Mangalore Chemicals & Fertilizers Limited (530011) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. On behalf of Mangalore Chemicals & Fertilizers Limited and SKP Securities, I'm happy to welcome you to MCFL's Q3 FY '25 Results Webinar. We have with us Mr. Nitin Kantak, Whole-Time Director, along with Mr. T. M. Muralidharan, Chief Financial Officer. This webinar is being recorded for compliance reasons. And during the discussion, there may be certain forward-looking statements. These must be viewed in conjunction with the risks that the company faces. We'll have the management's opening remarks and a presentation followed by a Q&A session. Thank you, and over to you, Mr. Kantak.

Thanks, Navin. Good morning, ladies and gentlemen. A warm welcome to Mangalore Chemicals & Fertilizers Limited Q3 FY '25 Earnings Call. We are delighted to share that MCFL has delivered an excellent performance this quarter, marking a significant improvement over both the previous quarter and the same period last year. This achievement is a result of our strong operational efficiencies and robust sales performance during the quarter. To set the context, I will begin with an overview of the agricultural scenario, the broader business environment, followed by a detailed discussion of our Q3 FY '25 performance. The Northeast monsoon brought 9% excess rainfall in our operating states, while nationwide, the rainfall remained normal. This has led to consistent crop acreage across India. Reservoir levels both nationally and in our key markets are at 120% and 133% of 10-year average, respectively. These favorable conditions are expected to support another year of record food production and provide a strong foundation for the upcoming kharif season. On the supply chain front, raw material and finished fertilizer prices remain elevated. However, the temporary cease fire between Israel and Hamas is a positive development, potentially bringing stability to the Middle East. This could ease shipping disruption in the Red Sea, leading to reduced freight cost for fertilizers and fertilizer inputs. The fertilizer industry as a whole has performed exceptionally well this quarter. All India urea sales grew by 13% year-on-year to 11.1 million metric tons, with cumulative sales for the year up 7% to 30 million metric tons, while DAP sales for the quarter increased by 9% to 3.76 million metric tons. However, the annual sales were down 14% to 83 million metric tons. This decline was more than offset by a 46% surge in NP and PK sales for the quarter, reaching 4.5 million metric tons and a 28% rise cumulatively for the year to 11.7 million metric tons. MOP sales also saw a substantial rise, up 50% for the quarter to 0.75 million metric tons and 32% for the year to 1.68 million metric tons. At MCFL, our sales performance has been exceptional this quarter with sales of 2.19 lakh metric ton, a significant improvement from 1.36 lakh metric ton in Q3 FY '24. Cumulative sales for the year, however, were lower at 5.9 lakh metric tons compared to 6.8 lakh tonnes in the previous year, primarily due to absence of DAP imports owing to negative margins. We took a conscious decision not to import any DAP. Despite this, we continue to hold a top position in N20 sales in Karnataka. On the operational front, we achieved high production volumes this quarter with 1.23 lakh tonnes of urea and 0.88 lakh metric tons of NP. These results reflect our consistent focus on optimizing plant operations and ensuring an uninterrupted supply to meet market demand. Financially, our strong operational and sales performance has translated into excellent results in Q3. We recorded an EBITDA of INR 110 crores, up from INR 92 crores in Q3 FY '24, while for April to December FY '25 period, EBITDA stands at INR 303 crores compared to INR 368 crores in the corresponding period of FY '24. Similarly, PBT for Q3 FY '25 rose to INR 75 crores from INR 51 crores in Q3 FY '24 with cumulative PBT for April to December FY '25 is at INR 184 crores versus INR 233 crores in the same period last year. As we move into the final quarter of FY '25, we are optimistic about maintaining this positive momentum. The favorable agricultural output -- outlook, combined with our robust operational and sales strategies positions us well to deliver strong results in Q4 and beyond. Now, I will hand over to our CFO, Mr. Muralidharan, for a detailed presentation of our financial performance, followed by the Q&A session. Thank you for your attention. Over to you, Murali.

Thank you, sir. Once again, good morning to all of you. In this presentation, we shall cover the highlights of the performance for Q3 FY '25 and 9-month operations FY '25 and the past annual performance. Overview of Q3 and 9 months FY '25. Urea production for the quarter at 123,000 tonnes at best efficiency, phosphate production of 87,000 tonnes for the quarter. Highlights, we move on. We have posted a sales volume of 2.19 lakh metric tons in Q3 FY '25 compared to 1.36 lakh metric tons in Q3 FY '24, an increase of 61% on account of higher production and import during the quarter compared to Q3 FY '24 with shutdown of urea plant for planned maintenance during October '23 and no imports in the corresponding quarter of the last financial year. As regards NIM, stood a sales volume of 5.9 lakh tonnes -- metric tons during the 9 months operations FY '25 to 6.77 lakh metric tons during 9 months FY '24, a decline of 13% due to reduced imports. Revenue for Q3 FY '25 is INR 968 crores compared to INR 641 crores in FY '24, an increase of 51% on account of production of urea and phosphatics and imports. We have posted a revenue of INR 2,558 crores in 9 months FY '25 compared to INR 3,009 crores in FY '24, a reduction of 15%. As regards EBITDA, it is INR 110 crores for Q3 FY '25 compared to INR 92 crores in FY '24, which is an increase of 20%, and EBITDA for 9 months FY '25 is INR 303 crores compared to INR 368 crores in FY '24, which is an decrease of 18%. PBT for Q3 FY '25 is INR 75 crores compared to INR 51 crores in FY '24, an increase of 47% and PBT for 9 months FY '25 is INR 184 crores compared to INR 233 crores in FY '24, a reduction of 21% primarily on account of lower sales volume on account of imports. PAT for Q3 FY '25 is INR 57 crores compared to INR 33 crores in FY '24, an increase of 74% and PAT for 9 months operation FY '25 is INR 128 crores compared to INR 150 crores in FY '24, a reduction of 15%. EPS for Q3 FY '25 is INR 4.84 per share compared to INR 2.78 per share in FY '24, an increase of 74%, and EPS for 9 months operations FY '25 is INR 10.77 per share compared to INR 12.65 per share in FY '24, a decrease of 15%. Now, we present the details of production, sales and revenue. The production and sale of urea is 1.23 lakh metric tons and 1.17 lakh metric tons, respectively, in Q3 FY '25 compared to production and sale of urea of 0.81 lakh metric tons and 0.76 lakh metric tons in Q3 of FY '24. As far as 9 months operations for FY '25 is concerned, we have achieved a production and sales of urea of 3.34 lakh metric tons and 3.3 lakh metric tons, respectively, compared to 3.13 lakh metric tons and 3.11 lakh metric tons in the corresponding period of FY '24. With regard to complex fertilizers, we have sold 1.02 lakh metric tons in current quarter compared to 0.61 lakh metric tons in Q3 FY '24. In 9 months of FY '25, we have sold complex fertilizers of 2.6 lakh metric tons compared to 3.65 lakh metric tons of corresponding period of last year. Revenue from operations, urea business has posted a revenue of INR 573 crores in Q3 FY '25 compared to INR 356 crores in FY '24 and INR 1,512 crores in FY '24 9 months compared to INR 1,322 crores in FY '24. Non-urea business posted a revenue of INR 395 crores in Q3 FY '25 as against INR 285 crores of Q3 FY '24, and in 9 months operations FY '25, it has posted a revenue of INR 1,046 crores as against INR 1,687 crores in 9 months period of our FY '24. We shall now look at the financial position. And we take this opportunity to inform all of you, the net worth has crossed INR 1,000 crores during this quarter FY '25. The net worth has grown by INR 114 crores between December 2023 and December 2024. In long-term debt, there is a net increase of INR 73 crores -- sorry, net decrease of INR 73 crores in December '24 over December '23 after factoring agreed payments. The short-term debt, which is primarily working capital after adjusting the short-term surplus stands at INR 220 crores apiece in December '24 and December '23. We shall present the position of receivables. The are 2 types of receivables in fertilizer industry. One is dealer receivable, other one is the subsidy receivable from Government of India. The dealer receivable is INR 160 crores in December 2024 as against INR 130 crores in December '23. Subsidy receivables is INR 319 crores in December '24 as against INR 359 crores in December 2023. Now, we shall look at some past annual performance. The revenue from operations was INR 2,711 crores in FY '20 has grown to INR 3,795 crores in FY '24 at a CAGR of 9%. In respect of EBITDA, from the levels of INR 200 crores in -- for FY '20, we have been able to maintain the EBITDA even during difficult times in FY '21 and '22, I mean, the COVID times, have been able to improve it from those levels to INR 340 crores in FY '23 and further improve to INR 417 crores in FY '24 at a CAGR of 16%. Similarly, PBT has improved from INR 70 crores in FY '20 to INR 241 crores in FY '24 at a CAGR of 36%. This is made possible due to the receipt of gas in FY '21 and successful commissioning of ammonia energy project in FY '23. Similarly, PAT has improved from INR 65 crores in FY '20 to INR 155 crores in FY '24 at a CAGR of 24%. Next slide. Cash profit has improved from INR 110 crores in FY '22 or INR 155 crores in FY '24 at a CAGR of 20%. Earnings per share has also improved from INR 5 per share in FY '20 to INR 13 per share in FY '24 at CAGR of 24%. The total receivables reduced from INR 1,446 crores in FY '20 to INR 604 crores in FY '24, which is about 50% reduction. The reduction in total receivables is an account of input liquidity in the market and significant reduction in subsidy receivables due to fiscal stimulus given in FY '21 during COVID-19 to clear subsidiary arrears and continued addition support given in FY '22, '23 and '24 by the Government of India and timely disbursements of subsidies. We expect the similar support to continue going forward as Government of India is committed to ensure that the health of industry is maintained by a timely disbursement of subsidies. Next slide. Let's look at the details of production and sale of urea. We have been -- we have produced on an average of 3.8 lakh metric tons against the reassessed capacity of 3.8 lakh tons. The trend in sale of P&K fertilizers is based on availability and viability in this vertical. Next slide. As usual, we carry the slide for the first time participants if anybody. This is overview of our operations as regards the location of the plant, products manufactured, the capacities, market territories and the brand. The plant is situated at Mangalore in West Coast opposite Mangalore Port and our present reassessed capacity of area is 3.8 lakh metric tons and the capacity of DAP and complex is 2.8 lakh metric tons. We are also trading in MOP, DAP and 10:26:26 based on market opportunities and business viability. We operate in the states of Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, Telangana and Maharashtra. We sell about 71% of our sales in Karnataka, 3% in Kerala, 15% in Tamil Nadu, 7% in Andhra, Andhra Pradesh, 1% in Telangana and 3% in Maharashtra. We sell under the brand name Mangala. Thank you for your time.

[Operator Instructions] First question from Saket Kapoor.

Sir, if you could just give us some more color on the business dynamics and the current environment for the fertilizer sector, particularly with respect to the RM prices and the price trends and the type of tariff war that is continuing? And since we -- I think so correct me there, depend a lot on RM imports. So how are we placed? And second question is on the energy efficiency part for urea revamp and all, how much have we spent currently? And what kind of benefits we will be reaping ahead?

Yes. I will take this, Murali. As far as the phosphatic fertilizer is concerned, all the raw material prices continue to remain at a higher level, elevated level. The acid price, phosphoric acid price, which is our main input, that has been remaining over the last 3 quarters. In the first quarter, it was $950 per tonne. In the next quarter, it went up to $1,060. And current quarter, it is declared at $1,055. So it continues to remain very, very high. Similarly, ammonia prices have also increased substantially. The prices remain elevated like in this quarter, the price of ammonia is $465 to -- I mean, Q3 FY '25. And even currently, it remains around $440. Previous quarter was also around $400 to $430. And MOP prices, of course, are quite stable and quite economical at around $283 per tonne. So the thing is that, whatever current subsidy provided is actually not sufficient to meet the -- to get any margins, very less margins, at least in this quarter, we are getting on the phosphatic fertilizers. So it has substantially reduced. And as I told earlier, on the DAP, the import price also continues to remain very high, currently around $632.5 per tonne. And of course, in Q2, it was lower $550 to -- then it went on increasing up to $643 and now it is around $632. So whatever subsidy provided by the government and the additional support what is provided, which has continued up to March, even that is actually not sufficient to get any margins on imported DAP and that's the reason we have not imported any DAP. So currently, the phosphatic fertilizer seed is not so good. But we are hoping that in the next round of subsidy revision, which is due in April, we expect support from the government and the subsidy could substantially go up to support the phosphatic fertilizer industry. Of course, those who are having their own phosphoric acid through rock phosphate route. So they are getting some margins. And, of course, the MRPs are controlled because there are more players with their own acid. As far as MCFL is concerned, we are completely dependent on imported phosphoric acid. So we are getting lower margins on phosphatic fertilizers. Coming to urea, I'm very happy to inform that in this quarter, our urea energy has been lowest ever at almost 5.45 gigacalorie per tonne of urea. You are aware that we had invested in the energy improvement -- ammonia energy improvement project at a cost of nearly INR 600 crores, it went up almost INR 600 crores. And, of course, we have got good energy reduction from levels of 6.3 gigacalorie per tonne, we have come down to 5.5 gigacalorie per tonne. Only in the last year, we had operated at lower load soon after the implementation of the energy improvement project because of our condition of our reformer tubes, which were old, almost 24 years old. As a precaution, we had kept lower loads of ammonia and thus, the energy was slightly higher last year. But this year, it has consistently remained lower, and we are expecting to finish this year with almost 5.55 gigacalorie per tonne energy level. I hope I have satisfied your queries.

Yes, sir. So taking into account, if we take -- if we look at the profitability aspect, if you could also throw some light when we look at the comparable numbers, how correct it is to compare on an year-on-year basis and the factors that has led to the improvement in the profitability? And sir, herein, are these all operational numbers or there is some input for the subsidy also that has gone into the revenue as has been the case with other fertilizer companies also we have to factor?

Now, of course, subsidy is part of the revenue what we get. We get from market, as well as from the government subsidy. So that is included in our revenues.

Can you...

Murali, you can -- if you want you can just give some further inputs?

Sir, can you just put your question again back?

Yes. Firstly, my question was, sir, how correct it is to compare the numbers on year-on-year basis or the factors that has led to the improvement in the profitability? First point. And secondly, how much of subsidy have been received for this quarter that has been included into the revenue numbers?

Okay. I'll answer your questions in 2 parts. First is on the dynamics behind the -- what you call the profitability. Second one is on the subsidy, what has been received, as well as what has been billed for this quarter? I hope my understanding is correct, Saket.

Yes, sir. Please.

See, as Mr. Kantak, our CEO was explaining to you the operational efficiencies. So it is a -- when we commissioned the project towards ammonia energy improvement project in FY '24 -- '23 sorry, FY '23, my correction, okay? So we are -- that year, we were in the -- maybe it's only 1, 2 quarters, we received the benefits. Last year, we operated with the faulty or maybe a very old, what I call aged [ informatives ] in FY '24. So this year, we are able to operate and improve the efficiency. So if you see year-on-year, if you see this -- there will be some small, small what you call gaps and understanding will be there because of specific events, which is the underlying events for each year performance improvement, okay? So we have come to a situation, as explained by our CEO, Mr. Kantak, that today, we have come to the 5.5 levels of Gcal, which will be the -- what I call the benchmark or base in which we operate going forward, okay? I hope I answered the first question. Coming to the second part of the question on subsidy, we have billed during the quarter, okay? Sorry, we received during the quarter INR 47 crores. The estimation of the subsidies is based on the gas price and also efficient we operate, we estimate, okay? And we account the income and report the, what you call, the results. Coming to the collections, the subsidies and disbursement are based on the consumption of the urea by respective what we call markets where we operate. And to give you some snapshot of the information regarding subsidy disbursement. And we have received during the Q3 INR 447 crores of subsidies, okay? And Q2, we received INR 848 crores and INR 561 crores in Q1 of this financial year. Already in January, we received INR 161 crores. So together, we have received INR 2,017 crores during this particular financial year. Another 2 more months left February and March, we expect to receive some more monies and with the adequate budget allocation available for disbursement.

Sir, my question was, when we look at the revenue profile of INR 967 crore for this quarter, yes, what should be factored in, in terms of the subsidy part in the revenue profile? And secondly, sir, what are the per tonne margins, sustainable margins that we anticipate going ahead also and what we have booked for the 9 months in both the verticals for urea and the DAP segment?

Just to give you details of the composition of the revenue for urea between subsidy and our billing to the dealers. 67% is our subsidy, okay, remaining amount is the collection from the market, to give the first answer, okay?

I missed the point.

So you asked, Saket, what is the component of subsidy billing and what is the remaining component for market collections, market billing as regards urea business, okay? In the quarter, 67% is the subsidy billing and remaining is billing on to the dealers to answer it, okay? Coming to the -- we don't give guidance per se on the future because it is dependent on various parameters like operational efficiency, the gas prices, the exchange rates, XYZ. Rather, we'll give you an update to you on what we have been able to realize, okay, in the current year for 9 months operations. The 9 months operations, we are able to realize close to INR 4,500 of -- INR 7,000 of EBITDA per urea, okay? And as regards to the N20 is the second, I would call a significant product, which manufacture and sell, we are able to make about around INR 1,500 per tonne, okay? These are only indications of what we've been able to achieve, okay? It cannot be [ definitely a much more difficult ] future because as I explained to you earlier, there are a lot of multiple variables which play into this analysis, okay, going forward.

This is for the quarter you mentioned, INR 4,500...

9 months operations.

9 months operation. For quarter, can you split that...

It's almost small variation, okay, maybe INR 7,000. For the month -- for the quarter, it was INR 7,500, okay, because improved efficiency as explained by my CEO.

Okay. And sir, there is also seasonality factor on a quarterly basis for the business we operate. So if you could just give us how seasonally the numbers are impacted, the rabi and the kharif season?

There is no such -- kharif and subsidy has no factor on operational efficiencies. There is no bearing at all. That is only bearing only on consumption of the fertilizers based on the demand. That has got impact only on the subsidy eligibility for disbursement. As you know, Saket, the subsidies are paid -- we are eligible for payment only when the farmer buys it. That is the only dynamics on the kharif and rabi season. So during kharif season, what I call then the consumption of fertilizer will happen. During the time the -- what I call the amount of subsidy, what you receive, okay, will be more during the peak months of consumption. Whereas coming to the operational, what we call efficiencies, there is much factor at all, either it is kharif or -- as such.

And last point is on the growth aspect. If Kantak sir or anybody can answer, what kind of growth are we articulating and backward integration if we are looking going ahead, sir? And that is the...

Murali, I will take that. See, as far as we are concerned, you must be aware that we are into the merger process with PPL. And after the merger is complete, we are going to go ahead with new investments. Currently, of course, we are -- our sulfuric acid project is right now in progress, and it is going to be completed in April. This is being done at an investment of INR 240 crores. And this is going to give us a benefit in terms of reduction in our urea energy by about 0.25 gigacalorie per tonne. And going forward, as I told you, after the merger, we are going to look at investment in NPK plant at MCFL. We are already studying the initial aspects of this project. We have already kickstarted that. And once the merger is completed, we are going to implement that. As far as backward integration is concerned, as I might have told in the last investors meet also that we are looking at acid plant not at Mangalore, but at a group level, either at Paradeep or maybe as a joint venture at Morocco at OCP site, where OCP are our major partners. So the phosphoric acid plants are going to come up there or at Paradeep and that asset is going to be utilized for the existing NPK plants, as well as for the future expansion.

Right, sir. And lastly, sir, on the fuel part also, currently, we are...

Saket, can I ask you to rejoin the queue?

Yes, Navin.

We take the next question from [ Ramesh Sivaraj ].

I again wanted to kind of ask one more question on the merger scheme that was being spoken about, right? And we did -- I did see some announcements about modification of the scheme of arrangement that we shared in the exchange updates on 25th of November. So does the modification of the scheme of arrangement kind of delay what could be the time for closure of the merger? Are we still on track? If you're on track, what time are we expecting the merger to get concluded?

Okay, yes. Ramesh, just to give you an update on this, the merger process, we had already completed -- taken the CCI approval and approval of all the creditors. And the stock exchanges had approved the scheme, original scheme, and that was recommended to the SEBI. However, in September, SEBI had written the scheme with certain observations. So subsequent to that, we had a Board meeting where we have a revised scheme, modified scheme, which has been submitted to the stock exchanges for their NOC. Both the stock exchanges have already cleared the files, and BSE, which is our designated stock exchange has submitted the file to SEBI for its clearance. So after the scrutiny, SEBI has raised certain queries and the same has been answered by the company. We are awaiting the approval of SEBI on the matter. Post the SEBI approval, we are going to approach the NCLT for final approval of the scheme, which may take something around 6 months to 9 months. So we are hoping that within the next 6 to 9 months, this process has to get completed.

We'll take the next question from [ Santanu Saikia ]. We'll just take the next question. [Operator Instructions] Okay, we'll take the next question from [ Anil Bagaria ].

Sir, in the current budget, the phosphoric acid duty has been reduced to 20%. So I believe previous to this duty reduction, the spreads of having our own phosphoric acid plant used to be about $150 to $200 based on the phosphorus price and the processes out here. So with the duty reduction, a, how is it beneficial for you and the industry overall? And b, how do you see -- I mean, post merger when you spoke that there are plans for you to put up a phosphoric acid plant either in JV with Paradeep -- at Paradeep site or at Morocco with OCP? So if you can just provide more clarity out there?

Anil, you mentioned there is a 20% duty on phosphoric acid. I think that is not factual. I don't know what quality of phosphoric acid you are talking about. The phosphoric acid, which is used for the fertilizer industry, the duty on that is only about 5%. And there is absolutely no change in that in the last budget. Okay. So as far as that is concerned, I don't think there are any changes made in that.

So regarding the phosphoric acid that we consume, you don't see any change that was in the financial because I think probably send your team the screenshot of the particular duty reduction. But yes.

Okay. Are you talking about the merchant phosphoric acid what is imported for fertilizer?

I think so, yes, yes.

Murali, are we aware of this?

No, I don't think so.

Because it is only 5%. You talked about 20%.

In fact, for information, there are some countries there is a mutual, what you call, cooperation agreement where also at 0% also we import like from places like Vietnam. So I don't think there's any increase as such, okay, or any change in the, what you call, the duty structure of the phosphoric acid, which is used for fertilizer industry, Anil, okay?

It is never 20%. I has always been 5% and as Murali mentioned from certain countries, it is almost nil also.

We'll take the next question from Naresh Naiker.

Sir, regarding the merger, I understood you told that it will take approximately 6 to 9 months to complete the whole process. So just want to know what are the observations we received from SEBI? Is it a major observation?

I don't think, Naresh, it would be appropriate from my side to disclose what are the queries and all from SEBI. Whatever the queries have been there have been satisfactorily answered, and we are awaiting their final approval.

Santanu Saikia? We'll take the next follow-up question from Saket.

Yes, sir. Sir, this was regarding the gas procurement and what are the pricing -- current pricing dynamics for our power and fuel?

Yes, Murali, you can take that.

Yes. See, we source our natural gas, RLNG imported gas from GAIL, as you're aware, and it is getting what we call transported by the pipeline from Kochi to Mangalore, okay? The current trends of the pricing of the price -- fuel price on GCV basis. So our current pricing is about $14.5 per MMBtu, which was a peak sometime back in November '23 at $16.6 per MMBtu. So current levels, you could see the current financial year, it was around $15.5 levels, and it is corrected to $14. We expect the same to continue with the crude prices holding up the same levels of $75 to -- $70 to $80 levels, okay, average $75 crude prices holding, we expect the pricing to continue.

Sir, when we look at our RM mix, if we take what should be the percentage split up between the key components, including power and fuel since we are not using the line item power and fuel separately. Correct me there. So what should be the breakup?

See, there are multiple, what you call -- see, what is the fuel used in -- as a raw material in the ammonia section and urea section is shown under the raw materials consumption. We also use power, which is being generated from the DG sets, for which you use the same natural gas, RLNG for power generation, but that is classified under power and fuel, okay? So it can't make up from the numbers per se. Both are considered in the 5.5 levels, what we -- the numbers we report, both are factored and giving you the numbers. We only quantify the numbers in terms of efficiency in total, both the power consumed -- the heat consumed to generate power, which is used to operate the ammonia and urea section, as well as the direct, what we call, energy, which is consumed in running the ammonia and urea plant. This is what I call -- across the industry, this is followed.

Sir, my question was, if we take the cost of material consumed line item at INR 535 crore, what should be the approach mix between the power and fuel and the other key raw material component in terms of the absolute value? If you could just give a breakup in percentage terms, that would suffice.

See, we don't -- I understood the question, Saket. So the component of other items, which is very negligible in terms of an area of operations, and we don't track and those components separately as such.

So the key will be the power and fuel only in the INR 535 crore or the phosphoric acid in all percentage, that what I was looking for.

The phosphoric acid is a part of -- sorry, raw material consumption. The -- not only phosphoric acid, there's ammonia and a few other chemicals go into manufacturing phosphoric, that all comes under the raw material consumption, okay? Coming to the urea, there is 2 components, what we call, the item -- material is same, okay? That is your natural gas consumption. What is used in ammonia and urea section is in raw materials. Similarly, natural gas is used also in as foreign fuel for generating power in the DG sets, which is shown under foreign fuel as per the disclosure, what we call, guidelines given under the SEBI regulations.

And last point is on the finance cost. Navin, sir, if I may just chip in. So the finance cost, we have seen down to INR 16 crore, and there is a reduction on a 9-month basis also from [Foreign Language]. So what factors have led to it? And are these numbers sustainable? And do we carry any long-term debt also, sir, on our book?

Yes. The main reason for the reduction in the finance cost for the quarter, as well as 9 months operation compared to the previous financial year. The major reason is, the reduction in the term loan interest per se since we are repaying the existing term loans, which we have borrowed for our ammonia energy project, okay? And also, there is a significant reduction in the working capital interest also. The major reason is the improved liquidity in the market where government has been disbursing subsidies, what we call in time, as we talk, we got the payments even for the, what we call, the first 2 weeks of December DBT bills have been paid -- January has been paid, sorry, okay? So this has led to the reduced working capital borrowing. And also, we got a significant reduction in the other charges, which we negotiated renewal of working facilities post the upgrade we got in the external credit rating into A- in March 2023. The impact is, we are able to see this in the, what we call, we are currently seeing this financial year as well, okay, these are the major reasons, okay? And other question on -- second part of the question on the amount of term loan we are carrying. So we are carrying a term loan book of end of January, INR 312 crores we are carrying, which is primarily significant amount was borrowed for purpose of the ammonia energy project and also some other CapEx we took -- we did in the earlier years. And this will be, what we call, repaid over another -- significantly over the next 3, 4 years. So we expect this to be cleared majority in another 3 years' time. By FY '28, we will be carrying a small book of, say, INR 90 crores, okay? That is a repayment plan. And going forward, as Mr. Kantak was explaining you, we are going to implement, what we call, execute this backward integration project of sulfuric acid project, which entire borrowing we will do. And that will be done in next financial FY '26 when we take delivery of the major equipments. Somewhere in the month of August, September, we will commission the plant. So by the time next year, maybe Q1 or Q2, we will start drawing. Currently, we are tied up INR 160 crores as of part of the cost of term loan against INR 240 crores of projected term loan. We'll draw the money based on our, what we call, our long-term generation vis-a-vis the, what we call, what is the requirement of the funding required for the project we decide. And we expect to draw at least INR 140 crores to INR 150 crores. Again, that means 4 years -- 3 to 4 years' time, we will like to repay that. This is our current situation on term loan and future plans of further loan we take.

INR 180 crores you mentioned, sir, I missed the number for term loan.

INR 160 crores is the current, what you call, financial closure, INR 160 crores of term loan and INR 240 crores is the total project cost. We have not so far done INR 1 against this particular term loan. And we are putting our own internal generations for the funding so far for the mentioned payments for the vendor payments. As we go -- come closer to taking delivery of the equipment, that time depending upon the generations further we are done and what is the requirement on the term loan, we will draw the money. So we expect to draw maybe INR 120 crores to INR 140 crores. We will not draw fully depending upon the -- because INR 240 crores is a projection. So as we, what we call, come close to the project execution and completion, we will draw the remaining part of the term loans.

And what is the cost of fund with the rating upgrade, I think so you mentioned?

We are getting about sub-9%, okay, at this current rate -- market rate. And we could see sub-9% is a good rating, a good cost for long-term loans of an average, what we call, tenure of, what you call, 5 years.

Right, sir. And lastly, on the working capital also, sir. How much is our working capital short-term borrowing we do?

See, we normally discount our gas bills, which, what we call, get from GAIL. So we normally discount those bills. And our cost is around, what we call, around 7%, plus or minus, depending upon the liquidity, what you call, the market and the pricing is based on, and which we take, what we call -- which changes every time when you go for discounting, okay? So around 7% is the, plus or minus, is the cost of [ internal borrowings ].

Saket, any more questions, let me know and we'll take that with the management. Sir, there's a question on the Q&A board, if I can take that. [ Rupam Jaiswal ], please quantify EBITDA per ton for urea and non-urea this quarter.

I'll answer the question, sir. We made INR 7,500 EBITDA for the quarter in urea. Second question is the -- Navin, what is the second question?

Non-urea business.

Non-urea business, we made about close to INR 1,000.

I hope your question is answered, Rupam. Since there are no further questions, may I hand over the webinar back to Mr. Kantak for his closing remarks. Sir?

Thank you all for joining today's call and for your insightful questions. This quarter reflects MCFL's operational strength, commitment to excellence and ability to adapt to evolving market dynamics. Our excellent sales and production numbers, coupled with strong financial performance, highlight our relentless focus on creating value for all stakeholders. As we approach the end of FY '25, we remain confident in our ability to capitalize on favorable agricultural conditions and continue our journey towards sustainable growth. Our priorities will remain centered on enhanced operational efficiencies, strengthening our market presence and delivering consistent returns to our shareholders. We extend our heartfelt gratitude to our employees, partners and stakeholders for their strong support and contributions to MCFL's success. For any further queries, please feel free to reach out to us. We look forward to your continued support and wish you all a pleasant day ahead. Thank you.

Thank you, Mr. Kantak. On behalf of SKP Securities, thank you very much, Mr. Kantak and Mr. Muralidharan for taking time out to interact with the investors. We look forward to hosting you again for the next quarterly webinar. Thank you, ladies and gentlemen, for joining us this morning. Have a lovely day.

Thank you.