much do we uh plan to spend in FI26, FI and FI27 39:50 39 minutes, 50 seconds and what do you estimate to be the peak debt? 39:53 39 minutes, 53 seconds Okay. You know, in fact, uh we we this is something we always uh uh opened and 40:00 40 minutes uh shared with the street our peak bet to go up to 4,500. Uh that that's what we expect towards end of this year. Uh 40:09 40 minutes, 9 seconds so so you can see uh majority of the capex will get spent towards end of this year. uh some 10 to 15% will remain 40:18 40 minutes, 18 seconds pending on hold uh which will be paid after certain uh amount of time uh after operations gets moved. 40:30 40 minutes, 30 seconds Okay. Okay. Understood. Thank you. Okay. 40:37 40 minutes, 37 seconds Thank you. The next question is from the line of Ranjit from Capital. Please go ahead. 40:45 40 minutes, 45 seconds Yeah. Hi sir, thanks for the opportunity. My question is on the ammonia plant. We had the state incentives 40:53 40 minutes, 53 seconds uh that kind of an assured payback on this particular investments you know with the GST been cut. How are we 40:59 40 minutes, 59 seconds viewing this and uh how should also one view on the returns on this particular plant? 41:07 41 minutes, 7 seconds Uh no Ranjit that's right the GSP rate cut that has impacted the incentives uh which which we were getting on this 41:14 41 minutes, 14 seconds plant. So with the revise rate the incentive is much lower uh compared to what it used to be earlier. Uh in fact 41:22 41 minutes, 22 seconds uh the reports the number has been computed and people uh everybody knows that number. Only thing what we intend 41:29 41 minutes, 29 seconds to do uh uh definitely uh we are now seeing how can we do more cost 41:37 41 minutes, 37 seconds efficiency bring in uh things which makes us more efficient internally and that's where the Q4 shutdown becomes 41:44 41 minutes, 44 seconds important for us. So a lot of activity what we are completing in that will help us to make us more efficient in terms of 41:52 41 minutes, 52 seconds consumption of gas is concerned. uh then naturally the gas prices with EU are coming in will help and then finally 42:01 42 minutes, 1 second ammonia prices getting firmer uh because the the last quarter ammonia prices were almost at the lower lowest of many many 42:10 42 minutes, 10 seconds quarters. So so once those started going up uh we do see uh things coming back to 42:16 42 minutes, 16 seconds normal and we should start making uh money in in PCL. uh other thing which is 42:22 42 minutes, 22 seconds important uh because we do see uh when we made the investment we expected this investment will be paid back uh as an 42:32 42 minutes, 32 seconds ultra mega fund. So, so we are representing government and seeing uh we should not be penalized by GST rate cut. 42:40 42 minutes, 40 seconds Government should support us paying us back or uh incentivize continue to incentivize uh in some way or the other 42:49 42 minutes, 49 seconds to support this investment. But that's a standby activity. Uh we are not backing on that. We are ensuring our internal 42:56 42 minutes, 56 seconds actions make us efficient to make money in this fund. 43:02 43 minutes, 2 seconds So I believe that this would be an industrywide issue. The overall I set up based on these things. So what is the initial feedback that you have got from the government if you can share in? 43:13 43 minutes, 13 seconds We we nothing so far. In fact we are talking in my best at this point of time. Uh so there will be there will be 43:19 43 minutes, 19 seconds uh representations too early to I say uh share these things 43:26 43 minutes, 26 seconds takes time. uh it's finally going back to the bodies and taking it up. So things takes time in this side. 43:35 43 minutes, 35 seconds Sure. Thank you. And second question is we have shared that we are again reinitiating exports in time. So any specific geographies that you are looking to tap? 43:46 43 minutes, 46 seconds Yeah, that's all. So usually you know the geographies of interest to us would be where we will be cost competitive in 43:55 43 minutes, 55 seconds terms of ocean freight. So that would mean South Asia, Southeast Asia and Middle East definitely and with a bit of 44:04 44 minutes, 4 seconds a stretch going up to East Africa and with a bit of a further stretch going up to West Africa on one side of the map 44:12 44 minutes, 12 seconds and then with a bit of a stretch on the other side of the map which we target once our new plant at Gokalo starts to operate that would be you know markets like Australia Sure. 44:26 44 minutes, 26 seconds Sure. Thank you very much. Yeah. Thank you. 44:33 44 minutes, 33 seconds Thank you. The next question is from the line of Sham Dasma from AF Koticha Family Office. Please go ahead. 44:42 44 minutes, 42 seconds Uh sir on the bank side of a business how much revenue comes from two and top five customers. 44:50 44 minutes, 50 seconds Sorry your voice is not clear. 44:53 44 minutes, 53 seconds Uh sir 10 part of a revenue how much revenue comes from top five or top two customers? 45:03 45 minutes, 3 seconds We could only hear 10 side of the business revenue and then after that nothing. Uh sir how much revenue comes? 45:13 45 minutes, 13 seconds Can you pick up the handset? Can you pick up the handset? Your wife has a eco. Actually, it's not clear. 45:22 45 minutes, 22 seconds Uh sir, how much the line for Mr. Shabb has been disconnected. 45:32 45 minutes, 32 seconds We will move on to the next participant. 45:35 45 minutes, 35 seconds The next question is from the line of Bwati from Asph Capital. Please go ahead. 45:42 45 minutes, 42 seconds Uh thanks for taking my question. Uh so I basically just wanted to understand uh you know what is the peak affect you 45:49 45 minutes, 49 seconds know we can expect from these two plants that are expected to get commissioned and uh by when can we reach that peak 45:57 45 minutes, 57 seconds utilization like is it FI28 or FI29 and uh lastly like what kind of ROC's do we see? 46:07 46 minutes, 7 seconds Okay. uh the the 3 year is the normal time when we expect these plants to reach to a normal 46:15 46 minutes, 15 seconds capacity utilization uh so 27 28 and then 29 that that's what we expect FI 29 46:22 46 minutes, 22 seconds is a year when things will be uh realized in terms of capacities uh for us 46:30 46 minutes, 30 seconds uh asset term for this business is roughly around 5.6 six uh this this is what we we see in asset. Uh this is 46:39 46 minutes, 39 seconds normal for this this industry and uh similar we'll see for this also 46:45 46 minutes, 45 seconds uh ROC is normal uh we we are expecting 20% plus uh because this is what we expecting this for the 46:54 46 minutes, 54 seconds new project and uh it should deliver. Okay. 47:00 47 minutes So this asset can be mentioned for both the clients. Yeah, 47:07 47 minutes, 7 seconds fair enough. Thanks a lot. That's it for Thank you. A reminder to all the 47:15 47 minutes, 15 seconds participants, you may press star and one to ask a question. 47:21 47 minutes, 21 seconds A reminder to all the participants, you may press star and one to ask a question. 47:29 47 minutes, 29 seconds The next follow-up K question is from the line of Arman from Blue Sky Feek. 47:34 47 minutes, 34 seconds Please go ahead. Uh yeah, just want to have an understanding of our margin which we told before that it will be in overall in 18 to 20 range. 47:47 47 minutes, 47 seconds Are we still seeking for the overall year that margin will be 18 to 20%. And 47:54 47 minutes, 54 seconds also for FI27 any broad uh uh estimation for our kind 48:01 48 minutes, 1 second of revenue growth or margins we could see uh okay for FI26 uh we expect our margins 48:11 48 minutes, 11 seconds to go back to a normal range uh definitely uh so that that's some expectations and uh we we are confident we should be able [clears throat] to go 48:18 48 minutes, 18 seconds back uh for FI27 uh I said too early for just to give you estimate but uh uh 48:26 48 minutes, 26 seconds things uh in terms of new capacities available and expected utilization we already spoke about. So broadly on those 48:34 48 minutes, 34 seconds line uh along with improvement of PCL business uh we we definitely see FI27 to be a stepping stone here for us. 48:46 48 minutes, 46 seconds Okay. Thank you. 48:55 48 minutes, 55 seconds The next question is from the line of Yash Gupta from Af Kota family office. Please go ahead. 49:03 49 minutes, 3 seconds Yeah. Hi, good afternoon everyone. Uh sir, my question is on uh what's our total dependency on the top two or top 49:11 49 minutes, 11 seconds five customer? Uh what's revenue percentage we received from them? 49:15 49 minutes, 15 seconds It's not uh I'll not say we have a very high concentration in terms of business. Uh each business is separate I call it. 49:24 49 minutes, 24 seconds Uh so there no point looking at broad question and saying uh top two or top five. 49:32 49 minutes, 32 seconds So so it's a diversified portfolio for each business and and we are spread across. 49:38 49 minutes, 38 seconds Okay. And the second question we have uh talked about in the previous quarter about the um about the value addition 49:46 49 minutes, 46 seconds value added product uh what's your thought now uh how much uh we are working on it and uh what's the progress now 49:54 49 minutes, 54 seconds we continue to work on that uh in fact uh if you hear the commentary we are very clearly saying the B2C segment 50:01 50 minutes, 1 second which is a uh reaching directly to customer in our time business contributes almost around 14% of revenue 50:08 50 minutes, 8 seconds And in our uh fertilizer business uh the specialtity product portfolio which is crop tax plus 50:17 50 minutes, 17 seconds there's contributes almost 35% of the revenue. 50:21 50 minutes, 21 seconds [clears throat] So so that journey continues and now we started publishing every quarter that number gets published. Mhm. 50:30 50 minutes, 30 seconds Okay sir. Uh thank you. Yeah. 50:36 50 minutes, 36 seconds Thank you. The next question is from the line of Nupour Gandhi from Suti Technology Private Limited. Please go ahead. 50:47 50 minutes, 47 seconds Hello. Hello. Am I audible? Yes, we can hear you. 50:53 50 minutes, 53 seconds Yeah. So, I just wanted to understand the pricing of ammonia. You said it was averaging around $300 per metric ton as 51:00 51 minutes mentioned in the PPT. So, as of now, what is the pricing like right now? currently ongoing. 51:06 51 minutes, 6 seconds It's $400 plus uh Middle East FOB. Okay sir. Thank you sir. Thank you. 51:13 51 minutes, 13 seconds Welcome. 51:18 51 minutes, 18 seconds Thank you. The next question is from the line of Shin Kumar Sha from Samia Capital. Please go ahead. 51:26 51 minutes, 26 seconds Yeah. Hi. Am I audible? Yes, we can hear you. 51:30 51 minutes, 30 seconds Yeah. Uh I'm just looking at your console cash flow and there is a spike in inventories and other assets if you can explain that 51:39 51 minutes, 39 seconds uh inventory basically quarter two being uh season to build the inventory. Uh so this this is normal happens as in every 51:48 51 minutes, 48 seconds quarter. So especially our two businesses one is tan business because of monsoon uh we build the inventory for next 51:56 51 minutes, 56 seconds quarter and also for our uh CNB business uh inventory gets build up so it broadly impacted that 52:05 52 minutes, 5 seconds okay and ammonia on ammonia prices so what is driving the ammonia prices now 52:12 52 minutes, 12 seconds and do you think they are sustainable ammonia prices in fact if somebody looking 10 At average, it's remain $450 52:20 52 minutes, 20 seconds up higher. Uh so $300 was abnormality I call it. Uh that's not the normal 52:27 52 minutes, 27 seconds somebody should look in. So it's it's getting back to the right scenario and that's how it should be. 52:34 52 minutes, 34 seconds Okay. And uh how much volume it will lose? Sorry. Sorry. 52:40 52 minutes, 40 seconds Yeah. So how much volume how much volume on a fertilizer side on a manufacturing it will lose because of shutdown? 52:47 52 minutes, 47 seconds We have not taken a shutdown. We are expected to take shutdown in quarter 4. 52:52 52 minutes, 52 seconds But our manufacturing volume was down right year on year in in which segment you 53:00 53 minutes fertilizer fertilizer in in in fertilizer right? Yeah. 53:07 53 minutes, 7 seconds No, that was down because we have one of the raw material was in short supply. So we cannot take a uh production of 53:14 53 minutes, 14 seconds fertilizers for some of the uh some of the grade fertilizers could not come under production. So instead of producing we have gone with the trading option. 53:24 53 minutes, 24 seconds Okay. So I mean can you help us with the details which now material and what's the status now? 53:31 53 minutes, 31 seconds No that that's normalized now. So we have uh coverage for this quarter and coming quarter. So we don't see that shortage to hit us in this quarter or in the next quarter. 53:41 53 minutes, 41 seconds Okay. And what impact do we see because of the expected shutdown? 53:46 53 minutes, 46 seconds That is quarter four ammonia shutdown or fertilizer shutdown. So that will not impact any of the business because we will import and then utilize that. 53:56 53 minutes, 56 seconds Understood. Thank you. Thank you so much. Yes. 54:03 54 minutes, 3 seconds Thank you. The next question is from the line of Ishan Bea from Ben. Please go ahead. 54:16 54 minutes, 16 seconds Ishan, please proceed with the question. Am I audible? 54:24 54 minutes, 24 seconds Uh, yes I can. Yes. 54:26 54 minutes, 26 seconds Yeah. Uh, yeah. Thanks for the opportunity. Uh I just have one query on the margins and how much is the margin 54:34 54 minutes, 34 seconds differential between the speciality products and uh uh normal products and what is the differential between the B2C in 10 and B2B in 10. 54:45 54 minutes, 45 seconds Uh it's a material difference. Uh we we normally don't give a differentiated margins portfolio that way. But uh if we 54:54 54 minutes, 54 seconds are looking at uh general trend definitely the specialtity product and the B2C products that gives us the 55:03 55 minutes, 3 seconds differentiated margin and that's one of the margin expansion initiative which we have more focus and more growth on this 55:11 55 minutes, 11 seconds will help us to expand margin portfolio and that will continue. 55:17 55 minutes, 17 seconds So what are the kind of uh targets internally we have set uh in say 3 years 55:24 55 minutes, 24 seconds time frame and how they will be uh attractive to the margins if uh it it is okay we we won't we won't give 55:33 55 minutes, 33 seconds you that uh uh I'll say uh color of that farmers but definitely this is a focus area strategic area for 55:41 55 minutes, 41 seconds us and we'll continue to work on converting more and our portfolio more and more towards specialtity uh in fertilizers. 55:52 55 minutes, 52 seconds If you see last few quarters the way we are moving so our crop tech and specialtity product portfolio growth 56:00 56 minutes will continue to be and it will be material growth. So the focus is to move more and more portfolio towards that. uh 56:07 56 minutes, 7 seconds so the B2C uh also uh more and more our entire TCPO journey and downstream discussion is to go in that path and 56:16 56 minutes, 16 seconds change the portfolio and go more towards B2C. So, so this uh journey is on uh 56:24 56 minutes, 24 seconds what number it will finally will be uh I'll hold on uh for some time uh and maybe at the right time we we can have 56:32 56 minutes, 32 seconds that discussion but focus is to move more more and more business towards specialtity and value added product. 56:42 56 minutes, 42 seconds Okay sir. Okay. Thank you. Much helpful sir. Thanks. Thank you. 57:19 57 minutes, 19 seconds Shukasta. Uh yes. 57:25 57 minutes, 25 seconds Uh okay. I think uh we can close down now. Uh thanks thanks everyone uh for taking out time and uh making it happen. 57:34 57 minutes, 34 seconds Uh thanks for your continued support and I wish all all of you uh best of health and good time. Uh thank you. Thanks again. 57:44 57 minutes, 44 seconds See you again next quarter. 57:48 57 minutes, 48 seconds Thank you on behalf of MK Global Financial Services Limited. That concludes this conference. Thank you for 57:55 57 minutes, 55 seconds joining us today and you may now disconnect your lines.