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

Ladies and gentlemen, good day, and welcome to Deepak Fertilisers Q1 FY '26 Earnings Conference Call hosted by IIFL Capital Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Mr. Ranjit Cirumalla, IIFL Capital Services Limited. Thank you, and over to you, sir.

Thank you, Preet. Good evening. Thank you for joining us on the Deepak Fertilisers and Petrochemicals Corporation Limited Q1 FY '26 Earnings Conference Call. From the company, we have with us Mr. S.C. Mehta, Chairman and Managing Director; Mr. Subhash Anand, President and Chief Financial Officer; Mr. Tarun Sinha, President, Technical Ammonium Nitrate; Mr. Suparas Jain, Executive Vice President, Corporate Finance; and Mr. Debasish Kedia, Senior General Manager, Corporate Finance. We would like to begin the call with a brief opening remarks from the management, following which we'll have the forum open for a Q&A session. I would now like to invite Mr. S.C. Mehta, Chairman and Managing Director, to make the initial remarks. Thank you, and over to you, sir.

Yes. Thank you. So a very warm welcome to all of you once again. And I hope you had a chance to review the results that we have uploaded on the website and stock exchange. But at the outset, I'm again happy to share that in the quarter that we just closed, we have had a 17% improvement in the top line and a 22% jump in the bottom line over the same quarter last year. The net debt reduced by over INR 225 crores, resulting into a net debt-to-EBITDA ratio improvement from 1.72x to the 1.5x despite the CapEx cycle still going on. Also, our journey from commodity to specialty continues where now almost 80% of our top line is emerging from the shift. And of course, the biggest contributor has been the Crop Nutrition Business, where we are seeing an excellent traction. As regards the 2 major ongoing projects, Gopalpur, the TAN project, there, we are seeing almost 90% of the total plant and machinery is already ordered or I would say 100% of the tagged equipment, meaning equipment, machinery, control valves, panels, packages are all ordered. Only some of the bulk items now would be balanced, which is normal in any project. And as far as the Dahej acid project goes, while 63% of the total plant and machinery is already ordered, 100% of the tagged one is already ordered. And so, both the projects, we are looking at commissioning in the Q4 FY '26. Both the projects are in a space where we've been there since the last 40 years. And in comparison to any kind of competition, we have number one, maximum proximity to customers. And in some of the products, we are on both the coasts. So that gives us the lowest freight deliveries to our customers. We are having multiple facilities, which gives a huge assurance to the consumers because they will have a fallback kind of a thing from multiple manufacturing facilities. We have a complete ready supply chain right from all the transportation warehouses and dealers and retailer networks. Of course, there is a 40 years of solid experience right from raw material sourcing, operations, safety, health environment, all the regulatory frameworks, linkages with -- on the sales and marketing side. And last but not the least, unique that is going to be with us is that we are an integrated player, right from LNG gas to ammonia to the building block nitric acid right up to all the finished products. So this is going to be something which will pan out in terms of further strength to our foundational projects and products that are there. As far as the quarter goes, I thought of sharing a few interesting insights. Now as many of you may know, ammonia contributes or constitutes almost 75% to 80% of our key chemical variable cost of production, 75% to 80%. Now ammonia has seen a volatility in the pricing right from, say, 10% to 200% over the last 5 Q1 quarters, if I might take it that way. And yet, our contribution margin in the downstream of our market determined key products, that is technical ammonium nitrogen acids has hovered around 40% plus and our consolidated EBITDA margins have hovered around 18% to 20% over the last 5 Q1 quarters. Now what it tells very clearly in terms of these actual facts that the business model, the businesses have a very strong resilience and robustness, which is evident from some of these financial figures. The second insight I might want to share is that our plant OP, OP is operational efficiencies have now improved from 78-odd percent to almost 86% and some plants over 93% over the last 5 years of hard work. And as per global benchmarks, this sits in what they would call it as a very efficient operations category. So the manufacturing setup and facilities are also on a very strong wicket. The third insight I might share is that with over 25% of our revenues now emerging, thanks to the move from commodity to specialty, the specialty shift has given us price premiums from 15% to almost 40% over the old commodity pricing. So net-net, the above all of this confirms and validates for us that the 3 major strategies that we have been working on over the last, I would say, 5 years, namely number one, that we grow in the area of our expertise where we have the expertise over the last 40 years. Second strategy that we need to look at, backward integration as a risk mitigator. And third, most important, that we get close to the end consumer based on not just products, but tech superior services. All these 3 strategies get validated that we are in the right direction and that it will deliver good shareholder value quarter-on-quarter or year-on-year. So with these, I would say, broad insights, let me hand you over to our CFO, Subhash Anand, who can -- who will take you through the details of the workings of the quarter and as we see things pan out. Subhash?

Thank you, Mr. Mehta, and good afternoon, everyone. Thank you, all of you joining us today to discuss the financials and operational performance of Deepak Fertilisers and Petrochemicals Corporation Limited for quarter 1 FY '26. We are pleased to report a strong start to the fiscal year marked by disciplined execution, improving operational efficiency and a healthy financial performance. Our strategic priorities are translating into intangible progress -- or tangible progress and we continue to strengthen our foundations for long-term sustainable growth. Let me now take you through the key financial highlights for the quarter. Revenue -- operational revenue stood at INR 2,659 crores, a robust 17% increase Y-o-Y driven by broad-based growth across segment. Notably, our differentiated specialty product portfolio in Crop Nutrition Business contributed 45% of revenue and the B2C segment in PAN accounted for 16%, underscoring the success of our market focus approach. On EBITDA, operating EBITDA reached INR 513 crores, up 10% Y-o-Y and 7% sequentially. Among our strongest Q1 result, EBITDA margin improved to 19.3%, a 130 basis points increase Y-o-Y, reflecting improved product mix and disciplined cost management. On profitability, the net profit grew 22% Y-o-Y to INR 244 crores, with PAT margin of 9.1% while the PAT declined sequentially 12%, but that was due to INR 37 crores after-tax reversal booked in quarter 4 of FY '25. If we adjust to that, the PAT is largely flat and that reinforces our underlying earnings spend. Coming on segmental performance, fertiliser segment delivers stellar Y-o-Y growth of 125%, driven by higher value-added products and favorable market dynamics. On the chemical front side, the profit declined 9% Y-o-Y due to pricing softness in IPA and ammonia. The rest 2 verticals has shown improvement or almost at a similar level of profitability. On balance sheet and CapEx, we invested INR 377 crores in CapEx during this quarter. We have successfully reduced the net debt from INR 3,305 crores to INR 3,078 crores. Our net debt-to-EBITDA ratio improved to 1.5x to 1.72x in March '25. The net debt-to-equity remain comfortable at 0.43x. Let me share one of the legal update, which happened just couple of days back. In our Mahadhan Agritech Limited, we received a favorable ITAT orders ruling for assessment year 2016-'17 to 2021. The ITAT deleted all additions made by the income tax department, eliminating tax demand totaling INR 581 crores. Corresponding penalty order of INR 479 crores are expected to be withdrawn, providing significant regulatory clarity. On a segmental highlights, in our CNB Crop Nutrition Business, the segment posted another strong quarter. Manufactured bulk fertiliser sales reached 1.8 lakhs metric tons, up 3% Y-o-Y. Croptek, our specialty bulk products saw 73% Y-o-Y growth, demonstrating growing farmer adoption. Specialty fertilisers like pencil water soluble grades recorded 21% Y-o-Y and 99% quarter-on-quarter growth, respectively, supported by sharp market penetration. Talking about outlook for our CNB business with a favorable monsoon, increasing adoptions of high-value solutions like Croptek and Solutek and a sharper marketing, we anticipate strong momentum for kharif 2025 season. On our mining chemical business, the sales volume rose 7% Y-o-Y to 146 Kt, supported by full capacity utilization. [ Elden ] volume declined 15% Y-o-Y due to early monsoon impacting mining activities. B2C volume grew 15% Q-o-Q, down marginally 2% Y-o-Y on account of lower Elden offtake as we just talked about early monsoon impacting activity. In terms of outlook, we expect Q2 to be seasonally muted due to monsoon. However, the enhancement of our export quota to 50,000 metric tons per year is a strategic positive, positioning us for growth in H2. Our focus remains on differentiated high-value offering to mining and infra customers. Coming to Industrial Chemicals segment. The nitric acid volume reached 74 Kt, growing 15% Y-o-Y and 3% Q-o-Q. IPA volume surged 27% Y-o-Y and 51% Q-o-Q, benefiting from plant upgrade completed in quarter 4. The continued softness in IPA pricing is a key factor weighing on the margins of our Industrial Chemicals segment this quarter. On outlook, while we foresee some pricing pressure in IPA and nitric acid due to seasonal and inventory late dynamics, our growing specialty portfolio and targeted customer segmentation efforts position us to weather these short-term challenges effectively. On our projects of Dahej and Gopalpur, we continue to advance our strategic CapEx project. The combined investment of INR 4,661 crores across Dahej and Gopalpur project. Gopalpur TAN project is at 80% complete stage and Dahej nitric acid project is at 57% complete. We are firmly on track to commence commercial operation by end of FY '26 and with tight control on timeliness and execution. In summary, Q1 FY '26 demonstrate our continued resilience and agility in a dynamic market environment. Our integrated strategy anchored in innovations, operational excellence and customer centricity is delivering consistent performance across all business lines. Each of our segments aligns strongly with India core economic growth pillars, agriculture, mining infrastructure and pharmaceutical, providing us the robust platform to create enduring value for all our stakeholders. We deeply appreciate your continued trust and support in our journey. I now welcome any questions you may have.

[Operator Instructions] The first question is from the line of Yash Gupta from Asit Koticha Family Office.

Sir, my first question is on the TAN value addition business. How meaningful is the TAN value addition business for us? Where do we see ourselves in the next 2 to 3 years with this value addition services?

Okay. Currently, as we just informed, the 16% of our total revenue comes from B2C segment. In terms of how things are going to span out, Tarun, you would like to add?

Sure. So thank you for your question. In terms of value-adding business for the technical ammonium nitrate portfolio, as we've been talking about in the previous investor calls as well, we pursue a model which is called as total cost of operations model, which is really the value for the end consumers and these end consumers being the mine owners, the mine operators, mining contractors and in the infrastructure sector, different kinds of projects where rock excavation takes place. So this model was started about 1.5 years ago roughly from now. And it is in simple terms, it's about how can we help these end consumers optimizing and potentially reducing the cost of rock extraction or cost of mineral extraction, if it is a mine. That's the value-added model at a high level that we are pursuing. It has got a combination of specialty products. It's got different kinds of technological interventions. It's got people capability, so on and so forth, which we have been building over a period of time. So this journey -- and the important part that I would like to underscore here in this value-added part of our business is the proof of concept. This total cost of operations that we have embarked upon has been proven in the industry in different kinds of mining conditions, in different kinds of minerals deposits as well. So that's one good news. And now we are working on a plan to scale it up going forward, which will require further capabilities to be built, further investments to be made, so on and so forth. That's where I will leave it at this point in time. But certainly, it's moving in the right direction.

Yes. Our initial phase was more to build or I say, prove ourselves on a proof of concept, which we did successfully. Now to time for us to look how do we accelerate and take it to the next level and that's where we are in our journey. Hope it clarified.

If you can throw some light on the EBITDA margin, like suppose like in the normal business of the TAN, our EBITDA margin are this much. And if we are going with the value-addition services that our EBITDA margin for that particular service is this much. It will be better help us to understand.

No. In fact, as Mr. Mehta spoke in his address, any specialty product or B2C segment help us -- do help us to have a price premium. And so this business also, we do have a differential margin portfolio to our normal TAN business to specialty or a B2C business. And that differentiation, we expect to continue because that's where we are adding value and we expect that to go further up, not come down because we were at a proof of concept. More we go in commercial, it will improve further.

Okay, sir. Sir, second question is on the Gopalpur project. We expect it to achieve like 75% of our capacity by FY '27. So how we are going to achieve this new capacity? Have we done any tie-up as of now?

No, it doesn't need a tie-up actually, if you ask me. This business is -- so far, India is a short -- there's more demand than supply. So the additional capacity, what we expect will help us actually to be more self-sustained as in India. And then yes, there are many activities currently which we are under -- or which we are picking up to ensure we have the right marketplace to fulfill or to go down in this and then place this material. Tarun, you would like to add more on this?

Yes, sure. So just adding up to what Mr. Subhash Anand mentioned, right now, as many of you would be aware, who are tracking the market closely, roughly, we see annual imports of ammonium nitrate to the tune of 400,000 tonnes, 4 lakh tonnes. Now obviously, that's the first thing to replace when these capacities are coming up. So that's the first point, how these additional domestic capacities will be used up. At the same time, the domestic market is projected to grow at a CAGR of anywhere around 6% to 7%, which in simple terms would mean every 3 years, roughly every 3 years, close to 250,000 to 300,000 tonnes of additional demand getting created. If you combine these 2, the import substitution to the extent I talked about in the quantities that I talked about and the extra demand creation, which is taking place in India, there is no need to be location concern. And the other advantage we have with at least Deepak's Gopalpur plant is it's on the East Coast. It is the only ammonium nitrate plant in the country on the East Coast at that scale. There's another satellite plant of our own only in Srikakulam on the East Coast. So therefore, we will have -- due to the locational advantage, as Mr. Mehta also pointed out, of having ammonium nitrate plants on the West Coast as well as on the East Coast of India, it will give us a very unique position in terms of optimizing the logistics cost, cost of delivery to our customers. And that will further help in capacity utilization. So if you combine all of this, we are reasonably placed from a longer perspective.

Sir, but if we talk about like 4 lakh metric tons we import overall in the India, so are we price competitive in terms of what's imported landed cost and what we are planning to sell?

As we talked earlier in the very first question, although it was from a different caller, I think, but it was about value. So we -- at least Deepak does not have a business model which competes on price. We have a business model which competes on value and that's what we will continue to do.

[Operator Instructions] The next question is from the line of Adarsh Jain, an individual investor.

Well, my question is related to the export quota of TAN, which was recently increased to 50,000 metric tons. So what was the earlier quota? And how much -- I mean, were we able to utilize the earlier quota in full?

Yes. Thank you. If I can take that question, Subhash, with your permission. So great question again. So the previous quota was 2-0, 20,000 tonnes, which was valid till December 2024. That was fully exhausted. That is the first part of your question. And the new export quota, which we have got from Government of India, which is 5-0, 50,000 tonnes, it is per financial year at this stage. And once we start delivering those numbers, we are reasonably confident that eventually Government of India will remove this quota system completely as far as the exports of ammonium nitrate is concerned.

Okay. So this 50,000 metric tons quota is allotted to Deepak or every manufacturers of India?

Technically, it is to Deepak because Deepak is the only exporter of ammonium nitrate as we speak.

Okay. And one more question related to Australian subsidiary. I think before some time, we had bought some additional shares from their stake actually some additional -- I mean, we had bought some additional stake in the Australian subsidiary from the local institutions in Australia. So what are we doing there? I mean, how much revenue we are generating from there? And what is the plan of scaling up that Australian business?

Shall I take that? Yes. Thank you for that question as well. So you're right, a few months back, we -- so we were a 65% shareholder in our Australian subsidiary company and the name is Platinum Blasting Services. A few months back, we acquired 20% additional shares of that company, which has brought us to 85%, 8-5, 85% as we speak. Certainly, it's a move by Deepak in the right direction when we earlier talked about the value-driven total cost of operations-driven business model that we are rolling out in India. It's this enhancement of shareholding in the Australian subsidiary is also a move in the same direction as far as the Australian market goes for us, where we will be playing a much more pronounced, I would say, role in Platinum and accelerating the growth of that subsidiary company in the Australian market. And secondly, by virtue of increasing our stakes in the Australian entity, it allows us to have exchange of knowledge or transfer of knowledge, intelligence, technology because Australia is a much more advanced country compared to India when it comes to mining. So there's a lot of other benefits to be gained through our Australian subsidiary by way of this shareholding enhancement by us. That is for the Indian market.

And in terms of overall number, yes, there is a qualitative benefit what Tarun spoke about. We get a lot of knowledge coming from our Australian entity. And currently, the RTCO model, what we are looking in India, yes, we get a lot of knowledge benefit coming from that entity. And then financially, this entity is profitable, do contribute in a decent amount to our bottom line. So everything is -- strategically it's the right fit for us. And that's what prompted us to enhance our holding in that entity.

Okay. So are we -- I mean, are we exporting TAN from here to Australia?

Yes, there is a plan to do that. Once we have our Gopalpur plant on the East Coast up and running, then if you visualize the world political map, it will be closer from India East Coast to Australia compared to currently the only plant that we have on the West Coast of India. From there to Australia is a long shot. So the answer is yes.

And currently we don't have any surplus capacity in TAN. So even if we want, we can't because of demand supply short. But yes, there is a plant.

The next question is from the line of S. Ramesh from Nirmal Bang Equities.

So if you're talking about your Australian subsidiary, can you share what is the investment and the cost acquired just additional 20% and what is the size of the company in terms of revenue and profits?

The last year if we talk about the total revenues of the company is around INR 600 crores approximate.

And how much was the profit last year EBIT or EBITDA?

See, we don't in fact share profitability specific, so you need to wait for that number. But in terms -- yes, and in terms of acquisition, the total entity value at which we acquired was approximate about…

I think about INR 80-odd crores, somewhere in that range.

That 15%.

Yes, we'll check back and get back to you with that. But that's the sort of magnitude.

20% at INR 80 crores, right, so INR 16,000 crores.

Around that. Yes, don't hold me to that number because I have to check that. [indiscernible].

Roughly. So is there any debt in that entity?

Small debt is there in that entity, not very high.

And what is the value of the 65% investment in your balance sheet?

No, I do not have that value of that number. But if you see the total valuation on 15% equity if I go with the number, it's roughly around INR 500 crores, INR 550 crores that would -- is a total equity value which [indiscernible].

So 15% equity. You said 65% shareholding [indiscernible]...

No, no, no. That's the value of the company. I'm saying 15% acquired value is around INR 75 crores, INR 76 crores. That's what we have paid for 15% share. So you can do reverse computation and see the total equity or EBIT enterprise value for that company.

Okay. Okay. So you're saying some 65% has gone up to 80%. Earlier I thought it was 85%. So 65 plus 15, 80%?

Now it is 80%...

85%.

Sorry, 85%, 65% plus 20%, so 85%, yes.

And the value of that 20%, we have got the number INR 77 crores.

That's what I'm saying INR 77 crores.

INR 77 crores. So it was -- I was saying INR 80 crores ballpark, but that's the number.

So equity value of around INR 400 crores, that's what we are paid to -- for that entity to acquire the estate.

So this is the equity value? Okay. INR 80 crores…

Yes.

Okay. INR 80 crores for 20%. Fine. Understood. Okay. So now if you see the B2C mining revenue, it is flat. Is it because of monsoon and do you expect that to improve in the next 9 months?

Don't expect this number quarter-on-quarter to improve because this is a proof of concept, and we are moving in that direction. The ramp-up will take some time. So it's not a number which every quarter need to be tracked. But directionally it gives where the company is focusing and how it's moving. So you'll continuously -- slightly mid-to long term you'll continuously keeps seeing things moving in this direction.

Okay. So I have 2 more thoughts. One is given that you have a larger share of the higher margin business where you're seeing margins under pressure now if you go in the first quarter. So how do you see the margins in the chemical segment moving in the next 1, 2 years? And secondly, on the TAN business, can you share what is the current absolute demand in India and the current capacity? And how do you see the capacity addition in the next 2 to 3 years because Coal India is talking about backward integrated capacity addition by '29. And that does raise some concern about the Coal India demand for the entire industry. So if you can give your thoughts on the capacity addition and particularly that of Coal India? And secondly, how do you see the margin profile in the next 1, 2 years?

Okay. In terms of industry capacity is coming, let Tarun give more insight how...

About the Coal India plant, yes.

Yes, Coal India.

Okay. See, I don't want to go out of TAN in trying to answer what Coal India might be doing. That's the first thing I want to put on record. They are our customers at the end of the day. Secondly, I'm sure the way things are panning out, there are think tanks in the government who are also looking at this thing whether Coal India should have its own ammonium nitrate plant or not. See, the critical thing is, it's not important whether it's ammonium nitrate plant or something else. Where this all started from is, see, India has got abundant coal reserves, as we all know. So that means there's a lot of carbon we are sitting on as a country. On the other hand, as a country, we import huge amount of carbon in the form of coal, natural gas, crude oil, so on and so forth. This is what prompted the policymakers in our government some years back, how is it possible that we are -- on one hand, we are importing so much of carbon. On the other hand, we are sitting on world's third largest carbon reserves. This is a complete contradiction in terms of how it should be. So that stemmed this whole thought process that, okay, how can we put India's carbon, which is the coal reserves to different usage. And that's where NITI Aayog started to do some work 7 years back and they came up with various initiatives. One of the themes they came out with is what is called in India Today as coal to chemicals, which means starting with coal that we have in India, how can we produce different kinds of chemicals. And that theme then got further evaluated and there is a long list of chemicals which can be produced through coal gasification process. Now coal gasification technology for Indian coal itself is not proven commercially at this stage. It's work-in-progress. But that's how it all started. That's where it is. So today, somebody might be thinking I will start from coal and produce ammonium nitrate. But that's not the only thing. At some stage, people may realize that India has a deficit of many other chemicals, which can be produced through coal gasification process, which India is currently importing all those chemicals. So why you do that? So now all this is work in motion. I'm not, of course, in any of those government committees, but I can definitely say this with some comfort and confidence that these things will be looked at by the government over a period of time as to how best to put this Indian coal to which kind of use. No point creating assets and products which we already have enough of, rather focus on producing things which we have deficit of. That's where government will intervene at some stage is my view.

Yes. And in terms of...

So just to get things in perspective, then are we to assume that the definite capacity additions will be Deepak Fertiliser, then GNFC and Chambal and you're not in the camp that believes that Coal India project will made progress although being announced in parliament and they have set up a GD and they're talking about executing by '29. So that's a very large capacity they are putting up, 6 lakh tonnes and there is about 60% of current consumption. So for an investor that's a huge overhang. So is there any discussion between you and the government to suggest that it is possibly not in the best interest of the industry and you expect to see the reconsideration, or are we to assume that you will be able to grow despite that capacity coming up or how should we look at that?

So first thing, as I mentioned earlier, that we are not -- first of all, we are not sitting in any of those government committees or think tanks who are making these policies. Hence, we are not in dialogue with government or anyone else on this matter. We are purely going by rationale how the industry will look at things, what to produce a thing which is already in sufficiency in the country to produce more of it even if it is not required or to produce other things, which is possible to produce from coal gasification, which country has a deficit of. Somebody has to answer that question at some point in time. Deepak is not the one who will answer that question.

Okay. So if you take the private industry capacity addition, what would that number be in the next 2 years? And do you think the 6%, 7% CAGR is enough to help everybody operate at say 85%, 90%? What is the kind of data you can share on that?

Yes. The answer is yes because as we talked earlier, there will also be some exports, which will be taking place from India. So the sort of capacity utilization numbers that you talked about has a combination of everything, the answer is yes.

Yes. And couple of things I'll just add in to what Tarun just spoke about, the new capacity which is coming up in -- towards end of this year, I call it, [ Smart ] will become operational from day 1. Neither we nor anybody else will have 100% capacity utilization immediately. So the capacity utilization will get built up for everybody. And so the CAGR of 6%, 7% additional demand also will keep coming. As Tarun spoke about, 3 years put together add to around another 300,000 tonnes additional demand in this. If we see a current shortfall of capacity and additional demand which will come in 3 years, we'll again be reaching to a net-net short capacity for India is concerned. So it's not a question of oversupply if somebody is looking midterm. It's again a question of demand supply getting balanced and we continue to be in the same space. And then, yes, other things which are important for us, which your question was margin protection, we are continuously working on margin expansion, various initiatives on margin expansion. TCO is downstream journey is one of that, which Tarun spoke about because that's what help us margin expansion. Export is another thing, doing more and more export and seeing how can we protect our margin. Other things, with Gopalpur coming in place will be among the largest producer of TAN, not just in India, but one among the world, I call it. The size and scale and efficiency what we'll have will definitely give us a competitive advantage. So that's what some of the few things which we know will help us to sustain, maintain or expand the margin in the near future or in the coming time.

[Operator Instructions] The next question is from the line of Niraj Mansingka from White Pine Investment Management Pvt Limited.

A few questions. One, what was the CapEx completed in rupees crore for both the projects? And second is, what is your view on the outlook of ammonia demand supply on the global situation? I understand there's an Indian market, but as well as global how you see the panning out of that? And thirdly, on the fertiliser, some specialty fertiliser has been export custom China. Any impact on Deepak Fertiliser because of that?