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

Good morning, ladies and gentlemen. I'm pleased to welcome you on behalf of Mangalore Chemicals & Fertilizers Limited and SKP Securities to MCFL's Q1 FY '26 result webinar. We have with us Mr. Nitin Kantak, Whole Time Director; along with Mr. T.M. Muralidharan, Chief Financial Officer. This webinar has been recorded for compliance reasons. During the discussion, there may be certain forward-looking statements that should be viewed in conjunction with the risk that the company faces. We'll have the opening remarks from the management, along with the presentation followed by a Q&A session. Thank you, and over to you, Mr. Kantak.

Thanks, Navin. Good morning, everyone, and a warm welcome to our Q1 FY '26 investor call. I am delighted to kick off this new fiscal year by sharing some truly encouraging results, demonstrating MCFL sustained growth and strategic agility. This quarter's performance underscores our resolute commitment to operational excellence and our resilience in a dynamic market. Let's set the stage with a look at the agricultural landscape and the broader business environment before diving into our Q1 FY '26 achievements. The agricultural outlook is exceptionally bright. We have witnessed a remarkably early arrival of the Southwest monsoon beginning in the third week of May, a full 2 weeks ahead of schedule. This early start, combined with an overall excess rainfall across India has led to higher reservoir levels nationwide. Critically, cur current crop swing has been significant 6% increase, setting the stage for what we anticipate will be a bumper harvest and a strong year for food production. These favorable conditions provide a robust foundation for our agricultural activity and consequently for our business. On the commodity front, we have observed a clear upward trend in international prices over the last few months. DAP price has climbed up to $815 per tonne from $650 per metric tonne, phosphoric acid to $1,258 per metric tonne from $1,153 per metric tonne, urea to $495 per metric tonne from $400 per metric tonne, and MOP to $349 per metric tonne from $283 per metric tonne. While these price movements reflect a buoyant global market, they also highlight the importance of our proactive sourcing and operational strategies. Industry-wide, the fertilizer sales trends this quarter indicate increase in urea, NP, NPK and MOP sales and reduction in DAP sales. Urea sales were up 12% to 70 lakh metric tonne. DAP sales were down 25% to 15.5 lakh metric tonne. NP NPK sales were up substantially to 29 lakh metric tonnes, an increase of nearly 34%. Also, the MOP sales shot up 48% to 4.6 lakh metric tonne. As was seen in the last more than a year, this quarter also decline in DAP sales is more than offset by surge in NP, NPK and MOP sales. Operationally, our performance continues to be very good this quarter. Our plants have delivered consistent and strong production volumes with 1.22 lakh metric tonne of urea and 0.67 lakh metric tonne of N20. Our sales figure are equally impressive, reaching 1.98 lakh metric tonne. Financially, our strong operational and sales performance has translated into excellent results for the first quarter of FY '26. We have recorded a top line of INR 862 crores, a notable increase from INR 814 crores in Q1 FY '25. Our EBITDA is INR 115 crores (sic) [ 118 crores ], up from INR 109 crores (sic) [ INR 112 crores ] in Q1 FY '25. And our profit before tax is INR 83 crores compared to INR 68 crores in Q1 of FY '25. These figures clearly reflect our effective management and robust business model I'm also pleased to provide an update on the significant strategic initiative, our merger with Paradeep Phosphates Limited. The process is making excellent progress at the NCLT and is now in its concluding phase. Both companies have successfully obtained approvals from their shareholders, secured and unsecured creditors as stipulated by NCLT. We have since filed a second motion with the NCLT for final approval, which is -- which was done in end of June. And the NCLT has already given the dates of 12th of August for PPL and 20th August for MCFL for the final hearing. And before that, we have to get some approvals. Some of those are already in place and a few more approvals are left, and we are confident that is going to happen before the NCLT final hearing. So I think this merger is poised to be a transformative step, creating substantial synergies and further solidifying our market standing. As we look ahead, we are strategically positioned to capitalize on the highly favorable agricultural and market conditions. Our ongoing focus remains on enhancing operational excellence, expanding our market presence and driving sustainable growth. Thank you for your continued confidence and partnership with MCFL. I'm confident that we will continue to reach new milestones and create enduring value. I'll now hand over to our CFO, Mr. Muralidharan, who will walk you through the specifics of our financial performance. We eagerly anticipate a productive and insightful discussion with all of you. Thank you. Murali, you can take over.

[Foreign Language] Thank you, and good morning once again. In this presentation, we shall cover the highlights of the performance for Q1 FY '26 and the past annual performance. The overview of Q1 FY '26. ammonia urea plants operated continuously throughout the quarter. Our urea production was 1,22,489 tonnes for the quarter. Now we shall move to some of the highlights of the performance of Q1 FY '26 with corresponding period of FY '25. Let us start with the sales volume. We have posted 1.98 lakh metric tonnes sales in Q1 FY '26 compared to 1.9 lakh tonnes in Q1 FY '25, an increase of 4%. Revenue from operations for the quarter is INR 862 crores compared to INR 814 crores in corresponding quarter of last year, an increase of 6% primarily due to increase in volume. EBITDA for the quarter is INR 118 crores compared to INR 112 crores of last financial year, an increase of 6%. And PBT for Q1 is INR 83 crores compared to INR 68 crores last financial year, an increase of 22%. PAT for the quarter is INR 62 crores compared to INR 44 crores of the last financial year, an increase of 41%. Primarily, this PAT increase is on account of the new [ tax ] credits we have started providing this current quarter compared to the last financial quarter. EPS for Q1 FY '26 is INR 5.2 per share compared to INR 3.7 in Q1 FY '25, an increase of 41%. Now we shall present the details of production, sales and revenue. The production and sale of urea is 1.22 lakh metric tonnes and 1.19 lakh metric tons, respectively, in Q1 FY '26 compared to production and sale of urea of 1.22 lakh metric tonnes and 1.16 lakh metric tonnes in Q1 of FY '25. As far as FY '25 is concerned, we have achieved production and sales of urea of 4.43 lakh tonnes each. With respect to complex fertilizers, we have sold 0.79 lakh metric tonnes in the current quarter compared to 0.74 lakh metric tonnes in Q1 FY '25. In FY '25 full year, we have sold complex fertilizers of 3.42 lakh metric tonnes, which contains manufactured volume of 3.07 lakh metric tonnes and trading of 0.35 lakh metric tonnes. Regarding revenue from operations in value terms, urea business has posted a revenue of INR 494 crores in Q1 FY '26 compared to INR 510 crores in Q1 FY '25 and INR 1,926 crores in FY '25. Non-urea business posted a revenue of INR 368 crores in Q1 FY '26 as against INR 304 crores in Q1 FY '25 and INR 1,406 crores in FY '25. We shall now look at the financial position. Net worth has grown by INR 142 crores between June 2024 and June 2025. The net worth now stands at INR 1,126 crores at the end of the quarter. In long-term debt, there is a net decrease of INR 94 crores by June '25 over June '24 after factoring agreed repayments. The short-term debt, which is primarily working capital after adjusting the short-term surplus stands at INR 179 crores in June 2025 over INR 486 crores in June 2024. Now if you look at the position of receivables, as many of you are aware, we carry 2 types of receivables, one from the dealer outstanding. Other one is from the subsidies from the government of India. The dealer receivables INR 165 crores in June 2025 as against INR 197 crores in June '24. The subsidy receivables is INR 292 crores in June 2025 as against INR 466 crores in June 2024. During this month, July 2025, we received INR 195 crores against the outstanding. We shall look at some past annual performance, more for the economic interest, so that we get the -- how we are able to get an overview of the journey of this company last 5 years. The revenue from operations was INR 2,144 crores in FY '21, which has grown to INR 3,332 crores in FY '25 registering a CAGR of 12%. In respect of EBITDA from the levels of INR 233 crores in FY '21, we were able to improve it to INR 417 crores in FY '24 and INR 359 crores in FY '25, again, posting an impressive CAGR of 12%. PBT has improved from INR 106 crores in FY '21 to INR 206 crores in FY '25 after receipt of natural gas in FY '21 and successful commissioning of ammonia energy improvement project in FY '23 by registering a CAGR of 18%. Similarly, you could see PAT has improved from INR 67 crores in FY '21 to INR 144 crores in FY '25, and once again registering an impressive 21% CAGR. Cash profit has improved from INR 117 crores in FY '21 to INR 220 crores, has almost double and registering a CAGR of 17%. Earnings per share has also obviously improved from INR 6 per share in FY '21 to INR 12 per share in FY '25, once again registering a CAGR of 21%. The total receivables was INR 509 crores in FY '21, which went up to INR 758 crores in FY '23, and it is now at INR 561 crores almost in FY '25, almost a similar level of INR 509 crores we saw in FY '21. Now some details of production and sales. We have been producing on an annual average of 3.9 lakh tonnes as against our recent capacity of 3.8 lakh tonnes in the last 5 years. The trend in sales of P&K fertilizers is primarily based on availability and viability in this vertical. A small glance of the people who are first time call participants in this particular webinar. This is an overview of MCFL operations as regards to the location of the plant, products manufactured, the capacities, marketing territories and the brand. The plant is situated at Mangalore in West Coast, as you could see on this map, opposite Mangalore Port and our present reassessed capacity of urea is 3.8 lakh tonnes and the capacity of DAP in other complex is 2.8 lakh tonnes per annum. 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 77% of our sales in Karnataka, 10% in Tamil Nadu, Maharashtra 7%, Andhra 4%, 1% Telangana and also 1% in Kerala. As all of you know that we sell under the brand Mangala. Thank you for your time. Thank you, sir.

Thank you, Mr. Kantak. Thank you, Mr. Muralidharan. [Operator Instructions] We'll take the question from Prashant Biyani. In the meanwhile, we'll take the question from Sandeep Mukherjee.

Am I audible now?

Yes.

Congratulations on excellent set of numbers. Sir, my first question is like what would be the inventory position of DAP and NPK at the country level, sir?

DLP inventory is very less. I don't know the exact figures. We can come back to you. But last few years because of the market conditions and DAP not being available in the international market, we have actually cut down on the DAP. India has cut down on DAP. And most of the other grades have replaced DAP. But right now, I understand the stocks are very low as compared to earlier years. And the second question was what -- which other stocks you wanted? Plex?

No, the inventory position of DAP and NPK.

NPKs are in quite a good surplus exact figure, I won't have them right now. But NPKs are there quite good stocks are there.

So -- any 2 NPK grades are you planning to manufacture how can be the product mix like [ Mangalore ], which is to achieve an optimal margin?

Right now, our plan doesn't have the capability to produce NPK. We produce NP 20-20. We don't have a potash handling system, and that's why we [Technical Difficulty]

Am I audible sir?

Yes. So as I was saying we don't produce NPK because we don't have any NPK handling facility. But going forward, we are already looking at putting up an NPK plant. And the work for that is almost completed. We already floated inquiries for a new NPK plant. And shortly, maybe another 1 or 2 months, we are going to go to the Board with the proposal. And this 3 are going to have -- NPK plant, we are going ahead.

All right, sir. Since the NBS subsidy in SSP has been increased substantially. So how do we see it as a threat to NPK and replacement to DAP?

So the SSP capacity in the country is very, very low as compared to DAP, NPK where most of the plants are the DAP, NPK plant. And very few plants -- of course, the number of plants are there, almost 100-odd SSP plants are there. But the capacity of those plants are very, very low as compared to the DAP, NPK. Yes, one thing is that for DAP replacement, SSP sales have also gone up. Like this quarter, SSP sales are up almost 25% from 9.6 lakh tonnes to 12.9 lakh tonnes. But if you see the NP, NPK sales have gone up from 21.9 (sic) [ 2.19 ] lakh tonnes to 29.3 (sic) [ 2.93 ] lakh tonnes, an increase of 34%. So it is not getting as a substitute for NPK. It is getting as a substitute for DAP.

Okay. All right, sir. Sir, my next question is, sir, how much incremental benefit should be like be for FY '26 post-urea ammonia integration, sir?

Sir, can you please come again? I didn't understand your question.

Sir, our sulfuric acid plant is coming -- is will be operational in H2 FY '26. So how much incremental benefit should flow this year, sir?

Okay. Okay. So I got it. See, the sulfuric acid plant, there is slight delay in the project. But we are not concerned about it because the stream which is going to be generated in the sulfur acid plant is going to be utilized in our ammonia urea plant. And right now, our plan is to have ammonia urea plant shut down in November, December. That is because the policy change is happening like in December, whatever the current norm is there that 5 years after the gas availability, that is getting over on November 23. So we have to shutdown later. And that's the reason whatever some delay there sulfuric acid is not affecting. But as you [indiscernible] this for almost [ 15 tonnes ] from the sulfuric acid plant we are going to utilize it in the urea plants and by that urea energy -- specific energy will go down by about 0.25 giga calorie per tonne.

Okay, sir. Correct, sir. Sir, next question is like what was the gas price last quarter currently what is it, sir?

Murali, you can take it up.

I think about $13 now. Dollar terms, if you convert -- normally, the prices are given -- Sandeep, it's only in terms of rupees per [indiscernible]. Okay. But we convert into for easy comprehension in dollar terms per MMBtu. Currently, it is about $13.5, June, July, it has been hovering around the stage. It was in the range of $14 only -- last almost 1 year. So it is about $0.5 correction as of now.

Can you please share the urea and NPK EBITDA per tonne for Q1 FY '26?

Okay. So EBITDA for urea is about INR 6,000 in Q1 current financial year compared to -- and then the end '20, we are able to get about of INR 3,200.

We will take the next question from Prashant Biyani.

Yes. Am I audible now?

Yes, please go ahead.

Sir, good morning to both of you. Sir, the Government has asked for no shutdown of urea plant this financial year. So sir, in that backdrop, how is it possible for us to shut down the plant by November?

Yes. Just let me give, in fact, since they send us a letter that you should not take any urea shutdown. Actually, the situation is the urea production so far this year has been much lower than your total production previous year. And the reason is there are some plants which have actually gone down due to some maintenance issues. And that's why the urea production is less. And they are concerned about the urea availability to the farmers, it should not create an issue. So that's the reason they had -- as a general thing, they have sent letters to all the manufacturers. As of now, we are already far ahead of the schedule. And what we have told them is we have to take a shutdown in November because one critical vessel in the urea plant, almost 22-, 23-year-old vessel, replacement is due, which we have to do. We cannot avoid that. And they are okay with that. If it is a genuine shutdown, that should not be a problem. But in spite of that, we are -- we'll be able to make the total production, whatever committed to DoF during the year.

Sure. And sir, post the new norms for urea, how much will be our EBITDA per tonne after the expiry of period of benefits?

Prashant, still we are waiting for the new norms to be notified with the revision underway for whole industry, okay? So we're able to give you a hangup after we get details of the notification. So at this point, we are able to give -- the committee is working on a proposal to increase -- to notify new norms for energy as well as what call for [ reduced ] fixed cost, which is in various stages of what we call evaluation at the Department of Expenditure under the Ministry of Finance as well as with the Department of Fertilizers. So at this point, we're unable to give you a hangup. The moment we get you -- get clarity on that, we'll be able to quantify and give you this.

Sure. Mr. Kantak, what is driving the phosphatic fertilizer prices globally? I understand India has less number of stock and China has also stopped exports. But except these 2 reasons, do you see any other reason which is driving phosphatic fertilizer prices?

Look, right now, major issue is because of the global scenario, mainly India-China relations over the last few years have gone down, and China has consciously stopped exports to India, while they are exporting to other countries, mainly Europe. So they have stopped even to our neighboring countries, China is exporting. So this is a very difficult situation. But nevertheless, the government has already been in touch with other countries and has already tied up. Like what I understand, almost 3 million tonnes of DAP has been tied up with Saudi government, Ma'aden, and that is over the next 5 years. they have already tied up. Similarly, with Morocco, about 2.5 lakh tonnes, that is only for this year as of now. But I think we are working for long-term supply with Morocco. And that 2.5 million tonnes will be both combination of DAP and TSP. So right now, there is no problem. And as I told you, although the DAP overall sales have gone down because of the availability in the country, farmer is not behaving what he was behaving maybe 3 years, 4 years, 5 years back. But if there was a DAP shortage, especially in the North of India, it could be a major political issue. But today, farmer is convinced that he can replace DAP with other NP, NPKs and he is able to get the yields also. Like you have seen in the last 1 or 2 years, our food production has substantially gone up. This year also is going to be a record food production. That's what we expect with excellent Kharif season and very high reservoir levels. So the Rabi season is also expected to be very good.

Sir, my question was why are prices rising globally, not with regard to...

That is the market dynamics, supply and demand. Demand will always go up and the supplies are definitely going to be less.

Okay. And sir, to one of the participants, you were alluding to the NPK capacity expansion. I missed the quantum of expansion, if you can share that? And after the merger, if any other plans do we have for expansion at MCFL site?

Yes. As of now, the capacity what we are looking at is 600,000 metric tons. And this -- like that is going to happen. And we are also looking at putting up a phosphoric acid plant. But right now, we don't have the proper land available for this. We are working out with some other parties to get some land for the phosphoric acid plant. But there is absolutely no concrete forward direction, which has happened on this front. So right now, we have planned for phosphoric acid plant, but right now, it is not concrete.

Sir, NPK plant will require how much of investment?

That I'll not be able to tell you as of now because it is still work under progress. So -- but it will be quite huge maybe -- but I cannot tell you right now. I don't have the figures with me.

Yes, the work in progress, Prashant.

And ideally, it should take how many years to come in?

That will take about 2 years. Once you kick start the plant within 2 years, you should be able to complete.

And sir, if we intend to set up a phos acid plant, it should be of what capacity?

As I told you, our first thing is land acquisition. Then only we will look at whatever capacity we can have. As of now, we have not decided on any of those things.

Prashant, it is basically to supplement Mr. Kantak. Basically, it depends on so many parameters, the size of the land [indiscernible] the proximity, logistics challenges, everything. As Mr. Kantak was explaining to you, only after you get firm what we call commitment to acquisition of land, then we'll be able to tell you. So at this point of time, it's very difficult for us to give any sort of clarity on that.

While the other questions line up, I think there's a follow-up question from Sandeep Mukherjee. Sandeep?

Sir like the country is importing from incremental DAP from Saudi. So what will be its premium with respect to Chinese DAP sir?

There is nothing called premium. The international prices for India remain same, whether it is from China or it is from Morocco or from Saudi Arabia.

Sir, like the logistics delta and...

Yes. So it is a CFR cost. So the freight is already included in that. We are bound by the international CFR price.

Okay. And sir, any CapEx plans?

Sandeep in just DAP business, I want to give the follow-up information to what my CEO explained to you to both Prashant also. See, the Chinese dependency has been going down over the last 5 years. It is not the first time that they are on the ban. Even during 2020 also this happened over a period of time, now currently whatever volume, the last 5 years, 20% we are dependent on China. So there's no big impact. The government of India is able to get alternative source, what Mr. Kantak explained to you getting Saudi, okay? And normally, that is first information I want to supplement. Second information is the premium per se you asked, actually, what you call if you look at what I'm paying, what you call India is paying to the -- generally to the what you call global players irrespective of location, that becomes a pricing. So there's no such big difference. Always prices are plus/minus a few dollars only. So no such thing like a premium you pay for getting this sourcing from different geography compared to China, I want to give clarity.

We will take the next question from [ Shaurya Punyani ] Shaurya?

Sir, first question is at what utilization we are operating currently capacity-wise?

Capacity-wise, urea, we are already at much higher loads, and we are capable of producing about -- as we have produced in the previous 2 years. So this year production will be around 440,000 to 450,000 metric tonnes. And as far as phosphoric acid is concerned, in fact, over the last 2 or 3 years, we have been able to increase the capacity from levels of 270,000 tonnes to about 320,000, 325,000 tonnes. This year also, we are going to produce about 325,000 tonnes.

325,000 for phosphoric?

Yes.

So what kind of -- so can we have like a 10% growth year-on-year like in terms of...

No. See, there are always limitations in further increasing the capacity. This capacity was only 270,000. With some improvements, we have been able to go up to 320,000, 325,000. But it is possible if acid is available throughout the year and there are no other constraints, plant is capable of going up to 350,000 tonnes.

Okay. And sir, like on year-on-year blended wise margins, so do we have an internal target like what kind of margins are we expecting this year, like 10%, like we'll be able to maintain?

See, these targets depend on the market prices. So a bit difficult to work on a target margins in this industry. Globally, as Mr. Kantak was explaining or responding to some of the questions, this industry is very difficult to predict a target margin or growth year-on-year. It is purely on interplay of demand supply conditions and the pricing, how much government is also willing to support the subsidies, how much you are able to realize the prices and margins. There's a cap on what we call -- what we can also -- what I call make margins in terms of a complex. As you are aware, there is a guideline issued those on 18th January, where there's a cap on 8% margins on imports and 10% margin on the manufacturing of the complex fertilizers. So very difficult to give that what you call -- gain, the 10%, 8% based on the cost of -- what I call cost of sales. So again, cost of sales is coming down for some prices, then the margin automatic will come down, okay? So very difficult to give you a clarity on the direction of this.

We take the next question from [ Abhijit Mitra ].

I have a couple of questions. First on your operating expenses as a percentage of sales have come down very sharply from, say, 31% last year, 34% last quarter to around 25%, 26% this quarter. So what has led to this drop in your manufacturing/operating expenses.

This industry is a very peculiar industry, tracking any cost as a percentage of sales will be difficult to run what you call directions because sometimes the top line seems to be registering a growth without a growth in volumes. We may all of us get, what you call, thinking that volumes are growing, cannot grow at all. Sometimes there will be a degrowth in the sales top line despite the growth in volume, sales volume because of this. So we normally track the value terms the operating cost, okay?

So essentially, what you're saying is volumes have not picked up, realizations picked up. That's what sort of taken the top line up and not the expenses equivalently.

Exactly. Expenses are under control and has been tracked and controlled. We control and manage this business on absolute control on the cost, fixed cost, operational cost. The other one, the margins are basically variable cost margins depending on factor of the prices. As we increase the price subsidy also gets increased, sometimes subsidy gets decreased when the commodity prices softened or getting cooling, okay? So this is a factor very difficult to predict even quarter-on-quarter and also maybe year as a whole, we can give a better picture than quarter-on-quarter also as well.

Just to add one more point -- just a second. One more point I want to add is the subsidy for the 6 months is declared based on previous 6 months prices. And during this time, if the prices have gone up, as compared to what was there in the previous 6 months, you are going to get less subsidy. But because of the higher commodity prices, your margins will go down and the other way around also. So there's a time lag between the subsidy is declared and the international prices.

Understood. And second question is you mentioned that in urea, you're making INR 6,000 in N20, you're making INR 3,200. But if I combine your blended EBITDA as in your sales EBITDA divided by sales, that's almost INR 7,100. So the delta is what delta is essentially trading...

EBITDA will be about INR 5,000 per tonne.

Yes. But if I look, you have reported EBITDA of INR 111 crores and your sales of urea and complex fertilizer put together is around 0.1 tonne.

See, the current quarter, if you see it is 190,000 we sold. When it comes to blended, INR 5,500, not INR 9,000.

INR 5,600. Got it.

INR 5,500 that's what Mr. Kantak was explaining to you.

And in the next few quarters, you feel you can maintain this absolute level of EBITDA? Or do you feel there is or there inventory gains which you need to sort of call out or anything that you sort of see adding or getting subtracted from this number over the next few quarters?

Q2 it is, it will be maintained -- urea at least will be maintained, but the gas prices are going down, so the EBITDA is going to go down on urea. And second thing is the commodity prices of phosphoric acid is going up, the margins on phosphatics also will slightly come down. But after November, as I told you, we are -- will be controlled by the new energy norm. So at that time, the effect will be much more on urea. It will be slightly compensated with what energy benefit you are going to get from sulfuric acid.

We take the next question from [ Badri Bajaj ]. We will take another question in the meanwhile. [ Reju Dhalvi ]

So just for clarification purpose, for the urea EBITDA per tonne, you said INR 6,500 for this quarter. Is that right?

INR 6,000 per tonne.

Sorry, INR 6000? Okay INR 6,000 only.

Yes.

And then as per the calculation, I think for the non-urea side, like if we can assume the trading EBITDA per tonne, so that could be INR 2,000 or maybe something.

INR 3,200.

Trading volume.

INR 3,200. For the NPK, we got EBITDA of INR 3,200 per tonne.

NPK INR 3,200?

Yes. N20. Only one product we are manufacturing that is N20. We got INR 3,200.

Okay. But if I look at the math, right, so if I assume INR 6,000 urea EBITDA per tonne, then urea EBITDA will come.

See, Reju there is other -- what you call other products also we do, okay? So it is not -- there are small other products also we manufacture, okay? So if there is an ABC, there is what you call [indiscernible] there is construction chemicals also -- there we realize very lower volumes, lower what we call margins, okay? So it cannot be one to one numbers, okay? It is not only pure fertilizers we manufacture.

Understood. So if you could let us know last year that non-urea portion EBITDA per tonne last year same quarter.

Last year, we realized much more less actually. As Mr. Kantak explained to you Reju, there is a process of realizing this cost -- the cost. As Mr. Kantak just now explained to the earlier questions about the earlier call participant, there is a timing difference of release the cost. So Government of India, when they notify the subsidy rates biannual basis. That is from April to September, October to now March, they take the last 6 months prices. So, for example, they want notify for month of April to September, they take the prices -- the earlier year, okay, somewhere from August to February, then they get this process. So by the time they notify the prices, actually, what we are going to incurring what call the subsidy we're getting will be much different on the prices in which we really operate, okay? Similarly, from October to March, then they take prices somewhere from March to August because they need a month for the process fee what they call their internal processes. So they take the prices from, say, for example, March to August. Then the workaround -- the notify the prices. By then for October to March is notified. So by the time, what happens -- but the payer prices, what is going to in October to March on the same price. So this teeming and lading process always keeps happening. [indiscernible] very difficult to track quarter-on-quarter. We cannot even draw any inferences out of that. I hope I'm able to reach out to your observations.

Yes, sir. So I just wanted to understand that like compared to last year, our EBITDA per tonne has improved for the non-urea [indiscernible] '20. So how much that was maybe driven by the inventory gain. So that I wanted to understand.

It is not inventory gain per se, we can say. It is the -- what I can say there's a timing difference in terms of prices actually, but not more than the inventory. We don't have to carry inventory. As I told you, the subsidy is based on particular prices and that is being paid to us. And subsequently, when the prices which we buy, okay, it is -- the prices are different than what was considered for subsidy calculation. It is not on account of inventory because none of us carry inventory per sale.

Understood, sir, basically, if I look at the RM prices, so RM prices for the month of March or maybe Feb was much lower. And our maximum sales happened in the Q1 as a placement time for the Kharif season. So we must have carried some inventory to sell in the Q1 that we have manufactured in the Q4 with a low-cost inventory. So that part I wanted to understand.

See, I can understand that in urea, there is absolutely what I call -- it's not only urea, both the products, what we manufacture, we don't carry inventory at all. Whatever we produce almost is sold, okay? Maybe we carry small 10,000 tonnes of inventory, both products together, okay?

We will take the next question from [ Roopam Jaiswal ]. We will take the next question from [ Badri ].

Your detailed outlook at national level and international level about DAP and NPK scenario, it is a burning topic not only in Telangana but also in many of the states. And you are struggling, diversifying and a lot of actions you have taken. I have seen earlier speech and you are responding. It is excellent. I appreciate and thank for that.

Thank you.

Sir, in this process also, you have highlighted the Paradeep or phosphate merger with us pending at NCLT, thankful for the update. Sir, a lot of CapEx you are underway and you are planning also as Mr. Muralidharan has explained. So I'll be much happy because I'm in Bangalore in around October. Can you permit me for a personal visit of the plant. It is my humble request.

Yes, you can consider it. You can contact us. We will take care of that.

Very good, sir. Nice of you because it is my company, and I'm proud of that for the past 20 years, I'm holding as a senior citizen, I wish it will grow much more. Good day, sir.

We'll take the next question from [ Shashi Raja ]. Let's take a follow-up question from [ Abhijit Mitra ].

Just sort of on a previous point. So for example, if we can calculate the realizations for urea and other products for the quarter, we are seeing a very sharp increase. So say, around 13% sequentially for urea and 6% sequentially for other products. So in terms of the subsidy that you have accounted for, which period subsidy have you accounted for, if you can sort of help me understand. Have you taken the subsidy amount by looking at the prices of Q1 FY '25, Q2 FY '25 on an average? Or generally, how do you sort of account for the subsidies as you report these numbers?

Can I respond sir?

Yes, please go ahead.

So Abhijit, kindly, I want to make understand that the accounting for the subsidies are different for urea or for N20 is different, okay? Because in subsidy for N20 is declared, okay? There the realization of the timing of these differences happens as we explained in the area require discussions. Whereas for urea, we account based on the current prices of gas prices because we get notified the prices on an absorption basis, which normally the trend is based on the contracts what we have in place. So accounting of the urea subsidy is based on current cost, whereas N20, the timing difference. The reason you can't blend these 2 and get an answer, okay? So there are 2 different animals by itself, okay.

So essentially, I can see that there has been an appreciation in urea price over the last 2 quarters, actually, it went down and then again started moving up. So are you sort of booking a lower than actual subsidy in this and hence, you are looking at a lower EBITDA or...

No, no, I think your understanding maybe -- and maybe I can take you a later point of time also to give you clarity on this. Prices of the gas, as we explained earlier on, prices have been coming down from $14 gas price has come down to $13.5, around $14, almost $1 correction or maybe close to less than $1 correction. So that will have an impact on the what you call subsidy we book. So the subsidy, what accounted for the current quarter FY '26 is lower than what we have accounted for the first quarter, corresponding quarter last financial year. So that is the difference. So that is what -- it's not easy to track this industry per se because a lot of variable dynamics go behind this. In urea, as you know, that MRP is fixed by the government and subsidy is full pass-through, okay? So based on the current cost, whereas N20 subsidy is fixed per se and what you call then there's a time difference on the cost. When we blend this 2, we can't get an answer straightforward. So if you still want clarity, we can always -- you can always contact us at a later point of time. We'll be able to give the clarity to you.

Mr. Kantak, one of the participants has asked -- has posted a question. May I take up?

Yes.

Roopam Jaiswal has requested if you could repeat the new energy norms coming in effect from November.

Yes. So after our gas conversion when the gas was available in November, there was a urea policy where the investments what you have done for gas conversion can be -- government has allowed to be recovered within the 5 years. And accordingly, that 5-year period is getting over in November, that is November 23 to be precise. So after that, the norm is going to change. And right now, as Murali mentioned that these are still not notified by the Department of Fertilizers, but there are talks going on that the energy levels, what each company is going to have, they are deciding on some things but it is still not notified. But it will come -- actually, it is going to be applicable from April for all the other companies. For us, it will be after November 23. But the norm is definitely coming down. But as I said, because of the sulfuric acid plant, our urea energy is going to go down by 0.25 gigacalorie per tonne. So to that extent, it will get compensated.

And also to supplement, Mr. Kantak, there is going to be upward revision of fixed cost. There is going to be revision of capacities. So overall, what we -- still we are awaiting the fine prints. [indiscernible] is notified, we'll be able to give much better clarity on this impact of this going forward after the what you call November 2025, okay? What could be the position we can able to say. At this point, it's very fluid and we have no clue on the numbers. And government is working around. This is not only for MCFL. It is for pan industry. They are supposed to notify the new norms from effective from 1st April 2025.

I hope your concern has been addressed. There is another question from [ Shashi Raja ] Any plans of expanding in Northern India.

Right now, we don't have any plans of expansion in Northern India because we don't have any manufacturing facility in Northern India. Only our group company, not exactly our group company, but with the same promoters Chambal Fertilizers is there. So maybe they are looking at already expansion of -- we are going ahead with the ammonium nitrate plant. And they may go with a dairy plant also in future.

We'll take the last question for the morning from [ Reju Dhalvi ].

So you said that with the sulfuric acid plant that you are expanding. So with that plant, how much energy will be able to generate with that new sulfuric acid plant.

What you said Reju?

How much energy will be able to generate from the new sulfuric acid plant?

Yes. So this plant is going to give a waste stream of about 16 tonnes per hour and that will be utilized in the ammonia plant. And by that, our urea energy -- specific energy will go down by about 0.25 gigacalorie per tonne.

Okay. So sir, just wanted to understand like in terms of megawatts, how many units we will be able to generate on our own.

Normally, urea energy is expressed in gigacalorie per tonne only. So even the gas price is based on MMBtu, which, of course, is converted to gigacalorie. So we don't work in terms of megawatt.

That was the last question for the morning. I now hand over the webinar back to Mr. Kantak and Mr. Muralidharan for the closing remarks.

Thank you. Thank you, Navin. To conclude, I want to extend my sincere appreciation to our investors, stakeholders and the dedicated MCFL team. The outstanding results of Q1 FY '26 powerfully demonstrate our strong execution capabilities and strategic foresight. The early and abundant monsoon, coupled with robust agricultural outlook signifies immense potential for the sector, and we are fully prepared to seize these opportunities. Our impressive production figures, strong sales performance and solid financial results highlight our strong commitment to creating value for all our stakeholders. Furthermore, our merger with Paradeep Phosphates Limited is progressing well, demonstrating our commitment to long-term growth and becoming a market leader. We remain resolutely focused on driving sustainable growth, upholding operational excellence and consistently delivering value to our stakeholders. Thank you once again for your strong support and confidence in MCFL. We look forward to continuing this journey of success together in the coming quarters. Thank you.

On behalf of SKP Securities, thank you very much, Mr. Kantak and Mr. Muralidharan for your time to interact with the investors. We look forward to hosting you once again. Thank you, ladies and gentlemen, and have a wonderful day.