Coromandel International Limited (COROMANDEL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Coromandel International Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stockbroking. Thank you, and over to you, sir.

Thank you, Shruti. On behalf of Antique Stockbroking, I'm pleased to host today's earnings call of Coromandel International. Today, we have Mr. Sankarasubramanian as Managing Director and CEO; Mr. Deepak Natarajan, CFO, on the call. Without further ado, I would like to hand over the call to Mr. Sankar for opening remarks, post which we'll open the floor for Q&A. Thank you, and over to you, Mr. Sankar.

An overview of the business environment experienced during the quarter and provide an update on Coromandel's operational performance. Thereafter, I will request Deepak to take you through the financial performance. On the agriculture side, India witnessed 23% of deficit rainfall on the long period average with most of the regions reporting lower rainfall. It has moderated fertilizer offtake as well in the current month. June was one of the driest months, and we have seen some recovery in the last few days, especially in Gujarat and Central regions, and this deficit has moderated to 17% -- all India reservoir levels stood at 34% of capacity versus 57% last year and Southern reservoirs have come down to 28% versus 65% last year. On crop acreages, picture is slightly mixed. While there is a drop in pulses by 15%, oilseed by 6% and cotton by 6%. Paddy acreages have come back to normal, aided by yearly monsoon in paddy build. With monsoon activity improving during July, sowing momentum has picked up, and we expect the acreages gap to narrow further over the coming weeks. Overall, farmer sentiment remains relatively cautious, influenced by uncertainty around monsoon and variability in agri commodity and input prices. On the regulatory side, government is quite active with a lot of policy announcements during this quarter. The government has approved natural investment policy for urea, which could potentially facilitate 9 million to 10 million tonnes of additional domestic urea capacity over the next 8 years across 7 proposed projects. In parallel, the announcement of INR 37,500 crores coal and lignite gasification scheme is expected to support the development of domestic syngas-based feedstocks and progressively reduce India's dependence on imported ammonia and other energy input over the medium term. The government has also initiated a pilot implementation of National Fertilizer sales framework, introducing QR code-enabled traceability across fertilizer transactions by integrating farmer land and sales data. If scaled effectively, this initiative can be very transformative for the sector, enabling a shift from conventional distribution system to more transparent data-driven and nutrient stewardship-based farming systems. The quarter was characterized by challenging operating environment for the phosphatic sector. Global prices of key raw materials, including phosphoric acid, ammonia and sulfur remained elevated, driven by continued geopolitical uncertainties and supply disruption. On the subsidy front, the government announced an increase of about 10% in subsidy rates across nitrogen phosphatic and sulfur nutrients under the NP regime. And this rate has been announced without factoring the Middle East crisis situation. These rates do not fully compensate for the increase in global raw material costs, which happened subsequent to Middle East crisis. The industry continues to engage closely with the Department of Fertilizers on the need for a review, and we remain hopeful of a positive outcome on this front. And actually, this sort of subdued subsidy rates, especially for NP NPK fertilizers have impacted production imports during the quarter, which were down by 21% and 38%, respectively. On the demand side, consumption remained stable, especially farmers picking up lower MRP stocks in the first quarter and the industry maintained the same volume of phosphatic fertilizer in the first quarter as compared to last year. Globally, there has been some impact on shortage of raw materials and production cuts announced by major manufacturers due to Middle East conflict. And this has led to lower availability of key raw materials like sulfur, acid and ammonia, resulting in surge in prices. However, the fortunate point is that industry inventories remain comfortable despite lower production and imports. In fact, urea and DAP stocks are reasonably comfortable and NPK stocks are also comfortable at this point of time to see through this kharif season. But it is very critical the industry continues to sustain production imports in the next 2 months to ensure that the carryover inventory into rabi is augmented for the smooth completion of rabi season as well. On the crop protection sector, domestic market was very muted. It's the early part of the kharif season. Demand was impacted due to delay in crop swings. But however, the export markets have shown improvement, although the market remains cautious and is waiting for price stabilization. There has been a shift in biological products globally as well as in India, and we continue to witness healthy growth driven by increased adoption of sustainable agriculture practices. In this backdrop, very happy to note that Coromandel has reported a very resilient performance, especially fertilizer business delivered very strong numbers in spite of a lot of headwinds that prevailed during this quarter. We have taken a conscious call to moderate production to 6.9 lakh tonnes compared to 8.4 lakh tonnes, roughly representing 72% of capacity utilization as the business prioritized inventory optimization amid volatile raw material markets. Process production also got moderated to 1.2 lakh tonnes, more or less in line with last year. Ideally, we should have grown with the commissioning of new plant, but higher sulfur prices, we have optimized the usage of sulfur and operated sulfuric acid plants at a moderate capacity to extend the availability of sulfur for a longer period. Elevated sulfur prices during this quarter, the company took a conscious call to moderate process production and ensure that the prices of sulfur reach a reasonable level to be competitive on sourcing and also looked at various other options to secure sulfur both from domestic and global markets. Fertilizer business margins are under pressure due to sudden spot in key input raw materials like ammonia and sulfur. As these rates have not been factored in the subsidy rates announced by the government, these rates are clear to the Middle East prices. The government has of this issue, and we hope we get the updated NBS rates for the kharif season, and this should help to improve the viability for NP NPK fertilizers. As you are aware, phosphoric acid prices for QP has been settled at $1,700 compared to $1,360 prevailed in Q1, reflecting a sharp increase in line with the increase in international price of DAP and other raw material inputs. On the project front, govern has commissioned the sulfuric acid plant and phos plant and operations have got stabilized and sulfuric acid achieved the rated capacity and also generated power as designed. And the operations are getting stabilized, and we are embarking on the new technology implemented here to ensure optimum utilization of rock. Commissioning of these plants has been at a very opportune time, and this has ensured that we continue to produce and make processes available to farmers when industry is facing shortage of key raw materials. Happy to note that granulation project is progressing well. And as planned, we are on track for commissioning this in Q4 of this year. In terms of sales, these are all early part of the season. Volumes have been moderated by 9% to 10 lakh tonnes as compared to corresponding period last year. And despite this, the company has strengthened its market position, increasing the primary market share to 22% compared to 18% in the last year. Consumption has been encouraging due to lower MRP stocks in the channel. The point of sales increased by 13% to 7.9 lakh tonnes, resulting in market share improving to 16%. SSP business continued its strong growth trajectory with volumes increasing by 19%, and we have been focusing on differentiated products like Gus and UA SSP, which constituted more than 50% of the total SSP sales, highlighting the success of company's strategy to drive premiumization and improve product mix. At our Senegal operations, the rock phosphate mining project produced over 1.1 lakh tonnes for this quarter, broadly in line with our plan. Building on the strength of this backward integration, the company is evaluating establishment of SSP facility at Senegal to cater to international markets and unlock additional value from its phosphate resources. Specialty Nutrients and organic business delivered a very strong performance in Q1, aided by higher offtake in organics and micronutrient segments. We are seeing increasing adoption of these products by farmers, particularly given their ability to improve soil health and help crops withstand stress conditions in an increasingly volatile climate. The business strengthened its innovation pipeline with the launch of 3 new products across water-soluble and sulfur nutrition segments. As highlighted earlier, we are building manufacturing capability to support long-term growth and reduce dependence on external sourcing. Our strategic project of setting up key MAP plant at Kakinada and seaweed granulation plant are progressing well and will enhance our ability to offer differentiated crop solutions. The Crop Protection business delivered a record performance in Q1, driven by strong growth in exports and B2B sales despite softer demand environment in the domestic formulation segment. Revenue grew by 20% year-on-year to INR 870 crores, while EBITDA increased 44% to INR 159 crores, reflecting improved product mix, traction for its key molecules and the ability to pass on higher raw material costs in the export market. Share of sales in the new products in the domestic B2C stands at 32% as compared to 23% last year. And we have also introduced 3 new products during this current quarter. Operationally, the business continued to make steady progress on its strategic priorities. Capacity expansion of key molecules is on track and is expected to be commissioned by September, strengthening our ability to support future growth. We are in the process of advancing our chlorochemistic capabilities and are establishing a launch facility to support product development and scale-up opportunities. Further progress was made on our CDMO strategy through engagements with the leading global innovators, while long-term raw material security was enhanced through strategic sourcing and supply arrangements. Our innovation pipeline continues to strengthen with new product registrations, novel combinations and patent filing. We remain focused on bringing differentiated solutions to the market and plan to introduce several new products over the coming months. We'll also be focusing on strengthening our market presence in Latin American markets to ensure that the market for our key molecules remain robust for the coming quarters. Our subsidiary, NACL Industries improved its performance and EBITDA has moved up by 9% to INR 41 crores with margin improving to 11% from 8%. These are in line with what we envisaged at the time of acquisition. Lower export volumes and price pressure has impacted export revenues and overall revenues were moderate at INR 383 crores. However, the business is strengthening its product portfolio and launched 3 new products during the quarter and is planning to accelerate new product introductions in the coming months. The company is closely engaging with MNC customers on development of AA intermediates in its current facility. The bioproducts business delivered a steady performance in Q1, supported by decent growth in domestic and export markets. The business is strengthening its innovation pipeline and developed 2 new products in the biostimulant and microbial category, specifically designed to address the requirements from the retail business. The white label products in the retail business, which either to source from outside will be now manufactured by bio business, providing huge opportunity and complete capturing of value chain right from manufacturing to marketing these products through our own captive retail outlets. In addition, a number of products are progressing through various stages of development and regulatory approvals. Bio business will be one of the key focus areas for us to grow both in domestic and global markets. And the company has invested in direct retailing of bioproducts by having their own trade team besides the retail outlets. The team is also actively exploring collaboration opportunities in adjacent segments such as feed additives while continue to build capabilities in plant extracts and microbial space. The retail business delivered an outstanding performance in the current quarter, benefiting from strong farmer engagement, expanded store network and higher sale of fertilizers, specialty nutrients and agronic products. Revenue on a stand-alone retail increased by 85% year-on-year, reflecting improved scale, operating leverage and profitability across the network. 76% of the stores were profitable during the quarter compared to 61% in the corresponding period last year. The business deepened its reach through additional 22 new stores, taking the network to over 1,200 outlets. while also expanding its digital and omnichannel capabilities through e-commerce and formal engagement initiatives. The The Nano business delivered stable performance with sales volume growing 2% year-on-year, supported by sustained demand for Nano DAP and a market leadership position with nearly 60% of market share. The business also initiated exports during the quarter and sees encouraging opportunities to expand its presence in international markets, supported by registrations secured in markets -- in few markets. There has been a ban on some of these products by fertilizer companies in the state of UP and Maharashtra, which industry has been representing, which has moderated the growth of these volumes. And in this current global crisis, it's very pertinent to note that this alternate fertilizers can make a huge difference to the farming community and also can save precious subsidy bill for the country and industry has been approaching state governments towards the same. And Coromandel has been pursuing with road spraying services continue to gain traction during the quarter, reflecting increasing farmer adoption of precision agriculture solutions. We are also evaluating introduction of higher capacity drones capable of fertilizer applications, which can significantly expand the addressable market and enhance the value proposition of our farm mechanization services. Our drone subsidiary, Dhaksha, while pursuing the defense orders has focused on agreed drone platform and has come up with the variances on agreed drones based on the inputs provided by the Coromandel agreed team and has also applied for the certifications of new type of drones, which can improve the efficiency and increase the battery life of drones. The business has consolidated its operations in its new integrated facility and is actively pursuing growth opportunities across various verticals while continuing to expand its technology and product capabilities through collaborations. Happy to share that Coromandel has achieved a significant sustainability milestone during the quarter with the receipt of responsible CA certification, reflecting our commitment to the highest standards of health, safety, environment and operational excellence. We are also setting up a corporate research center IIT Chennai Research Park, which is focused on developing next-generation platform technologies in nano, biologicals and advanced chemistries, strengthening our innovation pipeline and supporting long-term growth. Overall, we have delivered a resilient performance in a challenging operating environment marked by delayed monsoons, elevated raw material costs and pressure on fertilizer margins. The strength of our diversified portfolio, disciplined execution and strong growth across non-fertilizer business has helped us to offset the market headwinds which have witnessed in fertilizer business and enabled us to deliver a healthy performance during the quarter. Now I request Deepak to cover the financial performance.

Thank you, Sankar. Good afternoon, everyone. During the quarter, company recorded a consolidated total income of INR 8,215 crores as against INR 7,126 crores in Q1 of last year, registering a growth of 15%. The increase in revenues has been mainly on account of higher realization in fertilizers, combined with growth in the non-subsidy business. It's pertinent to note that last year's Q1 results does not include the NACL numbers as it became a subsidiary effective 8th August 2025 onwards. The revenue share from subsidy business stands at 77% during the quarter. As far as profitability is concerned, consolidated EBITDA for the quarter was INR 761 crores against INR 782 crores last year, registering a degrowth of 3%. The decrease in EBITDA is mainly due to higher input cost on account of the ongoing West Asia crisis, and the input cost inflation has not been fully commensurate with the revision in the NBS rates. The EBITDA share of subsidy business stands at 48% during the quarter. Net profit for the quarter was INR 382 crores in comparison to INR 502 crores last year. With regard to subsidy, during the quarter, the company received INR 1,392 crores towards the subsidy claims compared to INR 1,300 crores last year in Q1. Government has been prompt in clearing the subsidy dues. As of today, we have received our subsidy claims till the third week of June. Subsidy outstanding as on 30th June was about INR 3,254 crores. We have received additional subsidy of INR 568 crores in the month of July. As far as ForEx is concerned, during Q1, the rupee traded in a wide range of INR 92.9 to INR 96.83. Coromandel continues to hedge its exposures on a conservative basis. Thank you for the continued interest. We look forward to these interactions. I will now hand it over to Manish.

[Operator Instructions] The first question is from the line of Ankur Periwal from Axis Capital.

First question on the overall on-ground scenario. You mentioned a relatively lower utilization for us in this quarter and presumably, the imported fertilizer will also be lower, more importantly, urea and that there. So is there any structural shift that you are seeing higher demand for NPKs there? Or there is some shortage of fertilizers on the ground? And how are you looking at the on-ground scenarios?

Ankur, there is no shortage per se. Sufficient stocks of urea and DAP is available in the market. In the early part of the season, farmers have picked up low MRP packs and hence, there was an advanced purchase ahead of the season. But with the slowdown in the monsoon and the improved availability, there has been a slowdown in purchase as well. I think currently, the uptake is more through with the monsoon than availability of challenge.

Sure, sir. But given the subsidy -- there is no further revision in subsidy rates, is the situation on the ground still comfortable from a Kharif demand-supply perspective?

The industry has taken some price change. At this point of time, is the maximum the industry can do. Beyond this, this has to come through subsidy. That is what we have represented to government and hopefully, it should come through. As long as we don't correct it further, of course, the demand portion is impact.

Sure, sir. Second bit on the crop protection and the export side. Congratulations for a strong show there. Your thoughts on the bioproducts or the product registration for the formulation ones, both in the domestic and the export market. What could be the time lines that one can think of in terms of a revenue ramp-up here? And the second part of that question, on the Mancozeb capacity expansion, how is the demand pricing situation there as well?

The domestic formulation, our new product introduction, the action has been initiated 2, 3 years before. So we have been getting new 9(3) initiatives, 3 to 4 products coming through every year. That trend will continue. We have lined up the product pipeline with a clear visibility for next 3 to 4 years. On the export front, especially on Mancozeb, we have a broad-based sale of Mancozeb across various continents. We don't depend on one particular geography. Our presence in Latin America is fairly less at this point of time. Post completion of this project, we have planned to increase our volume in Latin American markets. There, we are trying to see how best we can come up with combination products and how do we have a physical presence on the ground through some collaborative support to ensure that there's a long-term demand for Mancozeb. So at this point of time, we are quite comfortable on the offtake, but it will be very important for us to build this portfolio for long term through combination products, and that is what we are working on.

Sure, sir. That's helpful. And just one last bit, if I may. You did alluded towards the CDMO opportunity for us. And earlier also, we had mentioned on the industrial chemical side. How do you look at it from a capital allocation perspective, given that will you prefer to expand into industrial chemicals, CDMO, et cetera, here, which we have been sort of talking for the last couple of years? Or there is scope for more getting backward integrated on the fertilizer side, whether it is BMCC or maybe possible further backward integration into PA and SA in India?

Well, these 2 are separate tracks. We'll continue to pursue this opportunity with the commissioning of new PASA plant, 60% of the asset deployments are taken care and we are reasonably comfortable at this point in time. We'll continue to keep some options open for imported acid as well. On the CDMO side, we are trying to do it in an organic way. And it calls a huge investment for various fluorination-based derivatives to be manufactured. Before we make that investment, we wanted to ensure that we have the proper product and customer specs are met. And hence, we are looking for launch plant, which we will be doing. And once we succeed here, then we will look at the sectors in which we will develop these products. Currently, we are focusing on fluorination-based chemicals for our agrochemical use. Once we succeed there, then we'll look for other sectors as well as the. That's our game plan on CDMO right now. But we are also trying to look at various other intermediates. Along with NACL, we are trying to see how best we can provide intermediate support to global MNCs for finished agrochemicals, which requires registration. It's a long gestation project. Intermediate does not require registration. So we are trying to see how we can leverage our capacities to produce those intermediates. The discussions are underway. We are having a multipronged approach to introduce some new products under this category as well.

[Operator Instructions] The next question is from the line of Himani from ICICI Prudential.

I wanted to ask on the business. So on the crop protection, the export just wanted to understand how much percentage of gains is coming from foreign currency, foreign currency gains?

I'm not able to hear you clearly. Can you please repeat the question?

Yes, sir. Am I audible?

Yes, now it's better.

Yes. Sorry. I just wanted to understand when our export business on the side has done well, so how much percentage of gains is because of foreign currency gains?

See, we follow the netting principle. We have a net exposure. So to that extent, the overall margins -- the EBITDA what we reported, not more than 5% to 6% can be attributable to foreign currency.

Okay. And just another question. So this is our NACL acquisition in last year, do we have any plans to increase our shareholding in the company?

I wish we can do that.

The next question is from the line of Somaiah from Avendus Spark.

Sir, my first question is on the medium-term CapEx or capital allocation. Now that the PA plant and SA plant is commissioned and the granulation is also about to get commissioned. So what are the options that we have? So whether we will can add further NPK capacity from import substitution angle and land availability. So in terms of priorities, which will be the ones that we'll be evaluating closely? And when can we expect any plan for the next couple of years? That's my first question.

Fertilizer, we are just completing the investments, and we want to ensure that we generate cash out of these investments. And meanwhile, we have this Middle East crisis, which is impacting in terms of margins. So we may not add any capacity immediately in fertilizer. Our game plan as of now, post commissioning of this new plant, we will be going up to 4 million tonnes of fertilizers and 1 million tonnes of trading, predominantly DAP. So we have a fair visibility of 5 million tonnes at this point of time, plus 1 million tonnes of SSP plus organic plus urea and imported DAP. We have high visibility of 8 million to 9 million tonnes of nutrients. That I think will see us through for the next 2 years because we want to ensure that whatever money we have invested, we generate the cash, whether it is phos sulfuric acid or finished fertilizers. So -- and in terms of the land, we always be looking for additional land for the future growth and opportunities. That investment can happen. And we have been working with Andhra Pradesh government for securing additional land for the future expansion. So this is as far as nutrient business is concerned. But of course, we are looking at other opportunities like MAP plant, which we are putting up in Kakinada for Vizag for our specialty nutrient business. This said, we are also evaluating purified phos for battery chemicals. These projects are under evaluation. If we see commercial viability, we will explore those opportunities. In Crop Protection business, we are just completing the capacity expansion. And here again, we wanted to focus on generating the cash -- we are also trying to see how best we can realize value out of any investment. We may not be adding capacities for active ingredients because we have spare capacities available in NACL. So hence, we will try and leverage the capacity between both the plants on the AI side. In Crop Protection business, the investment will be more towards marketing, brand building, channel network creation rather than focusing on any asset creation. So that is what we are looking at this point of time. Besides this retail, we are expanding our network, which doesn't cost us much in terms of the CapEx. It's more towards creation of network and providing additional supply chain book.

Got it, sir. Sir, also on NACL, so this time, we have seen margin improvement in NACL. So we are more or less this is the intended level of margin or this is kind of -- we'll be stabilizing at this level or we see further scope for improvement in NACL margins? And second, related to NACL, this time in our own crop protection, we had a very strong revenue growth. So you had alluded to exports. So what in terms of product portfolio or the difference that's leading to a decline in NACL versus a strong growth for us in our stand-alone business?

See, I think with the current product portfolio, what we have got, I think we have reached a reasonable level of EBITDA. In fact, if you remember in the time of acquisition also, we talked about EBITDA, which has fallen to 3%, 4% in first stage will move to 7%, 8%, and then we'll move it to 11%. I think the product portfolio, some molecules always keep going up, some comes down. Unless we introduce new products, which again will take 2, 3 years' time, sustaining this margin at this level is the best we can do for NACL. That's the reason they are looking at investing in intermediate capacity creation, opportunities. Those are other value chain creation we can do to improve EBITDA margins. And also, we continue to pursue efficiency improvement cost at different basis. Those things are yet to play out. So those things can take extra 1% or 2% margin. But any significant improvement to align with will call for additional investments and new products to come in. It will be a little time consuming.

So the other part was on the revenue front, where stand-alone, we had a quite strong exports, but NACL, we had an impact there. So I just want to understand the difference, what's...

Sorry, I didn't get that second. Can you please repeat?

So in the stand-alone Crop Protection, we had a very strong revenue growth, which you alluded to the exports part. NACL had a decline. Just wanted to understand, I think in the comments, you also mentioned about NACL exports was a bit impacted. So just want to understand the region or molecules or what was causing the difference?

There has been some price moderation in their molecules, which they are selling it to global MNCs. And that has moderated the revenue per se. in the case of Coromandel, our ability to pass on the input cost in case of prices helped us to realize better pricing. That is why you see a top line growth in Coromandel whereas there has been a marginal reduction in NAC. It goes to the product mix between the 2 companies.

Sure, sir. Just one last thought on sulfur. I mean we were expecting at a point in time, sulfur can come at least come off slightly, but it's still continuing to hold your thoughts on this?

Sulfur is actually against our initial expectation. sulfur is holding high. It's quite unfortunate. In fact, again, the revival of Middle East situation, the way it is playing out now. I think sulfur is likely to remain high for some time, but it's not sustainable. If you recollect sulfur used to be a disposal issue for most of the oil companies. And suddenly, the price has gone up, and this is not the correct position to be in, while there are structural shifts happened in terms of demand from EV batteries for nickel leaching and there is the offtake of sulfur has moved up from Indonesia and other countries. Still we feel that these are exorbitant levels. So that is where as Indian, decided to pay out at these price points doesn't make economic sense. We strongly believe the prices should soften. These are not sustainable.

The next question is from the line of Vivek from DSP Mutual Funds.

Sir, sorry, I joined the call a little late. I have just one question. You said that you're going to exploit the capacities you've added for the next 1 to 2 years. So have you given a CapEx target, sir, in terms of what you'll see for the next 1, 2 years in terms of rupees crores?

See, these things change. If there are opportunities, definitely, we do invest in CapEx. But at this point of time, we wanted to realize value of the investments what we have made. In fact, last 3, 4 years, we have invested close to INR 7,000 crores, both for organic and inorganic opportunities. It's very important for us to get the returns on those investments before we embark on further CapEx. So I would put a normal sustainable CapEx of INR 300 crores would be the number we'll look at. But having said that, if there are good opportunities and there are any reasonable return projects coming, we'll not be opposed to look at that.

The next question is from the line of Riju from Antique Stockbroking.

Congrats for a decent set of numbers amid challenging environment. My question regarding the industry level shift. If I look at in terms of NPK at a farmer level prices that are much, much higher compared to last year, while if I look at the DAP prices at the farmer level, that is roughly at INR 27,000 per tonne. So how do you see the shift in terms of NPK to DAP again in this year? Or like how is the consumption level market share of DAP and NPK overall the non-DR overall consumption overall as of now?

No, the shift is not happening. But if it continues to remain like this for a long period of time and the subsidy is not corrected for NPK we can't correct MRPs beyond certain levels. Then this will have a challenge of farmers looking for cheaper alternative. DAP, which is a high P product is available at INR 1,350 per bag. And whereas low P product like 2020 is going at INR 2,100. It doesn't reflect the balanced nutrition need of the crop. I hope as and when the subsidy revision happens, it will bring some normalcy. Current artificial bidding of DAP price is also impacting at this point of time. Farmers understand this balanced nutrition. And I don't think the reverse shift will happen. And also, it's also a function of availability. DAP is not available beyond certain volumes. And government also is encouraging farmers to look for alternates like SSP, organic fertilizers. I don't think the need for NPK will remain, but too much of price can lead to demand destruction. That is what we have been presenting to the government as well.

Understood. And sir, in terms of the BNCC, I think the ramp-up during the quarter was robust. So if you could highlight that thing as well. And also, if I look at in terms of the depreciation overall, depreciation overall this quarter was much, much higher on a sequential and on a Y-o-Y basis. So if you could all why that is the case? And also adding to that, if you could give us a sense that due to the commissioning of sulfuric acid and phosphate capacities in 4Q, so how much additional depreciation that you have booked during this quarter?

See, this additional depreciation also includes for the consolidated company, the amortization of mining costs that actually as per the accounting standards, some of the mining costs of over burden needs to be grouped under depreciation. So the spike in depreciation, what you're seeing is not because of additional CapEx, only on account of additional CapEx, the increase is around INR 16 crores to INR 18 crores, not more than that. The rest of them is only amortization expenses in mining operations. Plus when we do the consolidated financials, we may have to amortize the -- as per the merger accounting, we had to amortize the -- what you call amortization of intangible is close to INR 20 crores, INR 21 crores. So this is a combination of PA gap of INR 16 crores amortization of intangibles INR 20 crores and rest is coming mainly from mining charge towards pro.

Sorry, sir, how much was for the mining?

Mining will be INR 30-odd crores.

In terms of overall mining capacity of mining activities and also how that -- how in terms of the overall improvement in the fertilizer business EBITDA. So if you could quantify that?

See, mining operations are to be seen in 2 context. One is what is the margin we capture in the overseas entity. That is only one aspect of it. Suppose if we have 0.5 million tonne of rock phosphate produced there at a net EBITDA of even $30, 0.5 million tonnes, that's a minimum number we are talking about accruing year after year. That is the value what we capture in that company. But what it makes a difference is the rock gets converted into acid and the value gap in assets. So we've seen as a raw material security for our new projects at Karada plus the value gap on phosphoric acid, which we accrue as compared to imported process. That can't be seen in isolation, more of a strategic investment to ensure supply security, capturing value on rock side as well as on the...

Understood. And sir, one last question in terms of the CP business. So if you could provide us the mix of exports and the domestic CP business, including the NACL numbers?

Can I ask my team to get back to you on the specifics how much breakup I will get back to.

The next question is from the line of Ranjit from IIFL.

Congratulations for a good set of numbers in a challenging environment. My first question is on your commentary that you shared that the fertilizers are now being sold through QR code. If you can shed more light on the dynamics that are playing out on ground or the government's policy, are these to be taken as a parts and pieces that may eventually lead to an ideal DBT implementation? That's my first question.

If that happens -- actually, it's quite effective. I have witnessed myself the pilot operations in one of our retail stores. The QR code the person when he gives the other number, it links to his farm holding type of crop. And accordingly, what dosage of urea, DAP and NPKs are required and it is linked to the retailer. Retailer has to take this QR code into his POS mission and accordingly deliver the bags what has been mentioned there. The farmer has to restrict the purchase to that many number of bags. So that does 2 things, more use of state fertilizers like urea and DAP is restricted that can bring about a huge savings for the government in terms of subsidy. It helps the farmer to ensure that the over and is taken care of. It also takes away the arbitrage available to the channel because of urea demand. I think it's a win-win situation for all the stakeholders, and I wish this function if it gets replicated all across, it can bring about some sanity and balance and ultimately can lead to direct benefit transfer to the farmers, and they can decide what is good for them for their crops.

Right, sir. A guidance of how much is this being implemented, it's on a pilot basis in which states or districts it's been started?

Sim, right? They are trying to do it in 10 to 12 states, 2, 3 districts in each state. I will get back to you in specifics, that is what my understanding. Of course, it has been picked up for major district in Telangana. That is where we have witnessed. But I'm very impressed with the way the system is function.

Sure, sir. The second question is just trying to understand the difference. So you do consol minus stand-alone, the EBITDA that we see in the remaining part has seen quite a bit of a jump. I understand that a part of it is due to NACL consolidation and some growth in the base business, but it's still not able to reconcile that figure. There is a gap of INR 30 crores, INR 30-odd crores. Is this attributable to BMCC profitability?

Yes, that's what I was telling. See, in the mining cost, it comes below EBITDA under depreciation. The previous caller also has been asking for the reason for sport in depreciation number. That includes amortization of mining expenditure, which comes below the line. So to that extent, the BMC increase in the consolidated financials is showing up in EBITDA. But after providing for this amortization, the net impact comes down. That is INR 30-odd crores, which has got included under a market.

Right, sir. Sir, one request from our side is that now the non-subsidy business is kind of gaining scale. And in yesterday's press release, we also started highlighting or at least mentioning the crop protection EBITDA. If you can also try and give a bit more KPIs on the non-subsidy front, the subsidy EBITDA and nonsubsidy, at least to monitor them going forward would be helpful from our side, and that would help us to understand the company a little bit more in detail. That's the request from my side.

So we should do that definitely. We'll try and put those.

The next question is from the line of Tarang from Old Bridge.

So a couple of questions, one on Crop Protection and the other one on fertilizers. So first on fertilizer, stepping into Q1, from an industry vantage, the industry already had excess inventory, a sizable inventory. And you did call out that there was some element of prebuying because there were lower MRP package that were sort of available. So in that context, the real impact of high-cost inventory would have probably impacted only the latter part of this quarter. So just wanted to understand, over and above the subsidy, what is the broad pricing trends, pricing actions that the industry has taken? And number two, given that now the inventory that would be in the system would be fairly expensive and at least sowing seems to have caught up now, how should we look at Q2 on this business and for the fertilizer business? So that's on the fertilizer. And on crop protection, I'll probably ask after the first question's response.

You're right, actually. We need to wait for -- whatever we could do in terms of the price increase has already happened in this year has taken the price increase. Beyond this, it supplemented with the subsidy correction. That's the exact reason why we are impressing upon the need to update the NBS rates for Kharif. We hope for the Rabi revision will happen, but what we are seeking correction is for the ongoing kharif season because we don't want to increase MRP beyond the current level. Having said that, there has been correction in some of the global raw material prices. You know the urea having gone up to $900 has come down. Ammonia has started softening. And sulfur is only alluding it's a matter of time before it comes off. The industry has been very cautious in building up inventories, and there has been a lack of supplies as well. So most of us have calibrated our purchases and production to avoid any carryover of high-cost inventories. So further increase is not doable, it has to come from subsidy. Let's hope it happens.