Chambal Fertilisers and Chemicals Limited (CHAMBLFERT) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '22 Earnings Conference Call of Chambal Fertilisers and Chemicals Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab from CDR India. Thank you, and over to you, sir.

Thank you. Good day, everyone, and thank you for joining us on Chambal Fertilisers and Chemicals Q2 and H1 FY '22 earnings call. We have with us today Mr. Gaurav Mathur, Managing Director; Mr. Abhay Baijal, CFO; Mr. Rajveer Singh, Vice President, Legal and Company Secretary; Mr. Anuj Jain, Assistant Vice President, Finance; and Mr. Ashish Srivastava, EVP, Marketing. Before we get started, I would like to point out that some statements made or discussed on the conference call today may be forward-looking in nature and must be viewed in conjunction with the risks the company faces. Chambal Fertilisers and Chemicals does not undertake to update them. This statement in this regard is available for reference in the presentation. We will begin the call with opening remarks from Mr. Mathur. I would now like to invite Mr. Mathur to share his views. Over to you, sir.

Thank you, Rishab. Good day and a very warm welcome to all of you participating on this call. We are glad that the COVID scenario has eased a little and hopefully continues to improve as we head into this festive season. In the middle of all this, we hope that you and your families are all safe and taking all due precautions. The monsoon was normal in the country for the third consecutive year, with few states receiving above normal rainfall. The reservoir levels are being reported at almost the same levels as last year. With good, solid moisture due to rains during the latter part of monsoon period and subsequent rainfall in October, prospect of Rabi crop sowing appears encouraging. Moving on to our performance. We are happy with our performance during the quarter under review, especially considering the macro environment is quite challenging. On a consolidated basis, revenue from operations for the quarter ended September 30, 2021, stood at INR 4,479 crores as against INR 3,987 crores during the corresponding quarter last year, registering an increase of about 12%. EBITDA amounted to INR 835 crores compared to INR 811 crores in the corresponding quarter of previous year. Profit before tax stood at INR 735 crores as against INR 663 crores during the corresponding quarter last year, registering an increase of about 11%. If we look at performance of 6 months ended September 30, 2021, on a consolidated basis, revenue from operations stood at INR 8,018 crores as against INR 7,206 crores during the corresponding period last year, which is up by about 11%. EBITDA at INR 1,491 crore compared to INR 1,450 crores in the corresponding previous -- period of previous year. Profit before tax stood at INR 1,287 crores as against INR 1,123 crores in the corresponding period last year, which is up by about 15%. During the half year-ended September 30, the sales volume of urea, DAP and MOP were lower in comparison to the corresponding period last year. The supply constraints, coupled with rapid increase in prices of P&K Fertilisers, have impacted the sales volumes of DAP and MOP. We were able to increase volume of P&K fertilisers and the performance in crop protection chemicals, and micronutrients was also much better in comparison to the corresponding period last year. Spiraling prices and supply constraints pose a significant challenge for the phosphatic and potassic fertilisers in the industry. The high demand of fertilisers in Latin America and North America continue to push prices of fertilisers in the international market. Over the quarter under review, international prices of DAP, MOP and NPK fertilisers increased substantially. The restrictions on export of fertilisers from China has further impacted the supply volumes, causing continuous increasing in prices of DAP and NPK fertilisers. The announcement of additional subsidy on DAP and NPK fertilisers by the government of India have softened the impact of increase in prices of DAP and NPK fertilisers, but further increase in prices in international market is making the situation challenging once again. Considering the last size of our phosphatic business, we have developed reliable supply channels over the years and we continuously evaluate options to secure the supplies as part of our long-term strategy. As far as growth is concerned, intense focus on crop protection chemicals and micronutrients have started yielding results, and we achieved substantial double-digit growth in our existing territory. With our geographical expansion, we expect to achieve better performance in crop protection chemicals, micronutrients and NPK fertilisers. We are also evaluating options to monetize the excess ammonia available in our plants at Gadepan and are progressing well to narrow down the suitable option. We are likely to reach a conclusion by end of this financial year on this. Lastly, our emphasis continues to be on enhancing our presence in crop protection chemicals and micronutrients besides expanding the contribution of non-urea fertilisers in both existing and new geographies. With that, we would be happy to now take your questions. Thank you very much.

[Operator Instructions] Our first question is from the line of Vivek Ramakrishnan from DSP Mutual Fund.

My only question is on the subsidy receivables. I noticed that it has gone up a bit and -- hello, can you hear me?

Yes, we can hear you. Please go ahead, Vivek.

Okay. Sorry. Okay. The subsidies receivables have increased, do you expect, given the sharp increase in raw material costs across the board, that the subsidy portion would worsen before it gets better? Or is the government releasing it as they did last year?

So Vivek, the subsidy increased in 2 portions. One is on account of urea, and one is on account of DAP and NPK products. As far as DAP and NPK products are concerned, you would have noticed that the government has already made an increased allocation. So I guess that once the winter session (sic) [ season ] comes, they would tend to clear that part. As far as the urea portion is concerned, this is part of the normal escalation/deescalation process. And in the normal escalation/deescalation process, this normally does take about 6 to 8 months to settle. So I would say that there is nothing out of the ordinary. I would expect most of these monies to be paid out as far as urea is concerned towards the end of the year. As far as the NPK is concerned, we are quite hopeful that once the government makes the allocation in the budget by way of such kind of subsidiary grant, you should see some movement on this by fourth quarter.

The next question is from the line of Pratik Tholiya from Systematix.

Yes, sir. Congratulations on a good set of numbers considering the current industry dynamics. Sir, my first question is just a continuation to the last one, basically. Since even gas price has gone up, so there is a fair bit of increase in the subsidy. So you mentioned 6 to 8 months it will take to -- for the subsidy to normalize. Was that correct?

That is because the government recognizes the increases in the gas prices, but the cycle is little delayed because it's a administrative decision on part of the FICC, the Fertilizer Industry Coordination Committee. It is just nothing but bureaucratic lag effect, nothing else.

So would it be fair to assume that this year-end, by this year-end, our subsidy outstanding should be much higher than what we have seen in the previous year?

No, I wouldn't say that. I would say some part of it normally we have a mechanism called an adhoc adjustment. So that could get clear. We are already pressing the government on that issue.

Okay. Okay. Understood. And sir, what will be your current gas prices?

$15 per [ MMBTU ].

Sir, $15 per [ MMBTU ]. Okay.

This is the full price, provisioned full price for the month of October.

[indiscernible].

Understood. And sir, just on the -- on your JV front, we have received very healthy profits from the JV this time around almost INR 80-odd crores for the quarter. So just wanted to get your thoughts on the way forward for this JV, such thing that even now phos acid prices are moving up, and it has -- it is really to our advantage to have a presence or have a venture with the company, which is making this phos acid so -- and even one of the JV partners is [indiscernible], which does not have any lease for phos acid anymore. So what is our thought process? Are we just going to be just selling the phos acid in the open market? Or are we looking at using it internally? Can we expect the company to some sort of go for phosphatic production using this easily available phos acid for us.

1 Thank you, Pratik, for that question. So we continue to evaluate all possible options with our JV partners. And obviously, the entire phosphatic market, it's an international market, so there are many dynamics at play. So -- and we have to take a long-term view. This year obviously has been a unique year given the overall demand-supply situation in the international phosphatic market. So at the end, it's a very good question that you have. And we continue to evaluate possibilities looking at the future scenarios in the phosphoric acid and phosphatic area.

Okay. But anything on the -- are we -- because you in your opening you also mentioned that you will be looking at non-urea fertilisers. So can something of this sort materialize in the coming few quarters or years maybe?

Sorry could you repeat your question, Pratik?

Yes. Would it be active deliberation at the management end, to -- because you mentioned in the opening remarks that you are looking at enhancing your non-urea fertiliser business. So would this be a part of that your strategy to go for a non-urea phosphatic manufacturing business?

So Pratik, as we have mentioned in our previous call also, we have now expanded our footprint into the new geographies, the 5 states of Maharashtra, Andhra Pradesh, Telangana, Gujarat and West Bengal. And those are substantial NPK markets. So -- and obviously -- and there is DAP, which is a strong market, about 70% of DAP is in our existing territory. So that's now, therefore, our whole non-urea fertiliser segment takes a different perspective. And therefore, from a security of supply perspective, growth perspective, we are exploring, like I mentioned in my opening remarks, potential options linked to our long-term strategy. That does not necessarily mean one thing or the other. It is an open field right now. And given the strategic nature of this, it will not -- it's not something that we will rush into, but it will take due course of time.

The next question is from the line of Madhav Marda from Fidelity Investments.

Yes. I just wanted to ask you on the capital allocation strategy. So I think, if I understand right, over the last couple of quarters, we've mentioned investments, either in the ammonia downstream value chain or in the phosphatic value chain. So is it fair to say that the CapEx opportunities that we're evaluating are somewhere going to be in these 2 value chains? Or it could be something beyond that as well?

So thanks, Madhav. Like I mentioned, we are -- we have said in the past that we are evaluating the ammonia downstream section. And we are progressing well, like I said in my opening remarks. And we hope that within this financial year, we should be able to narrow down to what exactly we want to do. As regards investment in the phosphatic section, again, I know that was a question which was asked earlier, so it's the same answer: that we continue to look at all possible options and that is a bit much more complex scenario, given the global nature of the phosphatic's international business. So we will look at all possible options over there. It's too early to commit capital investment or not or anything as of now. We will develop it over the next quarters.

So the ammonia part of it is something which is -- seems to be something which is more near term, whereas the phosphatic one could take a little bit longer. Is that a fair assumption to make?

I think that's a fair assumption, Madhav. And like I said, ammonia, we feel that we can do it. Like when I say do it, we can come to some conclusion by the end of this financial year in all likelihood.

Okay. Got it. And the second question was on basically our non-urea fertiliser business. Volumes obviously were a bit weak, and that was for the country at large. In the second half of this year, can we expect volumes to pick up? Or it could -- this year itself could be a bit weak because of the supply constraint?

So I think given the overall situation on non-urea fertilisers, the supply side is indeed constrained all over the world. And I think the key focus of the stakeholders in the fertiliser and agriculture industry, which is the government, the farmers, industry is to ensure adequate quantity of fertiliser so the need of the farmer is met, right? Now clearly, given the challenges, the total volume in the country will be less compared to previous years. But as all the stakeholders are working together, including central government, state government, industry to ensure that the basic needs are met. But fundamentally, the volume is probably going to be less than last year for the entire industry and country as a whole.

And is there any outlook on by when we expect the situation to have some resolution? Like by at least next year, could we have some sort of easing? Is there any outlook or view on that?

Madhav, the global situation is such that anybody who has a hazards a guess, hazards a view on the outlook is likely to be proven wrong, right? So we have to be very careful that -- and just monitor the situation and sort of take appropriate actions. I would not like to hazard a guess on how the situation will evolve over the coming months.

The next question is from the line of Deepak Chitroda from PhillipCapital.

Yes. My first question is about the extension of the previous participant question regarding the outlook for the remaining of FY '22 or probably early FY '23. Obviously, as we have witnessed that volume pressure has been there because of the higher import prices, but how do you see in terms of further subsidy support? Do you see that probably government will announce other measures to subsidy as they have done so far?

Very good question, Deepak. As we are not in the government, I'm afraid I can't answer that question. That only the government will be privy to the thought process. And we have seen in the past in May and as recent as October, the government has taken action, but we cannot say anything for the future. I'm sure the government has many considerations before they take such decisions. So simple answer, it's not possible for us in Chambal to provide any view on the stand that the government will take.

So then do you think that, obviously, compared to last year, probably we'll -- I mean, not Chambal, but I think the entire industry will have some sort of a margin pressure compared to last year?

I think that is, I guess, a fair assumption because that's an industry-wide phenomenon and it's extremely unique here, which I believe last was seen about 10, 11 years ago when, again, there was a big challenge on phosphatic prices. Yes, so it's a fair assumption to make.

Sure. And sir, my second question is about the future strategy, again, as you talk about extension or utilizing our excess ammonia production. So [ what is ] the first area which we are exploring as of now or previously, as we talked about in terms of IMACID asset exposure, basically funding or setting up the plant there, the granulation plant there. So is there any thing on card immediately? Or that is something we can look out after this ammonia strategy is worked out?

Deepak, I'll say the same thing like which I said to this question which was asked earlier, that it's too early to say. We continue to look at all possible options. It's a complex area which requires a lot of evaluation of what all could be done. So all options are on the table. And it's too early to say anything concrete at this stage.

Sure. And last question is on just a bookkeeping question. And especially, if you can give a breakup of urea for Gadepan-I and II and Gadepan-III. And in addition to that, if you can explain, with the increase in gas prices beyond $15 how it works in terms of the mechanism?

So I can just tell you as far Gadepan-I and II are concerned, the policy states that all of it is pass-through anyways. So there is a fixed contribution which is given which is called the fixed cost in common parlance. So whatever be the price, where it's $15 or $30, that cost of gas is recognized. You are paid your normal energy norm, so you multiply the energy norm by the gas price multiplied by the dollar to rupee and so on, and that part gets pass-through. As far as the Gadepan-III is concerned, there is a slight risk. They say that beyond $14 the -- any possibility of increase above the normal floor price will not be recognized. So the only issue for us is that if there were any potential gain due to the very high international import parity price, which currently exists. That will not be available should the gas price go above $14. But the floor price, which assures us the requisite return, continues to be available. So as far as we are concerned, it is only a potential possibility which does not exist if it goes above $14. But otherwise, our return calculations and everything are based on the floor price. And that is assured, irrespective of the gas price which are used. That is the policy.

Sure. So basically, in Gadepan-I and II, so instantly, I think the increase in gas price will definitely going to support to some extent in terms of revenue. And in G-III, at least, I mean, more or less, it will remain the same?

I couldn't get the second part, could you repeat?

I'm saying for Gadepan-III, it is like not relevant much because anyways we are going to get a kind of a floor price where our contribution release more or less remain the same, right?

Yes, Yes.

And sir, the volume number, if you can share?

I will ask Anuj to answer that question.

Yes. We have sold total urea of 9.17 lakhs tonne.

Plant wise he is asking.

Plant wise basically Gadepan-I and II, we have sold 5.08 lakhs. And Gadepan-III, we have sold 4.08 lakhs.

Our next question is from the line of Tarang from Old Bridge Capital.

Yes, I've got 3 questions, actually. One, what is -- what was the average old gas price for Q2?

$13.49. Yes, $13.49.

$13.49 per MMBTU on NCV basis and GCV basis?

GCV basis it's $12.18.

Did you get that? It is $13.49 per MMBTU.

Quarter, second quarter.

It is second quarter actually.

Yes. On the crop protection business, if you could give us some flavor in terms of how big -- what's the size of the business has achieved? What are the products that you're launching? And which particular category of pesticides are you targeting or crops that you're targeting?

Sure, Tarang, we are -- don't disclose our segment-wise results as such. But we are -- like we mentioned, we are achieving high -- I mean good substantial double-digit growth which we believe is significantly above the industry. As regards the product-related question, I will request Ashish, who's our Head of Sales and Marketing, to give you some flavor.

Yes, Tarang, the product portfolio, which we are adding are majorly fungicides, wherein we have tied up with some companies for the gaps which are listed in our portfolio. Also, we are strengthening our wheat [indiscernible] portfolio where some new molecules have recently been introduced by the MNC. So that loops have been closed. So these are the 2 segments we are exploring at.

Okay. What is the excess inventory that would be ammonia inventory at the Gadepan plant currently? And what are the avenues for possible monetization?

So Tarang, we currently sell the extra ammonia that we produce. India is a net importer of ammonia. And given the global challenge on ammonia availability because of high gas prices, because of plants shutting down in some parts of the world, we are able to sell the entire ammonia that we produce at good prices. And therefore, we don't have any stock buildup as such. Whatever we produce excess, we are able to sell it.

Sure. And last, if you could give us a sense on what are the utilizations that the IMACID plant is running at currently?

Sorry. Which plant, IMACID plant?

Yes, yes.

IMACID plant is running at full capacity.

Full capacity.

That's right.

Our next question is from the line of Abhijit Akella from IIFL Securities.

Yes. First, I just wanted to understand the drivers behind this quarter's very impressive performance on the profits despite the fact that the phosphate business was almost about half in terms of volumes year-on-year. So if you could share some insights into what helped us offset that pressure. And specifically, I was thinking in terms of maybe mix shift towards the Gadepan-III plant, that seems to have happened, maybe 60,000, 70,000 tonnes [ it has ] shifted from the older plants towards Gadepan-III. So maybe a big shift seems to have moved our margins. Plus maybe some of the IPP linkage for the urea given the high international prices. And also, it seems like we've sold quite a lot of inventory out of existing stock, so maybe some benefit out of that as well. So if you could please just clarify whether this thought process is fair and am I missing out on something else?

I think you've asked an all-encompassing question, Abhijit. So there is -- you're not missing out on anything. So yes, so on urea, we've -- given the demand, we've sold full quantities of production. In quarter 1, we also had some shutdowns, et cetera. So that also impacted us. Your second part was on terms of phosphatic non-urea fertilizer. And yes, the volumes were lower. And that was, as you know, the subsidy announcements were made. So that helped to get back some of the margins on the DAP side and, obviously, the stock averaging that happens as a consequence of that. And we've also seen some contribution, like I've mentioned, from our agrochemicals and micronutrients business, right? So all those things have turned out. And obviously, in addition to that, with the government of India consistently clearing the subsidies and the one-off clearance of the large subsidy outstanding at the back end of last year, the interest charges are substantially lower, as you would have seen from the results. And last but not least, given the strong situation on the phosphoric assets, we got a good contribution from our joint venture partners also. So I think that's the answer to all your questions of why this quarter's results are what they are.

That's very helpful. And the second thing I just had was on this ammonia project that we are considering, could you give us a sense of how much volume we sell into the open market, merchant ammonia, per year? That would be helpful.

See, we sell somewhere in the range of 40,000 to 60,000 tonnes per annum, right. And it depends on a year-to-year basis based on the demand-supply situation, the import and so on and so forth and the prices that prevail in the international market, et cetera. But overall, it's in the range of 40,000 to 60,000. Given this year's challenge on the imports and the high prices, we expect to sell on the higher side, let's say, closer to [ 60 than 40 ].

Understood. And this wouldn't have been significant this quarter, right? Ammonia sales in 2Q? Because all our plants were running pretty much at 100% plus.

So the quantum of ammonia that we produce remains fairly consistent, the excess ammonia, right? We utilize all possible ammonia that we produce first to convert to urea. And that's obviously the top priority. We have a urea production facility. So -- and then whatever extra ammonia remains, which is generated due to technical reasons, we have been able to sell that in the market. And that is a fairly consistent number on a daily basis.

[Operator Instructions] Our next question is from the line of [ Falguni Dutta from Jet Age Securities ].

Yes. Sir, I just have one question on our trading margins, that is DAP and NPK. Would it be possible to give just directionally, like would our margins be 10% to 20% lower than the best quarter last year? Just to get a sense that in case they recover, how much more -- how much improvement from here on we can have?

Thanks, [ Falguni ], you ask a very difficult question because given the overall situation, it's extremely difficult for us to predict anything that will happen...

No, whatever it is as of -- whatever we did in Q2. I mean, would they have been in what range lower compared to our best quarter last year?

[ Falguni ] it's actually even if -- I can tell you honestly that even internally, I don't try to work that out too much because there are too many variables in that, [ Falguni ], okay?

Okay, nevermind.

One variable is the price at which we procure, the other variable is the subsidy, the other variable is the MRP. So there are many variables right now. And our top priority right now is to get material so that the farmers' need for the Rabi sowing can be met. As you know, we are working closely in the industry with the government.

And sir, how difficult is it to get -- how difficult is the availability? And now, I mean, has it improved a tad? Or it's the same?

Well, availability is a very, very big challenge. And in fact, it has worsened from quarter 2 to quarter 3 because, recently, China also put in export restrictions. So -- but we did manage to get some material before China has put in the export restrictions. But availability remains a significant challenge, both from a demand and supply perspective.

Our next question is from the line of Saket Kapoor from Kapoor Company.

Yes. Sir, with these inflationary trends and nonavailability, with the spike in the raw material price and the gases the 5 plants of urea which were on revamp by the government of India, do you think that, that would also take a backseat? Or those commissioning may happen and may ease out the situation because what the government was contemplating was that commissioning of these units will lead to a marked improvement in the lesser amount of urea to be imported going forward? So how will this math get affected because of the current situation?

So actually, because urea prices globally are now touching almost $900, right? So from that perspective, the decision of the government to install more urea capacity in India is certainly even more favorable than before, right? In spite of the gas price increase, because even at this gas price, the cost of indigenously produced urea will be substantially less than imported urea, okay? So there is no question that putting up those plants is a right step in AatmaNirbhar Bharat and will help the situation going forward. These, as you can understand, are not tactical. These are big strategic investments which will play over and support the country's urea requirements over decades.

But the pricing part, sir, as you told that even at these prices, even at these gas prices, what would be the indigenous cost of production for urea? Sir, and any ballpark number you are telling that [indiscernible].

Yes. At these kind of prices, the cost of production would be in the range of $450, $480, right? And import price right now is $900 as per the latest tendered documents that are available, right? But that's the situation right now. Going forward, this equation will keep changing based on gas prices and import prices. But fundamentally, the plants that are being put up, to the best of our knowledge, are fishing plants and should help in urea production, which should be possibly better than the import price.

And sir, what is the currently cost of production for people like us?

So we are also in that same ballpark.

$480.

Yes.

$480?

For Gadepan-I and II, it will be slightly less. And for Gadepan-III, it will be -- yes. So Gadepan-I and II would be around $380 to $400. And Gadepan-III would be slightly more because of the new investment policy 2012.

Okay. And sir, with the lower production across all fertiliser-maker people, so going forward, the inventory in the system will also get dried up. So how would we say next year looking up if all the producers of fertilisers have lowered down their production because of these factors? What would happen to the availability of fertiliser going down next year before the inventory gets dried up?

So are you asking about urea or the non-urea fertiliser?

Across the chain, sir, across the chain for -- we have seen in other people also guiding for lower number for other than urea going forward for the second half. And the reason they gave is that there's some ample inventory in the system. So once this inventory gets dried up, what would be the ecosystem looking like for the next year, if taking into account these factors?

So to the best of our knowledge, urea production has not been substantially less or more. So urea production is fairly steady. So there should be no impact on urea. In the non-urea part of it, a large part of the NPK fertilisers, more than 90%, is produced within India. And there, the production has also been, to our understanding, equal -- almost the same as previous years. Some challenges on DAP, but from a production perspective, it's not been very significantly lower. So the main challenge on fertilisers, which is the non is -- has been on DAP and that's because of the international situation. And like I said before to -- in answer to one of the questions asked earlier, that situation will remain dynamic. It is difficult to predict when any swing will happen in the international market. It depends -- there is no issue on the production in terms of DAP globally. The challenge is more because there was a huge spike in demand in Brazil and North America. And we -- nobody can right now say as to what how that demand will play out over the coming months.

Our next question is from the line of Resham Jain from DSP Investment Managers.

So I have just one question. Given the kind of availability situation which we are seeing for DAP as well as for other NPKs, do you see any impact on the cropping area this year? Because I think in your opening remarks, you mentioned that the Rabi season is looking quite strong. So in that context, are you seeing any impact on the cropping area because of shortages of fertiliser?

I think will be best answered by Ashish, who is -- who can give you a much better idea.

Yes, Resham, see, let's look at kharif first. Kharif, there was no significant reduction in the crop acreages of any crop, barring some low acreages reported in bajra [indiscernible] because of the net rains in Rajasthan. As far as start of Rabi is concerned, mustard is already showing an upstream, the sowing is 20% higher over the corresponding period last year. And with the good winter rains and good reservoir levels, I don't foresee any shortfall in acreages of any crop as of now.

Okay. So sir, your past data situation like this, let's say, 10 years, 11 years back when we saw similar situation, has there been any impact on the yield or on the acreage during those seasons? Any thoughts?

Yes. See, whenever there has been a crisis or nonavailability of phosphatic fertilisers, the acreages have not gone down. Farmers have reduced lower dosages, and there was no significant changes in the yield. The significant changes in the yield comes when there is a non usage of fertiliser over a period of time. That's what I understand. So I don't foresee any drop in yields as of now.

Our next question is a follow-up question from the line of Deepak Chitroda from PhillipCapital.

First question is about, sir, on the trading dynamics. So as we have gradually tried increasing our NPK trading compared to DAP. So -- and of course, we are trying to expand across India, especially in the southern part of India. So do you think that probably going forward, trading share between DAP, MOP and NPKs could be kind of 50-50 going forward?

See, we have a very substantial DAP, which has the -- base which has been established over a long, long number of years, right? So -- and the bulk of the DAP -- approximately 70% of the DAP market is in our existing territory. As regard NPK, it is roughly the reverse. The bulk of the NPK market is in the Southern and Western regions, right? So I think we will -- we are definitely looking to grow in the NPK area in those new geographies. But to suggest that we would, in a very short term, reach a 50%-50% ratio would probably be optimistic given the market dynamics and where what product is sold. But certainly, we do want to become much more significant players in the NPK area.

So do you think that SSP could be one product area where we can explore? I think we have explored that in the past. Do you think that is more viable now?

We do not believe that at Chambal Fertilisers, we would venture into SSP going forward.

Okay. Okay. And sir, second question is about our energy consumption. I mean, have we reduced further energy norms or actual energy consumption for our older plants? And what is the status for energy consumption for our new plant, especially Gadepan-III over the past 0.5 year or so?

So let me start with Gadepan-III first. We are able to operate the plant quite efficiently and have some energy gains over there. So that's Gadepan-III. With regard to Gadepan-I and II, we are, again -- we have energy efficiency better than the norms. So that continues. We are implementing energy improvement projects which have been sanctioned for Gadepan-I which shall be implemented in the beginning of the next financial year. So that will happen. And as such, we do continue to continuously look at, this is part of operational excellence. The company continues to look at how we can improve the energy. So those schemes are being evaluated on an ongoing basis.

Sure, sir. And lastly, if I can add more, what could be the ideal tax rate we can assume in the second half or probably going forward?

Sorry, tax rate?

Yes, yes.

I'm not sure I understand the question. I mean why does the tax rate change?

No, I'm saying, we have seen a couple of this improved -- sorry, this deferred tax credit which have been there in H1. So it is fair to assume, should take around 30%, 32% kind of a tax paid (sic) [ rate ] which we have paid in the past 1.5 years.

I'll request Abhay Baijal to answer.

Deepak, I think there are 2 parts to it. One is current tax, one is deferred tax. And the deferred tax calculations normally follow year-end principles, where we true up plus or minus, if there are any issues. It is also, to some extent, governed by the amount of dividend that we might get from IMACID. So those are the 2 variables. Otherwise, the tax rate remains what it is. We are not in [indiscernible] 22% plus bracket. We continue to remain at the moment an MAT paying company there is no alternate tax. And the balance, the difference, comes by the deferred tax. And the deferred tax calculations can shift a little bit here and there based on the early truing up situation. So that is what it is. And as well as tax rate is concerned, I don't see much change between now and next quarter and so on.

Ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for their closing comments. Thank you, and over to you.

Thank you, Rishab. So thanks, everyone, for your questions, and we appreciate your asking them. I hope -- and I would like to close by wishing you a very, very happy Diwali and -- sorry. Thank you very much. Have a good day.

Thank you very much. Ladies and gentlemen, on behalf of Chambal Fertilisers and Chemicals Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.