Deepak Fertilisers And Petrochemicals Corporation Limited (500645) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Deepak Fertilisers and Petrochemicals Corporation Limited Q3 FY '21 Earnings Conference Call hosted by Dolat Capital Market Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Archit Joshi from Dolat Capital. Thank you, and over to you, Mr. Joshi.

Thanks, Nirav. And good evening, one and all. On behalf of Dolat Capital, I would like to welcome all the participants for the Q3 FY '21 conference call of Deepak Fertilisers and Petrochemicals Corporation. We have with us today, Mr. Sailesh Mehta, Chairman and Managing Director; Mr. Amitabh Bhargava, President and Chief Financial Officer; Mr. Mahesh Girdhar, President of Crop Nutrition; Mr. Suparas Jain, VP of Corporate Finance; Mr. Debasish Kedia, GM Corporate Finance; and Mr. Deepak Balwani, Head of IR. Thanks a lot, gentlemen, for giving us this opportunity holding this call. Without further ado, I would like to hand over the floor to Mr. Sailesh Mehta for his opening remarks, post which we can have the floor open for a Q&A round. Thanks, and over to you, sir.

Thank you. You can hear my voice clearly, right?

Yes, sir, we can hear.

Thank you. So a very good afternoon to all of you. I hope you all and your family are safe and healthy. I am hoping that in the next few months, we all will get our vaccines. And so we will be able to meet each other in person and looking forward to that pleasure. I also take the pleasure of welcoming you all for the Q3 and 9-month FY '21 earnings call of DFPCL. I hope you all have had the chance to look at the consolidated financial statements and the results presented, which have been uploaded in the exchanges. So I'm extremely pleased to share with you that we have achieved possibly the highest ever in Deepak Fertilisers' history, our 9-month performance, despite various challenges imposed by COVID. Very broadly speaking, if I give you the headlines, at the consolidated level for the 9-month, there has been a sustained transformative shift. So our operating EBITDA has virtually doubled quarter-on-quarter or even year-on-year. Net profit grew from INR 30 crores to INR 89 crores for the quarter-on-quarter, and INR 67 crores to INR 291 crores for the 9-month. Margins also grew from 2.6% to around 6% quarter-on-quarter; and for 9-month, from 1.9% to around 6.8%. And 9-month, we have crossed the top line of INR 4,000 crores already. Now if I look at it in terms of what are the undercurrent aspects that have led to this positive change. And let me share with you at a very broad level a few macro aspects and a few micro aspects that have helped. So at the macro level, as we see all 3 of our sectors now seem to be beautifully aligned with the country's growth story and are getting a lot of tailwind, which is certainly a good help at the macro level. So our fertilizer business is well aligned with the mid-income group growing, growth in foods and vegetables, horticulture crop requirements. Our industrial chemicals are very well aligned with the country's pharmaceutical sectors and fine chemical sector. And now, of course, the hygiene needs for hand sanitizers and like. And our mining chemicals are beautifully aligned with the country's need for power, for which it needs coal or the country's need for cement, for which it needs to extra limestone or infrastructure for roads and the like. The one key thing that you are seeing is at the macro level, Deepak Fertilisers businesses has beautifully aligned with the fundamentally country's growth story. Second, that happened at the macro level was that it was peculiar, but the range were good. Peculiar in the sense that initially during kharif, there was an impact, but then for the rabi, it is a positive note. The third aspect at the macro level that we are seeing is that with some bit of the China shift, some bit of push towards AatmaNirbhar, a huge support in the budget for the agriculture sector, all of it has been positive for us at the macro level. And going forward also, the reforms that we have seen in terms of commercial mining, the reform that we feel are around the corner in terms of agriculture fertilizer sector of direct benefit transfer to the farmers. And the drive and push for doubling the farmer income and the steps in those directions, which have been taken and which we see around the corner, all of it, at the macro level, are going to be supporting the businesses that we are in. Now at the micro level at Deepak Fertilisers level. One aspect that has certainly helped is that the capacity that we have put up in the last, I would say, 3 to 4 years, whether it is the NPK fertilizer or the assets. Now all of them are firing away. All of them are going strong. Dahej has also performed very well, and that has also contributed to this kind of a positive trend. The second at the micro level, and which is the most critical one, is that our strategic drive from customer to consumer and climbing the value chain from product to solutions, that focus is really bearing fruits, whether it is for the fertilizer business, where we have made a major shift in our thinking process, in our marketing efforts, in our reach, where instead of focusing on the products, we have started focusing on a crop-specific strategy. And similarly, for our TAN project, instead of just focusing on our customers, the industrial explosives firms, we have now begun a very strong focus at the mine level itself. So this strategic driver is certainly something that has very positively helped. And the third and the most important aspect is that we have taken up a very strong drive on cost efficiencies, system controls, digitalization. And each of those are now reflecting into much better tracking, much better cost optimization. Broadly, I might share that in the quarter that went, cement infrastructure, which is a support to the TAN business, did not reach its pre-COVID levels. And so that is something that we are now looking forward to, as gradually to come out of it and that would have a positive impact for TAN, even further going forward. As far as our IPA goes for the hand sanitizer business, we did see a huge upswing in the first quarter. And since then, it has mellowed down. And today, IPA is roughly around 13.5% in our gross contributions. Yet, it is holding. It is not somewhere what it was 1.5 years back with the Chinese dumping. So today, the situation is somewhat better. But, of course, Q1 was a bonanza, which had mellowed down. So as we go forward, we do see that the fundamentals as far as fertilizer, food, industrial chemicals with health sector, fine chemicals, the mining activities, the AatmaNirbhar drive and, above all, still certain extra capacities that we have, all of it is going to be fundamentally giving us a very positive traction even going forward. So with these opening remarks, I would now hand you over to Mr. Amitabh Bhargava, our CFO, President, Finance, for a detailed financial overview and insights in the operational performance and also then address queries, if you have any. Amitabh?

Yes. Thank you, Mr. Mehta. Thank you very much. Good afternoon, ladies and gentlemen, and thank you for joining the Deepak Fertilisers and Petrochemicals conference call to discuss the Q3 FY '21 results. Our Q3 and 9-month financial performance clearly demonstrates the depth of our core business model and product diversity, leading us to a best-ever performance, even during challenging times. We are confident of maintaining this growth momentum, as Chairman mentioned earlier. Certain fundamentals are certainly now very clear and very clearly in place. The strong financials were backed by remarkable performance by all the 3 key sectors, strong demand for our products and better capacity utilizations. All the efforts that we had laid in last few quarters on debt reduction, cost optimization and efficiency measures through transformative initiatives have started bearing fruits. During Q3 FY '21, we reported total operating revenue growth of 29% Y-o-Y to INR 1,447 crores. Operating EBITDA increased by about 100% Y-o-Y to INR 217 crores. Operating margins increased to 15% in Q3 FY '21 as compared to 9.7% in Q3 FY '20. Net profit increased by 3x Y-o-Y to INR 89 crores in Q3 FY '21. Finance costs reduced by nearly 29% Y-o-Y in Q3 FY '21. We achieved reduced finance costs by putting significant efforts towards improving collections, and better working capital management, thereby reducing the short-term borrowings. In chemical segment, manufactured chemical business reported revenue of INR 685 crores in Q3 FY '21. Manufactured IPA revenues increased by 78% Y-o-Y to INR 131 crores in Q3 FY '21. IPA demand remained robust in Q3 and manufacturing sales volume increased by nearly 20% Y-o-Y. Softening in IPA prices are being witnessed, as Chairman also mentioned. Manufactured acid sales, revenue increased by nearly 16% Y-o-Y in Q3 FY '21. Robust performance in acids business was mainly driven by a strong demand and result in better realizations. The increased nitric acid plant at Dahej delivered an outstanding quarter with over 100% capacity utilization in concentrated nitric acid and nearly 95% in the dilute nitric acid segment. After facing serious challenges in the last 2 quarters due to COVID, our TAN showed significant recovery in line with the opening up of the consumer industries. TAN sales increased by 14% Y-o-Y in Q3 FY '21. Strong demand of TAN products experienced both Q-o-Q and Y-o-Y growth, driven by improvement in the end user sector. Pricing improved significantly, aided by the demand/supply issues in the market, particularly for HDAN and our AN Melt. Although demand for LDAN increased compared to Q2 and Q1 FY '21, weak performance of infrastructure, cement and steel-related sectors has resulted in lower-than-expected volumes as many of the cement plants are still sort of operating at below pre-COVID levels of capacity utilization. Chemical trading business was -- it registered INR 110 crores of revenue in Q3 FY '21, up about 11% Y-o-Y. Fertilizer segment continued its strong performance for fifth consecutive quarter, led by higher sales volumes, supported by good rains in the core command area and demand for recently launched Superfast Bensulf. Overall, margins improved significantly due to higher proportion of differentiated Smartek, NPK in the product mix. Manufactured fertilizers reported revenue increase of 39% Y-o-Y to INR 562 crores in Q3 FY '21. Nitrophosphate, NP, sales volumes in Q3 increased by 13.6% Y-o-Y and NPK by nearly 52% Y-o-Y. Fertilizer trading business increased by 28% Y-o-Y to INR 85 crores in Q3 of FY '21. We remain confident, as Chairman mentioned, both the macro and micro factors are helping us in that direction. And we remain confident of continuing our growth trajectory, while extending full support to our customers, suppliers and other value -- valued stakeholders in these testing times. With this, we would be happy to take your questions. Thank you.

[Operator Instructions] The first question is from the line of Lokesh Manik from Vallum Capital Advisors.

A couple of questions from my end. One is on the nitric acid side. Firstly, the realization has shot up by about 20% Q-o-Q and Y-o-Y from about 20,000 metric tonne to 25,000 metric tonne. So is this temporary in nature or due to a demand/supply mismatch? Or do you expect it to continue going forward?

So one is that, definitely, there is a strong demand we are seeing. And to the event that we sell a part of our products in the spot market as it will help realize their prices. But actually, on the long-term end, some of the contracts that has come up for revision, we also have negotiated price increase in those growth contracts. So a part of it, I will say, is sustainable. And remaining, it depends on the spot market. But we are seeing a very strong demand in nitric acid sector. So we are hopeful that these margins, per tonne margins sustain.

Right. Okay. And the second question was on the projects, the CapEx. So in the presentation, it was mentioned about expansion of IPA and TAN. So is that back on the table? I understand it was put on hold before. So is that back on the table? And if you can share what would be a time line tentatively when can you commission it? And second was the ammonia project, if you can provide a status update on that?

So as far as TAN project is concerned, I don't think at any stage, we said that it is on hold. What TAN project, we've been in the process of getting all the required approvals, environmental approvals and other regulatory approvals, the redevelopment activity that is required before you start investing on the ground. So that process is on. And therefore, the timing of that of, let's say, the CapEx construction and the rest of procurement would depend on that. We are hopeful that in next, say, 2 quarters, should be in a position to get most of the approvals. But like I said, it depends -- the CapEx will depend on all the regulatory approvals that we get. As far as IPA is concerned, again, we are watching the environment, the situation, in terms of the kind of IPA prices because IPA prices have gone through significant volatility. The raw material prices, whether it is RGP or acetone, have also -- not RGP so much, but acetone has seen significant volatility. So for us, before we make up our mind on whether we go ahead or not, we want to sort of wait and wait for the equilibrium to establish in some sense because there are too many factors right now sort of moving and shaking. So from that perspective, IPA, for the time being, we're waiting and watching. Ammonia project, we have got our consent to establish, which means we can start the construction now. The land acquisition is behind us. We've acquired all the line. We are just sort of in the final phases of negotiating our contracts, and we would then resume the progress of ammonia project.

Okay. Okay. But any time line as to when can you expect, maybe '23, is that being...

Yes, '23 first quarter calendar year, we expect that we would be in a position to commission the plant.

For ammonia and TAN?

Ammonia. TAN is, let's say, anywhere between 26 to 30 months from the date we start...

The next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, you spoke about the momentum in the growth trajectory as well as since your fundamental all are equal. So sir, any sort of outlook that you want to share for next year...

I didn't get your question. Is it specific to a product that you're asking? Or you are saying in general outlook?

No, in general, in general.

See, first of all, you would appreciate that some of our sectors are cyclical in nature, and raw material does play an important role in terms of margin. So to that extent, giving a prognosis or an estimation on numbers is something that we would want to stay out of. What -- the point that Chairman also mentioned earlier, which is the macro and micro factors. So you need to -- and we need to sort of concentrate or focus on some of those aspects. And there, I would say, if you look at product-by-product in nitric acid, we are seeing significant demand coming from downstream sectors. While, this year, so far, I would say, our capacity utilization because of Q1 and Q2 issues that we face on the production side, overall capacity utilizations have been in the range of 60%, 65%. So we have, I would say, a sort of -- a significant sort of operating leverage sitting there. It's just a question of having the production stream line. And that itself would give us the volumes because the demand is not an issue. Likewise, in IPA, again, we are -- as a country, we are a net importer. And despite we having capacities coming from some of the other players, we remain and we continue to remain an importer. So demand is not an issue. We'll have to see what the price is, how IPA and RGP prices behave. And this is, again, a typical sector, which -- where it's very difficult to predict. But the business does feel that there is still some steam left in IPA prices for a period. Fundamentally, if you look at TAN, again, TAN is -- this year, the capacity utilization in TAN also, because of what we faced in Q1 and Q2, have been more in the range of 80%, 81%. So there is -- and TAN demand is not a question mark at all. I mean, we are, again, a net importer. In fact, with certain restrictions on import, we've seen the demand/supply situation, again, sort of in -- more in favor of the supply side. So we've got good realization. And given that capacity utilizations can be further improved, I mean, we are nowhere close to what we achieved in FY '19, for example, we see that there is good headroom left there in terms of further sort of getting the volumes and the margins in TAN business. Fertilizer is where we have clearly -- despite all the challenges, we're still better -- significantly better than last year. But even with that, we are looking at capacity utilizations of about 73%, 74% that we have got utilized in this year, 9-month. So which means that again -- and given that farmers have accepted our products, and we are coming up with new variants, we are quite confident that this additional sort of operating leverage sitting in our capacity, particularly in NPK trains, we would be able to utilize them well. So if you look at all of the fundamentals on the demand side and the fact that we are still sitting on capacities -- unutilized capacity, we do see a good sort of traction going forward.

That's quite an elaborate explanation. And sir, so this last thing, when you're talking about growth, mainly the growth momentum, are you talking like last 2, 3 quarters, we have been maintaining about 20%, 25% kind of revenue growth on a Y-o-Y basis? So is that the momentum you're talking about?

So I have given you a sense on the capacities and unutilized capacity. So as far as capacity utilization is concerned, like I said, demand is not a constraint. And when the pandemic is behind us, we don't see challenges in utilizing our capacity. What happens to prices is something that we need to watch out for. And to that extent, I wouldn't want to predict. That said, you are -- I think you're aware that there is general inflationary trend that we are seeing in all commodities. And the question is, what happens to relative prices of finished goods and raw materials, that would also, in a way, decide what kind of margins we are able to secure in coming quarters. But we are seeing like -- demand is not a challenge. Capacity utilization is something that we're quite confident. But today, we are underutilized. We will utilize them better.

The next question is from the line of Nishith Shah from Aequitas Investments.

And congratulation on great numbers. Sir, I wanted to understand on subsidy front. How much is outstanding?

So there is -- by December end, INR 460 crore. But what I can confirm to you that in January -- month of January itself, we've received roughly about 200 -- thereabout INR 200 crores, INR 210-odd crores. So this number would have come down. But December end number is INR 460 crores.

Okay. And with the higher budgetary allocation, do you feel that the pending subsidies -- so basically, there would be no pending subsidies for this year-end?

That's our estimation as well, but let's see.

Okay. Sir -- and sir, this phos acid and ammonia prices have been on a rising track. So can you give me the current prices? And also, I wanted to understand, will we be able to pass on these prices to the consumers?

So phos acid prices have gone up by about $100. And -- while ammonia prices, today, we are looking at -- still looking at about $270 to $280 CFR prices. Now see, again, it's very difficult to answer that question. We'll have to see how other players in the market also react to this price increase. But we are -- where we are confident is that we have, in last several quarters, the demonstration that we have done at the farm level and the number of farmers who have now tested our differentiated products. And the fact that we have, compared to the competition, our variance, Smartek variants are commanding premium. That gives us the confidence that farmer would be willing to pay for that differentiation. And that gives us a better ability to pass on the price. But a lot also depends on how the market and rest of the players also react to that.

Sir, so is the channel inventory normalized by now? Or is it at a lower level?

Mahesh, would you like to take this question?

Yes. Thank you very much, Amitabh. So the channel inventory is at a normalized level because channel inventory started coming down from kharif onward because there were some supply challenges in the first half and demand this year, the consumption this year in first half was about 40% more than last year. So that has depleted the inventory and inventory is quite normal now.

Okay. Sir, can you give me breakup of EBIT for TAN and nitric acid?

Sorry, I didn't get your question.

Sir, I want EBIT of TAN and nitric acid separately. Is that possible?

So one is the report at Deepak stand-alone, we report EBIT, which has both IPA and acid numbers. And at the consol level, we report the chemicals segment, which has TAN, IPA and acid. So as such, we don't sort of report a split between IPA and the acid.

Okay, sir. Sir, our realizations for TAN and nitric acids have gone up. Some input costs would have also gone up. So has EBITDA margins for these per tonne basis have gone up than what we were experiencing in the past, those have been stable?

So if you see the overall EBIT numbers have gone up for chemical segment, and TAN was a significant contributor to that. We don't -- like I said, we don't report EBITDA, product-wise because some of our costs are also common. And to that extent, they appear below the segment EBIT number. So it's not -- I don't think it's sort of -- one is we don't report it, and I wouldn't want to sort of break up the costs, which are below our segment EBIT into respective sort of products.

Okay. Sir, now coming to our debt. So how much have we reduced debt, gross and net, in this quarter?

This quarter debt, I would say, roughly about INR 50-odd crores, net debt reduction. So by and large, it has remained flat. So I think September end, we were roughly about INR 2,050-odd crores, and we are now down to INR 2,000 crores.

INR 2,000 crores. Sir, and the interest cost has been stable quarter-on-quarter. So do we see that reducing going forward?

Well, we have, in fact, reduced the interest cost. What you're saying is quarter-on-quarter, there's been a stability? Yes. I think, see, fundamentally, like I said, we have by better working capital management and collections, we have significantly reduced our short-term debt. Long-term debt is -- most of it is actually there for the earlier CapEx that we had done or, in fact, there is a, out of INR 2,000 crores, nearly INR 870-odd crore debt is on account of ammonia project. So as far as that the -- that is concerned, that would -- long-term debt will remain. The normal amortization would apply there, while we are also looking at reducing some of that long-term debt interest rates, but given that we have significantly achieved efficiency on the short end, interest on short end is unlikely to go further. But on long end, we'll see what better efficiencies we can bring in. So I would say, I think this level of interest should sustain.

Okay. And sir, my last question, any direct impact on us from this budget?

There is no direct impact. I mean, there are cascading impact in terms of what happens to infrastructure sector or the expected reform in the fertilizer sector that Chairman earlier spoke about. So -- but if your question is more around any change of duty, et cetera, no, I think there is no...

There was some change in ammonium nitrate duty, will that affect us?

No, the net effect there is 0 because I think the 2 components is sort of -- a new component has been introduced where part of, I would say, the import duty has got earlier 7.5%, it's down to 2.5%, but we now have 5% agriculture and infrastructure assets. So net effect is 0.

[Operator Instructions] The next question is from the line of Sachin Kasera from Svan Investments.

Congrats for a good set of numbers. I had 2, 3 questions. One was a follow-up on this debt part. So you mentioned that the current debt is around INR 2,000 crores, of which INR 800 crores is for ammonia. So how do we see the overall debt number maybe in the next 1 to 2 years. You think it will remain at this level? Or you think we can bring it down? That could be one-off looking at it. Or are we looking at more as a debt-to-EBITDA, debt-to-equity, if you could just give us your thoughts on how we're looking at this overall debt?

So if you look at consolidated debt, and again, that we have not completed the year so it's difficult to compare debt to EBITDA. But if one were to just apply a proportionate, this one, increase, we are on a 9-month basis, we are nearly at a debt-EBITDA of maybe 2.1, 2.2 thereabout. As such, the debt, as far as the CapEx is concerned, to the extent we are going ahead with our ammonia project, it would add the debt in commensurate with the progress that project would meet. But as far as the other operating debt is concerned, like I said, on the short term, we have, by and large, achieved all the efficiency. So I don't expect that the short-term debt would go significantly down. On the long end of the debt, we are sort of -- there would be a normal amortization. So that debt will come down. What is also reflecting in debt is some of the optionally convertible bonds and compulsorily convertible debentures in our books. As and when these convert, because we have long 5 to 6.5 years of investment period, this is -- the investment done by IFC, to the extent these debt or today what is appearing as debt in the books from accounting purpose, as and when we convert into equity or they exercise the option of converting them into equity, that would also result in better debt-EBITDA or debt-equity ratio. So in summary, I think the CapEx debt will go up at least on ammonia because that's the project we are clearly going ahead. Then I had mentioned earlier that the timing depends on us getting all the approvals. And the operating debt would get amortized because some of it is for the CapEx that we have already done and we are now generating healthy EBITDA from those capacity.

Sure. And sir, just as a follow-up on that on the ammonia project. So you mentioned that the INR 800 crores is the current debt we are carrying. How much we have spent totally on the project? And how much more we need to spend? And what according to you could the tentative timeline maybe for that could get completed?

So we have nearly INR 1,500 crores. The numbers in terms of the -- going forward CapEx would get frozen with -- once we finalize our contract -- EPC contract, et cetera. Timing-wise, I've already mentioned that we expect that the project to get completed in the quarter 1 of FY '23 -- or rather the quarter 1 of calendar year FY '23. So by March, April of '23, we are looking to complete that project.

And sir, one just last question on the manufacturing side. With the existing capacities, what is the sort of like a peak revenue we can achieve on the manufacturing side, both on fertilizers as well as chemicals?

Now that depends on what happens to the prices of each of our finished products, which I've just mentioned, that looks -- that is -- in some cases, there is a cyclicality. What you need to maybe look at is how much additional volumes can we generate or sell in each of the products. And to that effect, I've mentioned earlier, what kind of capacity utilization has happened so far in this 9-month period, and what kind of additional capacities are sitting. Because demand, we don't see a challenge in most -- almost all of our products. So volume is something that you can take a view on. Very difficult for me to give you a view on the revenue.

Next year, we could look at very healthy utilization across all products in the manufacturing side, sir?

Yes, that is what we are aiming at.

The next question is from the line of Rohit Nagraj from Sunidhi Securities & Finance Limited.

And congratulations on a good set of numbers. So the first question is -- not exactly question, but the slide on the sales volume this time is missing, instead of that we have provided the volume growth on a Y-o-Y basis for 9 months in Q3. So if you could provide the sales volume, I think that would be better, maybe in the next quarter. Just a suggestion on that front. Secondly, the question is in terms of dilution, what would be the dilution which will happen post our IFC conversion and the bonds which are currently under conversion?

So we have reported earlier to stock exchange as well that IFC's FCCB are -- have a conversion option at INR 195 per share. The option, at what stage do they exercise because it's difficult for me to say what kind of price they will look for more than at INR 195 level before they exercise that option. But as such, the conversion is at INR 195 a share. And they have $13 million of FCCB that they have invested. So that's the -- you can do the math and come to the number.

So that is the only thing which is there in terms of convergence -- or dilution incrementally, right?

So at Deepak level, yes. There are other instruments that they've invested are at the Smartek level, which is at the subsidiary level.

All right. That helps. Sir, in terms of any imports were probably getting impacted, our existing segments, IPA or any other segment that we have seen in this particular quarter? Or is there any benefit because of the overall container situation and the shipping rates going up. So has there been any positive or negative impact on our business during Q3? And how are we expecting the same in Q4?

So as far as the container is concerned, the shortage of container has to some extent affected our TAN export. But that, again, is not a significant volume. And given the domestic demand, it's not as though that product cannot be placed. We can always -- that product can be sold domestically because export, in any case, is something that we -- we do aim to maintain a certain level of market presence and get certain marginal -- additional margins that we get and then export versus, let's say, domestic HDAN. But today, we are seeing a strong demand from -- on AN Melt. And therefore, even if you are not able to export a TAN, we don't see any significant impact. We marginally export IPA, and to an extent, the SNA, which is a blend between CNA and DNA, but those are very, very small volumes. And -- but those are -- in any case, I think container-wise, the only commodity that gets affected is TAN -- TAN export. As far as import is concerned, again, most of the import that we have is a bulk. And therefore, to that extent, barring some specialty fertilizers that we trade into, the other import -- significant part of our import is in bulk and therefore doesn't affect that much.

So just one last clarification. So I think we had intention of monetizing the [ Pune ] property. So if you can just throw some color on this.

Yes. So I think we will wait for the right opportunity. Also, as and when, let's say -- our funding requirement also, we will be assessing on a real-time basis. So any monetization would be a function of both of these.

The next question is from the line of [ Hardik from Prospero Tree Financial Services. ]

I just wanted to know what is the dividend distribution policy of the company? And -- yes.

Well, the Board has to decide the dividend based on the profit and the internal requirements. Yes, to some extent, yes, Board does want to maintain a certain level of track record as far as dividends are concerned. But it's very -- it's entirely a Board decision, which I wouldn't want to comment on.

Okay. And another thing is why is the employee cost significantly up during this quarter?

So a couple of things. One is there is -- given the performance that we are seeing in the business, and we wanted to wait for the third quarter. Based on that, some of the incentives, variable pay, management remuneration, all of that may have to be -- as for the company's policy, may have to be on the higher end. And therefore, when we trued it up for -- in this quarter, we have not provided for them in first and second quarter as the numbers that we are looking at were -- we were not anticipating at that stage. And to that extent, it has all come into third quarter. But one needs to look at last 3 quarters numbers and sort of true them up on a quarterly basis.